European stocks posted a second week of losses as a standoff between U.S. lawmakers led to the first government shutdown in 17 years for the world’s biggest economy.

The U.S. government began a partial shutdown on Oct. 1 after Democrats and Republicans failed to agree on a budget, closing some services and placing as many as 800,000 federal employees on unpaid leave. A two-week halt could shave 0.25 percentage point off fourth-quarter economic growth, Federal Reserve Bank of San Francisco President John Williams forecast.

In addition to passing a budget, Congress must authorize an increase to the $16.7 trillion debt ceiling this month to avoid a default. The Treasury has said it will exhaust measures to stay within the limit by Oct. 17 and warned that a default could have catastrophic consequences that might last for decades. The government will run out of cash to pay bills between Oct. 22 and Oct. 31, according to the Congressional Budget Office.

House Republicans met in Washington today to discuss their negotiating tactics, with Speaker John Boehner telling party members that he will not allow a U.S. default, according to a person in the room speaking on condition of anonymity.

National benchmark indexes fell in 11 of the 18 western European markets this week. Germany’s DAX retreated 0.4 percent, while the U.K.’s FTSE 100 (UKX) lost 0.9 percent. France’s CAC 40 decreased 0.5 percent.

Italy’s FTSE MIB surged 3.7 percent, the most since July. Letta won a confidence vote on Oct. 2 with support from former premier Silvio Berlusconi, who reversed his position after initially trying to bring down the five-month-old government by withdrawing his ministers from the coalition.

Popolare di Milano surged 16 percent and Mediobanca gained 12 percent in Milan trading. UniCredit SpA, Italy’s largest lender, advanced 9.6 percent.

Unilever dropped 3.7 percent in London trading after saying Sept. 30 that underlying revenue for the third quarter rose 3 percent to 3.5 percent. The world’s second-biggest consumer-goods maker reported 5 percent growth in the first half and second quarter.

A gauge of food and beverage stocks was the second-worst performer among 19 industry groups in the Stoxx 600. Nestle SA, the world’s biggest food company, lost 1.7 percent.

Nokian Renkaat tumbled 9.7 percent, the biggest weekly drop since October 2012. Full-year net sales and operating profit will decline because of the ruble’s retreat against the euro, the Nordic region’s biggest tiremaker said today.

Hochtief AG, which owns a controlling stake in Leighton Holdings Ltd., lost 4.9 percent for the largest slide since June. Leighton, Australia’s biggest builder, allegedly paid bribes to win contracts, the Age newspaper reported. Former chiefs Wal King and David Stewart were aware of the conduct, according to the report.