Piazza Affari opened the session on a positive note, even as geopolitical tensions in the Middle East flared following overnight U.S. strikes in Iran. The market action comes on a pivotal day for interest rates, with the ECB meeting this afternoon expected to deliver the first rate hike in three years.

In Milan, the index continues to be driven by the strength of the banking sector amid ongoing consolidation rumors and anticipation of the central bank's next moves. Markets have fully priced in a 25-basis-point increase, which would bring the deposit rate to 2.25%.

Brent crude prices remain below $100 per barrel despite the resurgence of geopolitical volatility.

As of 9:45, the Ftse Mib is trading up 0.92%.

The banking index is gaining 0.9%, led by heavyweights INTESA at +1% and UNICREDIT at +1.1%. BANCO BPM is also seeing interest, rising 0.5% to reach its highest level since March 2011 at €14.26. The stock had briefly moved to the sidelines of the latest wave of banking consolidation following last Monday's announcement of Intesa's exchange offer for MPS (+0.56%).

Elsewhere in the blue-chip index, STM continues its rally, advancing 2.53%. The move follows yesterday's upgrade by BofA to 'buy' from 'neutral' and a target price increase to €86, with analysts forecasting a significant profit turnaround for the Franco-Italian chipmaker.

Renewed interest returned to the energy sector today, particularly SAIPEM, which jumped over 2% after the oil services firm secured an onshore contract in Saudi Arabia for the Uthmaniyah Gas Compression Plant project. The deal is worth approximately €900m to the company. According to Equita, 'the news is positive, as it confirms the strong commercial momentum in the Middle East that management highlighted during the first-quarter earnings call.'

ENI is up 0.7%, while utilities are also performing well, with A2A advancing 1.3%.

Luxury stocks are in demand as well, with FERRAGAMO and BRUNELLO CUCINELLI both gaining 1.9%.

Finally, soccer stocks continue to see buying activity: JUVENTUS is up 2.2% and LAZIO is up 0.6%. The latter saw its gains trim after an initial 13% spike at the open, following a statement from the club 'categorically' denying press rumors regarding a potential sale of the team owned by Claudio Lotito.

(Giancarlo Navach, editing Andrea Mandala)