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ePub3 doesn't allow named entities like - it only accepts numbered entities (one of the dumber things I think the ODPF changed).
If you have Sigil set to ePub3 by default, it will automatically change the to & #160;
I honestly don't remember if Sigil does it for ePub2 automatically?? In any case you can go into Sigil Preferences/Preserve Entities and add & #160;
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