* Brent touches low of $117.79; U.S. oil slips to $98.74
* U.S. lawmakers fail to achieve a budget breakthrough on Sunday
* U.S. stock index futures fall, gold hits record high
* Coming Up: Preliminary UK Q2 GDP at 0830 GMT
By Florence Tan
SINGAPORE, July 25 (Reuters) - Crude slipped more than $1 on Monday as investors exited riskier assets on concerns a default by the U.S. may derail growth in the economy and pare oil demand in the world's biggest consumer.
From U.S. stock index futures to the Nikkei and base metals, markets have slipped as the U.S. government failed to win an agreement on raising the country's debt ceiling. Gold has benefited from the uncertainty, hitting another record on Monday, as investors piled into the safer asset.
Brent
"The most significant influence on the oil market is the concern that failing to raise the debt ceiling would mean the U.S. could either default or have to cut spending on a variety of social services," said Ben Westmore, a commodities economist at the National Australian Bank.
"If either of these happens it would have a negative impact on U.S. oil demand, hence lower prices."
Lawmakers missed a self-imposed deadline to settle a deficit-reduction deal by the time Asian markets opened on Monday, as a sharply divided Congress pursued rival budget plans that appeared unlikely to win broad support.
Rating agency Standard & Poor's last week reiterated that there was a 50:50 chance the U.S. AAA credit rating could be cut within three months.
Still, analysts expect the debt crisis to be resolved before the Aug. 2 deadline as a default by the world's biggest economy would rattle financial markets and threaten the nascent recovery being seen around the world.
"The debt issue will be resolved by the Aug. 2 deadline. The economic fallout of not resolving it is too significant for the political parties to risk it," Westmore said. "It's just a bit of posturing at the moment by the Republicans and the Democrats."
Expectations of steady demand from emerging nations such as China and Indian amid reduced output would put a floor under oil, and prices will recover once the situation is resolved, he said.
On Friday, Brent crude jumped 1 percent to top $118 in light trade, buoyed by Europe's latest agreement to bail out Greece and by spread buying that widened the gap between London and U.S. crude.
U.S. products, including heating oil and gasoline, rose alongside Brent, helping push U.S. crude to six-week highs, though gains were tempered by uncertainty over talks to avert the unprecedented U.S. default.
Investors will be scouring U.S. data on new home sales and consumer confidence due on Tuesday to assess the economic outlook for the United States.
Investors' concern about the euro zone debts "is absolutely not going to totally go away, but for the time being, it seems to be less of a concern," Westmore said. (Reporting by Florence Tan; Editing by Clarence Fernandez)