GLOBAL MARKETS-Stocks rise, US dollar drops after Trump denies tariff policy pullback

New throughout, updates headline and first paragraph, and adds investor comment in paragraphs 4-5

By Chibuike Oguh

NEW YORK, Jan 6 (Reuters) - Global stocks rose while the U.S. dollar index dropped on Monday after President-elect Donald Trump denied a newspaper report that his incoming administration would likely pursue a less-aggressive tariff policy than he previously threatened.

European stocks and currencies climbed following a Washington Post report earlier on Monday that Trump aides were exploring tariff plans that would be applied to every country but only cover certain sectors deemed critical to national or economic security. That would mark a significant shift from Trump's campaign pledge for broader tariffs.

Trump called the story wrong and "just another example of Fake News" in a social media post.

"We are going through this game where they are going to continue to use trial balloons from other people, giving the president the right to disclaim if he's not happy with the messaging," said Tom Plumb, CEO and lead portfolio manager at Plumb Funds in Madison, Wisconsin.

"We are still in the spot where if you look at the top 11 market-cap companies in the S&P 500, they're expected to have 50% earnings growth."

Wall Street's main indexes were trading higher, led by gains in technology, materials, communication services and consumer discretionary stocks.

The Dow Jones Industrial Average .DJI rose 0.58% to 42,981.89, the S&P 500 .SPX rose 1.13% to 6,009.78 and the Nasdaq Composite .IXIC rose 1.76% to 19,967.32.

The pan-European stock index .STOXX was up 0.78% to 512.17, trading near its session high of 513.08. MSCI's gauge of stocks across the globe .MIWD00000PUS rose 1.02% to 855.91.

The dollar index, which rose 0.9% last week, fell around 0.65%.

(Additional reporting by Alun John in London and Wayne Cole in Sydney; Editing by Himani Sarkar, Gareth Jones, Ed Osmond and Rod Nickel)

((Chibuike.Oguh@thomsonreuters.com; +332-219-1834; Reuters Messaging: chibuike.oguh.thomsonreuters.com@reuters.net))

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