U.S. stock markets jumped early Monday as Republicans and Democrats in Washington signaled hope the so-called "fiscal cliff" could be avoided.
Lawmakers have until Jan. 1 to assemble a budget plan that would replace a mandatory set of spending cuts and tax hikes that economists say would throw the U.S. economy back into recession.
Fears the economy would fall off the "fiscal cliff" have undermined markets that have dropped sharply since the Nov. 6 election. Both the Dow Jones industrial average and the Standard & Poor's 500 index are down more than 4.5 percent since the election and down 7 percent or more since the recent peak in late September.
In midmorning trading Monday, the DJIA added 154.84 points or 1.23 percent to 12,743.15. The tech-heavy Nasdaq composite index gained 45.30 points or 1.59 percent to 2,898.43. The S&P 500 tacked on 20.94 points or 1.54 percent to 1,380.82.
The benchmark 10-year treasury fell 13/32 to yield 1.624 percent.
The euro rose to $1.2817 from Friday's $1.2743. Against the yen, the dollar fell to 81.16 from 81.31 yen.
In Tokyo, the Nikkei 225 index gained 3.66 percent, 323.48 points, to 9,153.20.
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