Asian stocks gained, led by energy and finance companies, as oil prices rallied. Crude oil for September delivery rallied 4.7 % to $72.42 a barrel in New York. U.S. oil stockpiles dropped 8.4 mn barrels last week, the most since the week ended May 23, 2008, a report from the Energy Department showed.

China’s stocks are set to rebound from this month’s plunge on prospects earnings will beat estimates and policy makers will maintain bank lending, Bank of America Corp.’s Merrill Lynch unit said.

The Shanghai Composite Index climbed 2.7 % to 2,860.97 at 10:12 a.m. local time. The gauge yesterday fell 19.8 % below the high on Aug. 4, near the 20 % bear? market threshold, amid disappointing earnings and concern the government will seek to damp property speculation.

The index has slumped this month, paring the year?to?date advance to 57 %, after new lending in July tumbled to less than a quarter of June’s level, while losses at Yunnan Copper Industry Co. and Maanshan Iron & Steel Co. revived concern that earnings will deteriorate.

U.S. stocks gained for a second day as energy shares climbed on a rebound in oil and Merck & Co. led drugmakers higher after a judge upheld a patent, helping the market erase an early drop triggered by a retreat in China. Ten? year Treasury notes rose, and the dollar fell against the euro.

Treasuries rose, pushing 10?year yields to near a five?week low, as a tumble in Chinese stocks spurred investors toward the relative safety of government securities. Ten?year notes rose even as U.S. stocks reversed earlier losses and gained for a second day.

President Barack Obama’s budget office will announce the government’s deficit this year will total $1.58 trillion, about $262 billion less than forecast in May, according to an administration official.

The White House’s biannual budget review set for release next week will show the projected shortfall lessened primarily because the administration scrapped contingency plans to provide hundreds of billions of dollars in additional aid to the financial industry, said the official.

The reduced deficit is also attributable to fewer bank failures than the administration anticipated. The deficit will amount to 11.2 % of the nation’s gross domestic product, with spending totaling $3.653 trillion and revenues amounting to $2.074 trillion, the official said.