European and Asian shares climb after US debt agreement

European and Asian markets have climbed after US lawmakers reached an agreement to reduce the budget deficit and potentially avoid a debt default.

London's FTSE 100 index rose more than 1%, with the Paris CAC up 1.2%. Earlier in Asia, Japan's main Nikkei 225 index closed 1.3% higher.
The US dollar pared early gains but was still stronger, while crude oil gained.
Investors are optimistic that the US will be able to raise its debt limit and pay off its due accounts.
The deal still needs approval from Congress with a vote due on Monday.
Fewer worries "There is a very significant relief rally across the region," said P K Basu of Daiwa Capital Markets. "The sword of Damocles has been lifted from the Asian market."
Stock markets in Asia and elsewhere have been volatile in recent months when it looked as if an agreement between the Democrats and Republicans might not come through before the 2 August deadline.
Analysts now say the positive sentiment could continue over the coming days.

Phillips Futures Financial services provider

"The likelihood is that the first half of this week will be driven by this news," added Mr Basu.

The US dollar rose sharply against the Japanese yen, hitting 78 per dollar before retreating to 77.63, still some 0.3% higher.
Crude oil for September delivery was up $1.16 at $96.86 a barrel on the New York Mercantile Exchange.
Gold prices fell 0.8% to $1,611.89 an ounce, down from a record high of $1,611.89 an ounce on Friday.
Gold and the Japanese yen have been gaining in recent weeks as investors bet that they were less risky than many other assets, and were 'safe-haven' investments.
Future risks However, analysts have warned that there are still risks for the US economy and investors will be closely monitoring jobs numbers due out on Friday.
"If the figures disappoint, we could see equity markets come under pressure again," said financial service provider Phillips Futures.

Stock markets have been volatile as they awaited a debt deal

This view was underlined by Daiwa Capital Market's Mr Basu who added that slow jobs growth "would continue to show that the labour market is a deterrent to US recovery".
Fears about the strength of the US economy were fanned last week when growth numbers came in much lower than anticipated.
US President Barack Obama looked to allay concerns that the spending cuts of $1tn over 10 years he announced would impact the economy.
He said that those cuts would not happen too quickly and would not drag down the fragile US economy.

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