- US debt ceiling talks continue
- ECB clamps down on banks
- Merkel faces tough coalition negotiations
- Chinese exports fall, inflation rises
FTSE 100: 0.11%
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FTSE MIB: -0.03%
IBEX 35: -0.02%
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US debt ceiling concerns continued to cast a dark shadow over markets on Monday as the government came no closer to a deal.
The US is three days away from reaching its $16.7trn borrowing limit after which the government will start to run out of money to pay its bills and risk a default on its debt.
Lawmakers continued to butt heads after the Democrats rejected a number of GOP offers over the weekend on the debt ceiling.
Senate Majority Leader Harry Reid said he held productive talks with Republican leader Mitch McConnell but they failed to reach a plan.
"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 October 17th," said Ishaq Siddiqi, Market Strategist at ETX Capital.
"Having said that though, we are in the third [sic] week of the US government shutdown which is eating away at US Q4 growth. At a time when the economic recovery in the states is fragile, an erosion of economic growth is highly undesirable - the silver lining however is that the Federal Reserve will not taper asset purchases with this in the backdrop."
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 will meet in Washington on Monday, even though it is the Columbus Day federal holiday.
ECB tightens rein 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 regulation 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."
Merkel faces challenging coalition talks
Chancellor Angela Merkel faces a difficult challenge this week to form a government as prospective coalition partners start making demands.
The Social Democrats (SPD) party has commanded a nationwide minimum wage of €8.50 ($11.51) an hour while the Greens party is casting doubts on negotiations with Merkel's Christian Democratic party.
"It's clear above all that there won't be a government with the SPD" without an obligatory minimum wage, SPD General-Secretary Andrea Nahles told Bild am Sonntag in an interview yesterday. "Our members won't accept anything else."
Merkel is trying to form a coalition after failing to secure enough votes to win the election last month.
RBS mortgage applications rise on Help to Buy
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'.
Konecranes Oyj declined as the Finnish maker of lifting equipment forecast that 2013 sales will be "slightly lower" than last year.
PSA Peugeot Citroen plunged following a report it plans to sell new shares
to China's Dongfeng Motor Corp. and the French government.
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 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.
Brent crude slips
Brent crude futures fell $0.797 to $110.400 per barrel on the ICE.
The euro rose 0.10% to $1.3558.