LONDONFRANKFURT, July 22 Reuters Europe39;s biggest banks report their secondquarter earnings this week, with all eyes on whether the gains from higher interest rates have run out of steam and if recent political drama is weighing on sentiment.

The European Central Bank is expected to cut interest rates for a second time in September, but so far banks39; earnings have proved surprisingly robust and their shares have continued higher.

JP Morgan analysts said European banks39; sensitivity to rates remains low along with the proportion of customers shifting cash to higher paying accounts and they expect the amount banks earn from loans minus what they pay on deposits net interest income NII to remain strong.

Still, with expectations high and share prices near nineyear peaks, the experience of U.S. banks reporting this month signals no tolerance for NII disappointment, they added.

A busy Wednesday sees the euro zone39;s two largest lenders by market value, Spain39;s Santander and France39;s BNP Paribas, report for the April to June period, alongside Germany39;s Deutsche Bank and Italy39;s UniCredit.

Spanish bank Sabadell, the subject of a hostile takeover offer from rival BBVA, reports on Tuesday. Its results will be watched closely as it seeks to convince shareholders it is better off alone.

On Thursday, Britain39;s Lloyds Banking Group gets the UK banks going, with NatWest on Friday and Barclays and HSBC next week.

Spain39;s Bankinter said last week its lending…