Obama to meet top Democratic allies on debt

WASHINGTON: President Barack Obama was to meet with his top Democratic allies in the US Congress at 6:00 pm (2200 GMT) Sunday to discuss efforts to avert a disastrous US debt default, an official said.

Democratic Senate Majority Leader Harry Reid and Democratic House Minority Leader Nancy Pelosi were due at the White House with jittery world markets eyeing Washington for signs of a breakthrough, the Democratic official said.

While Republican House Speaker John Boehner was not going to be part of the talks, he spoke by telephone with Obama during the day, said his spokesman, Michael Steel.

"As he said he would, the speaker has kept the lines of communication open with the bipartisan, bicameral leadership in Congress and the White House," said Steel.

Investors, starting with Asia, were set to have their first chance at rendering judgment on the political stalemate in Washington since negotiations between Obama and his Republican foes collapsed late Friday.

A spokesman for Republican House Majority Leader Eric Cantor, Brad Dayspring, urged markets not to panic, insisting on his Twitter feed that "work is being done" towards a compromise to avert an early August US default.

"Note: There are 9 days before Aug 2. For those talking about Asian Markets, would recommend not stoking fear/concern. Work is being done," he said.

Washington hit its debt ceiling on May 16 but has used spending and accounting adjustments, as well as higher-than-expected tax receipts, to continue operating normally so far.

Finance and business leaders have warned failure to raise the US debt ceiling by August 2 would send shockwaves through the fragile world economy, while Obama has predicted a default would trigger economic "Armageddon."

Copyright AFP (Agence France-Presse), 2011