Global markets lower on US debt gridlock

US stocks dipped as lawmakers remained in a standoff over raising the debt ceiling to avoid default, but investors were convinced a compromise will be reached before next week's critical deadline.

On Wall Street, the Dow Jones industrial average was down 85.33 points, or 0.67 percent, at 12,595.83. The Standard & Poor's 500 Index was down 6.94 points, or 0.52 percent, at 1,338.08. The Nasdaq Composite Index was down 15.34 points, or 0.54 percent, at 2,843.49.

European shares fell today from their highest in more than a week as investors shied away from equities on the possibility of the first-ever US debt default after talks between Democrats and Republicans collapsed.

The pan-European FTSEurofirst 300 closed down 0.4 percent at 1,104.74, after hitting its highest in more than a week on Friday, as prospects of a budget breakthrough faded. US lawmakers still plan to outline proposals today, but both sides appear further apart than ever.

The Nikkei average snapped a three-day run of gains after US debt ceiling worries nudged the yen higher, but a key technical support held on hopes that a last minute deal will be reached and upcoming corporate earnings will be strong. The benchmark Nikkei average closed down 0.8 percent at 10,050.01, holding above support at its 5-day moving average at 10,018. The broader Topix also shed 0.8 percent, to 861.91.