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Asia stocks higher on hopes for US budget deal

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Photo -   FILE - In this Nov. 15, 2012, file photo, traders work on the floor at the New York Stock Exchange, in New York. World stock markets meandered Tuesday, Dec. 4, as traders weighed a surprise drop in U.S. factory production against hopes that the U.S. will avoid the so-called fiscal cliff. (AP Photo/Seth Wenig, File)
FILE - In this Nov. 15, 2012, file photo, traders work on the floor at the New York Stock Exchange, in New York. World stock markets meandered Tuesday, Dec. 4, as traders weighed a surprise drop in U.S. factory production against hopes that the U.S. will avoid the so-called fiscal cliff. (AP Photo/Seth Wenig, File)
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BANGKOK (AP) — Asian stock markets rose Wednesday as investors became increasingly convinced that U.S. political leaders will reach a budget deal that avoids a major hit to the world's No. 1 economy. Chinese shares soared on hopes for more stimulus measures.

Negotiations between the White House and the U.S. Congress have been revving up in recent days in order to reach a deal aimed at averting the so-called fiscal cliff, which is a series of sharp government spending cuts and tax increases that begin to kick in Jan. 1 and could cause a recession.

Despite political posturing and a deep divide on critical issues, most analysts think a deal acceptable to both President Barack Obama and congressional Republicans will be cobbled together before the end of the year.

Analysts at DBS Bank Ltd. said that "the US fiscal cliff is viewed as political theatre and not as an imminent threat to the US economy."

"Unlike 2010, both the White House and the Republicans have been careful in communicating that, despite the differences in opinions over how to rein in the fiscal deficit, the door is open for a compromise solution by the end of the year."

Japan's Nikkei 225 index rose 0.1 percent to 9,443.65. Hong Kong's Hang Seng jumped 1.6 percent to 22,143.19. South Korea's Kospi added 0.5 percent to 1,943.85. Australia's S&P/ASX 200 gained 0.4 percent to 4,520.40.

Mainland Chinese shares soared a day after the government pledged to maintain policies intended to strengthen the economy and also expressed a willingness to "fine tune" them and make them more effective.

The Shanghai Composite Index jumped 3.1 percent to 2,036.14 while the smaller Shenzhen Composite Index soared 4.3 percent to 775.58. Infrastructure-related shares posted strong gains. Fujian Cement surged 7.7 percent. Xinjiang Bayi Iron & Steel jumped 4.5 percent.

Chinese leaders have cut interest rates twice since early June and are pumping money into the economy through higher spending by state companies and on building airports and other public works.

"Investors expect the economic outlook to be improving based on recent economic data," said Zhang Yang, an analyst at Sinolink Securities in Shanghai.

Wall Street fell Tuesday as investors waited for developments in the budget talks. The Dow Jones industrial average fell 0.1 percent to close at 12,951.78. The Standard & Poor's 500 index fell 0.2 percent to close at 1,407.05. The Nasdaq composite fell 0.2 percent to 2,996.69.

Investors are also focused on U.S. economic data due for release later in the week. On Friday, U.S. nonfarm payrolls, which are a key gauge of employment, will be released for November. The figures could be distorted by the impact of Superstorm Sandy, which battered much of the eastern seaboard.

There's already evidence the storm had an impact on the U.S. economy. Monday's monthly manufacturing survey from the Institute for Supply Management was far weaker than anticipated.

Benchmark oil for January delivery was up 16 cents to $88.66 per barrel in electronic trading in the New York Mercantile Exchange. The contract fell 59 cents to close at $88.50 per barrel on the Nymex on Tuesday.

In currencies, the euro rose to $1.3103 from $1.3101 late Tuesday in New York. The dollar rose to 82.18 yen from 81.84 yen.

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AP researcher Fu Ting contributed from Shanghai.

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