Financial markets hit by U.S. government shutdown prospect

PanARMENIAN.Net - Financial markets have been hit by the prospect of a U.S. government shutdown and a crisis for Italy's government, BBC News reports.

Italy's stock market has fallen almost 2%, while shares in London, Frankfurt and Paris have dropped by about 1%.

The U.S. needs to agree a new spending bill before the financial year ends at midnight on Monday, Sept 30. But political divisions have resulted in a stalemate.

In Italy, Prime Minister Enrico Letta is to hold a confidence vote on Wednesday.

There are worries over the economic impact of a shutdown of the U.S. government. If the government does shut down on October 1, as many as a third of its 2.1 million employees are expected to stop work - with no guarantee of back pay once the deadlock is resolved.

National parks and Washington's Smithsonian museums would close, pension and veterans' benefit cheques would be delayed, and visa and passport applications would be stymied.

Programs deemed essential, such as air traffic control and food inspections, would continue.

Republicans are targeting President Barack Obama's healthcare law, popularly known as Obamacare.

Early on Sunday, the Republican-run House of Representatives passed an amended version of the Senate spending bill that removed funding for the healthcare law.

U.S. Senate Majority leader Harry Reid has vowed that his Democrat-led chamber will reject the Republican bill.

"Tomorrow, the Senate will do exactly what we said we would do and reject these measures," said Adam Jentleson, a spokesman for Senate Majority Leader Harry Reid. "At that point, Republicans will be faced with the same choice they have always faced: put the Senate's clean funding bill on the floor and let it pass with bipartisan votes, or force a Republican government shutdown."

Speaking for the president, White House spokesman Jay Carney said: "Any member of the Republican Party who votes for this bill is voting for a shutdown." The president, he said, would also veto the Republican bill.