ASIA-Shares to struggle as U.S. debt impasse weighs

WELLINGTON: Asian stocks face another tentative session as investors stay cautious in the face of the stalemate in talks to raise the $14.3 trillion U.S. debt ceiling.

The main Wall Street indices fell between 0.1 percent and 0.7 percent as the lack of progress ahead of the Aug. 2 deadline, dragged stocks lower and overshadowed solid earnings reports.

The CBOE Volatility Index, Wall Street's gauge of investor anxiety, rose 4.6 percent and broke above a 20 reading, which may already reflect a likely U.S. debt downgrade.

The United States will lose its top-notch credit rating from at least one major rating agency, according to a Reuters poll.

Light volumes, however, suggested many investors have taken to the sidelines until the debt wrangle becomes clearer, with a prevailing view that a deal will be struck at the 11th hour.

Asian stocks listed on Wall Street rose 0.47 percent while world stocks, as measured by the MSCI world equity index, were 0.19 percent higher.

British shares rose 0.1 percent while European shares slipped 0.3 percent.

The U.S. dollar was dumped across the board, falling to a four-month trough against the euro and a record low against the Swiss Franc, while gold and oil prices were boosted.

Japanese markets, which made ground on robust earnings reports on Tuesday, are set for a softer start, with Nikkei futures traded in Chicago 40 points below the last closing level in Osaka.

Australian stocks may also edge higher, with share price index futures are down 0.4 percent to be 48.3 points below the close of the underlying S&P/ASX 200 index. – Reuters