* Indexes up: Dow 1.95%, S&P 500 1.67%, Nasdaq 1.85%

* CBOE Volatility Index retreats from two-week high

* Banks, airlines jump amid wider market gains

* Synopsys ( SNPS ) up after Elliott takes stake

(Updates with late-morning trading)

By Purvi Agarwal and Twesha Dikshit

Mar 23 (Reuters) - The main U.S. indexes climbed in

broad gains on Monday after President Donald Trump said he had

ordered the military to postpone strikes against Iranian power

plants following "productive conversations" with Tehran.

Iran's foreign ministry refuted the claim, with a

spokesperson saying they had held no discussions with the United

States and that their conditions to end the war had not changed.

A source told Reuters Israeli officials believed the U.S. and

Iran could hold talks this week.

Global markets staged a sharp recovery after Trump's

comments, with Europe's STOXX 600 and precious metals

edging up while oil prices fell, signaling improving risk

appetite. They had been trading lower after threats of attacks

on Israeli and Iranian power networks.

"It (the comments) buys time. We are in a very intense

conflict... maybe they need some more time to prepare whatever

they're staging to do. I don't see this conflict going back in

the bottle overnight," said David Bianco, Americas chief

investment officer at DWS.

Investors trimmed bets on interest-rate hikes from the U.S.

Federal Reserve following Trump's comments, which now stand at

24% for a cut in December, compared with more than 50% earlier,

according to CME Group's FedWatch.

Markets had scaled back bets last week to show no easing was

expected in 2026 after the central bank struck a hawkish tone,

projecting higher inflation and a single reduction this year.

"The Fed is stuck where they are for a while longer.

Conflict is inflationary, but you don't hike when your country's

in the middle of a deep, escalating conflict," said Bianco.

At 11:43 a.m. ET, the Dow Jones Industrial Average

rose 888.09 points, or 1.95%, to 46,465.56, the S&P 500

added 108.40 points, or 1.67%, to 6,614.88, and the Nasdaq

Composite gained 399.63 points, or 1.85%, to 22,047.64.

All three indexes were set for their biggest single-day

jumps since February 6.

The Russell 2000 gained 2.9%. The small-cap index,

sensitive to higher interest rates, on Friday ended more than

10% below its record close of January 22, confirming it had been

in correction territory.

The CBOE Volatility Index, Wall Street's fear gauge -

retreated after earlier hitting its highest level in two weeks -

and was last down 1.82 points at 24.96.

Oil prices fell by more than 10%, but energy stocks

were mixed. The energy index was up 0.6%, in line with

broader markets.

Airlines jumped, with American Airlines and United

Airlines adding more than 5% each. Cruise ship operators

soared, with Carnival Corp, Norwegian Cruise Lines

and Viking Holdings all gaining more than 7%.

S&P 500 Consumer discretionary stocks rose 3%.

Banks, which had sold off sharply during the conflict,

inched up, with JPMorgan Chase ( JPM ) and Goldman Sachs ( GS )

adding 1.7% and 3%, respectively. The S&P 500 Banking index

gained 1.8%.

Investors will look forward to Fed speakers, business

activity surveys and consumer sentiment readings this week.

In individual stocks, Synopsys ( SNPS ) gained 3.7% after

activist investor Elliott Investment Management built a

multibillion-dollar investment in the electronic design

automation firm.

Advancing issues outnumbered decliners by a 4.9-to-1 ratio

on the NYSE, and by a 3.12-to-1 ratio on the Nasdaq.

The S&P 500 posted four new 52-week highs and five new lows,

while the Nasdaq Composite recorded 28 new highs and 109 new

lows.