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US stocks rise sharply after Trump hints at targeted

tariffs

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Dollar rises to three-week high after strong economic data

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Oil rises after Trump seeks to punish Venezuelan oil

buyers

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German business sentiment improves

(Updates with morning European trading)

By Ankur Banerjee and Alun John

SINGAPORE/LONDON, March 25 (Reuters) - European shares

rose on Tuesday, taking their cue from a strong overnight rally

on Wall Street on hopes of narrower-than-feared U.S. tariffs,

while the dollar continued its cautious rebound, trading near

three-week highs against a basket of peers.

Europe's broad Stoxx 600 share index was up 0.6% in early

trading with most national benchmarks and sectors cautiously in

positive territory.

Investors' primary focus was the impending reciprocal

tariffs promised by U.S. President Donald Trump and, while Trump

said on Monday automobile tariffs were coming soon, he indicated

that not all of his threatened levies would be imposed on April

2 and some countries may get breaks.

That led to an exuberant "risk-on" reaction in U.S. markets

and the S&P 500 closed at its highest in more than two

weeks, while a rally in tech stocks led Nasdaq up more

than 2%.

S&P 500 share futures were steady in European trade on

Tuesday.

But investors remain on edge before the April 2 deadline.

"Headline risks (are) the global investors' daily lot," said

Benoit Anne, senior managing director, at MFS Investment

Management's strategy and insights group.

"Only Covid caused more concern over policy uncertainty at

the global level. We are currently facing numerous sources of

risks, with the risk of trade war escalation standing out as the

key item to watch."

Tariff news was also showing up in the oil market. Prices

were up for a fifth day in a row, with Monday's and Tuesday's

rises on the back of concerns about supply after Trump issued an

executive order declaring that any country buying oil or gas

from Venezuela would pay a 25% tariff on trade with the U.S.

Brent futures were up 44 cents to $73.43 a barrel

and U.S. crude climbed 38 cents to $69.49. Both

benchmarks gained more than 1% on Monday.

BETTER DATA

Investors were also digesting activity and sentiment data

this week. German business morale rose in March, as companies

expect a recovery after two years of contraction in Europe's

largest economy.

The data comes after Germany passed a landmark bill to

massively boost infrastructure and defence spending.

That was also supporting European shares and caused German

bond yields to tick higher, with the 10-year Bund yield last up

4 basis points at 2.82%.

In the U.S. on Monday, S&P Global's flash U.S. Composite PMI

Output Index, which tracks the manufacturing and services

sectors, increased, suggesting the economy was regaining speed

after hitting a soft patch halfway through the first quarter.

But so-called hard data, including retail sales and the

employment report, have hinted at cracks in the foundation of

the economy.

The broad risk on mode led to a selloff in safe haven bonds.

The benchmark 10-year Treasury yield rose 8 bps on Monday,

and was a further 2 bps higher on Tuesday, at 4.354%, its

highest in a month.

Higher yields supported the U.S. dollar, which has been

under pressure in recent months. The dollar index, which

measures the currency against six peers, touched a three-week

high on Monday, and was last at 104.26.

The dollar hit a three-week high against the rate-sensitive

yen at 150.95, after jumping 0.9% in the previous

session.

The strong dollar also cast a shadow across emerging

markets. The Indonesian rupiah sank to its lowest level

since June 1998, during the Asian financial crisis, on mounting

concerns over the country's fiscal health.

Shares were also under pressure across Asia and Hong Kong's

Hang Seng index fell 2.35%, as tech stocks led a broad

selloff.

The Hang Seng is up 17% this year though, still the

best-performing major stock market in the world, on AI bets

after startup DeepSeek's sparkling debut.

Gold was up a touch at $3,022 per ounce.