GLOBAL MARKETS-Wall St shares rise on U.S. budget deal hopes, yen gains

Mon Oct 14, 2013 4:38pm EDT

* Planned White House meeting buoys sentiment
    * Dollar slips against safe-haven yen, Swiss franc
    * Brent oil pares losses, U.S. crude turns higher
    * Treasury markets closed for Columbus Day


    By Herbert Lash
    NEW YORK, Oct 14 (Reuters) - Global equity markets rebounded
and oil pared losses on Monday     on news of efforts by
President Barack Obama and leaders in Congress to resolve an
impasse over how to extend the U.S. debt ceiling and end a
partial government shutdown.
    The lack of an expected deal over the weekend to avert a
looming U.S. debt default as early as Oct. 17 weighed on world
equity markets earlier in the day and kept the dollar under
pressure. The yen rose as some investors sought safer assets.
    Obama had planned to meet leaders from the Senate and House
of Representatives 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. 
    But the meeting was postponed to allow Senate leaders time
to "continue making important progress" on talks over the debt
and government shutdown, the White House said. 
    U.S. senators later said they were closing in on a deal that
would reopen the government and push back a possible default for
several months, though many hurdles remained as the Thursday
deadline drew near. 
    "We expect there will be an agreement in the next day or so,
but there's a lot of fear," said Ralph Bassett, deputy head of
North American equities at Aberdeen Asset Management in
Philadelphia.
    MSCI's world equity index rose 0.24 percent
after trading lower by about the same earlier, while the FTSE
Eurofirst 300 index of leading European shares closed
0.13 percent higher at 1,252.47 after late-session gains.
    The Dow Jones industrial average closed up 64.15
points, or 0.42 percent, at 15,301.26. The Standard & Poor's 500
Index rose 6.94 points, or 0.41 percent, at 1,710.14. The
Nasdaq Composite Index gained 23.40 points, or 0.62
percent, at 3,815.28.
    U.S. government debt markets were closed because of Columbus
Day, a federal holiday.
    Investors started the day skeptical of a deal that had been
expected over the weekend, said Brad McMillan, chief investment
officer at Commonwealth Financial in Waltham, Massachusetts.
    Even if a deal gets done, McMillan said the stand-off had
created "justifiable anxiety" and tremendous uncertainty.
    "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. 
    The earlier cautious mood was reflected in the neutral
reaction to news that factory output in the euro zone grew at
its strongest pace in two years in August. 
    The dollar, as it has since the budgetary crisis, bore the
brunt of the early nervousness but pared losses on news of the
White House meeting. It was 0.03 percent lower against the safer
option of the yen, trading at around 98.53 yen.
    The greenback also slipped against the Swiss franc,
falling 0.24 percent at 0.9100 francs, while the euro 
rose 0.16 percent to $1.3563. 
    
   
    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 the annual inflation rate hit a
seven-month high of 3.1 percent, limiting the scope for rate
cuts. 
    The decline in exports from the world's second-largest
economy raised questions over the global recovery, which was
highlighted last week when the International Monetary Fund
trimmed its forecast to the lowest since the global recession in
2009. 
    Brent crude hovered around $111 a barrel, while
copper rose 0.76 percent to close at $7,255.00 a tonne
as strong imports of the metal from top consumer China boosted
optimism about the outlook for demand.
    U.S. oil prices rebounded as traders covered short positions
in the event U.S. politicians reach a deal to fund the
government and avert a debt default.
    "We're trading back and forth on the changing perceptions of
what is happening in D.C. at this point," said Gene McGillian,
oil analyst with Tradition Energy in Stamford, Connecticut. 
    "You saw some short-covering on the latest news that the
Senate will have a plan. Nobody wants to be exposed if something
should change," McGillian said.    
    Brent crude futures fell 24 cents to settle at $111.04. U.S.
oil rose 39 cents to settle at $102.41.
    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.