- US leaders pass budget deal to avert fiscal cliff
- Italy and German elections to shape Eurozone in 2013
- Irish manufacturing slows at end of 2012
FTSE 100: 2.31%
FTSE Mibtel 30: 3.40%
Ibex 35: 3.12%
Stoxx 600: 1.91%
European equities were sitting even higher by the midday mark after the US passed legislation to avert the so-called fiscal cliff.
Lawmakers agreed Tuesday on a compromise bill which avoided most tax hikes although they did rise for the highest earners. However, the temporary payroll tax reduction was allowed to expire and there was no agreement as to where exactly spending cuts ought to come from nor on the need to lift the national debt limit.
Elections sway Europe recovery
Elections in Germany and Italy this year will have a huge impact on the Eurozone economy.
Germany, Europe's biggest donor and guarantor, is headed to the polls late 2013 while Italy holds elections in February.
German Chancellor Angela Merkel warned Europe's financial crisis was far from over and faced a tough year.
"We're all in this Eurozone together, and that shapes my job. Work for Europe always means work for Germany, too," German Chancellor Angela Merkel said in her December video message.
Europe's recovery also hinges on key votes in Italy.
Italian Prime Minister Mario Monti confirmed he will lead a centrist alliance in February.
He will run against the centre-left Democratic party (PD), which is leading in the polls, and Silvio Berlusconi's People of Freedom (PDL) party.
Monti was appointed head of a technocrat government last year to save Italy from financial crisis after Berlusconi stepped down as prime minister.
Monti, who declared his mission was accomplished as he resigned as Italy's prime minister, has put an end to weeks of speculation that he will attempt a second stint.
Irish manufacturing weakens
The Eurozone manufacturing sector purchasing managers´ index for the month of December has come in at 46.1, versus a reading of 46.3 in the month before (Consensus: 46.3).
Irish manufacturing weakened at the end of 2012 as output and new orders increased at slower rates, a survey revealed Wednesday. The NCB Manufacturing Purchasing Managers' Index dropped to 51.4 in December compared to 52.5 in the previous month.
The world's largest steelmaker ArcelorMittal, gained 4.1% after China Steel Corp. and Posco led a group that agreed to pay $1.1bn for a 15% stake in ArcelorMittal Mines Canada Inc. for iron ore supplies.
Maersk increased 3.8% after container shipping company Maersk Line predicted a growth in demand on the Asia-Europe route until February, buoyed by an increase in production and exports from Chinese manufacturers.
From a sector stand-point the largest rises are now to be seen in the following sectors on the DJ Stoxx 600: Basic resources (4.48%), Automobiles (3.18%) and Banks (2.86%).
Euro rises against dollar
The euro climbed 0.42% to the 1.3260 dollar
at the open on Wednesday.
Front month Brent crude futures increased 1,174 to 112.43 on the ICE.