UPDATE 1-European shares trade sideways, focus on M&A

* Sanofi bids $11.6 billion for U.S. Bioverativ

* Richemont to buy out Yoox

* UK betting groups fall on new regulation report (Adds shares, comments)

LONDON, Jan 22 (Reuters) - European shares traded with little clear direction on Monday as markets focused on a flurry of M&A, with limited impact from the shutdown of the U.S. government and progress towards an end to political deadlock in Germany.

At 0918 GMT the pan-European STOXX 600 index was flat (-0.02 percent). Germany's DAX was down 0.1 percent, France's CAC-40 was 0.2 percent lower and the UK's FTSE was up 0.1.

French drugmaker Sanofi fell 3.4 percent after the company announced a $11.6 billion takeover of U.S. haemophilia treatment specialist Bioverativ, with some traders saying the deal looked expensive.

Kepler Cheuvreux analysts said the deal raised a "host of questions" and wondered whether Bioverativs pipeline could offset pressure from a rival Roche treatment.

Italian online luxury retailer Yoox Net-a-Porter's shares surged 25 percent, hitting a record after shareholder Richemont moved to buy out the company.

Still in Italy, Mediaset was up about 5 percent with traders citing an upgrade to "Buy" from Goldman Sachs.

Ocado jumped 13 percent after it signed an agreement with Sobeys to develop the online grocery business at Canada's second-largest food retailer.

UBS, Switzerland's biggest bank, saw its shares fall 2.5 percent after reporting a quarterly loss, driven by a large writedown on the U.S. tax reforms. UBS still boosted its dividends and announced a new share buyback programme.

UK betting groups were the worst performers on the STOXX 600, with William Hill and Ladbrokes down 14 percent and 13 percent respectively, on a report that the government is set to cap maximum stakes on fixed-odds betting machines at 2 pounds ($2.8).

South African retailer Steinhoff rose over 11 percent after it said it planned to sell about 7.5 billion rand ($620 million) of shares in investment firm PSG Group as it scrambles to plug a liquidity gap.

British drugmaker Indivior jumped 6.3 percent after a competitor for its Sublocade drug suffered a setback in the United States.

"It bodes well for Indivior and improves its positioning with the upcoming launch of Sublocade," broker Jefferies said in a note.

The energy sector was the main contributor to the STOXX 600, with Total and Royal Dutch Shell rising 1 percent and 0.8 percent respectively.

Telcos were also up slightly, spurred by Deutsche Telekom which gained 1.3 percent after its CFO flagged rising dividends. ($1 = 0.7194 pounds) (Reporting by Julien Ponthus; Editing by Tom Pfeiffer and Susan Fenton)