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French downgrade puts brakes on FTSE

The London market struggled to make headway after a credit rating downgrade in France sparked further uncertainty in Europe.

The FTSE 100 Index, which rallied more than 2% on Monday amid optimism that the US will avoid the so-called fiscal cliff, closed 10.4 points higher at 5748.1 yesterday.

While Moody's decision to downgrade France was widely expected by the markets, it highlighted the ongoing struggles across the single-currency bloc and the London market spent most of the session in the red.

And traders were anticipating a quiet week in the US due to the Thanksgiving holiday, which will see markets close tomorrow and early on Friday.

Mining giant Xstrata was 3% higher after its shareholders finally approved a multibillion- pound merger with commodities trader Glencore.

The move, which will form one of the world's largest natural resources firms, has faced months of setbacks. Xstrata shares were 29.8p higher at 986.6p.

Most of the corporate news came from outside the top flight, with low-cost airline easyJet topping the FTSE 250 Index risers board after profits at the carrier climbed to a record £317 million as higher sales offset a further £182 million surge in fuel costs.

Shares were up by more than 6%, ahead 39.5p to 692p, after the company also doubled its annual dividend payout to shareholders to 21.5p a share.

Further restructuring efforts at Premier Foods were welcomed by investors, even though it will mean the loss of around 900 jobs and the closure of two bakeries. Its shares gained 3%, up 2.5p to 94.8p, as the City welcomed efforts by the company to offset intense competition.

Enterprise Inns, the UK's biggest pub landlord, was up 0.5p at 67.3p after it revealed a 12% slide in profits to £137m in the year to September 30.

The Solihull-based group revealed some hope as it saw a smaller decline in like-for-like sales of 1.2%, compared to 4.3% in the previous year.

Embattled home repair and insurance group Homeserve convinced investors it was recovering from mis-selling allegations after it said customer complaints had fallen by 42%.

While the cost of overhauling the group kept UK half-year profits flat at £26m after an 11% drop in revenues to £134.5 million, shares still rose 11% or 24.9p to 247.9p.

Insurer Aviva's decision to appoint former AIA boss Mark Wilson as chief executive met City approval as its shares climbed 4p to 335.2p yesterday.

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