(Repeats to more subscribers)
* STOXX Europe 600 index up 0.8 pct
* Banking stocks among top gainers
* PostNL sinks after rejecting Bpost offer
By Atul Prakash
LONDON, Dec 7 (Reuters) - European shares climbed on Wednesday, with the regional banking index hitting an 11-month peak after Credit Suisse announced further costs cuts and Italian banks surged towards their best two-day run since 2012.
The STOXX Europe 600 Banks index was up 1.6 percent after touching its highest level since January, supported by an 8.3 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 2.5 percent, with Reuters exclusively reporting Italy was preparing to take a 2 billion euros controlling stake in Monte dei Paschi di Siena as the bank’s hopes of a private funding rescue faded following Prime Minister Matteo Renzi’s decision to quit.
Italian banks are now up nearly 12 percent since Monday’s close, staying on track for their biggest two-day rally since the middle of 2012.
Shares in Monte dei Paschi di Siena were up about 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.
Renzi will hand in his resignation on Friday, a parliamentary source said 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.”
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.
The STOXX Europe Basic Resources index was up 1.8 percent after reaching its highest level since the middle of 2015, helping the pan-European STOXX 600 to trade 0.8 percent higher by 0926 GMT after hitting a 2-1/2-month high earlier in the session.
In a broader market rally, several other regional share indexes climbed to new peaks.
Germany’s DAX was up 1.4 percent after a one-year high, while France’s CAC traded 1 percent higher after setting its highest level in 11 months. Italy’s FTSE MIB index was last up 1.1 percent after setting a 6-month peak.
Elsewhere, Dutch mail carrier PostNL slumped more than 9 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 Gareth Jones)