While Omicron was already as far afield as Canada and Australia, a South African doctor who had treated cases said symptoms of the virus were so far mild. The World Health Organisation said assessing the severity of Omicron could take "days to several weeks", though in a sign of caution it warned on Monday that it posed a "very high" global risk.
"We're all still reaching around in the dark and will need more data, but things do seem a bit more hopeful than they were on Friday," said BlueBay Asset Management CIO Mark Dowding.
S&P 500 futures ESc1 added 0.7% and Nasdaq futures NQc1 , 1%. Both indexes suffered their sharpest fall in months on Friday with travel and airline stocks hit hard.
Europe's STOXX 600 index rallied 0.9%, having on Friday suffered its biggest one-day fall since June 2020. MSCI's broadest index of Asia-Pacific shares outside Japan eased 0.4%, but found support ahead of its 2021 low. Japan's blue-chip Nikkei fell 1.6% as the country moved to bar foreigners to head off the Omicron strain.
And having plunged more than 10% on Friday in their biggest one-day drop since April 2020, oil prices rallied more than 4%, with Brent crude oil futures LCOc1 last trading at around $76 a barrel. U.S. crude rose 4.5% to $71.16.
Speculation that oil producing group OPEC and its allies, known as OPEC+, may pause an output increase in response to the spread of Omicron aided the oil price rebound.
SHIFT IN EXPECTATIONS
Bonds meanwhile gave back some of their hefty price gains after rallying sharply as investors priced in the risk of a slower start to rate hikes from the U.S. Federal Reserve, and less tightening by some other central banks.
Two-year Treasury yields edged up to 0.54%, after falling 14 basis points on Friday in the biggest drop since March last year. Fed fund futures had pushed the first rate rise out by a month or so.
European sovereign bond yields also nudged higher.
The shift in expectations undermined the dollar, to the benefit of the safe-haven Japanese yen and Swiss franc.
On Monday, the dollar dipped fifth of a percent to 113.30 yen JPY= , after sliding 1.7% on Friday. The dollar index held at 96.27, after Friday's 0.7% drop.
The euro was struggling again at $1.1273, following its rally from $1.1203 late last week.
European Central Bank President Christine Lagarde put a brave face on the latest virus scare, saying the euro zone was better equipped to face the economic impact of a new wave of COVID-19 infections or the Omicron variant.
The economic diary is also busy this week with China's manufacturing PMIs on Tuesday to offer another update on the health of the Asian giant. German inflation numbers are out later on Monday, followed by the U.S. ISM survey of factories on Wednesday and key U.S. jobs data on Friday.
Fed Chair Jerome Powell and Treasury Secretary Janet Yellen speak before Congress on Tuesday and Wednesday.
"The Omicron variant is emerging at a critical time for policymaking in the advanced world, even if the room for manoeuvre differs for central banks across constituencies," said Gilles Moec, AXA Group chief economist.
Gold has so far found little in the way of safe-haven demand, leaving it stuck at $1,792 an ounce.
Turkey's lira meanwhile slid as much as 4.6% against the dollar in thin and volatile trade, nearing recent record lows, after President Tayyip Erdogan ordered a probe into possible currency manipulation. (Reporting by Dhara Ranasinghe; Additional reporting by Wayne Cole in Sydney; graphics by Danilo Masoni and Sujata Rao; Editing by Alex Richardson) ((Dhara.Ranasinghe@thomsonreuters.com; +442075422684;))