Obama wins the fiscal battle but not yet the war US stocks kicked off the new year with their best day in over a year on Wednesday. The rally was prompted by relief over a last minute deal to avoid the so-called "fiscal cliff" - a hard-core programme of tax hikes and spending cuts that threatened to derail any growth in the economy. The Dow Jones closed up 2.4%, while European shares were up about 2% for the day. Barack Obama headed back to his holiday in Hawaii secure in the knowledge that he had won this time round. But there are potentially bruising showdowns in the offing over the next two months over spending cuts and national borrowing. Republicans are angry that the fiscal cliff deal did little to curb the federal deficit. Their intransigence in the lower house led to fears that it would be derailed. They have vowed to use the debt-ceilng debate to win deep spending cuts next time round. More about: Markets, USA, Wall Street