By Jeremy Gaunt, European Investment Correspondent

LONDON (Reuters) - Hopes that the worst of the credit crisis has past boosted investor sentiment on Monday with global stocks trading at their highest since mid-January.

Japanese shares stormed to a two-month closing high but European equities slipped after a strong rally in the previous session. The dollar, too, fell back from recent gains.

Sentiment was boosted at the end of last week by U.S. earnings resilience from internet leader Google and heavy equipment maker Caterpillar and fewer-than expected writedowns from banking giant Citigroup.

"Banks it seems are just figures in a cathartic Greek tragedy, on the road to redemption," Societe Generale said in a note.

The Bank of England was also adding to investor confidence with a plan to swap UK government bonds worth around 50 billion pounds ($99.8 billion) for banks' riskier mortgage debt.

World stocks as measured by MSCI were up 0.8 percent at levels not seen since January 15. It has risen 4.3 percent since its close last Monday.

Its emerging market stock counterpart .MSCIEF was up 1 percent on the day.

In Europe, however, the FTSEurofirst 300 index was down 0.3 percent, retreating slightly after rising more than 2 percent on Friday.