European stocks hesitant as US debt deadline nears

European stocks wavered on Monday with investors on edge over the approaching US debt deadline that has for now failed to overly alarm markets. But a growing chorus of officials warned that a failure by US leaders to end the deadlock would have catastrophic consequences that could affect the entire global economy. Adding to the volatility was a disappointing batch of Chinese economic data, while on the corporate front shares in French car giant Peugeot plunged. In London at close, the benchmark FTSE 100 index gained 0.32 percent to 6,507.65 points. In Frankfurt, the DAX 30 was virtually unchanged, down just 0.01 percent to 8,723.81 points, while the CAC 40 in Paris edged up 0.07 percent to 4,222.96 points. \"It\'s hard to think about anything else but the budget negotiations in the United States this week! The October 17 date is nearing fast,\" economists from brokerage Aurel BGC in Paris said. But analyst Renaud Murail of Barclays Bourse said that despite the \"absurd\" situation in Washington, the market \"refuses to reverse in the belief that a default will be avoided.\" But US stocks did fall Monday after a weekend that saw no progress in the talks between the White House and Republicans. In midday trade, the Dow Jones Industrial Average was down 0.34 percent, the broader S&P 500 lost 0.27 percent, and the Nasdaq Composite gave up 0.22 percent. And on the foreign exchange market, the US budget impasse was also weighing on the dollar. The European single currency rose against the greenback to $1.3580 from $1.3543 in New York late on Friday. The dollar fell to 98.25 yen from 98.58 yen. Sterling rose to 84.89 pence to the euro and to $1.5995. With the US expected to run out of cash to pay its bills on Thursday, President Barack Obama has urged Republicans to agree to a debt ceiling hike. Failure to raise the borrowing limit would mean a default that EU Economic Affairs Commissioner Olli Rehn warned \"could have potentially dramatic consequences on the world economy and on the still nascent recovery in Europe.\" China and Japan -- which between them hold more than $2.4 trillion of US debt -- have also urged the United States to get its house in order and avert a default. The price of gold rose to $1,285.50 an ounce on the London Bullion Market, from $1,265.50 on Friday. EU finance ministers meet Meanwhile in Luxembourg, EU finance ministers are again this week trying to resolve deep differences over how to supervise, and if necessary close, failing banks before they can plunge the economy into crisis. Ireland was among the worst affected by the collapse of its banks but over the weekend announced it would exit its three-year, 85-billion-euro bailout programme on schedule in December. The Irish news, plus the fact that further aid for twice-bailed out Greece is not pressing, highlights how far the 17-nation eurozone has come since the dark days of 2009-10. In company news on Monday, shares in French auto group PSA Peugeot Citroen plunged on rumours that the struggling company will raise new capital and might tie up with a Chinese firm. The shares dove 9.1 percent to 11.25 euros. The group, a top name in French industry, is in trouble and struggling to carry through a deep restructuring with job cuts and a plant closure Shares in French defence software group Dassault Systemes fell by 10.5 percent to 86.24 euros on a profits warning. In Germany, energy group EON rose 1.16 percent to 13.9 euros and RWE gained 1.29 percent to 27.12 euros on expectations that the companies will benefit from an expected reform of the country\'s green energy policy. In Asia on Monday, China said that its inflation reached a seven-month high in September. China\'s consumer price index rose sharply to 3.1 percent last month, the government said Monday, from 2.6 percent in August.