Index: wp-includes/formatting.php
===================================================================
--- wp-includes/formatting.php	(revision 17614)
+++ wp-includes/formatting.php	(working copy)
@@ -845,7 +845,7 @@
 	}
 
 	$title = strtolower($title);
-	$title = preg_replace('/&.+?;/', '', $title); // kill entities
+	$title = preg_replace('/&[^\s]+?;/', '', $title); // kill entities
 	$title = str_replace('.', '-', $title);
 	$title = preg_replace('/[^%a-z0-9 _-]/', '', $title);
 	$title = preg_replace('/\s+/', '-', $title);