BANGKOK (AP) â€” Uncertainty over whether Washington will be able to work out a spending and taxation deal that is crucial to keeping the U.S. economic recovery on track caused Asian stock markets to stall Monday.
Economists have said the U.S. risks slipping into recession if hundreds of billions of dollars in expiring tax cuts and automatic spending reductions take effect on Jan. 1 â€” the so called "fiscal cliff." Congress and the White House must find a compromise to prevent a big hit to the world's biggest economy.
President Barack Obama, fresh from a re-election victory, and House Speaker John Boehner have spoken of compromise but appear to be taking firm stances on some issues, including whether to raise taxes for the wealthiest Americans.
"Despite comments from the US administration and Congressional leaders of a willingness to compromise, markets remain unconvinced," analysts at Credit Agricole CIB in Hong Kong said in a market commentary.
Japan's Nikkei 225 index fell 0.7 percent to 8,693.29. South Korea's Kospi fell 0.4 percent to 1,897.51 and Australia's S&P/ASX 200 lost 0.1 percent to 4,457.20. Benchmarks in Singapore, Taiwan and Indonesia fell. The Philippines and New Zealand rose.
But Hong Kong and mainland Chinese stock markets rose following comments over the weekend by Chinese Cabinet officials that the country's economic slowdown has ended but that the economy is not ready to stage a recovery, and that exporters still face tough conditions.
Hong Kong's Hang Seng added 0.2 percent to 21,415.80. The Shanghai Composite Index gained 0.2 percent to 2,074.13 and the smaller Shenzhen Composite Index added 0.6 percent to 833.42.
Wall Street stocks began a slide Wednesday in the biggest sell-off of the year after Obama won re-election. Then investors immediately turned to worrying about the looming fiscal crunch.
On Friday, the Dow Jones industrial average rose marginally to 12,815.39. The Standard & Poor's 500 rose 0.2 percent to 1,379.85. The Nasdaq composite rose 0.3 percent to 2,904.87.
Benchmark oil for December delivery was down 18 cent to $85.88 in electronic trading on the New York Mercantile Exchange. The contract rose 98 cents to finish at $86.07 per barrel on the Nymex on Friday.
In currencies, the euro rose to $1.2723 from $1.2713 late Friday in New York. The dollar strengthened slightly to 79.47 yen from 79.45 yen.
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