- POSTED: 08 Oct 2013 17:18
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Asian stocks rose on bargain hunting on Tuesday after two days of losses, but dealers remain nervous that the US budget stand-off shows no signs of being solved, fuelling fears Washington will suffer a catastrophic default.
HONG KONG: Asian stocks rose on bargain hunting on Tuesday after two days of losses, but dealers remain nervous that the US budget stand-off shows no signs of being solved, fuelling fears Washington will suffer a catastrophic default.
Despite Republicans and Democrats digging in their heels and raising the stakes in the Capitol Hill deadlock the dollar rebounded against the yen, lifting Japanese exporters.
Tokyo added 0.30 per cent, or 41.29 points to end at 13,894.61 and Seoul was up 0.42 per cent, or 8.34 points, at 2,002.76 but Sydney slipped 0.23 per cent, or 11.7 points, to 5,149.4.
Hong Kong was 0.89 per cent higher, adding 204.90 points to 23,178.85 and Shanghai climbed 1.08 per cent, or 23.53 points, to 2,198.20 in the first session after a week-long Chinese holiday.
However, Katsuhiro Kondo, a broker with Tokai Tokyo Securities, said: "Considering the recent decline, I can say it's natural to see buying on dips.
"But today's rebound does not guarantee a firm recovery. It's difficult to buy shares until the US budget impasse finishes."
Global traders are nervously awaiting some movement from lawmakers on Capitol Hill as an October 17 deadline approaches for raising the country's debt ceiling.
Failure to do so will mean the government will be unable to pay its bills or service its debts, causing a default that analysts have warned could send the world economy back into recession similar to that after the financial crisis.
A similar crisis in 2011 saw a deal struck at the last minute but not before global markets were sent tumbling and Standard & Poor's cut Washington's AAA credit rating.
Worries about the borrowing limit have drowned out angst over a week-long government shutdown that has seen hundreds of thousands of federal workers sent home and several agencies closed down.
And despite world governments led by China and Japan urging Congress to get its act together, Republicans and Democrats remain at loggerheads, blaming each other for the impasse.
Beijing warned the United States to act quickly to establish the credibility of the dollar, the world's major reserve currency.
On Wall Street, the Dow fell 0.90 per cent, the S&P 500 lost 0.85 per cent and the Nasdaq gave up 0.98 per cent.
The crisis weighed on the dollar in the morning but the unit enjoyed some support against the yen in the afternoon.
In Tokyo, the greenback bought 97.12 yen in the afternoon, against 96.68 yen in New York on Monday.
The euro traded at $1.3566 compared with $1.3579, while it was also at 131.77 yen, from 131.30 yen.
However, National Australia Bank said in a note: "With the debt ceiling set to be breached in just 10 days' time, market nervousness is rising."
It added that "the yen stands to benefit the most from the US fiscal issues, due to its strong safe-haven characteristics and dissociation from the US budget troubles".
On oil markets, New York's main contract, West Texas Intermediate for delivery in November rose 34 cents to 103.37 while Brent North Sea crude for November added one cent to $109.69.
Gold cost $1,325.00 at 0800 GMT compared with $1,313.05 on Monday.
In other markets, Taipei rose 0.50 per cent, or 41.99 points, at 8,375.65; Wellington fell 0.37 per cent, or 17.37 points, to 4,738.68; and Manila closed 0.18 per cent higher, adding 11.65 points to 6,454.86.