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At the open: Stocks rise as 'fiscal cliff' optimism spreads

Regulators propose trading rules for direct access


North American stock markets opened higher, with spirits buoyed by reports that meaningful progress is finally taking shape in the talks to avoid the U.S. "fiscal cliff" that looms at the end of this year.

In early trading, the S&P/TSX composite index was up 17 points, or 0.1 per cent, at 12,247; the S&P 500 was up 6 points, or 0.4 per cent, at 1,425; and the Dow Jones industrial average was up 61 points, or 0.4 per cent, at 13,231.

Commodities this morning are mixed, with West Texas Intermediate oil up 16 cents at $85.72 (U.S.) and gold down $5.30 at $1,709.10.

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The Wall Street Journal is reporting that the talks to ease the burden of tax hikes and spending increases set to take hold at the start of next year have been making steady progress in recent days. While big differences remain, the Journal quoted unnamed sources in both the Republican and Democratic camps as saying there has been a significant shift and more "serious" behind closed doors discussions are under way.

NBC News this morning notes that the president's public schedule is mostly free today, suggesting that he's busy working on the deal. An increasing number of Republicans are giving signals that they will have to cave in on tax rates. The biggest obstacle right now, the network suggests, is on raising the debt ceiling. GOP leaders are hard pressed to sell the idea to other Republicans given the arduous battles over that issue in the past.

An agreement needs to come soon. Washington is expected to largely shut down for the holidays on Dec. 21, and legislation must be in hand several days prior to that date to be passed in time.

U.S. monetary policy will also be in focus over the next two days as the Federal Reserve holds its monthly meeting. Chairman Ben Bernanke, at the conclusion of the get together on Wednesday, is widely expected to announce a further $45-billion in monthly Treasury buying. The Fed has promised to continue that open-ended method of boosting economic growth until there is substantial improvement in employment levels.

Markets also received some welcome news this morning out of Europe, where German investor confidence unexpectedly rose in December. The ZEW Centre for European Economic Research said its index of investor and analyst expectations rose to 6.9 from minus 15.7 in November. The index aims to forecast economic conditions six months in advance, and economists were expecting a reading more like minus 11.5.

In economic news here this morning, Statistics Canada reported a trade deficit of $169-million in October as exports rose 1.0 per cent and imports fell 1.2 per cent. The report surprised economists, who had expected a deficit of $1.2-billion.

The U.S. Commerce Department reported a trade deficit of $42.24-billion (U.S.) in October, widening from a deficit of $40.3-billion in September. That was close to forecasts and didn't have much impact on markets.

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Here's a look at some stocks moving on news this morning:

Shares in American International Group Inc. are up 2.6 per cent at the open after the U.S. government announced this morning it will sell all of its remaining 234.2 million shares at $32.50 per share.

Hudson's Bay Co. shares are down a penny, or 0.06 per cent, after reporting a $2-million third-quarter loss from continuing operations on Tuesday as it initiated a quarterly dividend. It also said it may considering spinning off its real estate assets into an investment trust.

Delta Air Lines shares are up 2.3 per cent t after announcing it will acquire Singapore Airline's Virgin Atlantic stake for $360-million (U.S.).

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About the Author
Investment Editor

Darcy Keith is The Globe and Mail's Investment Editor. He has been a business journalist since 1992 and joined the Report on Business in 2010 from Yahoo! Canada, where he was the senior editor of finance. More


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