Europe stocks, U.S. futures gain with dollar as oil rises

European stocks rebounded from a one-month low, U.S. index futures and the dollar advanced while Treasuries fell as American lawmakers indicated they’re open to a short-term increase in the debt ceiling. Oil stayed higher after Libya’s prime minister was released from detention.

The Stoxx Europe 600 Index climbed 1.2 percent to 308.65 at 6:35 a.m. in New York and Standard & Poor’s 500 Index (SPX) futures rose 1 percent. The U.S. currency appreciated for a third day against the yen while the 10-year Treasury yield increased to a two-week high, Bloomberg reports. Corporate bond risk declined for the first time in four days. Brent oil added 0.7 percent, paring earlier gains.

House Republican and Senate Democratic leaders in the U.S. are open to an increase in the $16.7 trillion debt ceiling, according to congressional aides. Hong Kong Exchanges & Clearing Ltd. increased the haircut on U.S. Treasury bills for maturities of less than one year, citing default concerns. Treasury Secretary Jacob J. Lew is scheduled to testify before the Senate Finance Committee today, a week before the government runs out of its borrowing authority on Oct. 17.

“It’s just not very likely the political gridlock will persist because the fallout could be catastrophic to the U.S. and the world economy,” Donald Williams, the Sydney-based chief investment officer at Platypus Asset Management Ltd., which oversees about A$1.6 billion ($1.5 billion), said by phone. “But having said that, the market is uncertain until this is resolved and so we’ve got choppy trading conditions ahead for the next week or so.”

Debt Deal

House Republicans are weighing a short-term increase in the debt limit, and Senate Democrats aren’t ruling one out, according to aides of both parties who spoke on condition of anonymity yesterday to discuss their strategies. Democrats would insist that any subsequent debt-limit increases wouldn’t require agreement by the parties on long-term fiscal and health-care policy.

House Republicans will meet at 10 a.m. in the Capitol to discuss their strategy. All Senate Democrats will meet with Obama at 1:45 p.m. in the White House. At 4:35 p.m., 18 House Republican leaders and committee chairmen will meet with Obama.

“They’d be mad if there wasn’t an agreement,” Cato Stonex, who helps oversee $5.4 billion at THS Partners in London, said in an interview in London today. “There’s no reason for a long-term investor to change his stance because of an internal political issue in the U.S. It may affect growth on the margin, but we are encouraged by the recovery.”

Banks Rally

The Stoxx 600 rebounded from the lowest close since Sept. 5 as all 19 industry groups advanced. Italy’s Banco Popolare SC and Germany’s Commerzbank AG led gains in financial shares, rising more than 4 percent. CGG (CGG), the largest seismic surveyor of oilfields, rallied 5.5 percent in Paris after saying its vessel production rate climbed.

The gain in S&P 500 futures indicated the U.S. gauge will extend yesterday’s 0.1 percent advance. A report at 8:30 a.m. in Washington may show initial claims for jobless benefits increased by 3,000 to 311,000 last week, according to a Bloomberg survey of economists.

The MSCI Emerging Markets Index added 0.4 percent Benchmark gauges in Russia, Poland, Turkey, Thailand and Egypt advanced more than 1 percent. The Shanghai Composite Index lost 0.9 percent, led by financial companies on concern earnings growth will slow.