The U.S. dollar fell on Tuesday as U.S. lawmakers remained deadlocked over raising the nation's debt ceiling to avoid a devastating default, while U.S. and European shares also declined, Reuters reported. Unless lawmakers reach a deal to raise the $14.3 trillion ceiling by Aug. 2, the United States would face the prospect of a default on some of its $9.6 trillion government bonds outstanding. In a televised address, President Barack Obama warned that this would be a "reckless and irresponsible outcome," but he gave no indication that a compromise was imminent. Weakness in stocks earlier weighed on crude oil prices, while gold hovered near a record high hit in the previous session as investors looked to the precious metal for safety. The U.S. currency hit a record low against the Swiss franc of 0.7997 on trading platform EBS and fell to a four-month low near 77.883 yen, approaching a record low of 76.25 set in March. Against a basket of currencies, the dollar fell 0.6 percent. The euro rose 0.8 percent to $1.4498. U.S. stocks were mostly lower, pressured by worries about U.S. debt talks and weakness in 3M Co and United Parcel Service Inc, which both reported earnings. The Dow Jones industrial average was down 60.85 points, or 0.48 percent, at 12,531.95. The Standard & Poor's 500 Index was down 2.15 points, or 0.16 percent, at 1,335.28. The Nasdaq Composite Index was up 2.10 points, or 0.07 percent, at 2,844.90. European stocks fell 0.3 percent after weaker-than-expected results from BP and UBS. World stocks as measured by MSCI world equity index rose 0.3 percent, while emerging stocks rose 0.7 percent. Investors so far appear to have done little to prepare for a default or a cut in the U.S. triple-A credit rating. Many are still clinging to the hope that lawmakers will eventually reach a deal. It is also nearly impossible to insure against what is considered a low-probability event, especially given the lack of alternatives and the depth of the market, analysts said. The cost of insuring the United States against default stood around 57 basis points, nearly half the March 2009 peak. The credit default swap curve is nearly flat with one-year CDS at 56.5 bps. This in itself reflects investor jitters, but it is not the kind of pricing normally seen when investors expect an imminent default. -- SPA
