Lawmakers approved a plan to prevent huge tax increases and delay spending cuts that together would have pushed the world's largest economy off the "fiscal cliff" and into a likely recession.

European markets followed their Asian counterparts and rallied on the news, while futures markets pointed to Wall Street doing the same.

London's FTSE .FTSE, Frankfurt's DAX .GDAXI and CAC 40 .FCHI in Paris opened between 1.4-1.9 percent higher, pushing the pan-European FTSEurofirst 300 .FTEU3 up 1.3 percent and the MSCI world index .MIWD00000PUS 0.8 percent.

"This is great news for global growth and explains why shares and other growth-related assets are up strongly today," said Shane Oliver, strategist at AMP Capital.

Although the U.S. deal is not as far-reaching as markets had wanted, Tuesday's approval by the House of Representatives of a plan already backed by the Senate allayed fears that Republican objections to the heavy emphasis on taxes rather than spending cuts could have scuppered an agreement.

Assets which are traditionally see as more risky rose across the board with crude oil futures up 1.1 percent, gold gaining $7 an ounce and copper futures in London up 1.7 percent.

In currency markets the euro rose to $1.3281 as the dollar fell 0.5 percent against a basket of major currencies .DXY.

The Japanese yen also continued its slide, hitting its lowest level since July 2010, as investors bet that the Bank of Japan would have to take ever-more aggressive easing steps to support the economy and satisfy the new government.

The pattern was the same for bonds, where prices of higher-yielding Spanish and Italian government bonds rose and the German equivalent, usually favored by risk-averse investors, fell. The Bund future was last 89 ticks down at 144.75.

"The compromise is supportive for risk sentiment as we've seen in a few markets already and it should weigh on Bunds which should correct in line with (U.S.) Treasuries. Treasuries could even underperform," said Rainer Guntermann, a strategist at Commerzbank.

(Reporting by Marc Jones; editing by David Stamp)

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