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"The longer Congress fails to act, the more we risk that investors here and around the world will lose confidence in our ability to meet our commitments and our obligations," Geithner said in a letter to congressional leaders. "Default by the United States is unthinkable."

Previously, the Treasury had forecast that the $14.3 trillion statutory debt limit would be reached between April 15 and May 31.

Some Republican lawmakers have sought to use the need to raise the debt limit as a lever to pressure the Obama administration into agreeing on large-scale budget cuts.

The debt-limit showdown comes as Congress struggles to complete a spending package that would keep the government operating beyond Friday. Republicans are seeking to use that bill to enact deep spending cuts.

Geithner said a failure to raise the ceiling in a timely way would lead to hardship for many Americans as government payments would stop, pushing interest rates higher and sparking "a financial crisis potentially more severe than the crisis from which we are only starting to recover."

Both Geithner and Federal Reserve Chairman Ben Bernanke have said a failure to raise the ceiling could have "catastrophic consequences."

As the government nears the debt ceiling, the Treasury has authority to take certain extraordinary measures to postpone the date the United States would default on its obligations.

However, those actions would be exhausted after about eight weeks and there would be "no headroom" to borrow after July 8, Geithner said. The Treasury has already taken steps to avoid reaching the debt ceiling.

Lawmakers in both chambers have introduced legislation that would force the Treasury to first pay interest on U.S. bonds before other obligations, such as unemployment benefits and Social Security and Medicare payments, as a way to stave off a debt default.

They have also asked Treasury whether financial assets such as the country's gold reserves or the government's portfolio of student loans could be sold to avoid raising the debt ceiling.

Treasury has rejected the proposals as unworkable.

"To attempt a fire sale of financial assets in an effort to buy time for Congress to act would be damaging to financial markets and the economy and would undermine confidence in the United States," Geithner said.

He said that while the debt ceiling projections could change, the Obama administration does not believe they could change in a way that would give Congress more time to raise the debt ceiling. He said Treasury would provide updated projections in early May.

(Editing by James Dalgleish)

British media have said BP is in talks with Washington to restart drilling at existing fields following the blast on the Deepwater Horizon rig that ruptured the company's underwater Macondo well, unleashing millions of barrels of oil.

Interior Secretary Ken Salazar called that a "misconception", and a spokeswoman for the Bureau of Ocean Energy Management regulator said "there are no ongoing negotiations".

"There is absolutely no such agreement nor would there be such an agreement" with BP to resume drilling, Salazar said at a briefing while visiting the Mexican capital.

He added that BP would need to go through the same review process to resume drilling as other companies.

Salazar also condemned rig operator Transocean Ltd for granting bonuses based on what it said last week was an "exemplary" safety record in 2010, notwithstanding the rig blast that killed 11 workers. One of the leading members of a presidential panel on deepwater drilling said the firm "just doesn't get it".

U.S. legal probes into the accident are ongoing, but a presidential commission earlier this year released a report blaming the disaster on systemic safety lapses and a series of mistakes made by BP and its contractors.

Months after lifting a temporary ban on deepwater drilling, the bureau has begun approving permits for such activity, clearing more than a handful of projects in the past few weeks.

BP is a partner in a well operated by Noble Energy, which received the first permit since the end of the ban.

GULF KEY TO BP FUTURE

Last week, BP America CEO Lamar McKay said the company was "working constructively" with regulators to meet new rules.

"We are encouraged by both verbal and written messages we have gotten from regulators," McKay had said.

BP is the largest holder of deepwater acreage in the Gulf of Mexico and the region is key to the company's future growth.

"The Gulf of Mexico is by value about 15 percent of the company at the moment so it's important that they drill there to replace reserves," Investec analyst Stuart Joyner said.

"If you look at the company's reputational issues, it's important that they're seen resuming business in the Gulf of Mexico alongside other participants. It's very much a psychological issue," Joyner said.

The global restaurant chain said it plans to hire as many as 50,000 new U.S. employees -- ranging from restaurant crew to managers -- on April 19. The move would increase the hamburger company's U.S. workforce by 7.7 percent to 700,000, but such hiring is typical in the lead up to the busy summer months.

