LONDON, March 4 (Reuters) - German government bond

futures fell sharply on Tuesday, while stock futures rose and

the euro rallied after two main German political parties agreed

to debt brake reform and a 500 billion euro infrastructure fund.

Germany's Bund futures turned sharply lower on the

news, which came after the close of European markets. They were

last down 1%.

German and European stock futures, which had fallen earlier

in the day on U.S. tariff worries, rose. German Dax futures were

last down 1.5% on the day after the benchmark Dax index closed

down 3.5%.

The conservatives and the Social Democrats agreed to seek a

loosening of Germany's debt brake to allow higher defence

spending, and proposed the creation of a 500 billion euro ($529

billion) infrastructure fund, their leaders said.

The euro also rallied sharply on the news and was last up 1%

at $1.0595. It was 0.4% higher against sterling

.