Asian stock markets fell Monday after U.S. political leaders failed to reach a deal to raise Washington's debt limit that is crucial to avoiding an impending default.

Oil prices fell below $99 a barrel amid investor concern that the lack of a debt agreement could damage the world's biggest economy and reduce demand for crude.

Japan's Nikkei 225 was off 0.8 percent at 10,053.2 points and China's Shanghai Composite Index slid 2.1 percent to 2,711.37. Hong Kong's Hang Seng Index lost 0.8 percent to 22,268.28.

Elsewhere, South Korea's Kospi lost 0.8 percent to 2,152.74 and Australia's S&P/ASX 200 dropped 1.4 percent to 4,538.50.

"The only thing you can be assured of over the coming hours and days is volatility as the political posturing continues in the U.S.," said Ben Potter, market strategist for IG Markets, in a report.

U.S. leaders had hoped to strike a deal Sunday to reassure investors. President Barack Obama has insisted on raising revenues, mainly through letting tax cuts for wealthier Americans expire, but Republicans want more spending cuts and have rejected higher taxes.

A default would mean the U.S. government could not pay all its bills starting next month, including interest and principal on Treasury bonds. That would cause shockwaves through the global economy and financial markets.

Many analysts expect U.S. leaders to reach a last-minute deal to raise the government's $14.3 trillion borrowing limit before an Aug. 2 deadline. But markets are watching anxiously for what tax or spending changes might be part of the settlement.

In China, market heavyweight PetroChina Ltd., Asia's biggest oil and gas producer, and the country's biggest commercial lender, Industrial & Commercial Bank of China Ltd., both were off 0.8 percent.

Chinese railway shares fell after this weekend's deadly bullet train crash in southeastern China. China South Locomotive and Rolling Stock Corp. declined 8.6 percent and China Railway Group was off 7 percent.

The dollar was little changed at 78.45 yen, up slightly from Friday's 78.43. The euro also was largely unchanged at $1.4366.

Benchmark oil for September delivery was down $1 to $98.87 a barrel in electronic trading on the New York Mercantile Exchange. Crude rose 74 cents to settle at $99.87 on Friday.

In London, Brent crude slid 97 cents to $117.70 per barrel on the ICE Futures exchange.