World stocks climbed again on Monday for their fifth session gain in a row, lifted by hopes that the U.S. economic downturn may be bottoming out and with investors seeking to take advantage of cheaper equities.

Reassurances over the health of the U.S. banking industry have sparked a something of a recovery in investor appetite for risk.

Executives from Citigroup , Bank of America and JPMorgan Chase said last week their banks had been profitable for the first two months of the year.

U.S. Federal Reserve Chairman Ben Bernanke also said on Sunday that he sees the U.S. economic decline moderating but with and recovery beginning in 2010.

Risks remain, he said in a rare television interview on the CBC 60 Minutes program, that politicians lack the will to do everything necessary to fix the fractured financial system.

Global stocks as measured by MSCI <.MIWD00000PUS> were up more than 1 percent, bringing gains to around 11.5 percent since hitting a low a week ago.

The eternal battle between the bulls and the bears will intensify this week. Whilst it is hard to say if we have seen the worst, we certainly haven't seen a week like last week in a long time, said Chris Hossain, senior sales manager at ODL Securities.

European shares also rose for a fifth straight session, led higher by financial stocks.

The pan-European FTSEurofirst 300 <.FTEU3> index of top European shares was up 1.9 percent. The index, however, is still down around 14 percent this year after plunging 45 percent in 2008.

Earlier, Japan's Nikkei average <.N225> gained 1.8 percent to post its highest close in a month, with banks such as Mitsubishi UFJ Financial Group <8306.T> jumping amid the easing fears about the health of U.S. lenders.

The benchmark rose 134.87 points to 7,704.15, its highest finish since February 16. The broader Topix <.TOPX> climbed 2.4 percent to 741.69.

BONDS FOR SALE

The equity charge undermined demand for government bonds with June Bund futures down 65 ticks, two-year Schatz yields rising 5 basis points to 1.374 percent, and 10-year Bund yielding 3.119 percent, up 7 basis points.

Bonds didn't trade particularly well last week and there's a fair bit to get our teeth into later this week, so for now we'll probably look at stocks for a lead early on, said a bond trader in London.

Over the weekend, finance ministers and central bankers from Group of 20 countries pledged to use their full fiscal and monetary firepower to combat the economic crisis, but decisions taken focused more on funds for the IMF and regulating hedge funds.

G20 was a bit wishy washy, they said a lot without really saying a lot, so we're not taking too much from that, the trader added.

The dollar fell broadly, reversing earlier gains made in the Asian session, as stock markets rallied.

The currency market was also looking ahead to policy meetings by the Federal Reserve and the Bank of Japan later in the week.

The dollar fell 0.41 percent against a basket of currencies to 86.892 <.DXY>, while the euro rose 0.4 percent from U.S. trade on Friday to $1.2976.

The dollar was 0.25 percent higher at 98.20 yen after rising as high as 98.50 yen on demand from Japanese importers.

(Additional reporting by Atul Prakash and Ian Chua; Editing by Andy Bruce)

Japan Ben Bernanke