HONG KONG - Asian stocks fell Friday on growing concern that US lawmakers will not break a deadlock on a deal to avert a default by the world's richest country.
Adding to downward pressure was news from Washington that a vote on a plan drawn up by Republican leaders had to be abandoned as they failed to convince the hardline members of their own party.
With the clock ticking on the August 2 deadline, when the Treasury says it will run out of cash, global markets are looking to Washington, where the White House, Democrats and Republicans have failed to agree a deficit-cutting plan.
Tokyo ended 0.69%, or 68.32 points, lower at 9,833.03 as data showing an improvement in industrial production was outweighed by disappointing earnings results, including from Nintendo, which suffered a huge sell-off.
Sydney lost 0.88%, or 39.2 points, to end at 4,424.6 and Seoul shed 1.05%, or 22.64 points, to end at 2,133.21.
Hong Kong fell 0.92% and Shanghai dipped 0.45% in the afternoon.
Politicians on Capitol Hill have been unable to reach a compromise deal that would allow the government to raise the debt ceiling above its current $14.3 trillion.
Most experts agree that a default by the United States could send seismic ripples through the global economy and lead to another downturn like that of 2008.
With just days before the tank runs dry the troubles were compounded when a vote on a Republican plan had to be abandoned late Thursday because party leaders were unable to garner enough support from their own members.
A number of Tea Party-backed Republicans are opposed to any hike in the debt ceiling at all.
"Unfortunately the situation in the US is deteriorating, with clear signs of cracks within the Republicans," CMC Markets chief market strategist Michael McCarthy told Dow Jones Newswires.
However, there is an expectation the deadlock will be broken, with the White House saying it is confident "sanity will prevail in the United States Congress and they will reach a compromise".
The impasse hit Wall Street, with the Dow losing 0.51%, the S&P 500 down 0.32% and the Nasdaq flat.
In Tokyo Nintendo was hammered, losing more than 20% at one point after it posted a first-quarter loss, cut forecasts and slashed the price of its 3DS handheld console less than six months after its launch. It closed 12.2% lower.
There was some good news, however, with data showing industrial production rose for the third straight month in June as companies revive output amid an ongoing recovery of supply chains after the March 11 quake-tsunami.
Japan's output went up 3.9% in June from the previous month.
On currency markets the euro slipped on lingering worries the eurozone will not be able to contain its sovereign debt crisis, despite last week's key bailout deal for Greece that also aimed to avoid more economies falling into trouble.
Also on Friday Moody's warned it was planning to downgrade Spain's credit rating because of the country's budget problems.
The single currency bought $1.4291 in afternoon Tokyo trade, down from $1.4324 late Thursday in New York. It fetched 110.89 yen, up from 111.37.
The dollar traded at 77.53 yen, compared with 77.74 in New York.
New York's main contract, light sweet crude for delivery in September, fell 34 cents to $97.10 per barrel.
Brent North Sea crude for September delivery rose 14 cents to $117.50.
Gold opened in Hong Kong at $1,615.00-$1,616.00 an ounce, down from Wednesday's finish of $1,618.00-$1,619.00.