Asian Stocks Decline as U.S. Lawmakers Mired in Debt Stalemate

Asian stocks fell, with a regional gauge retreating from a four-month high, as American lawmakers struggled over an accord to raise the U.S. debt limit and restore government operations.

LG Electronics Inc., the world's No. 2 television maker that gets about 30 percent of sales in North America, slipped 0.9 percent in Seoul. Newcrest Mining Ltd. (NCM), Australia's biggest gold producer, declined 3.9 percent as the bullion traded near a three-month low. OZ Minerals Ltd., a copper supplier, tumbled 8.1 percent in Sydney after reducing its production forecast.

The MSCI Asia Pacific excluding Japan Index dropped 0.3 percent to 471 as of 10:04 a.m. in Singapore, with about three shares falling for each that rose. Markets in Tokyo and Hong Kong are shut for holidays. With the U.S. borrowing authority set to lapse Oct. 17, Senate leaders in Washington sought a pact to avert a default and re-open the government.

"It's a situation no one wants to be in, causing market volatility," said Angus Gluskie, managing director at White Funds Management Ltd., where he helps oversee about $550 million "The two political parties do need to reach an agreement. If there's no deal by Thursday, markets will fall further. Investors are getting a little bit concerned on China after seeing a couple of weak data points."

Senate Majority Leader Harry Reid was negotiating with Minority Leader Mitch McConnell after talks between President Barack Obama and House Speaker John Boehner broke down. Chinese exports unexpectedly fell in September, data Oct. 12 showed.

Regional Gauges

Australia's S&P/ASX 200 Index declined 0.7 percent and Taiwan's Taiex retreated 0.9 percent. New Zealand's NZX 50 Index and South Korea's Kospi Index (KOSPI) both slipped 0.2 percent.

Singapore's Straits Times Index dropped 0.3 percent. The nation's economy shrank an annualized 1 percent in the three months through September from the previous quarter, when it expanded a revised 16.9 percent, the Trade Ministry said in a statement today. The median forecast in a Bloomberg News survey of 13 economists was for a 4 percent contraction.

China's Shanghai Composite Index was little changed. The nation's consumer prices rose 3.1 percent in September from a year earlier. That exceeded the 2.8 percent median estimate of 44 analysts surveyed by Bloomberg News and compared with a 2.6 percent gain in August. India will release inflation data later today.

Reid Confident

Standard & Poor's 500 Index futures sank 0.7 percent. Reid said he's "in conversation" with McConnell and is "confident" Republicans will agree to end the partial government shutdown and raise the debt ceiling. McConnell said in a statement that it's time for Democrats to support a plan, based on one drafted by Republican Susan Collins, which Reid rejected Oct. 12.

The talks are shifting away from Republican efforts to curtail Obama's signature health-care law to rescinding a tax on medical devices to focus on the level of spending and the duration of the deficit-ceiling extension.

Obama, in a phone call with House Minority Leader Nancy Pelosi of California, "reinforced that there must be a clean debt limit increase" -- and a stopgap spending measure also free of policy add-ons -- before budget negotiations can begin, according to a White House statement.

"The market fully expects a deal to be done, but they are going to be nervous until it's confirmed," Matt McCormick, who helps oversee $10.1 billion as a portfolio manager at Cincinnati, Ohio-based Bahl & Gaynor Inc., said by phone. "It will be jittery until it happens. A jittery, nervous market will blow up when it is finally resolved. Then it will trend back down."

The MSCI Asia Pacific Index, which includes Japan, climbed 1.3 percent last week amid optimism U.S. lawmakers were moving closer to resolving the debt impasse. The gauge traded at 13.6 times estimated earnings on Oct. 11, compared with 15.4 for the S&P 500 and 14.3 for the Stoxx Europe 600 Index.