Markets mostly rose Monday on news that President Joe Biden and House Speaker Kevin McCarthy have reached a deal to lift the US debt ceiling and avoid a calamitous default.

After weeks of wrangling, the two announced that an agreement had finally been reached and urged lawmakers on both sides of the aisle to vote for it before the government runs out of cash on June 5.

However, there is some nervousness on trading floors as the bill contains plenty of elements that are likely to anger Democrats and Republicans alike.

For now, dealers are upbeat as the breakthrough lifts the threat of a debt default by the United States that economists warn could hammer the global economy and cause market turmoil.

The bill will suspend the debt ceiling until January 1, 2025, and place curbs on federal spending that will please some Republicans, but it does not deliver the big cuts right-wingers wanted and progressive Democrats would have balked at.

"The agreement prevents the worst possible crisis," Biden said at the White House on Sunday. "Which means no one got everything they want."

"But that's the responsibility of governing. I strongly urge both chambers to pass that agreement."

He added: "It takes the threat of a catastrophic default off the table, protects our hard-earned and historic economic recovery and... represents a compromise that means no one got everything they want."

McCarthy said: "We know anytime we sit and negotiate with two parties, that you got to work with both sides of the aisle. So it's not 100 percent of what everybody wants."

Hopes that a deal was in the works lifted all three main indexes on Wall Street on Friday, and Asia picked up the baton Monday.

Tokyo rallied one percent while Sydney, Shanghai, Bangkok, Mumbai, Taipei, Manila and Wellington were also in the green. But Hong Kong, Singapore and Jakarta were unable to maintain their early gains.

Paris and Frankfurt rose at the open. London was closed for a holiday.

Fresh pressure on the Fed 

"The obvious positive interpretation is that a negative tail risk is close to being taken off the table," said Dan Suzuki of Richard Bernstein Advisors.

"With the distraction of the debt ceiling fading into the background, investors can now refocus their attention on the underlying fundamentals. One concern, though, is that the fundamental picture remains precarious."

However, in a sign of the opposition the bill will face, Republican Representative Dan Bishop -- a member of the ultra-conservative House Freedom Caucus -- tweeted a vomit emoji and said McCarthy secured "almost zippo".

Nicholas Creel, a political analyst and business law professor at Georgia College and State University said: "Overall, the deal is probably best viewed as a win for Biden and Democrats given that it contains fairly modest spending cuts and would prevent another debt ceiling showdown or a government shutdown during the remainder of Biden's presidency.

"Nobody has enough power to get too much of what they want right now, so a compromise like this that makes everyone a little unhappy is probably the best anyone could have hoped for."

Observers said investors could now turn their focus back to the economic outlook, although data on Friday gave them further cause for concern.

The US Federal Reserve's preferred measure of inflation -- the personal consumption expenditures (PCE) index -- rose 4.4 percent year-on-year in April, up from 4.2 percent a month earlier.

The core index, excluding volatile food and energy prices, also rose, as did personal income and spending.

The figures will put fresh pressure on the central bank to continue lifting interest rates to bring inflation under control and deal a blow to hopes it will pause next month after more than a year of hikes.

The Turkish lira weakened to 20.01 per dollar after President Recep Tayyip Erdogan won another term in office to extend his two-decade rule.

And Morgan Stanley warned the currency could suffer further pain, tipping it to hit 28 if Erdogan sticks to his ultra-loose monetary policy despite rampant inflation, which is sitting at more than 40 percent.

Key figures around 0715 GMT 

Tokyo - Nikkei 225: UP 1.0 percent at 31,233.54 (close)

Hong Kong - Hang Seng Index: DOWN 0.6 percent at 18,633.64

Shanghai - Composite: UP 0.3 percent at 3,221.45 (close)

London - FTSE 100: Closed for a holiday

Pound/dollar: UP at $1.2372 from $1.2350 on Friday

Euro/dollar: UP at $1.0741 from $1.0725

Dollar/yen: DOWN at 140.29 yen from 140.59 yen

Euro/pound: DOWN at 86.81 pence from 86.84 pence

West Texas Intermediate: UP 0.6 percent at $73.11 per barrel

Brent North Sea crude: UP 0.5 percent at $77.36 per barrel

New York - Dow: UP 1.0 percent at 33,093.34 (close)