Footsie flat as rise in Italian borrowing costs offset positive US economic data

FTSE: 5,517.44 (–1.60) Mid-250: 10,260.11 (–87.65) Small Cap: 2,803.11 (–13.36)UK STOCKS were little changed after Italian borrowing costs gained as premier-in-waiting Mario Monti struggled to build political support for a new cabinet, offsetting US economic data that exceeded forecasts.

The FTSE 100 Index fell less than 0.1 per cent in London, after earlier rising as much as 0.6 per cent and tumbling 1.6 per cent.

“European debt remains the main concern,” Ben Critchley, a sales trader at IG Index in London, wrote. “Reports that the Italian PM Mario Monti is struggling to get political approval is encouraging investors to play a waiting game to see just exactly what the next step in this political and economic drama will be.”

Mr Monti, a former European Union competition commissioner, struggled to get political parties to agree to participate in his so-called technical cabinet during talks in Rome on Monday.

In the US, retail sales rose more than projected in October as American shoppers gave the economy a boost at the start of the fourth quarter. The 0.5 per cent gain, helped by the biggest jump in electronics purchases in two years, followed a 1.1 per cent increase for September, Commerce Department figures show.

UK prime minister David Cameron rebuffed a call by German chancellor Angela Merkel to embrace a “political union” in Europe to send a message to bond holders that euro-area leaders are serious about ending the sovereign-debt crisis.

The crisis offers an opportunity for powers to “ebb back” from Europe to nation states, Mr Cameron said in a speech in London last night before meeting Ms Merkel on November 18th.

Burberry tumbled 5.2 per cent to 1,347p, the biggest retreat in six weeks, even after first-half earnings beat analysts’ estimates.

LSE, the operator of Europe’s oldest independent stock exchange, slid 3.9 per cent to 830p as Goldman Sachs cut its recommendation on the shares to “sell” from “neutral”.

Cable & Wireless Worldwide tumbled 26 per cent to 22.31p, the biggest drop since it started trading in March 2010.

Barclays fell 1.6 per cent to 171.2p and Royal Bank of Scotland sank 3.2 per cent to 21.23p.

Oxford Instruments rose 14 per cent to 960p after the maker of instrumentation equipment reported increased first-half revenue. – (Bloomberg)