By PAMELA SAMPSON, Associated Press
BANGKOK (AP) — Asian stocks rose Tuesday as investors gained confidence that President Barack Obama and the U.S. Congress will reach a budget deal to avert a package of tax hikes and spending cuts that could throw the world's No. 1 economy into recession.
News of a possible budget deal before the end of the year enabled markets to shake off a credit downgrade that was slapped on France late Monday. France's prized AAA rating was yanked, Moody's Investors Service said, over its weaker growth prospects and its exposure to Europe's financial crisis.
Investors were further cheered by U.S. housing data, which showed sales of previously occupied homes rose in October, helped by a stronger job market and record-low mortgage rates. The pace of sales is roughly 11 percent higher than a year ago.
Japan's Nikkei 225 index edged up 0.1 percent at 9,163.35. Hong Kong's Hang Seng rose 0.9 percent to 21,444.85 and South Korea's Kospi added 0.5 percent to 1,887.77. Australia's S&P/ASX 200 advanced 0.4 percent to 4,380.50.
Analysts at Credit Agricole CIB in Hong Kong said hopes of a U.S. budget deal and the firmer U.S. housing data would underpin stocks despite the French downgrade.
Obama and congressional leaders are in talks to avoid going over a "fiscal cliff" on Jan. 1, when tax increases and government spending cuts are set to take effect. If they are allowed to take full effect, the cuts and tax increases will total about $800 billion in 2013. Economists say they could knock the U.S. economy back into recession.
Markets may be in for some volatility, because volumes will likely be light leading up to the Thanksgiving holiday in the U.S. on Thursday. Big price swings are more likely when there are fewer buyers and sellers in the market.
Investors will also be monitoring this week's developments in Greece's bailout saga, amid hopes that the country's euro partners and the International Monetary Fund will finally sign off on the release of €31.5 billion, which is money the country needs to avoid bankruptcy.
Finance ministers from nations that use the euro will meet Tuesday. Later in the week, leaders will convene to discuss the European Union's budget for the next few years.
Benchmark oil for December delivery was down 33 cents to $88.96 in electronic trading on the New York Mercantile Exchange. The contract rose $2.36, or 2.3 percent, to finish at $89.28 in New York on Monday.
In currencies, the euro fell to $1.2785 from $1.2807 late Monday in New York. The dollar fell to 81.26 yen from 81.33 yen.
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