- 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

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European equities soared at the start of the first day of business for the New Year 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.

It was the highest jump in taxes in the past two decades and left a number of problems including budget clashes unresolved.

The House voted 257-167, with 172 Democrats joining 85 Republicans in supporting the measure. There were 151 votes against the bill from Republicans.

Minutes after the House passed the bill, President Barack Obama addressed the media.

"Thanks to the votes of Democrats and Republicans in Congress I will sign a law that raises taxes on the wealthiest 2% of Americans while preventing a middle-class tax hike that could have sent the economy back into recession and obviously had a severe impact on families all across America."

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

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 3.9% to €13.44 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 1.9% to 43,400 kroner 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.

Euro rises against dollar

The euro climbed 0.44% to the 1.3262 dollar at the open on Wednesday.

Front month Brent crude futures increased 0.555 to 111.730 on the ICE.


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