Asian markets weighed by US fiscal cliff gridlock

HONG KONG: Asian markets fell in New Year's Eve-shortened trade on Monday as hopes that US lawmakers will reach a deal to avert the fiscal cliff faded just a day before a deadline.

However there was some bright news out of China, where a survey by HSBC showed manufacturing activity hit a 19-month high in December.

Hong Kong lost 0.20 percent, Sydney was 0.28 percent lower and Singapore shed 0.92 percent but Shanghai jumped 0.46 percent.

Tokyo, Seoul, Taipei, Jakarta, Bangkok and Manila were all closed for public holidays.

Republicans and Democrats on Capitol Hill ended Sunday without reaching a compromise deficit-cutting budget that would be less painful than the deep spending cuts and tax hikes due to take effect on Tuesday.

Leaders remained locked in talks that appeared to be making little headway, with each side blaming the other as analysts warned the measures could tip the economy into recession.

Senate Republican Minority Leader Mitch McConnell warned that, despite through-the-night talks, negotiators were still a long way from success, with Democrats not responding to a "good faith offer" from his party.

Senate Democratic Majority Leader Harry Reid agreed talks were at a standstill, adding: "There is still significant distance between the two sides, but negotiations continue."

If talks fail on Monday President Barack Obama has demanded a vote on his fallback plan that would preserve lower tax rates for families on less than $250,000 a year and extend unemployment insurance for two million people.