European shares jump on U.S. budget deal

LONDON Wed Jan 2, 2013 8:06am GMT

LONDON Jan 2 (Reuters) - European shares notched up solid gains on Wednesday, kicking off the new year with a broad-based rally after U.S. lawmakers approved a deal preventing huge tax hikes and spending cuts.

Republican-controlled House of Representatives late on Tuesday finally approved a bill that will raise taxes on top U.S. earners, fulfilling President Barack Obama's re-election promise and avoiding the "fiscal cliff" of $600 billion in broad-based tax hikes and spending cuts which threatened to drag the U.S. economy into recession.

The FTSEurofirst 300 was up 1.1 percent at 1,146.20 by 0802 GMT, trading at levels last seen in May 2011.

"The U.S. news allows some apprehension to be reduced and although we have been confident of a deal being announced last minute we can now see more aggressive buying in today's session," Atif Latif, director of trading at Guardian Stockbrokers, said.