World stocks fall as US debt deadlock continues

BEIJING (AP) - World stock markets were lower Monday after U.S. political leaders failed to reach a deal to raise Washington's debt limit and avoid a default.

Oil prices fell to near $99 a barrel in Asia amid investor concern the lack of a debt agreement might damage the world's biggest economy and reduce demand for crude.

Investors were not reassured by Secretary of State Hillary Rodham Clinton's assertion that America's economy is sound despite its current woes and the deadlock over the national debt.

Speaking in Hong Kong, Clinton predicted a debt deal would be reached before the Aug. 2 deadline to avoid an unprecedented default. She said the partisan debate over the debt ceiling was a fact of life in American politics.

In Europe, France's CAC-40 was down 0.3 percent at 3,380.76 and Germany's DAX was off 0.1 percent at 7,321.78. London's FTSE was little changed at 5,934.15.

Futures augured losses on Wall Street. S&P 500 futures dropped 0.7 percent to 1,331.40 and Dow futures fell 0.7 percent to 12,532.

Japan's Nikkei 225 closed down 0.8 percent at 10,050.01. China's Shanghai Composite Index slid 3 percent to 2,688.75 after a weekend bullet train collision killed 38 people. Hong Kong's Hang Seng Index lost 0.7 percent to 22,293.29.

Elsewhere, South Korea's Kospi shed 1 percent to 2,150.48 and Australia's S&P/ASX 200 dropped 1.6 percent to 4,530.40. Markets in Singapore, Taiwan and Indonesia also fell while India and Thailand gained.

"The only thing you can be assured of over the coming hours and days is volatility as the political posturing continues in the U.S.," said Ben Potter, market strategist for IG Markets, in a report.

U.S. leaders had hoped to strike a deal Sunday to reassure investors. President Barack Obama has insisted on raising revenues, mainly through letting tax cuts for wealthier Americans expire, but Republicans want more spending cuts and have rejected higher taxes.

A default would mean the U.S. government could not pay all its bills starting next month, including interest and principal on Treasury bonds. That would cause shockwaves through the global economy and financial markets.

Many analysts expect U.S. leaders to reach a last-minute deal to raise the government's $14.3 trillion borrowing limit before the Aug. 2 deadline. But markets are watching anxiously for what tax or spending changes might be part of the settlement.

Chinese shares suffered their biggest one-day loss in six months as railway-related shares plunged after this weekend's deadly bullet train crash that raised doubts about rapid expansion of the high-speed rail network. Producers of cement and water conservation technology also suffered.

China South Locomotive and Rolling Stock Corp. declined 8.9 percent and Gem Year Industrial Co. Ltd., a maker of fasteners used by the railway industry, fell by the daily 10 percent limit.

"Investors might be affected by the accident and prefer to watch the market. Also, many people are wondering whether such quick economic development is correct," said Yang Yining, an analyst at Capital-Edge Investment & Management Co. in Shanghai.

The dollar fell to 78.18 from 78.43 late Friday in New York. The euro was little changed at $1.4374


Breitbart
hostgator coupon 2011