Stock index futures jumped on Monday, pointing to sharp gains in equities, as Republican and Democratic leaders reached an agreement to cut about $2.4 trillion from the deficit and avoid an unprecedented U.S. default.

At 0939 GMT, futures for the S&P 500, the Dow Jones and the Nasdaq 100 were up 0.9 to 1 percent, after U.S. stocks had ended the worst week in a year on Friday on a stalemate in debt talks. Analysts said the oversold conditions had also primed the market for a bounce.

The lawmakers were expected to vote on Monday on the White House-backed agreement. The Democratic-led Senate may pass the deal, but it may face tougher opposition in the House of Representatives where both conservative Tea Party supporters and liberal lawmakers have criticized it.

The dollar received a lift against the yen and Swiss franc as the debt deal prompted traders to unwind safe haven plays. Gold, which generally gains in difficult economic and political situations and had hit record highs last month, fell more than 1 percent.

This morning's bounce is a classic relief rally, but investors remain concerned about the U.S. because they went so close to the wire in a game of what looked increasingly like reckless political brinkmanship, said Darren Sinden, senior sales trader at Silverwind Securities in London.

And if the U.S. were to be downgraded, then higher borrowing costs would be a further obstacle to a continued recovery.

Rating agencies have said the United States could face downgrades to its gold-plated AAA sovereign debt rating, if the world's biggest economy failed to agree on a viable long-term deficit reduction program.

Even if the debt ceiling is raised, all of the heavy lifting will be in front of us, said Peter Kenny, managing director in institutional sales at Knight Capital Group in Jersey City, New Jersey.

I think it's an almost foregone conclusion that there is going to be a downgrade at some point.

Some analysts said any relief rally could be short-lived, with other big risks present. A report on Friday showed U.S. economic growth in the first half was much slower than anticipated.

Investors will continue to focus on company earnings and macroeconomic indicators. Both July ISM data and June construction spending numbers are due at 1400 GMT, while widely-watched non-farm payrolls data for July will be released on Friday.

Allstate , the largest publicly traded U.S. home and auto insurer, will report second-quarter results, having already warned of one of the worst quarters in its history because of U.S. tornado losses.

Other companies announcing results on Monday included health insurer Humana and Vornado , whose core business focuses on U.S. office and retail properties.

Resource-related stocks were expected to be in demand as key base metals prices jumped and crude oil prices climbed more than 1.4 percent.

In Europe, the FTSEurofirst 300 index <.FTEU3> of top shares rose 0.6 percent, while In Asia, Japan's Nikkei average <.N225> surged 1.3 percent.

(Editing by Jane Merriman)