By Suzanne Barlyn

NEW YORK (Reuters) – Stock markets rose on Monday, with investors taking lower U.S. bond yields in stride as a sweeping $1.9 trillion U.S. coronavirus relief bill and distribution of Johnson & Johnson’s newly authorized COVID-19 vaccine spurred Wall Street’s enthusiasm.

Wall Street’s rise followed a jump in European shares and solid gains in Asian stock markets.

“We got a pretty good bounce back from the selling at the end of last week,” said Rick Meckler, partner at Cherry Lane Investments, a family investment office in New Vernon, New Jersey. “Investors have started to refocus on the idea that the pandemic could be drawing to a close.”

The Dow Jones Industrial Average rose 657.73 points, or 2.13%, to 31,590.1, the S&P 500 gained 82.71 points, or 2.17%, to 3,893.86 and the Nasdaq Composite added 300.97 points, or 2.28%, to 13,493.31.

The much-anticipated $1.9 trillion COVID-19 relief bill was passed in the U.S. House of Representatives on Saturday, and now moves to the Senate.

The pan-European STOXX 600 index rose 1.85% and MSCI’s gauge of stocks across the globe gained 1.87%.

Emerging market stocks rose 1.77%. MSCI’s broadest index of Asia-Pacific shares outside Japan closed 1.76% higher, while Japan’s Nikkei rose 2.41%.

Major sovereign bonds rallied on Monday as markets showed further signs of stabilization after their worst monthly performance in years.

Expectations of economic recovery and rising inflation boosted global benchmark bond yields in February to their biggest monthly rises in years. But in the meantime, the expected run-down of U.S. Treasury balances at the U.S. Federal Reserve has held down shorter-dated rates.

Benchmark 10-year Treasury notes last rose 6/32 in price to yield 1.4376%, from 1.456% on Monday.

Sebastien Galy, senior macro strategist at Nordea Asset Management, noted that the benchmark Treasury yield has settled below the one-year highs over 1.60% touched last week, even as the Fed and others like the European Central Bank refused to intervene and cap rising yields.

“This is most likely the end of this temper tantrum and presents opportunities for investors faced with dislocated markets,” he said.

Germany 10-year https://fingfx.thomsonreuters.com/gfx/mkt/jbyprddzype/Germany%2010-year.png

PENT-UP DEMAND

PMI data for February is also in focus this week. Germany’s factory activity rose to its highest level in more than three years last month, driven by higher demand from China, the United States and Europe.

Manufacturing in Japan grew at its fastest pace in more than two years in February, as strong orders led to the first output rise since the start of the pandemic.

But China’s factory activity grew at a slower pace than in the previous month, missing market expectations, after COVID-19 related disruptions earlier in the year.

U.S. crude recently rose 0.31% to $61.69 per barrel and Brent was at $64.81, up 0.61% on the day.

The dollar index rose to a three-week high on Monday as investors bet on faster growth and inflation in the United States, while the Australian dollar gained after Australia’s central bank increased its bond purchases in a bid to stem rapidly rising yields.

“The dollar is trading relatively bid on the yield differential, on the growth expectation differentials,” said Boris Schlossberg, managing director of FX strategy at BK Asset Management in New York.

Bitcoin BTC=BTSP rose 6.69% to $48,275 but was still off a record high of $58,354.14 hit on Feb. 21.

(Reporting by Suzanne Barlyn; Editing by Dan Grebler)