It looks like you're having a permissions error, based on this message in your output: error: could not create '/lib/python2.7/site-packages/lxml': Permission denied.
One thing you can try is doing a user install of the package with pip install lxml --user. For more information on how that works, check out this StackOverflow answer. (Thanks to Ishaan Taylor for the suggestion)
You can also run pip install as a superuser with sudo pip install lxml but it is not generally a good idea because it can cause issues with your system-level packages.
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