* Yen slides broadly as Russia sanctions seen as modest
* Crimea referendum eases safety bid for U.S. Treasuries
* U.S. stocks also boosted by factory data
By Angela Moon
NEW YORK, March 17 (Reuters) - World stocks rose sharply on Monday and prices of the safe-haven yen and U.S. Treasuries fell, a day after Crimea's vote to join Russia passed without major violence, easing fears that had driven equities to a one-month low on Friday.
The yen fell broadly after the United States and the European Union imposed what investors perceived to be only modest economic sanctions on some officials of Russia and Ukraine following the Crimea vote.
The dollar, often a shelter for investors against global stresses, was also down, with the dollar index, a measure of the greenback's value against six major currencies, off 0.13 percent to 79.345 in afternoon trading.
Although investors are not ruling out another flare-up in tensions between Russia and Ukraine, many do not expect contagion to major markets. The lack of military conflict between the two countries also appeased investors.
"The market thinks it's not so bad," said Joseph Trevisani, chief market strategist at WorldWideMarkets Online Trading in Woodcliff Lake, New Jersey. "You don't see any signs of play against the euro. If the sanctions were serious, say against Russia's oil and gas exports, you'd see selling of the euro because they don't have much alternative for energy."
U.S. stocks closed roughly 1 percent higher, with the S&P 500 bouncing from its worst weekly drop in the past seven, as the concerns over Crimea eased and as economic data indicated the U.S. economy was improving after a winter slowdown.
The advance continued a recent trend of investors using market pullbacks as buying opportunities. Major indexes have not undergone a sustained pullback in more than a year.
The Dow Jones industrial average rose 181.55 points, or 1.13 percent, to 16,247.22. The S&P 500 gained 17.7 points, or 0.96 percent, to 1,858.83, and the Nasdaq Composite added 34.552 points, or 0.81 percent, to 4,279.949.
"It's sort of a relief rally there was no real negative surprise (in Ukraine). What happened was what was expected," said Terry Morris, senior vice president and senior equity manager for National Penn Investors Trust Company in Reading, Pennsylvania.
The MSCI world equity index, which tracks shares in 45 countries, rose 0.8 percent, after hitting a one-month low on Friday.
In late New York trading, the dollar was up 0.3 percent against the yen at 101.66 yen, rising after four days of losses driven by investors buying the safe-haven Japanese currency in the midst of the Russia-Ukraine crisis.
The euro also gained against the yen, rising 0.5 percent to 141.51 yen. It climbed against the dollar, to $1.392 , despite data showing a dip in euro zone inflation, the latest indicator to argue for outright money-printing by the European Central Bank to support growth.
European stocks rose, bouncing back from a three-week slide. The FTSEurofirst 300 index of top European shares ended 1 percent higher at 1,297.45 points, rising for only the second time in seven sessions.
Shares of mining and industrial companies featured among the biggest gainers, with BHP Billiton up 1.2 percent and ArcelorMittal up 1.2 percent.
FED IN FOCUS
In the latest economic data, the New York Federal Reserve Bank's Empire State index, a gauge of manufacturing in New York state, rose in March, helped by increases in new orders and inventories, though the rise was less than forecast. Separately, U.S. industrial output rose 0.6 percent in February, a far bigger rise than had been expected.
"The data gives us another kick up, since it is another sign that we're recovering from recent weather issues," said Selkin, who helps oversee about $3 billion in assets.
With the Crimea vote out of the way, investors are now focusing on the Fed's two-day policy meeting that begins on Tuesday. The central bank is expected to continue to reduce the size of its bond purchase program but alter its forward guidance.
"They are going to move away from thresholds on specific economic indicators and take a more holistic approach that depends on subjective evaluation of a broad array of economic indicators. They are trying to move back to a more normal approach to policy," said Ward McCarthy, chief financial economist at Jefferies in New York.
The Fed previously said that it would not raise interest rates until joblessness fell to at least 6.5 percent; unemployment hit a five-year low of 6.6 percent in January, before rising to 6.7 percent in February.
Benchmark 10-year Treasury notes fell 13/32 in price on Monday to yield 2.69 percent, up from 2.65 percent late on Friday and in the middle of a two-month long range that has kept yields between 2.57 percent and 2.82 percent.
U.S. crude oil rose on Monday, gaining for a third session in a row. U.S. crude oil futures settled down 81 cents at $98.08 a barrel.