"Our total hires are similar to past years, but the goal of hiring 50,000 people in one day across the U.S. is unique," McDonald's spokeswoman Ashlee Yingling told Reuters.

The April hiring event is preparation for the busy summer months. "But these are not just seasonal jobs. It's a mix of permanent and temporary jobs," Yingling said.

She added that McDonald's hourly employees typically make more than minimum wage, often more than $8 per hour.

There are some 14,000 McDonald's restaurants in the United States. Ninety percent of McDonald's U.S. restaurants are run by franchisees, and pay varies by ownership.

Oak Brook, Illinois-based McDonald's said in a statement that its April hiring event is an opportunity to highlight that "a McJob is one with career growth and endless possibilities."

Yingling said many of McDonald's top executives and franchisees worked their way up the company ranks.

Janney Capital Markets analyst Mark Kalinowski told Reuters that the announcement "certainly seems like a way to attract some favorable publicity around something it was more or less going to do anyway."

McDonald's said it and its franchisees would be spending an extra $518 million on wages and salaries for the 50,000 new workers it plans to hire.

McDonald's reported that February sales at its U.S. restaurants open at least 13 percent rose 2.7 percent compared with a year earlier.

U.S. employment grew firmly for a second straight month in March and the jobless rate hit a two-year low of 8.8 percent, underscoring a decisive shift in the labor market that should help to underpin the recovery.

That is better news for some than others.

Income growth for the top-earning U.S. workers has risen sharply since the 1980s, while the loss of well-paying manufacturing jobs has led to stagnation at the low end.

Workers earnings and corporate earnings also have barely risen so far this year.

(Reporting by Lisa Baertlein and Phil Wahba; Editing by Gerald E. McCormick and Tim Dobbyn)

The German exchanges operator is also waiting to see how credit rating agencies score Nasdaq's move, two people familiar with Deutsche Boerse's (DB1Gn.DE) strategy said on Monday.

"Rating agencies as well as the NYSE Euronext board have not yet reacted to the offer, so it's far too early to say what Boerse's next move will be," said one of the two sources.

Deutsche Boerse unveiled its $10.2 billion takeover of NYSE Euronext (NYX.N) in February -- aiming to form the world's largest exchange operator as part of a wave of tie-ups in the increasingly competitive and global exchange world.

Nasdaq (NDAQ.O) and ICE (ICE.N) on Friday bid $11.3 billion for NYSE Euronext in an effort to trump the German exchange operator's deal, and pushed their case with an appeal to U.S. patriotism.

Their counterbid, which was unveiled to some skepticism it can succeed, would redraw the world's capital markets so that Americans have a stronger hand than Europeans as exchange operators globally maneuver to come out on top.

A spokesman for Deutsche Boerse declined to comment. Earlier, in response to a report in German newspaper Die Welt that the exchanges operator would not raise its bid, the spokesman said the company strongly believed a merger of Deutsche Boerse and NYSE Euronext was the best possible combination.

Shares in Deutsche Boerse (DB1Gn.DE) dropped 1.5 percent to 52 euros by 0858 GMT on Monday morning.

Analysts said the counterbid left it looking vulnerable -- either it retaliates with an expensive counterbid or risks losing an opportunity to grab market share and economies of scale as the global exchanges M&A heats up.

"If Deutsche Borse intends to be back in the merger they have to raise the price substantially including a potential cash component which would be negative in our view," said DZ Bank analyst Matthias Duerr.

LBBW analyst Martin Peter downgraded Deutsche Boerse to "hold" from "buy" on the grounds of uncertainty over whether it would raise its bid.

At the same time, he said, the Nasdaq/ICE offer was still seen as shaky.

"It will be hard for Nasdaq to eliminate the existing doubts regarding synergies, leverage, and valuation as well as regulatory and political issues," Peter said.

WestLB and Commerzbank also cut their ratings on Deutsche Boerse.

DEAL OVERHAUL?

* Shares on Wall Street started the second quarter on a solid footing on Friday, ending the session higher on optimism over the recovery in the labor market after data showed the unemployment rate fell to a two-year low.

