By William L. Watts & Nick Godt, MarketWatch NEW YORK (MarketWatch) -- The dollar advanced against major counterparts Monday as government efforts to stabilize the financial system and support from Federal Reserve Chairman Ben Bernanke for more economic stimulus boosted appetite for U.S. assets. The U.S. unit also got a lift after the Conference Board reported a 0.3% rise in its index of leading economic indicators in September. See full story. The dollar index , a measure of the greenback against a trade-weighted basket of six major currencies, traded at 83.131, up from 82.050 in early trade and 82.552 in late trade Friday. Bernanke said he backs a second fiscal stimulus package by Congress. See full story. Meanwhile, a bounce higher by Asian and European equities Monday left the Japanese yen under pressure as traders reversed recent moves into safe havens. The yen has been the ultimate safe-haven currency through the financial crisis. It's posted strong gains during periods of financial turmoil as traders shun once-popular carry trades that rely on shorting the low-yielding currency unit of Japan -- where the Bank of Japan's benchmark interest rate remains at 0.5% -- and using the proceeds to buy assets denominated in higher-yielding currencies. Read about the yen's role. In recent weeks, the yen and other currencies have traded in close correlation to swings in volatile equity markets, largely ignoring economic data releases. Asian equities rallied overnight, with Hong Kong's Hang Seng index up more than 6% and Tokyo's Nikkei index jumping by 3.6%. See Asia Markets. Europe followed suit, with the pan-European Stoxx 600 index up more than 2%. See Europe Markets. The Bank of Japan's downward revision in its economic outlook in its latest quarterly update Monday also put pressure on the yen, said strategists at Lloyds TSB. The dollar traded at 101.61, up from 101.58 yen in North American trade late Friday. But the euro fell to 135.37 yen, down from 136.31 yen. The euro also fell to $1.3313 against the dollar from $1.3408. The dollar's strength also hit the British pound, which earlier rose along with risk appetite. The pound recently fell 1.1% against the greenback to $1.7124. Meanwhile, the euro could gain more ground in the near term if tensions in money markets continue to ease and equities show further signs of stability, said strategists at BNP Paribas. The euro has to hold gains above $1.3440, however, for the outlook to remain constructive, they wrote. While global recession fears remain, the idea that the worst of money-market tensions may be in the past have contributed to a modest revival of risk appetite, analysts said. Currency markets paid little notice to slower-than-expected third-quarter Chinese gross domestic production growth. China's economy expanded 9% in the third quarter after growing 10.1% in the second, according to data released Monday by the National Bureau of Statistics. The expansion was the slowest since the second quarter of 2003, and missed consensus forecasts for a 9.5% rise. See full story.

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