European stocks are as the deadline to raise the debt ceiling approaches and investors' worries about a default grow.European stock markets tumbled to the lowest level in a month on Tuesday, on U.S debt ceiling woes.
The Stoxx Europe 600 index lost 0.8% to 306.84.
The U.S government shutdown enters the eighth day, but lawmakers have made little headway in raising the country's debt ceiling. If the U.S misses the deadline by Oct. 17--that would raise the possibility of a U.S. government debt default. An economist says this will send shockwaves around the global economy and markets.
"Many prices and interest rates are based on the rates for U.S government debts. I think that will create a lot of fear if it happens. The actual functioning of the financial system will be disrupted. "said Alex Callincos, Professor of King's College Lodon.
And he also said a debt default would bring a fatal strike to the eurozone.
"A lot of the European banking system is still carrying very big losses. So the eurozone recovery is very fragile, the financial markets don't like uncertainties, therefore the kind of uncertainty the Amecan is creating will easily impact the Euro market."said Callincos.
The International Monetary Fund has also stepped in, warning about the harm to the global economy if the U.S failed to raise its borrowing limit. It also cut its global economic growth forecasts for 2013 and 2014.