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 The MSCI World Index, which tracks stocks from developed economies,
was up 0.4 percent at 06.52 a.m. EDT - though still down 3.9 percent
from July highs as the prevailing market mood remained a cautious
one.
The pan-European FTSEurofirst 300 index tracked Asia up 1 percent.
Both regions followed Wall Street's surge on Friday after Russia
said it had finished military exercises close to the Ukrainian
border, which the United States had criticized as provocative.
The Ukraine crisis has hit European markets particularly hard with
the German blue-chip DAX index down 9 percent from its June peak,
luring investors looking for attractively priced entry points into
European equities.
"Fears over the conflict between Ukraine and Russia have receded for
now, which is helping the market recover some ground," said Arnaud
Scarpaci, fund manager at Montaigne Capital in Paris.
"But this is mostly a technical bounce which should last just a few
days."
Corporate merger activity also buoyed markets, with UK
infrastructure company Balfour Beatty up 2.9 percent after rejecting
a second tie-up proposal from rival Carillion and Swiss
dental-implant maker Nobel Biocare also up on reported takeover
interest.
The increased appetite for risk led to a modest drop in safe-haven
bonds, with German Bund futures slightly down. The dollar edged up
0.1 percent against a basket of six major currencies.
The cautious mood extended to the market's assessment of events in
the Middle East, with investors keeping an eye on political
infighting in Iraq and talks in Cairo between Israel and the
Palestinians on ending the month-old Gaza war.
"There has been a slight easing in (global) geopolitical tensions
but the underlying situation ... remains fragile," said Nick
Stamenkovic, bond strategist at RIA Capital Markets.
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Emerging markets also got a boost, with the MSCI Emerging Market
index up 1.1 percent, as Russian stocks rose more than 2 percent
while the rouble rose against the dollar.
However, Turkey's stock market gave up early gains after Prime
Minister Tayyip Erdogan's victory in the country's first direct
presidential election on Sunday. Investors weighed the economic
risks associated with a likely further concentration of power in the
former premier's hands.
U.S. crude oil and Brent crude futures were broadly flat, with the
former ticking up at $97.65 per barrel and the latter ticking down
at $104.81.
"It's very early to start celebrating and you've still got the
negative effects of the sanctions (against Russia), which are likely
to filter through over the coming months," said Michael Hewson chief
market analyst at CMC Markets UK.
"But anything that ratchets down the tension is always going to be
an opportunity to take profit on the shorts and maybe doing a little
bit of bargain hunting."
(Reporting by Lionel Laurent; Additional reporting by Blaise
Robinson, Marius Zaharia, Andrew Winterbottom and Francesco Canepa;
Editing by John Stonestreet and Toby Chopra)
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