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* STOXX Europe 600 index up 0.9 pct
* Banking stocks among top gainers
* Search for bargains boosts auto stocks
* Healthcare sector hit by Trump comments
* PostNL sinks after rejecting Bpost offer
By Atul Prakash and Danilo Masoni
LONDON/MILAN, Dec 7 European shares climbed on
Wednesday, with the regional banking index hitting an 11-month
peak after Credit Suisse announced further cost cuts and Italian
banks surged in their best two-day run since mid-2011.
The STOXX Europe 600 Banks index was up 2.3 percent
after touching its highest level since January, supported by an
7.4 percent rise in Credit Suisse after the Swiss bank
announced more than 1 billion Swiss francs ($991 million) in
extra cost cuts.
Italian banks rose 4.4 percent after sources
told Reuters that Italy was preparing to take a 2-billion-euro
controlling stake in Monte dei Paschi di Siena as the
lender's hopes of a private funding rescue faded following Prime
Minister Matteo Renzi's decision to resign.
"The market is betting on a systemic and once-and-for-all
solution," analysts at Italian broker ICBPI said in a note.
Italian banks are now up nearly 14 percent since Monday's
close, making their biggest two-day rally since July 2011.
Shares in Monte dei Paschi rose 10.8 percent, a day after
Italian banks jumped 9 percent on short-covering before a
European Central Bank meeting this week and after Renzi said he
would step down following his defeat in a referendum. He was to
tender his resignation later on Wednesday.
"Two big political events have passed without calamity. The
market is starting to digest the terrible level of politics in
Europe and the focus has turned back to the economy," said Lorne
Baring, managing director of B Capital Wealth Management.
"European equities are cheaper than U.S. stocks on valuation
grounds and dividend yields are more attractive. It seems a
geographical rotation is taking place now."
The European auto sector index surged 3.3 percent to
their highest level since mid-January with investors lured by
low valuations and a continued rotation into cyclical stocks.
Traders said the mergers and acquisition activity also
helped after Faurecia started talks to buy the
automotive unit of French drone specialist Parrot.
Miners were also in demand as their shares tracked metals
prices, which rallied on signs that global manufacturing
activity will return to a firmer footing next year.
Their gains helped the pan-European STOXX 600 to
end up 0.9 percent, at its highest since end-September.
In a broader market rally, several other regional share
indexes attained new peaks. Germany's DAX rose to a
one-year high while France's CAC hit its loftiest level
in 11 months. Italy's FTSE MIB index rose to its
highest point in more than 6 months.
According to a Reuters poll, European shares are expected to
rise steadily in 2017, but analysts are cautious about possible
shocks after a series of unexpected political upsets raised
volatility this year.
Healthcare stocks fell 1 percent after U.S.
President-elect Donald Trump said he would "bring down drug
Elsewhere, Dutch mail carrier PostNL slumped 13
percent, the biggest decliner in the STOXX Europ 600 index,
after it rejected the latest takeover offer from Belgium's Bpost
, citing political concerns.
(Editing by Mark Heinrich)