Asian shares fell on Tuesday on concerns about a downgrade of the United States credit rating and economic worries after sluggish data, while the yen gave some gains on jitters over the possibility of intervention by Bank of Japan.
An 11th hour deal to raise the U.S. debt ceiling cleared its biggest hurdle in the House of Representatives, staving off the prospect of a calamitous default but failing to allay fears Washington could still lose its coveted triple-A credit rating.
U.S. manufacturing grew at its slowest pace in two years in July as new orders contracted, and economic concerns coupled with uncertainty over the U.S. debt deal boosted demand for safe-haven currencies such as the Swiss franc .
The dollar traded around 77.35 yen on Tuesday, having fallen as far as 76.29 on electronic trading platform EBS on Monday, its weakest since the coordinated intervention by major central banks in mid-March to slow its gains, raising speculation that Tokyo will come back into the currency markets.
Japan's Nikkei fell 1.3 percent, while MSCI's broadest measure of Asian shares outside Japan slipped 0.4 percent. U.S. stocks eased on Monday, with the S&P 500 closing down 0.4 percent.
The world's manufacturing sector expanded at its weakest pace in two years last month, as factories reported shrinking orders for the first time since major economies emerged from the banking crisis and recession of 2008.
Commodity markets were subdued. Oil edged up, with U.S. crude CLc1 gaining around 0.5 percent to $95.40 a barrel, while gold was steady around $1,619 an ounce. (Editing by Ramya Venugopal)