London close: Footsie stages late recovery

London's FTSE 100 index bucked the trend in global markets on Tuesday to trade broadly flat by the close despite some heavy falls for Burberry and the banks. Some slightly better-than-expected domestic economic news seemed to lift sentiment in the UK during the day.Worth noting, UBS has set its year-end 2012 target for the FTSE 100 at 6,100 points.ITALIAN, SPANISH YIELDS ON THE RISE European markets were weighed down by news of rising sovereign debt yields. Former EU Competition Commissioner Mario Monti may have run into political resistance on forming a Cabinet in Italy, according to Bloomberg. The news may be a reason why the closely-watched yield on a 10-year Italian government bond has surged back towards the 7%, a level seen by most as dangerous and unsustainable. By 16:54 in London, the borrowing rate was 37 basis point higher at 7.07%.Meanwhile, the Spanish Treasury issued a total of €3.158bn in short-term debt, with yields coming in significantly higher than the last auction. The Treasury issued both 12-month and 18-month debt at yields of 5.2% and 5.32%, respectively, up from 3.61% and 3.8% previously. Rising yields were "keeping politicians feet to the fire and reminding everyone that regardless of who takes power, the debt situation needs to be dealt with urgently and decisively," said CMC Markets' analyst Colin Cieszynski.UK INFLATION COMES IN BETTER THAN EXPECTEDIn domestic news, CPI, the government's preferred measure of inflation, stood at 5% in October 2011, down from 5.2% in September - a bigger fall than expected. Some experts are now predicting the Bank of England's long-held belief that inflation would soon start a prolonged fall could now materialise. Some comments from BoE governor Sir Mervyn King may have helped spur the recovery in the afternoon. In his letter to chancellor George Osborne, King said that the Monetary Policy Committee expects inflation to fall back "sharply" in the next six months or so, and will continue to fall back towards to 2% target by the end of next year."This news, along with falling Chinese inflation announced last week and declining US producer prices suggests that inflation may have peaked for now, enabling central banks like the Bank of England and US Fed who have been accommodative on monetary policy to remain so and enable central banks that had been more restrictive like the PBOC, ECB and RBA to back away from inflation fighting mode and perhaps start easing more aggressively," Cieszynski said.US retail sales grew at a monthly rate of 0.5% (7.2% on year), to $399.677bn, according to the latest data out this afternoon from the US Census bureau. Consensus estimates were for a rise of 0.3% on month. BURBERRY DISAPPOINTS, C&W WORLDWIDE PLUMMETS Luxury fashion firm Burberry was the heaviest faller despite reports a 29% growth in revenue to £830m, while adjusted pre-tax profit rose 26% to £162m. Despite the market's cool reaction to Burberry's figures, Nomura upped its full-year numbers saying it sees "significant growth potential ahead". According to Credit Suisse, Burberry trades at 20.5 times next year's earnings, a hefty premium to the sector average multiple of 16.5.Banks were out of favour on the Footsie, with RBS, Lloyds, and Barclays falling lower. Commodities trading house Glencore also registered a steep fall ahead of its quarterly statement on Thursday.Meanwhile base metal mining oriented group Rio Tinto rose on reports that it is unlikely to walk away from a bidding war for uranium developer Hathor Exploration, despite rival bidder Cameco Corp trumping the global miner with a C$625m ($615m) offer. On the FTSE 250, the announcement of a new chief executive at embattled telecoms firm Cable & Wireless Worldwide wasn't enough to stop shares plunging as it announced a big fall in profits. The company posted pre-tax profits of £35m in the first half, down from £64m in 2010. The company also announced that while an interim dividend would be paid, future payouts would be suspended to improve the strength of the balance sheet. Shares were down over 13% by lunchtime. Another big mover was Europa Oil & Gas which lost over a quarter of its market value after revealing that drilling at its Horodnic-1 exploration well in northern Romania has been a failure. It says of the operation, which cost Europa £720,000, that "no potentially commercial hydrocarbon bearing interval was found." OTHER NEWSEurozone gross domestic product (GDP) grew by 0.2% in the third quarter, driven by a rebound in activity in German and France. The former saw its GDP rise 0.5% from the preceding quarter while France's GDP rose 0.4%. The ZEW economic sentiment index for Germany in November was 55.2, just a shade below market expectations of 55.3. BCFTSE 100 - RisersSmith & Nephew (SN.) 592.50p +3.49%Fresnillo (FRES) 1,867.00p +3.04%Tate & Lyle (TATE) 684.00p +1.86%Capita Group (CPI) 674.00p +1.81%British American Tobacco (BATS) 2,943.00p +1.71%Imperial Tobacco Group (IMT) 2,331.00p +1.48%British Sky Broadcasting Group (BSY) 752.50p +1.28%United Utilities Group (UU.) 637.00p +1.27%Pearson (PSON) 1,119.00p +1.27%Diageo (DGE) 1,337.00p +1.25%FTSE 100 - FallersBurberry Group (BRBY) 1,347.00p -5.21%Essar Energy (ESSR) 273.50p -4.70%Lloyds Banking Group (LLOY) 27.30p -3.79%Glencore International (GLEN) 412.65p -3.70%Royal Bank of Scotland Group (RBS) 21.23p -3.24%GKN (GKN) 187.60p -2.75%Lonmin (LMI) 1,044.00p -2.70%Intertek Group (ITRK) 1,886.00p -1.87%Kingfisher (KGF) 248.20p -1.82%Barclays (BARC) 171.20p -1.64%