Hillary Clinton 'confident' over US debt deal
US Secretary of State Hillary Clinton has said she is "confident" the president and Congress will reach a deal to raise the US debt ceiling.
Global markets were down on Monday amid concerns about a lack of a deal as the 2 August deadline looms.
President Obama dropped two fundraising events in Washington on Monday to focus on the debt issue, US media said.
The US risks default on its $14.3tn (£8.7tn) debt without a deal to raise the borrowing limit.Debt law
If the ceiling is not raised, the US Treasury could run out of money to pay all of its bills - which could lead to interest rate rises, threaten the US economic recovery and in turn the global recovery.
"Let me assure you we understand the stakes. We know how important this is for us and how important it is for you," Mrs Clinton told Hong Kong business leaders.
"I'm confident Congress will do the right thing and secure a deal on the debt ceiling," she said.
With investors becoming increasingly nervous about the political stand-off in Washington, Tokyo's Nikkei average closed down on Monday by 0.8%, while the STOXX Europe 600 Banks index was down 1.9%.Continue reading the main story
Last Updated at 05:31 ET
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The US benchmark Dow Jones index fell by 0.68% during the first half-hour of trading on Monday, while the broader S&P 500 fell 0.63%.
The federal government is running a large budget deficit - equal to $1.3tn, or more than $4,000 per person, during the 12 months to June this year.
The borrowing is required to meet the government's agreed spending plans and because its ability to raise taxes is limited under current laws.
But the government must also comply with a law that limits the total amount of debt it can take on - the debt ceiling.
On Sunday, US Treasury Secretary Timothy Geithner told ABC News the process to ratify a deal needed to be underway in Congress by Monday night in order to reach a 2 August deadline.
He said that a Republican proposal to first raise the debt limit, and then negotiate spending cuts, was "irresponsible" and would not be agreed by Democrats.
President Barack Obama and fellow Democrats have been seeking to hammer out a deal with Republicans who control the House of Representatives to cut the annual budget deficit in return for a rise in the total debt ceiling.
The sticking point is the issue of taxation.
President Obama wants the debt reduction deal to include a combination of spending cuts and tax rises, but Republicans in both houses of Congress are strongly opposed to the latter.
Mr Obama was joined at the negotiating table on Saturday by Vice-President Joe Biden, Republican House Speaker John Boehner, Democratic House Minority leader Nancy Pelosi, Democratic Senate Majority leader Harry Reid and Senate Republican leader Mitch McConnell.
Following the meeting, the White House urged Congress to "refrain from playing reckless political games with our economy... and do its job, avoiding default and cutting the deficit".
Both Mr McConnell and Mr Boehner issued statements saying they intended "to find a bipartisan solution to significantly reduce Washington spending and preserve the full faith and credit of the United States".
Aides said they expected to work through the weekend to come up with a bill that would be acceptable to both sides for Monday.
On Friday, Mr Boehner accused the president of moving "the goal posts", saying they had been close to a deal until Mr Obama demanded $400bn in tax increases on top of about $800bn in revenues that would have been reaped through a comprehensive rewrite of the tax code.
Mr Obama had declared his deal "extraordinarily fair", offering to cut $650bn from Medicare, Medicaid and other entitlements, as well as slashing $1tn in discretionary spending.
While Republicans in Congress are unwilling to consider raising new taxes, their Democrat counterparts are opposed to cutting popular healthcare and welfare programmes for pensioners and the poor.