LONDON The cost of insuring exposure to a U.S. debt default fell further on Monday, reflecting investor optimism over a tentative deal by U.S. lawmakers to raise the debt ceiling.

U.S. one-year credit default swaps (CDS)- market-based gauges of the risk of a default - narrowed 15 basis points from Monday's close to 118 bps, data from S&P Global Market Intelligence showed.

Five-year CDS fell to 54 bps from 56 bps at Monday's close, the data showed.

Trading was picking up on Tuesday after much of Europe and the United States was closed on Monday for holidays. A crucial first test comes on Tuesday, when the House Rules Committee takes up the debt ceiling bill, in a necessary first step before a vote in the full House.

(Reporting by Dhara Ranasinghe, editing by Karin Strohecker)