[jQuery] JSON error: " missing } after property list"

Why does this JSON generate the error "missing } after property list"
in Firebug?
What's missing?

{"newitem": "<div id='iid_27' class='round-block'> <div class='left'>
Test Title 10 </div> <div class='right'> <ul><li>Test Caption 10</li></
ul><div class='drag-handle'>drag to reorder</div> </div> </div> "}

Guessing the error lies outside this code block but not sure how to
track down the problem.