* FTSEurofirst 300 up 1.3 pct, highest since May 2011
* Miners top gainers, copper up strongly
* Euro STOXX 50 volatility index drops 14 pct
By Tricia Wright
LONDON, Jan 2 (Reuters) - European shares rallied across the board at the start of the new year after U.S. lawmakers approved a deal to prevent a fiscal crunch that had threatened growth in the world’s largest economy.
The 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 $600 billion in broader-based tax hikes and spending cuts.
Asian shares rose strongly overnight on the news, while copper prices climbed 2.2 percent, with robust manufacturing data from top metals consumer China also aiding the mood.
The FTSEurofirst 300 rose 1.3 percent at 1,148.97 by 0914 GMT, hitting levels last seen in May 2011.
Uncertainty as to whether U.S. politicians would manage to hammer out a deal to avoid the fiscal cliff had cast a shadow over market sentiment in the last weeks of 2012.
“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.
The Euro STOXX 50 Volatility Index, or VSTOXX, Europe’s widely-used measure of stock market risk aversion, dropped 14 percent on Wednesday following the U.S. budget deal.
The VSTOXX - which is used to measure the cost of protecting stock holdings against corrections - tumbled to 18.45.
China’s official manufacturing purchasing managers’ index held steady in December at 50.6, matching November’s seven-month high and adding to evidence of a move back toward growth in the world’s biggest metals consumer.
That helped basic resources stocks put in a solid showing on Wednesday, the top performing sector with a 3.1 percent advance.
The euro zone’s blue-chip Euro STOXX 50 firmed 49.54 points, or 1.9 percent, to 2,685.47.
The Euro STOXX 50 climbed 13.8 percent in 2012, while the FTSEurofirst 300 rose 13.2 percent, boosted by bold measures from central banks to resolve Europe’s debt crisis and revive global growth.
Among technical strategists there was optimism as to how 2013 would proceed.
“We’ve started the year on a positive note, and it does look like the market is pushing on towards 2,722,” Barclays Capital’s chief European technical strategist Phil Roberts said, referring to the Euro STOXX 50.
The 2,722 level in technical analysis is an equality target - the point at which the rally from the low in 2011 to the high in March 2012 is replicated off the low in June 2012.