** Capital One COF.N shares rise 6.2% to $172.87 premarket after U.S. banking regulators approve co's $35.3 bln purchase of Discover Financial Services DFS.N

** DFS share higher in thin early trading

** Combined entity will become eighth largest bank covered by government deposit insurance, Fed said. Combined assets of ~$637.8 bln will make up 2.2% of nation's insured deposits

** Deal expected to close on May 18, companies said

** YTD, COF down 8.7% and DFS down 7.9%

(Reporting by Twesha Dikshit)

((Twesha.Dikshit@thomsonreuters.com))