MBP External Display Won't Stay Asleep: stuck in sleep / wake loop

I have a mid-2012 MacBook Pro (running Mountain Lion) connected to an HP Pavilion 23xi external display. The external is connected via DVI-->Thunderbolt adapter, is set as the primary display and the MacBook Pro is mostly in Clamshell mode.

When I put the Mac to sleep, the displays sleep as they should. However, if I put just the displays to sleep (ctrl - shift -eject or hot corner) the internal display behaves as it should but the external display goes to sleep for a second or so then immediately wakes up. It then gets caught in a sleep / wake loop.

Other threads suggest restarting and resetting the SMC but, in my case, this hasn't helped. Wake for network access is off and the problem persists when the display is the only peripheral connected to the mac.

This is what the Console shows when this happens:

Update: It's not Mountain Lion

On the off chance that the OS X display sleep settings were conflicting with the monitor's built-in power saving feature, I tried using them independently. When the display's power saving is off OS X just cuts the signal, and the display remains awake (but displays the no input message).

But when the display's power saving is on, and I try to put it to sleep, the sleep-wake loop problem occurs.

This is very annoying. As a temporary workaround, I'm just manually switching off the display. People on the HP forum seem to think it's an issue with the DVI connection. [Link.]

Thanks for the input. I guess we'll just have to turn the monitor off by hand then...