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US markets edge mostly up on hopes for resolution of fiscal cliff

The US markets were mostly up on Wednesday, amid optimism that lawmakers will reach a budget agreement before the end of the year to avoid automatic spending cuts and tax increases, but the Nasdaq Composite declined with fall in Apple Inc. A few dozen Republicans joined a bipartisan call to break the impasse between President Barack Obama and House Speaker John Boehner over taxes for the highest-earning Americans, signing a letter calling for exploration of all options. One of the petition signers, Representative Mike Simpson of Idaho, stated that he would be willing to go along with higher tax rates for married couples earning more $500,000 in exchange for reforming spending on entitlement programs like Medicare. Separately, Texas Representative Kay Granger, also a Republican, called extending tax cuts for middle-class earnings the right thing to do. In addition, President Barack Obama and House Republicans dug in on their fiscal-cliff positions, with Obama rejecting a nascent GOP plan to extend middle-class taxes and Republicans demanding that the president send a new proposal to Congress. The budget saga continued to play out in public on Capitol Hill. Boehner declared his willingness to meet with President Barack Obama at any time to resolve the fiscal cliff, or billions in spending cuts and tax hikes scheduled to begin in January.

The markets have appeared to ignore reports on the economy while waiting for resolution to the fiscal cliff. The Institute for Supply Management stated that the US services sector grew at a slightly faster pace in November, and the Commerce Department reported factory orders unexpectedly rose 0.8% in October. However, the US saw slower jobs growth in November as Hurricane Sandy hurt employment, particularly in the manufacturing sector, payrolls processing firm estimated. The ADP Research Institute estimated US companies added 118,000 people to their payrolls in November after a revised 157,000 gain the prior month. The market offered little reaction after the Labor Department reported nonfarm productivity rose 2.9% in the third quarter, its fastest pace in two years. The US businesses produced goods and services more efficiently in the third quarter than originally believed, mainly by boosting output while keeping labor costs down.

In Europe, the European Central Bank may refrain from cutting interest rates any further after its pledge to buy government bonds lowered borrowing costs and boosted confidence that the euro area can emerge from recession next year. Greece's credit grade was reduced to SD, or selective default, by Standard & Poor's from CCC after the government began buying its bonds back from investors, the rating agency stated. On the economy front, euro zone retail sales on a monthly comparison decreased 1.2% in October following a 0.6% drop in September. Separately, the euro zone private sector activity downturn continued in November, according to a survey released by Markit Economics. The Markit Eurozone PMI Composite Output Index rose to 46.5 in November from the 40-month low of 45.7 in October and above the earlier flash estimate of 45.8.

The Dow Jones Industrial Average gain 82.71 points, or 0.64 percent, to close at 13,034.50, the S&P 500 added 2.23 points, or 0.16 percent, to finish at 1,409.28, while the Nasdaq slid 22.99 points, or 0.77 percent, to end at 2,973.70.

Indian ADRs closed mostly in green on Wednesday, ICICI Bank was up by 1.35%, Sterlite Industries was up 0.35%, Tata Motors was up by 0.34% and HDFC Bank was up by 0.16%.  On the other hand, Infosys was down 0.54%.

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