MILAN (Reuters) -An appeal by UniCredit against Italian government conditions hampering its $17 billion bid for Banco BPM will be heard by a court on Wednesday, a day after it lifted its voting stake in another target - Germany's Commerzbank.

The acquisition-hungry lender has asked the court to annul the government's decision, after saying that terms Rome set in April for the deal's approval make it detrimental to the bank to comply.

The decision is not expected to be made public before Thursday at the earliest.

Meanwhile, UniCredit said late on Tuesday it had doubled its equity and voting stake in Commerzbank to around 20% by converting derivative contracts worth around 10% of the bank's capital. It also plans to convert a remaining 9% it holds in derivatives in due time.

CEO Andrea Orcel, whose acquisition plans have sparked angry reactions both in Rome and Berlin, has sought meetings with the new German government to discuss a possible combination of Commerzbank with UniCredit's German unit HVB.

Italian laws give Rome special powers to block, or set terms for deals affecting strategic assets on national security grounds. But in Germany, the government has no effective legal tools to block UniCredit's expansion plans.

It has voiced, however, strong opposition and UniCredit has said it wants support for its acquisition plans.

Orcel could also receive support from European Union authorities which are expected to challenge Italy's interference in banking deals.

After years of record profits fuelled by high interest rates, Italy's banking sector has seen much consolidation, with almost a dozen takeover bids currently unfolding or recently concluded.

UniCredit's bid for Banco BPM, which the Treasury had hoped to combine with state-backed Monte dei Paschi di Siena, is the only offer where conditions have been imposed.

Orcel's other M&A moves include a doubling of UniCredit's stake in Greece's Alpha Bank in May. He also built a stake in Italian insurer Generali, but he has said he will gradually sell it.