- US government begins shutdown
- Italy's political future uncertain
- European unemployment and factory data
FTSE 100: -0.17%
CAC 40: 0.73%
FTSE MIB: 0.91%
IBEX 35: 0.65%
Stoxx 600: 0.35%
European equities were little changed as investors shrugged off news of a partial US government shutdown.
The US government came to a screeching halt after failing to meet its Monday midnight deadline for passing the budget bill.
It marks the first time in 17 years the government has experienced a shutdown, potentially putting up to one million workers on unpaid leave.
Congress was unable to break a political statement as they continued to disagree over President Barack Obama's signature healthcare reform.
House Republicans floated a late offer to break the impasse but Democrats rejected the area.
Senate Majority Leader Harry Reid said Democrats would not enter into formal negotiations on spending "with a gun to our head" in the form of government shutdowns.
According to IHS Inc., a partial shutdown would cost the US at least $300m a day in lost economic output at the start.
On Monday fears over a shutdown sent stocks spiralling downwards but equities started to recover on Tuesday morning.
"This morning, the risk tone improves somewhat as investors take the view that a partial shutdown, if resolved quickly, will do little damage to the overall health of the US economy," ETX Capital's Head of Trading Joe Rundle said, adding that the market expects a deal in coming days.
"What's more is that this shutdown means Federal Reserve Chairman [Ben Bernanke] will be more inclined to hold back from tapering quantitative easing at the October policy meeting - in fact, as it stands, the US labour department has closed along with other agencies which means payrolls data will not be complied or released."
Italy's government on brink of collapse
Prime Minister Enrico Letta is trying to rally up support ahead of a confidence vote on Wednesday as centre-right leader Silvio Berlusconi works to topple the ruling coalition.
Berlusconi sent the government into disarray after ordering the resignation of his People of Freedom party ministers from the coalition over the weekend.
Letta's survival appears to depend on some 20 senators from Berlusconi's party who are displeased with his shock decision.
Fabrizio Cicchitto, a senior member of parliament from the PDL party and a once loyal supporter of Berlusconi, told the La Repubblica daily that "making the government fall would be a mistake".
It could lead to election in November which Cicchitto believes would be impractical.
Eurozone manufacturing, unemployment
Eurozone manufacturing activity growth eased in September, according to a survey on Tuesday. Markit Economics said its euro-zone factory index fell to 51.1 in September from 56.7 in August. However, it was in line with forecasts and exceeded the 50 reading the signals expansion.
The German manufacturing purchasing manager's index (PMI) was at 51.1 in September, down a tad from August's 51.3 reading and below expectations for the reading to remain unchanged.
Germany's jobless rate rose slightly to 6.9% in September from 6.8% the prior month. Economists predicted the rate to hold steady.
The Eurozone unemployment rate was flat in August at 12%, beating forecasts for a rise to 12.1%.
Wolseley, Unilever, Experian
Wolseley advanced after the distributor of plumbing and heating products posted full-year earnings that beat analysts' estimates.
Unilever dropped after the world's second-largest consumer-goods maker said sales growth slowed in the third quarter.
Experian gained after announcing the acquisition of US fraud detection company The 41st Parameter for $324m.
easyJet was higher after announcing two new routes from Bristol Airport with flights to to Reykjavik in Iceland and Marrakech in Morocco in December.