Japanese stocks lead shares worldwide, IBM weighs on Dow

NEW YORK (Reuters) - Equity markets rose worldwide on Monday, lifted by gains in Japanese shares, while disappointing quarterly results from IBM (IBM.NY)weighed on the Dow and helped buoy safe-haven U.S. Treasuries prices.

European stocks closed lower, however, after a profit warning from German business software maker SAP hit technology shares, while the IBM results dragged the Dow lower.

Japan's Nikkei average <.N225> surged 4 percent, however, 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 shares were last down about 7 percent at $169.24. The decline helped support Treasuries prices, and while it weighed on the Dow, the S&P 500 and Nasdaq advanced.

"IBM is in a transition and will need to continue to be in transition to catch up," said Art Hogan, chief market strategist at Wunderlich Securities in New York. "We can look at earnings misses as they should be viewed, which is company-specific," he added.

U.S.corporate earnings season will ramp up this week, with nearly 130 S&P 500 companies scheduled to report. Apple Inc , which was up 1.7 percent at $99.34, is scheduled to report after the close Monday.

The Nikkei's gain on Monday, which led a rally in Asia and buoyed a measure of worldwide stock market performance, marked its biggest daily rise since June 2013.

"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> was last up 0.6 percent, to 399.37, while the FTSEurofirst 300 index <.FTEU3> of top European shares closed down 0.58 percent at 1,272.72.

The Dow Jones industrial average <.DJI> was last down 0.17 percent, to 16,353.34, while the S&P 500 <.SPX> was up 0.51 percent, to 1,896.32. The Nasdaq Composite <.IXIC> was up 0.85 percent, to 4,294.48.

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, fell 0.16 percent to 84.978.

Brent crude resumed its decline on nagging concerns about abundant supply and sluggish demand, and was last down $0.29, or 0.34 percent, at $85.87 a barrel. U.S. crude was last up $0.26, or 0.31 percent, at $83.01.

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

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