European shares turned negative in cautious trade on Thursday ahead of a crucial EU summit after a source said a proposal to give the euro zone's European Stability Mechanism a banking licence was off the table.

The source also said that euro zone countries were likely to agree to lend 150 billion euros to the International Monetary Fund via bilateral loans from their central banks.

At 11:14 a.m., the FTSEurofirst 300 index <.FTEU3> of top European shares was down 0.2 percent at 986.87 points after trading as high as 996.63 points earlier in the session.

(Reporting by Atul Prakash)