FTSE 100 rallies on US fiscal cliff deal

Investors welcomed in the first trading day of the new year with a sharply higher blue chip index this morning, as the FTSE 100 rose around 90 points in early trading as US policymakers approved a deal to prevent the so-called fiscal cliff.

Miners led the rally, with Eurasian Natural Resources, Rio Tinto, Anglo American and Glencore topping the headline index leader board, up more than three per cent. Steelmaker Evraz added 4.87 per cent in early deals.

Investors were heartened by the US deal, which came late on Tuesday, to approve a bill that will avoid a swathe of broad-based tax hikes and spending cuts that threatened to drag the world’s largest economy into recession.

On the FTSE All-Share, rig maker Lamprell rose 14.6 per cent as it said it had received waivers from its lenders in respect to its existing debt facilities.

South African miner Aquarius Platinum also led the index up, rising 9.5 per cent.

At 9.30am, there were only three blue chip fallers – British American Tobacco, WM Morrison and J Sainsbury, shedding 0.7 per cent, 0.49 per cent and 0.17 per cent respectively.

On the wider index, interactive whiteboard maker Promethean fell 3.76 per cent, while NMC Health shed 2.67 per cent.

UK banking shares had a strong showing this morning. HSBC rose 1.83 per cent, RBS was up 3.25 per cent, Barclays added four per cent and Lloyds Banking Group increased 2.56 per cent.

Asian stocks rose sharply overnight following news of the deal, helped by upbeat manufacturing data from China. Japan’s Nikkei closed 0.7 per cent up, while in Hong Kong the Hang Seng was up 2.89 per cent.