* U.S. shutdown enters 4th day; World stocks down 0.4
percent for week
* Wall St end higher on Friday, but Dow, S&P 500 post weekly
* Dollar rises 0.5 percent but not far off eight-month low
* U.S. one-month T-bill rates hit highest in 10 months on
By Wanfeng Zhou
NEW YORK, Oct 4 Major stock markets rose on
Friday but posted a second week of losses while the dollar
hovered near an eight-month low on fears the budget standoff in
Washington will drag on until politicians reach a deal to raise
the U.S. debt ceiling.
U.S. stocks ended higher on the day, but the Dow and S&P 500
indexes fell for the week as the partial U.S. government
shutdown entered its fourth day and appeared likely to drag on
for another week or more.
While selling has been orderly so far, investors see
volatility rising if the shutdown continues, which would hurt
the economy. Many do not expect lawmakers to reach an agreement
until they near the deadline to raise the U.S. government's
$16.7 trillion debt ceiling to avoid a U.S. default. Treasury
Secretary Jack Lew has said the government will hit the limit by
Fears of a U.S. default lifted interest rates on
ultra-short-term U.S. Treasury bills to their highest levels in
over 10 months, while the cost of insuring one-year U.S.
government bonds against default hit the highest level since
"If there's no agreement by the end of next week, the
concern will really become greater and the impact will be more
pronounced," said Kate Warne, investment strategist at Edward
Jones in St. Louis. Warne helps oversee $670 billion in assets.
MSCI's world equity index, which tracks
shares in 45 countries, edged up 0.2 percent on the day, but
lost 0.4 percent this week.
House Republicans held their ground Friday in a standoff
with President Barack Obama over the shutdown, triggered by a
dispute over the president's healthcare reforms. The two sides
also dug in over a measure to raise the nation's borrowing
authority, which is considered more important by investors.
Top international policymakers have warned that a failure to
raise the U.S. debt ceiling would be a serious blow to the world
economy. On Thursday, Dennis Lockhart, president of the Federal
Reserve Bank of Atlanta, said the shutdown will hurt growth in
the last quarter of this year, while the Bank of Japan said an
extended U.S. budget standoff would have a severe global impact.
Still, many long-term investors believe Congress will
eventually resolve the budget and debt issues, which would
ensure that any stock pullback would be followed by a rebound.
"Day by day, people are getting more tense," said Francois
Savary, chief investment officer at Swiss firm Reyl. "But we are
betting on the fact that a deal will be found, and this should
provide us with the opportunity to increase our equity
European shares rose 0.1 percent to end at 1,243.74
SHORT TERM BILL RATES RISE
The U.S. shutdown delayed the government's release of
non-farm payrolls data for September, which had been scheduled
for Friday. The Labor Department's monthly jobs report has been
playing a key role in the Federal Reserve's assessment of the
economy in its deliberations on when to scale back stimulus. The
postponement had no noticeable market impact.
The dollar rose for the first time in six days. It
gained 0.5 percent to 80.138 against a basket of major
currencies. The euro slipped 0.5 percent to $1.3552. The
dollar had hit an eight-month low on Thursday on views the
government shutdown will further delay the Fed's plans to reduce
its bond-buying program.
On Oct. 17, when the government is projected to reach its
debt ceiling, $85 billion of Treasury bills will mature. The
interest rate on that T-bill issue last traded at
0.12 percent, up 1 basis point from late on Thursday and up 8
basis points on the week.
Interest rates on T-bills that mature in the first half of
November last traded at 0.1 percent, 4 basis points higher than
late Thursday and up 8 basis points from a week earlier.
"We are seeing some real volatility in the bill sector,"
said Jason Rogan, managing director of Treasuries trading at
Guggenheim Partners in New York. "Bills are showing the first
signs of distress."
The benchmark 10-year U.S. Treasury note was down 10/32, its
yield at 2.651 percent.
Oil prices rose as a tropical storm approached the
oil-producing regions around the Gulf of Mexico, offsetting
worries that a prolonged U.S. government shutdown will dent
Brent crude rose 46 cents to settle at $109.46. U.S.
oil gained 53 cents to settle at $103.84.
Gold slipped to $1,309 an ounce from $1,316.69.