* Indexes up: Dow 1.66%, S&P 500 1.52%, Nasdaq 1.77%

* Russell 2000 gains 2.25%

* CBOE Volatility Index retreats from two-week high

* Banks, airlines jump amid broader market gains

(Updates on market open)

By Purvi Agarwal and Twesha Dikshit

Mar 23 (Reuters) - Wall Street's main indexes rose in

broad gains on Monday after U.S. President Donald Trump said he

had ordered 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.

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.

"The market woke up to some potentially good news out of the

Middle East on Monday. But follow-through on any relief rally

will likely require tangible follow-through on the geopolitical

front," said Chris Larkin, managing director of trading and

investing at E*TRADE from Morgan Stanley.

"We're still living in a headline-driven market, and with a

light economic calendar this week, the focus will remain (on)

oil prices and politics."

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

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

24% in December, compared with more than 50% before, according

to CME Group's FedWatch.

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

expected in 2026 after the Fed struck a hawkish tone, projecting

higher inflation and a single reduction this year.

At 09:40 a.m. ET, the Dow Jones Industrial Average

rose 758.78 points, or 1.66%, to 46,336.25, the S&P 500

added 99.24 points, or 1.52%, to 6,605.26, and the Nasdaq

Composite gained 383.36 points, or 1.77%, to 22,033.90.

The Russell 2000 gained 2.26%. 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 2.03 points at 24.75.

Oil prices fell by more than 7%. Exxon Mobil ( XOM ) and

Chevron ( CVX ) lost 1.2% and 0.6%, respectively, while

Occidental Petroleum ( OXY ) shed 1.6%. The energy index

was down 0.3%, the only sector trading lower.

Airlines jumped, with American Airlines and United

Airlines adding more than 4.5% each. Cruise ship

operators soared, with Carnival Corp, Norwegian Cruise

Lines and Viking Holdings all rising more

than 5.5%.

Consumer discretionary stocks gained 3%.

Banks, which had sold off sharply during the conflict,

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

adding about 2% each. The S&P 500 Banking index gained

1.5%.

Investors look forward to Fed speakers, business activity

surveys and consumer sentiment readings this 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.

Advancing issues outnumbered decliners by a 4.69-to-1 ratio

on the NYSE, and by a 3.39-to-1 ratio on the Nasdaq.

The S&P 500 posted no new 52-week highs and three new lows,

while the Nasdaq Composite recorded 11 new highs and 60 new

lows.