FTSE 100 struggles to shake off 3-week low as Italy worries linger

U.K. stocks seesawed Wednesday, following the prior day’s selloff. That slide was driven in part by political uncertainty in Italy that left London’s blue-chip benchmark at a three-week low.

What markets are doing

The FTSE 100 index  was down 0.1% at 7,627.01, but has been darting in and out of positive territory. The basic materials group fell the most while oil and gas shares gained the most. On Tuesday, the index dropped 1.3% to mark its lowest close since May 8 and its sharpest decline since mid-March, according to FactSet data.

The pound bought $1.3266, up slightly from $1.3253 on Tuesday in New York.

What’s driving the market

Investors appeared to be searching for a catalyst to drive equities firmly one way or another, after Tuesday’s rout on Italian political jitters.

U.K. stocks had suffered alongside other global equity markets as a political crisis in Italy revived concerns about the stability of the eurozone. A March election in Italy left two antiestablishment parties — the 5 Star Movement and League — in place to enter government in coalition. But the country’s president effectively blocked the euroskeptic parties from taking power and appointed Carlo Cotarelli as prime minister, asking him to form a government.

If Cotarelli, an International Monetary Fund veteran, cannot set up a government, that would leave Italy’s president with the choice of bringing in a caretaker cabinet or calling early elections, potentially as early as July.

What strategists are saying

The FTSE 100 “showed no signs of bouncing back this Wednesday,” as it holds above the 7,600 level,” wrote Connor Campbell, financial analyst at Spreadex.

“With little else on its agenda, the FTSE will be hoping that things don’t take another downturn in the eurozone (or, indeed, the U.S.),” he said.

Stock movers

Royal Bank of Scotland Group PLC  fell 0.8% after the lender said Chief Financial Officer Ewen Stevenson has resigned to “take up an opportunity elsewhere.” That news arrived a few hours before RBS begins its annual general meeting in Edinburgh. Shares of the company on Tuesday fell 3.4% following a Sky News report that the U.K. government is preparing to sell a multibillion-pound stake in RBS.

J Sainsbury PLC   and Wm. Morrison Supermarkets PLC each rose 0.8% after data from Kantar showed sales at all U.K. grocers rose in the 12 weeks ended May 20. Sales got a boost from the Royal Wedding, a major soccer tournament and good weather during a May Bank Holiday. But Tesco PLC  shares were off 0.2%.