Which city-state was in the best location to benefit from trade-based cultural exchange with the islamic civilization just across the mediterranean?

That would be Florence. This city in Italy, that was often called " the Athens of the Middle Ages" was one of the wealthiest city in the world at one time and a center of commerce and finance. It is considered to be a birth place of the Renaissance. Due to its position at the time as a center of trade Florence dealt with many Islamic Civilizations across the Mediterranean and thus benefited from the trade-base cultural exchange.