Reuters: Hot Stocks: Australia shares rise to 19-month high on U.S. fiscal talks

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Australia shares rise to 19-month high on U.S. fiscal talks Jan 2nd 2013, 02:24 Tue Jan 1, 2013 9:24pm EST MELBOURNE, Jan 2 (Reuters) - Australian shares climbed to a 19-month high in the first trading session of 2013, led by top miners, after the U.S. Senate passed a bill to avert tax hikes and spending cuts that could push Australia's top foreign investor back into recession. The benchmark S&P/ASX 200 index, which ended 2012 up 14.6 percent, its best annual gain since 2009, rose 1 percent to 4,695 as of 0157 GMT. That was the highest since June 1, 2011. U.S. lawmakers have struggled to find a way to head off $600 billion of tax hikes and spending cuts, a legacy of earlier failed budget deals that is known as the fiscal cliff. All eyes are on the Republicans in the House of Representatives as they vote on the Senate bill. "They will get it done. We're pretty confident a deal will be struck in the next few days. There's a political and fiscal imperative that the fiscal cliff is avoided," said Martin Lakos, private wealth adviser at Macquarie Bank. "Markets are up today in anticipation of that. There's an expectation that there will be a compromise and a deal struck," he said. Lakos said he was expecting a better year provided earnings results lived up to expectations and improved stock values, starting with the February reporting season. "That's going to be key for our market going forward. We've seen PE (price-to-earnings) expansion, so we now need to see earnings growth following that. That's potentially a point of disappointment if we don't see that coming through," said Lakos. The New Zealand market remains closed for a holiday on Wednesday. U.S. stocks closed out 2012 with their strongest day in more than a month, putting the S&P 500 up 13.4 percent for the year. STOCKS ON THE MOVE: * BHP Billiton rose 1 percent while Rio Tinto gained 1.7 percent after iron ore prices posted the biggest monthly increase on record in December. Both stocks rose to their highest levels since February. The benchmark index for 62-percent grade iron ore .IO62-CNI=SI rose $5.50 a tonne to $144.90 a tonne on Monday, its highest level since May 1. "It is starting to look like China has bottomed in terms of the decline in its growth. You're now starting to see a restocking of copper, iron ore and coal as well," said Lakos. 0143 GMT * Gindalbie Metals Ltd rallied 12 percent to A$0.28 after it shipped the first shipment of magnetite concentrate to China from the Karara iron ore project, marking the first significant shipment of magnetite from Western Australia. Around 55,000 tonnes of magnetite concentrate was shipped on Tuesday, it said, adding the project was on track to reach full production by the end of April. 0142 GMT (Reporting by Miranda Maxwell; Editing by Ryan Woo) Link this Share this Digg this Email Reprints

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