Asian shares mostly slip as US debt talks drag on

HONG KONG - Asian markets slipped Monday, with traders growing nervous that talks to raise the US borrowing limit remain deadlocked just days before the deadline to avoid a default.

Republicans and Democrats were unable to find a compromise after a rare Sunday session to hammer out a budget deal to reopen the government, which has been partially shut down for two weeks.

Adding to selling pressure was a disappointing batch of Chinese trade figures at the weekend that indicated a recent pick-up in the world's number two economy may not be as strong as hoped.

Sydney fell 0.44 per cent, or 23.0 points, to 5,207.9, Seoul eased 0.23 per cent, or 4.63 points, to 2,020.27 and Singapore dropped fell 0.45 per cent, or 14.46 points, to 3,165.25.

However, Shanghai added 0.43 per cent, or 9.62 points, to 2,237.77 despite the weak data at the weekend, with investors buying consumer-related shares owing to a bigger jump in inflation than expected.

Tokyo, Hong Kong and Jakarta were closed for public holidays.

With the US expected to run out of cash to pay its bills on Thursday, focus is on Washington, where President Barack Obama has urged Republicans to agree to a debt ceiling hike.

Failure to raise the spending limit would mean a default that could have a devastating effect around the world.

Democratic Senate Majority Leader Harry Reid said he would meet with his Republican counterpart, Mitch McConnell, their second talks in as many days.

"Americans want Congress to compromise. Americans want Congress to give the economy certainty and security, not more indecision and doubt," he said.

After the talks he added: "I'm optimistic about the prospect for a positive conclusion."

Republican Senator Bob Corker said he was confident an agreement can be reached. "This is something that's wreaking havoc around the world and will affect economic growth, and I do hope that over the next week we'll reach a conclusion and I think we will," he said.

China and Japan - who between them hold more than US$2.4 trillion of US debt - have urged the US to get its house in order and avert a default.

On currency markets the dollar weakened, buying 98.25 yen compared with 98.59 yen, while the euro was at $1.3561 against $1.3546. The single currency eased to 133.25 yen from 133.55 yen.

US stocks ended the week on a high on Friday as dealers bet lawmakers would eventually reach a deal.

The Dow rose 0.73 per cent, the S&P 500 climbed 0.63 per cent and the Nasdaq added 0.83 per cent.

China said Saturday that an unexpected drop in exports led to its trade surplus narrowing to US$15.2 billion in September from $28.6 billion in August.

Overseas shipments fell 0.3 per cent year-on-year to $185.64 billion, while imports increased 7.4 per cent to $170.44 billion, indicating potential headwinds for the economy, which relies heavily on global demand for its products.

Analysts surveyed by Dow Jones Newswires had forecast a surplus of US$27 billion.

Data on Monday showed inflation at a seven-month high of 3.1 per cent in September, up from 2.6 per cent in August and higher than expectations of 2.9 per cent.

In oil trade New York's main contract, West Texas Intermediate for delivery in November was up 24 cents at $102.26, while Brent North Sea crude for November added two cents to $111.30.

Gold cost $1,281.60 at 1045 GMT compared with $1,290.30 on Friday.

In other markets:

- Bangkok edged up 0.14 per cent, or 2.06 points, to 1,459.84.

Coal producer Banpu slipped 0.86 per cent to 28.75 baht while Bangkok Bank gained 0.49 per cent to 205.00 baht.

- Kuala Lumpur ended flat, losing 0.06 per cent, or 0.99 points, to 1,784.76.

CIMB Group fell 0.1 per cent to 7.48 ringgit, while slipped 0.4 per cent to 4.86. Tenaga Nasional added 0.6 per cent to 9.10 ringgit.

- Manila eased 0.73 per cent, or 47.10 points, to 6,442.70.

Philippine Long Distance Telephone Co. fell 1.03 per cent to 2,870 pesos, while SM Prime Holdings dropped 1.80 per cent to 16.38 pesos.

- Mumbai rose 0.38 per cent, or 78.95 points, to 20,607.54.

Karnataka Bank rose 16.97 per cent to 108.97 rupees, while Tata Consultancy Services rose 4.27 per cent to 2,214.65 rupees.

- Taipei fell 0.90 per cent, or 75.41 points, to 8,273.96.

Taiwan Semiconductor Manufacturing Co was 1.41 per cent lower at Tw$105.0 while Hon Hai Precision shed 1.86 per cent to Tw$74.0.

- Wellington fell 0.14 per cent, or 6.60 points, to 4,734.17.

Fletcher Building was down 0.42 per cent at NZ$9.42, Telecom eased 0.22 per cent to NZ$2.295 and Air New Zealand was steady on NZ$1.49.