European stock markets steadied on Thursday as the US government shutdown dragged on for a third day. London\'s benchmark FTSE 100 index added 0.22 percent to stand at 6,451.17 points in morning deals. In Paris, the CAC 40 reversed 0.25 percent to 4,147.23 points and Frankfurt\'s DAX 30 dipped 0.06 percent to 8,624.23. Milan\'s FTSE Mib index gained 0.20 percent in value, as a bid to topple Italy\'s government fell apart. Asian stock markets mostly closed higher on Thursday but investors remained nervous over the budget gridlock in Washington, as President Barack Obama warned markets that the crisis could trigger a catastrophic US debt default. \"As we enter the third day of the shutdown of the US government the various positions seem as inextricably entrenched as ever,\" said CMC Markets analyst Michael Hewson. The euro hit an eight-month high at $1.3623 after former Italian prime minister Silvio Berlusconi abandoned his bid to topple Enrico Letta\'s government, in a humiliating climbdown that averted a political crisis. The single currency later stood at $1.3609, up from $1.3580 in New York late Wednesday. The dollar gained to 97.86 yen from 97.34 yen. Sterling fell to 83.88 pence to the euro but rose to $1.6272. In commodity deals on the London Bullion Market, the price of gold rose to $1,311.65 an ounce, compared with $1,306.25 on Wednesday. Obama met top Republican leaders for an hour on Wednesday, but the talks failed to end the crisis that has sent hundreds of thousands of government workers home and shut museum sites and national parks throughout the country. There is no end in sight to the latest crisis to hit bitterly divided Washington, with both sides accusing the other of refusing to negtiate. Traders are nervous as Republicans and Democrats have just over two weeks to strike a separate deal on raising the country\'s debt ceiling and avoiding a default that would send shockwaves across markets. \"President Obama met Congress for the first time since the shutdown last night in an attempt bring an end to the US government shutdown,\" added Spreadex trader Alex Conroy. He added: \"If the both sides continue to play chicken with each other and fail to agree before the debt ceiling deadline, October 17, the government would only have cash left to pay bills and the chance of default goes from unthinkable to near certainty.\" ECB chief Mario Draghi warned on Wednesday that the US political deadlock could pose a danger to the world economy. European equities had fallen on Wednesday, but the euro soared against the dollar as Italy averted a political crisis and the European Central Bank (ECB) signalled more efforts to boost recovery in the eurozone. In Paris, the price of shares in global tyremaker Michelin fell by 2.30 percent to 78.89 euros, after falling on Wednesday in response to a briefing to investors which was cautious about the outlook, notably for tyres for the mining sector.