PARIS, Jan 2 European stocks were set to rally on Wednesday in their first session of the new year after U.S. lawmakers approved a deal preventing massive tax hikes and spending cuts that threatened to drag the economy into recession. At 0720 GMT, futures for Euro STOXX 50, for Germany's DAX and for France's CAC were up 1.8-2.5 percent. The Republican-controlled House of Representatives 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. Asian shares surged and the dollar dropped following Washington's last-minute deal, with The MSCI Asia Pacific ex-Japan index of stocks up 2 percent. Japanese markets were closed on Wednesday for a holiday. The Bund future was last down 85 ticks at 144.79, compared with 145.64 of Monday's close. "The market knew that the negotiations would drag on to the very last minute, but this was too big for both parties to walk away, just look at what big austerity measures have done to Europe," a Paris-based trader said. "With the fiscal cliff out of the way, the focus will now turn back to the macro data. We're positive for stocks in the medium term, but we need reassuring data." The FTSEurofirst 300 rose 13.2 percent in 2012 while the euro zone's blue chip Euro STOXX 50 climbed 13.8 percent - both indexes posting their best annual performance since the sharp bounce of 2009 - propelled by bold measures from central banks to resolve Europe's debt crisis and revive global growth. The market's sharp rally that started in early June brought valuation ratios to levels not seen since April 2010. The broad STOXX Europe 600 trades at 11.5 times 12-month forward earnings, up from a low of 8.3 hit during the heat of the region's debt crisis in October 2011, but still below the 10-year average of 12.2. After suffering an 84 percent plunge between October 2009 and June this year, Athens's benchmark index posted a gain of 33.4 percent for 2012, the best performance among European benchmarks and outpacing Germany's DAX , up 29.1 percent. The Spanish and UK equity markets were the laggards in 2012, with Madrid's IBEX down 4.7 percent on the year and London's FTSE 100 up only 5.8 percent, outpaced by France's CAC 40 index, which gained 15.2 percent and Italy's FTSE MIB, up 7.8 percent. Gains in Europe on Wednesday, however, could be limited by concerns over the economic outlook for the region after German Chancellor Angela Merkel said in her New Year's address that the euro zone sovereign debt crisis was far from over. Investors awaited manufacturing PMI data Spain, Italy, France and Germany, due on Wednesday, looking for insight on the extent of the economic slowdown. Swiss markets were closed on Wednesday for a holiday. -------------------------------------------------------------------------------- MARKET SNAPSHOT AT 0726 GMT LAST PCT CHG NET CHG S&P 500 1,426.19 1.69 % 23.76 MSCI ASIA EX-JP 559.19 2.02 % 11.08 EUR/USD 1.3287 0.63 % 0.0083 USD/JPY 87.21 0.62 % 0.5400 10-YR US TSY YLD 1.757 -- 0.00 10-YR BUND YLD 1.379 -- 0.06 SPOT GOLD $1,682.10 0.45 % $7.56 US CRUDE $92.82 1.09 % 1.00 > GLOBAL MARKETS-Asia stocks rally as US fiscal crisis ends > FOREX-Yen down as U.S. avoids 'fiscal cliff' > Gold regains strength on U.S. fiscal talks progress > METALS-Copper hits two-week high on imminent US fiscal deal > Brent rises toward $112 as US approves fiscal deal COMPANY NEWS: SIEMENS The engineering group's CEO told Frankfurter Allgemeine Sonntagszeitung that he expects 2013 to be tough for the industry but that there could be some positive developments. 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BAYER The drugmaker's clot prevention drug Xarelto will face more competition after U.S. health regulators approved Eliquis, developed by Bristol Myers-Squibb and Pfizer, for treatment in patients with atrial fibrillation, or irregular heartbeats. METRO The CEO of the group's department store chain Kaufhof told newspaper Welt am Sonntag that Christmas trading had been satisfactory, although bargain-hunting shoppers had waited until late to spend on presents, reflecting a trend across Europe. IMPREGILO The operative targets in Impregilo's 2013-15 industrial plan are "ambitious but can be met", Chief Executive Pietro Salini told MF-Milano Finanza newspaper on Saturday. ATLANTIA Italian motorway tariffs are set to rise an average 2.9 percent on Jan. 1, 2013, Italy's Infrastructure and Transport Ministry said on Sunday. Tariffs on roads operated by Atlantia will rise by 3.47 percent, the ministry said. 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