The FTSE MIB fell to around 52,100 on Wednesday, extending losses from the previous session as a flare-up in Middle East tensions dampened risk sentiment.
Fresh US strikes on Iran and the revocation of a waiver allowing new purchases of Iranian oil pushed oil prices higher, fueling inflation concerns.
As a result, markets priced in greater ECB tightening, with implied rate hikes rising to around 32 basis points from 25 basis points a day earlier.
Most major stocks traded lower, including financials UniCredit (-1.3%), Intesa Sanpaolo (-1.3%), Banco BPM (-0.9%), Unipol Gruppo (-1.0%), Banca Mediolanum (-1.2%), and BPER Banca (-1.0%).
Automakers and luxury stocks also declined, led by Ferrari (-1.7%), Stellantis (-2.1%), Moncler (-0.7%), and Brunello Cucinelli (-1.1%).
On the other hand, energy-related stocks outperformed, with Eni (+2.8%) and Tenaris (+1.8%) advancing alongside higher oil prices.