* Dollar falls vs yen after coming close to 100 mark
* Wall Street led higher by tech, cyclical shares
* Bargain-hunters lift gold, gains may be short-lived
By Angela Moon
NEW YORK, April 22 World equity markets edged up on Monday, erasing early losses as Wall Street rebounded after a hefty decline last week, while the dollar fell against the yen but remained within a hair's breadth of the key 100-yen level.
U.S. stocks closed higher after last week's sharp losses brought buyers back to the market and shares of Microsoft jumped after an activist investor took a stake in the company.
But the day's biggest gainers were in cyclical sectors, groups closely tied to the pace of economic growth. Last week, concerns about growth sparked steep declines in cyclical equities.
"It still seems like the bulls are buying the dips. Unless there is a fair amount of bad news, I think the market hangs in at these levels," said Uri Landesman, president of Platinum Partners in New York. He added that he still expects the market to be "significantly lower" in six months.
In the currency market, the dollar climbed as high as 99.88 yen, according to Reuters data, within striking distance of a four-year high of 99.94 set on April 11 and the 100 level, where option barriers are said to be lined up. It last traded at 99.28 yen, down 0.2 percent on the day.
Japanese officials said the Group of 20 nations accepted that the country's $1.4 trillion stimulus program is aimed at conquering 15 years of deflation rather than at weakening the yen.
"The lack of pushback by the G20 effectively gives the BOJ room to ease further if needed and should keep the yen biased broadly lower," said Omer Esiner, chief market analyst with Commonwealth Foreign Exchange Inc. in Washington, DC.
The G20's actions removed any remaining obstacles to further yen weakness, setting up a test of the symbolic 100 yen to the dollar level and boosting demand for Japanese stocks.
Major central banks have been holding interest rates at rock-bottom levels since 2008 while pumping over $6 trillion into their banking systems through loans and asset-purchase operations, with only modest success so far.
The euro remained vulnerable against the dollar on central bank expectations. The euro last traded at $1.3058, up 0.1 percent on the day, according to Reuters data.
CATERPILLAR, HALLIBURTON GAIN
On Wall Street, Caterpillar Inc and Halliburton ranked among the S&P 500's biggest gainers after reporting results. Caterpillar shares were up 3 percent at $82.82 and Halliburton rose 6 percent to $39.35.
European shares ended higher as signs of progress to break political stalemate in Italy outweighed fresh downbeat earnings news and concern over the health of the global economy.
Milan's FTSE MIB index, up 1.7 percent, was the regional outperformer for most of the day after the re-election of Italy's president. Broad agreement among various political groups raised the prospect of an end to two months of stalemate after an inconclusive election.
The broad FTSEurofirst 300 index rose 0.2 percent.
The Dow Jones industrial average was up 19.66 points, or 0.14 percent, at 14,567.17. The Standard & Poor's 500 Index was up 7.25 points, or 0.47 percent, at 1,562.50. The Nasdaq Composite Index was up 27.50 points, or 0.86 percent, at 3,233.55.
MSCI's world equity index added 0.3 percent.
In commodity markets, gold closed up 1.5 percent, cutting gains late in the session but remaining supported by strong physical buying, after the price hit a two-year low last week.
At one point, spot gold was up 2.48 percent at a session high of $1,438.66 per ounce. That was more than $100 higher than the two-year low of $1,321 last Tuesday. In later trading bullion fetched $1,424.30 per ounce, up 1.47 percent from late Friday.
Brent crude futures rose for a third straight session, up 74 cents to close at $100.39 a barrel, down from a high of $101.04. The May U.S. contract, which expired Monday, was up 75 cents to $88.76 after reaching a high of $89.13.
U.S. government debt prices rose on news of weaker-than-expected home resales in March and the implications of waning inflation. On the open market, benchmark 10-year Treasury notes US10YT=RR were 4/32 higher at 102-23/32 on below-average volume, yielding 1.699 percent.