LONDON — Financial markets were decidedly perkier Thursday as President Barack Obama prepared to meet with top Republican leaders in an effort to bring an end to the budget impasse that has gripped Washington over the past few weeks.
With the partial shutdown of the U.S. government entering a tenth day and a deadline to raise the debt ceiling just a week away, investors across financial markets are focused on developments in the U.S. capital. The biggest worry has been the debt ceiling: If it's not raised, the U.S. could default on its debts.
One option reportedly being considered to break the standoff has been a short-term increase in the debt ceiling. Obama is due to meet 18 Republicans later to discuss how to resolve the crisis.
"There has been some talk of a short term debt cap bill with neither side ruling this option out in order to buy more time to come to a more permanent agreement," said Michael Hewson, senior market analyst at CMC Markets.
Though a short-term deal is not the ideal solution for investors, it at least would get rid of some of the uncertainty that has hobbled markets over the past few sessions.
In Europe, the FTSE 100 index of leading British shares was up 1.1 percent at 6,406 while Germany's DAX rose 1.4 percent to 8,634. The CAC-40 in France was 1.5 percent higher at 4,191.
Wall Street was poised for a solid opening too, with Dow futures up 0.8 percent and the broader S&P 500 futures 0.9 percent higher at 1,664.
The dollar has also settled somewhat in recent days following losses that sent it near a year-low against the euro. Europe's single currency was up 0.1 percent at $1.3530 while the dollar rose 0.3 percent to 97.90 yen.
With the partial shutdown of the U.S. government meaning that many economic releases have been postponed, investors have little to trade on later apart from the machinations in Washington.
The minutes to the last Fed policy meeting, published Wednesday, indicated that the monetary stimulus will not be reduced until there is clearer evidence of a further improvement in the U.S. economic outlook. The increased likelihood that so-called "tapering" of the stimulus will be delayed until next year has provided stocks a further boost. One of the reasons why stocks have risen over the past few years has been the Fed's stimulus.
Earlier in Asia, Japan's Nikkei rose 1.1 percent to close at 14,194.71 but South Korea's Kospi fell nearly 0.1 percent to 2,001.41. Australia's S&P/ASX 200 shed 0.1 percent to 5,147.10 after the release of worse-than-expected unemployment data. Benchmarks in Singapore, Indonesia and Thailand rose while mainland China fell.
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