NEW YORK, Jan. 2 (UPI) -- The first stock market session of 2013 began with a reaction to a new U.S. tax code that ended speculation about a recession triggered by budget gridlock.
Major market indexes rose sharply on pent up optimism after Congress passed the deal on taxes Tuesday and sent it to President Barack Obama to be signed into law.
Technically, the deal was a day late and it postpones a debate about spending cuts. But the fear of the default budget, which the new tax code eliminates, has been quelled.
The tax bill leaves federal tax rates intact for income up to $400,000 for individuals and $450,000 for families, circumventing concern that a large segment of the country will have less money to spend in 2013.
In early afternoon trading, the Dow Jones industrial average added 1.65 percent or 216.43 points to 13,320.57.
The Nasdaq gained 2.35 percent or 70.89 points to 3,090.40.
The Standard and Poor's 500 added 1.74 percent, 24.75 points, to 1,450.94.
The 10-year treasury note was off 22/32 to yield 1.837 percent.
The euro fell to $1.3164 from Monday's $1.32. The dollar rose to 87.14 yen from 86.71 yen.
In London, the FTSE 100 index gained 2.2 percent, 129.56 points, to 56,027.37.
Markets in Japan were closed.
Manufacturing ends 2012 on strong note
NEW YORK, Jan. 2 (UPI) -- An index of U.S. manufacturing activity reached a seven-month high in the final month of 2012, a research firm said Wednesday.
Markit Economics said the manufacturing sector's Purchasing Managers Index for the month rose to 54 from 52.8 in November, "signaling solid expansion" of the sector with its highest reading since May.
The PMI, which shows business expansion with numbers above 50, failed to reach the early "flash" estimate of 54.2 , but "total new work increased at a solid rate," the report said.
The component index for new orders rose from 53.6 to 54.7 in December. New export orders also rose, the index climbing from 50.3 to 52.6.
The index on output or production rose from 53.5 to 54.5, both numbers indicating that growth accelerated in the last month of the year.
Employment also accelerated, with the index measuring the number of workers rising from 52.6 to 54.5.
"The final Markit PMI came in slightly below the earlier flash estimate but still indicates that the U.S. manufacturing sector enjoyed a reasonably strong end to the year. Production is growing at a solid pace, buoyed by rising domestic and export sales," said Markit Chief Economist Chris Williamson.
"Firms are also taking on more staff, suggesting that the underlying improvement in demand pushed any worries about the 'fiscal cliff' to backs of manufacturers' minds in the closing weeks of the year.," he said.
Avis to buy Zipcar for $500 million
BOSTON, Jan. 2 (UPI) -- U.S. car rental firm Avis Budget Group said it has agreed to purchase Zipcar for $500 million, expanding its offerings to hourly rentals.
Zipcar rents cars by the hour or by the day, representing a growing segment of the competitive market of car rentals. Its outlets are generally in large cities or near college campuses, where short-term renting can be a viable alternative to renting a car in 24-hour blocks of time.
The deal presents Zipcar with a 49 percent premium on its closing stock price at the end of 2012, The New York Times reported Wednesday.
Avis said its current fleet could help Zipcar during periods of peak demand.
The overlapping synergies, which represents duplicating costs that can be saved with a merger, come to $50 million to $70 million per year, Avis said.
Zipcar will operate as an Avis subsidiary, Scott Griffith is expected to remain as chief executive officer, and Mark Norman is to stay on as president and chief operating officer.
Zipcar will keep its headquarters in Boston, but move to a new location, the Times said.
ArcelorMittal sells slice of Canadian unit
LUXEMBOURG, Jan. 2 (UPI) -- Steel making giant ArcelorMittal said it had agreed to sell 15 percent of ArcelorMittal Mines Canada to a largely Asian consortium for $1.1 billion.
The buyers include South Korea's Posco, the world's fifth-largest steelmaker, The New York Times reported Wednesday. The group also includes Taiwanese firm China Steel and South Korean investment group EQ Partners.
ArcelorMittal has been paring down its assets, selling $4.2 billion worth of assets in the past 16 months to keep up with debt payments during the economic downturn, which has reduced its sales in Europe by 30 percent compared with 2007, the Times said.
The sale announced Wednesday involves some of the firm's more promising iron ore mines. It produces 40 percent of Canada's iron ore, the company said.
ArcelorMittal shares rose 3.9 percent in early trading in European markets, a sign that investors thought the firm got a good price for the 15 percent of the operation it sold. AccelorMittal will retain 85 percent of the unit, which the deal values at $7.3 billion.