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* TSX up 14.8 points, or 0.12 pct at 12,423.05
* Gold stocks lift index, offset weaker financials
* Italy turmoil stokes new EU fears
By Jon Cook
TORONTO, Nov 7 (Reuters) - Toronto's main stock index was virtually flat in a volatile session on Monday, as gains from gold miners on higher bullion prices offset broader investor concern about political turmoil in Europe.
Speculation that Italian Prime Minister Silvio Berlusconi's government was on the verge of collapse sparked fears the euro zone debt crisis could overwhelm the region's third largest economy. [MKTS/GLOB]
The Toronto Stock Exchange's subindex of gold producers .SPTTGD, which often climbs on investor uncertainty, hit its highest point since Sept. 22.
Goldcorp (G.TO), up 3.4 percent to C$54.21, and Barrick Gold (ABX.TO), up 1.9 percent to C$53.23, led the sector.
"Given the weight of the TSX gold sector, which is roughly 13 percent, it's going to have a positive net effect for the broader index," said Sid Mokhtari, market technician and director of institutional equity research at CIBC World Markets.
The move in gold miners helped lift the heavily weighted materials sector, which rose nearly 1 percent.
At midday, the Toronto Stock Exchange's S&P/TSX composite index .GSPTSE was up slightly, rising 14.8 points, or 0.12 percent, to 12,423.05.
After Greek political unrest held the market's attention last week, investor focus switched to Italy, where Berlusconi faced a rebellion in his party. A recovery in Italian stocks and a pullback in government bond yields reversed when he denied reports that he would resign. [ID:nL6E7M7283]
The turmoil in Italy, one of Europe's biggest economies, extended the European debt malaise that has embraced the region and global markets for weeks.
Eight of the TSX's main sectors were down, with financial stocks a significant drag.
While Canadian lenders have little direct exposure to European debt, there is a risk a widening crisis could hit the global economy and their results.