European stocks wobbled on Wednesday as jitters over the US budget showdown offset news that President Barack Obama will nominate Janet Yellen to replace Federal Reserve chief Ben Bernanke.
In midday deals, London's benchmark FTSE 100 fell by just 0.01 percent to 6,365.11 points, with sentiment hit by weak industrial output data.
Frankfurt's DAX 30 advanced 0.24 percent to 8,576.12 points and the CAC 40 in Paris gained 0.61 percent to 4,158.68.
In Asia, shares were mostly higher after Obama had offered a short-term deal to end the political gridlock in Washington.
Analysts added that Yellen's nomination would also raise hopes that the US central bank would stick to its easy-money policy.
Yellen is a supporter of the Fed's $85-billion-a-month bond-buying scheme and is considered unlikely to wind it down too soon.
However, while a continuation of the loose monetary policy would be expected to press the dollar lower, dealers took the news as a positive, boosting riskier assets.
Tokyo's benchmark Nikkei 225 index gained 1.03 percent, as the dollar also strengthened against the yen.
"The overnight rally in the Nikkei has done its best to raise the morale of European traders, but the complete lack of any progress from the US political scene is squashing any optimism markets can muster," said analyst Alastair McCaig at traders IG in London.
Shanghai stocks won 0.62 percent and Sydney added 0.07 percent. On the downside, Hong Kong stocks fell 0.63 percent, while Seoul was shut for a holiday.
With the US government shutdown moving into a ninth day, global investors are concerned Republicans and Democrats will not find a way round a budgetary impasse before an October 17 deadline to raise the borrowing limit.
Obama said on Tuesday that world leaders were nervous that Republicans would "blow up" the US economy if they did not abandon their demands for cuts to his healthcare law in return for passing a new budget and raising the borrowing limit.
Failure to raise the limit would mean the government could not pay its bills or service its debts, triggering a default that analysts have warned could send the world economy back into recession.
However, Obama said he was willing to accept a short-term deal to raise the $16.7-trillion debt ceiling and reopen the government -- effectively postponing the crisis for a number of weeks.
Wall Street sank on Tuesday and short-term bond yields jumped as the budget stalemate took a deeper toll on financial markets.
Investors sold a wide range of high-flying tech stocks especially as Obama toughened his line on negotiating with Republicans, saying he would not bow to extortion.
The Dow Jones Industrial Average fell 1.07 percent to 14,776.53 points.
"The constant bickering by both the Republicans and the Democrats have seen almost 1,000 points wiped off the Dow in the last four weeks, and with no end in sight US markets looks set to tumble even further," added McCaig.
The broad-based S&P 500 sank 1.23 percent, while the tech-rich Nasdaq Composite Index plummeted 2.0 percent.
On Wednesday, the European single currency eased to $1.3522 from $1.3572 in New York late on Tuesday. The dollar firmed to 97.44 yen from 96.86 yen.
Sterling fell to 84.65 pence to the euro, and to $1.5973.
On the London Bullion Market, the price of gold declined to $1,310.06 an ounce from $1,329.50 on Tuesday.
In Paris, shares in telecom-equipment group Alctael-Lucent bucked the stock market to plunge 5.81 percent to 2.61 euros, as controversy grew over a restructuring plan to cut 10,000 jobs worldwide and 900 jobs in France.
Prime Minister Jean-Marc Ayrault threatened to block the loss of 900 jobs in France unless the layoffs and plant closures, announced on Tuesday, were pared back.