Asian markets extend losses on US fears

Asian markets fell on Friday, extending their losses from the previous day as fears the United States is headed for another economic crisis sent Wall Street diving again and dealers running. The yen remained elevated after Barack Obama's re-election as US president stoked concerns of political gridlock in Washington with a “fiscal cliff” approaching that could tip the country back into recession.

But Chinese data showing inflation at a new three-year low provided some hope, giving authorities more room to loosen monetary policy, while industrial output figures also pointed to a pick-up in the economy.

Tokyo fell 0.90 percent, or 79.55 points, to 8,757.60, Sydney fell 0.49 percent, or 21.8 points, to 4,462.0, while Seoul shed 0.52 percent, or 10.00 points, to 1,904.41.

Hong Kong lost 0.85 percent, or 182.53 points, to 21,384.38.

Shanghai ended down 0.12 percent, or 2.44 points, at 2,069.07, although it was well off its earlier lows thanks to the upbeat economic figures indicating China could be emerging from its growth slowdown.

While Obama's victory over Mitt Romney removed uncertainty, traders have now turned their focus to the deep spending cuts and huge tax hikes that will come into force on January 1 if Republicans and Democrats do not reach a deal.

The package is a major threat to the economy after a protracted but possibly reckless compromise was reached last year -- with the expectation a less painful plan could be agreed -- to raise the country's borrowing cap.

If the automatic measures kick in, the United States' slow recovery from the financial crisis could be reversed and the nation tip back into recession, dealing a blow to the global economy.

The threat of a fiscal crisis sent Wall Street tumbling for a second day Thursday.

The Dow, which suffered its worst oneday drop of the year on Wednesday, lost another 0.94 percent, the S&P 500 fell 1.22 percent and the Nasdaq lost 1.42 percent.

However, US dealers were provided another set of upbeat data that indicate the world's biggest economy is picking up.

The commerce department said the country's trade deficit narrowed in September to $41.5 billion, from $43.8 billion in August, thanks to a rebound in exports to a record level for the month.

Expectations had been for the trade deficit to widen to $45.4 billion.

With optimism weakening investors sought out safer assets in the forex market.

In early European trade the single currency fetched $1.2750 and 101.12 yen, from $1.2748 and 101.27 yen in New York late Thursday. The dollar was at 79.33 yen against 79.43 yen in New York.

In comparison the euro bought $1.2932 and 103.77 yen last Friday, while the dollar was at 80.21 yen.