GLOBAL MARKETS-Stock futures drop, gold up on no US debt deal
* U.S. stock futures drop as debt deal elusive
* Gold futures hit record
* Markets have seesawed on signs of progress, inaction
* Boehner tells Republicans no deal likely with Obama
(Updates prices, adds Nikkei)
By David Gaffen
NEW YORK, July 24 (Reuters) - U.S. stock futures fell and gold hit a new record on Sunday as Washington was no closer to raising the U.S. debt ceiling to avert a devastating default.
The decline in equity futures points to a poor open for U.S. markets and shows investors are getting increasingly worried about the failure of legislators to coalesce around one approach that will resolve the stalemate that is unnerving investors.
"The fact that they seem to be jumping from one type of proposal to another and not converging on anything is beginning to worry markets," said Steven Englander, head of G10 FX strategy at Citigroup.
In Asia, Japan's Nikkei index was down 0.5 percent in Monday morning trade.
S&P 500 futures fell at the outset of electronic trading. The benchmark S&P SPc1 was down 0.8 percent, or 11 points, at 1,330.20.
Gold rose to $1,614.71 an ounce, just off a new record for the precious metal reached earlier in the session, as it has been a favored asset of those seeking safety from declining U.S. assets.
Currency trading also showed investors moving away from the U.S. dollar, with the biggest drop in the greenback coming against the Swiss franc. The dollar dropped to 0.8153 against the Swiss franc , down 0.4 percent.
White House officials and Republican leaders scrambled on Sunday to avoid a debt default, but the two sides were still not close to a deal. House Speaker John Boehner told fellow Republicans on a conference call that a large-scale debt deal was not possible with President Barack Obama.
An aide to U.S. Senate Majority Leader Harry Reid told Reuters on Sunday the Nevada senator was outlining a plan that would cut $2.5 trillion in spending and increase the debt limit that he hoped would be brought to the Senate floor this week.
Earlier in the day, White House Chief of Staff Bill Daley warned that there would be a "few stressful days" ahead for financial markets.
"The unproductive course in DC may result in continued volatility, especially now that the focus is turning away from Europe, and back to the U.S.," said Robert Tipp, chief investment strategist at Prudential Fixed Income in Newark, New Jersey.
U.S. bond futures prices fell but the losses were held in check in part because of the fall in equity prices. The 10-year Treasury bond fell 3/32 to 124 7/32. The Treasury is expected to sell $99 billion in two-, five- and seven-year debt later in the week.
Ratings agencies have warned of a possible downgrade of U.S. triple-A rated debt if long-term budget cuts are not sufficient. The safe-haven status of Treasuries may be slightly diminished by a potential downgrade of U.S. debt but it will still hold appeal for many investors.
"A single notch ratings cut should not overwhelm the market, the usual reaction to such a move is a sudden drop in Treasury prices, then a recovery," said David Keeble, global head of interest rate strategy with Credit Agricole Securities (USA) Inc. in New York.
In the past few days, markets seesawed on reports suggesting progress toward an agreement to cut the deficit that would allow for the U.S. debt ceiling to be raised and avert a market-roiling default.
U.S. crude oil CLc1 for September delivery in New York was down 65 cents at $99.22 a barrel, and Brent oil futures LCOc1 in London were down 63 cents at $118.04. For more, see
"There's an old saying that things don't matter until the day they matter; we're getting close to the day when it will matter," said Quincy Krosby, market strategist at Prudential Financial in Newark, New Jersey.
(Additional reporting by Ryan Vlastelica, Richard Leong and Steven C. Johnson; Editing by Dale Hudson and Muralikumar Anantharaman)
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