Disgraced financier Madoff, 71, was sentenced to 150 years for defrauding investors in an historic $65 billion (39.2 billion pound) investment scheme. "I live in a tormented state knowing the pain and suffering I have created," he told his victims.

Central bankers gathered in Switzerland said Monday that to prevent another global credit crisis, only the safest financial instruments should be made widely available.

And developments in Russia and Argentina reflected repercussions of the global economy's woes.

In one of the latest efforts by governments to ease the crisis, Russia's Prime Minister Vladimir Putin told the heads of Russia's top banks on Monday to scrap their summer holidays until they pump $16 billion into the economy, now poised to fall as much as 8.5 percent this year.

Economic policies, along with a combative style, cost Argentine President Cristina Fernandez control of Congress in Sunday's mid-term election, creating a new political landscape there on Monday.

But global oil and stock prices rose as markets continue to bet that the worst of the most brutal global economic downturn in decades is past and that an anaemic recovery is around the corner.

A rise in Japanese industrial output and a pick-up in euro zone economic confidence showed unprecedented government spending to ease the crisis is having an effect.

U.S. crude oil settled up more than $2 to $71.49 per barrel. But earlier, the International Energy Agency struck a cautious tone on the prospects for much higher prices when it sharply cut its medium-term forecast for oil demand.

Policymakers said it was too early to conclude a recovery was taking root, with officials in the United States, Europe and China said the need for further stimulus measures should not be ruled out.

"I think that we are not out of the woods yet," said Guillermo Ortiz, Mexico's central bank governor and the Bank for International Settlements (BIS) board chairman, on the last scheduled day of the group's meeting in Basel, Switzerland, on Monday. "One important question is whether these green shoots actually take root."

As traders waited for major U.S. manufacturing and employment data later in the week, a report Monday from the Federal Reserve Bank of Chicago said economic activity remained extremely weak in May, at levels consistent with a persistent severe recession.

WHAT IS FINAL MADOFF TOLL?

Madoff confessed to running a Ponzi scheme in which investors were paid phantom returns from money provided by subsequent investors.

Investigators do not know how much was stolen, according to court papers. Prosecutors say $170 billion flowed through the principal Madoff account over decades, and that weeks before the financier's December arrest the firm's statements showed a total of $65 billion in accounts.

The trustee winding down the Madoff firm has so far collected $1.2 billion to return to investors.

Global recovery hopes have pushed world stocks more than 20 percent higher in the second quarter. But markets have moved sideways the last two weeks on worries that a rally off the March lows may have been too aggressive in their bets on the strength and timing of the nascent upturn.

U.S. blue chips closed up 1.08 percent, at 8,529

The BIS, which acts as a forum for central banks, said government efforts to revive the global economy might have only a temporary impact because banks are not being pushed hard enough to fix their underlying problems.

Banks' lending and other practices, including the approval of risky mortgages in the United States, led the global economy into the severe recession.

The BIS was alarmed by how a collapse in the value of opaque and complex securitised products propelled the world's financial system into crisis. It said in its annual report all financial products should be registered like medicines.

The safest instruments would be available to everyone, a second tier only to people with authorization, treated like prescription drugs, and a third tier to a limited number of pre-screened individuals and institutions, like experimental drugs are. A final tier would be securities deemed illegal.

The BIS said that while governments have moved quickly to support their economies, they have not done enough to remove problem assets from banks' balance sheets.

"A significant risk is therefore that the current stimulus will lead only to a temporary pickup in growth, followed by protracted stagnation," it said.

RECOVERY SIGNS

The euro zone's economic sentiment index rose for the third month in a row to 73.3 in June, a European Commission survey showed, topping a Reuters poll forecast of 70.8.

But the signs of recovery are fragile and inconclusive.

Japanese industrial output is still nearly a third below year-ago levels while euro zone economic confidence is below the lows of the last big recession in the early 1990s.

Japanese industrial output rose 5.9 percent in May and manufacturers see further, albeit smaller, increases in the next two months. That improvement is set to be reflected in the Bank of Japan's quarterly tankan survey Wednesday.

Policymakers are concerned the nascent revival could fizzle out and said they stand ready to take more action if needed.

"Right now we believe what we have done is adequate to the task. If more is needed, we'll have that discussion," top White House adviser David Axelrod said Sunday.

(Writing by Mark Potter in London and John Parry in New York; Editing by Philip Barbara)