ASIA MARKETS: Asia Stocks Volatile As U.S. Debt Deadline Nears

By Carla Mozee, MarketWatch

LOS ANGELES (MarketWatch) -- Equities across Asia seesawed Wednesday as investors watched to see if Washington will craft a deal to raise the debt ceiling in time to meet Thursday's deadline.

The U.S. Senate was due to convene at noon Wednesday after Senate leaders late Tuesday restarted their negotiations on reopening the government and lifting the debt ceiling. The new round of talks came after a plan by House Republicans to vote on their own proposal fell apart.

Australian stocks had turned higher as reports emerged that Senate Majority Leader Harry Reid and Minority Leader Mitch McConnell were optimistic about reaching an agreement on a bill. The S&P/ASX 200 was up 0.1%.

Japanese stocks darted in and out of positive territory, putting the Nikkei Stock Average up 0.2% but the broader Topix down fractionally.

Chinese stocks, however, were solidly lower. Hong Kong's Hang Seng Index fell 0.4%, giving back some of the gains logged over the past two sessions, while the Hang Seng China Enterprises Index also shed 0.4%. On the Chinese mainland, the Shanghai Composite fell 1.4%.

Investors in Chinese assets were also awaiting Friday's release of government data, including third-quarter gross domestic product.

The lackluster tone to Asian trade came after U.S. debt-limit and shutdown concerns helped send Wall Street stocks lower, leaving the Dow Jones Industrial Average (DJI) down 133 points, or 0.9%, at 15,168.01, and the S&P 500 index (SPX) off 0.7% a day after closing at a three-week high.

Each week of the U.S. government shutdown has shaved off 0.1% to 0.25% from fourth quarter U.S. GDP growth, according to an estimate from economists at Société Générale.

Likewise, several consumer and business indicators have already reflected "a rapid decline in confidence as uncertainty has been compounded by the debt-ceiling gridlock," wrote Société Générale cross-asset strategists led by Patrick Legland.

Major Treasury holders, namely Japan and China, are asking the U.S. administration "to find a clean solution" to the impasse, said Société Générale, adding that Japanese investors sold record amounts of foreign bonds in early October, the largest outflows since 2001.

"However, the U.S Treasury market remains the world largest and most liquid bond market, which does not leave investors with many alternatives," they said.

In Hong Kong on Wednesday, stock in Hang Seng Index heavyweights HSBC Holdings PLC (HBC) and China Mobile Ltd. (CHL) gave up 0.3% and 0.4%, respectively. Among the retail group, shares of Li & Fung Ltd. (LFUGY) , a Wal-Mart Stores Inc. (WMT) supplier, gave up 0.7%.

In Tokyo, meanwhile, shares of Softbank Corp. (9984.TO) stood out, rising 2.1% amid news the mobile telecom was in talks to buy a stake in U.S. mobile-phone distributor Brightstar Corp. That move would follow Softbank's agreement Tuesday to buy a 51% stake in Supercell, a Finnish mobile-game maker, for 150 billion yen ($1.52 billion).

Meanwhile, shares of Hong Kong Television Network Ltd. tumbled 34% after the Hong Kong government rejected the company's application for a free-TV license. HKTV, which had invested in infrastructure and other efforts to win the license, said it will cut 320 employees.

But PCCW Ltd. and I-Cable Communications Ltd. each won free-TV licenses, prompting shares of I-Cable to more than double, and PCCW shares to climb 8.9%.

Subscribe to WSJ: http://online.wsj.com?mod=djnwires