MELBOURNE: Australian shares climbed to a 19-month high in the first trading session of 2013, led by top miners, after the US 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.
US 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.
US 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.
Center>Copyright Reuters, 2013