Shares rise, Treasury yields fall, buoyed by easing trade tensions

By Chibuike Oguh and Tom Wilson

NEW YORK (Reuters) - Global shares rose on Tuesday, buoyed by signs of easing trade tensions, even as longer-dated U.S. Treasury yields were set for their biggest one-day drop in more than a month.

U.S. President Donald Trump paused his threatened tariffs until July 9 on U.S. imports of European goods following a weekend call with European Commission President Ursula von der Leyen.

Data showed on Tuesday that U.S. consumer confidence snapped five straight months of decline and improved in May amid a truce in the trade war between Washington and Beijing.

All three Wall Street indexes finished higher, with the benchmark S&P 500 and Nasdaq adding more than 2% following Monday's Memorial Day holiday. The S&P 500's 11 subsectors all gained, led by consumer discretionary and technology stocks.

The Dow Jones Industrial Average rose 1.78% to 42,343.65, the S&P 500 gained 2.05% to 5,921.54 and the Nasdaq Composite climbed 2.47% to 19,199.16.

European shares rose 0.33%, with the defence subindex reaching a record high.

UK shares climbed 0.69% following a holiday at the start of the week. MSCI's gauge of stocks across the globe rose 1.21% to 880.84.

"We are seeing a relief rally as more and more there's confirmation that all this (tariff threat) basically is negotiation tactics that have real teeth although not a bluff, meaning that Trump is not trying to drive us over the cliff but he's taken us to the edge," said Daniel Genter, president and chief investment officer at Genter Capital Management in Los Angeles.

"I think people are getting more confident that we are not going to have massive tariffs that are going to significantly interrupt the U.S. economy or business flow, and have a reversal of modest GDP growth."

The yield on 30-year U.S. Treasuries fell 8 basis points to 4.9572%, on track for the biggest one-day decline since mid-April.

The 30-year yields - at the epicentre of the market selloff in April following Trump's initial raft of tariffs - are still just below 5%, near their highest since October 2023.

The move mirrored a near-20-basis-point fall in yields for Japanese 30-year debt that came after a Reuters report on Tuesday that Tokyo will consider trimming issuance of the super-long bonds, after recent sharp rises in yields.

"It was good news over the weekend, at least for the market, with the 30-day extra time frame for the EU trade tariff negotiation deadline. I guess the market was happy about that," said Wasif Latif, chief investment officer at Sarmaya Partners in New Jersey.

"Then the Bank of Japan said it was not going to issue as many bonds and so the yield story looked a little bit better."

Investors will focus on results from Nvidia on Wednesday, with the chipmaker expected to report a 66% jump in first-quarter revenue.

Speeches from a slew of Federal Reserve policymakers and Friday's U.S. core PCE price index are also due, which could provide clues on the outlook for U.S. rates.

The U.S. dollar advanced against major peers including the yen, euro and Swiss franc following the decision of the Japanese authorities to curb bond issuance and improvement in U.S. consumer confidence.

The dollar strengthened 1.09% to 144.39 against the Japanese yen. Against the Swiss franc, the dollar strengthened 0.82% to 0.82745. The euro was down 0.51% at $1.132725.

The dollar index, which measures the greenback against a basket of currencies including the yen and the euro,rose 0.66% to 99.608.

Gold prices fell as the U.S. dollar advanced. Spot gold dropped 1.15% to $3,304.52 an ounce. U.S. gold futures settled 1.9% lower at $3,300.40.

Oil prices eased, spurred by worries of a supply glut after Iranian and U.S. delegations made progress on their talks and on expectations that OPEC+ will decide to increase output at a meeting later this week.

Brent crude futures closed down 1% at $64.09 a barrel, while U.S. West Texas Intermediate crude fell around 1.04% to $60.89 a barrel.

(This story has been refiled to remove extraneous quotation marks in paragraph 8)

(Reporting by Chibuike Oguh in New York and Tom Wilson in London and Rae Wee in Singapore; Additional reporting by Dhara Ranasinghe; Editing by Saad Sayeed, Lincoln Feast, David Evans and Rod Nickel)