UPDATE 2-Unipol appeals antitrust terms for FonSai merger

* Unipol says moves to sell assets continue

* Regulator had placed 30 pct share cap on various segments

* New group would have 37 pct of car insurance segment

(Adds Unipol statement, shares)

By Andrea Mandala

MILAN, Oct 11 (Reuters) - Italian insurer Unipol has lodged an appeal against conditions laid down by the country's competition watchdog to clear its planned takeover of peer Fondiaria-SAI to create Italy's No.2 player.

Unipol said on Thursday it had filed an appeal with an Italian administrative court seeking a review of regulatory requirements it considered too penalising.

While Unipol did not say which measures it wanted reviewed, a s ource close to the matter said the cap placed on the new group's market share in the auto insurance business was perceived as too tough.

Unipol said the procedure for the sale of insurance assets and financial holdings requested by the antitrust authority was underway, rejecting earlier media reports that the appeal temporarily halted the disposal process.

Shares in Unipol ended down 1.25 percent at 1.73 euros, underperforming a 1.2 percent gain on the Milan blue chip index .

Fondiaria is Italy's leading motor insurer and merging it with Unipol would create a company with around 37 percent of this segment and 32 percent of the non-life insurance market.

On June 20 the antitrust regulator called on Unipol to dispose of assets so as not to exceed a 30 percent threshold in the various domestic insurance segments.

To meet competition watchdog demands, Unipol had previously said it was ready to sell policies attracting 1.7 billion euros of annual premiums.

In January investment bank Mediobanca crafted a deal for Unipol to save the faltering Fondiaria. The merger is planned to be operative on Jan. 1, 2013.

On Wednesday antitrust head Giovanni Pitruzzella said there were various deadlines for Unipol's commitments, adding the more "industrial" operations had been put back to 2013.

Among the conditions laid down by the regulator is an undertaking by Unipol to sell a 3.8 percent stake in Mediobanca before the end of 2013.

Bologna-based Unipol, controlled by a group of cooperatives, will own around 67 percent of the new company when formed.

Filings from market regulator Consob on Thursday showed that some cooperatives had raised their stakes in Unipol following the purchase of preference shares left unsold after the insurer's 1.1 billion euro rights issue.

The Lima cooperative raised its stake in Unipol to 4.55 percent from 3.12 percent while the Coop Adriatica and Nova Coop had 3.315 percent and 2.308 percent respectively.

(Additional Reporting By Danilo Masoni, writing by Stephen Jewkes, Editing by Lisa Jucca and Mark Potter)


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