UK stocks leap on U.S. 'fiscal cliff' deal

Britain's top share index jumped higher on the first trading session of 2013 after U.S. lawmakers approved a deal preventing massive tax hikes and spending cuts, boosting the outlook for the new year.

The Republican-controlled House of Representatives late on Tuesday finally approved a bill that will raise taxes on top U.S. earners, fulfilling President Barack Obama's re-election promise and avoiding the "fiscal cliff" of $600 billion in broad-based tax hikes and spending cuts which threatened to drag the U.S. economy into recession.

At 0808 GMT, the FTSE 100 index was up 86.52 points, or 1.5%, at 5,984.50, having ended a thinly traded half-day session on Monday, New Year's Eve down 0.5% as traders awaited news on the U.S. fiscal cliff negotiations.

Asia stocks rose strongly, copper prices hit a two-week high, and Brent crude reached a one-month peak on Wednesday after U.S. lawmakers struck the last-minute budget deal, with upbeat manufacturing data from top commodities consumer China also helping.

China's official manufacturing purchasing managers' index held steady in December at 50.6, matching November's seven-month high, adding to evidence that the world's second-largest economy was headed towards steady growth revival.

Miners led the blue-chip gainers, contributing almost 20 points of the FTSE 100's advance, boosted by the jump in commodity prices.

Banks were also in demand, with Barclays the top blue-chip gainer, up 4.8%, with traders saying the stock was helped by a price target hike from Investec Securities.