U.S. index futures slumped, Asian shares declined and the yen strengthened after House Republican leaders canceled a planned vote that would permit higher taxes amid stalled budget talks. Treasuries gained, while oil and precious metals led declines by commodities. Standard & Poor’s 500 Index futures dropped 1.5 percent at 1:04 p.m. in Tokyo, after falling as much as 3.4 percent. The MSCI Asia Pacific Index (MXAP) slid 0.6 percent, reversing an earlier 0.6 percent advance. The yen climbed against all 16 major peers, while the euro weakened 0.4 percent against the dollar. The yield on 10-year U.S. bonds decreased four basis points to 1.76 percent. Oil fell 1.2 percent and gold approached its lowest level since August. The canceled vote on Speaker John Boehner’s plan to allow higher tax rates for annual income above $1 million has thrown budget negotiations deeper into turmoil. “The House did not take up the tax measure today because it did not have sufficient support from our members to pass,� Boehner said in a statement. If Congress doesn’t act, tax rates for income at all levels would rise next month, along with taxes on estates, capital gains and dividends. “The vote delay news is hurting sentiment,� Lee Jin Woo, a fund manager at Seoul-based KTB Asset Management Co., which oversees about $6.5 billion in assets, said by phone today. “While many investors have been focusing too much on whether the agreement will be reached, I think it’s time to ponder the expected drag on the U.S. economy next year, especially at a time when some markets are either at or near previous highs.� Samsung Declines About three stocks fell for each that rose on MSCI’s Asian gauge, which reached its highest level in 16 months on Dec. 19 and has gained 13 percent this year. South Korea’s Kospi index dropped 1 percent and Taiwan’s Taiex Index slid 1.3 percent. Technology companies and material producers led declines. Samsung Electronics Co. (005930), the world’s biggest maker of smartphones and TVs, slumped 3.6 percent in Seoul trading as it faces a European Union antitrust complaint. The Philippine Stock Exchange Index climbed 1 percent to a record on speculation the nation will win an investment-grade rating next year after Standard & Poor’s raised its credit outlook to positive. A 1.5 percent decrease in the S&P 500 would mean a 21.66 point drop to 1,422.03 from yesterday’s close in New York of 1,443.69. Budget Talks Boehner called on President Barack Obama and Senate Majority Leader Harry Reid to come up with legislation to avoid more than $600 billion of tax increases and spending cuts scheduled to start in January. The Congressional Budget Office has said that a failure to avert those changes would probably lead to a recession in the first half of 2013. “The president’s main priority is to ensure that taxes don’t go up on 98 percent of Americans and 97 percent of small businesses in just a few short days,� White House spokesman Jay Carney said in an e-mailed statement. “We are hopeful that we will be able to find a bipartisan solution quickly.� The yen strengthened 0.5 percent to 83.95 per dollar. The dollar added 0.4 percent to $1.3196 per euro. The 17-nation euro lost 0.9 percent to 110.80 yen. Australia’s dollar slid 0.3 percent against the dollar to $1.0449. “The delay in the U.S. budget talks may boost risk-off trades� supporting currencies such as the dollar and yen, said Yunosuke Ikeda, head of Japan foreign-exchange research at Nomura Securities Co., the nation’s biggest brokerage. Crude for February delivery declined to $89.03 a barrel in its biggest loss for two weeks. Prices are still up 2.7 percent this week, the most since September. Gold for immediate delivery dropped 0.4 percent to $1,641.55 per ounce, after retreating to a four-month low of $1,635.70 yesterday. Silver slipped 0.6 percent to $29.79 an ounce. To contact the reporters on this story: Richard Frost in Hong Kong at rfrost4@bloomberg.net; Saeromi Shin in Seoul at sshin15@bloomberg.net To contact the editor responsible for this story: Shelley Smith at ssmith118@bloomberg.net

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