HONG KONG: 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 also remained at elevated levels 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.
Tokyo fell 0.94 percent by the break, Hong Kong lost 0.53 percent, Sydney shed 0.42 percent and Shanghai was 0.11 percent off, while Seoul slipped 0.88 percent.
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 in 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 one-day 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, maintaining the yen's strength and hurting the euro.
In early Asian trade the single currency fetched $1.2741 and 101.28 yen, from $1.2748 and 101.27 yen in New York late Thursday. The dollar was at 79.47 yen against 79.43 yen in US trade.
In comparison the euro bought $1.2932 and 103.77 yen last Friday, while the dollar was at 80.21 yen.
The euro was also weak after the European Central Bank said it would keep interest rates on hold, refusing to announce any cut and saying it was up to governments to work on getting the region's finances back on a level footing.
Regional finance ministers are due to decide whether to release the latest tranche of rescue cash for Greece, which on Thursday posted a record unemployment level of 25.4 percent of the workforce.
European Central Bank President Mario Draghi welcomed a sweeping austerity package passed by Greek lawmakers on Wednesday to qualify for the money, saying it "really represents progress".
Investors are also keeping an eye on China where a week-long congress is underway at which the country's next leaders will be anointed.
On Friday official data showed Chinese inflation eased to a nearly three-year low in October, hitting 1.7 percent year-on-year, compared with 1.9 percent in September.
Dealers saw the figures as providing the central bank more leeway to cut interest rates to spur the economy, which is showing signs of breaking out of a recent slumber.
Oil prices were higher, with New York's main contract, light sweet crude for delivery in December gaining 13 cents to $85.22 while Brent North Sea crude for December delivery was up 20 cents at $107.45.
Gold was at $1,734.40 by 0345 GMT compared with $1,714.90 late Thursday.
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