US markets

US stocks fell Tuesday as the deadline for raising the government's debt ceiling stood just one week away, with no signs of a resolution to the bitter standoff in Washington. Republicans and Democrats remained deadlocked over the debt-ceiling issue on Tuesday amid deep disagreements over tax increases and spending cuts. The White House and the US Treasury say Congress must raise the government's $14.29 trillion debt limit by August 2 to prevent a default, which would have devastating repercussions on the global economy. Despite the recent weakness, stocks remain within striking distance of multi-year highs. Many investors still believe the political posturing will eventually give way to some type of resolution.

European markets

European stock markets fell modestly while the euro strengthened broadly, as investors digested a range of disappointing earnings from BP, UBS and STMicroelectronics, as well as the debt stalemate in Washington. The Stoxx Europe 600 index fell 0.4% to 270.08, as a lack of progress over U.S. debt talks and the lingering cloud of Europe's sovereign concerns kept buyers on the sidelines.

While disappointing Spanish and Italian bond auctions kept Europe's sovereign-debt woes in view, the focus remained on the U.S. after President Obama and House Speaker John Boehner in back to back speeches late Monday showed a resolution over raising the country's $14.3 billion debt ceiling by the Aug. 2 deadline may be difficult to achieve. In Zurich, UBS shed 2.9% after the Swiss bank said second-quarter profit was cut nearly in half by the strong Swiss franc, falling client volume and lower trading income. UBS said it will slash costs and cut jobs to offset the weakness. Other bank stocks were mostly lower, with Greek lenders under particular pressure. Piraeus Bank sank 6% as the ASE Composite fell 2.8% to 1233.22. In London, the U.K.'s FTSE 100 index fell 0.1% to 5929.73.

BG Group rose 4.3% after its second-quarter doubled to beat expectations. And GlaxoSmithKline ended in the black as investors took comfort in the company's progressing pipeline. But oil giant BP slid 2.6% after its second-quarter results missed estimates on lower production volume. Miner Anglo American rose 1.2% after De Beers, in which it holds a 45% stake, reported a sharply higher profit. In Paris, the CAC-40 index fell 0.7% to 3787.88. STMicroelectronics slumped nearly 12% after the chip maker issued a weak sales outlook late Monday. That hit Infineon Technologies, which fell 0.8% in Frankfurt, and ARM Holdings, which fell 3.3% in London though it reported a 21% rise in second-quarter profit. Electricite de France rose 1.2%.

Credit Suisse Group started coverage with an outperform rating, saying a push by the French state for dividend growth and better capital management means the interests of private shareholders and the state are no longer in opposition. In Frankfurt, the DAX rose 0.1% to 7349.45. SAP soared 3.6%. Shortly before the market closed, the business software maker said it expects to reach the high end of its forecast for full-year revenue and operating profit, citing strong performance in the second quarter. Metro rose 2.1% a day after the retailer confirmed its outlook for the year.

Asian markets

Most Asian markets ended higher Tuesday, but regional sentiment remained cautious after back to back speeches from U.S. President Barack Obama and House Speaker John Boehner indicated little progress toward a deal on raising the debt ceiling. Hong Kong's Hang Seng Index rose 1.3% to 22572.08, South Korea's Kospi gained 0.9% to 2168.70, Australia's S&P/ASX 200 advanced 1% to 4573.3 and Taiwan's Taiex added 1.3% to 8794.24. Japan's Nikkei Stock Average finished the day up 0.5% at 10097.72. China's Shanghai Composite finished 0.5% higher at 2703.03 after choppy trade, retracing some of Monday's 3% tumble. India's Sensex, which stood out Monday by being one of the few markets to advance, Tuesday defied the heard by falling, losing 1.9% to 18518.22. Financial stocks were broadly higher across the region, recouping some of their losses from the previous session.

Mitsubishi UFJ Financial Group rose 1.8% in Tokyo, Macquarie Group climbed 1.5% in Sydney and Shinhan Financial Group advanced 2.5% in Seoul. The sector advanced despite some analysts' noting the possibility credit-rating firms might downgrade U.S. sovereign debt. Some Japanese exporters managed modest gains despite the U.S. dollar's fall against the yen, with Toyota Motor up 0.2% and Honda Motor up 0.5%. On the downside, Tokyo Electric Power declined 4.3% after a Nikkei report predicted a rise in fuel costs for power utilities this year. Chubu Electric Power declined 1.1%.

Indian shares tumbled after the country's central bank raised interest rates by 0.5 percentage point-twice what the market expected-to 8%. That sent rate-sensitive shares sharply lower. State Bank of India fell 2.7%, Tata Motors skidded 3.1% and Indiabulls Real Estate lost 4.8%. Chinese railway-sector stocks remained weak after the deadly collision two high-speed-rail trains Saturday, while the country's airline plays outperformed on growing expectations more passengers will switch to plane travel. China Railway Construction Group's Hong Kong shares dropped 5%, while its Shanghai ones shed 0.9%. Among airline stocks, China Eastern Airlines' Shanghai shares gained 10%, while its Hong Kong shares added 3%.

Base metals

Copper closed at its highest price in a week on the London Metal Exchange Tuesday, as investors turned a blind eye to the current debt ceiling stalemate on Capitol Hill and focused instead on the floundering dollar and bullish supply-side developments in top-copper producer Chile. At the close of open outcry trading, LME three-month copper was 1.7% higher at $9,819 a metric ton, while the rest of the complex also tracked solid gains.

Zinc saw the steepest uptick, ending the session up 2.6% on the day at $2,531/ton, its highest close since April 11. Oil futures briefly touched $100 a barrel Tuesday before quickly backing off, as traders remain hesitant to lay big positions without a deal on the U.S. debt ceiling.

Light, sweet crude for September delivery settled up 39 cents, or 0.4%, to $99.59 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange settled up 34 cents, or 0.3% to $118.28 a barrel. Nymex crude futures briefly shot as high as $100.62 a barrel, their highest since June 15, before quickly pulling back to settle slightly higher on the day. The intraday rally was spurred by a weaker dollar, which fell as lawmakers remained deadlocked over a deal to raise the U.S. debt limit. Oil traders are wary of making major trades without a deal.

Any failure to reach an agreement before Aug. 2, when the Treasury Department says the government will run out of cash, is likely to trigger a sell-off of risky assets like commodities, analysts have said. News of an agreement, however, could prompt a rally back above $100 a barrel. Gold set a second consecutive record Tuesday as concerns about the U.S. debt ceiling crisis dominated market attention, but the mild gains reveal widespread hope that a resolution will be reached ahead of the Aug. 2 deadline. The most actively traded contract, for August delivery, gained 0.3%, or $4.60, to settle at a record $1,616.80 a troy ounce on the Comex division of the New York Mercantile Exchange.

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