World stocks edged up towards last week's three-month peak on Monday while the dollar held near a 15-year low versus the yen on rising expectations the Federal Reserve could soon buy bonds to support the economy.   

Weaker-than-expected US jobs data in July fanned speculation the Fed may send a clear signal when it meets on Tuesday that it is prepared to print more money to counter renewed economic weakness.   

The prospect of the Fed increasing the amount of cash floating around the financial system through purchases of US bonds has been dragging on the dollar, while potentially stronger economic stimulus aided risky assets.   

"Disappointing growth and stubbornly high unemployment is likely to leave officials with the important task of deciding whether to further bump the economy with a debt-buying programme," noted James Hughes, analyst at CMC Markets.   

"Markets could see the move as a good sign of officials seeing the problem and acting before it's too late." The MSCI world equity index rose a quarter percent while the Thomson Reuters global stock index gained 0.3 percent.   

The FTSEurofirst 300 index rose more than 1 percent on the day while emerging stocks added 0.3 percent.   

The dollar slipped towards a 15-year low below 85 yen before reversing to 85.63. It was steady against a basket of major currencies.   

"The dollar is highly likely to fall below 85 yen, possibly dropping beyond 84 yen if the Fed mentions a concrete plan to help the economy," said Masafumi Yamamoto, chief FX strategist at Barclays Capital.

"Meanwhile, a sense of urgency is still missing among Japanese authorities with regards to possible market intervention."    

The positive correlation between US and Japanese two-year yield spreads, which have been narrowing, and the dollar/yen rate has strengthened to its highest since the period just after the collapse of Lehman Brothers two years ago.

Given that, investors believe it is only a matter of time before the dollar hits a 15-year low against the yen.  A weaker dollar helped US crude oil rise 0.9 percent to $81.41 a barrel. The bund futures was steady. - Reuters