Asian stocks higher, amid caution over US debt

Asian stocks edged higher in cautious trade Tuesday as Washington lawmakers try to hammer out a deal to avert a catastrophic US default. The dollar touched a four-month low against the yen in early Tokyo trade after an address to the nation by President Barack Obama failed to indicate any progress on a debt agreement. Tokyo was flat by the break, as the yen's strength pared gains made on the back of a batch of upbeat earnings reports on Monday as well as optimism over other results this week. Hong Kong rose 0.74 percent and Sydney added 0.77 percent while Seoul gained 0.21 percent. Shanghai edged up slightly after diving almost three percent in the previous session following the weekend's fatal high-speed rail crash in China. Despite the fast-approaching deadline for the White House, Democrats and Republicans to reach a deficit-cutting budget deal, equity markets remain calm as they expect an agreement to be made in time. While the two sides agree a default must be avoided, they disagree on how to cut the deficit, with Democrats wanting to slash some spending and raise taxes but the Republicans vowing to oppose any tax rises. But SHK Financial analysts Daniel So said: "The current situation is similar to early last week before the passage of the Greek bailout package. "Investors are taking a wait-and-see stance before a likely solution (to the US debt-ceiling issue)," he told Dow Jones Newswires. The government must raise its $14.3 trillion debt ceiling by August 2 so that it can pay its debts. A default by the world's richest country would cause a seismic event on global markets, analysts say, which would likely lead to another financial crisis and worldwide recession. Obama has described such as scenario as economic "Armageddon". The president late Monday went on prime time television to warn that the Republicans' unyielding approach to the US debt crisis was a "dangerous game" and urged Americans to press for compromise. With a potential US default looming, Obama appealed to Americans to "make your voice heard". However, Hideki Hayashi, global economist at Mizuho Securities, said: "The speech falls short of market expectations that the President might show progress on the ongoing standoff." Obama's statement sent the dollar down to 77.89 yen, its lowest level since March 17 after the Japanese earthquake. The greenback later saw volatile trade. After the speech it recovered to surge to 78.70 yen before falling back to 78.11. The euro rose to $1.4476 from $1.4382 in New York Monday and was at 113.11 yen from 112.37 in New York. While attention is mostly on events in Washington, Japanese traders were given some support by earnings data from camera giant Canon, which rose 2.8 percent after it raised its earnings outlook for the year on Monday. Household goods maker Kao soared 4.67 percent to 2.261 yen in the wake of its upbeat earnings announced Monday. New York's main contract, West Texas Intermediate light sweet crude for September delivery, was up three cents to $99.23 a barrel in morning Asian trade. Brent North Sea crude for September delivery eased 44 cents to $117.50. Gold opened in Hong Kong at $1,614.00-$1,615.00 an ounce, down from Monday's finish of $1,617.00-$1,618.00.