AP Business Writer
BANGKOK (AP) -- Uncertainty over whether Washington will be able to work out a spending and taxation deal that is crucial to keeping the U.S. economic recovery on track caused Asian stock markets to stall Monday.
Economists have said the U.S. risks slipping into recession if hundreds of billions of dollars in expiring tax cuts and automatic spending reductions take effect on Jan. 1 -- the so called "fiscal cliff." Congress and the White House must find a compromise to prevent a big hit to the world's biggest economy.
President Barack Obama, fresh from a re-election victory, and House Speaker John Boehner have spoken of compromise but appear to be taking firm stances on some issues, including whether to raise taxes for the wealthiest Americans.
"Despite comments from the US administration and Congressional leaders of a willingness to compromise, markets remain unconvinced," analysts at Credit Agricole CIB in Hong Kong said in a market commentary.
Japan's Nikkei 225 index fell 0.6 percent to 8,704.21, with growth figures showing the economy contracted an annualized 3.5 percent for the quarter ending September. Most economists forecast a further decline in economic activity for the October-December quarter, which would officially put the world's No. 3 economy in recession, according to the common definition of two consecutive quarters of contraction.
South Korea's Kospi fell 0.2 percent to 1,900.27 and Australia's S&P/ASX 200 lost 0.2 percent to 4,453.40. Benchmarks in Singapore, Taiwan and Indonesia fell. The Philippines and New Zealand rose.
Hong Kong and mainland Chinese stock markets rose following comments over the weekend by Chinese Cabinet officials that the country's economic slowdown has ended, although the economy is not ready to stage a recovery, and that exporters still face tough conditions.
Hong Kong's Hang Seng added 0.2 percent to 21,421.44. The Shanghai Composite Index gained 0.1 percent to 2,071.80 and the smaller Shenzhen Composite Index added 0.4 percent to 831.58.
Jackson Wong, vice president at Tanrich Securities in Hong Kong, cautioned against too much optimism regarding China's economy amid disappointing Chinese loan growth figures.
Lending in October stood at 505.2 billion yuan ($80.3 billion), dropping 81.6 billion yuan from a year earlier, the People's Bank of China said Monday, according to Xinhua news agency. The figure decreased from the 623.2 billion yuan of new yuan loans registered in September.
"Expect light trading this week unless major news comes out," Wong said.
Among individual stocks, Suzuki Motor Corp. enjoyed a 5.1 percent jump. The company reported a 30.9 percent rise in April-September consolidated net profit reported Friday.
Australia's QBE Insurance Group, which said it expects losses from superstorm Sandy in the U.S. to be up to $450 million, tumbled 8.2 percent.
Wall Street stocks began a slide Wednesday in the biggest sell-off of the year after Obama won re-election. Then investors immediately turned to worrying about the looming fiscal crunch.
On Friday, the Dow Jones industrial average rose marginally to 12,815.39. The Standard & Poor's 500 rose 0.2 percent to 1,379.85. The Nasdaq composite rose 0.3 percent to 2,904.87.
Benchmark oil for December delivery rose 2 cents to $86.09 in electronic trading on the New York Mercantile Exchange. The contract rose 98 cents to finish at $86.07 per barrel on the Nymex on Friday.
In currencies, the euro rose to $1.2729 from $1.2713 late Friday in New York. The dollar strengthened slightly to 79.47 yen from 79.45 yen.
Follow Pamela Sampson on Twitter at http://twitter.com/pamelasampson
Copyright 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.