HONG KONG: Asian shares rose sharply Wednesday as the US Congress backed a deal to avert a "fiscal cliff" of drastic tax rises and spending cuts in an upbeat start to the year for regional markets.
As the House of Representatives approved the bill, which avoids tax hikes for most Americans and delays automatic spending cuts, the dollar strengthened against the yen and oil prices surged.
Hong Kong was up 1.91 percent, Singapore gained 1.26 percent, Seoul rose 1.48 percent, and Sydney put on 1.29 percent. Financial markets in Japan and China were closed for a public holiday.
Asian shares had risen on Wednesday morning in anticipation of a deal in Washington, strengthening further after it was approved by US lawmakers.
Jason Hughes, head of premium client management for IG Markets Singapore, said the market reaction was "very positive".
"With the final hurdle being passed now, we've got a minimum deal that avoids any immediate threat of the US falling off the cliff... that's definitely boosted Asian equities markets," he said.
The gains followed jumps in US stocks on New Year's Eve as Congress moved towards a deal.
The Dow Jones Industrial Average finished up 1.28 percent, the S&P 500 gained 1.69 percent and the tech-rich Nasdaq Composite surged 2.00 percent.
The upbeat start for shares in 2013 will be a relief for investors after the uncertainty that clouded markets in the final months of last year as wrangling over the fiscal cliff dragged on.
The US deal passed the Senate early on Tuesday but its fate hung in the balance for hours as House conservatives sought to amend it to include big spending cuts, which would likely have killed it.
In the end, the House voted by 257 votes to 167 to pass the original bill with minority Democrats joining a smaller number of majority Republicans to pass the legislation after a bitterly contested session on New Year's Day.
The deal between the White House and Senate Republicans raises taxes on the rich and puts off automatic $109 billion budget cuts for two months.
Had it splintered, all Americans would have been hit by tax increases and spending cuts would have kicked in across the government, in a combined $500 billion shock that could have rocked the fragile recovery.
The House vote took place after a conservative rebellion fizzled when it became clear there were not sufficient votes in the restive Republican caucus to send an amended version of the bill with spending cuts back to the Senate.
Republican party leaders ultimately feared they would carry the can if the deal collapsed.
On currency markets in Asian afternoon trade, the dollar rose to 87.18 yen from 86.69 yen on Monday and the euro strengthened to $1.3272 from $1.3192. The single currency was at 115.71 yen from 114.45 yen.
On oil markets, New York's main contract, light sweet crude for delivery in February gained 63 cents to $92.45 a barrel and Brent North Sea crude for February delivery advanced 65 cents to $111.76.
Gold was at $1,677.72 at 0440 GMT compared with $1,658.90 late Friday.
- AFP/al
Asian markets rise as US averts fiscal cliff
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Asian markets rise as US averts fiscal cliff
