ASIA STOCKS fell on U.S. budget impasse

A possible government shutdown in the U.S. loomed large in Asia Monday, sparking a measured selloff across the region’s stock markets. 

U.S. budget talks hit an impasse over the weekend as lawmakers wrangled over funding for President Obama’s signature health law. Congress must pass a budget before Tuesday to avoid a partial shutdown of the federal government, but jabs traded by Washington leaders over the weekend indicated that passage remains far from certain. 

The MSCI Asia Excluding Japan Index is up 6% since the start of July, on track for its best quarter in a year. 

The Nikkei Stock Average traded 1.3% lower, steadying after earlier falling more than 2%. Helping was the U.S. dollar which recouped some losses after earlier falling to a one-month low of ¥97.53. 

In Japan retail sales rose 1.1% in August from a year earlier. The figures, released by the Ministry of Economy, Trade and Industry, also showed that sales at large-scale retailers fell 0.1% on year, after adjustment for the change in the number of stores, marking the second straight month of declines. 

Toyota Motor Corp. lost 1.9%, Mizuho Financial Group Inc. fell 2.7%, Nippon Yusen K.K. dropped 3.1%. Meanwhile, industrial-plant operator Chiyoda Corp. jumped 2.2% after a report it plans to build the world’s first large-scale plant to produce hydrogen for fuel-cell cars. 

In Sydney, the benchmark S&P/ASX 200 fell 1.3%, more than shedding all the gains added last week, when the index hit levels not seen since before the global financial crisis. 

Hong Kong’s Hang Seng Index slumped 1.1%. Stocks in Shanghai, however, edged up 0.6% in the market’s final session before the week-long Golden Week holiday. 

China has been a standout in Asia this quarter, with the Shanghai benchmark up 9.8% so far, rebounding after a shaky first half of the year. 

Data released showed the HSBC China Manufacturing Purchasing Managers' Index edged up to a final reading of 50.2 in September from 50.1 in August.The final gauge of nationwide manufacturing activity, however, was lower than HSBC's preliminary September PMI of 51.2 announced Sept. 23. 

Banking, transportation, property and metal issues traded broadly lower, including a 1.7% pullback in China Construction Bank Corp. and a 1.9% fall in Cosco Pacific Ltd. 

Elsewhere in the region, South Korea’s benchmark Kospi Composite fell 0.4% and Singapore’s Straits Times Index lost 0.6%.

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