Gold continued to lose its shine, with the precious metal on course for its biggest monthly decline for three years.

It touched a six month low of $1530 an ounce, down $25, and is likely to record a fall of around 12% during December, the worst performance since October 2008.

The latest trigger was Italy's bond auction, which raised only €7bn or so compared to a target of €8.5bn and with yields of almost 7%. Kathleen Brooks at Forex.com said:

Today's auction in Italy reminds us that stresses remain, and although [it] was always going to be a hard sell as it comes at the end of the year, Italy has a mountain to climb next year, as it tries to sell €400bn of debt – half of which needs to be sold to merely re-finance its original debts.

Investors had already been selling assets such as gold and silver to free up cash, cover losses and buy dollars, seemingly the last remaining investment haven.

Precious metal mining companies were - unsurprisingly - among the leading stock market fallers. New FTSE 100 entrant Polymetal International, a Russian gold and silver producer, lost 17p to £10.92 while Mexican miner Fresnillo fell 4p to £15.02.

Among the mid-caps Petropavlovsk dropped 20p to 598p and African Barrick Gold ended 9.3p lower at 440.1p.

But overall the market shrugged off the Italian debt auction, helped by reasonable US economic data. The latest Chicago purchasing managers' index came in higher than expected, while pending home sales rose 7.3% in November compared to forecasts of a 2% increase.

So with Wall Street up nearly 90 points by the time London closed, the FTSE 100 added 59.37 points to 5566.77.

A steady oil price, with crude hovering around $107 a barrel, helped the likes of Petrofac, up 31p at £14.46, and Royal Dutch Shell A shares, 45p better at £23.77.

Smith and Nephew, a constant takeover candidate, added 16.5p to 620p while outsourcing group Serco edged up 1.2p to 473.3p as it bought JBI Property Services from the Abu Dhabi state investment company Mubadala.

Betfair fell for the second day running, down 21.5p at 760p after problems with a series of bets at Leopardstown on Wednesday.

Lower down the market the unfortunately named Shaft Sinkers sank 32% to 56.5p. The company, which builds infrastructure for underground mines, said difficult ground conditions at potash mine in Volgakaly meant progress was much slower than anticipated. So it has begun discussions with operator Eurochem about amending or terminating the contract. Sinking works have now been suspended.

Hambledon Mining lost 3.45% to 3.5p following news of a £1.17m fine by a Kazakh court relating to an administrative offence arising from environmental damage caused by a rupture at its Sekisovskoye gold mine. The company is appealing against the level of the fine. Analysts at company broker Fairfax said:

News of any fine is never good for a company but the imposition and contesting of fines in Kazakhstan is considered to be normal practice in Kazakhstan and previous experience suggests that the fine could be significantly reduced. The news comes at a time when the gold mine is expected to be operating well.

Finally bus maker Optare fell 4% to 0.575p. Rival Alexander Dennis pulled out of a possible bid after India's Ashok Leyland - which owns 26% of Optare and wants to raise that to 75% - refused to sell its stake. Optare is now expected to issue new shares to Ashok, thus gaining access to a £12m credit line.