Risk assets soar on U.S. fiscal cliff hopes
By Ryan Vlastelica
NEW YORK (Reuters) - World stock markets and commodities surged on Monday, recovering some of the previous week's sharp losses as traders focused on politicians' comments indicating readiness to compromise to avoid the U.S. "fiscal cliff."
Wall Street stocks climbed almost 2 percent, extending a rally that began on Friday, while crude oil was up almost 3 percent. The S&P 500 closed above its 200-day moving average for the first time in the past eight sessions.
U.S. lawmakers indicated compromises were possible in negotiations to avert $600 billion in tax increases and spending cuts due to start in January - the "fiscal cliff" that threatens to send the U.S. economy back into recession.
Legislators from both parties have indicated in recent days compromise was possible on key issues like raising tax rates for wealthy individuals, which previously seemed unlikely.
MSCI's world equity index .MIWD00000PUS jumped 2 percent, more than erasing the 1.8 percent drop it posted last week. Monday was the best day for the index since July 27.
"At this point, we haven't seen any of the details, so we're still a bit cautious but optimistic that we will see an agreement reached some time," said Joseph Tanious, global market strategist at J.P. Morgan Funds in New York. "It's become fairly clear that both sides of the aisle are willing to compromise and want to negotiate."
The Dow Jones industrial average .DJI was up 207.65 points, or 1.65 percent, at 12,795.96. The Standard & Poor's 500 Index .SPX was up 27.01 points, or 1.99 percent, at 1,386.89. The Nasdaq Composite Index .IXIC was up 62.94 points, or 2.21 percent, at 2,916.07.
Optimism in Europe over the prospects of a deal this week to release much-needed aid for Greece also lent support. Continued...