World stocks bounced higher on Tuesday from a recent five-week low in a broad risk rally that boosted oil prices, while investors sold off the dollar and government bonds.

MSCI's all-country world stock index <.MIWD00000PUS> was up 1 percent, with Europe putting in gains of around 2.5 percent.

The FTSEurofirst 300 <.FTEU3> bounced back from six-week closing lows with a gain of 2.5 percent, led by mining shares, while Japan's Nikkei <.N225> closed up 0.8 percent, coming off a seven-week low.

U.S. stock futures were also up around 1 percent <.SPX>, pointing to a stronger start on Wall Street, which re-opens after a holiday on Monday. Emerging market stocks <.MSCIEF> gained more than 1 percent.

Markets are a bit oversold. The decline has been quite strong, said Joost de Graaf, senior portfolio manager at Kempen Capital Management in The Netherlands.

There are (also) hopes that second-quarter earnings will be OK and will lift some of the negative atmosphere.

The MSCI world index is still down more than 10 percent so far this year. Stocks were weaker on Monday in response to data showing a slower-than-expected improvement in U.S. employment.

Investors have been beset by concern that the global economic recovery is slowing enough to send some countries into a double-dip recession.

This is combined with nagging fears that the recovery seen so far is all down to government action, which may soon end.

Awash with private sector debt (in its various forms), the world's major economies may struggle to maintain their forward impetus once policy stimulus, both fiscal and monetary, is set on the path toward normalization, BNY Mellon said in a note.

Early signs of ebbing momentum are of concern.

DOLLAR HIT

The more risk-friendly mood hit the dollar, which fell a third of a percent against a basket of major currencies <.DXY>.

It was particularly weak against the high-yielding Australian dollar, which rose more than 1 percent at one stage on cautiously optimistic remarks from the Australian central bank after it left interest rates unchanged as expected.

The strength in the Aussie was somewhat surprising given the change in the RBA's wording suggests it may keep interest rates lower for some time, said Ulrich Leuchtmann, currency strategist at Commerzbank in Frankfurt.

But risky assets are performing well, so there's been a gradual return of risk appetite.

The euro gained a third of a percent to $1.2575.

Euro zone government bonds were sold off as a result of the rise in equities, with the bund future down 53 ticks.

The 10- and 2-year benchmark yields rose two to three basis points.

Oil prices rebounded after several days of declines, heading toward $73 a barrel on the view that oil's recent slide had been overdone.

(Additional reporting by Naomi Tajitsu; Editing by Susan Fenton)

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