Asian shares down as US faces shutdown over budget row

People walk past the electronic stock indicator of a securities firm in Tokyo, Monday, Sept. 30, 2013. Asian markets slumped on Monday as the US government edged towards a shutdown over a budget battle. AP PHOTO/SHIZUO KAMBAYASHI

HONG KONG—Asian markets slumped on Monday as the US government edged towards a shutdown over a budget battle.

The face-off in Washington also sent the dollar lower, while the euro suffered selling pressure from a crisis in Italy that has left the country’s five-month-old government on the brink of collapse.

Tokyo fell 2.06 percent, or 304.27 points, to 14,455.80, Sydney shed 1.66 percent, or 88.2 points, to end at 5,218.9 and Seoul eased 0.74 percent, or 14.84 points, to 1,996.96. Hong Kong shed 1.50 percent, or 347.18 points, to close at 22,859.86.

But Shanghai rose 0.68 percent, or 14.64 points, to close at 2,174.67 after a survey by banking giant HSBC showed Chinese manufacturing expanded further in September.

Traders have been spooked by the latest row on Capitol Hill, with the US government on the brink of shutting down after the House of Representatives approved a Republican bill seeking to delay President Barack Obama’s healthcare law.

Lawmakers now have until midnight Monday to reach an agreement to keep the government open, but analysts say the chances of a breakthrough are slim.

Obama has threatened to veto any bill that undercuts his sweeping health overhaul, while Democratic Senate Majority Leader Harry Reid says his chamber will reject the bill.

Adding to the crisis is a deadline to raise the country’s borrowing limit, which comes up in mid-October. With Republicans determined not to raise the debt ceiling unless Obama gives way on the health bill, there are fears that Washington will run out of cash and default on its repayments.

“Things are far from the ‘panic stage,’ but they don’t have to be for investors to be spooked by the apparent intractability of the US political deadlock,” said Tachibana Securities market analyst Kenichi Hirano.

The impasse weighed on the dollar Monday, with the unit weakening to 97.87 yen from 98.24 yen in New York Friday.

The euro fell to $1.3500 and 132.16 yen compared with $1.3519 and 132.88 yen.

The single currency suffered selling pressure after Italian Prime Minister Enrico Letta called a vote of confidence in his left-right government, as former premier Silvio Berlusconi pulled his party’s ministers out of the coalition.

President Giorgio Napolitano will have to mediate to find a way out of the latest political impasse, and has said he would dissolve parliament, triggering new elections, only “if there are no other solutions.”

On oil markets New York’s main contract, West Texas Intermediate for delivery in November, fell $1.35 to $101.52 in afternoon trade. Brent North Sea crude for November was down 95 cents to $107.68.

Gold cost $1,340.86 at 0805 GMT compared with $1,324.60 on Friday.

In other markets:

— Mumbai fell 1.76 percent, or 347.50 points, to 19,379.77 points on fears of future interest rate hikes.

Private oil explorer Essar Oil fell 7.61 percent to 50.40 rupees, while steel giant Tata Steel fell 5.65 percent to 271.6 rupees.

— Taipei fell 0.69 percent, or 56.81 points, to 8,173.87.

Taiwan Semiconductor Manufacturing Co. shed 2.43 percent to Tw$100.5 while Hon Hai Precision was 0.52 percent lower at Tw$75.9.

— Jakarta ended down 2.43 percent, or 107.54 points, at 4,316.18.

Cement producer Semen Indonesia fell 5.80 percent to 13,000 rupiah, while tin miner Timah rose 3.21 percent to 1,610 rupiah.

— Singapore closed down 1.32 percent, or 42.31 points, at 3,167.87.

Real estate developer Capitaland fell 2.52 percent to Sg$3.09, while United Overseas Bank was down 2.87 percent at Sg$20.67.

— Kuala Lumpur fell 7.54 points, or 0.42 percent, to close at 1,768.62.

Financial firm CIMB Group Holdings lost 3.2 percent to 7.52 ringgit, while Axiata Group shed 0.2 percent to 6.88. Power company Tenaga Nasional gained 0.3 percent to 9.03 ringgit.

— Wellington eased 0.97 percent, or 46.29 points, to 4,736.39.

Telecom fell 1.9 percent to NZ$2.33 and Warehouse Group was off 2.92 percent at NZ$3.66, while Air New Zealand rose 0.33 percent to NZ$1.52.

— Bangkok lost 2.42 percent or 34.33 points to 1,383.16.

Coal producer Banpu dropped 4.35 percent to 27.50 baht, while Siam Cement fell 5.33 percent to 426 baht.

— Manila slipped 2.95 percent, or 188.01 points, to 6,191.80.

Alliance Global Group fell six percent to 23.50 pesos while SM Investments dropped 4.41 percent to 7.80 pesos.