* Wall Street set to fall on deadlock in fiscal talks
* Dollar slips against safe-haven yen, Swiss franc
* Chinese exports drop unexpectedly in September
* Brent oil under $111 on U.S. uncertainty, Chinese data
By Richard Hubbard
LONDON, Oct 14 Slow progress in talks to avert a
U.S. debt default kept world shares and oil under pressure on
Monday, while the yen rose as some investors shifted into safer
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."
U.S. stock index futures showed the failure of efforts over
the weekend to resolve the gridlock in Washington would prompt
falls on Wall Street, although volumes were expected to be kept
light by the Columbus Day holiday.
Promising signals had emerged from Senate negotiations on
Sunday, but there were no concrete moves towards passing
legislation needed to fund the government and raise its
borrowing authority in time to avoid a default later this week.
The dollar, as it has done throughout the crisis, bore the
brunt of the nervousness, shedding 0.3 percent against the safer
option of the yen to trade at around 98.25 yen.
"We think the closer we get to the debt ceiling deadline
without an agreement, (the more) dollar/yen will come under
intensive selling pressure," said Lee Hardman, currency
economist at BTMU.
The greenback also slipped 0.3 percent against the Swiss
franc at 0.9098 francs while the euro rose 0.1
percent to $1.3558.
Shares markets outside the U.S. reflected uncertainty about
events in Washington. But equities markets continue to be
supported by hopes that the deadlock provides the Federal
Reserve with reasons to delay cutting back its stimulus for the
Europe's broad FTSE Eurofirst 300 index was little
changed by midday, while stocks tracked by MSCI's world equity
index were also unchanged, with Hong Kong and
Japan having been closed for holidays.
MSCI's broadest index of Asia-Pacific shares outside Japan
, which had hit a three-week high on Friday,
eased 0.2 percent.
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.
Commodity markets mirrored uncertainty over the outlook with
gold hovering near a three-month low at $1276.80 an
Brent crude dropped below $111 a barrel while copper
edged up 0.6 percent to $7,248 a tonne as strong imports
of the metal from top consumer China boosted optimism about the
outlook for demand, though gains were capped by events in