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FTSE flat, BP hit by lawsuit, EU worries linger

Published 12/16/2010, 11:58 AM
Updated 12/16/2010, 12:00 PM

* FTSE flat, EU concerns prevent move higher

* BP falls as U.S. govt launches lawsuit

* Serco rises as it reassure investors

By David Brett

LONDON, Dec 16 (Reuters) - Britain's top shares closed little changed on Thursday as persistent concerns over Europe's debt problems capped moves on the upside while BP fell after the U.S. government launched a lawsuit over the Gulf oil spill.

The FTSE 100 ended down 1.06 points at 5,881.12.

The index ebbed away from an intra-day high of 5,907.10, with analysts citing lingering doubts over euro zone debt helping to peg back London's blue chips.

"The FTSE's a little bit tetchy and a little bit nervous (over Europe's sovereign debt crisis) but seems content in and around its highs (for the year)," said Angus Campbell, head of sales at Capital Spreads.

Campbell said hitting the 6,000 level by the year-end is still a possibility but the FTSE will need a significant driver, such as EU ministers providing a clearer solution to the debt problems affecting the euro zone.

EU leaders met to discuss changing the bloc's treaty to create a permanent crisis-resolution mechanism from 2013, and may look at enlarging their existing crisis fund.

BP fell 1.4 percent after the U.S. government launched a legal battle against the oil major and its partners that might make the cost of the oil spill much greater than earlier thought.

Miners and energy shares were the main weight on London's blue chips, sagging along with commodities as the dollar strengthened on Europe concerns.

SERCO GAINS

Business support services companies lent their support to the FTSE with Serco up 4.1 percent after reiterating its guidance for 2010, reassuring investors in the light of the UK government's austerity measures.

Peer Capita rose 1.9 percent.

Investors rotated into stocks perceived as better able to weather a harsh economic climate, with drugmaker AstraZeneca up 0.1 percent, brewer SABMiller up 1.0 percent and British American Tobacco gaining 0.7 percent.

Burberry climbed 1.4 percent as H2O markets said the British luxury goods group's premium rating is justified as expansion plans and takeover speculation will underpin growth into 2011.

Technical factors were seen pressuring the UK blue-chip index.

"Unless the market can find its footing back above 5,900 the technical indications are for a corrective move from here," said Jonah S. Ford, analyst at Autochartist.

"The breakout of the Rising Wedge chart pattern, if successful, portends a downside price target ranging from 5,841 to 5,820 in the near term."

(Editing by David Cowell)

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