Stock markets hold up, shrugging off US shutdown fears

Global stock markets mostly rose on Friday as investors shrugged off a looming shutdown of the US government. "Investors don't appear particularly bothered about the prospect of a government shutdown, with the assumption being that one will eventually be signed and any economic impact will be minor or non-existent," said Craig Erlam, senior market analyst at trading firm OANDA. The Dow was down marginally in late morning trading, but the S&P 500 and Nasdaq Composite indices were both in the green as lawmakers bickered over a federal funding deal, which must be passed by midnight on Friday US time. The House of Representatives on Thursday approved a short-term spending bill to keep the government open after funding runs out at midnight (0500 GMT Saturday), but the measure appeared to be dead in the Republican-controlled Senate. Leaders of both political parties were pointing fingers at one another. Analysts say a government shutdown could damage the economy, particularly sectors that do extensive business with the government and especially if it is prolonged. An extended shutdown in 2013 hit the US economy and led to a downgrade of its sovereign debt rating. But for the moment, analysts are not too concerned. Fitch Ratings said a shutdown in itself would not impact the US government's top rating, but could further destabilise budget policymaking and lead to brinkmanship over raising the debt level before the US Treasury runs out of extraordinary measures to fund the government in March or April. "Investors don’t really fear a shutdown as they don’t foresee it happening, but it has cast enough doubt over the stock market to curtail buying momentum," said market analyst David Madden at CMC Markets UK. "American stocks have enjoyed such a positive run lately, these concerns are the perfect excuse for profit taking." Meanwhile in Europe, Frankfurt pushed 1.2 percent higher, while London managed to break a four-day losing streak despite poor UK retail sales data. IG analyst Joshua Mahony said the "disappointing set of retail sales figures should be put in the context of shifting shopping habits". British retail sales slid 1.5 percent in December from the previous month after consumers had brought forward their Christmas shopping, official data showed. Retail sales had already jumped by 1.0 percent in November, boosted by Black Friday price reductions, the Office for National Statistics said. Asian markets mostly rose Friday after another positive week across trading floors. - Oil beats retreat - Oil prices retreated on profit-taking despite official data on Thursday showing US stockpiles fell more than expected. That came a day after an industry group's report pointing to a seventh consecutive drop. With Brent around $70 a barrel and three-year highs, analysts said crude could struggle to move much higher. In a separate development on Friday, the International Energy Agency said the United States is set to overtake Saudi Arabia as the world's number two oil producer after Russia this year, as shale companies ramp up drilling. - Key figures around 1630 GMT - London - FTSE 100: UP 0.4 percent at 7,730.79 points (close) Frankfurt - DAX 30: UP 1.2 percent at 13,434.45 (close) Paris - CAC 40: UP 0.6 percent at 5,526.51 (close) EURO STOXX 50: UP 0.8 percent at 3,648.91 New York - DOW: DOWN 0.1 percent at 25,990.06 Tokyo - Nikkei 225: UP 0.2 percent at 23,808.06 (close) Hong Kong - Hang Seng: UP 0.4 percent at 32,254.89 (close) Shanghai - Composite: UP 0.4 percent at 3,487.86 (close) Euro/dollar: DOWN at 1.2229 from $1.2243 at 2200 GMT Pound/dollar: DOWN at $1.3848 from $1.3898 Dollar/yen: DOWN at 110.64 yen from 111.02 yen Oil - Brent North Sea: DOWN 63 cents at $68.68 per barrel Oil - West Texas Intermediate: DOWN 61 cents at $63.34 burs-rl/jh