GLOBAL MARKETS-U.S. debt doubts keep lid on shares, yen rises
* Deadlock in U.S. fiscal talks weigh on global equity markets * Dollar slips against safe-haven yen, Swiss franc * Brent oil drops toward $110 on U.S. uncertainty By Herbert Lash NEW YORK, Oct 14 (Reuters) - Global equity markets and the dollar pared some losses on Monday after news of a planned meeting between President Barack Obama and leaders in Congress to discuss an impasse over how to extend the U.S. debt ceiling and end a government shutdown. The lack of an expected deal over the weekend to avert a looming U.S. debt default as early as Oct. 17 kept world equity markets and the dollar under pressure, while the yen rose as some investors shifted into safer assets. Obama and Vice President Joe Biden will meet congressional leaders at 3 p.m. to discuss how to raise the $16.7 trillion federal borrowing limit and end a partial shutdown of the federal government, which began Oct. 1. Senate Majority Leader Harry Reid emerged from a half-hour meeting with Senate Republican leader Mitch McConnell and said he hoped to have a plan to present to Obama to end the shutdown and to raise the debt limit. "They are looking for a big agreement sooner rather than later," said Stephen J. Carl, principal and head equity trader at The Williams Capital Group in New York. Investors remained wary after a deal was expected over the weekend, said Brad McMillan, chief investment officer at Commonwealth Financial in Waltham, Massachusetts. Even if a deal gets done, which McMillan said was likely, the stand-off had created "justifiable anxiety" and tremendous uncertainty, he said. "We've done more damage both directly to the economy, through the shutdown, and indirectly through postponing decisions and reintroducing uncertainly in the decision processes than anyone appreciates," McMillan said. MSCI's world equity index rebounded to trade 0.01 percent higher, while the FTSE Eurofirst 300 index of leading European shares rose 0.13 percent in late-session gains to close at 1,252.47. On Wall Street, Nasdaq stocks turned higher but the Dow and S&P 500 index remained lower. The Dow Jones industrial average was down 14.64 points, or 0.10 percent, at 15,222.47. The Standard & Poor's 500 Index was down 1.74 points, or 0.10 percent, at 1,701.46. The Nasdaq Composite Index was up 5.26 points, or 0.14 percent, at 3,797.13. U.S. government debt markets were closed because of Columbus Day, a federal holiday. The cautious mood was reflected in the market's neutral reaction to news that factory output in the euro zone grew at its strongest pace in two years in August. "It's not time to be adventurous right now," said Alastair Winter, chief economist at Daniel Stewart. "I don't think people should be in a rush to do anything." The dollar, as it has since the budgetary crisis, bore the brunt of the nervousness, shedding 0.28 percent against the safer option of the yen to trade at around 98.28 yen. The greenback also slipped 0.44 percent against the Swiss franc at 0.9082 francs, while the euro rose 0.27 percent to $1.3578. Adding to market worries, China said exports dropped 0.3 percent in September from a year earlier against expectations of a 6 percent rise, while annual inflation rate hit a 7-month high of 3.1 percent, limiting scope for rate cuts. The decline in exports from the world's second-largest economy has raised questions over the global recovery, which were highlighted by the IMF last week when it trimmed its forecast to the lowest since the global recession in 2009. Brent crude dropped below $111 a barrel, while copper edged up 0.78 percent to $7,256.25 a tonne as strong imports of the metal from top consumer China boosted optimism about the outlook for demand. Brent crude futures fell by 53 cents to $110.75. U.S. oil rose 36 cents at $102.38. German government bond yields held near three-week highs, as debt markets in Europe remained confident the United States would resolve its fiscal stalemate. Safe-haven German Bund futures closed 4 ticks down at 139.75, while 10-year cash yields were flat at 1.86 percent. U.S. government debt markets were closed for the Columbus Day federal holiday.