LONDON -- Financial markets around the world were largely steadyin thin holiday trading Monday, although concerns remain over theprogress of U.S. budget discussions and the future of the economicreform program in Italy.
U.S. stock index futures were pointing to a lower open on Wall Street, where trading will end at 1 p.m. ET.
Forweeks, discussions between the White House and Congress over a budgetdeal have been the main driver in markets. If a deal isn't agreed to bythe start of 2013, automatic spending cuts and tax increases worthhundreds of billions of dollars will be imposed - which many economistssay could push the U.S. economy back into recession.
Theprevailing view has been that a deal would be agreed to in time to avoidthe "fiscal cliff" but as the deadline nears there are growing doubts.
"Thereality is given that the U.S. government is now closed for the holidaybreak the likelihood of anything other than soothing procrastination ishighly unlikely much before the Jan. 1 deadline," said Michael Hewson,senior market analyst at CMC Markets.
Doubts over the progress of discussions prompted a fairly sizeable selloff Friday.
"Evenif this stopgap measure is implemented it may not be enough to preventunwanted volatility in equity markets going into 2013 as investors tryand assess the adverse impact on the U.S. economy," said Neil MacKinnon,global macro strategist at VTB Capital.
Most markets acrossEurope are only open half a day and will re-open again Thursday. Germanmarkets are closed for Christmas Eve.
Britain's FTSE 100 index of leading British shares was up 0.24% while the CAC-40 in France was down the same 0.24%.
Aswell as monitoring developments in the U.S. investors will be keeping aclose watch on what's going on in Italy ahead of a general election inFebruary.
Over the weekend, outgoing Prime Minister Mario Monti indicated he would be willing to return if pro-reform parties back him.
Overthe past year or so, Monti and his technocratic government have wonplaudits in the markets for their economic reforms and efforts to get agrip on the country's borrowing. Italy has the second-highest debtburden among the 17 EU countries that use the euro. Only Greece's ishigher.
Earlier in Asia, Hong Kong's Hang Seng, closed up 0.1% at22,541.18 while South Korea's Kospi rose less than 0.1% to 1,981.82.Japanese markets were closed for the Emperor's birthday holiday.
Otherfinancial markets were subdued too. In the currency markets, the eurowas up 0.2% at $1.3227 while the benchmark New York oil price was down22 cents at $88.44 a barrel.