Asia stocks higher on hopes for US budget deal
BANGKOK (AP) — Asian stock markets rose Wednesday as investors became increasingly convinced that U.S. political leaders will reach a budget deal that avoids a major hit to the world's No. 1 economy. Chinese shares soared on hopes for more stimulus measures.
Negotiations between the White House and the U.S. Congress have been revving up in recent days in order to reach a deal aimed at averting the so-called fiscal cliff, which is a series of sharp government spending cuts and tax increases that begin to kick in Jan. 1 and could cause a recession.
Despite political posturing and a deep divide on critical issues, most analysts think a deal acceptable to both President Barack Obama and congressional Republicans will be cobbled together before the end of the year.
Analysts at DBS Bank Ltd. said that "the US fiscal cliff is viewed as political theatre and not as an imminent threat to the US economy."
"Unlike 2010, both the White House and the Republicans have been careful in communicating that, despite the differences in opinions over how to rein in the fiscal deficit, the door is open for a compromise solution by the end of the year."
Japan's Nikkei 225 index rose 0.1 percent to 9,443.65. Hong Kong's Hang Seng jumped 1.6 percent to 22,143.19. South Korea's Kospi added 0.5 percent to 1,943.85. Australia's S&P/ASX 200 gained 0.4 percent to 4,520.40.
Mainland Chinese shares soared a day after the government pledged to maintain policies intended to strengthen the economy and also expressed a willingness to "fine tune" them and make them more effective.
The Shanghai Composite Index jumped 3.1 percent to 2,036.14 while the smaller Shenzhen Composite Index soared 4.3 percent to 775.58. Infrastructure-related shares posted strong gains. Fujian Cement surged 7.7 percent. Xinjiang Bayi Iron & Steel jumped 4.5 percent.
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