LONDON, Oct 9 (Reuters) - European shares slipped to aone-month low on Wednesday as a lack of progress in resolving aU.S. budget impasse prompted some investors to trim backpositions in sectors such as construction.
The FTSEurofirst 300 index fell for a thirdstraight day and was down 0.3 percent at 1,227.91 points by 0704GMT, just off an intraday trough of 1,227.38, its lowest levelsince early September. The construction sector,meanwhile, was down 1.1 percent.
However, losses were limited on news that U.S. PresidentBarack Obama will announce later in the day the nomination ofdovish Federal Reserve Vice Chair Janet Yellen to head thecentral bank.
If confirmed by the Senate, Yellen will replace Ben Bernankewhose second term ends in January. She has been a forcefuladvocate for aggressive action to stimulate the economy throughlow rates and bond purchases.
Yellen's nomination is certainly a good thing for themarkets. She is one of the main supporters of a loose monetarypolicy and the markets will be assured that changes in thepolicy will be minimal, as long as underemployment persists,"Koen De Leus, senior economist at KBC, in Brussels, said.
"However, markets are getting more nervous day by day. Thelonger the uncertainty of the debt ceiling and the governmentshutdown lasts, the more damage is inflicted to the economy."
Investors' focus remained on the U.S. budget talks thatdragged on for a second week. Obama said on Tuesday he would bewilling to negotiate budget issues with Republicans only if theyagree to reopen the government and raise the debt limit.
- Politics & Government
- Janet Yellen
- President Barack Obama