Global shares at three-month high on U.S. "fiscal cliff" optimism
By Angela Moon
NEW YORK (Reuters) - Signs of compromise in U.S. talks to stop automatic tax hikes and spending cuts hurting the economy next year pushed world shares to their highest level since September on Tuesday and weakened investor appetite for safe-haven bonds and the dollar.
Wall Street opened slightly higher as investors continued to expect a deal would be reached to avert the "fiscal cliff," though caution remained in the absence of any concrete progress.
Gains were limited following a steep rally in the previous session, which lifted the S&P 500 to its highest in nearly two months, but hopes for a deal grew on signs of compromise between the major political parties in Washington.
"We've been getting a series of snippets suggesting accommodation from both Boehner and Obama, which is feeding the sense in markets that we could get a deal," said Michael Holland, chairman of Holland & Co in New York.
Investors have been reluctant to make big bets in the face of the uncertainty over the budget.
"You can never discount the possibility that the government will do something dumb and screw this up, but right now the market is happy over the prospects for a deal," said Holland, who oversees $4 billion in assets.
The political divide narrowed on Monday night when President Barack Obama proposed leaving lower tax rates in place for those earning under $400,000, moving closer to the $1 million threshold favored by Republican House of Representatives Speaker John Boehner.
The Dow Jones industrial average .DJI was up 52.22 points, or 0.39 percent, at 13,287.61. The Standard & Poor's 500 Index .SPX was up 7.60 points, or 0.53 percent, at 1,437.96. The Nasdaq Composite Index .IXIC was up 21.77 points, or 0.72 percent, at 3,032.37. Continued...