By Joshua Franklin and Brenna Hughes Neghaiwi

ZURICH (Reuters) - Credit Suisse (CSGN.S) on Wednesday pledged to cut another 1 billion Swiss francs (786.20 million pound) in costs and pared back profit targets amid challenging markets which have made it harder for banks to make money.

Markets welcomed the increased cost cuts and shares in the bank soared around 6 percent by 1300 GMT to their highest level since April. They have lost around 30 percent in 2016.

Chief Executive Tidjane Thiam stuck with his strategy of focussing Switzerland's second-biggest bank more on wealth management and less on volatile investment banking, a push which has included several thousand job cuts in Switzerland, London and New York.

However, the lender has had to adapt to a squeeze in banks' profitability due to the mix of negative interest rates, political uncertainty and sluggish economic growth.

"Given unsupportive market conditions we are focussing ...our execution priorities on cost reduction measures and adjusting our 2018 targets to the more challenging revenue environment," Thiam, who took over at Credit Suisse in July 2015, said at the lender's investor day in London.

In its second adjustment in less than 10 months, Credit Suisse upped savings targets to over 4.2 billion francs and lowered its intended operating cost base to under 17 billion francs through end-2018.

It had already overshot full-year cost-cutting goals through September this year.

"At a bank of this size and complexity, it's always possible to save more on costs somewhere," Zuercher Kantonalbank analysts, who rate the stock "market weight", said in a note.

Thiam did not say how many additional layoffs there will be to the 6,000 already planned for 2016, adding that it had already exceeded this target with a reduction of 6,050.

"EARNING ADULT"

As expected, Credit Suisse also lowered 2018 pre-tax income targets for its Asia Pacific and International Wealth Management (IWM) divisions to 1.6 billion and 1.8 billion francs, respectively. The previous target for both divisions was 2.1 billion francs.

The cuts were due to weaker trading in Asia-Pacific and falling asset management performance fees. Credit Suisse confirmed a 2018 target of 2.3 billion francs at its Swiss business, which it plans to partially list next year.

"The targets were just overly ambitious," said Vontobel analyst Andreas Venditti. "The targets are still ambitious but maybe less unrealistic."

Credit Suisse also lowered its end-2018 target common equity Tier 1 capital ratio, a measure of balance sheet strength, to 12-13 percent from approximately 13 percent

Growth in Asia Pacific was one of the cornerstones of Thiam's new strategy at the bank's October 2015 investor day but the unit now has the lowest profit target across Credit Suisse's three regional units.

Thiam said Credit Suisse's focus on the region will pay off eventually, a view echoed by one top-40 investor, who said it was doing the right thing in "not abandoning the baby that one day may be an earning adult."

Management also struck an optimistic note going forward, suggesting market conditions could be set to improve.

But some investors and analysts were cautious about transforming a cost-cutting story into one of growth.

"Cost cutting initiatives always bear the risk that you kill future growth opportunities to save short term results," the top-40 investor said.

($1 = 1.0091 Swiss francs)

(Additional reporting by Simon Jessop in London; Editing by Louise Heavens and Alexandra Hudson)