Bright start for stock markets

AROUND £33 billion was added to the value of UK blue chips as relief over America’s fiscal cliff deal sent the FTSE 100 Index shooting past 6,000 for the first time since July 2011.

World markets started the new year with a bang as investors cheered moves by politicians to pass short-term measures preventing devastating tax hikes and spending cuts that had threatened to derail the US economy.

London’s top tier closed 2.2% higher at 6,027.4 — while the Dow Jones Industrial Average on Wall Street rallied 2.35% to 13,412.55.

Germany’s Dax was up 2% and the Cac 40 in France up 2.6%.

The London market has been in limbo in recent sessions as traders pondered the implications of America failing to reach a compromise to avoid the fiscal cliff.

But experts feared the market elation would be short-lived, with America still to agree a long-term package of measures to reduce spending.

Johan Jooste, chief market strategist at Merrill Lynch Wealth Management, said that the US was “delaying decision-making rather than resolving the fiscal position”.

David Jones, chief market strategist at IG, said the fiscal cliff cheer was also helping markets capitalise on a “January effect”, when investors who have sold shareholdings in December to book profits and offset losses buy back into the market.