European stock markets were mixed on Tuesday as investors reacted to a rare US government shutdown and unease across the eurozone.
The euro hit the highest point against the dollar in 8 and-a-half months before pulling back slightly.
London's benchmark FTSE 100 index fell 0.21 percent to 6,448.95 points approaching midday in the British capital.
The CAC 40 in Paris climbed 0.73 percent to 4,173.85 points and Frankfurt's DAX 30 grew 0.59 percent to 8,645.34.
"It would appear that the markets either aren't overly bothered by Congresses inability to avoid a government shutdown, or aren't particularly surprised," said analysts from the Alpari trading group.
Asian stock markets diverged Tuesday after political gridlock in Washington triggered the first US government shutdown in 17 years, while upbeat regional economic data provided some cheer, traders said.
The dollar edged back down against the yen, with investors saying the Capitol Hill stand-off made it less likely the Federal Reserve would start winding down its stimulus programme soon.
The US government shut down at midnight Washington time (0400 GMT) as Republicans and Democrats refused to give ground to reach a budget deal.
World markets had expected the deadline to pass with no breakthrough and shares had fallen in previous sessions.
The US closure will see about 800,000 federal staff told to stay at home, leading to the closure of numerous agencies in the first shutdown since 1996 that President Barack Obama warned will hit a budding recovery in the world's biggest economy.
More eurozone strains
Traders were reacting also to news of an unexpected jump to unemployment in Germany, Europe's top economy.
German unemployment registered a surprising rise in September, due to a scaling back of job creation schemes, but the labour market overall remains in good shape, data showed on Tuesday.
The number of people registered as unemployed in the eurozone's top economy rose by 25,000 to 2.975 million in seasonally adjusted terms last month, the Federal Labour Office said in a statement.
Analysts had been expecting a drop of around 5,000.
Overall, eurozone unemployment dropped for the first time in more than two years to 12.0 percent in July against 12.1 percent the previous month, and then remained stable in August, data showed.
Ahead of the unemployment release, the euro hit $1.3588 -- the highest point since early 2013. It later stood at $1.3545, which compared with $1.3524 late on Monday.
The dollar fell to 97.78 yen from 98.21 on Monday.
"The euro has been a beneficiary of dollar weakness to some extent but has been held back by ongoing political instability in Italy," said Currencies Direct dealer Phil McHugh.
Once loyal supporters of Italy's Silvio Berlusconi spoke out against him Tuesday as Prime Minister Enrico Letta worked to shore up support on the eve of a crucial confidence vote in parliament
Investors appeared increasingly confident that Letta's government would not fall, with Milan's FTSE Mib stocks index rebounding 0.93 percent on Tuesday after closing 1.2 percent lower on Monday.
Italy's borrowing costs on 10-year-government bonds however rose to 4.580 percent from 4.431 percent on Monday after analysts warned Italy's fiscal targets for the year could be at risk.
The 77-year-old Berlusconi on Saturday announced he was withdrawing his party's five ministers from the fragile coalition presided by Letta, who said it was a "crazy and irresponsible" act.
Unilever warning
On the corporate front, Anglo-Dutch food and cosmetics giant Unilever, seen as a bellwether for global consumer spending, warned on Tuesday of slowdown in sales growth brought on by weakened demand in emerging markets.
Its share price slumped 3.54 percent to 2,354 pence in reaction.
Elsewhere, the price of gold rose to $1,332.25 an ounce from $1,326.50 Monday on the London Bullion Market.
AFP
Tue Oct 01 2013
UK makes use of AI tools to create child abuse material a crime
Britain becomes the first country in the world to introduce the new AI sexual abuse offences.
Taiwan's Barbie Hsu, hugely popular in East Asia, dies of flu
Taiwanese actor Barbie Hsu has died of influenza-induced pneumonia at 48, according to her sister.
Sultan Ibrahim: Parliament not a place for hostility, insults or slander
Honourable Members should be as a bastion of national unity, not agents of division among the people, says His Majesty Sultan Ibrahim.
[COLUMNIST] Egypt, Sinai & Israel's loss of strategic initiative
Israel still hasn't regained any meaningful strategic initiative post-1982 withdrawal from the Sinai.
DC official: 55 victims identified in Washington helicopter plane collision
The Army Corps of Engineers is surveying and preparing to begin significant salvage operations to remove the wreckage from the river.
Beyonce wins top Grammys prize for first time with 'Cowboy Carter'
Beyonc triumphs over Taylor Swift, Billie Eilish, and others to win trophy that had eluded her, despite holding the most lifetime Grammys.
Chappell Roan takes home best new artist Grammy
Chappell Roan, was nominated in six Grammy categories this year, including song of the year for "Good Luck, Babe!"
Musk to give update on reform effort amid questions about his power
Elon Musk's access to the Treasury system raises concerns about how he will use the information.
King ograces opening of 15th Parliament's fourth session
This marks Sultan Ibrahim's second Parliament opening ceremony since being sworn in as the 17th Yang di-Pertuan Agong on Jan 31, 2024.
Trump says Americans could feel 'pain' in trade war with Mexico, Canada, China
Donald Trump also says tariffs would "definitely happen" with the European Union, but did not say when.
Israeli military blows up buildings in West Bank refugee camp
Israel's military dismantles 23 structures in the northern West Bank, citing explosives labs, weapons, and observation posts.
Beyonce, Sabrina Carpenter win Grammys as musicians honor Los Angeles
Beyonce's "Cowboy Carter" is also in the running for the night's top Grammy prize of album of the year.
Ringgit opens slightly lower against US dollar
Dr Mohd Afzanizam Abdul Rashid says DXY has gained momentum after Donald Trump issued an executive order to raise import tariffs.
Soccer - Man United's Rashford joins Aston Villa on loan
Manchester United forward Marcus Rashford, who has been capped 60 times by England, will join Aston Villa until the end of the season.
ASEAN 2025: PM meets Thaksin to discuss situation in Myanmar, cryptocurrencies
According to Datuk Seri Anwar Ibrahim, the discussion continued with former Singapore Foreign Minister George Yeo.
Canada to take legal action against US for tariffs
Trump applied a 25% import tariff on all Canadian goods, except energy products such as oil and gas and electricity.
Beyonce and Miley Cyrus duet claims country prize as Grammys kick off
The pair won the trophy for "II Most Wanted," a song on Beyonce's album "Cowboy Carter".
Beyonce competes for the big prize - again - at Sunday's Grammys
Beyonce leads all Grammy nominees this year with 11 nods.
For millions of children in food crises, a heightened risk of lifelong damage
Even after relief reaches these children, the hunger they have endured could cast a shadow over their health for years to come.
Can Trump pay US government employees to quit their jobs?
The financial incentives is likely to run into a number of complications, including funding issues, and it could also face legal challenges.