SINGAPORE, Jan 22 (Reuters) - The dollar was higher, gold softer and stocks on the rebound on Thursday after U.S. President Donald Trump dropped tariff threats and ruled out seizing Greenland from an ally by force.

"I won't do that," Trump said. "Okay? Now everyone's saying 'oh, good' that's probably the biggest statement I made because people thought I would use force. I don't have to use force, I don't ‌want to use force, I won't use force."

Wall Street indexes jagged higher on those words, and the S&P 500 closed overnight notching a 1.16% rise, its largest ​in two months, and European futures rose 1.3% in the Asia morning. A bouncing dollar has pushed the euro back ‍under $1.17, to $1.1676, and gold has dropped about $100 an ounce to $4,790 from a record high ⁠of $4,887. Equity benchmarks in Australia ⁠and Japan rose around 1% and in Seoul the Kospi crossed 5,000 points for the first time.

"The TACO, as they call it, is certainly real," said ‌Damian Rooney, director of institutional sales at Argonaut, a resources-focused ​broker in Perth, referring to a Wall Street acronym for "Trump Always Chickens Out".

Trump said after meeting with NATO Secretary General Mark Rutte that Western Arctic allies could forge a new deal over Greenland ⁠that would satisfy his desire for a missile defence system ‍and access ​to critical minerals.

But there were no details. Rutte later told Fox News the issue of whether Greenland will remain with Denmark did not come up in his conversation with Trump. And investors were wary of completely ‍unwinding some of the haven bets made this week.

"Our mood here is it's been fabulous fun being a gold bull for the last year and a half," said Rooney, "and with gold you never throw the baby out with the bathwater because (Trump) can't help himself doing or saying some crazy things, whether he's going to carry through or not."

The VIX index, nicknamed Wall Street's fear gauge, sharply fell back towards baseline levels and U.S. Treasuries, which had been sold through ​the week, ‍caught a bid.

"The market has largely removed the tail risk of a U.S. confrontation with its NATO partners - not that conflict was ever truly priced into the distribution, but some would have hedged against the ​risk," said Pepperstone analyst Chris Weston.

Benchmark 10-year Treasury yields were down one basis point in Tokyo trade to 4.24%, after falling four bps in New York. Japanese government bonds started the day steady after a wild week where election spending promises triggered an historic rout in long-dated paper. [JP/]

The Bank of Japan began a two-day meeting with the policy rate seen on hold but a hawkish tone is expected to flag future hikes.

The yen was steady at 158.24 per dollar but remained under some pressure on crosses, with the Australian dollar ​scaling an 18-month top of 107.04 yen. [FRX/]

The Aussie also hit a 15-month high of $0.6786 on the greenback after data showed a stronger-than-expected rise in Australian hiring and a sharp fall in the jobless rate.

Later on Thursday U.S. core PCE figures are due.

Markets have priced in two further U.S. rate ‍cuts this year. Earnings are expected from Intel, General Electric, Freeport McMoRan and Procter & Gamble.