European city encapsulated by souvenir Utahan brought back (5)
I believe the answer is:
turin
'european city' is the definition.
(Italian city)
'encapsulated by souvenir utahan brought back' is the wordplay.
'encapsulated by' indicates a hidden word (the clue encapsulates or contains the answer).
'brought back' says the letters should be written backwards.
'nirut' is hidden within 'souvenir utahan'.
'nirut' in reverse letter order is 'TURIN'.
(Other definitions for turin that I've seen before include "First capital in 1861 of united Italy" , "City abroad" , "First capital of a united Italy, 1861-65" , "regional capital" , "Piedmontese capital" .)