FRANKFURT (Reuters) - Germany's Commerzbank is preparing staff cuts and revamped financial targets in its efforts to fend off tie-up advances by Italy's UniCredit, multiple people with direct knowledge of the plans told Reuters.

Four of them said, however, the measures would be more evolutionary than radical, while some conceded that a takeover of the German bank, which saw its stock price jump by 50% since UniCredit first signalled interest, may be hard to stop.

The battle for Commerzbank, pitting one of Italy's biggest banks against the German establishment, has become a test case of the country's ability to fend off foreign suitors and prevent its financial centre from losing one of its few remaining big commercial banks.

The job cuts will amount to several thousand people, two of the people said, while a third said they would number between 3,000 and 4,000 people out of a workforce of some 42,000 employees.

They all spoke on condition of anonymity because of the sensitivity of the ongoing deliberations.

Commerzbank's supervisory board is set to discuss the cost cuts and new goals with management at an all-day meeting on Wednesday, and the bank is due to present the new strategy to the public on Thursday.

For months, Commerzbank's management, under the leadership of CEO Bettina Orlopp, has been working on a strategy update that she has said would reveal the "significant value potential" of Germany's second-largest bank.

Commerzbank, which is partly state-owned and has labelled UniCredit's moves as hostile, declined to comment.

Thursday's announcement is meant to mark a significant moment in the effort by Germany's No. 2 bank to convince its investors that it can thrive as an independent company.

Andrea Orcel, the CEO of UniCredit, shocked Germany's corporate and political establishment last year when his Italian bank - also that nation's No. 2 - snapped up a hefty stake in Commerzbank and began pressing for a tie-up in the most ambitious attempt yet at a pan-European bank merger.

Commerzbank's strategy update follows a better than expected 20% increase in full-year net profit, a result the bank believes illustrates the success of its turnaround in recent years.

The bank's current strategy plan through the year 2027 was first published in 2023. Last September, weeks after UniCredit disclosed its interest, Commerzbank ratcheted up some of those targets.

The job cuts, which could send hundreds of employees into early retirement, will aim to avoid unsettling the remaining staff while underlining the bank's willingness to sacrifice some to avoid even worse cuts under UniCredit.

The bank will attempt to harness technology to streamline its operations and is also expected to signal that it is on the hunt for modest bolt-on acquisitions rather than major deals, the people added.

That contrasts with big deals in the works in Spain, Italy and elsewhere. The CEO of the Dutch lender ING told Reuters he was looking for acquisition opportunities, potentially joining a wave of takeovers sweeping Europe.

Orcel, who has long considered a tie-up with Commerzbank, has said a combination between the two banks would be the best possible outcome, but he has not ruled out walking away.

Commerzbank's management, employees and the nation's chancellor, Olaf Scholz, have all spoken against a potential takeover, but at least one big investor and some business leaders favour talks.

Political defiance remains strong. Boris Rhein, the premier of Commerzbank's home state of Hesse, told a gathering of Germany's financial elite on Monday that UniCredit needed to give up.

"Nobody wants what you are doing. Withdraw!" Rhein said.

(Editing by Tomasz Janowski)