Japan's top government spokesman on Monday said he welcomed the tentative deal over raising the U.S. debt ceiling to avoid a default, and said he expected it to help bring stability to roiled markets.
"Japan welcomes the announcement that an agreement was made to avoid default. We expect the deal will lead to the stabilization of markets," Chief Cabinet Secretary Yukio Edano said at a news conference.
Finance Minister Yoshihiko Noda said he was "glad to see the last-minute development."
Japan is the second-largest holder of U.S. Treasury bonds after China.
Tokyo stocks were 1.84% higher by noon Monday, after the dollar strengthened against the yen on news of the agreement.
Concerns over the protracted debt negotiations had sent the greenback close to post-War lows against the safe haven yen, with risk-averse investors embracing the Japanese unit to the detriment of exporters whose repatriated earnings are eroded by a strong domestic currency.
The likes of Panasonic, Sharp, Toshiba and Hitachi saw profits tumble in the fiscal first quarter due in part to the strength of the yen.
U.S. President Barack Obama announced that he and top lawmakers had reached a deal to raise the nation's debt limit and avoid default, pending Congress approval.
In Washington, leaders of the Democratic-held Senate and the Republican-led House of Representatives said they would present the framework to their rank-and-file on Monday ahead of final votes to approve the deal.
If approved, the deal will raise the debt ceiling by at least $2.1 trillion -- enough to reach 2013 -- and entail cuts of $2.5 trillion in two rounds, an official said Sunday. The parties have until Tuesday to raise the $14.3 trillion debt limit.
The U.S. government hit the debt limit in May and has used spending and accounting adjustments, as well as higher-than-expected tax receipts, to continue operating normally -- but can only do so until Tuesday.
Japanese business and finance leaders have warned that default would send crippling aftershocks through the fragile U.S. economy, still wrestling with stubbornly high unemployment of 9.2% in the wake of the 2008 global meltdown.© 2011 AFP