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Sept 4 (Reuters) - Italian stocks led a rebound in European shares on Wednesday, as political tensions eased after Rome moved closer to forming a new government, while hopes of avoiding a no-deal Brexit improved overall investor sentiment.
British lawmakers defeated Boris Johnson in parliament on Tuesday in a bid to prevent him from taking Britain out of the EU without a divorce agreement, prompting the prime minister to announce that he would immediately push for a snap election.
The pan-European STOXX 600 index rose 0.75% by 0708 GMT, hitting its highest level since Aug. 2.
Italy's FTSE MIB index rose 1.17% - touching a more than one-month high, after 5-Star members overwhelmingly backed a proposed coalition with the Democratic Party, opening the way for a new government to take office.
Asia-exposed UK banks HSBC and Prudential were the biggest boosts to the benchmark STOXX 600, after Chinese media reported that Hong Kong leader Carrie Lam is expected to announce later on Wednesday the formal withdrawal of the proposed extradition bill that has triggered major protests this summer. (Reporting by Amy Caren Daniel in Bengaluru; Editing by Bernard Orr)