*

Global stocks down most since Sep. 2024

*

Gold touches all-time high near $3,000 an ounce

*

U.S. stocks poised for rise after hitting correction

*

Chinese markets jump on expectations of more consumption

stimulus

*

Investors remain nervous over escalating global trade

tensions

(Updates throughout after German parties reported to agree

spending package)

By Naomi Rovnick and Samuel Indyk

LONDON, March 14 (Reuters) -

German government bond yields, equities and the euro all

rose on Friday on reports Germany's Chancellor-in-waiting

Friedrich Merz had reached an agreement with the Greens to

reform debt rules and massively increase state borrowing.

Merz's conservatives and the Social Democrats, who are

in negotiations to form a government after an election last

month, had proposed a 500 billion euro fund for infrastructure

and sweeping changes to borrowing rules to revive growth and

ramp up military spending.

To reach the two-thirds majority required for the

necessary constitutional changes, though, they need the support

of the Greens. The three parties

reached a deal on Friday

, two sources close to the talks said.

Germany's 10-year government bond yield, the

euro area benchmark, was last up 8 basis points at 2.932%.

Germany's benchmark stock DAX index jumped 2%

to a one-week high, while mid- and small-caps,

which are more exposed to the domestic economy, rose 3.2% and

3.5% respectively.

"Overall, it's a good thing. It will unlock growth for

Germany and more importantly, it will possibly unlock a new

economic paradigm for Europe," George Lagarias, chief economist

at Forvis Mazars, said.

"Essentially Europe is moving forward and this is

something that markets and investors have long been looking

for."

Global equity markets had been higher prior to the news,

but were still set for a weekly drop, as angst over U.S.

tariffs, inflation and a trade row hitting industries from

metals to malt whisky weighed on risk appetite.

The pan-European STOXX 600 index was up 0.9%,

while blue chip indexes in Paris and London added 1.3% and 0.7%

each.

MSCI's broadest gauge of global stocks

was up 0.2% on Friday but still down 3.6% for the week, heading

for its biggest weekly fall since September.

GOLD HITS $3,000/OZ

Spot gold rose to $3,000 an ounce in early London

trading, the first time above that milestone, building on a

historic rally as trade tensions and U.S. rate cut bets

supercharge its appeal as a safe store of value.

Investors have been growing more nervous that trade tensions

between the U.S. and Europe would escalate after the European

Union retaliated against blanket U.S. tariffs on steel and

aluminium.

In response, U.S. President Donald Trump threatened to

impose a 200% tariff on European wine and spirit imports.

"I think Trump 2.0 is nothing like Trump 1.0," Michael

Strobaek, global chief investment officer at Lombard Odier,

said. "This time, the president seems prepared to let U.S.

markets and the economy suffer while he implements his 'America

first' goals."

The developments sparked Thursday's steep selloff on Wall

Street, and confirmed that the S&P 500 was in a

correction, just a week after similar observations for the

Nasdaq index.

Friday's mood was brighter, with Nasdaq futures up

more than 1.2% and S&P 500 futures advancing 0.9%.

In Asia, MSCI's broadest index of Asia-Pacific shares

outside Japan traded 0.9% higher, although it

was on track to lose 1.5% for the week, as simmering trade

disputes battered global stocks.

Japan's Nikkei rose 0.8%.

EURO JUMPS

The euro rose against most major peers on the rising

prospects that German parties will agree the fiscal deal that

could revive growth.

The single currency was up 0.5% against the dollar to

$1.0904. It was up 1.2% against the yen and 0.5% against the

pound.

The dollar index, which measures the currency against

six others including the euro, was down 0.2%.

Benchmark Treasury yields were up 4 basis points

to 4.314%, but remain far below January's 4.8% level.

Oil prices, pinned lower this month by recession fears,

rebounded on Friday to reflect diminishing prospects of a

Ukraine ceasefire, with Brent crude futures adding 0.7%

to reach $70.39 a barrel.