- US debt ceiling looms
- Eurozone industrial production rises
- Merkel and SPD coalition talks
- ECB clamps down on banks
FTSE 100: 0.32%
CAC 40: 0.07%
FTSE MIB: 0.19%
IBEX 35: 0.28%
Stoxx 600: 0.00%
European stocks were little changed as the US debt ceiling crept closer and as Eurozone industrial production data beat forecasts.
The US has three days before reaching its $16.7trn borrowing limit and starting to run out of cash to pay its bills.
Senate Majority Leader Harry Reid said he held productive talks with Republican leader Mitch McConnell, but they failed to reach a plan over the weekend.
"With three days to go before the US Treasury technically runs out of cash to pay the bills, traders are now fearing the worst-case default scenario being played out," said Ishaq Siddiqi, Market Analyst at ETX Capital.
"Although many dismiss it as unlikely with hopes that US lawmakers will strike an 11th hour deal, traders are showing reluctance to take risk as we head into the deadline on the October 17th."
International Monetary Fund head Christine Lagarde has warned that a US default could send the rest the world into a recession.
The government shutdown, while not as damaging as the debt ceiling, also risks hurting economic growth.
"[...] the longer this shutdown lasts, the greater the impact I see it having on both consumer and business confidence, especially if the debt ceiling resolution is only a short-term one," Craig Erlam, analyst at Alpari, said.
The government has been in a partial shutdown since October 1st after missing its deadline to agree on a federal budget.
The Senate and House meet in Washington today, even though it is the Columbus Day federal holiday.
In the Eurozone, industrial production rose 1% in August, the strongest pace in more than two years and exceeding the consensus for a 0.8% increase.
Portugal registered the highest increase, with output growing by 8.2%. German output rose 1.8% while French output climbed 0.2% following three consecutive months of decline.
Germany's SPD lists demands ahead of coalition talks
Germany's Social Democrats (SPD) stood their ground on Monday over the introduction of a minimum wage before a second round of talks with Angela Merkel to form a coalition with her Christian Democrats.
Merkel faces difficult coalition talks this week as the SPD raised its demands for a nationwide minimum wage of €8.50 ($11.51) an hour.
Merkel is trying to seek a partner for her third term after failing to secure enough votes to win the election last month.
ECB cracks down on banks
European Central Bank Executive Board member Benoit Coeure said there will be three different checks on the balance sheets of European banks to ensure credibility.
The ECB will be taking over supervision of Europe's lenders to avoid another banking crisis sparked by sovereign debt.
"The way we will do it next year will be very different from the way that the previous two stress tests were done," Coeure said at an event in Washington yesterday.
"Any number provided by the banks will first be checked by the national supervisor, then there will be a second check at the European level, in Frankfurt. And then there will be a third check by independent auditors."
The UK has reached a draft deal with the European Union (EU) to lift its objections to turning the ECB into a supervisor, two EU officials told Bloomberg.
Britain had blocked approval of the legislation last month on concerns over a potential unwinding on safeguards to prevent the UK from being ostracised in meetings.
RBS, PSA Peugeot Citroen
Royal Bank of Scotland slumped despite saying yesterday that it had booked up 5,000 mortgage appointments with customers within just three hours of the Help to Buy scheme going live last week. The stock was downgraded this morning by Bank of America to 'underperform'.
PSA Peugeot Citroen plunged following a report it plans to sell €3bn of new shares
to China's Dongfeng Motor Corp. and the French government.
Konecranes Oyj declined as the Finnish maker of lifting equipment forecast that 2013 sales will be "slightly lower" than last year.
French maker of design software Dassault Systemes slid after third quarter revenue missed forecasts.
UK platinum refiner Johnson Matthey rose after JPMorgan upgraded the shares to 'overweight' from 'neutral'.
Electricite de France advanced as Energy Secretary Ed Davey said the UK was close to announcing a deal to build a nuclear power plant.
Chinese exports fall, inflation rises
Chinese exports fell in September by 0.3% from a year earlier, against expectations of a 6% rise, data showed on Saturday.
Inflation in China jumped to a seven-month high of 3.1% last month as poor weather drove up food prices, another report revealed.
Separate data showed Brent crude futures fell $0.879 to $110.310 per barrel on the ICE.
The euro rose 0.28% to $1.3582.