Asian stocks edged down on Monday on fears US lawmakers will not agree a budget to avoid a default in the world’s number one economy as well as the ongoing eurozone crisis.

Investors chose to brush off news that fewer than expected European banks had failed stress tests, while the euro suffered fresh selling pressure and gold hit a record high above $1,600 an ounce.

Hong Kong fell 0.32 per cent, or 70.63 points, to 21,804.75, Shanghai fell 0.12 per cent, or 3.48 points, to 2,816.69 and Seoul closed 0.69 per cent, or 14.72 points, lower at 2,130.48.

Tokyo was closed for a public holiday.

Traders are growing nervous over the United States, where President Barack Obama and the Republican party struggled to make progress at the weekend in hammering out a deal to raise the debt ceiling.

The eurozone crisis also continues to weigh as officials struggle to make headway on a second bailout for Greece, which narrowly avoided a default last month.

Markets have become skittish ahead of a European Central Bank (ECB) meeting on Thursday that will discuss the bailout, with many concerned by weekend comments by ECB president Jean-Claude Trichet and German Chancellor Angela Merkel.

Greece’s financial woes have raised concerns of a spillover into Italy and Spain, which many analysts fear could lead to another global financial crisis.

Traders were little moved by Friday’s announcement by the European Banking Authority that just eight lenders — including five from Spain and two from Greece — out of 91 had failed its stress tests.

In other markets, Singapore closed down 0.17 per cent, Mumbai fell 0.30 per cent, Taipei fell 0.42 per cent, Manila rose 0.39 per cent, Kuala Lumpur ended down 0.93 per cent, Jakarta rose 0.24 per cent, and Bangkok rose 0.37 per cent.