Britain's FTSE 100 outperforms and manages monthly gain amid Italian deficit woes (UPDATE 1)

British shares fell only slightly on Friday while bourses on the continent sustained heavy losses after the Italian government set a higher than expected budget deficit target that could put Rome on a collision course with Brussels.

The FTSE 100 fell 0.5 percent while the Eurozone STOXX 50 index lost 1.4 percent and Milan sank 3.7 percent.

Insulated from concerns over Italy and the eurozone, the top UK index ended the month with a 1 percent gain but was down 1.6 percent on the quarter after three months of turmoil in Brexit negotiations.

Financials weighed the most with RSA Insurance Group falling 8 percent after it reported an underwriting loss of about 70 million pounds ($91.43 million) in the third quarter due to bad weather, large losses, and claims.

British insurers have taken a beating from a run of volatile weather, with the hottest summer in living memory following a blast of icy weather earlier in the year dubbed the "Beast from the East".

"Negatively, although the Solvency II coverage ratio is above its targeted range, management said these losses could impact the dividend growth decision for the full year," wrote KBW analysts.

Easyjet shares fell 0.9 percent despite the budget carrier forecasting annual profit at the upper end of expectations, as it benefited from robust flight demand and cancellations at bigger rival Ryanair in 2018.

"Good numbers from EasyJet, with profits for the full year seen at the top end of guidance, but doubts about 2019 have weighed on the stock," wrote Neil Wilson, a chief market analyst at Markets.com.

Randgold Resources ended the day up 3.6 percent, the top FTSE 100 riser.

Having fallen earlier in the session after Congo's state miner warned Randgold it would "assert its rights" in the DRC-based Kibali mine in the planned acquisition by Barrick Gold, the stock recovered after Randgold refuted the miner's claim.

Among mid-caps outsourcer, Serco was a top performer, up 11.8 percent after it reported full-year profit and revenue above market expectations.