European shares gain ground, led by Italy
* FTSEurofirst 300 up 0.4 pct, Euro STOXX 50 up 0.3 pct
* Volumes low as Wall St closed for Thanksgiving break
* Italian shares still cheapest in Europe, data shows
* Thomas Cook surges after raising targets
PARIS, Nov 28 (Reuters) - European stocks gained ground on Thursday in light trade, with Italian shares outperforming after the country's Senate expelled former prime minister Silvio Berlusconi, fuelling hopes of stability for the current government.
The FTSEurofirst 300 index of top European shares gained 0.4 percent at 1,305.02 points, hitting its highest closing level since 2008.
Volumes were thin however - representing only about two-thirds of an average session of the past three months - as Wall Street was closed for the Thanksgiving holiday.
Italian shares were in focus, with Milan's FTSE MIB rising 0.9 percent, led by banks such as UniCredit, Intesa Sanpaolo and UBI Banca, up 1.7-2.2 percent.
Late on Wednesday, the Italian Senate expelled Berlusconi over his tax fraud conviction, while Prime Minister Enrico Letta said his government would press on with its reform programme.
"It brings more visibility about the Italian government. Investors bet that things will be more stable from here," said Riccardo Designori, market analyst at Brown Editore, in Milan.
"The review of banks' holdings in the Italian central bank is also boosting the banking sector today, and it could turn out to be a game changer," Designori said.
On Wednesday, a government decree approved a revaluation of bank holdings in the Bank of Italy, aimed at helping the banks improve their capital positions.
Italian shares have been outpacing the broader market since June, with the MIB surging 28 percent while the broad STOXX Europe 600 gained 18 percent.
But despite the outperformance, Italian shares remain among the cheapest across Europe, trading at 12 times expected earnings in the next 12 months, while the STOXX 600 trades at 13.5 times.
Around Europe on Thursday, the euro zone's blue-chip Euro STOXX 50 index gained 0.3 percent, to 3,092.42 points, the UK's FTSE 100 index added 0.1 percent, France's CAC 40 gained 0.2 percent and Germany's DAX index rose 0.4 percent.
Tour operator Thomas Cook featured among the top gainers, leaping 15 percent after it raised its revenue and cost-cutting targets.
Heavyweight mining company Rio Tinto also gained ground, up 3.9 percent after it unveiled an ambitious plan to cut costs by $3 billion.
Following a four-month rally which propelled pan-European indexes to five-year highs, stocks stalled in late October and have moved sideways since.
The market has been capped by mixed macroeconomic data, a raft of lower-than-expected corporate earnings as well as worries over the outlook for the U.S. Federal Reserve's stimulus measures.
However, David Thebault, head of quantitative sales trading at Global Equities, sees further gains on the market before the end of the year, supported by strong central bank liquidity and an acceleration in mergers and acquisitions.
"Almost everyday, there's a deal announced," he said.
"European companies are sitting on about 1,000 billion euros in cash, and the best option they have in this low growth environment is to make acquisitions instead of boosting capital expenditure. So we can expect many more deals, and that will support the market."
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