* STOXX 600 up 0.2 pct
* Banks rise, Santander to buy Banco Popular
* German utilities gain after court ruling
* UK election, ECB meeting in focus (Recasts, adds quotes and detail)
LONDON, June 7 (Reuters) - Banks and utilities buoyed European stocks on Wednesday, with relief that Spain's struggling Banco Popular was being rescued by Santander lifting bank shares.
The pan-European STOXX 600 index reversed to trade 0.2 percent higher in its first session of gains this week, while Britain's FTSE 100 index rose 0.2 percent and Germany's DAX fell 0.1 percent.
Although shares in Santander fell 2.4 percent in choppy trade and Banco Popular's were suspended, European banks were among the standout performers, gaining 0.7 percent.
Santander said that it would buy Popular and carry out a capital increase of around 7 billion euros ($7.9 billion).
"We're getting rid of a weak link from Europe in terms of Banco Popular being taken over by Santander," Mike van Dulken, head of research at Accendo Markets, said.
"As a stand-alone bank, (Popular) was close to failing ... and the failure of any bank, as we've seen in the past, can set of that chain of events where the whole banking sector gets freaked out, investors especially," van Dulken added.
Spain's Bankia, Italy's BPER Banca and France's Societe Generale were all up between 2.2 percent and 3.8 percent.
European utilities also enjoyed gains, led by Germany's E.ON and RWE, which both rose around 4 percent after the country's highest court declared a nuclear fuel tax illegal, enabling them to claim back 6 billion euros ($6.76 billion) in cash.
A rise among basic resources stocks and energy firms also helped support the wider market.
Shares in Swedish biometric firm Fingerprint Cards were the top risers, jumping more than 7 percent after confirming an order for its sensors.
On the downside, Covestro dropped more than 4 percent after Bayer cut its stake further in the plastics maker to 44.8 percent from 53.3 percent.
Investors were also looking ahead to the UK's election on Thursday, as well as the European Central Bank's policy meeting.
"Whatever the outcome on Friday morning, markets actually have very little to go on to be able to judge whether such a new government would be more or less successful in negotiations with the EU," Don Smith, chief investment officer at Brown Shipley, said in a note.
"We are unlikely to see anything like the huge fluctuations in markets that occurred in the immediate wake of last summers referendum," Smith added, referring to the UK's vote in June last year to leave the EU. (Editing by Hugh Lawson and Alexander Smith)