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FTSE at 2-1/2 week closing low on Italy election stalemate

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(Globalpost/GlobalPost)

* FTSE 100 down 1.3 percent

* Italy election vote ends in hung parliament

* Randgold Resources bucks weak market trend

By Tricia Wright

LONDON, Feb 26 (Reuters) - Weak banks and commodity stocks sent Britain's top shares to a more than two-week closing low on Tuesday after an inconclusive election result in Italy revived euro zone debt crisis concerns.

Europe's most indebted state faced a political vacuum after a huge protest vote left no party or likely coalition with enough seats to form a majority in Italy's upper house.

The FTSE 100 ended down 84.93 points, or 1.3 percent, at 6,270.44, its lowest close since Feb. 8. Some strategists, however, reckoned any losses would be short-lived.

"It'll be a relative blip, one would suspect," Henk Potts, market strategist at Barclays, said.

"The European sovereign debt perspective looks an awful lot better given the work done and the initiatives implemented from the European Central Bank; the long term refinancing operations, OMT (Outright Monetary Transactions), the work of the European Stability Mechanism."

And with the index still well above a low of 6,216.72 hit on Feb. 7 the bottom of a range in place over the past four weeks, the technical picture did not look so bleak.

"Until you see the FTSE drop below that level, it's going to be possible to argue that it's moved into a choppy phase," said Bill McNamara, technical analyst at Charles Stanley.

GFT Markets technical analyst Fawad Razaqzada, meanwhile, said: "It's worth remembering that we are still in a long-term bull market. Therefore, I don't expect to see a huge pullback."

Banks, among the most exposed to the euro zone crisis through corporate and public debt, knocked around 15 points off the index on Tuesday.

With the outcome of Italy's election also clouding the outlook for the global economy, commodity-related stocks looked shaky too, exerting downward pressure on the index to the tune of around 23 points.

Britain's biggest hotel and coffee shop operator, Whitbread , shed 3.7 percent after it saw a slowdown in fourth-quarter sales.

Panmure Gordon repeated its "hold" rating on Whitbread, with the broker cautious on current trading and the increasingly competitive environment for budget hotels.

Randgold Resources bucked the weak market trend, ahead 2.6 percent, as investors turned to the gold miner as a proxy for the safe-haven precious metal.

Car and plane parts maker GKN was another significant gainer as it beat forecasts with a 19 percent rise in 2012 pretax profit, helped by demand for luxury cars in China, the world's biggest autos market.

Its shares jumped 3.6 percent, topping the FTSE 100 leader board, while specialty chemical maker Croda International firmed 1.1 percent after it announced a rise in full-year profit. (Reporting by Tricia Wright)

http://www.globalpost.com/dispatch/news/thomson-reuters/130226/ftse-at-2-12-week-closing-low-italy-election-stalemate