Britain’s defence secretary, Liam Fox, sounded a little scripted in Misrata at the weekend when I asked him whether NATO’s airstrikes in Muammar Gaddafi’s home town of Sirte were staying within its remit to protect civilians in Libya. “NATO has been extraordinarily careful in target selection.” “NATO has been very careful to minimize civilian casualties.” “NATO has stayed within its mandate throughout.” It’s a mantra that NATO, and the countries that have contributed to its Libyan adventure, have had to learn well.  They’ve been accused of stretching the legality of the mission “to protect civilians by all necessary measures” before. But the problem with sticking to a script, is that the Libyan conflict hasn’t really progressed with any sort of predictable narrative since the fall of Tripoli on the night of August 23rd. If the then rebels of the now ruling National Transitional Council (NTC) expected that internal insurrections would help them and they’d race into Gaddafi’s hometown of Sirte and the other remaining holdout, Bani Walid, to a hero’s welcome, they were mistaken. Sirte and Bani Walid were not Tripoli. They resisted  — and resisted ferociously. Taken aback, fighters loyal to the NTC began drawn-out sieges of both towns, battering them with rockets, mortars and tanks as Gaddafi loyalists hit them with intense sniper and rocket fire. And all the while, the NTC men were backed by NATO warplanes. Now it’s not only the usual critics saying that NATO has overstepped the mark. It’s terrified Libyans fleeing Sirte with tales of dead relatives, weeks of little food and houses demolished by rockets. “What did America and NATO bring to us? Did they bring apricots?” one man shouted at a Reuters journalist in Sirte last week.  “No, they brought us the shelling and the strikes. They terrorised our kids.” It’s war, some officials say privately. It’s always messy towards the end. But civilian deaths have been kept to a minimum and the country’s infrastructure has been left largely intact, giving the economy a chance to get moving quickly. They could have surrendered, NTC commanders point out. NATO says that remnants of the Gaddafi regime pose a threat to civilians and it will support NTC operations for as long as that threat remains. They say Gaddafi loyalists in Sirte had kept people there as human shields and executed anti-Gaddafi residents – stories echoed by some fleeing the city. For NATO’s detractors, it’s hard to see how launching airstrikes on a city already under heavy shelling from the NTC and with no power and little food amounted to protecting the people who lived in it. Liam Fox was sure where the blame for the suffering lay. “There wouldn’t be any NATO strikes if it had not been for the fact that Gaddafi was threatening his own population and threatening a civilian, humanitarian catastrophe in Benghazi,” he told me, adding that the people of Sirte may need to be given “some information” on why the siege played out as it did. The risk now is that a people embittered by weeks of misery and the deaths of their friends may turn on the young government, making it difficult to stabilise the country and get it properly running again. Also, it seems true that many of them are sorry to see Gaddafi go – some because of tribal allegiances, some because their city benefitted from his position and some simply because they admired him. One loyalist captured at the hospital in Sirte kept a photo of the ousted leader in his pocket. For NATO, the worst-case scenario risks turning an operation it heralds a success, into an embarrassment. “It was more than I expected,” I heard Fox say to his NTC hosts over lunch in Misrata, referring to the wreckage wrought by Gaddafi’s merciless bombardment of that city after it was taken by the NTC. The pictures emerging from Sirte as it enters endgame suggest its devastation will be similar. What that will mean is the question.

* Credit rating agency Moody’s said it may slap a negative outlook on France’s Aaa credit rating in the next three months if the country fails to make progress on crucial fiscal and economic reforms.* Meanwhile, risk assets languished in negative territory for a second day after German officials on Monday cautioned against expectations of a quick solution to the region’s two-year-old debt crisis. Equity futures pointed to a lower opening on Wall Street.* But traders said that with the United States in earnings season, positive surprises could help equity markets rally and in turn weigh on Treasuries later in the session. Goldman Sachs and Coca Cola are among those reporting on Tuesday, with Apple due after the market close.* “Analysts have ratcheted down their expectations, so the potential is that they come to the upside and if we see a string of those it could give a bid to the equity market and we’ll see fixed income fade on the back of that,” a trader said.* Benchmark 10-year Treasury yields were 4 basis points lower at 2.12 percent, with 30-year yields down 2 basis points at 3.11 percent.* The 10-year note is now hovering close to support around 2.266 percent, the 38.2 percent retracement of a July to September rally in the maturity. More support is clustered near 2.3 percent to 2.31 percent, an area containing a few daily highs hit in late August.* The Federal Reserve will buy between $2.25 and $2.75 billion of Treasuries on Tuesday as part of “Operation Twist”, the central bank’s latest easing programme.* Barclays Capital strategists said a flattening in the 10/30s portion of the U.S. Treasury curve on Monday may have been exacerbated by the looming purchase operation and expected the curve to resteepen coming out of it.* “The belly of the curve has cheapened significantly over the past few weeks and has room to richen if risk aversion stays high,” the bank’s strategists said.

ITALIAN BOND AUCTION:Italy is set to pay lower yields when it sells up to 6.5 billion euros of bonds on Thursday, with growing optimism that European leaders are responding more effectively to the euro zone debt crisis outweighing two rating downgrades in less than a week.EDISONItalian investors in Edison still need to sort out a final agreement to present to EDF for a reorganisation of the Italian company that could give majority control to the French utility and trigger a bid on minorities.BANCA POPOLARE DI MILANOA trade union shareholder group at Banca Popolare di Milano is counting on the support of the Sator Fund of banker Matteo Arpe to ensure the success of an 800 million euro capital increase, a trade union leader said on Wednesday.SMALL AND MID CAPS:MONDO HOME ENTERTAINMENTThe home video distributor will ask a shareholder meeting on Nov 23 to change the group’s name to Moviemax Media Group, it said in a statement on Wednesday.For Italian market data and news, click on codes in brackets:20 biggest gainers (in percentage)…………20 biggest losers (in percentage)………….FTSE IT allshare indexFTSE Mib index……..FTSE Allstars index…FTSE Mid Cap index….Block trades……….Stories on Italy…… IT-LENFor pan-European market data and news, click on codes in brackets: European Equities speed guide………………. FTSEurofirst 300 index………………………… DJ STOXX index……………………………….. Top 10 STOXX sectors……………………… Top 10 EUROSTOXX sectors…………………. Top 10 Eurofirst 300 sectors………………. Top 25 European pct gainers………………….. Top 25 European pct losers…………………… Main stock markets: Dow Jones…………… Wall Street report ….. Nikkei 225…………. Tokyo report………… FTSE 100…………… London report……….. Xetra DAX…………. Frankfurt market stories CAC-40…………….. Paris market stories… World Indices……………………………….<0#.INDEX> Reuters survey of world bourse outlook……… Western European IPO diary…………………….. European Asset Allocation…………………… Reuters News at a Glance: Equities…………… Main currency report:………………………….