Caution dominates markets amid U.S. budget gridlock LONDON The mood in financial markets remained cautious Tuesday as U.S. politicians remained at loggerheads over how to solve the budget crisis that has raised fears of a possible U.S. debt default. The prevailing view is that Congress and the White House will solve their standoff over the budget that has seen the partial shutdown of the government drag into an eighth day, as well as the potentially more important issue of raising the debt ceiling. Asian stocks managed to eke out gains earlier, while the dollar clambered off recent lows against the yen. In particular, investors want to see progress on the debt ceiling, which the Treasury Department has said has to be raised by Oct. 17. If it's not, the world's largest economy faces the possibility of defaulting on its debts, a move that would send shockwaves around global markets. "Although most investors believe that a deal will be reached by the deadline, investors are still concerned with the impact their portfolios are likely to take in the meantime," said Shavaz Dhalla, a financial trader at Spreadex. In Europe, the FTSE 100 index of leading British shares was down 0.8 percent at 6,384 while Germany's DAX fell 0.3 percent to 8,564. The CAC-40 in France was 0.6 percent lower at 4,143. U.S. stock markets were poised for a flat opening following big falls on Monday, when both the Dow Jones industrial average and the broader S&P 500 index fell 0.9 percent. The dollar has also steadied somewhat Tuesday following a run of weak trading sessions. The euro was flat at $1.3575 while the dollar rose 0.4 percent to 97.07 yen. Oil prices also recovered their poise, with the benchmark New York rate up 38 cents at $103.41 a barrel. The focus will remain on the gridlock in the U.S. especially as much of the U.S. economic data has been postponed amid the government's partial shutdown. The Federal Reserve has said any reduction in its monetary stimulus will be data-dependent. "Without the data, the Fed can't taper," said Gary Jenkins, managing director of Swordfish Research. Earlier in Asia, Japan's Nikkei index closed up 0.3 percent to 13,894.61, while Hong Kong's Hang Seng index rose 0.9 percent to 23,178.85. China's Shanghai composite, reopening for the first time since closing for public holidays on Oct. 1, climbed 1.1 percent to 2,198.20.