Asia Roundup: US debt fears spook markets

HONG KONG: Asian stocks were mixed yesterday on nervousness
about the progress of talks aimed at averting a US debt default despite
President Barack Obama backing a cross-party plan.

However,
markets were given some support as the outlook in the eurozone
brightened after France and Germany came to an agreement on an aid
strategy for indebted Greece.

Tokyo ended flat, edging up 4.49 points to 10,010.39, Seoul closed 0.46 per cent, or 9.91 points, lower at 2,145.04 and Sydney added 0.14 per cent, or 6.3 points, to 4,556.

Shanghai
lost 1.01 per cent, or 28.31 points, to 2,765.89 after preliminary
figures from HSBC showed manufacturing in China had declined in July for
the first time in a year.




Obama met separately on Wednesday with Democrats and Republicans to
reach a deficit-cutting deal that would allow the nation's debt limit
to be raised before an August 2 deadline. But the talks ended
without news of a breakthrough, leading to concerns that a tentative
deal brokered by the bipartisan group of six senators could not be
built on to pass through both houses of congress.

HSBC said it
expected a contraction, which comes after five interest rate hikes
since October, which Beijing introduced as it tries to tame inflation,
which hit a three-year-high 6.4 per cent in June.

A slowdown
in activity in China is considered bad for other economies as many
nations rely on the Asian giant to help propel their own growth.

However, there was some cheer for investors after news from Europe
that an agreement had been reached between German Chancellor Angela
Merkel and French President Nicolas Sarkozy over a new Greek bailout.

"The market is now waiting to see what the expected Greek aid
package looks like," said Dai Sato, dealer at Mizuho Corporate Bank.

In other markets:

* Taipei ended 0.13 per cent, or 10.97 points, higher at 8,717.14.

* Manila fell 0.16 per cent, or 7.03 points, to 4,480.01. The loss follows a six-day rally that sent the index to a record high.

* Wellington closed 0.38 per cent, or 12.97 points, higher at 3,421.34.

* Jakarta rose 0.43 per cent, or 17.44 points, to 4,068.07.

* Bangkok added 0.25 per cent, or 2.78 points, to close at 1,104.15. - AFP