* Italy renews attempt to form a government
* HP Inc, Salesforce.com gain on strong results
* Energy, bank stocks lead S&P gainers
* Indexes up: Dow 1.18 pct, S&P 1.22 pct, Nasdaq 0.83 pct (Updates to early afternoon)
By Medha Singh
May 30 (Reuters) - U.S. stocks rose on Wednesday, with a surge in energy stocks helping Wall Street recover from a steep selloff in the previous session that was driven by political turmoil in Italy.
Hopes that Italy might avoid a potentially damaging general election set the markets off to a strong start on Wednesday.
At the session's peak, the S&P 500 erased all its losses from Tuesday on news that Italy's 5-Star Movement party called for eurosceptic economist Paola Savona to withdraw his candidacy as economy minister to the possible formation of a government.
"The extent that it sold off was probably a little too much. So a little bit of a bounce back is not that big a surprise," said Randy Frederick, vice president of trading and derivatives for Charles Schwab in Austin, Texas.
Fears about the political instability had sent investors scurrying to safety assets on Tuesday, with the U.S. Treasury market enjoying its best day in at least about seven years. However, stocks took a beating, with the S&P 500 posting its first 1 percent drop in May.
At 13:13 p.m. EDT the Dow Jones Industrial Average was up 286.48 points, or 1.18 percent, at 24,647.93, the S&P 500 was up 32.91 points, or 1.22 percent, at 2,722.77 and the Nasdaq Composite was up 61.05 points, or 0.83 percent, at 7,457.65.
Traders also said the political uncertainty in Italy also led to a drop in the expectations for U.S. interest rate hikes for the year, helping the stock markets gain momentum.
"In essence, investors perceived the mounting risks in Europe to warrant almost one less rate hike this year than just one week ago, a meaningful shift in investor sentiment," John Lynch, chief equity strategist at LPL Financial in Charlotte, North Carolina, wrote in a note.
The S&P energy index jumped 3.13 percent and was on track for its biggest one-day gain in nearly three weeks.
Energy shares, which provided the biggest boost to the S&P 500, benefited from a more than 2.4 percent surge in crude oil prices.
Bank stocks, which were the worst hit on Tuesday, recovered with the S&P financial index rising 1.86 percent.
Cloud-based business software maker Salesforce.com rose 1.7 percent, while computer and printer maker HP Inc jumped 3.4 percent after raising full-year profit forecasts.
Advancing issues outnumbered decliners by a 4.28-to-1 ratio on the NYSE. Advancing issues outnumbered decliners by a 2.77-to-1 ratio on the Nasdaq.
The S&P index recorded 24 new 52-week highs and two new lows, while the Nasdaq recorded 171 new highs and 21 new lows. (Reporting by Medha Singh in Bengaluru; Editing by Arun Koyyur)