LONDON World stocks rose on Monday on hopes the U.S. economy can avoid slipping back into recession, although the International Monetary Fund's chief economist warned of weak growth in both the United States and Europe.
With U.S. markets closed for the Labour Day holiday, Friday's encouraging news about the employment picture continued to spill over into trading on Monday.
Some investors, particularly in Asia, were catching up with the U.S. jobs numbers, which were not as bad as some had feared. The slowing of the world's largest economy has been one of the major factors holding investors back over recent months.
MSCI's all-country world stock index .MIWD00000PUS and its Thomson Reuters counterpart .TRXFLDGLPU were up more than 0.4 percent at the European close after a nearly 3.7 percent gain for the MSCI last week.
Europe's FTSEurofirst 300 .FTEU3 closed slightly higher, up 0.2 percent.
The jobs data was supportive, but utilities shares topped the gainers list after Chancellor Angela Merkel's coalition government agreed to a two-tier extension of the life spans of German nuclear power plants on Sunday.
Trading was also thin because U.S. markets are closed for Labor Day.
Japan's Nikkei .N225 earlier closed up 2.05 percent.
"After a string of disappointing numbers, the data last week provided an element of stability and helped increase risk appetite," said Henk Potts, equity strategist at Barclays Wealth.
"When you couple that with the outlook for corporates, it looks pretty good."
The latest corporate earnings season has been relatively strong in both the United States and Europe while merger and acquisition activity in August was the most robust for the month since 1999.
The dollar was generally weaker with the euro rising for a time to its highest in three weeks before easing back.
"We are seeing some relief from fears about a double-dip recession in the U.S. helping risk sentiment and the euro," said Gareth Berry, currency strategist at UBS. "But whether this sentiment can be sustained or not is difficult to say."
IMF chief economist Olivier Blanchard told France's Le Figaro that a U.S. slowdown would have an automatic impact on growth in Asia in the short term but "decoupling" between developing and rich economies is possible in the medium term.
The euro was at $1.2885, having risen to $1.2918 earlier in the day, its highest since August 12.
The dollar index, a gauge of the greenback's performance against a basket of six major currencies, was down 0.1 percent .DXY and the dollar fell slightly to 84.17 yen, not far from a 15-year low of 83.58 hit late last month.
Euro zone government bond yields were flat to higher.
(Additional reporting by Atul Prakash and Anirban Nag; Editing by Ron Askew)