President Barack Obama and House Republican leaders were movingtoward an agreement to extend the nation's borrowing authority asthey remained at odds over terms for ending the partial governmentshutdown.

They met for 90 minutes at the White House yesterday after HouseSpeaker John Boehner of Ohio said he would offer a measure topostpone a potential U.S. default to Nov. 22 from Oct. 17, a stepback from the brink that was enough to trigger the biggest rise inU.S. stocks in nine months.

The developments were the first sign that the president andHouse Republican leaders could resolve the fiscal impasse withoutnegative economic consequences from a default as the halt ingovernment operations moved into its 11th day.

Any prospective deal faces many questions, including whetherBoehner can make a deal with Obama without losing the support ofhis members who are backed by the limited-government Tea Party.They've sought to use the debt ceiling and partial governmentshutdown to force curbs to Obamacare and federal spending cuts.

Obama didn't accept or reject House Republicans' plan for ashort-term increase in the debt limit. The two sides plannedfurther talks among their staff members last night to address thepresident's insistence that Republicans agree to fund thegovernment before starting broader fiscal talks.

“No specific determination was made,” the White House said in astatement. The two sides talked about “potential pathsforward.”

Representative Eric Cantor of Virginia, the House majorityleader, called the meeting “constructive” and that, with talkscontinuing overnight, “hopefully we will have a clearer way, pathforward.”

Obama began the meeting by acknowledging that Republicanleaders' offer to extend the debt limit was a positive step whileurging them to open the government, according to a Democraticofficial who asked not to be identified discussing the closed-doordeliberations.

The Republican lawmakers responded by saying that they neededconcessions in order to do so, the official said. Obama said that,while he would consider what they want, nothing would be deliveredin exchange for a spending bill that would allow federal agenciesto resume operations.

Obama “would like the shutdown stopped,” Representative HalRogers, a Kentucky Republican, said after the White House session.“We are trying to find out what it is he would insist upon” in aspending measure to open the government.

Air Cleared

The meeting was “very positive” and “a lot of air was cleared,”another participant, Representative Howard “Buck” McKeon ofCalifornia, chairman of the Armed Services Committee, said today onMSNBC. “At the end of the day, we're going to get this workedout.”

White House Chief of Staff Denis McDonough and Deputy Chief ofStaff Rob Nabors were taking the lead in last night's talks withHouse Republican aides, the Democratic official said.

As word of possible progress emerged, stock indexes ralliedaround the world. The MSCI Asia Pacific Index added 0.5 percent to385.43 at 7:07 a.m. in New York. Royal Mail Group Ltd., Britain's360-year-old postal service, jumped as much as 38 percent on itstrading debut. Standard & Poor's 500 Index futures increasedless than 0.1 percent after the gauge rallied the most since Jan. 2yesterday. Japan's currency dropped for a fourth straight dayagainst the dollar. Oil fell 1.3 percent.

Rates on Treasury bills scheduled to mature on Oct. 17 droppedyesterday for the first time in six days. The benchmark 10-yearTreasury yield rose two basis points, or 0.02 percentage point, to2.68 percent, after touching 2.72 percent, the highest level sinceSept. 23.

The financial markets, which have weathered fiscal brinkmanshipat least four times since Republicans gained the House majority inJanuary 2011, so far have taken Washington's dysfunction in stride.Treasury Secretary Jacob J. Lew warned in testimony to lawmakersyesterday that “uncertainty” over the debt limit is starting tostress financial markets.

It was unclear whether the talks will lead to a breakthrough,after House Republicans yesterday had planned to bring Boehner'sdebt-ceiling extension plan to a vote as early as today. Withoutcongressional action, the government will exhaust its borrowingauthority Oct. 17.

Jay Carney, the White House press secretary, said yesterday thatObama would support a short increase in the U.S. debt limit with no“partisan strings attached,” though he prefers a longerextension.

Extraordinary Measures

Under Boehner's plan, the Treasury Department wouldn't be ableto use so-called extraordinary measures to further extend borrowingauthority, creating a hard deadline, said Representative Tom Reed,a New York Republican.

House Minority Leader Nancy Pelosi of California said ending theextraordinary measures “isn't very smart” because it would limitTreasury's flexibility.

If the U.S. fails to raise the debt limit by Oct. 17, thegovernment will have $30 billion plus incoming revenue to pay itsbills. It would start missing scheduled payments, includingbenefits, salaries and interest, between Oct. 22 and Oct. 31,according to the Congressional Budget Office.

Meanwhile, Senate Democrats are pressing ahead with theirpreferred plan, which would push the next debt-limit fight into2015 and include no policy conditions. A test vote could occurtomorrow.

Democrats, who control 54 seats in the 100-member Senate, wouldneed the support of at least six Republicans on procedural votes topass their bill.

Senate Majority Leader Harry Reid's proposal would suspend thedebt ceiling through Dec. 31, 2014. Because the Treasury Departmentcan use extraordinary measures to stave off default, anotherincrease wouldn't be needed until sometime in 2015. The previousdebt-limit suspension expired on May 18 and the extraordinarymeasures are lasting five months.

Senate Republicans are scheduled to visit the White House at11:15 a.m. today.

“I hope the Republicans decide what they want and we'll be happyto work with them in any way,” Reid, of Nevada, said at the WhiteHouse after he and other Senate Democrats met with Obama for almosttwo hours yesterday. “We'll just wait and see because they cannotdecide what they want.”

A Wall Street Journal/NBC News poll released yesterday foundthat 53 percent of those surveyed blamed Republicans for the fiscalimpasse, compared with 31 percent who blame Obama.

Economists' Estimates

The shutdown would pare 0.2 percentage point from U.S. economicgrowth if it lasts through this week and as much as 0.5 point if itcontinues another two weeks, according to the median estimate in aBloomberg survey of economists.

Boehner and Republican leaders say they want to engage Obama intalks about the budget. Those conversations would start under anunwritten agreement that wouldn't be part of the debt-limitmeasure, said Representative Dave Camp, a Michigan Republican andchairman of the House Ways and Means Committee.

Republicans are debating what policy conditions they would wantto attach to a bill that would end the shutdown, said a Republicanaide who requested anonymity to discuss strategy. House Republicansare backing away from demanding major changes to the 2010health-care law, the Patient Protection and Affordable Care Act,the aide said.

The government shutdown started Oct. 1 after Republicansinsisted that further funding for many programs be tied to aone-year delay in the health-insurance mandate.

Obama and Senate Democrats refused, and the resulting furloughsand agency shutdowns have slowed mortgage closings, small-businessloans and nutrition assistance to poor mothers. Some programs, suchas Social Security, continue uninterrupted.

Bloomberg News

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