GLOBAL MARKETS-U.S. deal offers respite, but downgrade looms

Riskier assets rally after tentative U.S. debt deal

* Wall Street set for gains

* Gold weaker but Swiss franc gains vs dollar

* U.S. credit downgrade expected

* PMIs show stagnant growth


By Jeremy Gaunt, European Investment Correspondent

LONDON, Aug 1 (Reuters) - Investors boosted stocks and sold some safe-haven assets on Monday, betting that a last-minute deal in Washington meant the U.S. economy would avoid default.

Wall Street looked set for significant gains but caution was the watchword, with the dollar falling to a new record low against the Swiss franc.

There remained a widespread assumption that ratings agencies could downgrade U.S. Treasuries from their vaunted triple-A status, a move that would impact the valuation of numerous other assets.

Investors were also digesting data pointing to stagnant growth in the global economy, with Chinese factory activity slowing and euro zone manufacturing falling.

After a tense weekend spent in search of a compromise to allow the U.S. borrowing limit to be lifted, U.S. President Barack Obama said leaders from both parties reached a deal to cut the budget deficit by $1 trillion over 10 years, with additional savings of $1.4 trillion possible.

The plan must be passed by both houses of Congress and will still face some opposition. But it is expected to allow the debt ceiling to be raised, avoiding the prospect of Washington not being able to pay its bills and defaulting.

World stocks as measured by MSCI climbed 0.7 percent with emerging market shares up 1.3 percent.

There were large gains in Japan, where the Nikkei rose 1.3 percent. In Europe, the FTSEurofirst 300 rose 0.5 percent with banking shares enjoying a big boost.

But scepticism persisted about how long the rise in risk sentiment might last, given the likely U.S. downgrade that some believe could come this week.

"It is a relief rally on the back of the parties coming together, but it could only last for a couple of days as the United States could now face a ratings downgrade," Manoj Ladwa, senior trader at ETX Capital, said.

"That would impact every part of the United States."

It would also raise issues for other assets. Some large pension funds, for example, will only hold triple-A debt, meaning they may have to sell Treasuries and buy elsewhere, crowding trades into German Bunds, for example.

The relative valuations of a number of assets, meanwhile, are based on their divergence from supposedly risk-free Treasuries.


UNWINDING

An unwinding of investor positions taken to protect against U.S. default was short-lived.

Gold fell more than 1 percent before recovering to stand just half a percent down. It was at $1,618 an ounce after hitting all-time nominal highs last week.

Early dollar gains against the Swiss franc reversed, leaving the U.S. currency at a new record low. The franc has seen intense interest from investors as the twin euro zone and U.S. debt crises have stirred markets this year.

"The problems are not fully solved so I think we will see a muted reaction," said Richard Falkenhall, currency strategist at SEB in Stockholm.

"You have the risk of ratings agency downgrades, and no further fiscal stimulus in this deal," he said.

On bond markets, yields on U.S. Treasuries and core euro zone debt rose, reflecting some selling to release money parked in fixed income in the runup to the U.S. deal.

(Additional reporting by Naomi Tajitsu and Joanne Frearson; Editing by John Stonestreet/Catherine Evans)