* STOXX 600 down 0.2 pct
* Italian banks gain from record demand for bond issue
* Alstom rises after EU rejects Siemens deal
* Daimler falls after cutting dividend
* Dassault rallies as results top expectations (Updates prices, adds details, quotes)
By Josephine Mason and Helen Reid
LONDON, Feb 6 (Reuters) - European shares inched up to touch 12-week highs on Wednesday, fuelled by strong gains in Italian banks and tech stocks, while Ubisoft sank following a revenue warning from U.S. videogame maker Electronic Arts (NASDAQ:EA).
Europe's STOXX 600 .STOXX managed a 0.2 percent gain by the close, having oscillated in and out of negative territory during the day.
The regional benchmark hid wide variations at country level: Germany's trade-sensitive DAX .GDAXI was down 0.4 percent and France's CAC 40 .FCHI fell 0.1 percent while Italy's FTSE MIB .FTMIB jumped 0.8 percent.
Bank stocks, which began the day as a drag on the market, reversed course to rise thanks to a rally in Italian lenders after a new 30-year Italian bond drew record demand, a positive sign for government bonds. Sanpaolo ISP.MI and Unicredit CRDI.MI climbed 2.4 and 4.4 percent, helping drive the banks index .SX7P up 1 percent, the top boost to the STOXX.
Strong results from Dutch lender ING INGA.AS also helped lift the mood in bank stocks, which were the worst-performing in Europe last year.
ING shares climbed 6.1 percent after it reported stronger-than-expected earnings driven by rising interest income and fees.
"ING has reported a strong set of Q4 numbers but we would caution against extrapolating Q4 trends," wrote UBS analysts.
BNP Paribas BNPP.PA shares recovered after weak results, ending the day up 1.8 percent. The French lender reduced its profit target for 2020 and said weak financial markets hit revenues in the final quarter of 2018. investors have remained unimpressed with European bank stocks, though.
"We're concerned in this cycle that banks are the value trap - it might be you're waiting for a leg up in bank stocks that never occurs," said James Bateman, chief investment officer of multi asset at Fidelity.
Bank aside, M&A developments also drove some moves.
Alstom ALSO.PA shares climbed 4.1 percent after Brussels rejected the French rail manufacturer's plan to merge with Siemens' SIEGn.DE rail division, as investors said the decision removed uncertainty and opened the way for potential alternative deals. carmaker Daimler DAIGn.DE fell to the bottom of the DAX, down 1.8 percent after saying fourth-quarter operating profit fell 22 percent as trade war and ballooning costs for developing electric and self-driving cars hit profits at Mercedes-Benz autos. on Wednesday showed that German industrial orders fell unexpectedly on weak foreign demand in December, another sign that companies in Europe's largest economy are struggling with a slowing world economy and trade disputes. further dented sentiment for Germany's DAX, which lagged the market.
A standout faller was French gaming firm Ubisoft UBIP.PA , which sank 9.5 percent after U.S. videogame maker Electronic Arts cut its revenue outlook due to its newest "Battlefield" title selling about a million fewer units than expected. stocks .SX8P hit a 3-month high thanks to strong results from French software company Dassault Systemes DAST.PA , which shot up 10.1 percent after fourth-quarter revenue topped guidance. the company's outlook for 2019 is slightly below our expectations, we want to highlight that the company has a track record to guide conservatively," said Baader Helvea analyst Knut Woller.
Finnish engineering firm Metso METSO.HE and Swedish industrial technology group Hexagon HEXAb.ST rose 5.4 and 8.5 percent after well-received results. AMS AMS.S was also a top European gainer, jumping 10.1 percent and recovering all the ground it lost on Tuesday when results sent it down 6.9 percent.