Asian shares slip on US fiscal cliff fears

Asian shares slip on US fiscal cliff fears

HONG KONG - Asian markets fell Wednesday, following losses on Wall Street, as traders fret US lawmakers will not agree a deal to avert the fiscal cliff.

Forex dealers also ran for cover after the Senate Majority Leader Harry Reid said "little progress" had been made in cross-party talks on the looming tax hikes and spending cuts due to come in on January 1 that would tip the US into recession.

Tokyo slumped 1.22 per cent, or 114.95 points, to close at 9,308.35, Seoul ended 0.65 per cent, or 12.42 points, lower at 1,912.78 while Sydney shed 0.21 per cent, or 9.5 points, to finish at 4,447.3.

Hong Kong was down 0.62 per cent, or 135.05 points, at 21,708.98 and Shanghai closed down 0.89 per cent, or 17.64 points, at 1,973.52.

Reid's comments raised the spectre of another long battle between Republicans and Democrats, similar to last year's row over raising the country's borrowing cap, which led to the United States losing its AAA credit rating.

"The difficulties with solving the US 'fiscal cliff' are coming to a head again and may present a good selling opportunity for investors," said Kenichi Hirano, market analyst at Tachibana Securities.

The news hit Wall Street shares. The Dow ended 0.69 per cent lower, the S&P 500 lost 0.52 per cent and the Nasdaq slid 0.30 per cent.

The losses came despite data showing US consumer confidence rose in November to its highest level since February 2008, while a separate report said home prices rose in September, a fresh sign of recovery in the crucial housing market.

Also Tuesday the Organisation for Economic Cooperation and Development (OECD) warned that failure to reach a deal would likely see the world's number one economy fall back into recession, which would have a global knock-on effect.

And Richard Fisher, president of the Federal Reserve Bank of Dallas, said a temporary fix with no clarity on tax and regulatory policy could have destructive effects.

Currency traders have also been spooked, with euro and dollar falling against the yen after enjoying a recent rally on hopes for a US deal, while the Greek bailout success had also been priced in.

The euro bought US$1.2922 and 105.78 yen in Asian trade, compared with US$1.2938 and 106.30 yen in New York late Tuesday.

The dollar was at 81.86 yen against 82.16 yen.

The yen has seen selling pressure in recent weeks after the man expected to become prime minister following next month's election vowed to press for more aggressive monetary easing to lift the economy.

Focus has moved to Washington as Greece debt concerns abate after the country was eventually given long-frozen bailout cash on Tuesday.

After marathon talks in Brussels, the eurozone and the International Monetary Fund agreed to unlock 43.7 billion euros (US$56 billion) in loans and on the need to grant significant debt relief for decades to come.

Greece must still meet a series of agreed conditions but "the decision will certainly reduce the uncertainty and strengthen confidence in Europe and in Greece," said European Central Bank President Mario Draghi.

On oil markets New York's main contract, West Texas Intermediate (WTI) for January delivery, was down 18 cents to US$87.00 a barrel in the afternoon, and Brent North Sea crude for January was down seven cents at US$109.80 in volatile trade.

Gold was at US$1,739.60 at 0800 GMT compared with US$1,746.42 late Tuesday.

In other markets:

Taipei was almost unchanged, edging up 4.73 points to 7,434.93.

Hon Hai Precision added 0.54 per cent to Tw$93.3 while TSMC was 0.42 per cent lower at Tw$95.9.

Manila rose 0.85 per cent, or 47.27 points, to 5,633.72.

Dealers welcomed news that the economy grew 7.1 per cent year on year in the three months to September, making it the best performer in Southeast Asia.

Top-traded Philippine Long Distance Telephone Co. gained 1.41 per cent to 2,586 pesos while SM Investments Corp. rose 0.12 per cent to 842.50 pesos.

Wellington ended flat, edging up 2.55 points to 4,012.16.

Air New Zealand added 2.0 per cent to NZ$1.27 and Fisher & Paykel Healthcare climbed 2.4 per cent to NZ$2.59.

Jakarta ended down 0.75 per cent, or 32.69 points, at 4,304.823.

Car maker Astra International dropped 5.13 per cent to 7,400 rupiah while tin miner Timah fell 2.19 per cent to 1,340 rupiah.

Singapore closed flat, slipping 0.14 points at 3,011.77.

Commodities supplier Olam International tumbled 3.85 per cent to S$1.50 after issuing a 45-page rebuttal to a report by a US research firm that it was in danger of collapsing.

Bangkok gained 0.22 per cent, or 2.91 points, to 1,299.94. Electricity firm EGCO lost 0.39 per cent to 127.50 baht, while oil company PTT added 0.64 per cent to 316.00 baht.

Kuala Lumpur shares rose 0.52 per cent, or 8.35 points, to end at 1,606.52. Plantations giant Sime Darby ended 2.7 per cent lower at 9.00 ringgit while Malaysian Airlines fell 16.8 per cent to 0.84 ringgit.

Mumbai was closed for a public holiday.

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