* Futures up: Dow 1.42%, S&P 500 1.30%, Nasdaq 1.29%

* Russell 2000 futures gain 2.5%

* CBOE Volatility Index retreats from two-week high

* Banks, airlines jump amid broader market gains

(Updates before markets open)

By Purvi Agarwal and Twesha Dikshit

Mar 23 (Reuters) - The main U.S. indexes were on track

to open higher on Monday after President Donald Trump said he

would order the military to postpone strikes against Iranian

power plants and energy infrastructure following "productive

conversations" with Tehran.

Iran's Fars News Agency, however, disputed Trump's

statement, citing a source who said there had been no direct

communication with the United States, nor via intermediaries.

Israel's military said it was conducting strikes on Iran.

Still, global markets staged a sharp recovery after Trump's

comments, with Europe's STOXX 600 and precious metals

turning positive, while oil prices fell, signaling improving

risk appetite.

Markets had been trading lower after Iran's Revolutionary

Guards said Tehran would attack Israel's power plants and plants

supplying U.S. bases in the Gulf if Trump carried out his threat

to "obliterate" Iran's power network.

"It's exactly what the market needed to hear to sort of

reprice worst case expectations. This means there is potential

for the Strait of Hormuz to reopen; it's being priced in almost

immediately," said Fiona Cincotta, senior market analyst at City

Index.

The recovery depended on if "we get more supportive

comments, particularly from Iran" that progress was being made,

she said.

At 08:03 a.m. ET, Dow E-minis rose 653 points, or

1.42%, S&P 500 E-minis added 85.25 points, or 1.3%, and

Nasdaq 100 E-minis gained 312 points, or 1.29%.

The CBOE Volatility Index - Wall Street's fear gauge

- retreated after earlier hitting its highest level in two weeks

- and was last up 0.30 points at 27.08.

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

Federal Reserve after Trump's comments, and they now stand at

20% in December, compared with more than 50% before, according

to CME Group's FedWatch Tool.

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

expected in 2026 after the Federal Reserve struck a hawkish

tone, projecting higher inflation and a single reduction this

year.

Futures tracking the Russell 2000 index rose 2.5%,

after being down more than 1% earlier. The small-cap index

, sensitive to higher interest rates, ended more than 10%

below its record close of January 22 on Friday, confirming it

had been in correction territory.

Oil prices fell by more than 13% and energy stocks reversed

gains. Exxon Mobil ( XOM ) and Chevron ( CVX ) lost over 1% each

in premarket trading, while Occidental Petroleum ( OXY ) shed

4.5%.

Airlines jumped, with American Airlines and United

Airlines adding more than 4% each.

Banks, which had sold off sharply during the conflict,

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

adding 1.6% each.

Wall Street's main indexes hadlogged their fourth week of

declines on Friday, with the Nasdaq posting its biggest weekly

drop since early February.

Investors now await business activity surveys and consumer

sentiment readings later in the week.

In individual stocks, Synopsys ( SNPS ) gained 4% before the

bell after activist investor Elliott Investment Management built

a multibillion-dollar investment in the electronic design

automation firm.