* The Dow Jones industrial average .DJI hit 12,419.71, its highest intraday level since June 2008, before closing on Friday at 12,376.72.

* The robust jobs data has prompted some caution in equity markets as expectations grow that the Federal Reserve could scale back ultra loose monetary policy in the second half of the year as the economy shows signs of recovery and inflation expectations pick up.

* Monetary tightening expectations have been fueled by hawkish talk from some Fed officials in the past weeks, though influential member William Dudley said recently that there was no need for the central bank to reverse course.

* The European Central Bank (ECB) is expected to lead the way among Western central banks to shift rates higher at a meeting later this week.

* Some nervousness over the political unrest in the Middle East and North Africa continued to linger in financial markets, with Brent crude rising to a 2-1/2 year high above $119 on the worries.

* In company news, Nasdaq OMX Group Inc (NDAQ.O) and IntercontinentalExchange Inc (ICE.N) are expected to face serious hurdles to their bid for NYSE Euronext (NYX.N).

* Separately, Deutsche Boerse (DB1Gn.DE) is holding off on making any decision as to whether to raise its rival offer for NYSE Euronext, two sources familiar with Deutsche Boerse's thinking said on Monday.

* The Bureau of Ocean Energy Management said on Sunday it had not struck a deal with BP (BP.N) to allow the oil company to resume deepwater drilling in the Gulf of Mexico, refuting a press report.

* Abbott Laboratories Inc's (ABT.N) experimental Absorb heart stent, designed to dissolve and thereby restore the blood vessel's natural flexibility, has proven safe and effective a year after being implanted in patients, researchers said.

* In Europe, the pan-European FTSEurofirst 300 .FTEU3 index of top shares was higher in early trade, with the chemicals sector boosted by a pickup in merger and acquisitions (M&A) activity.

(Reporting by Harpreet Bhal; Editing by Greg Mahlich)

In what could be one of the biggest such breaches in U.S. history, a diverse swath of companies that did business with Epsilon stepped forward over the weekend to warn customers some of their electronic information could have been exposed.

Drugstore Walgreen, Video recorder TiVo Inc, credit card lender Capital One Financial Corp and teleshopping company HSN Inc all added their names to a list of targets that also includes some of the nation's largest banks.

The names and electronic contacts of some students affiliated with the U.S.-based College Board -- which represents some 5,900 colleges, universities and schools -- were also potentially compromised.

No personal financial information such as credit cards or social security numbers appeared to be exposed, according to the company statements and e-mails to customers.

Epsilon, an online marketing unit of Alliance Data Systems Corp, said on Friday that a person outside the company hacked into some of its clients' customer files. The vendor sends more than 40 billion e-mail ads and offers annually, usually to people who register for a company's website or who give their e-mail addresses while shopping.

"We learned from our e-mail provider, Epsilon, that limited information about you was accessed by an unauthorized individual or individuals," HSN, also an e-commerce operator, said in an e-mail to customers on Sunday.

"This information included your name and e-mail address and did not include any financial or other sensitive information. We felt it was important to notify you of this incident as soon as possible."

Citigroup customer names and some credit card customers' e-mail addresses -- but no account information -- were part of the data breach, the third-largest U.S. bank said on Saturday.

The College Board, which administers the SAT admissions tests, on Saturday warned students about the breach and asked them to be cautious about receiving "links or attachments from unknown third parties," according to two e-mails reviewed by Reuters.

The not-for-profit organization is in contact with more than 7 million students, according to its website. It did not immediately return calls for comment.

PROBING FOR ANSWERS

Law enforcement authorities are investigating the breach, though it was unclear on Sunday how many customers or students had been exposed. Epsilon is also looking into what went wrong.

"While we are cooperating with authorities and doing a thorough investigation, we cannot say anything else," said Epsilon spokeswoman Jessica Simon. "We can't confirm any impacted or non-impacted clients, or provide a list (of companies) at this point in time."

Capital One, which also runs a bank, and Walgreens, the largest U.S. drugstore, said the Epsilon hacker accessed its customer e-mail addresses, but no personally identifiable information.