Asia Stocks Take off, U.S. Fiscal Cliff Crisis Ends

{{Asian stocks rose nearly two percent to hit a five-month high and the dollar fell as both houses of Congress passed a bill to end the “fiscal cliff” crisis that threatened a U.S. recession and roiled world financial markets.}}

European markets were set to rally on the news, with spreadbetters expecting London’s FTSE <.ftse> to rise about 1 percent and Frankfurt’s DAX <.gdaxi> to open up 0.5 percent.

The Congress approved extending lower Bush-era tax rates to all but the nation’s wealthiest households in a budget deal that stopped automatic implementation of $600 billion in spending cuts and tax increases.

The bill’s passage in Congress allayed earlier concerns over complaints from a number of Republicans that spending cuts were still not adequately addressed.

The temporary reprieve that the deal offers the U.S. economy also sets up Wall Street for a strong start to trading which resumes later in the day.

Asian stock markets cheered the developments as a major risk for investors, namely a slump in the global economy, appeared to have receded for now.

“This is great news for global growth and explains why shares and other growth-related assets such as the Australian dollar are up strongly today,” said Shane Oliver, strategist at AMP Capital.

Australian shares <.axjo> rose to a 19-month high while the Aussie dollar jumped to 1.4082.

The MSCI Asia Pacific ex-Japan index of stocks <.miapj0000pus> rose 1.9 percent. Chinese shares in Hong Kong <.hsce> jumped 3 percent as last month’s rally spilled over into the new year with stocks closely linked to China’s economy such as steel and cement posting the biggest gains.

In South Korea, where data showed manufacturing activity rose for the first time in seven months in December, the KOSPI index <.ks11> was up 1.6 percent led by a 3.6 percent jump in smartphone giant Samsung Electronics .

{Wirestory}