NEW YORK - US stocks suffered hefty losses as the partial government shutdown dragged through a third day and worries climbed that the budget battle could escalate into a debt default. The Dow Jones Industrial Average dropped 136.66 points (0.90 per cent) to 14,996.48. The broad-based S&P 500 fell 15.21 (0.90 per cent) to 1,678.66, while the tech-rich Nasdaq Composite Index tumbled 40.68 (1.07 per cent) to 3,774.34. While the shutdown has fuelled jitters, analysts have generally expressed even deeper concerns about the October 17 deadline to raise the debt ceiling. International Monetary Fund chief Christine Lagarde warned that a US failure to raise the ceiling could wreak havoc on the global economy, while the Treasury Department said a default could have a "catastrophic" effect on the economy. The comments likely raised the anxiety of some investors, said Jack Ablin, chief investment officer of BMO Private Bank. LONDON - European stock markets mostly slid while the euro continued to rise against the greenback as the US government shutdown dragged on for a third day. At close in Europe, London's benchmark FTSE 100 index edged up 0.18 per cent to 6,449.04 points, as traders shopped for bargains after sharp falls the day before. But Frankfurt's DAX 30 shed 0.37 per cent to 8,597.91 points, while the CAC 40 in Paris fell 0.73 per cent to 4,127.98 points. Milan's FTSE Mib index slid 0.44 per cent in value, after rising on Wednesday when a bid to topple Italy's government fell apart. The euro hit an eight-month high at $1.3646 after former Italian prime minister Silvio Berlusconi abandoned his bid to topple Enrico Letta's government but later stood at $1.3638. HONG KONG - Hong Kong shares rose 1.00 per cent as upbeat Chinese data offset concerns about the US government shutdown. The benchmark Hang Seng Index on Thursday climbed 229.92 points to 23,214.40 on turnover of $HK53.26 billion ($A7.34 billion). China's official non-manufacturing Purchasing Managers' Index rose to a six-month high of 55.4 in September from 53.9 in August - adding to growing optimism that the world's second-largest economy is on the mend. The Shanghai market was closed for a public holiday. WELLINGTON - The NZX 50 Index rose 1.345 points, or 0.03 per cent to 4,770.215.