* FTSE 100 flat at 5,921 points, capped by 5,930 resistance
* Diageo falls as Cuervo talks are called off
* Whitbread boosted by Costa sales
* Banks fall on Italian debt concerns
By Francesco Canepa
LONDON, Dec 11 Britain's blue-chip index was
flat on Tuesday, consolidating 9-month closing highs, with
beverages group Diageo falling after it called off
long-running acquisition talks with Jose Cuervo.
Shares in Diageo fell 1.6 from an all time high of 1,887
pence hit on Monday as the firm ended negotiations that had
widely been expected to result in a deal to buy a stake in the
world's number 1 tequila brand.
"The news of the (Cuervo) acquisition not working out could
be the catalyst for Diageo to come down to more realistic
levels," Manoj Ladwa, head of trading at TJ Markets, said.
Ladwa said he would wait for the shares to come down to
1,500 pence, a level last hit in June, before buying into the
stock, but he cautioned that demand from fund managers was
likely to come in even before that level in light of the stock's
reliable business model and dividend yield.
Diageo traded at 18.1 times its expected earnings for the
next 12 months and offered a 2.5 percent dividend yield, broadly
in line with the broader STOXX 600 food & beverages
index, trading at a 18.3 multiple and 2.7 percent yield, Thomson
Reuters data showed.
For the broader market, however, Diageo's share loss
knocked 3 points off the FTSE 100, which was up just
Whitbread was up 4.5 percent to the top of the UK
blue-chip index as Britain's biggest hotel and coffee shop
operator posted a rise in third quarter sales, helped by rising
demand for its expanding Costa brand.
The FTSE 100 reached its highest closing level in nearly
nine months on Monday and is now capped by technical resistance
at 5,930, an intra-day high hit in September.
UK banks were down 0.3 percent, weighed down by
concerns that the euro zone debt crisis may flare up again in
Italian yields crept higher on Tuesday and stocks in Milan
extended losses, adding to the move seen in the previous session
triggered by technocrat Prime Minister Mario Monti's decision to
resign early, which has shaken faith in Italy's reform agenda.
"If you saw the government in Italy and Spain really back
away from the commitments that they have made in the last twelve
months, that would be taken badly," Chris Wyllie, chief
investment officer at Iveagh, said.
(Reporting By Francesco Canepa. Editing by Jeremy Gaunt.)