20130102 1105 Global Markets & Energy Related News.

GLOBAL MARKETS-Asia holds breath as U.S. fiscal talks go to wire
SYDNEY/HONG KONG, Jan 2 (Reuters) - Asian stocks started new year trading with tentative gains as investors anxiously wait to see if the U.S. Congress can strike a last-minute compromise and avert the harsh "fiscal cliff" tax rises and spending cuts that are technically already in force.
"Frankly, we don't know what to make of it all. It's like a circus there," said one exasperated forex dealer at an Australian bank in Sydney. "The markets have always assumed they would eventually strike a deal that would avoid the worst affects of the fiscal cliff, but it's getting harder and harder to stay optimistic."

US House Republicans weigh last-ditch challenge to fiscal deal
WASHINGTON, Jan 1 (Reuters) - The U.S. Congress headed toward another showdown over the "fiscal cliff" on Tuesday as Republicans in the House of Representatives mounted a last-ditch effort to reshape a tax deal meant to prevent Washington from pushing the world's biggest economy into recession.
If successful, the measure would set up a high-stakes showdown with the Democratic-controlled Senate and risk a stinging rebuke from financial markets about to open in Asia. If it fails, lawmakers - including many Republicans - would likely back tax hikes for the wealthiest Americans and thus resolve a main chapter of the fiscal crisis that has consumed Washington for months.  

U.S. 'fiscal cliff' deal called a dud on deficit front
By Kim Dixon
In the controversy surrounding the "fiscal cliff" issue, it's easy to forget that the origin of the entire debate was a professed desire to reduce swollen federal deficits.
Whether the target was $4 trillion over 10 years, as proposed by the Bowles-Simpson deficit reduction commission, or in the $2 trillion range, as tossed around by House of Representatives Speaker John Boehner and President Barack Obama, the idea was to rein in total debt that now tops $16 trillion.

FOREX-Dollar rises in thin trade, ends 2012 lower overall
NEW YORK, Dec 31 (Reuters) - The dollar rose against most currencies on Monday in thin trading, and held its gains even after President Barack Obama said a deal was in sight to avert a fiscal disaster that would have meant tax hikes and spending cuts for the world's largest economy.
"Even though, it's not definitive yet, overall it is hopeful," said Nick Bennenbroek, head of New York FX strategy, at Wells Fargo in New York. "So long as Obama's statements are consistent with the idea that we are getting a deal, that is going to keep the market relatively calm. That should be positive for foreign currencies because of risk appetite and negative for the dollar as a safe-haven."

China factory sector strongest since May 2011-survey (Reuters)
Activity in China's vast manufacturing sector hit its fastest pace in December since May 2011, a survey of private factory managers showed, with a sub-index for new orders pointing to continued strength in the new year. The final reading for the HSBC Purchasing Managers' Index rose to 51.5 in December, well above the preliminary reading of 50.9 published in the middle of the month and November's final reading of 50.5. A complementary December survey by China's National Bureau of Statistics, due to be published on Tuesday, is expected to show similar signs of manufacturing strength. Economists polled by Reuters expect the official PMI to show a rise to 51.0 from 50.6 in November, expanding at its fastest pace in eight months. The HSBC PMI rose above 50, the line that demarcates accelerating from slowing growth, in November for the first time in more than a year.

Merkel says euro zone crisis far from over (Reuters)
The euro zone sovereign debt crisis is far from over even though reform measures designed to address the roots of the problem are beginning to bear fruit, German Chancellor Angela Merkel has said in her New Year's address. In a taped interview to be broadcast on Monday evening, Merkel urged Germans to be more patient even though the euro zone crisis has already dragged on for three years. She drew a line linking German prosperity to a prosperous European Union. "For our prosperity and our solidarity we need to strike the right balance," Merkel said. "The European sovereign debt crisis shows how important this balance is. "The reforms that we've introduced are beginning to have an impact," she said. "Nevertheless we need to have further continued patience. The crisis is far from over." Merkel indirectly contradicted Finance Minister Wolfgang Schaeuble with those comments. In an interview  on Friday in Bild newspaper Schaeuble said the worst of the crisis was over.
Germany has been the paymaster in the euro zone crisis, to the chagrin of many German voters and a growing bloc of conservative lawmakers in Merkel's coalition. Germans remain wary of euro zone bailout efforts but give Merkel high marks for what they consider to be her judicious handling of the crisis. Merkel, who is seeking a third term in an election in September, proudly pointed out that unemployment in Germany had fallen to its lowest level since reunification in 1990 while the number of people employed had also risen to record highs.

OIL-Brent crude rises, hits record annual average for 2012
NEW YORK, Dec 31 (Reuters) - Brent crude rose on Monday, closing 2012 up for the fourth straight year after geopolitical threats to production offset worries about flagging oil demand.
"Oil is going to be attached to the Middle East issues, I don't think Iran is going away, they have been quiet of late," said Richard Ilczyszyn, chief market strategist and founder of iitrader.com LLC in Chicago.