NEW YORK World equity markets rose on Monday, erasing earlier losses as Wall Street attempted a rebound after its worst weekly decline this year, while the dollar slipped against the Japanese yen but remained within a hair's breadth of the key 100 level.
U.S. stocks were higher in afternoon trade, reversing an earlier decline on strength in technology shares. Microsoft (MSFT.O) jumped nearly 4 percent, boosting both the Nasdaq and the S&P 500.
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.
"Ultimately, we think cyclical names will lead the market higher, but in the short term, the recent decline could continue," said Eric Green, senior portfolio manager at Penn Capital Management in Philadelphia, who said that cyclical stocks were oversold.
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 that 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 single currency last traded at $1.3048, flat on the day.
Technical analysts at SEB said that a break below $1.3026 would likely "trigger a new round of selling" in the euro, with the next support then seen at $1.3001.
CATERPILLAR, HALLIBURTON GAIN
On Wall Street, Caterpillar Inc and Halliburton ranked among the S&P 500's biggest gainers after reporting results. Caterpillar shares (CAT.N) were up 3 percent at $82.82 and Halliburton (HAL.N) 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 .FTMIB, up 1.7 percent, proved 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 .FTEU3 rose 0.2 percent.
The Dow Jones industrial average .DJI was up 21.40 points, or 0.15 percent, at 14,568.91. The Standard & Poor's 500 Index .SPX was up 7.90 points, or 0.51 percent, at 1,563.15. The Nasdaq Composite Index .IXIC was up 29.29 points, or 0.91 percent, at 3,235.35.
MSCI's world equity index .MIWD00000PUS added 0.4 percent.
In commodity markets, gold rebounded from its sharp selloff last week, though sentiment remained shaky after the precious metal posted its biggest-ever daily loss in dollar terms last Monday.
Spot gold rose more than 2 percent to a session-high of $1,438.66 per ounce, more than $100 above the two-year low of $1,321 hit on April 16.
Brent crude futures edged up to hover above $100, extending gains from the two previous sessions as cheap prices from last week's selloff drew buyers back into the market.
June Brent crude settled at $100.39 a barrel, up 74 cents. The May U.S. contract rose 75 cents to $88.76 after reaching a high of $89.13.
In Treasuries, the benchmark 10-year U.S. Treasury note was up 2/32, with the yield at 1.6963 percent.
(Additional reporting by Toni Vorobyova in London and Luciana Lopez in New York; Editing by Nick Zieminski)