Japanese stocks lead shares worldwide, IBM weighs on Dow

NEW YORK (Reuters) - Equity markets worldwide edged higher on Monday, lifted by gains in Japanese shares, while mixed performance in U.S. stocks after IBM (IBM.NY)s quarterly results disappointed helped keep safe-haven U.S. Treasuries prices steady.

While European technology shares sagged and the IBM results weighed on the Dow, Japan's Nikkei average <.N225> surged 4 percent, underpinned by news that Japan's $1.2 trillion public pension would likely more than double its allocation to domestic stocks to about 25 percent.

IBM's weakness also helped spur speculation the Federal Reserve may be reluctant to end its massive bond-buying stimulus program this month. The S&P 500 and Nasdaq posted modest gains, however.

IBM shares were last down about 7.1 percent at $169.187. The decline helped support Treasuries prices, which had also risen earlier on views the Fed could delay possible plans to raise interest rates in 2015.

"On a number like that, with the forecast they gave you would expect the broader market would come under more pressure, and maybe it will," said Ken Polcari, Director of the NYSE floor division at O?Neil Securities in New York, on the IBM results.

The gains in Japanese shares led a rally in Asia and buoyed a measure of worldwide stock market performance. The Nikkei's gain on Monday marked its biggest daily rise since June 2013. In addition to the move by Japan's public pension fund, the index gained on Friday's strong U.S. consumer sentiment data and a weaker yen.

"This sends a really strong psychological message that the smartest money in Japan, at the pension fund, is willing to take a much more aggressive bet that Japanese equities are moving higher in the future," said Chris Konstantinos, head of international portfolio management at RiverFront Investment Group in Richmond, Virginia.

MSCI's all-country world index <.MIWD00000PUS> rose 0.46 percent, while the FTSEurofirst 300 index <.FTEU3> of top European shares dropped 0.51 percent at 1,273.64.

On Wall Street, the Dow Jones industrial average <.DJI> was last down 36.99 points, or 0.23 percent, to 16,343.42, while the S&P 500 <.SPX> was last up 6.45 points, or 0.34 percent, to 1,893.21. The Nasdaq Composite <.IXIC> was up 27.39 points, or 0.64 percent, to 4,285.83.

Benchmark 10-year U.S. Treasury notes were last up 2/32 in price to yield 2.19 percent. The U.S. dollar index <.DXY>, which tracks the greenback versus a basket of six currencies, rose 0.04 percent to 85.142.

Brent was last down $1.41, or 1.64 percent, at $84.75 a barrel. U.S. crude was last down $0.94, or 1.14 percent, at $81.81 per barrel.

(Additional reporting by Atul Prakash in London, Alistair Smout in Edinburgh, and Chuck Mikolajczak and Richard Leong in New York; Editing by Meredith Mazzilli)