The FTSE 100 surged in the morning, climbing 1% after Barack Obama gave in to the pressure from Republicans and agreed to extend the Bush-era tax breaks, which is expected to have a significant positive impact on economic growth.
Antofagasta (LON:ANTO) led the way with a 4.1% gain.
Food company Unilever (LON:ULVR) and plumbing and heating equipment manufacturer Wolseley (LON:WOS) advanced 3.8%.
Mining majors Eurasian Natural Resources (LON:ENRC) and Kazakhmys (LON:KAZ) climbed 3.7%.
Miner Xstrata (LON:XTA) and fashion house Burberry (LON:BRBY) tacked on 3.4%.
Silver miner Fresnillo (LON:FRES) and food company Associated British Foods (LON:ABF) climbed 3.2% and 2.7%.
Temporary power provider Aggreko (LON:AGK) was at the bottom of the pile with a 1.7% loss.
Interdealer broker ICAP (LON:IAP) and Capital Shopping Centres Group (LON:CSCG) shed 1.1%.
Futures for the Dow Jones and S&P 500 indexes rose 0.7%, pointing to a higher open on Wall Street.
US President Barack Obama has reached a compromise with Republicans, agreeing to extend tax breaks that mostly affect wealthy Americans introduced by his predecessor George W. Bush.
Goldman Sachs (NYSE:GS) estimated that the extension of the tax cuts will translate into US$185 billion of fiscal stimulus for the US economy.
The news cheered up the markets, which were under pressure form reports that China may go for further policy tightening as soon as this weekend.
In other news, the US government sold the remainder of its stake in Citigroup (NYSE:C) for a net profit of US$10.5 billion.
Most Asian stocks were on the rise today.
China’s Shanghai Composite Index climbed 0.65%, Hong Kong’s Hang Seng added 0.8% and South Korea’s KOSPI tacked on 0.45%, while Japan’s Nikkei 225 went against the tide, shedding 0.25%.
Australia’s S&P/ASX 200 advanced 0.8%.
Commodities
Oil prices rose with US light, sweet crude climbing to US$90.38/barrel. February Brent Crude advanced to US$92.50/barrel.
Precious metals advanced with gold reaching US$1,427/oz, while silver and platinum rose to US$30.43/oz and US$1,724/oz respectively.
Base metals followed. Copper and nickel climbed to US$4.09/lb and US$10.83/lb. Zinc stood at US$1.036/lb.