Global stocks jump on Greek debt plan, U.S. dollar falls

NEW YORK (Reuters) - Stock markets rallied around the world on Tuesday while the U.S. dollar fell after the new Greek government dropped calls for a write-down of its foreign debt, easing concerns about growing instability in the euro zone.

While gold, viewed as a safe-haven investment, fell on the day, copper prices saw their biggest one-day jump since July 2013. Oil prices also continued their recent rebound, up more than 1 percent for a third straight session.

The Greek government, led by the left-wing Syriza party that won elections just over a week ago, on Monday ditched calls for a reduction of foreign debt and proposed ending a standoff with its creditors by swapping the debt for new growth-linked bonds.

"The market is beginning to see signs of some stability coming into oil and the Greek situation seems to be tilting towards the side of what the market is looking for, which is a retreat from its call for a debt writedown," said Andre Bakhos, managing director at Janlyn Capital LLC in Bernardsville, New Jersey.

The MSCI International ACWI Price Index rose nearly 1 percent, while the pan-European FTSEurofirst 300 index rose 0.8 percent. The Greek banking index soared 18 percent while Greek bond yields fell sharply.

The Dow Jones industrial average rose 177.02 points, or 1.02 percent, to 17,538.06, the S&P 500 gained 14.47 points, or 0.72 percent, to 2,035.32 and the Nasdaq Composite added 12.24 points, or 0.26 percent, to 4,688.93.

The benchmark 10-year U.S. Treasury note was down 22/32, the yield at 1.7471 percent.

The U.S. dollar index fell 0.9 percent against a basket of currencies, while the euro was up 1.1 percent. The yen rose 0.1 percent against the dollar. The Aussie dollar skidded 0.9 percent lower against the greenback after Australia unexpectedly cut interest rates.

U.S. crude oil futures jumped 4.6 percent to $51.85 per barrel while Brent crude added 3.5 percent to $56.67. Oil was boosted by the decline in the dollar as well as encouraging manufacturing data in the U.S.

Over the past four sessions oil has risen nearly 15 percent but both Brent and U.S. crude are still down about 50 percent from highs reached in June. U.S. shares of BP Plc rose 3 percent to $41.06 after the company announced a 13 percent reduction in capital expenditure for 2015, adding to cuts in investment in the sector.

Gold , seen as a safe-haven investment, fell 1.3 percent on the day while silver rose 0.3 percent.

Earlier, Asian shares sagged on growth concerns. MSCI's broadest index of Asia-Pacific shares, excluding Japan , dipped 0.2 percent after weak U.S. data added to concerns about the state of the global economy. Japan's Nikkei closed down 1.3 percent.

(Editing by James Dalgleish)