European Stocks Close Lower; Italy’s FTSE MIB Drops 0.85%, Defense ETFs Slide

The sharper drop in Italian equities alongside weakness in the FTSE Italy All-Share Banks index points to domestic financials, not just broad risk sentiment, as a driver of the region's underperformance. Defense-linked ETFs falling harder than the major benchmarks suggests the sector is giving back recent gains rather than tracking the wider market, a reversal worth noting given how crowded that trade has been. Whether banks and defense continue to lead declines, or the pullback stays contained to those pockets, is the open question for European risk appetite.