- POSTED: 10 Oct 2013 17:13
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Asian markets were mixed on Thursday as traders nervously awaited signs of progress in solving a budget stand-off in Washington that threatens to plunge the US into default.
HONG KONG - Asian markets were mixed on Thursday as traders nervously awaited signs of progress in solving a budget stand-off in Washington that threatens to plunge the US into default.
President Barack Obama said he will meet leaders of the Republicans and Democrats to try to break the deadlock, which has shut down parts of the government for 10 days and could continue past a deadline to raise the country's borrowing limit.
The dollar got a boost after Obama formally picked fiscal dove Janet Yellen to take over from Ben Bernanke as head of the Federal Reserve.
Tokyo ended up 1.12 percent, or 156.87 points, at 14,194.71 thanks to the weaker yen, but Sydney dropped 0.11 percent, or 5.9 points, to 5,147.1 and Seoul was flat, edging down 1.36 points to close at 2,001.40.
Hong Kong fell 0.36 percent, or 82.67 points, to finish at 22,951.30, while Shanghai lost 0.94 percent, or 20.84 points, to 2,190.93.
Taipei was closed for a public holiday.
Markets are growing jittery that the Capitol Hill row shows no sign of ending as Republicans demand cuts to Obama's flagship health law before they agree to a new budget and a rise in the debt ceiling.
There was some small hope that a deal might be found. Obama announced he would meet both parties at the White House after saying he was open to a short-term rise in the ceiling so that substantive talks on the budget could be held.
"The signs emanating from Washington are slightly more positive for equity sentiment," said Hiroichi Nishi of SMBC Nikko Securities.
"Talk of a short-term increase in the debt limit to allow time for broader budget negotiations is seen as a first step to ending the deadlock," Nishi said.
"But with only a week to go now (until the October 17 default), there isn't a great deal of time."
Failure to lift the borrowing limit would mean the government runs out of money to pay its bills and service its debts, leading to a default that analysts say will have devastating consequences.
In a warning for Congress to get its act together before the deadline, the Organisation for Economic Co-operation and Development said the paralysis was "needlessly putting at risk the stability and growth not only of the US but also the world economy".
Despite the Washington crisis, dealers took some heart from Obama's choice of Yellen as the next Fed chief, which had a positive impact on the dollar.
"While the selection of Yellen, a known policy dove, would generally be seen as negative for the dollar, an active Federal Reserve could be seen as positive for an economy that could become increasingly vulnerable to fiscal headwinds from a chaotic backdrop in Washington," said Omer Esiner, chief market analyst at Commonwealth Forex Exchange.
In afternoon Tokyo trade, the dollar bought 97.72 yen compared with 97.37 yen in New York Wednesday.
The euro sat at US$1.3505 compared with US$1.3523 while it fetched 131.99 yen, against 131.74 yen.
On Wall Street Wednesday, the Dow rose 0.18 percent, while the S&P 500 edged up 0.06 percent but the Nasdaq fell 0.46 percent.
Investors were also poring over the minutes of the Fed's most recent policy meeting that ended with the surprise decision not to start winding down its stimulus programme.
The minutes showed the bank was close to a taper of the US$85b-a-month bond-buying but felt the economy still needed some support. However, it did say the consensus was in line with an end to the scheme by the middle of next year.
On oil markets, New York's main contract, West Texas Intermediate for delivery in November was up 39 cents at US$102.00 in afternoon trade. Brent North Sea crude for November gained 89 cents to US$109.95.
Gold cost US$1,300.10 at 0845 GMT compared with US$1,311.10 on Wednesday.