European stocks rallied to a 19-month high

European stocks rallied to a 19-month high as U.S. lawmakers passed a budget bill that avoided most scheduled tax increases threatening a recovery in the world’s largest economy. Asian shares advanced.

The U.S. House of Representatives passed the budget legislation just after 11 p.m. in Washington yesterday, breaking a yearlong impasse over how to head off more than $600 billion in tax increases and spending cuts set to start taking effect yesterday. President Barack Obama said he will sign the bill after 257-167 vote. The Senate approved the proposals 89-8 in the first hours of Jan. 1.

The bill will delay by two months automatic spending cuts scheduled to start this month as Republican lawmakers abandoned their effort to add further reductions to the deal. It reinstates tax cuts that expired Dec. 31 on taxable income of individuals up to $400,000 and of married couples of up to $450,000, leaving those top earners with a marginal tax rate of 39.6 percent, up from 35 percent last year.

A gauge of mining shares soared 3.9 percent, leading gains on the Stoxx 600. Rio Tinto rallied 5.4 percent to 3,700 pence, the highest price in 10 months, and Anglo American Plc surged 4.7 percent to 1,983.5 pence.

All 14 members of an index of auto-industry companies in the Stoxx 600 advanced. Volkswagen, Europe’s biggest carmaker, climbed 3.8 percent to 178.65 euros. Porsche SE gained 4.5 percent to 64.50 euros and Bayerische Motoren Werke AG (BMW) added 3.7 percent

ArcelorMittal, the world’s biggest steelmaker, rose 3.8 percent to 13.42 euros. China Steel Corp. and Posco led a group that agreed to pay $1.1 billion for a 15 percent stake in ArcelorMittal Mines Canada Inc. to secure supplies of iron ore.