US STOCKS-Wall St down after two-week decline as Washington deadlocked
* Debt ceiling deadline draws closer
* Wall St's fear gauge CBOE VIX jumps to highest since June
* Indexes off: Dow 0.6 pct, S&P 500 0.5 pct, Nasdaq 0.5 pct
By Angela Moon and Julia Edwards
NEW YORK, Oct 7 (Reuters) - U.S. stocks fell on Monday with the Dow and the S&P 500 adding to their two-week decline as the U.S. government shutdown dragged on with no signs politicians were willing to relax positions over the debt-ceiling limit or budget impasse.
Reflecting a rise in the level of investor anxiety, the CBOE Volatility index VIX, Wall Street's so-called fear gauge, jumped 8.8 percent to 18.22, its highest since late June.
As the U.S. government neared the second week of a shutdown with no end in sight, a deadlocked U.S. Congress also confronted an Oct. 17 deadline to increase the nation's borrowing power or risk default.
In comments on Sunday television political talk shows, neither Republicans nor Democrats offered any sign of impending agreement on either the shutdown or the debt ceiling, and both blamed the other side for the impasse.
"The market is obviously showing some unnecessary worries, while at the same time preparing for earnings season," said Peter Cardillo, chief market economist at Rockwell Global Capital in New York. Continued...