Asian stocks fell for a third day this week as US lawmakers failed to break a deadlock over raising the federal debt limit, and durable goods orders in the world\'s biggest economy unexpectedly declined. Toyota Motor slid 2.2 per cent in Tokyo, Mitsubishi UFJ Financial Group fell 1.5 per cent as China Construction Bank led Chinese lenders lower after the government prohibited banks from renewing loans to local financing vehicles. BHP Billiton retreated 2.3 per cent in Sydney after oil and metal prices declined. Nan Kang Rubber Tire surged in Taipei after a newspaper said development of land by the company may reap sales of $3.5 billion (Dh12.8 billion). \"There\'s increased nervousness in equity markets as the debt ceiling deadline draws near,\" said Tim Schroeders, who helps manage $1 billion in global equities at Pengana Capital in Melbourne. \"A de-rating of US debt down the track could reduce monetary liquidity, and some bank earnings may be hurt. Exporter-led earnings are increasingly at risk under such a volatile backdrop.\" Article continues below Higher earnings The MSCI Asia Pacific Index slid 1 per cent to 137.63 as of 7:38pm in Tokyo. More than three stocks fell for each that rose on the gauge. The measure is headed for a decline this week as forecasts for higher earnings at companies from Canon to Baidu were overshadowed by concern the US may default on its debt if lawmakers can\'t reach an agreement on raising the government\'s borrowing limit by August 2 Japan\'s Nikkei 225 Stock Average fell 1.5 per cent, sliding below the 10,000 yen level for the first time in a week and its biggest drop in over a month. South Korea\'s Kospi index declined 0.9 per cent and Australia\'s S&P/ASX 200 Index slipped 1.6 per cent. Hong Kong\'s Hang Seng Index climbed 0.1 per cent, reversing an earlier drop of 1.4 per cent, while the broader Hang Seng Composite Index slipped 0.1 per cent. China\'s Shanghai Composite Index retreated 0.5 per cent. Futures on the Standard & Poor\'s 500 Index were little changed after rising as much as 0.6 per cent yesterday. The index sank 2 per cent on Wednesday in New York as lawmakers indicated they were no closer to reaching a compromise on the federal debt limit, while a government report showed orders for durable goods unexpectedly decreased. The S&P 500\'s biggest decline since June 1 came as House Speaker John Boehner\'s reworked deficit-cutting plan gained support among Republicans, while Senate Majority Leader Harry Reid said his competing proposal to avert a potential US default is the only \"true compromise.\" Stocks extended declines after the US Commerce Department on Wednesday said bookings for goods meant to last at least three years fell 2.1 per cent in June after a 1.9 per cent gain in May that was smaller than last reported. The median forecast of 76 economists surveyed by Bloomberg News projected a 0.3 per cent increase. Demand for business equipment, including machinery and computers, also dropped. Greek default Declines also followed Standard & Poor\'s saying that Greece will partially default on its debt once European officials push through a plan that will see bondholders foot part of the bill of a second bailout agreed to last week in Brussels. The rating company also cut its ranking for Greece to CC, two steps above default, from CCC. A measure of consumer discretionary stocks including exporters such as Toyota and Honda Motor in the Asia-Pacific gauge dropped 1 per cent yesterday. Toyota, which counts North America as its biggest market for sales, slid 2.2 per cent to 3,185 yen. Honda, the automaker which receives 83 per cent of its revenue abroad, declined 1.9 per cent to 3,085 yen in Tokyo. Samsung Electronics gets about 85 per cent of its revenue abroad, lost 1 per cent to 837,000 won in Seoul. The companies were among the biggest drags on the MSCI Asia Pacific index. \"In addition to the recent debt impasse in the US, investors need to be more conscious about the deterioration of the actual economy,\" said Mitsushige Akino, who oversees about $600 million in Tokyo at Ichiyoshi Investment Management. \"Risk avoidance is increasing again.\" The US government may lose its AAA credit rating even if lawmakers reach a plan to avoid a default, Mohammad A. Al Erian, whose Pacific Investment Management is the world\'s largest manager of bond funds, said in an email. BlackRock, Franklin Templeton Investments, Loomis Sayles & Co and Western Asset Management have also said that the nation faces the loss of its top-level grade. Mitsubishi UFJ Financial Group, the largest-listed Japanese holder of US government debt, according to data compiled by Bloomberg, fell 1.5 per cent to 397 yen. Westpac Banking slumped 1.8 per cent to A$20.65. Australia & New Zealand Banking Group lost 1.4 per cent to A$20.99. Heavy drag Banks as a group were the heaviest drags on the MSCI Asia Pacific Index among its 10 industry groups. Chinese banks fell after commercial lenders were banned from rolling over or renewing their loans to local-government financing vehicles, according to a statement posted on the China Banking Regulatory Commission\'s website. China Construction Bank slid 0.9 per cent to HK$6.30 in Hong Kong. Industrial & Commercial Bank of China Ltd. slumped 0.5 per cent to HK$5.96. Bank of China Ltd. declined 0.7 per cent to 3.03 yuan in Shanghai. Raw-material and energy producers dropped the most among the 10 industry groups on the MSCI Asia Pacific Index after crude oil dropped for a second day in New York, while the London Metal Exchange Index of prices for six metals including copper and aluminum slid 0.2 per cent on Wednesday. BHP retreated 2.3 per cent to A$42.03, the biggest single drag on the MSCI Asia Pacific Index. Woodside Petroleum slumped 1.6 per cent to A$38.92. Inpex Corp declined 2 per cent to 590,000 yen. Crude oil for September delivery slid as much as 0.6 per cent to $96.80 a barrel yesterday. Copper in London dropped as much as 0.3 per cent to $9,750 a metric tonne. The MSCI Asia Pacific Index rose 0.9 per cent this year through on Wednesday, compared with a gain of 3.8 per cent by the S&P 500 and a drop of 3.2 per cent by the Stoxx Europe 600 Index. Stocks in the Asian benchmark are valued at 13.7 times estimated earnings on average, compared with 13.1 times for the S&P 500 and 10.9 times for the Stoxx 600. Among stocks that advanced, Nan Kang Rubber jumped 6.9 per cent to NT$58.70 in Taipei, the biggest gain on the MSCI Asia Pacific Index.