BUSINESS
07/25/2011 07:29 EDT | Updated 09/24/2011 05:12 EDT

Oil, Stock Markets Down After US Leaders Fail To Agree On Debt Ceiling

AP

THE CANADIAN PRESS -- BEIJING, China - World stock markets were lower Monday after U.S. political leaders failed to reach a deal to raise Washington's debt limit and avoid a default.

Oil prices fell to near $99 a barrel in Asia amid investor concern the lack of a debt agreement might damage the world's biggest economy and reduce demand for crude.

Investors were not reassured by Secretary of State Hillary Rodham Clinton's assertion that America's economy is sound despite its current woes and the deadlock over the national debt.

Speaking in Hong Kong, Clinton predicted a debt deal would be reached before the Aug. 2 deadline to avoid an unprecedented default. She said the partisan debate over the debt ceiling was a fact of life in American politics.

In Europe, France's CAC-40 was down 0.3 per cent at 3,380.76 and Germany's DAX was off 0.1 per cent at 7,321.78. London's FTSE was little changed at 5,934.15.

Futures augured losses on Wall Street. S&P 500 futures dropped 0.7 per cent to 1,331.40 and Dow futures fell 0.7 per cent to 12,532.

Japan's Nikkei 225 closed down 0.8 per cent at 10,050.01. China's Shanghai Composite Index slid 3 per cent to 2,688.75 after a weekend bullet train collision killed 38 people. Hong Kong's Hang Seng Index lost 0.7 per cent to 22,293.29.

Elsewhere, South Korea's Kospi shed 1 per cent to 2,150.48 and Australia's S&P/ASX 200 dropped 1.6 per cent to 4,530.40.

Markets in Singapore, Taiwan and Indonesia also fell while India and Thailand gained.