Heat butter in saucepan over medium heat. When hot, add shallot and cook 2 minutes. Add mushrooms, season and cook 5 minutes.
Mix in flour until well incorporated and cook 2 minutes over reduced heat.
Season well and pour in chicken stock; mix well and bring to boil. Pour in milk, add nutmeg, parsley and paprika. Mix well and cook 7 minutes over low heat, stirring occasionally.
Serve sauce over hot pasta and accompany with cheese.