Asian stocks rise on momentum from US budget deal

Asian stock markets rise slightly on momentum from last-minute US 'fiscal cliff' resolution

Associated Press
World stocks put relief rally on pause
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Filipino traders hear a mass before the start of the first day of trading at Philippine Stock Exchange at the financial district of Makati, south of Manila, Philippines on Wednesday Jan. 2, 2013. Stock markets in Asia registered relief Wednesday over the U.S. congressional vote to stop hundreds of billions of dollars in automatic tax increases and spending cuts that risked plunging the world's biggest economy into recession. (AP Photo/Aaron Favila)

BANGKOK (AP) -- Asian stock markets rose again Thursday on a second day of momentum following an agreement preventing the U.S. from going off the so-called fiscal cliff.

A last-minute deal agreed to by U.S. lawmakers late Tuesday prevents steep tax and spending cuts from automatically taking effect. The cost of those cuts was so great that economists were warning they could eventually trigger a recession in the world's largest economy.

"Regional equities are seeing a continuation of the buoyant risk environment in Asia today as investors react to the passing of the fiscal cliff deal," Stan Shamu, market strategist at IG Markets in Melbourne, said in a market commentary.

Benchmarks in Hong Kong and Sydney crested above the 19-month highs hit on Wednesday. Hong Kong's Hang Seng Index rose nearly 0.2 percent to 23,348.03, while Australia's S&P/ASX 200 rose 0.8 percent to 4,742.30. Benchmarks in Singapore, Taiwan, Indonesia, Thailand, the Philippines and New Zealand also rose.

South Korea's Kospi fell 0.6 percent to 2,019.61 amid fears the weakening Japanese yen could hurt South Korean exporters. Hyundai Motor Co., the country's largest carmaker, tumbled 5.1 percent. Auto parts maker Mando Corp. slid 4.7 percent.

Markets in Japan and mainland China were closed for extended holidays.

Wall Street stocks soared Wednesday, the first trading day of the year, amid investor relief that Republicans and Democrats hammered out a last-minute budget deal, though the compromise left many issues unresolved.

The deal doesn't include any significant deficit-cutting agreement, meaning the country still doesn't have a long-term plan or even an agreement in principle on how to curb spending. Big cuts to defense and domestic programs, which would have hit with the new year, weren't worked out but instead were delayed for two months.

"Continued advances will depend on how spending deals are or are not negotiated over the next two months and whether any down payment on the national debt is made," said analysts at DBS Bank Ltd. in Singapore.

Mixed data on manufacturing and construction spending in the U.S. didn't dent investor enthusiasm. The Dow Jones industrial average finished 2.4 percent higher at 13,412.55. The Standard & Poor's 500 index rose 2.5 percent to 1,462.42. The Nasdaq composite index shot up 3.1 percent to 3,112.26.

U.S. manufacturing grew slightly last month and factory hiring increased. The modest gain suggests the economy entered the new year with some momentum.

The Institute for Supply Management said Wednesday that its index of manufacturing activity rose in December to 50.7, up from a reading of 49.5 in November. A reading above 50 indicates growth, while a reading below signals contraction.

Spending on U.S. construction projects fell in November from October because a steep drop in volatile federal projects offset another gain in home building.

Benchmark oil for February delivery fell 29 cents to $92.83 in electronic trading on the New York Mercantile Exchange. The contract rose $1.30 to finish at $93.12 per barrel on the Nymex on Wednesday.

In currencies, the euro fell to $1.3132 from $1.3178 in late trading Wednesday in New York. The dollar rose to 87.23 yen from 87.14 yen.

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