AP Business Writer
LONDON (AP) -- 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. Ahead of his meeting, Treasury Secretary Jacob Lew said the president was ready to negotiate over the future direction of fiscal policy but not over whether the U.S. pays its bills.
"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 1.4 percent at 6,427 while Germany's DAX rose 1.9 percent to 8,675. The CAC-40 in France was 2 percent higher at 4,209.
In the U.S., the Dow Jones industrial average was up 1.2 percent at 14,986 while the broader S&P 500 index rose 1.3 percent to 1,678.
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 flat at $1.3512 while the dollar rose 0.6 percent to 98.11 yen.
Not even a surprisingly big increase in jobless claims could derail the positive sentiment. The Labor Department said claims soared by 66,000 to 374,000 last week, but analysts noted flaws in the data, especially with regard to California.
Stocks have also been shored over the past day or so by the nomination of Janet Yellen to succeed Ben Bernanke as chairman of the U.S. Federal Reserve as well as the minutes to the last Fed policy meeting.
The minutes indicated that the Fed's 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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