Asia Shares Can't Get Past U.S. Impasse

By SARAH TURNER in SydneyAnd V. PHANI KUMAR in Taipei Asian stock markets ended lower Monday as U.S. lawmakers' failure to reach a weekend deal to increase the nation's debt ceiling heightened investor worries about a default. Mainland Chinese shares tumbled on lingering worries about the nation's economic-growth outlook, with railway stocks hit especially hard after a high-speed <a href="http://www.salehandbagsbags.com"><strong>cheap gucci handbags for sale</strong></a> rail system accident over the weekend. Hong Kong's Hang Seng Index ended 0.7% lower at 22293.29, Japan's Nikkei Stock Average fell 0.8% to 10050.01, Australia's S&amp;P/ASX 200 index lost 1.6% at 4530.4, Taiwan's Taiex gave up 0.9% to 8683.51 and South Korea's Kospi finished down 1% at 2150.48 India's Sen###### went its own way, gaining 0.8% to 18871.29. China's Shanghai Composite Index ended at 2688.75, a 3% drop—its worst one-day percentage loss since January. Rail-related stocks were hurt by Saturday's collision of two high-speed railway trains, which killed at least 35 people. China Railway Erju dropped 5.1% and China Railway Tielong Container Logistics tumbled 8.6% in Shangha while China Railway Construction Group and China Railway Group each sank 6.7% in Hong Kong, in addition to losing 5.9% and 5.7%, respectively, in Shanghai. "We believe the accident will substantially undermine people's confidence in the Chinese [high-speed rail] system and significantly discourage use of the HSR," Barclays analysts wrote in an emailed note to clients. "As a result, we expect travellers to gradually turn to alternative transport means, including expressways. The accident is also expected to deter the development of HSRs under construction or in planning across China." Airline stocks rose in Hong Kong, in a bit of a ghoul rally. Air China added 3.6%, and China Southern Airlines gained 3.4%. India's jump was led by telecom stocks, which rose on hopes other carriers would follow Bharti Airtel by raising prices. Bharti was up 5.4% and Reliance Communications soared 15%. Losses in the rest of the region came after U.S. politicians haggled into Sunday night in Washington about raising the country's debt ceiling before an Aug. 2 deadline to avoid a potential default, but couldn't reach an agreement. "For the time being I think that [the negotiations have] fairly much stalled," said Stephen Roberts, Sydney-based strategist at Nomura Securities—though he added that equity markets were holding up reasonably well against the backdrop of lingering U.S. debt concerns, supported by recent good earnings. The dollar index traded at 74.180, compared with 74.221 late Friday. Against the yen, the dollar was buying ¥78.08, down from ¥78.47 late Friday; the yen's rising value weighed on many Japanese exporters. Sony slid 2.2%, Honda Motor dropped 1.6% and Toyota Motor declined 1.4% in Tokyo. South Korean exporters were also weak, with LG Electronics down 1% and Hyundai Motor 1.1% lower. David Bianco, Bank of America Merrill Lynch's head of U.S. equity strategy, wrote to clients the bank expects that a "stopgap deal comes at the last minute—an agreement that will lift the debt ceiling and prevent interest-payment defaults and disorderly spending cuts, but fails to provide a credible long-term fiscal solution or lift rating agency concerns." Mr. Bianco added it was likely that a more comprehensive follow-up deal will be needed to provide funding through the next election and prevent a U.S. credit-rating downgrade—though he expects that follow-up deal to disappoint as well, leading to a likely rating cut to AA from AAA by year-end. The financial sector felt some pain, with HSBC Holdings down 0.6% in Hong Kong, Commonwealth Bank of Australia off 1.9% in Sydney and Mitsubishi UFJ Financial Group and Mizuho Financial Group down 2% and 1.5%, respectively, in Tokyo. Regional energy stocks also lost ground as benchmark Nymex crude-oil futures eased back below 99 a barrel for a large part of the Asian session. PetroChina dropped 2.9% and Cnooc shed 1.2% in Hong Kong; Shanghai-listed shares of PetroChina fell 2.1%. Woodside Petroleum lost 2.4% <a href="http://rooyee.org/view.php?id=2508"><strong>Articles Jam » discount oakley sunglasses This photo are an</strong></a> in Sydney. Shares of AWE tumbled 10 in Sydney after the company said reserves at its Tui oil field assets could be smaller than estimated earlier.