LONDON (ShareCast) - Mining stocks were putting in an impressive performance on Wednesday after politicians in the US struck a deal to avert the fiscal cliff, a series of automatic spending cuts and tax increases that risked plunging the world's largest economy into recession.
The House of Representatives passed a Senate-backed bill in the early hours of Tuesday morning to dodge the fiscal cliff, by 257 votes to 167. A day before it had cleared the Senate by a majority of 89 votes to eight.
Market strategist Ishaq Siddiqi from ETX Capital said: "2013 has kicked off with a bang with bulls in full control of price-action - the risk rally sees all your traditional investments in vogue [stocks EUROSTOXX making 16-month high, euro, commodities, peripheral bond yields, banks, miners et al] while core government bonds and US Treasuries take a beating."
Stock markets across Europe celebrated the news, with major indices across the continent rising between 2% and 4%. In London, the FTSE 100 (FTSE: ^FTSE - news) was up 2.38% at 6,038 in afternoon trade as investors' appetites for risk increased. The last time the Footsie closed higher was at the end of April (Paris: FR0004037125 - news) 2011.
Steel producer and diversified mining group EVRAZ was among the best performers on the UK benchmark, gaining around 8%, while commodities trader Glencore increased 7.3% and diversified metals producer Xstrata (Other OTC: XSRAF - news) rose 7.2%.
Gold prices reached a two-week high today of $1,692.60 an ounce in New York as the dollar weakened after the budget deal. Meanwhile, copper rose the most in three months while tin surged to a 10-month high.
Top performing sectors so far today
Industrial Metals & Mining 2,960.24 +7.97%
Mining 20,668.28 +5.36%
Personal Goods 20,535.38 +4.69%
Aerospace and Defence 4,072.43 +3.90%
Industrial Engineering 8,445.60 +3.57%
Bottom performing sectors so far today
Tobacco 35,459.58 -0.34%