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A trader works on the floor at the New York Stock Exchange in New York, Wednesday, Jan. 2, 2013. The “fiscal cliff” compromise, for all its chaos and controversy, was enough to send the stock market shooting higher Wednesday, the first trading day of the new year.

Seth Wenig/The Associated Press

Bulls are partying hard this first trading day of 2013, celebrating the less-than-ideal agreement reached in Washington to prevent the nation from a hard fall off of the "fiscal cliff" of tax hikes and spending cuts.

In early trading, the S&P/TSX composite index was up 118 points, or almost 1 per cent, at 12,551, after earlier rising by as much as 150 points. Major U.S. indexes were near their intraday highs: the S&P 500 was up 28 points, or nearly 2 per cent, at 1,454, and the Dow Jones industrial average was up 260 points, or nearly 2 per cent, at 13,364. The Nasdaq was doing even better, up 76 points, or 2.5 per cent, at 3,095.

At the TSX, materials was the top gaining sector, up more than 2 per cent, as investors bid up commodities in relief the U.S. budget deal will prevent an immediate slowdown in the economy. The February crude oil contract in New York was up nearly 2 per cent at $93.63 (U.S.) per barrel. Brent oil hit an 11-week high of almost $113 per barrel. Copper, which was also supported by some positive economic news out of China, was soaring 2.6 per cent at $3.75 per pound in New York. China's official manufacturing purchasing managers' index came in at 50.6, holding steady and adding further evidence its economy was picking up steam.

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Even gold was on the rise, thanks to the slide in the greenback against major currencies this morning, gaining just over 1 per cent to $1,693.

Late last night, the House of Representatives approved a Senate-backed plan that scales back the broad tax hikes and spending cuts that officially took effect on Tuesday and had threatened to send the U.S. economy back into recession. For a while on Tuesday, the bill appeared to be in jeopardy due to many House Republicans objecting the proposal.

The bill raises tax rates on individuals making more than $400,000 and couples making over $450,000. But it only delays, by two months, automatic spending cuts that could eventually total $1.2-trillion over a decade and does not address the U.S. borrowing limit.

The U.S. will take special measures that will delay hitting the debt ceiling for now, but the lack of a broad budget agreement on spending and on deficit levels means much more acrimonious debate and fiscal uncertainty to come in the U.S capital.

"Buy the risk trade now, but don't get greedy and take your profits before the Cliff Part II becomes a cheesier Hollywood remake of the original," commented Scotia economists Derek Holt and Dov Zigler.

Already in 2013, there's renewed worry about the fragile state of global economies. Markit's Eurozone Manufacturing Purchasing Managers' Index for December was revised down to 46.1 from an earlier preliminary reading of 46.3, signifying further contraction in factory output. The index has been below the 50 threshold since August of 2011.

And U.S. data this morning showed construction spending unexpectedly falling in November by 0.3 per cent from a month earlier, as home building slowed and federal government outlays plummeted. Economists, by contrast, were expecting growth of about 0.6 per cent.

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In other U.S. economic data, the Institute for Supply Management's manufacturing index for December came in at 50.7. While that was a little better than the 50.3 reading economists were expecting, it was just barely above the 50 level that separates expansion from contraction.

In corporate news this morning, Avis Budget Group Inc. agreed to acquire Zipcar Inc. for about $500-million in cash. Zipcar shares spiked nearly 50 per cent.

Major automakers will be releasing their latest sales data throughout the day.

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