Sawt Falasteen - Stocks drift lower as US struggles to reach debt deal

Sentiment was also weighed down by data showing China's economic recovery remained sticky, with key indicators missing expectations owing to weak domestic demand.

Meanwhile, US retail sales rebounded less than expected last month, and a major US retailer Home Depot saw first quarter revenue drop as consumer spending softened.

Oil prices nudged up, while the dollar edged higher against main rivals.

"Concerns are rising that not enough progress is being made to avoid a US default, which would send shockwaves through financial markets," noted Susannah Streeter, head of money and markets at Hargreaves Lansdown.

Elsewhere, "China's pandemic snapback is losing elasticity, adding to worries about growth unravelling across the global economy".

Separate data Tuesday showed UK unemployment edging higher as inflation remains elevated.

In the United States, Treasury Secretary Janet Yellen has again said the government would likely run out of cash on June 1, meaning it would not be able to meet its debt repayment obligations, sparking a potentially devastating default.

While there is a general feeling that a debt agreement will be reached, Republican House Speaker Kevin McCarthy has warned that staff-level meetings were "not productive at all" and they were "nowhere near reaching a conclusion".

Republicans are demanding spending cuts as a condition for passing the bill while Democrats want a "clean" increase of the borrowing limit with no strings attached.

US President Joe Biden, who has expressed confidence the two sides can bridge the gap, was set to meet with McCarthy and other congressional leaders at the White House later Tuesday.

"Some anxiousness over what might be heard today could act as a limiting factor for the stock market during today's trade as buyers and sellers refrain from showing strong conviction in front of that meeting," said Patrick O'Hare at Briefing.com.

Wall Street stocks opened lower, with the Dow shedding 0.4 percent. Europe's main equity markets were down marginally in afternoon trading.

Data showed US retail sales rose 0.4 percent last month, but that was less than analysts had expected.

O'Hare said the data "wasn't strong enough to mitigate worries about weakening consumer activity nor was it weak enough to make the Fed think it should entertain a rate cut anytime soon."

Several US Federal Reserve policymakers have spoken in recent days, but have been divided on whether to pause the US central bank's interest rate-hiking drive next month or raise rates further.

- Key figures around 1330 GMT -

New York - Dow: DOWN 0.4 percent at 33,220.75 points

London - FTSE 100: DOWN 0.2 percent at 7,763.17

Frankfurt - DAX: DOWN less 0.1 percent at 15,907.40

Paris - CAC 40: DOWN 0.2 percent at 7,406.03

EURO STOXX 50: FLAT at 4,315.49

Tokyo - Nikkei 225: UP 0.7 percent at 29,842.99 (close)

Hong Kong - Hang Seng Index: FLAT at 19,978.25 (close)

Shanghai - Composite: DOWN 0.6 percent at 3,290.99 (close)

Euro/dollar: DOWN at $1.0875 from $1.0878 on Monday

Pound/dollar: DOWN at $1.2506 from $1.2528

Dollar/yen: UP at 136.19 yen from 136.10 yen

Euro/pound: UP at 86.96 pence from 86.80 pence

Brent North Sea crude: UP 0.2 percent at $75.36 per barrel

West Texas Intermediate: UP less than 0.1 percent at $71.17 per barrel

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Z.Ramadan--SF-PST