* U.S. politicians still trying to hammer out a deal to avert default
* Deadline to lift U.S. debt ceiling due on Thursday
* U.S. stock index futures sag, oil prices ease
* China export growth fizzles in September, CPI at 7-month high
Asian shares and U.S. stock index futures fell and the safe-haven yen rose on Monday as a possible U.S. debt default edged closer after the failure of weekend talks in Washington, though expectations are that a last-minute compromise will be reached.
Adding to the gloom, data showed China's export growth unexpectedly fizzled in September, underscoring worries about flagging global demand, and annual consumer inflation quickened to a seven-month high.
MSCI's broadest index of Asia-Pacific shares outside Japan , which had hit a three-week high on Friday on hopes a U.S. deal was imminent, dropped 0.3 percent and China's CSI300 index slipped 0.2 percent.
Markets in Japan and Hong Kong are closed on Monday for public holidays.
U.S. stocks had risen strongly ahead of the weekend on hopes a deal to raise the $16.7 trillion federal borrowing limit was near. However, politicians remain at loggerheads as the Oct. 17 deadline approaches and U.S. stock index futures fell 0.7 percent in Asian trade.
U.S. equity markets will trade on Monday, although some markets, such as the Treasury market, will be shut for the Columbus Day holiday. In Asia, U.S. Treasury futures edged up 4 ticks.
Failure to break the stalemate before Thursday's deadline would leave the world's biggest economy unable to pay its bills in the coming weeks, an outcome that is unthinkable for the global economy and financial markets. IMF chief Christine Lagarde warned of "massive disruption."
Still, trading has remained relatively calm as many analysts expect Republicans and Democrats to strike a last-minute deal, believing U.S. politicians would want to avoid the dire consequences of a default.
"Most likely, a solution will be found before, or be in the making, by October 17," analysts at Nomura wrote in a client note.
"The tail risk comes into play if there is no clear framework for a solution by October 17. Entering this tail would see risk jump in terms of funding market stress and risk assets more broadly."
Some financial institutions have reduced the use of Treasury bills as collateral for trades as the deadline gets closer. Hong Kong's securities exchange is applying a bigger discount on U.S. Treasuries used as margin collateral.
The failure of the weekend talks in Washington saw investors react by seeking safety in the yen.
The dollar fell 0.3 percent to 98.285 yen and the euro dipped 0.1 percent to 133.30 yen. The Australian dollar eased 0.1 percent to 92.81 yen.
The dollar index, which tracks the greenback against a basket of major currencies, was a touch softer.
In commodity markets, gold fell 0.2 percent to just below $1,270 an ounce, adding to last week's 2.9 percent decline.
Brent crude dipped 0.2 percent to around $111 a barrel on concerns that the U.S. debt standoff and slower growth in China would crimp demand.
"China still faces significant external headwinds while a recovery in domestic demand is lifting import growth," HSBC said in a note on the weak export data.
"Beijing should keep its accommodative policy and steer structural reforms to sustain a recovery driven by domestic demand," it added.