U.S. Treasury prices moved lower, suggesting a weakening bid for "safe-haven" assets. Yields on benchmark 10-year Treasurys stood at 2.62 percent on Friday.
President Barack Obama canceled a trip to Indonesia to attend the APEC (Asia-Pacific Economic Cooperation) conference, to focus on budget negotiations back at home.
"U.S. politics will inevitably dominate again today. And there still looks to be no near-term end in sight for the fiscal farce, with Republican House Speaker Boehner up against it, as he will have another go today at forging a more pragmatic position within his party," wrote Chris Scicluna, an economist at Daiwa Capital.
(Read more: Boehner to GOP: I won't let the nation default)
"But the Republican headbangers hardly look like budging. And in the meantime, the economic disruptions caused by the shutdown both in the U.S. and beyond, and arguably more significantly, the uncertainty and hit to confidence from fears over the debt ceiling not being lifted, will intensify," Scicluna added.
The monthly government jobs report has been delayed due to the shutdown. About 180,000 jobs were expected to have been added in September, up from 169,000 added in August.
Facebook rose after the social-networking giant's Instagram announced plans to start using ads in their feed in the next couple of months. Facebook acquired the photo-sharing company last April for $1 billion.
Several Fed officials are scheduled to speak Friday. These include talks by two voting members of the FOMC (Federal Open Market Committee), William Dudley and Jeremey Stein, plus Richard Fisher and Narayana Kocherlakota.
Speaking in Washington on Thursday, Christine Lagarde, managing director of the International Monetary Fund, said that a failure to raise the debt ceiling before October 17 could hurt the global economy, and warned that U.S. economic growth could drop below 2 percent this year.
Similarly, Bank of Japan Governor Haruhiko Kuroda warned on Friday that the fiscal standoff could destabilize global financial markets if it dragged on. The Japanese central bank opted to maintain its massive stimulus program.
(Read more: Track Asian markets here)
In Europe, investor attention remained on Italy. Former Prime Minister Silvio Berlusconi faces another political test on Friday as the Italian Senate votes on whether to expel him from politics for a tax fraud conviction he received in August.
If the vote goes against Berlusconi it will pass to the Upper House in two weeks' time. The Senate vote comes after a turbulent week in which Berlusconi bowed to pressure from his own party to support Prime Minister Enrico Letta in a vote of confidence on Wednesday.
The Italian FTSE MIB Index was the standout gainer among European indexes, posting moderate gains.
(Read more: Track European markets here)