Piazza Affari slowed its pace and dipped just below parity, reflecting a mixed European equity market and a subdued Wall Street opening anticipated after yesterday's rally.

Investors have reined in purchases, choosing to remain cautious despite the prevailing positive sentiment on the geopolitical front, as the fragile truce between Israel and Iran appears to be holding for now.

"With (hopefully) the geopolitical issue behind us, the market may shift its focus back to trade matters, given that there are only two weeks left until July 9, the expiration date for the 90-day extension on the introduction of additional bilateral tariffs," Mps wrote in its daily 'market strategy' note.

The note also highlighted that the most "heated" front remains with the European Union, where significant progress in negotiations is still lacking.

Around 12:50 PM, the Ftse Mib index was marginally down by 0.1%, with gains in automotive and select industrial stocks more than offset by declines in the banking sector.

Trading volumes were sluggish, with less than one billion euros changing hands.

Stocks in Focus:

Stellantis stood out on the Ftse Mib, climbing 4.4%, buoyed by a 'Buy' rating from Jefferies, which pointed to signs of a turnaround in the automaker's results that could accelerate under its new CEO.

Ferrari also shone (+2.7%) thanks to positive indications for the second quarter that emerged from a pre-closing call with analysts yesterday, ahead of results scheduled for the end of July.

Leonardo gained 2.8% amid heightened investor interest in the European defense sector, as the conclusion of today's NATO summit is expected to seal an agreement to raise member states' defense spending to 5% of GDP.

Banks retraced after yesterday's strong session. Among stocks under scrutiny, Mps slipped 0.9% after surging 7% the day before, as the ECB this morning approved its public exchange offer for Mediobanca, which edged down 0.5%. Shares in Piazzetta Cuccia are trading at a 6.3% premium over the implied offer price, indicating a gap of around one billion euros.

Also in banking, UniCredit lost 1.3% and its target Banco Bpm fell 1%, while Bper dropped 1.7%, mirroring its acquisition target Pop Sondrio.

On the M&A front, Illimity rose 3% after Banca Ifis (-0.3%) announced a 5% cash premium per share if its public exchange offer for all of Illimity's shares, which ends Friday, garners more than 90% acceptance.

Among smaller caps, Moltiply fell 4.7% following the placement of treasury shares equal to 2.5% of the company's capital at a price of 44 euros per share.

(Reporting by Andrea Mandalà, editing by Claudia Cristoferi)