GLOBAL MARKETS-Stocks rally, U.S. Treasury yields climb on tariff optimism

By Chuck Mikolajczak

NEW YORK, March 24 (Reuters) - Global stocks rallied on Monday, powered by gains in U.S. stocks, while U.S. Treasury yields climbed after reports that President Donald Trump's tariff plan may use a more targeted approach than previously thought, boosting risk appetite.

Trump's administration is likely to exclude a set of sector-specific tariffs while applying reciprocal levies on April 2, the Wall Street Journal and Bloomberg reported.

"The default position for today's investor is to be very worried about changes that the administration has proposed - whether or not there are tariffs imposed or if he repeals them, or if he delays them, it just causes extreme volatility in the market," said Peter Andersen, founder of Andersen Capital Management in Boston.

Equities have been under pressure in recent weeks, weighed down by uncertainty over the potential tariffs and damage they could inflict on the global economy as well as on corporate profits.

A string of economic indicators has also pointed to cooling consumer sentiment as tariff concerns grew.

Data on Monday showed S&P Global's flash U.S. Composite PMI Output Index, which tracks the manufacturing and services sectors, increased to 53.5 this month from 51.6 in February. A reading above 50 indicates expansion.

However, concerns about tariffs and the sharp cuts in government spending continued to dent sentiment, as the survey's business confidence measure dropped to the second lowest reading since 2022.

"Overall, the services side is a much more important component of the U.S. economy so I take this as good news," said Adam Button, chief currency analyst at ForexLive in Toronto.

The Dow Jones Industrial Average .DJI rose 434.77 points, or 1.03%, to 42,419.10, the S&P 500 .SPX gained 79.85 points, or 1.41%, to 5,747.41 and the Nasdaq Composite .IXIC jumped 339.50 points, or 1.91%, to 18,123.55. The Nasdaq touched its highest level since March 7.

MSCI's gauge of stocks across the globe .MIWD00000PUS gained 7.70 points, or 0.91%, to 849.69 after hitting a two-week high of 851.89.

The MSCI index had fallen nearly 8% from its mid-February record through its March 13 closing low, before snapping a four-week string of declines last week.

Tariff uncertainty still weighed on other global stock indexes, however, and the pan-European STOXX 600 .STOXX index closed down 0.13%.

European shares had risen earlier in the session after HCOB's preliminary composite euro zone Purchasing Managers' Index, compiled by S&P Global, rose to 50.4 this month from February's 50.2, its highest since August.

Trump still plans to impose new reciprocal tariffs next week, but questions remain about the size of the duties and which countries will be targeted.

Trump said on Monday that any country that buys oil or gas from Venezuela will pay a 25% tariff on exports to the United States.

The possibility of more targeted tariffs boosted U.S. Treasury yields, with the yield on benchmark U.S. 10-year notes US10YT=RR up 8.1 basis points to 4.333% after registering a slight increase last week to end a four-week run of declines.

Atlanta Federal Reserve President Raphael Bostic said he sees slower progress on inflation in coming months, and now expects the Fed to cut its benchmark interest rate by only a quarter of a percentage point by the end of this year.

The dollar index =USD, which measures the greenback against a basket of currencies, rose 0.35% to 104.39, with the euro EUR= down 0.25% at $1.0787.

The dollar TRY= was last trading up 1.6% at 37.976 against the Turkish lira, after a Turkish court jailed Istanbul Mayor Ekrem Imamoglu, President Tayyip Erdogan's main political rival, pending trial on corruption charges in a move that sparked the country's biggest protests in more than a decade.

Against the Japanese yen JPY=, the dollar strengthened 0.86% to 150.60 while Sterling GBP= softened 0.08% to $1.2905.

U.S. crude CLc1 gained 1.08% to $69.02 a barrel and Brent LCOc1 rose to $72.91 per barrel, up 1.04% on the day, as Trump announced the 25% tariff on countries that buy oil and gas from Venezuela.