GKN PLC Share News (GKN)

* STOXX edges up 0.3 pct

* E.ON, RWE rally after "win-win" Innogy deal

* Downgrade to sell hits Just Eat(For a live blog on European stocks, type LIVE/ in an Eikonnews window)

By Danilo Masoni

MILAN, March 12 (Reuters) - European shares hit theirhighest level in almost two weeks on Monday, boosted by gainsamong German utilities after the sector's leading playersannounced a major overhaul of the industry.

Innogy soared 12 percent after parent RWEand rival E.ON said they would break up Germany'slargest energy company by market value and divide up its assets.

The deal would give E.ON greater economies of scale in powerdistribution and retail and RWE in renewables, making it easierfor them to cope with Germany's rapid shift to cleaner energysources. RWE and E.ON, whose share prices collapsed over thepast decade, rose 7.5 and 5 percent respectively.

Morgan Stanley said the agreement could be a win-win deal,with larger networks and retail businesses for E.ON and a longterm renewables strategy and a stable dividend for RWE.

Shares in utilities in other countries rose on optimism forfurther M&A in the sector.

The STOXX utility index rose 1.4 percent to leadsectoral gainers in Europe, helping the pan-European STOXX 600index rise by 0.3 percent by 0920 GMT to its highestsince Feb. 28.

Germany's DAX was up 0.7 percent, while the UK'sFTSE dipped 0.1 percent on weaker commodity stocks.

Among top gainers were GKN, up 1.2 percent afterMelrose increased its hostile bid for the UK automotiveengineer, appealing to investors after the company struck arival deal of its own last week. Melrose fell 2.4percent.

The autos sector index rose 0.6 percent, brushingoff a tweet by U.S. President Donald Trump in which hethreatened to impose taxes on European autos imported into theU.S. if the EU retaliates in a row over steel tariffs.

https://goo.gl/oJ2PBs

The top faller on the STOXX was Just Eat , down 4.3percent, following a downgrade to "sell" from Deutsche Bank.

"Along with 2017 results, new CEO Peter Plumb announced aninvestment plan to expand into the delivery services business.While we think this move is strategic to defend Just Eat'sleadership position against increased competition, it will comeat the expense of profitability," Deutsche Bank said.

Shares in Aryzta's fell 3.8 percent as the Bakerycompany announced another management shuffle after posting awider first half net loss.

Meanwhile, basic resources stocks fell 0.7 percent,tracking lower metal and crude oil prices.(Reporting by Danilo Masoniediting by Tom Pfeiffer and Jon Boyle)