(Updates throughout)

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Europe stocks, euro rise ahead of German spending vote

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Dollar weakens as US data points south

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Trump, Putin to hold call on Ukraine

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Safe-haven flows keep gold above $3,000

By Amanda Cooper

LONDON, March 18 (Reuters) - European markets held firm

on Tuesday ahead of German lawmakers voting on a landmark

overhaul to government spending, while uncertainty over a call

on Ukraine between U.S. President Donald Trump and Russia's

Vladimir Putin kept gold at $3,000 an ounce.

This month has brought a huge divergence between the

performance of U.S. stocks and those elsewhere, particularly in

Europe and China, where markets have seen a surge in inflows

from investors that have cashed in on Wall Street's sky-high

valuations.

Trump's erratic approach to trade policy, coupled with his

mass firings of federal employees, has stirred up uncertainty

for companies, households and investors and U.S. economic data

is starting to reflect that.

Europe's STOXX 600, which on Tuesday was up 0.5%,

has risen by 8% this year, compared with a 4% drop in the S&P

500, marking the biggest outperformance in European

stocks against the U.S. index in the first 12 weeks of the year

in a decade.

The euro, meanwhile, rose further above $1.09 to

its highest since early October, supported by this month's steep

rise in German bond yields.

Germany's lower house of parliament votes later on Tuesday

on a massive surge in borrowing that could boost Europe's

largest economy and stimulate growth across the region, a key

factor in the euro's recent strength.

"History will be made today when the Bundestag approves a

change to the constitution, abandoning the fiscal stance Germany

has always been known for," Commerzbank chief rates strategist

Christoph Rieger said.

German 10-year government bonds were last at 2.843%, up 4

basis points on the day and up 45 bps this month

The prospect of a ceasefire and eventual peace in Ukraine

has helped shore up sentiment in Europe in recent weeks. A

scheduled call between Trump and Putin later on Tuesday to

discuss steps to end the conflict could cover territorial

concessions by Kyiv and control of a nuclear power plant, which

injected a degree of caution into markets.

GOLD STAR

Gold, which has roared above $3,000 for the first

time on record driven by safe-haven flows, held above this level

on Tuesday, bringing gains for the year to 15%.

"In uncertain times, central banks and individuals demand

gold, while inflation concerns emanating from President Trump's

tariffs and trade war are also boosting the price of gold. Life

above $3,000 per ounce could be the norm for the gold price in

2025," XTB research director Kathleen Brooks said.

Asian stock markets also got a bump higher on Tuesday from

stronger retail sales data from China the previous day, as well

as from a series of steps aimed at revitalising domestic

consumption in the world's second-largest economy.

Hong Kong shares hit a three-year peak, while Japan's

Nikkei bounced 1.5%, putting it on course for its

sharpest rise in three weeks.

China has been an unlikely winner of Trump's burst of

tariffs and cuts to government spending in his first two months

in office, as fears of a U.S. slowdown turn investors abroad.

"Momentum and sentiment are shifting now as well in a

positive way," said Nick Ferres, chief investment officer at

Vantage Point Asset Management in Singapore.

Trump said Chinese President Xi Jinping may visit the U.S.

in the not-too-distant future, further raising expectations that

some sort of breakthrough deal could reduce tariffs.

U.S. stock futures were mostly unchanged in

Europe, following modest gains in the S&P 500 and the Nasdaq

on Monday. But the mood on Wall Street remains fragile

leading into April, when Trump's threatened reciprocal tariffs

are set to take effect.

Softer-than-expected retail sales and factory activity

figures kept downward pressure on the U.S. dollar and on U.S.

yields.

Sterling rose 0.1% to $1.300, hitting this

milestone for the first time since the U.S. election in early

November. The Japanese yen was the outlier, weakening

sharply to leave the dollar up 0.3% at 149.67.

Ten-year Treasury yields were steady at 4.2908%.

A German economic survey is due later today, though

markets' focus is on the U.S. Federal Reserve, which concludes a

two-day meeting on Wednesday.

(Additional reporting by Tom Westbrook in Singapore; Editing by

Shri Navaratnam, Lincoln Feast and Ed Osmond)