The dollar rose from three-year lows, oil fell and world stocks put in gains on Monday after news Al Qaeda leader Osama bin Laden was killed by U.S. forces swept across thinly-traded financial markets.

The death of the West's most wanted man stripped some of the risk premium that has been underpinning asset prices. But investors warned that this kind of reaction is often only temporary.

Markets across the globe received a bit of a boost ... as news broke that U.S. forces had killed Osama bin Laden. However, like many euphoric bounces, they are often short-lived, especially given the possibility for reprisal attacks from extremists, said Ben Potter, market strategist at IG Index.

There were holidays in many countries -- including China, Hong Kong, Singapore, Thailand and Britain, so trading was limited.

Nonetheless, the dollar rebounded from a three-year low against a basket of currencies <.DXY>, where it had languished as a result of perceptions that the U.S. Federal Reserve is in no hurry to tighten monetary policy.

The dollar was up a third of a percent.

European shares <.FTEU3>, minus Britain's usual contribution, rose a third of a percent, lifting MSCI's all-country world stock index by 0.2 percent.

U.S. stock index futures added to gains, Japan's Nikkei average <.N225> rose 1.4 percent on the day, while U.S. Treasury prices fell.

U.S. Treasury yields pushed higher across the curve with the 10-year rising to 3.308 percent from a six-week trough of 3.273 percent.

By lowering national security risks overall, this is likely to bolster equity markets and lower U.S. Treasury prices in a reverse flight to quality movement, said Mohamed El-Erian, Chief Executive Officer and Co-Chief Investment Officer at PIMCO, which oversees $1.2 trillion in assets.

Oil markets are likely to be the most volatile given their higher sensitivity to the tug of war between lower risk overall and the possibility of isolated disturbances in some parts of the Middle East and central Asia, he said.

U.S. crude fell close to 1.5 percent to a session low of $112.21, retreating from a 31-month peak of $114.18 set on Friday.

(Additional reporting by Ian Chua and Harpreet Bhal; Editing by Alex Richardson)