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December 19 2012, 10:39AM

The Australian market has opened higher amid signs US politicians are willing to compromise to avoid the world's largest economy falling off the fiscal cliff.

At 1020 AEDT on Wednesday the benchmark S&P/ASX200 index was up 29 points, or 0.63 per cent, at 4,624.2 points, while the broader All Ordinaries index was up 28 points, or 0.61 per cent, at 4,638.5 points.

On the ASX 24, the December share price index futures contract was 24 points higher at 4,626 points, with 66,030 contracts traded.

IG Markets Stan Shamu said the Australian market opened higher after US Democrats and Republicans appeared willing to compromise with their budget negotiations.

"We've had a strong start to the morning on the back of fiscal cliff negotiations," he said.

"Everyone is optimistic we will see a positive agreement."

The fiscal cliff refers to a series of automatic tax hikes and spending cuts that will come into affect on January 1, and could send the US economy into a recession, if a deal is not reached beforehand.

On Wall Street, the Dow Jones Industrial Average gained 115.73 points (0.87 per cent) to close at 13,351.12 in closing trade.

In Europe at close, London's benchmark FTSE 100 index of leading shares rose 0.40 per cent to 5,935.9 points, Frankfurt's DAX 30 added 0.64 per cent to 7,653.58 points, while in Paris the CAC 40 was 0.14 per cent higher at 3,648.63 points.

Locally, mining stocks were leading the way after the iron ore price continued to rise.

Rio Tinto surged $1.30 to $66.00, BHP Billiton jumped 36 cents to $37.02 and Fortescue gained nine cents to $4.69.

Troubled retailer Billabong announced it would consider a $527 million takeover bid. Its shares will resume trading at 1100 AEDT after being in a halt for two days.

Whitehaven Coal shares added nine cents to $3.30 after it said it had held talks with China's largest coal company, Shenhua Group, but no offers were currently on the table.

In economic news on Wednesday, the Westpac-Melbourne Institute Leading Indexes of Economic Activity is due out.

National turnover was 234 million securities worth $522.9 million, with 379 stocks trading up, 186 down and 267 unchanged.