Asian markets rise as US poised to avert fiscal cliff

HONG KONG: Asian shares rose Wednesday as the US Congress looked set to back a deal to avert a "fiscal cliff" of drastic tax rises and spending cuts in an upbeat start to the year for regional markets.

With the House of Representatives set to vote on the pact, which has already passed the Senate, the dollar slipped against the euro as risk appetite returned to markets.

Hong Kong was up 1.89 percent, Seoul rose 1.40 percent, and Sydney put on 1.26 percent. Financial markets in Japan and China were closed for a public holiday.

The gains followed sharp jumps in US stocks on New Year's Eve as Congress moved towards a deal.

The Dow Jones Industrial Average finished up 1.28 percent, the S&P 500 gained 1.69 percent and the tech-rich Nasdaq Composite surged 2.00 percent.

Analysts however noted that the reaction in Asia was muted after the protracted wrangling in the United States and that the decision to put off spending cuts had potentially set up another political fight.

"There hasn't been a tremendous market reaction and I think that people are looking at all the politics that is going on," Matthew Sherwood, head of investment market research at Perpetual Investments in Sydney, told Dow Jones Newswires.

Nevertheless, the upbeat start for shares will be a relief for investors after the uncertainty that clouded markets in the final months of 2012 as wrangling over the fiscal cliff dragged on.

In Washington, the House of Representatives was set to vote on the bid to raise taxes on the rich and put off a $109-billion dollar programme of spending cuts for two months, after a conservative rebellion fizzled out.

The deal passed the Senate early on Tuesday, but its fate hung in the balance for hours as House conservatives sought to amend it to include big spending cuts, which would likely have killed its chance of passage.