U.S. lawmakers begin last-ditch effort on debt ceiling

WASHINGTON | Wed Oct 16, 2013 6:03am BST
(Reuters) - The U.S. Senate prepared for a last ditch effort Wednesday to avoid a historic lapse in the government's borrowing authority, a breach that President Barack Obama has said could lead to default and deliver a damaging blow to the global economy.

After a day of stop-and-go negotiations, the top Democrat and Republican in the U.S. Senate were said to be close to agreeing on a proposal to raise the debt limit - and reopen the partially shuttered government - for consideration by the full Senate on Wednesday.

European Factors to Watch -Shares seen gaining as U.S. deadline looms

Wed Oct 16, 2013 6:20am BST
LONDON, Oct 16 (Reuters) - European stocks were seen opening flat to higher
on Wednesday in what could be a volatile session of trade as investors retained
optimism that a deal could be struck to solve the U.S. debt crisis on the last
day before the deadline.

Financial spreadbetters expect Britain's FTSE 100 to open up 2 to 6
points, or as much as 0.1 percent higher, Germany's DAX to open 33 to
51 points higher, or as much as 0.6 percent, and France's CAC 40 to open
between 1 point lower to 13 points higher, as much as a 0.3 percent gain.

U.S. Senate leaders were still discussing a deal late on Tuesday aimed at
raising the debt limit and reopening federal agencies that have been closed for
two weeks. Senate aides said a deal was close but earlier hopes that a deal
could be announced late on Tuesday were not met.

European stocks rallied on Tuesday after Senate leaders made optimistic
noises that a deal would be done, however in Asia stocks slipped after House
attempts to get an agreement failed without a vote.

The Speaker of the U.S. House of Representatives John Boehner could be more
likely to allow a vote over a Senate proposal in the House after his own
initiatives failed to get the support of his own party, analysts said.

"The latest headlines suggest a deal will be sealed," Stan Shamu, market
strategist at IG, said in a trading note.

"It now seems like Mr Boehner will allow a clean Senate bill vote in the
House which is a strong sign he has yielded."

While the UK's FTSE and French CAC look set to eke out small gains at best,
the German DAX is set to lead European indexes higher. A gain at the open would
see the German blue-chip index post fresh record highs for a second day running.

FTSE100 slightly lower ahead of UK unemployment data

Italian Trade Balance 0.96B 5.21B 5.95B

GBP Claimant Count Change -41.7K -24.3K -32.6K

GBP Unemployment Rate 7.7% 7.7% 7.7%

GBP Average Earnings Index 3m/y 0.7% 1.0% 1.1%

CHF ZEW Economic Expectations 24.9 previous 16.3

CAD Manufacturing Sales m/m -0.2% 0.3% 1.7%

USD NAHB Housing Market Index 55 58 57

FTSE100 ends day modestly higher on hopes of US deal

At 11th hour, U.S. edges away from brink of debt crisis

WASHINGTON | Wed Oct 16, 2013 8:13pm BST
(Reuters) - U.S. Senate leaders announced a deal on Wednesday to end a political crisis that partially shut down the federal government and brought the world's biggest economy close to a debt default that economists said threatened financial calamity.

U.S. stocks surged, nearing an all-time high, on news of the deal, which must still be approved by vote in the Senate and the House of Representatives. But trading volumes remained low, underscoring how the political brinkmanship in Washington has unnerved Wall Street.

The deal, which has the backing of President Obama, would fund the government until 15 January and lift the borrowing limit until 7 February.