Investors’ confidence rose as the US successfully averted fiscal cliff

The UK stock market buoyed the New Year with stocks rallying past the 6,000-mark, which was last seen in July 2011, rising 1.8% to 6,005.26, and gaining 108 points. The rise was attributed to the US House of Representatives’ approval of the bill to avert fiscal cliff, which brought the much-awaited relief to the global economy.

The bill prevented massive tax hikes and automatic spending cuts that would have become effective in the new year. The fiscal cliff threatened to take the US economy back into recession with scheduled tax rises of around $536bn (£329bn) and spending cuts of $109bn (£67bn). The bill is a temporary relief as the fiscal cliff headache still looms as talks over spending cuts continue amidst US Treasury’s announcement that the country has hit its borrowing limit once again.

This morning, investors were in a celebratory mood which was reflected in the rising stock performances. Riskier assets in the mining and banking sectors were among the best performers in London. Glencore, Barclays, Rio Tinto, Vedanta and Lloyds stocks climbed up this morning. Oil major BP rose after it announced a successful beginning of production at the Skarv field in the Norwegian Sea.

Meanwhile, Shell reported a subdued performance at the UK stock market after reports emerged that its Kulluk drilling rig ran aground off the Alaskan coast, after being caught up in a storm. Engineering firm Babcock gained after announcing that it has acquired liquid gas plant unit LGE Process from Weir for £23m.

The top gainers in the UK stock market this morning are Evraz 271.50p +4.87%, Rio Tinto 3,666.50p +4.41%, Barclays 273.20p +4.12%, Eurasian Natural Resources Corp. 295.50p +4.05%, Melrose Industries 232.00p +3.80%, Antofagasta 1,372.00p +3.63%, Vedanta Resources 1,198.00p +3.54%, Glencore International 363.10p +3.36%, Anglo American 1,955.00p +3.22%, Lloyds Banking Group 49.45p +3.19%. The top losers in the UK stock market this morning are British American Tobacco 3,101.50p -0.62% and Morrison (Wm) Supermarkets (MRW) 261.70p -0.49%.