Major stock indexes in Asia and Europe and the United States stock futures rose sharply after President Barack Obama and Congressional leaders disclosed the details of the plan aimed at avoiding a possible debt default by the US government after Tuesday.

The relief was evident around the world, with Asian shares enjoying one of the best sessions in weeks. Japan's Nikkei index closed 1.3 percent higher while Hong Kong's Hang Seng ended 1 percent firmer.

The advance continued in Europe. Of the major markets, the FTSE 100 index of leading British shares spiked 1.2 percent, while Germany's DAX rose 0.8 percent. The CAC-40 in France was up 1.1 percent.

The Dow Jones Industrial Average jumped 85 points, or 0.6 percent, to 12,227 shortly after the market opened. The Standard and Poor's 500 index was up 12 points, or 0.9 percent, to 1,304. The Nasdaq composite is up 32, or 1.2 percent, to 2,788.

However, a relief rally in oil and commodities markets is likely to prove short-lived, while US and European debt problems remain far from being solved and economic data raise fears of a new global recession. Oil, metals, grains and soft commodities all rose on Monday and gold fell. Oil was up only $1 per barrel compared with gains of $3 per barrel during Asian trading, Reuters said.

Although some investors remained cautious, the overall market reaction showed the deal is expected to get approval in both houses. The House of Representatives and the Senate must approve the agreement.

The agreement would cut at least $2.4 trillion from federal spending over a decade but does not include tax increases on wealthy Americans to reduce deficits, something President Barack Obama had wanted. The deal also raises the country's debt limit by $2.1 trillion,to about $16.5 trillion, which will allow borrowing through the end of 2012, The Associated Press reported.

The Treasury Department has said that after Tuesday the US government won't have enough money to meet all of its financial obligations if Congress doesn't raise the nation's debt ceiling.

Jarmo T. Kotilaine, chief economist at the Jeddah-based National Commercial Bank, said that although the last-minute bipartisan deal now likely means that Congress will meet the Aug. 2 deadline for increasing the $14.3 trillion federal debt ceiling, there is little to suggest that this is the end of this particular drama. First of all, the package has to be approved by Congress, which is not absolutely guaranteed due to entrenched political polarization, although it is likely, he added.

Secondly, the only thing that will be unequivocally approved is a fairly modest $900 billion increase in the ceiling, to be followed by concomitant cuts over the next decade. The remaining up to $1.5 trillion, which is needed to take the US to the November 2012 elections, will need to be worked out by a Congressional committee by the end of the year, he said.

The main consequence of this projected trajectory is recurrent market uncertainty and volatility, periods of pressure on the dollar as investors fret about the tough choices, and continued speculation about the global role of the dollar, he said.

"In the GCC, such uncertainty will likely fuel risk aversion and further test or delay the recovery expected in the financial markets. At a very fundamental level, the region can expect resilience from its attractive growth prospects and macroeconomic stability, including the firm commitment to the dollar pegs," Kotilaine said.

He said even with the dollar tested, the adherence of five of the regional central banks to the policy framework is extremely strong. Much time and effort has been spent on building credibility and consistency and few would wish to challenge that in the absence of a massive dollar correction, which must be deemed extremely unlikely. By contrast, Kotilaine added, recurrent market stress can result in disruptions for regional companies.

Moreover, potential demand concerns could depress the oil price, although the strength of global demand, which is already above the pre-crisis levels and further growing, should significantly limit the size and duration of any correction. Downward pressure on the dollar could add to inflation somewhat, a process that might accelerate if the Federal Reserve renews or boosts quantitative easing, Kotilaine said.