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Market closes in the red as stocks come under pressure before Italian referendum

The London market closed in the red on Friday as European stocks came under pressure ahead of the Italian referendum on constitutional reforms.

The FTSE 100 Index closed lower by 0.3% or 22.21 points at 6,730.72, as investors became skittish at the prospect of a No vote on December 4, which could be enough to topple Prime Minister Matteo Renzi's government and trigger a fresh bout of economic uncertainty.

Mr Renzi is gambling that Italians will back his plans to hand powers back to Italy's regions, making parliament's lower house - the chamber of deputies - more powerful than the senate.

Jasper Lawler, a market analyst at CMC Markets, said: "Rising political risk in Europe is seeing funds flow to the US, where companies potentially stand to benefit from lower taxes and regulation under Donald Trump."

Across Europe, Germany's Dax closed down 0.2%, the French Cac 40 fell 0.7%, and the Italian FTSE MIB was relatively flat.

The pound rose 0.7% against the US dollar to 1.267, and 0.7% against the euro to 1.188.

Sterling climbed as Britain's international trade minister suggested that the UK could seek a deal with Europe that would allow individual sectors of the economy to remain in the EU's customs union after Brexit.

The UK currency was also supported by news that the closely watched Markit/CIPS UK Construction purchasing managers' index (PMI) rose to 52.8 last month, up from 52.6 in October, and above economists' expectations of 52.2.

US dollar weakness aided its surge. It comes after n on-farm payrolls showed that 178,000 American jobs were created in November, less than the 180,000 forecast.

In oil markets, Brent crude was up 0.9% at 54.11 US dollars per barrel after rising around 10% earlier this week when Opec and Russia said on Wednesday that they would cut oil production to support prices.

In UK stocks, housebuilders were enjoying a lift on the back of a strong financial update from Berkeley Group, which recorded a 34% rise in pre-tax profits to £392.7 million in the six months to the end of October, up from £293.3 million over the period last year.

Berkeley shares soared 215p to 2,760p.

In the top tier, shares in Barratt Developments and Taylor Wimpey were clocking gains, up 7.8p to 475.3p and 1.1p to 150.8p respectively .

G4S shares rose 1.5p to 243.1p after the security group reached a deal to sell its controversial Israeli operations to a local private equity fund for £88 million.

G4S Israel has faced criticism from pro-Palestinian campaign groups for the unit's role in Israeli prisons, checkpoints and settlements, but a spokesman for G4S said that the sale was an entirely commercial decision.

The biggest risers on the FTSE 100 were Land Securities up 20.5p to 959.5p, Randgold Resources up 120p to 5,825p, Royal Mail up 9p at 464.2p, and Barratt Developments up 7.8p to 475.3p

The biggest fallers on the FTSE 100 were Royal Bank of Scotland down 6.3p to 193.4p, Rolls-Royce Holdings down 21p to 661p, Barclays down 6.1p to 212.95p, and BHP Billiton down 35p to 1,304p.

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