Asian shares lower on US budget fears

HONG KONG: Asian markets slipped on Thursday, with attention now on another stand-off in Washington over the US budget that could see parts of the government shut down if a deal is not agreed within days.

The dollar sank further following some underwhelming economic data that suggest the US economy is not yet strong enough for the Federal Reserve to start winding down its stimulus programme in the near future.

Tokyo fell 0.92 percent as exporters were hit by a strengthening yen, while Hong Kong slipped 0.41 percent, Sydney lost 0.14 percent, and Shanghai was 0.43 percent lower -- but Seoul added 0.20 percent.

Republican and Democrats have until midnight on Monday to agree a budget package to fund the government. If a deal is not reached some federal agencies will shut down on Tuesday, and hundreds of thousands of workers will be sent home.

Adding to investors fears is Republicans' refusal to agree to lift the US debt ceiling from $16.7 trillion -- which must be achieved by mid-October -- unless there are cuts to Obamacare in the budget.

"It's very difficult for the market to go up from here with all the shenanigans in Washington," said Mace Blicksilver, director at Marblehead Asset Management.

On Wall Street, the Dow fell 0.40 percent, the S&P 500 dipped 0.27 percent and the Nasdaq declined 0.19 percent.

Traders fear a repeat of the 2011 gridlock in Washington that saw lawmakers take debt ceiling negotiations to the wire but not before global markets were sent tumbling. The face-off led to the historic downgrade of the country's AAA debt rating by Standard & Poor's.

With uncertainty reigning in the United States, the dollar has suffered a sell-off this week, ending in New York on Wednesday at 98.46 yen, compared with levels above 99 yen seen at the start of the week.

In early Tokyo forex trade the greenback sat at 98.62 yen.

The euro fetched $1.3517 and 133.00 yen Thursday against $1.3522 and 133.18 yen in New York.

Adding to dollar weakness was a batch of uninspiring economic data that suggests the economy remains fragile.

US new home sales bounced back in August after July's slump, but the pace of 421,000 units a year remained slower than in January-March.

And durable goods orders rose just 0.1 percent in August, not rebounding from July's sharp fall.

Investors remain uncertain about the Fed's plans for its $85 billion a month stimulus after it last week left the programme unchanged, saying the economy was not yet able to stand on its own two feet.

On oil markets, New York's main contract, West Texas Intermediate for delivery in November was down 29 cents to $102.37, while Brent North Sea crude for November eased 22 cents to $108.10.

Gold cost $1,334.48 at 0210 GMT compared with $1,320.56 on Wednesday. (AFP)