BANGKOK (AP) -- Lack of progress in negotiations for a deal to avoid a U.S. budget crisis before a January deadline sent Asian stock markets lower on Wednesday.
President Barack Obama and U.S. lawmakers have until Jan. 1 to reach a deal to trim the country's unwieldy deficit. Otherwise, a series of automatic tax increases and sharp spending cuts will take effect that could drag the world's No. 1 economy into recession.
A high-ranking member of the U.S. Senate unnerved investors and sent Wall Street lower on Tuesday after expressing frustration over the budget impasse and the looming "fiscal cliff."
Japan's Nikkei 225 index fell 1.1 percent to 9,318.80, a day after closing at a seven-month high. South Korea's Kospi shed 0.7 percent to 1,911.70 and Australia's S&P/ASX 200 lost 0.2 percent to 4,447.30. Hong Kong's Hang Seng fell 0.9 percent to 21,657.91.
Obama plans to make a public case this week for his strategy for dealing with the issue as he pressures opposing lawmakers to allow tax increases on the wealthy while extending tax cuts for families earning $250,000 or less.
On Wall Street, reports released Tuesday showing increases in U.S. consumer confidence and orders for machinery and equipment failed to boost stocks significantly.
"If one could just take politicians and the fiscal cliff out of the picture, an optimistic outlook would be far easier to cobble together. There's been depressingly little news of cliff breakthroughs, or even developments, of late," said analysts at DBS Bank Ltd. in Singapore in an email commentary.
Mainland China's Shanghai Composite Index, which hit a four-year low on Tuesday, fell a further 0.8 percent to 1,976.14. The smaller Shenzhen Composite Index tumbled 1.6 percent to 753.66.
Linus Yip, strategist at First Shanghai Securities in Hong Kong, said the steep drop in Shanghai can be attributed to the expiration of lock up periods for some investors, which allows them to sell their shares and creates a glut on the market for the stock.
Otherwise, the drop among Asian stock markets represents profit-taking by investors who've enjoyed substantial gains in the past two months, Yip said.
Among individual stocks, Australian flag carrier Qantas Airways fell 1.9 percent after ending its 40-year partnership with the tourist body Tourism Australia and suspending a $50 million marketing deal. Japan's Toshiba Corp. fell 4.5 percent. Kobe Steel Ltd. plunged 7.8 percent.
The Dow Jones industrial average fell 0.7 percent to close at 12,878.13. The Standard & Poor's 500 index fell 0.5 percent to close at 1,398.94. The Nasdaq composite fell 0.3 percent to 2,967.79.
Benchmark oil for January delivery was up 3 cents to $87.21 per barrel in electronic trading on the New York Mercantile Exchange. The contract fell 56 cents to finish at $87.18 per barrel on the Nymex on Tuesday.
In currencies, the euro fell to $1.2932 from $1.2939 on Tuesday in New York. The dollar fell to 81.83 yen from 82.17 yen.
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