European city's butter's occasionally genuine (7)
I believe the answer is:
utrecht
'european city's' is the definition.
(I've seen this before)
'butter's occasionally genuine' is the wordplay.
'occasionally' means one should take alternating letters.
'genuine' becomes 'echt' (echt means genuine or authentic).
The alternate letters of 'butters' are 'utr'.
'utr'+'echt'='UTRECHT'
(Other definitions for utrecht that I've seen before include "The curt (anag) - city in the Netherlands" , "Dutch city where peace treaties were signed to end the 1701-14 War of the Spanish Succession" , "Netherlands city, scene of 1713 Treaty" , "European city" , "Its treaty gave us Gibraltar" .)