Global markets rallied today after fiscal cliff talks between President Barack Obama and Congressional leaders stepped up a notch over the weekend.
At a meeting between Obama and leaders at the White House, Republicans demonstrated optimism in backing higher taxes.
According to a BBC report, House Democratic leader Nancy Pelosi said she is confident a solution is in sight.
Asian markets were up overnight, lifted by the talks. The Nikkei 225 rallied by 1.43% to 9,153, while the Hang Seng was up 0.57% to 21,280.
Meanwhile, the FTSE 100 strengthened by 0.98% to 5,660 soon after open this morning, while the French Cac 40 gained 1.17% to 3,380.
The German Dax climbed 1.19% to 7,033 and the EuroStoxx 50 gained 1.24% to 2,457.
Investors will now be eagerly awaiting Wall Street's open this afternoon. The Dow Jones and the S&P 500 have both sold off by roughly 3% since the election result a fortnight ago. The Dow has fallen from a high of 13,200 to around 12,600, while the S&P 500 has dropped from 1,425 to 1,360.
Since Obama's election victory, investors have fretted over whether the much-debated fiscal cliff issue will be resolved, and whether politicians can steer the US economy away from recession.
After the meeting, the Republican speaker of the House of Representatives John Boehner said the Republicans are now willing to consider increased revenue, in exchange for spending cuts.
"I think we are all aware that we have some urgent business to do. We have got to make sure taxes do not go up on middle class families, that our economy remains strong," Obama said before the meeting.
"My hope is this is going to be the beginning of a fruitful process, that we are able to come to agreement that will reduce our deficit in a balanced way, that we will deal with some of these long-term impediments to growth, and we are also going to be focusing on making sure middle class families are able to get ahead," he said.
The fiscal cliff issue involves the expiration of the George W Bush-era tax cuts in January 2013, set to occur in combination with automatic reductions to military and domestic spending. Obama has made his plan to force high earners to pay more taxes clear, but Republicans have so far been opposed to the proposals.
In the past, Republicans have adamantly opposed any fresh tax hikes, but now they are showing willing to compromise in exchange for a revised tax code and changes to benefit programmes.
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