* Optimism on U.S. debt talks spurs dollar higher
* Wall St lower as Citi results offset Washington optimism
* Gold steadies after falling to 3-month low
By Caroline Valetkevitch
NEW YORK, Oct 15 Global equities markets rose
and the dollar strengthened on Tuesday on signs of progress in
Washington's budget and debt talks, though U.S. stocks edged
lower on Citigroup's weaker-than-expected quarterly
The political standoff in Washington showed signs of giving
way to a Senate deal to reopen federal agencies and prevent a
damaging default on federal debt. The deadline to lift the U.S.
debt ceiling is Oct. 17.
U.S. Senate Majority Leader Harry Reid, a Democrat, and his
Republican counterpart, Mitch McConnell, ended talks on Monday
with Reid saying they had made "tremendous progress".
Signs of optimism are building and "investors are showing
increasing signs of confidence that default will be averted,"
said Andrew Wilkinson, chief economic strategist at Miller Tabak
& Co. in New York.
MSCI's world equity index, which tracks
shares in 45 countries, was up 0.1 percent, close to a five-year
high hit in September prior to the crisis in Washington.
The Dow Jones industrial average was down 14.45
points, or 0.09 percent, at 15,286.81. The Standard & Poor's 500
Index was down 0.34 points, or 0.02 percent, at 1,709.80.
The Nasdaq Composite Index was up 5.49 points, or 0.14
percent, at 3,820.77.
Shares of Citigroup fell in early trading but subsequently
rose 6 cents to trade at $49.66.
In the U.S. Treasury bill market, most U.S. Treasuries
prices were narrowly lower and short-term bill rates were the
lowest in a week.
Treasury rates on T-bill issues due in October to November
fell to their lowest level in a week, although they remained at
elevated levels compared with three weeks ago.
The one-month Treasury bills due on Nov. 7 are the
most sensitive to efforts to raise the statutory $16.7 trillion
borrowing limit, which expires on Thursday. The benchmark
10-year U.S. Treasury note was down 12/32, the yield
at 2.7239 percent.
The dollar rose to touch a one-month high against a basket
of currencies, buoyed by the optimism over possible progress in
The dollar index rose 0.45 percent to 80.624, its
highest since Sept. 18.
"There is a glimpse of good news from the U.S. government
and markets are adding to risk positions," said Camilla Sutton,
chief currency strategist at Scotiabank in Toronto.
Gold, whose safe-haven appeal is usually burnished during
times of uncertainty, steadied after an early drop to
three-month lows tempted some buyers back to the market.
Spot gold plunged to its lowest since July 10 at
$1,251.66 in early trade, but recovered to $1,271.21.
Oil prices were lower after Iran presented a proposal over
its nuclear program at talks in Geneva. Brent was
trading 64 cents lower at $110.40 a barrel. U.S. oil was
down 45 cents at $101.96.
In Europe an unexpected rise in German analyst and investor
sentiment lifted the outlook for the region's largest economy.
The influential ZEW Institute's monthly poll of economic
sentiment rose to its highest level since April 2010 and beat a
Reuters poll forecast for no change.
A separate report on price pressures in Britain showed
inflation was higher than expected in September and house prices
had risen sharply, adding to doubts over how long the central
bank can hold down interest rates.