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LONDON (AP) â¿¿ The partial shutdown of the U.S. government failed to spook markets Tuesday, with stock indexes rising around the world.
The shutdown, which came into effect after Congress failed to approve a funding agreement, affects hundreds of thousands of federal workers and scores of agencies and operations.
But some critical parts of the government, from the military to air traffic controllers, will remain open, and analysts said significant damage to the economy was unlikely unless the shutdown lasted more than a few days.
"Markets have become more and more rational over the last 24 months, particularly when they've seen central banks ... all working very closely together to make sure their economies are supported," said Evan Lucas, market analyst at IG in Melbourne, Australia.
On Wall Street, the Dow was up 0.4 percent at 15,195.69 and the S&P 500 up 0.8 percent at 1,694.88. Helping sentiment, a private industry group said that U.S. manufacturing expanded last month at the fastest pace since April 2011.
In Europe, Germany's DAX advanced 1.1 percent to 8,689.14 while France's CAC-40 rose 1.3 percent to 4,196.60. Britain's FTSE 100 was flat at 6,460.01.
European stocks were supported by hopes that Italy's government might avoid collapse, sparing the eurozone's third-largest economy unwanted uncertainty as it tries to emerge from recession. The FTSE MIB in Milan jumped 3.1 percent after key members of Silvio Berlusconi's party said they would not support his move to bring down the government.
Meanwhile, figures showing unemployment across the eurozone stabilized in August offered a further sign of economic recovery.
In currency markets, the dollar took a hit â¿¿ it fell 0.2 percent against the Japanese yen, to 98.06 yen, while the euro rose almost 0.1 percent to $1.3531.
Earlier, in Asia, Japan's Nikkei 225 advanced 0.2 percent to close at 14,484.72 after the latest quarterly "tankan" survey showed a sharp improvement from the prior period. Large manufacturers were especially upbeat, with a reading of positive 12, up from 4 in the July survey.