SHANGHAI/NEW YORK (Reuters) – Asian shares fell on Thursday and U.S. Treasury yields ticked lower as investors fretted over the slow pace of U.S. stimulus talks and a surge in global cases of COVID-19.

FILE PHOTO: A passersby wearing a protective face mask stands in front of a screen displaying world stock indexes outside a brokerage, in Tokyo, Japan October 5, 2020. REUTERS/Issei Kato

Global investor sentiment took a fresh hit over talks to boost the world’s largest economy after U.S. President Donald Trump on Wednesday accused Democrats of being unwilling to craft an acceptable compromise on stimulus, following reports of progress earlier in the day.

It remains unclear whether stimulus negotiations would continue ahead of the U.S. presidential and congressional elections on Nov. 3.

“We still think that this deal will remain elusive in the sense that this amount that we are talking about, $1.88 trillion, that’s about 9% of GDP, and 2.2 trillion which is Speaker Pelosi’s package, is even higher at around 10% of GDP,” said Anthony Chan, chief Asia investment strategist at Union Bancaire Privee (UBP) in Hong Kong.

“Even if both sides do manage to reach an agreement, given the tight deadline ahead of the election it’s unlikely that something like that would be able to go through the Senate smoothly.”

In morning trade, MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS was down 0.63%.

Australian shares .AXJO gave up 0.6%, Seoul’s Kospi .KS11 was off 0.59% and and Chinese blue-chips .CSI300 dropped 1.1%.

The Nikkei .N225 was 0.69% lower.

Uncertainty over the passage of a bill to stimulate a pandemic-ravaged economy comes as the United States faces a new wave of COVID-19 cases.

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Nearly two-thirds of U.S. states were in a danger zone of coronavirus spread and six, including election battleground Wisconsin, reported a record one-day increase in COVID-19 deaths on Wednesday.

Against the backdrop of stimulus talks and the spread of the novel coronavirus, Wall Street’s three major averages closed lower on Wednesday after a choppy trading session.

The Dow Jones Industrial Average .DJI inched lower by 0.35%, while the S&P 500 .SPX lost 0.22%. The tech-heavy Nasdaq Composite .IXIC dropped 0.28%.

On Thursday, the dollar was 0.11% higher against the yen at 104.67 JPY=, while the euro EUR= notched down 0.19% to $1.1839.

But against a basket of major peers, the dollar =USD appeared relatively unaffected by setbacks to stimulus talks, trading only slightler higher at 92.784.

“Markets are now pricing in a strong likelihood of a Biden Presidency perhaps even clean sweep of Congress, and this is weighing on the USD, as they view a less confrontational trade environment. They will also probably be factoring in a large fiscal stimulus early next year, with none of the hold up that is currently preventing a deal,” Rob Carnell, chief economist at ING in Singapore said in a note.

The yield on benchmark U.S. 10-year Treasury notes US10YT=RR ticked down to 0.8108% from a U.S. close of 0.816% on Wednesday.

In commodity markets, oil prices dropped, adding to sharp losses overnight, after higher U.S. gasoline inventories pointed to a deteriorating outlook for fuel demand as coronavirus cases soar.[EIA/S]

U.S. West Texas Intermediate (WTI) crude CLc1 futures fell 0.6% to $39.79 a barrel and Brent crude LCOc1 futures wer 0.48% lower at $41.358 a barrel.

Via Reuters Finance