(Adds analysis, quotes, stocks on the move)
SYDNEY Oct 14 (Reuters) – Australian shares fell 0.8 percent on Monday morning, hurt by an unexpected drop in Chinese exports and increasing nervousness as a deadline neared for Washington politicians to strike a deal and avert a possible U.S. debt default.
Although Wall Street closed strongly ahead of the weekend, U.S. stock index futures fell 0.8 percent in early trade, underscoring the fragile market mood .
“The ‘deal or no deal’ game being played in Washington continues to wear down the markets, the sentiment is definitely bearish,” said Vito Henjoto, senior technical strategist at Invast Financial Services in a note.
While both Republicans and Democrats appear in agreement that the debt ceiling should be raised and the government reopened, they remained at loggerheads over the terms for doing so, including the duration of the debt ceiling increase and levels of funding for the government. [ID:nL1N0I309B
The S&P/ASX 200 index fell in a broad-based selloff, down 38.5 points at 5,191.7 by 0038 GMT. The benchmark rallied 1.6 percent on Friday, posting its biggest gain in three months.
The market has faltered since the U.S. government shutdown on Oct. 1, dipping to one-month lows before recovering slightly to the 5,200-level as investors keep a wary eye on the developments in Washington.
The financial sector dragged on Sydney stocks with the Commonwealth Bank of Australia slipping 0.4 percent while Westpac Banking Corp fell 0.2 percent.
Consumer retail staples were also weaker as Wesfarmers Ltd lost 0.4 percent and rival Woolworths Ltd dropped 1.2 percent.
Adding to the dour mood, data over the weekend showed China’s export growth unexpectedly fizzled in September to post a surprise fall. China is Australia’s largest export market.
Miners slipped on the back of the underwhelming Chinese trade data, but losses were contained as copper edged higher on Friday. BHP Billiton Ltd fell 0.3 percent and Rio Tinto Ltd slipped 0.4 percent.
Gold miners Newcrest Mining Ltd and Regis Resources Ltd slumped 4 percent and 2.9 percent, respectively, after bullion prices dropped to a 3-month low.
Discovery Metals Ltd was hovering at all-time lows of A$ 0.05 after cutting its 2013 copper production target for the second time this year due to mine repair work.
Bucking the market, iSelect Ltd rallied 3.2 percent after its chief executive resigned with immediate effect, as the company warned it would not meet its revenue target in the 2014 fiscal year. iSelect shares have lost almost 30 percent since the company’s debut in June.
New Zealand’s benchmark NZX 50 index slipped 0.1 percent to 4,735.2.
Xero Ltd soared 10 percent to all-time highs of NZ$ 19.74 after the online accounting software developer announced a successful raising of NZ$ 180 million from U.S. and New Zealand investors from 9.9 million shares, around 8 percent of shares on issue.
(Reporting by Thuy Ong; Editing by Shri Navaratnam)