Shutdown debate moves to US Senate as debt deadline creeps up

Senate will hold a rare Sunday session as politicians debate how to reopen the shuttered govt and avoid debt defaults

A breakthrough on how to end the US government shutdown remained elusive as negotiations to raise the debt limit and avert a catastrophic default have now shifted to the Senate after talks between House Republicans and the White House collapsed.

The Senate will hold a rare Sunday session as politicians debate how to reopen the shuttered government and avoid a potentially calamitous failure to pay the country's debt obligations.

Democratic and Republican leaders in the Senate held direct talks for the first time in weeks yesterday, but there is little sign of any resolution to the crisis which the World Bank chief Jim Young Kim said that US is headed towards a very dangerous moment.

The talks between Senate Majority Leader Harry Reid and Senate Republican leader Mitch McConnell represented the first face-to-face meeting between the two since July, the New York Times reported.

The US stands on the verge of a debt default for the first time in its history as the October 17 deadline creeps closer.

If a deal to raise the debt limit is not reached by then, the nation faces an unprecedented default, a prospect which has caused alarm both domestically and abroad.

The shutdown began when Congress missed the October 1 deadline to pass the federal budget.

Senator Dick Durbin, a Democrat, said the aim was to reach a deal on extending the debt limit before markets reopen tomorrow.

"The conversations were extremely cordial but very preliminary of course - nothing conclusive, but I hope that our talking is some solace to the American people and to the world," said Reid.

"We had a good meeting," said McConnell, without elaborating. Reid then went to the White House for talks with President Barack Obama.

But he rejected a plan put forward by Republican Senator Susan Collins to allow the government to increase its debt limit until 31 January.

Democrats have a majority in the Senate, but could not muster enough support to advance a proposal to lift the debt ceiling there. Talks between House Republicans and the White House had collapsed earlier.

Republicans have refused to pass a new budget unless Obama agrees to delay or eliminate the funding of the healthcare reform law dubbed Obamacare.

Hundreds of thousands of federal employees have been sent home as a result of the shutdown.