Markets jittery as Congress meets to tackle debt ceiling crisis

US and Asian markets fell overnight on fears the US government will fail to resolve its debt crisis, ahead of a crucial vote by the House of Representatives today.

The S&P 500 index dropped 2% yesterday, its biggest fall in almost two months, while the Dow Jones fell 1.59% and the Nasdaq dropped 2.65% to 2,765.

US congressional leaders need to made a decision on the debt ceiling limit by 2 August, or risk a default.

European markets opened slightly down this morning in reaction to continued concerns over the US in combination with eurozone fears.

London's FTSE 100 opened at 0.51% down at 5,826, while the French Cac and the German Dax also lost 0.81% and 1.1% respectively, to 3,703 and 7,173.

The cost of buying insurance against a default rose to record levels yesterday as US fears intensified.

Trading in credit default swaps (CDS) increased as buyers sought protection from a default or missed payment, severely reducing the liquidity of the US CDS market as a result.