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Fiscal cliff talks lift stocks

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NEW YORK (CNNMoney) — Even though no agreement is imminent, and lawmakers have a nasty habit of waiting until the last minute to resolve disputes, markets around the world are reacting positively to signs that Washington might be moving toward a deal on the fiscal cliff.

U.S. stocks opened higher Thursday, building on the prior day’s strong performance.

The Dow Jones industrial average gained 58 points, or 0.4%, while the S&P 500 added 0.5% and the Nasdaq gained 0.7%.

Lawmakers and the White House have been in talks to avoid the slew of year end tax increases and spending cuts known as the fiscal cliff and investors will likely be taking their cue from developments in Washington during the trading day.

Data showing an improving economy also provided a boost. The government said U.S. gross domestic product grew at a 2.7% annual rate in the third quarter. Separately, weekly claims for unemployment benefits fell 23,000 to 393,000.

Investors also sifted through a batch of quarterly results. Shares of troubled bookseller Barnes & Noble slipped after the company posted a loss of 4 cents per share and a revenue decline of 0.4%.

Grocery chain Kroger shares rose after the company posted better-than-expected results for the third quarter and also lifted its outlook for the year.

Shares of Tiffany tumbled after the luxury retailer reported third-quarter earnings and sales that missed estimates. The company cut its forecast for the full-year.

Many major retailers also reported same-store sales for November, including the start of the holiday shopping season over the Black Friday weekend.

Shares of Target were under pressure after the retailer reported a 0.1% decline in sales for the first four weeks of November.

Research in Motion got a big boost from a Goldman Sachs upgrade. The BlackBerry maker also announced updates to its so-called developer ecosystem as the company works to drum up enthusiasm for the BlackBerry 10.

Meanwhile, world markets took their cues from the United States.

Asian exchanges gained, with the Nikkei adding 1.0% and Hong Kong’s Hang Seng closing 1.1% higher.

China’s marquee index, the Shanghai Composite, lagged its rivals and posted a fresh multi-year low. The index lost 0.5%, and remains well below the psychologically important 2,000 point mark.

Markets in Europe also capitalized on the fiscal talks momentum, gaining between 0.7% and 0.9% in afternoon trading.

Two reports European sentiment reports injected life into the ailing eurozone economy. The European Commission’s reading on economic sentiment pushed higher in November, after two months of deceleration. And the EC’s business climate indicator also edged higher.

The dollar lost ground against the euro and the British pound, but strengthened against the Japanese yen.

Oil prices for January delivery gained more than 2% to $88.60 a barrel.

Gold prices for December delivery also edged higher, rising 0.6% to $1,725 an ounce.

The price on the 10-year Treasury fell, pushing the yield up to 1.63% from 1.62% late Wednesday.