U.S. and Japanese stock futures surged, indicating equities may rebound from last week's slump, and the dollar gained versus the yen and Swiss franc amid signs American lawmakers were close to an agreement to raise the federal debt limit and avoid a default. Oil rallied.

S&P 500 futures expiring in September advanced 1.1 percent to 1,305.3 at 8:53 a.m. in Tokyo. Dow Jones Industrial Average futures climbed 151 points, or 1.3 percent, to 12,239. Futures on Japan's Nikkei 225 Stock Average also gained. The U.S. dollar strengthened 0.7 percent against the yen and 0.8 percent versus the Swiss franc. Oil for September delivery rose 1.4 percent on the New York Mercantile Exchange. Gold retreated from a record.

U.S. Senate Majority Leader Harry Reid, a Democrat, and Mitch McConnell, the Senate Republican leader, voiced support for a tentative agreement with House leaders and President Barack Obama's administration to raise the borrowing limit, paving the way for possible votes in both chambers. House Speaker John Boehner, a Republican from Ohio, was to brief rank- and-file Republicans, a Republican aide said.

"They are going to pull a rabbit out of the hat," Jeffrey Saut, chief investment strategist at Raymond James & Associates in St. Petersburg, Florida, said in a telephone interview. His firm manages $275 billion. "The word default that's being thrown around is being used inappropriately. I don't think the U.S. in any way, shape or form is going to default. The collateral damage would be calamitous."

Futures on the Nikkei 225 Stock Average expiring in September last traded at 9,930 in Chicago, compared with 9,840 in Osaka, Japan. The stock average sank 3 percent to 9,833.03 in the week ended July 29, its largest weekly slump since March.

The S&P 500 fell for a third straight month in July, the longest streak since 2008, amid speculation Republicans in the House would fail to reach a compromise with the Senate, controlled by Democrats, and President Barack Obama to boost the nation's ability to borrow by an Aug. 2 deadline. That concern helped overshadow a second-quarter earnings reporting season in which per-share profits have exceeded analysts' projections at 78 percent of S&P 500 companies that reported so far.

Ten-year Treasuries surged last week, driving yields as low as 2.77 percent on July 29, the lowest level since Nov. 30, as investors retreated to the relative safety of U.S. government bonds. Yields may rise today as the tentative agreement on the debt ceiling curbs demand for a haven.

IntercontinentalExchange Inc.'s Dollar Index, which measures the currency against six U.S. trading partners, fell in each of the past three weeks. The index has fallen 2.7 percent since July 11. The U.S. currency traded at 77.28 yen today from 76.76 yen on July 29 in New York, and bought 79.20 Swiss centimes, from 78.55 last week.

The agreement would raise the $14.3 trillion debt limit while cutting $1 trillion in spending and charging a special committee with proposing additional savings of up to $1.8 trillion, according to people familiar with the discussions. Still, White House Communications Director Dan Pfeiffer said in a Twitter message that the two sides have "important issues to work out."

Unresolved issues include the final details of the enforcement mechanism designed to compel future deficit reduction, a Republican aide said, speaking on condition of anonymity.

Both S&P and Moody's Investors Service are weighing a reduction of the U.S. credit rating. The impasse has boosted the chance S&P will cut the U.S. credit rating from AAA within three months to 50 percent, the ratings company said last month.

Even if the country defaults on some obligations after Aug. 2 and pays bondholders, S&P said short- and long-term interest rates would rise by 0.50 percentage point and 1 point, respectively.

U.S. stocks fell five straight days, driving the S&P 500 down 3.9 percent to 1,292.28 for its biggest weekly decline in a year. The retreat brought the benchmark gauge closer to its average price of the last 200 days of about 1,285. A drop below that level could trigger further losses, according to analysts who study charts to make forecasts.

Stocks also fell last week after government reports showed orders for durable goods unexpectedly decreased and the U.S. economy grew less than forecast in the second quarter.

The Morgan Stanley Cyclical Index of companies most-tied to economic growth decreased 5.6 percent, the most in a week since July 2010. The Dow Jones Transportation Average had the biggest loss since August, falling 4.5 percent.

Crude for September delivery rose to $97 a barrel on the New York Mercantile Exchange, rebounding from a 4.2 percent plunge last week that drove prices to the lowest settlement in about two weeks. Brent oil jumped 1 percent to $117.90 a barrel on the London-based ICE Futures Europe exchange.

Gold for immediate delivery declined 0.8 percent to $1,614.80 an ounce after reaching an all-time high of $1,632.80 an ounce on July 29. Cash silver fell 0.3 percent to $39.7475. Read More