HONG KONG - Asian markets mostly rose on Wednesday after President Barack Obama said he was open to a short-term deal to end a US budget stand-off and avoid a devastating default.
There was also broad support for assets and the dollar on news that Obama had nominated the dovish Janet Yellen to become the next Federal Reserve chief, raising hopes the bank would stick to the same the track mapped out by Ben Bernanke.
Tokyo climbed 0.44 per cent by the break, Hong Kong was 0.76 per cent lower and Sydney was up 0.10 per cent, while Shanghai added 0.17 per cent. Seoul was closed for a public holiday.
With the government shutdown moving into a ninth day, global investors are concerned Republicans and Democrats will not find a way round a budgetary impasse before an October 17 deadline to raise the borrowing limit.
Obama said Tuesday world leaders were nervous Republicans would "blow up" the US economy if they did not give up their demands for cuts to his healthcare law in return for passing a new budget and raising the borrowing limit.
Failure to raise borrowing will mean the government cannot pay its bills or service its debts, triggering a default that analysts have warned could send the world economy back into recession similar to that after the financial crisis.
However, Obama did say he was willing to accept a short-term deal to raise the $16.7 trillion debt ceiling and reopen the government - effectively postponing the crisis for a number of weeks.
"If (the Republicans) can't do it for a long time, do it for the period of time in which these negotiations are taking place," he said.
Despite the president's comment, Wall Street saw a big sell-off. The Dow fell 1.07 per cent, the S&P 500 sank 1.23 per cent and the Nasdaq tumbled 2.00 per cent.
But Desmond Chua, market analyst at CMC Markets in Singapore, said Asian dealers welcomed the announcement of the nomination as Fed chief of Yellen, who is considered a fiscal dove who will likely keep the bank's stimulus programme in place for as long as needed.
"There is some support in the market after these two pieces of news, but investors are still well aware that a resolution still depends on the House, which remains deadlocked," he told AFP.
And Kelly Teoh, market strategist at IG Markets in Singapore, said: "She is very much accepted by Asian investors because of her dovish stance on tapering and there is confidence that she will continue to keep interest rates low. Investors here see her as the closest to Bernanke". On forex markets the dollar rose to 97.30 yen compared with 96.86 yen in New York on Tuesday.
The euro firmed to $1.3577 (S$ 1.69) from $1.3572, and to 131.91 yen (S$ 1.69) from 131.47 yen.
On oil markets New York's main contract, West Texas Intermediate for delivery in November was down one cent to $103.48 in mid-morning trade while Brent North Sea crude for November eased 16 cents to $110.00.
Gold cost $1,317.20 at 0230 GMT compared with $1,320.86 on Tuesday.