By Chuck Mikolajczak
Prime Minister Silvio Berlusconi appeared to lose his parliamentary majority after a key vote, piling further pressure on him to resign.
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Berlusconi won a vote on the ratification of the country's debt-weighed public finances because the opposition abstained. But he obtained only 308 votes, below the 316 needed for an absolute majority in the 630-seat Chamber of Deputies.
"Maybe it is just another nail in the coffin of the entire euro crisis, slowly but surely it seems to be sort of unfolding and progress is being made."
The PHLX Europe sector index <.XEX>, which includes major European shares, advanced 0.6 percent.
Italian 10-year borrowing costs touched a new record of 6.74 percent, raising the risk that Rome's massive debt -- the second highest in Europe at 120 percent of gross domestic product -- could spiral out of control.
The Dow Jones industrial average <.DJI> was down 1.74 points, or 0.01 percent, at 12,066.65. The Standard & Poor's 500 Index <.SPX> was up 1.96 points, or 0.16 percent, at 1,263.08. The Nasdaq Composite Index <.IXIC> added 6.68 points, or 0.25 percent, at 2,701.93.
With little on the U.S. economic calendar this week and earnings season drawing to a close, investors were fixed on Europe. According to Thomson Reuters data, of the 442 S&P 500 companies that have reported earnings, 70 percent topped expectations.
Activision Blizzard Inc <ATVI.O> advanced 1 percent to $13.88 as the video-game maker began selling the highly anticipated new entry in its "Call of Duty" series.
(Reporting by Chuck Mikolajczak; editing by Jeffrey Benkoe)