World stocks rose for a fifth straight session on Monday as investors sought bargains against a background of increasing optimism about the global economy.

Wall Street looked set to join Europe and Asia higher.

Underlining the mood, the Japanese yen, which usually gains when investors worry about risk, fell to a six month low against the dollar.

Hopes that recent global economic stabilization packages will work has revived sentiment, U.S. financial giant Citi said in a note to clients, although it also warned against overconfidence.

MSCI's all-country world index rose 0.7 percent for a more than 7 percent gain so far in April. It is now down around 5 percent for the year.

U.S. home sales, auto sales data; company purchasing managers' surveys, and reports on credit in the UK, have all offered a more optimistic readout than that to which investors have become accustomed.

The FTSEurofirst 300 index of top European shares was up 1 percent, a bit of fits highs but tracking strong gains in Asia and a late rally in the United States on Friday. The index has risen around 21 percent since hitting a lifetime low on March 9.

Earlier, Japan's Nikkei average rose 1.2 percent to strike a three-month closing high. The benchmark gained 108.09 points to 8,857.93.

No impact was seen from Sunday's launch by North Korea of a long-range rocket that flew over Japan.

SELLING YEN

Helping Japanese stocks, especially exporters, was the falling yen.

The Japanese currency fell broadly as investors took on perceived riskier assets. The dollar rose above 101 yen, the highest in almost six months, while the euro also extended gains against the Japanese currency to levels last seen in October.

Markets are taking heart that the pace of economic contraction is fading, said Lee Hardman, currency economist at Bank of Tokyo-Mitsubishi UFJ. That is helping risk assets and prompting the unwinding of safe assets.

The dollar was up 0.8 percent at 101.15 yen, after rising to 101.23 yen, the highest since October 21, 2008, according to Reuters data. The dollar, however, lost ground against other major currencies as risk appetite improved.

The euro gained 0.3 percent to $1.3525.

Euro zone government bond prices were weak. Two-year bond yields were 2 basis point higher at 1.553 percent, having risen as high as 1.62 percent, and 10-year yields were up 2 basis points 3.259 percent, around their highest since mid-February.

(Additional reporting by Tamawa Desai; Editing by Victoria Main)

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