* STOXX 600 flat at close
* Deutsche up after settling mortgage fraud claim
* Credit Suisse turns lower, Barclays falls on lawsuit
* NN Group, JCDecaux gain on merger deals (Recasts, adds detail and updates prices at close)
By Kit Rees and Alistair Smout
LONDON, Dec 23 (Reuters) - European shares were steady onFriday with the focus on lenders after Deutsche Bank and Credit Suisse settled mortgage securities fraudsuits in the United States, and Italy's Monte dei Paschi agreed to a bailout.
The STOXX Europe 600 was flat at its close andunchanged for the week, but the index still on track for itsbest month since October 2015.
Deutsche Bank trimmed early gains to end 0.3 percent higher,outperforming a slightly negative European banking index, after it agreed to a $7.2 billion settlement with theU.S. Department of Justice (DoJ) over its sale of toxic mortgagesecurities before the 2008 financial crisis.
U.S. authorities had been seeking nearly twice as much.
Deutsche's shares have risen nearly 80 percent sincetouching record lows in September.
Credit Suisse turned negative after early gains, while RBS, which is also being investigated, rose 1.4 percent onhopes that its final settlement might be lower than expected.
However, Barclays underperformed after failing toreach a settlement. It was down 0.9 percent after the DoJlaunched a lawsuit against the bank over its sale ofmortgage-backed securities. The bank said it rejected thecomplaint.
"(Gains for) Deutsche Bank shares suggests relief at a goodresult and the affair being closed," Accendo Markets head ofresearch Mike van Dulken said in a note.
"Barclays' (fall) indicates some uncertainty about what iteventually ends up paying."
Britain's FTSE 100 closed 0.1 percent higher.
Italian lenders rose 0.6 percent after theItalian government agreed to bail out Monte dei Paschi. Thebank's shares will remain suspended until the conditions of astate bailout become clear.
Shares in Telecom Italia rose 4.5 percent after areport that Italy was considering a plan for its state lender tobuy a stake in the telecoms company to counter the ambitions ofFrench businessman Vincent Bollore.
Dutch insurer NN Group rose 3.7 percent after itreached an agreement to buy Delta Lloyd. NN had nudgedup its unsolicited offer by 1.9 percent to 2.5 billion euros.
NN Group said the deal would cement its leading position inlife insurance in the Netherlands, increase assets undermanagement by 60 billion euros, and lead to "double-digit"dividend increases starting in 2018.
Advertising firm JCDecaux rose 3.4 percent on itsmerger of activities with Top Media, strengthening its presencein Panama, Guatemala, Costa Rica and El Salvador. (Reporting by Kit Rees and Alistair Smout; editing by DavidClarke)
Barclays (BARC)
