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MELBOURNE, Nov 18 AAP

November 18 2012, 2:23PM

The Australian market is set to open higher on Monday following gains in US stocks on Friday and some positive comments by political leaders about tackling the fiscal cliff and deficit.

The December share price index on the ASX 24 indicates the market will open 12 points (0.28 per cent) higher on Monday.

The Australian dollar was trading at 103.45 US cents on Sunday afternoon.

AMP Capital's chief economist Shane Oliver said US stocks seemed to get a boost out of talks on Friday between President Barack Obama and Democrat and Republican party leaders regarding the so-called "fiscal cliff".

The cliff refers to large tax hikes and spending cuts that will automatically come into force on January 1 unless legislation is changed.

The Dow Jones closed up 0.37 per cent at 12,588.30, the broader S&P 500 was 0.48 per cent better at 1,359.88 and the tech-heavy Nasdaq improved 0.57 per cent to 2,853.13.

Global markets have been dominated in recent weeks by talk about the cliff, which is expected to send the world's largest economy back into recession if political opponents can't reach a compromise.

"The key person there, the Republican House of Representatives leader John Boehner, described talks as constructive, providing a bit of confidence that there will be some sort of solution to the fiscal cliff," Dr Oliver told AAP.

"It looks like we'll have a reasonable start to trading on Monday with futures trading up 12 points or 0.3 per cent, suggesting a gain 10 to 15 points at the start.

"Then it will probably remain another nervous week, waiting for more news regarding the so-called fiscal cliff in US ... I think it's more of the same."

With the Thanksgiving holiday in the US later in the week, trade was expected to be thin, and a resolution on the cliff was not expected until December, Dr Oliver said.

The outbreak of violence in the Middle East is also making markets nervous, with oil prices rising on Friday on concerns about supply.

The Australian share market closed lower on Friday, with the S&P/ASX200 index down 12.4 points (0.28 per cent) at 4,336.8 - a loss of 2.8 per cent for the week - while the broader All Ordinaries index was down 10.5 points (0.24 per cent) at 4,360.1.

on Tuesday, the Reserve Bank of Australia will release minutes of its last board meeting, which are expected to reveal a mild easing bias.

Reserve Bank governor Glenn Stevens will deliver a speech on the same day.

CommSec chief economist Craig James said if Mr Stevens wanted to send a message on the Aussie dollar, wage growth or views on the global economy, this would be the opportunity.

By Greg Roberts