Banks lead European shares higher as Brexit fears wane slightly

LONDON (Reuters) - European shares rallied on Monday with the beaten down banking sector leading as renewed hope that Britain would to vote to stay in the EU spurred investors bank into risky assets.

The pan-European STOXX 600 and FTSEurofirst 300 indexes both rose nearly 3 percent. They are still down about 10 percent for 2016.

The STOXX 600 was poised for its biggest one-day percentage gain since mid-February with only 4 stocks in the index in the red in early trading.

Royal Bank of Scotland and Lloyds rose by 6.8 percent and 5.7 percent respectively on signs that Britain will vote to stay in the EU.

Italian bank UniCredit also rose 6.3 percent after a media report that it would name former industry minister Corrado Passera as its new chief executive.

Britain is due to vote on its European Union membership on June 23. Opinion polls have been split, although bookmakers have given a greater probability towards Britain opting to stay in the EU, rather than leave in a "Brexit" scenario.

Three British opinion polls ahead of the EU membership referendum showed the "Remain" camp recovering some momentum, although the overall picture remained one of an evenly split electorate.

(Reporting by Sudip Kar-Gupta, Editing by Vikram Subhedar)