World stocks and oil rose on Monday, led by a sharp jump in Tokyo shares as brighter Japanese data helped offset concerns about a slowdown in China and worries that U.S. monetary stimulus will soon be withdrawn.
Japan's Nikkei average climbed 1.3 percent to a one-month high .N225 and European shares jumped 0.9 percent .FTEU3 as investors started the new quarter in a positive mood. The gains lifted MSCI's world equity index .
Sentiment among Japanese manufacturers turned positive in the three months to June for the first time in nearly two years, a closely-watched central bank survey showed. The data suggested recent market turbulence has yet to hurt the positive mood created by the government's reflationary policies.
A recovery in Chinese shares after factory data showing activity hit a nine-month low in June supported sentiment ahead of similar surveys of euro zone and U.S. manufacturing performance due later on Monday.
In fixed income markets, German Bund futures fell in early trade on persistent nervousness over the Fed's plans and with the key non-farm payrolls report due on Friday set to intensify speculation over the timing of its end to money-printing.
"This week will be huge for bond bears if the payrolls report validates the Fed's decision to lower its unemployment forecasts," noted analysts at JPMorgan.
Brent crude dropped to as low as $101.63 a barrel after the Chinese data before recovering to be up 9 cents at $102.25 a barrel.
The dollar started the week broadly firmer, hitting a four-week high against its Japanese counterpart of 99.55 yen. It also firmed against the euro, to $1.3010.
(Editing by Catherine Evans)