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You Are Here: Home» World News » Asian stock indexes gain after US debt deal is reached 1 August 2011 Last updated at 05:50 GMT


P K Basu of Daiwa Capital Markets says the US debt agreement is definitely good news for Asian markets
Asian markets have climbed after US lawmakers reached a last-minute agreement to reduce the budget deficit and potentially avoid a debt default.
Japan's main Nikkei 225 index rose 1.7%, with South Korea and Australia also up. The US dollar and crude oil also gained.
Investors are optimistic that the US will be able to raise its debt limit and pay its obligations.
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.
"The likelihood is that the first half of this week will be driven by this news," added Mr Basu.
The US dollar rose to 77.50 yen in Asia, from 76.72 yen late Friday in New York.
Crude oil for September delivery was up $1.20 at $96.90 a barrel on the New York Mercantile Exchange.
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.
Investor watches stock market moves 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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