NEW YORK (Reuters) - Stocks around the world rose along with U.S. Treasury bond yields and the U.S. dollar on Monday as investors regained some appetite for riskier assets as the United States and North Korea appeared to take a break from their war of words.

After a week of market jitters from increasingly aggressive exchanges between the nuclear-armed nations, investors were emboldened after South Korea’s president said resolving North Korea’s nuclear ambitions must be done peacefully and U.S. officials played down the risk of an imminent war.

Oil investors, however, had little to celebrate with daily declines of more than 2 percent.

MSCI's world equity index gained 0.75 percent .MIWD00000PUS and the U.S. benchmark S&P 500 rebounded to close up 1 percent after its biggest weekly loss in almost five months, marking just the third time the U.S. benchmark has boasted a 1-percent daily gain in 2017.

“There’s still cash on the sidelines looking for an opportunity to buy the dip. And they’re in there with both hands today,” Bucky Hellwig, senior vice president at BB&T Wealth Management in Birmingham, Alabama.

The Dow Jones Industrial Average .DJI rose 135.39 points, or 0.62 percent, to 21,993.71, the S&P 500 .SPX gained 24.52 points, or 1.00 percent, to 2,465.84 and the Nasdaq Composite .IXIC added 83.68 points, or 1.34 percent, to 6,340.23.

Last week’s fear was prompted by U.S. President Donald Trump’s warning North Korea would face “fire and fury” if it threatened the United States and North Korea’s announcement it was considering plans to fire missiles at the U.S. island territory of Guam..

A worker shelters from the rain under a Union Flag umbrella as he passes the London Stock Exchange in London, Britain, October 1, 2008. REUTERS/Toby Melville/File Photo

While investors were relieved the weekend passed without further escalation, some were mindful, ahead of North Korea’s Liberation Day celebration marking the end of Japanese rule, that tensions could resurface.

“Tensions might flare up again. This is not the last we are going to hear of this situation,” said Justin Hoogendoorn, head of fixed income strategy and analytics at Piper Jaffray in Chicago.

In currencies, the U.S. dollar rose 1 percent against the Swiss franc CHF=, erasing much of the greenback's losses last week against the safe-haven currency, which was set for its biggest one-day drop against the dollar since July.

The dollar was up 0.45 percent against the Japanese yen, reversing some of its 1.37 percent loss last week against the safe-haven currency. Against a basket of major currencies, the U.S. dollar .DXY rose 0.36 percent on the day but has fallen 8.6 percent so far this year.

U.S. Treasury benchmark yields rebounded from six-week lows as investors pared back holdings of low-risk government debt.

The yield rise was also underpinned by an Associated Press report that New York Federal Reserve President William Dudley would support another interest rate hike if economic data meets his expectations.

Benchmark 10-year notes US10YT=RR last fell 10/32 in price to yield 2.2202 percent, from 2.187 percent late on Friday. Oil prices tumbled in a volatile session, hurt by the rising dollar and weak domestic demand data from China. Earlier in the session oil prices saw a short-lived boost on potential reductions in crude supply from Libya.

U.S. crude CLcv1 settled down 2.5 percent while Brent LCOcv1 ended the session 2.63 percent lower and slipped further after settlement.

U.S. crude was last down 2.7 percent at $47.50 per barrel and Brent LCOcv1 was last at $50.65, down 2.78 percent.

Gold was out of favor on Monday after clocking a 2.46 percent jump and hitting two-month highs last week. Spot gold XAU= dropped 0.5 percent to $1,282.13 an ounce.