Asian stocks snapped a three-day loss, while U.S. stock futures and oil surged after President Barack Obama said Congressional leaders reached an agreement to raise America’s debt ceiling. The yen, Swiss franc and Treasuries fell. The MSCI Asia Pacific Index added 1.7 percent as of 12:48 p.m. in Tokyo, set for the biggest gain since May 26. Standard & Poor’s 500 futures climbed 1.5 percent, indicating the gauge will rebound from three straight monthly losses. The U.S. dollar increased 1 percent against the yen and 0.8 percent versus the Swiss franc. Ten-year Treasury yields jumped four basis points. Oil rose 1.4 percent in New York, while gold slid from a record. Leaders of the Republican and Democratic parties have agreed on a deal that will “reduce the deficit and avoid default,” Obama said in remarks at the White House. The plan would raise the $14.3 trillion debt ceiling by $2.1 trillion, sufficient to serve the nation’s needs through 2013. Stocks also rallied after data showed growth in Chinese manufacturing and South Korean exports beat analyst estimates, and as companies including Mitsubishi UFJ Financial Group Inc. posted higher profits. “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.” U.S. Futures S&P 500 futures indicate the gauge will rebound from last week’s 3.9 percent slump, the worst weekly loss in more than a year. Dow Jones Industrial Average futures rose 176, or 1.5 percent, to 12,265. The average sank 4.6 percent in the previous six days. Yields on 10-year Treasuries rose to 2.84 percent, after plunging to as low as 2.77 percent last week. Congressional leaders are preparing to sell to members the deal to cut $917 billion in spending over a decade, raising the debt limit initially by $900 billion, and to charge a special committee with finding another $1.5 trillion in deficit savings by the year’s end. They confront an Aug. 2 deadline for approval. 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 tonight that the U.S. will not default on its obligations. No Default “They are going to pull a rabbit out of the hat,” Jeffrey Saut, chief investment strategist at Raymond James & Associates in St. Petersburg, Florida, said in a telephone interview before Obama’s speech. His firm manages $275 billion. “The word default that’s being thrown around is being used inappropriately. I don’t think the U.S. in any way, shape or form is going to default. The collateral damage would be calamitous.” The dollar traded at 77.55 yen today from 76.76 yen on July 29 in New York, and bought 79.20 Swiss centimes, from 78.55 last week. Higher-yielding currencies rallied against the greenback, with the Australian dollar rising 0.5 percent to $1.1048 and New Zealand’s gaining 0.4 percent to 88.30 U.S. cents. The South Korean won strengthened 0.4 percent to 1,049.55 per dollar, approaching a three-year high. Economic reports today showed consumer prices rose 4.7 percent last month from a year earlier, after having climbed 4.4 percent in June, while exports increased 27.3 percent from a year earlier in July. China’s Purchasing Managers’ Index was at 50.7 for July, compared with 50.9 in June, the China Federation of Logistics and Purchasing said in a statement today. The reading beat every forecast in a Bloomberg News survey of 13 economists. A separate manufacturing index for China released today by HSBC Holdings Plc and Markit Economics fell to 49.3 for July from 50.1 in June. Stocks Rebound About eight shares rose for every one that declined on MSCI’s Asia Pacific Index, helping the gauge rebound from a 1.6 percent weekly loss. Japan’s Nikkei 225 Stock Average increased 2.1 percent, South Korea’s Kospi index jumped 1.8 percent, and Australia’s S&P/ASX 200 Index climbed 2 percent. Mitsubishi UFJ rallied 5.4 percent after Japan’s biggest publicly traded bank said first-quarter profit tripled to a record. Of 257 companies in the Asia-Pacific gauge to have reported net income from July 11 through 9 a.m. Tokyo time today, 115 had surpassed analysts’ estimates while 88 had fallen short, according to data compiled by Bloomberg. Macarthur Coal Ltd. (MCC) rose 1.6 percent after saying BidCo has advised that it intends to make an offer for a controlling stake in the Australian coal producer. Default Risk The cost of insuring Asia-Pacific corporate and sovereign bonds against non-payment decreased, with the Markit iTraxx Asia index of 50 investment-grade borrowers outside Japan falling 2.5 basis points to 113.5 basis points, Credit Agricole CIB prices show. That will be the lowest close since July 7, CMA data show. The Markit iTraxx Australia index dropped 4 basis points to 114.5 basis points, Nomura Holdings Inc. prices show, while the Markit iTraxx Japan index decreased 2 basis points to 117.5 basis points, Citigroup Inc. prices show. Crude for September delivery rose to $97.03 a barrel on the New York Mercantile Exchange, rebounding from a 4.2 percent plunge last week that drove prices to the lowest settlement in about two weeks. Brent oil jumped 1.3 percent to $118.25 a barrel on the London-based ICE Futures Europe exchange. Gold for immediate delivery declined 0.9 percent to $1,613.35 an ounce after reaching an all-time high of $1,632.80 an ounce on July 29. Bullion advanced 8.5 percent last month on concern the sovereign-debt crises in the U.S. and Europe may derail the global recovery. Cash silver fell 1 percent to $39.50. Copper, Wheat Copper for delivery in three months gained as much as 0.7 percent to $9,894 a metric ton on the London Metal Exchange. The metal reached $9,895 a ton on July 29, the highest level since April 11. December-delivery wheat climbed 1.1 percent to $7.2325 a bushel and corn increased 0.8 percent to $6.74 a bushel on the Chicago Board of Trade. Commodities beat stocks, bonds and the dollar for the first time in three months in July, as expectations that China’s booming economy will spur demand for raw materials outweighed the debt crises in the U.S. and Europe. S&P’s GSCI Total Return Index of 24 raw materials gained 2.4 percent, ending two months of losses. To contact the reporters on this story: Shiyin Chen in Singapore at schen37@bloomberg.net; Yudith Ho in Singapore at yho29@bloomberg.net To contact the editors responsible for this story: Nick Baker at nbaker7@bloomberg.net; Nick Gentle at ngentle2@bloomberg.net.

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