* Pan-European STOXX 600 index up 0.8 pct
* Reinsurers Munich Re, Swiss Re rally
* AstraZeneca up on reassuring cancer drug news (Adds closing prices)
MILAN, Sept 11 (Reuters) - European shares closed higher on Monday as insurers benefitted from a drop in the estimated cost of Hurricane Irma and investors breathed a sigh of relief that North Korea celebrated its founding day without a major missile test.
The pan-European STOXX 600 rose 1 percent. The insurance index posted its best performance since April with a 2.1 percent jump after Irma, which pounded heavily populated areas of central Florida over the weekend, gradually lost strength and was downgraded to a tropical storm.
Wall Street opened sharply higher, helping Europe during afternoon trading.
"Insured losses (overall) are now expected to be less than many feared," Credit Suisse analysts said after the estimated insured loss in the United States resulting from Irma was cut to $20-40 billion.
Among top gainers were reinsurers Hannover Re, which jumped 5.3 percent, while Beazley, Munich Re and Swiss Re rose by 4.1-4.3 percent.
Analysts at Baader Helvea upgraded Hannover Re to hold from sell, saying that following the stock's recent heavy losses the market had already priced in an extremely severe scenario.
Europe's insurance index has underperformed the broader market so far in 2017 and is still down 4.6 percent from its year high, hit in early August.
Banks also benefited from the insurers' rally and rose 1.5 percent across all major bourses. Banco Santander, Commerzbank, Unicredit, and Credit Agricole rose between 2.5 percent and 3.4 percent.
Elsewhere, pharma heavyweight AstraZeneca rose 2.1 percent after two of its drugs tackling lung cancer delivered impressive clinical results on Saturday.
That helped the British group offset a big clinical trial setback in the disease in July that sent its shares down more than 15 percent, its biggest daily loss ever.
In the same sector, however, Denmark's Lundbeck slumped 13.8 percent, the leading faller in Europe, after the resignation of CEO Kåre Schultz.
(Reporting by Danilo Masoni and Julien Ponthus, Editing by Mark Potter)