By Sara Sjolin, MarketWatch
LONDON (MarketWatch) — European stock markets posted stellar broad-based gains Wednesday, as investors returning from the New Year’s break cheered a deal in Washington to avert the so-called fiscal cliff, widely seen as potentially threatening a U.S. recession.
The Stoxx Europe 600 index /quotes/zigman/2380150 XX:SXXP +2.02% jumped 2% to end at 285.33, the highest closing level since February 2011.
Obama praises fiscal-cliff deal
President Barack Obama says he’ll sign the bill sent to him by Congress to avert the fiscal cliff.
Richard Perry, chief market strategist at Central Markets, said the rally was supported by the fiscal-cliff solution, but that he was concerned “that much will already now be priced in.”
“The whole fiscal-cliff scenario still looks like a bit of a fudge to me, too,” he said.
“Obama is already answering questions about the debt ceiling in February, so focus will quickly turn to that. I think this could easily weigh on the markets,” he said.
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Banks put in some of the best performances in the pan-European index, with shares of Barclays PLC /quotes/zigman/152323/quotes/nls/bcs BCS +3.70% /quotes/zigman/301787 UK:BARC +5.03% up 5% in London, Spain’s Banco Popular Español SA /quotes/zigman/382819 ES:POP +5.97% adding 6% and Société Générale SA /quotes/zigman/167380 FR:GLE +5.33% rising 5.3% in Paris.
Also on the move, shares of Nokia Corp. /quotes/zigman/161997 FI:NOK1V +6.77% /quotes/zigman/162154/quotes/nls/nok NOK +4.05% surged 6.8%. Financial-analysis website Seeking Alpha said on Monday that the struggling phone-handset maker could get a much-needed breakthrough in China, where the Lumia phone has proved to be a success. See full story on Seeking Alpha and See: Nokia kicks off year with rally; broker says time to take profits
U.S. fiscal-cliff deal
Broader sentiment was buoyed by overnight news that U.S. lawmakers passed a budget deal to avoid the fiscal cliff of large-scale tax hikes for most Americans and deep spending cuts that had slated to take effect in 2013. The deal raises tax rates on upper-level household incomes, extends unemployment benefits and delays across-the-board spending cuts for two months, but it also lets a 2% payroll-tax cut lapse. See: Fiscal-cliff deal passes Congress
U.S. opened sharply higher on Wall Street. See: U.S. stocks start year in rally mode
Stocks held their gains, after the Institute for Supply Management said its gauge of manufacturing activity expanded in December, to 50.7% from 49.5% the month before. See: ISM survey climbs to 50.7% in December from 49.5%
Back in Europe, all country-specific bourses kicked off the trading year in an upbeat fashion.
In the U.K., the FTSE 100 index /quotes/zigman/3173262 UK:UKX +2.20% surged 2.2% to 6,027.37. The move marked the first time that the London index raced past the 6,000 level since July 2011.
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