Stocks climb on fiscal cliff hopes

European stocks snapped three days of declines, US equity futures advanced and commodities gained on signs of progress in US budget talks.

The yen traded near a 20-month low against the dollar and Sweden's krona strengthened.

The Stoxx Europe 600 Index climbed 0.3 per cent at 8.47am in New York, with more shares changing hands than is typical for this time of day.

Standard and Poor's 500 Index futures advanced 0.1 per cent.

The yen was at 83.87 per dollar after trading at 84.48 yesterday, the weakest since April 2011.

The krona appreciated against all 16 of its major peers after the Riksbank cut the cost of borrowing.

President Barack Obama proposed a budget plan that would cut about $1.2 trillion in federal spending and raise a similar amount in taxes, according to a person familiar with the talks.

European Central Bank president Mario Draghi yesterday said ECB policies and governance reforms in the euro area have revived confidence that will help foster a gradual economic recovery.

"If there is a budget resolution, equities will clearly perform the best out of all the assets," said Jim Reid, a strategist at Deutsche Bank in London.

"I would expect a marginal increase in commodities, and one might argue if there isn't a deal it might increase the attractiveness of gold as a safe haven."

Europe's Stoxx 600 has advanced 14 per cent this year, set for the first annual gain since 2010, amid increased confidence that policy makers are taking control over the debt crisis.

The S&P 500 is up 14 per cent and the MSCI Asia Pacific Index has risen 12 per cent this year.

Asia's benchmark rose 0.5 per cent today. Japan's Party Japan's Nikkei 225 Stock Average advanced 1 per cent.

The gauge has climbed 10 per cent in the past month on speculation the Liberal Democratic Party, which returned to power in last weekend's elections, will spend more to boost the economy and pressure for more bond purchases by the central bank, which meets tomorrow.

Shares of Nomura Holdings, Japan's biggest brokerage, jumped 6.4 per cent today.

Mr Draghi, testifying yesterday to the European Parliament's Economic and Monetary Affairs Committee in Brussels, said the central bank expects "a beginning of a recovery in the second part of next year."

The ECB's commitment to preserve the euro at any cost and the establishment of a single banking supervisor have improved financial-market sentiment, he said.

Bloomberg