SYDNEY, Dec 31 (Reuters) - Financial markets across Asia and
Western Europe were either closed or closing early on Monday,
abandoning the field as the U.S. Congress and the White House
battled it out for a solution to the impending "fiscal cliff".
Market holidays were in force in Japan, South Korea, Taiwan,
Indonesia, Thailand, the Philippines and Vietnam, with half-day
trading in Australia, New Zealand, Hong Kong and Singapore.
MSCI's broadest index of Asia-Pacific shares outside Japan
was effectively unchanged given the extensive market closures.
It has gained about 18 percent this year, a sharp turnaround
from an 18 percent plunge in 2011.
In Washington, Senate Majority Leader Harry Reid said the
Senate would resume sitting at 11 a.m. Washington time (1600
GMT), to continue discussions, but there were still significant
differences between the two sides.
S&P 500 futures were up 5.6 points, or 0.4 percent,
to 1,389.40 in electronic trading at 0030 GMT. Dow and
Nasdaq futures were also slightly higher on news the
parties were still talking.
But traders said the rise in the futures market did not
necessarily bode well for a Wall Street rally on Monday after
the cash market and futures markets closed far apart on Friday.
"Hard to predict how or when there will be a deal, but I
believe investors will show their displeasure tomorrow by
selling stocks if there is no deal," said Mohannad Aama,
managing director at Beam Capital Management, an investment
advisory firm in New York.
The U.S. dollar was trading around 85.96-97, off its
two-year, four-month highs above 86.63-64 yen seen last Friday
as investors sold to take profits amid the fiscal cliff
The euro inched up 0.14 percent to 1.323 on Monday.
An agreement on the U.S. budget would be viewed as positive for
riskier currencies such as the euro and Australian dollar, while
a deadlock is deemed positive for the haven and highly liquid
The Australian dollar was around $1.0365, from
$1.0375 in late New York on Friday. It touched a one-month low
of $1.0345 last week, but is on track to finish up 1.4 pct this
The Aussie dollar was supported by a bounce in iron ore
prices , which hit eight-month highs at $139.40.
Prices are now up 61 percent from the lows hit in September.
Australian shares fell 0.4 percent in a shortened session on
Monday ahead of the New Year's Day holiday with big miners and
banks losing ground as investors awaited the outcome of the U.S.
The benchmark S&P/ASX 200 index fell 19.4 points to
4,651.9 at 0028 GMT. It rose 0.5 percent to 4,671.3 on Friday,
its highest close since June 2, 2011.
Although iron ore prices had jumped to eight-month high, a
weaker U.S. economy could bite into the gains in commodities,
said Damien Boey, an equity strategist at Credit Suisse.
"If you've got a weaker American economy because taxes have
gone up and confidence is down, what you will find is that the
key driver of commodities prices, which is the Chinese economy,
will not actually be able to sustain strong growth," he said.
Gold added $1.25 an ounce to $1,656.64 by 0004 GMT.
Gold is up around 6 percent for the year and is on track for a
12th consecutive year of gains on rock-bottom interest rates,
concerns over the financial stability of the euro zone, and
diversification into bullion by central banks.
U.S. crude futures slipped on Monday for a third consecutive
session the budget crisis, with failure to reach a solution seen
causing a large drop in fuel consumption.
U.S. crude for February delivery was down 14 cents to
$90.66 a barrel by 2353 GMT after a 2.4 percent gain last week.
Front-month prices are on track to post an 8 percent fall in
2012, after three straight annual gains. Brent crude
slipped 26 cents to $110.36 a barrel, but is set to post a 2.8
percent year-on-year increase in 2012, up for a fourth
Hong Kong shares could end 2012 off 18-month closing highs
on Monday as the United States dithered on a deal that will
avert a fiscal crisis, with turnover likely weak in a half day
session before shutting for the New Year's Day holiday.
Last Friday, the Hang Seng Index crept up 0.2 percent
to 22,666.6, its highest closing level since July 8, 2011. It is
up 23 percent on the year to date after sinking 20 percent in
The China Enterprises Index of the top Chinese
listings in Hong Kong rose 0.3 percent last Friday to its
highest close since Aug. 5, 2011. The H-shares index is up 14.5
percent in 2012 after diving 22 percent last year.