European Shares May See Tepid Start As US Debt Deal Talks Drag On

European stocks may drift lower at open on Wednesday after no new progress was made in talks between the White House and U.S. congressional leaders to raise the federal debt ceiling and avoid a potential default next month.

The Treasury Department has asked federal agencies whether they can make upcoming payments at a later date, the Washington Post reported, citing two people familiar with the matter.

Asian markets declined while the kiwi dollar fell 1 percent to hit a three-week low after the Reserve Bank of New Zealand surprised markets by flagging an end to rate hikes.

The dollar eased but held close to a two-month high, driven by a jump in short-term Treasury yields overnight.

Gold edged up slightly while oil prices rose over 1 percent to extend gains for a third consecutive session on signs of a tighter gasoline market outlook and a warning from the Saudi energy minister to speculators that raised the prospect of further OPEC+ cuts to support the market.

U.S. stocks fell sharply overnight, as growing worries over raising the nation’s debt limit overshadowed data showing fairly sharp growth in U.S. private sector activity and a jump in new home sales to a level not seen in over a year.

The Dow shed 0.7 percent, the S&P 500 dropped 1.1 percent and the tech-heavy Nasdaq Composite gave up 1.3 percent as another round of debt ceiling talks ended without an agreement.

European stocks fell on Tuesday amid signs of increased Sino-U.S. tensions and data showing a contraction in eurozone manufacturing activity.

The pan European STOXX 600 declined 0.6 percent. The German DAX dropped 0.4 percent, France’s CAC 40 fell 1.3 percent and the U.K.’s FTSE 100 slipped 0.1 percent.

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