* U.S. politicians still trying to hammer out a deal to
* U.S. debt ceiling authorization lapses on Thursday
* U.S. stock index futures sag, oil prices ease modestly
* China export growth fizzles in September, CPI at 7-month
By Dominic Lau and Ian Chua
TOKYO/SYDNEY, Oct 14 Asian shares and U.S. stock
index futures fell while the safe-haven yen rose on Monday as a
possible U.S. debt default crept closer after weekend talks in
Washington failed -- though markets appear still to expect that
a last-minute compromise will be reached.
Adding to the gloom, China's export growth unexpectedly
fizzled in September, underscoring worries about flagging global
demand, and annual consumer inflation quickened to a seven-month
MSCI's broadest index of Asia-Pacific shares outside Japan
, which had hit a three-week high on Friday on
hopes a U.S. deal was imminent, eased 0.2 percent, although
China's CSI300 index added 0.5 percent. Markets in
Japan and Hong Kong are closed on Monday for public holidays.
U.S. stocks had risen strongly on Friday reflecting
hopes a deal to raise the $16.7 trillion federal borrowing limit
was near. However, politicians remain at loggerheads as the Oct.
17 deadline approaches. U.S. stock index futures
shed 0.8 percent in Asian trade.
U.S. equity markets will trade on Monday, although some
other markets, such as Treasuries, will close for the Columbus
Day holiday. In Asia, U.S. Treasury futures edged up
"This is such bad theatre. Congress is likely to take this
to the wire. Expect a selloff in stocks on Monday," said Sharon
Lee Stark, fixed-income strategist at D.A. Davidson & Co in St.
"Tuesday, bond traders have to position for a possible
default which could cause a sell off in risk assets and rising
U.S. rates. A bad scenario from all perspectives just because
our government can't get it together!"
Financial bookmakers expected major European indexes
to open down as much as 0.3 percent on Monday.
Failure to break the stalemate before Thursday's deadline
would leave the U.S. government unable to pay its bills in the
coming weeks, an unthinkable outcome for the global economy and
Still, trading has remained relatively calm as many analysts
expect Republicans and Democrats to strike a last-minute deal,
believing U.S. politicians would want to avoid the dire
consequences of a default.
"Most likely, a solution will be found before, or be in the
making, by October 17," analysts at Nomura wrote in a client
"The tail-risk comes into play if there is no clear
framework for a solution by October 17. Entering this tail would
see risk jump in terms of funding market stress and risk assets
Some financial institutions have reduced the use of Treasury
bills as collateral for trades as the deadline gets closer. Hong
Kong's securities exchange is applying a bigger discount on U.S.
Treasuries used as margin collateral.
The failure of the weekend talks in Washington saw investors
seeking safety in the yen and Swiss franc.
The dollar fell 0.3 percent to 98.26 yen after
gaining 0.5 percent on Friday, and the euro dipped 0.1 percent
to 133.30 yen.
The U.S. currency was down 0.3 percent at 0.9096. The
dollar index, which tracks the greenback against a basket
of major currencies, dipped 0.1 percent.
In commodity markets, gold fell 0.1 percent to about
$1,271 an ounce, adding to last week's 2.9 percent decline.
Brent crude inched down 0.1 percent to around $111 a
barrel, extending Friday's 0.5 percent decline, as concerns that
the U.S. fiscal standoff and slower growth in China would crimp
"China still faces significant external headwinds while a
recovery in domestic demand is lifting import growth," HSBC said
in a note on the weak export data.
"Beijing should keep its accommodative policy and steer
structural reforms to sustain a recovery driven by domestic
demand," it added.