Stocks and oil gained while the cost of U.S. default insurance fell the most in 18 months after President Barack Obama said Congressional leaders reached an agreement to raise America’s debt ceiling. The yen, Swiss franc and Treasuries declined. The MSCI All-Country World Index increased 0.6 percent at 10:10 a.m. in London. Standard & Poor’s 500 futures advanced 0.8 percent. Credit-default swaps on Treasuries dropped nine basis points to 52, the biggest retreat since February 2010. The yen weakened against 16 major peers, while the Swiss franc depreciated 1 percent versus the euro. The 10-year U.S. Treasury yield added five basis points to 2.85 percent. Crude oil jumped 1.4 percent and gold slipped 0.7 percent. Republican and Democratic party leaders agreed on a deal that will “reduce the deficit and avoid default,” Obama said. The House plans votes today and the Senate may follow to consider the agreement that would raise the $14.3 trillion debt ceiling by $2.1 trillion and cut government spending. Data today may show American manufacturing grew last month, following reports that China’s factory output expanded. “They’re trying to balance how they pay back the money without crushing growth potential in the short term, weighed off against long-term considerations where they need to reduce their overall debt burden,” said Hayden Briscoe, Sydney-based director of Asia-Pacific fixed income at AllianceBernstein LP, which manages $460 billion in assets. “It’s still very early days. There are still ongoing issues that need to be resolved.” Factory Output The gain in S&P 500 futures indicated the gauge will rebound from last week’s 3.9 percent slump, the worst weekly loss in more than a year. The Institute for Supply Management’s U.S. manufacturing index for July may fall to 54.5 from 55.3 in June, according to the median estimate of 63 economists surveyed by Bloomberg. Figures greater than 50 signal expansion. The data is due at 10 a.m. in New York. Another report might show construction spending rose in June for the first time in seven months. The dollar weakened against a majority of its most-traded counterparts, while the yield on the 30-year Treasury bond jumped seven basis points to 4.19 percent. Senate Majority Leader Harry Reid endorsed the accord among Republican leaders and the Obama administration even as negotiators were working out the final details. Senate Minority Leader Mitch McConnell told senators that the U.S. won’t default on its obligations. HSBC, Rio The Stoxx Europe 600 Index advanced 0.8 percent, following last week’s 2.5 percent loss. HSBC Holdings Plc, Europe’s biggest bank by market value, rallied 3 percent as net income topped estimates. Rio Tinto Group led gains in mining companies as copper gained. Profits at European companies are trailing analyst estimates by the most in at least five years, dragged down by manufacturing shares that had been forecast to lead a rally in the second half of the year. About 52 percent of companies in the Stoxx 600 that have reported earnings since July 11 missed analysts’ projections. The MSCI Emerging Markets Index climbed 1.2 percent, set for the biggest gain in more than two weeks. The extra yield investors demand to own emerging-market debt over U.S. Treasuries dropped five basis points to 2.96 percentage points, according to JPMorgan Chase & Co.’s EMBI Global Index. Lira Rallies Turkey’s lira rallied 0.7 percent against the dollar as concern eased that the resignations of Turkey’s four top generals on July 29 would spur political turmoil. The resignations signal Prime Minister Recep Tayyip Erdogan is consolidating civilian control over the country, Goldman Sachs Group Inc. analysts said. Oil climbed $1.35 to $97.05 a barrel in New York, and gold fell $11.57 to $1,616.30 an ounce. The S&P GSCI Index of 24 commodities rallied 1.5 percent, the most on a closing basis in more than three weeks. The Australian dollar appreciated 0.4 percent to $1.1031, while New Zealand’s dollar rose to a record against the greenback before paring gains. The yen depreciated 0.8 percent against the 17-nation euro, which was little changed versus the dollar at $1.4393. To contact the reporter on this story: Stephen Kirkland in London at skirkland@bloomberg.net To contact the editor responsible for this story: Stuart Wallace at swallace6@bloomberg.net

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