Britain's FTSE rallies on U.S. fiscal optimism

A man walks past the London Stock Exchange in the City of London October 27, 2008.

LONDON (Reuters) - Britain's top shares rose on Tuesday, recovering after falls in the previous session, on signs of progress in negotiations to avoid a "fiscal cliff" of spending cuts and tax rises that threaten the U.S. economy.

The FTSE 100 .FTSE was up 13.77 points, or 0.2 percent, at 5,925.92 by 0805 GMT, erasing Monday's 0.2-percent drop.

Investors became more optimistic that a U.S. budget deal will be struck on Monday night after President Barack Obama made a counter-offer to Republicans that included a major change in position on tax hikes for the wealthy.

"Now that a deal looks likely to be done, a strong end to the year for equities is certainly on the cards," said Craig Erlam, market analyst at Alpari (UK), who reckons a break above the psychologically important 6,000 level is within reach before year-end.

(Reporting by Tricia Wright; Editing by Toni Vorobyova)