London open: 'Fiscal cliff' hopes drive stocks early on

18th Dec 2012 08:30

The FTSE 100 opened strongly on Tuesday morning on the back of increasing optimism that US President Barack Obama and House Speaker John Boehner will be able to strike a deal by the end of the year to avert the 'fiscal cliff'.Without a deal by the January 1st deadline, the $600bn in automatic spending cuts and tax increases which come into effect are expected to pull the US economy back into recession. Markus Huber, the head of German HNW trading at ETX Capital said this morning that with the end of the year approaching fast and an empty economic data schedule, focus will mostly be on US budget negotiations and "the smallest hint of progress or setback can have a substantial impact on the markets. "Overall for now, any indication at all that there is some movement as the budget negotiations are concerned and that the two parties are making an effort to find a solution is enough to keep markets moving higher.Obama has reportedly proposed raising taxes for those that earn over $400,000, a higher threshold than the $250,000 annual salary he had previously targeted. While Boehner's proposal at the weekend offered to raise taxes on those earnings over $1m in exchange for cuts to entitlement spending, it appears that the real negotiations have officially begun.FTSE 100: Miners making gainsResource peers Vedanta, EVRAZ and BHP Billiton were in demand this morning on the back of hopes that US politicians can come to an agreement. Metals prices were firmer as the Dollar Index held near a two-month low.However, Kazakhmys was bucking the red after Deutsche Bank downgraded its rating on the stock to 'hold' and cut its target price from 1,066p to 746p.Oilfield services giant Petrofac was on the up after reiterating its target of achieving net profit growth of at least 15% this year, saying that operations continue to perform in line with expectations.Whitbread gained after saying that it has raised £51.04m from the sale and leaseback of seven Premier Inns and joint-site restaurants. The price represents a profit over book value of £19.6m.Engineering group Rolls-Royce rose after signing a $1bn contract, at list prices, with Japan's Skymark Airlines for Trent 900 engines to power six Airbus A380 aircraft.FTSE 250: Insurers hit by Sandy loss estimatesSector peers Hiscox and Catlin were lower after revealing their estimates for the impact of Superstorm Sandy. Hiscox estimates net claims of around £90m, while Catlin predicts Sandy-related losses of $200m.Support services and construction group Interserve gained after acquiring Advantage Healthcare from Rutland Partners and management for a cash consideration of £26.5m.FTSE 100 - RisersCarnival (CCL) 2,516.00p +1.82%G4S (GFS) 254.60p +1.72%Whitbread (WTB) 2,453.00p +1.41%Evraz (EVR) 270.00p +1.31%BHP Billiton (BLT) 2,151.50p +1.27%Antofagasta (ANTO) 1,373.00p +1.03%Petrofac Ltd. (PFC) 1,697.00p +1.01%Eurasian Natural Resources Corp. (ENRC) 273.30p +1.00%Aviva (AV.) 373.00p +0.97%Pennon Group (PNN) 631.50p +0.96%FTSE 100 - FallersGlaxoSmithKline (GSK) 1,353.50p -0.88%Randgold Resources Ltd. (RRS) 6,175.00p -0.72%Imperial Tobacco Group (IMT) 2,409.00p -0.70%Kazakhmys (KAZ) 779.00p -0.45%Aggreko (AGK) 1,657.00p -0.42%Polymetal International (POLY) 1,176.00p -0.42%Intertek Group (ITRK) 3,064.00p -0.39%Diageo (DGE) 1,830.00p -0.33%Serco Group (SRP) 536.00p -0.28%Croda International (CRDA) 2,340.00p -0.26%FTSE 250 - RisersNew World Resources A Shares (NWR) 278.20p +5.54%Ruspetro (RPO) 82.00p +4.66%Barr (A.G.) (BAG) 504.50p +3.44%Fidessa Group (FDSA) 1,510.00p +3.28%Heritage Oil (HOIL) 181.00p +2.55%Imagination Technologies Group (IMG) 393.00p +2.48%Ocado Group (OCDO) 79.15p +2.13%Dunelm Group (DNLM) 649.50p +2.12%Salamander Energy (SMDR) 172.30p +2.07%Hansteen Holdings (HSTN) 77.95p +1.90%FTSE 250 - FallersSynthomer (SYNT) 181.90p -2.05%Investec (INVP) 402.60p -1.44%Supergroup (SGP) 582.50p -1.27%Catlin Group Ltd. (CGL) 492.10p -1.03%Telecom Plus (TEP) 887.50p -0.95%Lancashire Holdings (LRE) 784.50p -0.88%Diploma (DPLM) 502.50p -0.79%Domino's Pizza Group (DOM) 497.10p -0.78%Filtrona PLC (FLTR) 557.00p -0.71%Renishaw (RSW) 1,900.00p -0.68%BC