Asian stocks fell Wednesday amid increasing pessimism over economic prospects in the United States, despite the country having avoided a potentially catastrophic debt meltdown.

Japan's Nikkei 225 index declined 1.7 percent to 9,675.46. South Korea's benchmark Kospi fell 2.3 percent to 2,072.59. Stock markets in Australia and New Zealand also dropped. Most other markets had yet to open.

The declines followed a sharp drop on Wall Street on Tuesday on a series of weak economic reports and poor earnings from several big companies.

The Dow Jones industrial average fell 265.87 points, or 2.2 percent, to 11,866.62 for its eight straight decline. That's the longest streak since October 2008.

The Standard & Poor's 500 index, meanwhile, lost 32.89 points, or 2.6 percent, to 1,254.05. That was its seventh consecutive drop and the longest since the height of the financial crisis in October 2008.

European stock markets also fell Tuesday, with Germany's DAX falling 2.3 percent.

Hurting investor sentiment were reports showing that U.S. consumers cut spending in June for the first time in nearly two years, while incomes rose by the smallest amount since September. That news followed a weak manufacturing survey the day before.

Pessimism about the economy outweighed relief that the U.S. averted a potentially debilitating debt default after President Barack Obama signed a compromise bill Tuesday to raise the country's borrowing limit.

The signing, the culmination of weeks of often acrimonious debate and political brinkmanship between Democrats and Republicans, came just hours ahead of a midnight deadline to raise the debt ceiling.

In currencies, the dollar rose marginally to 77.25 yen from 77.22 yen late Tuesday in New York. The euro, meanwhile, fell to $1.4191 from $1.4201. (AP)