Global

 World Bank’s Kim Says U.S. Fiscal Deadlock May Hurt Poor Nations. The U.S. congressional partisan deadlock that partially shut down the government for the first time in 17 years threatens to undermine global confidence and hurt the poorest nations, World Bank President Jim Yong Kim said. “The ongoing fiscal uncertainty in the United States greatly concerns us,” Kim said in prepared remarks to students at George Washington University. “This uncertainty, combined with other sources of volatility in the global economy, could do great damage to emerging markets and developing countries in Africa, Asia and Latin America that have lifted millions of people out of poverty in recent years,” he said today. (Bloomberg)

Asia Pacific

 In Historic Step, Japan Pm Hikes Tax; Will Cushion Blow To Economy. Japan's Prime Minister Shinzo Abe took a step on Tuesday that none of his predecessors had managed in more than 15 years - making a dent in the government's runaway debt. Abe, riding a wave of popularity with economic policies that have begun to stir the world's third-biggest economy out of years of lethargy, said the government will raise the national sales tax to 8 % in April from 5 %. But at the same time he softened the blow to the nascent recovery. As the tax increase is set to raise an additional 8 trillion yen ($81.42 billion) a year, Abe also announced an economic stimulus package worth 5 trillion yen. (Reuters)

 S’pore Home Prices Fall After Cooling Steps. Home prices softened in the third quarter, with analysts predicting further declines in prices of government-built Housing and Development Board (HDB) apartments as recent credit restrictions began to hurt demand. According to flash estimates yesterday, resale prices of HDB apartments fell for the first time in over four years, with the index dipping 0.7 % in the July-September quarter from the preceding three months. HDB apartments house around 80 % of Singapore’s 5.4 million people. (Reuters)

 Indonesia Posts Surplus In August. Indonesia recorded a surprise trade surplus for August, its first in five months, offering some relief to the ailing rupiah, but the country’s current account deficit will likely keep weighing on Asia’s weakest currency this year. Southeast Asia’s largest economy had a trade surplus of US$130 million in August, compared with a record US$2.3 billion deficit the previous month. “The trade surplus will give comfort to the current account deficit problem,” said Aldian Taloputra, senior economist with Mandiri Sekuritas. (Reuters)

 Australia Holds Rates At 2.5% As Mining Investment Cools. Australia’s central bank held interest rates at their record 2.50% low yesterday, adopting a wait-and-see approach as the dollar adjusts and earlier cuts boost confidence. The Reserve Bank of Australia kept rates on pause for a second consecutive month, as expected, after a series of cuts designed to stimulate the economy as its decade-long Asia mining splurge cools. (AFP)

USA

 US Begins Government Shutdown As Budget Deadline Passes. The US government has begun a partial shutdown after the two houses of Congress failed to agree a new budget. The Republican-led House of Representatives insisted on delaying President Barack Obama's healthcare reform - dubbed Obamacare - as a condition for passing a bill. More than 700,000 federal employees face unpaid

leave with no guarantee of back pay once the deadlock is over. It is the first shutdown in 17 years and the dollar fell early on Tuesday. (BBC)

 U.S. ISM Manufacturing Index Rose In September. Manufacturing unexpectedly picked up in September, showing American factories were a source of strength for the world’s largest economy before the federal government shut down. The Institute for Supply Management’s factory index rose to 56.2, the strongest since April 2011, from 55.7 a month earlier, the Tempe, Arizonabased group’s report showed today. Readings greater than 50 indicate growth. (Bloomberg)

Europe

 German Unemployment In Surprise Increase. The number of people out of work in Germany unexpectedly rose by 25,000 in September to just under three million. Analysts had pencilled in a fall of 5,000, following a rise of 9,000 in August. The Federal Labour Office said there had been a cut in the number of government job schemes. Meanwhile, new figures showed unemployment across the eurozone dropping slightly in August to a rate of 12%. (BBC)

 Euro Zone Manufacturing Output Falls In September. Manufacturing output in the euro zone fell in September, according to the latest data from Markit. The manufacturing purchasing manager's index (PMI) fell to 51.1 in September, down from 51.4 in August. The figure was in line with an earlier flash estimate and is just above the 50-point mark separating expansion from contraction in the sector. A breakdown of the figures revealed that while output increased in France, up to 49.8 (a 19-month high) from 49.7 a month before, in Germany output declined in September, falling to 51.1 from 51.8. Spain and Italy, meanwhile, showed a stabilization of output rather than a recovery. (CNBC)

 UK Manufacturing Continues To Grow In September. UK manufacturing grew for the sixth consecutive month in September, a survey has indicated, and recorded its strongest quarterly performance for two and a half years. The Markit/CIPS Purchasing Managers' Index slipped to 56.7 last month from August's 57.1, but was still above the 50-mark indicating expansion. Growth in output and new orders remained close to August's 19-year high. (BBC)

Currencies

 Dollar Pares Loss But Remains At Mid-February Low. The U.S. dollar slipped against other major currencies on Tuesday as a partial shutdown of the U.S. government went into effect. The ICE dollar index, a gauge of the greenback against six rivals, edged down to 80.116 from 80.237 late Monday. That marked its lowest level since Feb. 13’s close of 80.09, according to FactSet. The dollar index has hovered near mid-February lows since mid-September. The British pound gained to $1.6205 from $1.6185 late Monday, while the euro inched higher to $1.3531 from $1.3524. Against the Japanese yen, the dollar fell to ¥97.82 from ¥98.26 late Monday. The Aussie edged up to 93.96 U.S. cents from 93.26 U.S. cents late Monday. (Market Watch)

Commodities

 Oil Prices Lower As U.S. Government Remains Shut Down. Oil prices ended lower on Tuesday and extended losses after the market closed as U.S. politicians continued battling over how to overcome a budget impasse that shut down Federal agencies and programs. Brent crude settled 43 cents lower at $107.94 after trading as low as $106.81. It was trading 79 cents lower at $107.58 at 4:54 p.m. EDT (1654 GMT). U.S. crude oil ended the day 29 cents lower at $102.04 a barrel, after dropping to a low of $101.06. It was last trading at $101.61. (Reuters)

 Gold Tumbles 3 Pct, Rattled By Fund Trade, Govt Shutdown. Gold sank nearly 3 % on Tuesday to its lowest level in almost two months as an unusually large trade in the New York futures market rattled investors already edgy over a partial shutdown of the U.S. government. Spot gold fell 2.8 % to $1,289.51 by 3:12 p.m. EDT (1912 GMT), having earlier hit $1,282.59, its lowest price since Aug. 7. Among other precious metals, silver fell 2.3 % to $21.14. Platinum was down 1.4 % to $1,379.40 an ounce, while palladium fell 0.7% to $716.47 an ounce. (Reuters)