* Deadlock in U.S. fiscal talks weigh on global equity
* Dollar slips against safe-haven yen, Swiss franc
* Brent oil drops toward $110 on U.S. uncertainty
By Herbert Lash
NEW YORK, Oct 14 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
U.S. government debt markets were closed for the Columbus
Day federal holiday.