UKX FTSE 100 Index

By Carla Mozee, MarketWatch

PostNL rejects bid offer; BMPS rallies

European stocks rose Wednesday, driven by a surge in shares of banks, on hopes of a state-backed rescue for struggling Italian lenders and as Credit Suisse said its restructuring plan is working.

The Stoxx Europe 600 index was higher by 0.8% at 347.20, on track for its highest close since Sept. 22, according to FactSet data. The index is set for its third day of gains after ending 1% higher on Tuesday (http://www.marketwatch.com/story/european-stocks-step-higher-as-banks-stage-a-revival-2016-12-06).

Financial and basic materials topped the sector gainers Wednesday. Only the utilities sector lost ground, after gaining in the previous session.

Banks sustain rally: Among financials, bank shares popped higher, led by a 5.4% climb for Credit Suisse Group AG (CSGN.EB) (CSGN.EB) . Chief Executive Tidjane Thiam said the Swiss banking heavyweight's restructuring "strategy is working," after making more job cuts than anticipated. But the bank lowered some profit targets (http://www.marketwatch.com/story/credit-suisse-cuts-targets-says-revamp-is-working-2016-12-07) that it set last year, while holding to the goals it set for wealth management units.

Meanwhile, Italian bank stocks pushed higher after reports Wednesday that the Italian government is taking steps to rescue lender Banca Monte dei Paschi Siena SpA (http://www.marketwatch.com/story/bmps-jumps-11-on-hopes-of-16-billion-rescue-loan-for-italian-banks-2016-12-07)(BMPS.MI) and other struggling lenders. The FTSE Italia All-Share Banks Sector Index was up by 2.7%, building on Tuesday's 9% rally. Off the Stoxx 600, BMPS shares surged 8%.

Shares of Italy's BPER Banca SpA (BPE.MI) shot up 6.5%, moving toward the top of the Stoxx 600. Meanwhile, Italy's largest lender, UniCredit SpA (UCG.MI) , jumped 4.6%.

Worries about the health of the Italian economy and the integrity of the eurozone have grown after voters rejected Prime Minister Matteo Renzi's reform proposals. Renzi's resignation, announced after Sunday's referendum, is expected to be effective on Dec. 9, according to Reuters.

Read:How Italy's 'no' vote might be the ECB's silver lining (http://www.marketwatch.com/story/how-italys-no-vote-might-be-the-ecbs-silver-lining-2016-12-05)

Also: The other loser in Italy's vote -- its big banks (http://www.marketwatch.com/story/the-other-loser-in-italys-vote-its-big-banks-2016-12-05)

Investors widely expect the European Central Bank to extend its stimulus for the eurozone, including its bond-buying program, when it meets Thursday.

Miners: Rio Tinto PLC (RIO) (RIO) (RIO) was a top performer Wednesday, with shares up 4% after Credit Suisse raised the diversified miner's rating to outperform from neutral.

Credit Suisse said it's maintaining a "positive view" on the mining sector, saying it expects "apparent demand trends to continue to recover following the aggressive destock through 2014-15," among other drivers for the industry.

Gains for mining shares helped lift the U.K.'s FTSE 100 by 1.3% (http://www.marketwatch.com/story/ftse-100-climbs-1-powered-by-mining-shares-2016-12-07).

Other movers: PostNL NV shares (PNLYY) tumbled 10% after the Dutch mail delivery company against rejected a takeover bid from Belgian postal service Bpost SA (BPOST.BT) . Bpost shares were up 0.6%.

(http://www.marketwatch.com/story/the-other-loser-in-italys-vote-its-big-banks-2016-12-05)Indexes: In Frankfurt, the DAX 30 index leapt 1.4% to 10,924.64, and France's CAC 40 index moved up 1% to 4,679.90. Spain's IBEX 35 rose 0.3% to 8,919.30.

The euro was trading at $1.0717, not far from $1.0715 it bought late Tuesday in New York.

(END) Dow Jones Newswires

December 07, 2016 05:43 ET (10:43 GMT)

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