Wall St adds to world equities gains on Russia relief

Global stocks bounced after recent sell-offs and core government debt prices fell on Monday as markets saw receding risks of direct conflict between Russia and Ukraine while Middle East tensions diminished.

Wall Street, which erased a week's losses on Friday during a rally ignited by Russia's ending of military exercises near its Ukraine border, on Monday extended the global gains many see as fragile.

The main U.S. stock indexes were up modestly in early New York trading, partly on relief over Ukraine.

U.S. equities were also boosted by Federal Reserve Vice Chairman Stanley Fischer, who said the recoveries in the U.S. and global economies had been "disappointing," indicating the Fed may not imminently raise interest rates.

The MSCI World Index, which tracks stocks from developed economies, was up 0.67 percent at 9:50 a.m. EDT (1350 GMT), though still down nearly 4 percent from July highs as the prevailing market mood remained a cautious one.

"Tangible events have outweighed good economic data in determining the near-term course of bonds and stocks because events have supplied the more persuasive story trend in 2014," said strategist Jim Vogel of FTN Financial in Memphis, Tennessee. "Investors know they have to reconnect the two eventually, but 'eventually' might not be found until 2015."

The pan-European FTSEurofirst 300 index tracked Asia up 1.2 percent.

The Ukraine crisis has hit European markets particularly hard, with the German blue-chip 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."

An increased appetite for risk led to a modest drop in safe-haven bonds, with German Bund futures FGBLc1 slightly down.

Yields on long-duration U.S. Treasuries, which last week touched 14-month lows on fear-driven buying, eased in early New York trading before turning flat. The benchmark 10-year was off 1/32 to yield 2.418 percent.

The dollar was up 0.7 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.

Emerging markets also got a boost, with the MSCI Emerging Market index .MSCIEF up 1.4 percent.

U.S. crude oil CLc1 and Brent crude futures were mixed, with the former ticking up 33 cents to $97.98 per barrel and the latter edging down 12 cents to $104.91.

Gold was off 0.15 percent at $1,309 an ounce.