Asia stocks up amid optimism over US budget

BANGKOK (AP) -- Asian stock markets rose Monday, registering optimism after negotiations late last week between President Barack Obama and leaders of Congress raised hopes the U.S. would avoid its "fiscal cliff" before the end-of-the-year deadline.

Obama met with the top leaders of the House and Senate on Friday to discuss ways to avert a series of automatic tax increases and spending cuts scheduled to take effect Jan. 1 in the absence of intervening action. U.S. lawmakers have said a budget deal before Christmas is possible.

Economists have been warning of the consequences if no action is taken. The spending cuts and higher taxes — plus the expiration of extended unemployment benefits — would mean that $671 billion is sliced out of the American economy next year. That's enough to throw the world's biggest economy into a recession.

Asian benchmarks were also driven up by investors looking for good deals following a global stock market slump that occurred in the aftermath of the U.S. presidential election. Hong Kong's Hang Seng added 0.4 percent to 21,247.47 and South Korea's Kospi rose 1 percent to 1,878.48. Australia's S&P/ASX 200 gained 0.2 percent to 4,345.60.

"Because Hong Kong dropped for two weeks, maybe there is some bargain hunting," said Linus Yip, strategist at First Shanghai Securities in Hong Kong. He said that the budget negotiations in the U.S. are occupying the spotlight in the near term, but the ultimate issue is the state of the global economy.

Investors were particularly concerned by data last week showing U.S. industrial output falling 0.4 percent in October and the 17-country euro area falling into another recession.

The yen's recent weakness helped boost Japan's Nikkei 225 and its heavy orientation toward exporting companies. The index in Tokyo jumped 1.6 percent to 9,171.26, a two-month high.

A weak yen reduces the cost of Japanese products overseas, and that helps companies whose survival depends on sales beyond their home turf.

Toyota Motor Corp. rose 2 percent. Yamaha Motor co. gained 2.9 percent. Canon Inc. surged 4 percent. Nikon Corp. added 3.8 percent.

Heavy industrial shares also posted gains. South Korean shipbuilder Hyundai Heavy Industries Co. rose 3.8 percent. Japan's heavy equipment maker Komatsu Ltd. rose 3.9 percent. Nippon Steel & Sumitomo Metal Corp. gained 3.9 percent.

Australian surf wear company Billabong International soared 10.1 percent after news that its U.S. business head Paul Naude was considering a leveraged buyout of the company.

U.S. stocks closed higher for the first day in four on Friday after Congressional leaders reported progress in talks with Obama. The Dow Jones industrial average closed up 0.4 percent to 12,588.31. The Standard & Poor's 500 index rose 0.5 percent to 1,359.88. The Nasdaq composite index gained 0.6 percent to 2,853.13.

Benchmark oil for December delivery was up 62 cents to $87.54 per barrel in electronic trading on the New York Mercantile Exchange. The contract rose $1.05 to finish at $86.92 per barrel.

In currencies, the euro rose to $1.2760 from $1.2727 late Friday in New York. The dollar fell to 81.12 yen from 81.22 yen.

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