At last: Good news from the US

Good news from the US, with consumer spending rising last month. The Commerce Department reports that consumer purchases jumped 1.1% in November.

This was the largest monthly increase in three years and provided good news to economists fearful that the country was teetering on the edge of recession. The jump in spending prompted some economists to revise their forecasts up from a slow growth rate of 0.6% for the fourth quarter GDP to 1.5%.

The Australian sharemarket opened to good gains today buoyed by good news from the US and a seeming breakthrough in the BHP and Rio Tinto inpass.

At mid morning the S&P/ASX200 index was up 1.49% to 6339.8 before dropping to 6308.8. The All Ordinaries, which was also up by 87.1 points by mid-morning, also fell back to 6371 by 12.30pm.

As for deals: BHP must declare its intentions to its buyout target Rio Tinto by February 6. The $174 billion bid to merge the two giants has hit a stumbling block after Rio refused to talk. The deadline has got the nod from both companies opening the way forward to a potential deal.

Rio believes the $174 billion offer undervalues Rio. Meanwhile some traders believe Rio could lose all of the 30% gain in its share price since BHP can courting.