The FTSE MIB rose 1.6% to close at 52,428 on Thursday, supported by lower-than-expected US labor data and defense-linked gains.
Defense stocks extended the previous session's gains, led by Fincantieri (6.8%), Leonardo (6.5%) and Avio (1.5%).
Weaker-than-expected US labor data fueled gains in financial stocks by reducing expectations of further Fed rate hikes this year, while the BTP-Bund spread dropped to 78bps during the session and added support.
UniCredit led gains at 4.1%, followed by Banca Mediolanum (2.2%), Finecobank (2.1%), Intesa Sanpaolo (2.1%) and Mediobanca (1.2%).
Insurers Unipol (3.2%) and Generali (0.7%) also extended advances.
Energy stocks also advanced, led by A2A (3.6%), while Eni gained 1.6% after announcing a fusion energy joint venture.
Meanwhile, AI-related stocks remained volatile, with STMicroelectronics (-0.9%) and Prysmian (-0.7%) ending lower.