US, European stocks muted on US government shutdown risks

A note of caution took hold of world markets on Tuesday, with the dollar and equities slipping and gold briefly hitting new record highs on concern a US government shutdown could delay key jobs data.

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The dollar was broadly weaker while US and European stocks either traded flat or posted slim gains, as Washington braced for a fast-approaching government shutdown as Republicans and Democrats appeared unlikely to reach an agreement that would extend funding past a midnight deadline.

A government closure would delay the issue of Friday's key employment numbers, putting the spotlight on the labour Department's JOLTS report on August job openings due later on Tuesday. It could also complicate the outlook for the Federal Reserve, which cut rates earlier this month.

"A full government shutdown on Oct. I appears increasingly likely," said Monica Guerra, head of US policy at Morgan Stanley Wealth Management. "Economic data releases could be delayed, such as Friday's nonfarm payrolls report, though mandatory government spending-such as Social Security, Medicare and Medicaid-will continue."

The S&P 500 and the Dow Jones Industrial Average were flat, while the Nasdaq Composite lost 0.2%.

"We are seeing a bit of concern about how the next few days play out, it seems like both sides are accepting that a shutdown is inevitable," said James Rossiter, head of global macro strategy at TD Securities in London.