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Aug 21 (Reuters) - European shares rebounded from the previous session's sharp falls on Wednesday, with brokers pointing to an Italian report on continuing merger talks between Fiat Chrysler Automobiles and Renault SA as pushing car industry shares higher.
The pan-European STOXX 600 index rose 0.5% at 0716 GMT, with Italy's FTSE MIB rebounding from a drop in the previous session amid a deepening Italian political crisis.
Milan shares rose 0.89% and its banking index gained 0.96%. Shares in Renault and Fiat both rose around 1.7%.
Italian prime minister Giuseppe Conte resigned on Tuesday, potentially paving the way for a new coalition government.
Capita Plc rose 4.3% to the top of the STOXX 600 index, after brokerage Goldman Sachs upgraded its shares to "buy". (Reporting by Shreyashi Sanyal and Amy Caren Daniel in Bengaluru; editing by Patrick Graham)