By Chuck Mikolajczak and Matt Scuffham

NEW YORK (Reuters) – A gauge of global stocks headed for its biggest one-day percentage climb in a week on Tuesday as a fall in U.S. Treasury yields eased concerns the economic recovery could overheat and lead to stronger-than-expected inflation.

With eyes on the $120 billion auctions of 3-, 10- and 30-year Treasuries this week, U.S. Treasury yields fell after a weak 7-year note sale that prompted a spike in yields two weeks ago was followed by another soft auction last week.

Benchmark 10-year notes last rose 18/32 in price to yield 1.5316%, down from 1.594% late on Monday. The note has topped 1.6% three times since Feb. 25, reaching levels not seen in over a year.

“It is important to put it into context – the 10-year has gone from 1% to 1.60%,” said Andrew Mies, chief investment officer at 6 Meridien in Wichita, Kansas. “If it goes to 2% nobody will be particularly surprised. I don’t think many people would expect it to go to 2.5%.”

Tuesday’s auction of $58 billion in U.S. 3-year notes was well received, with the next tests of investor appetite for government debt in the form of 10-year and 30-year auctions later this week.

On Wall Street, each of the major averages closed higher, led by a gain of nearly 4% in the Nasdaq, giving the tech-heavy index its best day since Nov. 4.

The index has been highly susceptible to climbing rates, and Monday’s retreat left it down more than 10% from its Feb. 12 close, confirming what is widely considered to be a correction.

The Dow Jones Industrial Average, after earlier topping 32,150, rose 30.3 points, or 0.1%, to end at 31,832.74, the S&P 500 gained 54.09 points, or 1.42%, to 3,875.44 and the Nasdaq Composite added 464.66 points, or 3.69%, to 13,073.83.

“Today the 10-year is down a bit, and that takes pressure off valuations, so tech is performing well. The market is just about getting comfortable at this level of rates,” said Kristina Hooper, chief global market strategist at Invesco in New York.

In Europe, stocks closed higher after extending gains from their best session in four months a day earlier as a rise in shares of oil and utility companies helped counter losses in miners.

The pan-European STOXX 600 rose 0.8%, with the utility sector rising more than 1.5%.

Investors will closely watch a European Central Bank meeting later this week for whether policymakers have decided to step up the pace of emergency bond purchases to appease skittish markets.

Data on Tuesday showed the ECB barely nudged up its emergency bond purchases last week even before subtracting debt that matured over that period, raising fresh questions about the central bank’s resolve to curb a bond market sell-off.

MSCI’s gauge of stocks across the globe gained 1.35%.

The speedier rollout of COVID-19 vaccines in some countries and the planned $1.9 trillion U.S. stimulus package helped underpin a brighter global economic outlook, the Organisation for Economic Cooperation and Development said, as it raised its 2021 growth forecast to 5.6%.

In foreign exchange markets, the dollar index backed away from a 3-1/2-month high, allowing riskier currencies such as the Aussie and the Kiwi dollar to move higher.

The dollar index fell 0.434%, with the euro up 0.48% to $1.19.

Oil prices backed off early highs in choppy trading, with Brent dipping back to the $68 mark as investors weighed easing concerns over a supply disruption in Saudi Arabia with the likelihood of limited supply from OPEC+ output limits.

U.S. crude futures settled at $64.01 per barrel, down $1.04 or 1.60%. Brent crude futures settled at $67.52 per barrel, down 72 cents or 1.06%.

Gold surged more than 2% on the retreat in U.S. Treasury yields and the weaker dollar, staging a strong recovery from the nine-month low it hit in the previous session.

Spot gold added 2.1% to $1,717.08 an ounce.

U.S. gold futures settled up 2.3% at $1,716.90.

(Additional reporting by Herb Lash in New York and Karen Pierog in Chicago; Editing by Jonathan Oatis, Mark Heinrich and Dan Grebler)