Il Nuovo Postiglione - Asian markets mixed as sluggish debt talks worry investors

Regional traders were provided a tepid lead from Wall Street, where disappointing retail sales data and weak earnings from Home Depot indicated softening consumer demand.

But analysts said the readings were unlikely to give the Federal Reserve room to pause its interest rate hikes yet.

All eyes are on Washington, where lawmakers remain deadlocked in negotiations to lift the country's borrowing limit to pay its debts and avert a market-rattling default.

US President Joe Biden met Republican House speaker Kevin McCarthy and other congressional leaders at the White House on Tuesday after saying staff-level talks had produced no shift.

McCarthy told reporters there was still "a lot of work to do" before the country runs out of cash, which the Treasury has warned will happen around June 1.

However, there was a sliver of light as he said he ultimately expected a deal.

"America is the number one economy in the world. And when we get done with these negotiations, America's economy is going to be stronger," McCarthy said.

And the White House said Biden was "optimistic that there is a path to a responsible, bipartisan budget agreement if both sides negotiate in good faith".

In a bid to get an agreement over the line, the president -- who flies to Japan on Wednesday for a G7 summit -- scrapped subsequent stops in Papua New Guinea and Australia, instead returning to Washington on Sunday.

Still, investors remain nervous about the possibility of a default, which many economists warn will send shivers through the world economy.

In early Asian trade, Hong Kong, Shanghai, Sydney, Singapore and Wellington fell, though Seoul, Taipei, Manila and Jakarta edged up.

"The standoff has forced traders to keep one foot on the gas and one foot on the brake, causing markets to spin wheels this week," said SPI Asset Management's Stephen Innes.

-Japan GDP boosts Nikkei-

Tokyo led gainers after figures showed Japan's economy grew more than expected in January-March thanks to a surge in tourism after pandemic border restrictions were lifted.

The figures helped push the Nikkei 225 even higher, and it has now piled on more than 15 percent since the turn of the year, while the Topix is at a three-decade high.

Analysts said the strong market performance has been helped by corporate reforms and the central bank's ultra-loose monetary policies.

Comments from several Fed officials did little to provide any clarity on its plans for rates at next month's policy meeting.

Richmond president Thomas Barkin said he was open-minded but still looking for signs that more than a year of tightening was having the necessary effect on inflation, which remains well above the bank's target.

"I do want to learn more about what's happening with all these lagged effects," he told Bloomberg Television.

"But I also want to reduce inflation. And if more increases are what's necessary to do that, I'm comfortable doing that."

- Key figures around 0230 GMT -

Tokyo - Nikkei 225: UP 0.7 percent at 30,039.41 (break)

Hong Kong - Hang Seng Index: DOWN 0.1 percent at 19,955.10

Shanghai - Composite: DOWN 0.1 percent at 3,287.13

Euro/dollar: DOWN at $1.0865 from $1.0865 on Tuesday

Pound/dollar: DOWN at $1.2483 from $1.2483

Dollar/yen: UP at 136.37 yen from 136.37 yen

Euro/pound: UP at 87.01 pence from 87.01 pence

West Texas Intermediate: DOWN 0.4 percent at $70.86 per barrel

Brent North Sea crude: DOWN 0.4 percent at $74.91 per barrel

New York - Dow: DOWN 1.0 percent at 33,012.14 (close)

London - FTSE 100: DOWN 0.3 percent at 7,751.08 (close)

M.Dodaro--INP