WASHINGTON - With a potential debt default looming, Senate leaders appear close to a deal to avoid a self-inflicted political calamity that would shred US credibility and rock the global economy.
Senate Republicans are scheduled to convene Tuesday at noon to review a plan being hammered out between Senate Majority Leader Harry Reid and Republican Minority Leader Mitch McConnell that would raise the US government's borrowing limit and end a partial federal government shutdown.
"I'm very optimistic we will reach an agreement that's reasonable in nature this week to reopen the government, pay the nation's bills and begin long-term negotiations to put our country on sound fiscal footing," Reid said at the conclusion of Monday's Senate session.
"We are not there yet, but tremendous progress" has been made, he said.
If Congress does not raise the US$16.7 trillion debt ceiling by Thursday, the US government will begin to run out of money and could start defaulting on its obligations for the first time in history.
Reid's statement eased tension on the markets.
The Dow Jones Industrial Average closed Monday 0.42 per cent higher at 15,301.26, while the broader S&P 500 rose 0.41 per cent to 1,710.14.
Asian markets broadly rose Tuesday, with Tokyo, Sydney, Hong Kong and Seoul all closing up. Jakarta, Kuala Lumpur, Manila and Singapore were closed for public holidays.