By Ellen Freilich
NEW YORK (Reuters) - U.S. stocks and bonds rose on Monday while the dollar fell against most major currencies after a soft jobs report last week fed debate over when the U.S. Federal Reserve would begin to reduce its stimulative bond-buying program.
U.S. stocks opened higher after upbeat Chinese export data lessened concern about a sharp economic slowdown in a key developing economy.
The Dow Jones industrial average was up 90.70 points, or 0.61 percent, at 15,013.20. The Standard & Poor's 500 Index was up 8.37 points, or 0.51 percent, at 1,663.54. The Nasdaq Composite Index was up 22.43 points, or 0.61 percent, at 3,682.44.
The upswing in Chinese exports lifted other world equity markets as well, though worries about Syria and uncertainty over when and by how much the U.S. central bank would cut its monetary stimulus program saw investors hedge their bets.
U.S. bond prices rallied as well as some investors covered bearish bets that yields are likely to continue to rise.
Concerns over potential conflict with Syria also drew some buyers to safe-haven U.S. debt.
Benchmark 10-year note yields have fallen from two-year highs of 3 percent since Friday's employment report showed that employers added fewer jobs than expected in August, while jobs gains for June and July were also revised downward.
The Fed is expected to announce a cut in its $85 billion a month bond purchase program when its policymakers meet next week, though Friday's payrolls data has led some to think the initial reduction may be smaller than previously thought.
"The market is still under the impression that the Fed will announce some sort of tapering next week," said Jason Rogan, managing director in Treasuries trading at Guggenheim Partners in New York.
Most economists think the Fed will announce a cut in bond purchases next week, a Reuters poll showed on Monday.
Benchmark 10-year notes were last up 13/32 in price to yield 2.89 percent, down from 2.94 percent late on Friday.
Concerns over Syria also added a bid to the debt on Monday as the White House worked on persuading Congress to approve a military strike to punish Syrian President Bashar al-Assad.
The Treasury will sell $65 billion in new three-year, 10-year and 30-year bonds this week.
While the dollar fell against most major currencies, it gained against the yen which lost ground as Japanese stocks rallied following Tokyo's winning bid to host the 2020 Olympics and got an upgrade of second-quarter economic growth. Better-than-expected euro zone sentiment data lifted the euro.
The euro rose 0.2 percent against the dollar and the dollar gained 0.3 percent against the yen. The dollar index was down 0.2 percent on Monday, extending Friday's 0.6 percent drop.
Expectations the Fed would announce a tapering of its monthly bond purchases at its September 17-18 policy meeting have buoyed the dollar lately and are still largely responsible for the 2.8 percent gain in the dollar index this year. A reduction in stimulus will lift U.S. Treasury yields and bolster the appeal of dollar-denominated assets.
While the euro was supported by the positive Sentix sentiment data, investors kept a wary eye on Rome where the Italian Senate will debate whether to expel former premier Silvio Berlusconi from parliament. Such an expulsion could threaten the country's ruling coalition.
A German general election later this month also kept the euro in check.
The dollar's gains were pronounced against the yen. The Olympics win for Tokyo could translate into a big boost for the Japanese economy and a shot in the arm for Prime Minister Shinzo Abe who is attempting to inflate the economy after decades of sub-par growth and deflation.
The Tokyo bid committee estimates hosting the Olympics would boost the economy by 3 trillion yen over the next seven years.
The news sent the Nikkei, to a five-week high and as the yen has an inverse correlation with Tokyo shares, the currency slipped. The yen is a safe-haven currency and tends to move in the opposite direction to riskier assets like stocks. Japanese stocks were also helped by a sharp upward revision of second-quarter growth data.
The dollar hit a high of 100.10 yen earlier on Monday. The euro rose 0.5 percent to 131.27 yen.
Both the dollar and the euro have gained more than 14 percent this year against the yen as the Bank of Japan embarked on a massive monetary stimulus program in April.
"The Olympics bid has added a bit more to the underlying negative yen trend," said Paul Robson, currency strategist at RBS Global Banking.
Meanwhile, the Australian dollar hit a three-week high at $0.9224, benefiting from Chinese trade data. China is Australia's biggest export market. The Aussie last stood at $0.9210, up 0.33 percent. It barely reacted to Saturday's national election result.
China publishes industrial production and retail sales numbers on Tuesday, which should add to signs the economy is on track to hit its target of 7.5 percent growth this year.
MSCI emerging equities index rose 1 percent to a three-week high and has rallied more than 3 percent in the last four trading sessions, helped by the stronger Chinese data.
The MSCI's world equity index gained 0.75 percent for a sixth successive daily rise.
European shares, however, slid as disruptions to business in the Middle East hurt oil firm BG Group
The broad FTSE Eurofirst 300 index was 0.1 percent lower though it is still up 6.4 percent since the start of July, more than twice as much as the U.S. S&P 500.
Oil markets looked past the Chinese data to focus on Syria after Russia and China again urged the United States to avoid military action ahead of a key vote by the U.S. senate.
The global Brent crude benchmark fell $1.37 to $114.75. U.S. oil lost 59 cents to $109.93.
(Additional reporting by Karen Brettel, Nick Olivari and Chuck Mikolajczak; Editing by Chris Reese)
