US Secretary of State Hillary Clinton said Monday she was confident lawmakers would reach a deal to avert a debt default, addressing business leaders in Hong Kong towards the end of an Asian tour.
"The political wrangling in Washington is intense right now," she said, as the White House and top lawmakers scrambled to reach an agreement on avoiding a disastrous default on the country's debt.
"I am confident that Congress will do the right thing and secure a deal on the debt ceiling and work with President (Barack) Obama to take steps to improve our long-term fiscal outlook," the top US diplomat said.
Democrats and Republicans have been sparring over a measure to raise the $14.3 trillion US debt ceiling, allowing Washington to pay its bills past an August 2 deadline, while cutting $2.7 trillion in spending over 10 years.
Obama has warned of economic "Armageddon" if the talks fail and the US goes into a devastating default -- though analysts said they continued to believe an agreement would be reached.
Markets in Asia fell Monday in reaction to the impasse, although losses were muted on expectations a deal would eventually be reached.
Clinton's comments came after she met Hong Kong Chief Executive Donald Tsang and the city's legislators as she neared the end of an Asian tour in which she weighed in on North Korean denuclearisation talks and South China Sea tensions.
She was later due in the southern Chinese boom town of Shenzhen, considered the heartland of the country's industrial machine, for talks with Chinese officials.
The top US diplomat's visit comes as Beijing and Washington continue sparring over their increasing economic integration, with the US leading calls for China to boost the value of its currency, the yuan, which critics argue is artificially undervalued to make China's exports cheaper.
Beijing, meanwhile, has called for the lifting of US export and investment controls directed against China, arguing move could help conquer the steep trade imbalance between the two powers.
Clinton attended a series of meetings from Thursday on the Indonesian island of Bali culminating in the Association of Southeast Asian Nations Regional Forum security dialogue.
In a sign that stalled talks with North Korea may restart, Clinton invited a top North Korean envoy to New York for "exploratory talks" on the possible resumption of the six-party negotiations on denuclearisation.
That revelation came after envoys from North and South Korea held unexpected talks Friday, on the sidelines of the Asian security forum.
Clinton said she was "encouraged" by the talks, but warned that the US was not ready to offer new concessions to re-start the stalled negotiations.
A senior official travelling with Clinton on Monday reiterated her note of caution.
"Those who are suggesting we are on the fast track to the resumption of six-party talks, we need to see many more indications from the North Koreans before we reach that point," the official said.
The six-nation talks involve the two Koreas, China, the United States, Japan and Russia. The last round ended in a stalemate in December 2008.
Clinton also said rising tensions in the South China Sea threatened regional peace, warning against using force in a region considered to be rich in oil and gas deposits -- and one of Asia's potential military flashpoints.
The Philippines, China, Vietnam, Malaysia, Taiwan and Brunei claim all or part of the Spratlys, part of a broader territorial dispute across the South China Sea.
The Philippines and Vietnam have accused China of acts such as harassing oil exploration vessels, shooting or beating up their fisherman, and placing territorial markers on islets in the sea.