World markets rally after U.S. ‘fiscal cliff’ deal

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How the European economy fares over the coming months will likely hinge on developments in the debt crisis. In the last few months of 2012, tensions eased largely in the wake of the announcement of a new bond-buying plan from the European Central Bank.

“If the second half of 2012 is anything to go by it seems that on the back of central bank action investors are presently inclined to turn a blind eye to poor news and more likely to look on the bright side of events,” said Jane Foley, senior currency strategist at Rabobank International.

That has shored up the euro over the past few months and Europe’s single currency eked out further gains Wednesday as investor sentiment was buoyant in the wake of the fiscal cliff deal. When investors have a propensity to take on riskier assets, the dollar often loses ground. The euro was up 0.4 percent at $1.3243.

Oil prices also pushed higher, with the benchmark New York contract up 83 cents at $92.65 a barrel.

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Sampson contributed from Bangkok.

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