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US markets see best day of 2013 on debt ceiling deal hopes

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US markets had their best day of the year so far yesterday, with all three major indices rising by more than 2%, after politicians took a step towards agreeing a deal on the country's debt ceiling.

Extending an olive branch, US Republicans offered President Obama a short-term increase in the debt limit to stave off default.

While negotiations are ongoing, the move boosted shares which saw their biggest percentage gains of the year.

The Dow Jones Industrial Average closed up 2.2%, or 323 points, at 15,126, while the S&P 500 was also up 2.2% – or 36 points – at 1,692. The NASDAQ rose by 2.3%.

Obama has been offered a short-term increase in the debt ceiling – currently at £10.47trn – by the House Republican leader John Boehner in order to prevent a default ahead of next week’s deadline on 17 October.

Traders around the globe have already been betting Congress would approve a deal, despite growing fears it may cross the October deadline, and the latest positive news on talks between the two parties also boosted shares in Asia.

The Nikkei closed up 1.5% at 14,404, while the Hong Kong Hang Seng climbed 1.3% to close at 23,252. 

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