Global stocks, oil rally on Greek plan; 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.

Gold, viewed as a safe-haven investment, fell, and copper prices jumped the most in one day since July 2013. Oil prices also continued their recent rebound, up more than 7 percent for a third straight gain.

The Greek government, led by the left-wing Syriza party that won elections just over a week ago, on Monday ditched its stance of calling 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 toward 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 <.MIWD00000PUS> rose 1.2 percent, while the pan-European FTSEurofirst 300 index <.FTEU3> ended 0.8 percent higher. The Greek banking index <.FTATBNK> soared 18 percent and Greek bond yields fell sharply.

The Dow Jones industrial average <.DJI> was up 250.46 points, or 1.44 percent, at 17,611.50. The Standard & Poor's 500 Index <.SPX> was up 21.37 points, or 1.06 percent, at 2,042.22. The Nasdaq Composite Index <.IXIC> was up 27.12 points, or 0.58 percent, at 4,703.81.

Gains in U.S. markets were broad, with all 10 primary S&P 500 sectors up on the day.

The benchmark 10-year U.S. Treasury note was down 29/32, the yield at 1.771 percent.

The U.S. dollar index <.DXY> fell 1.5 percent against a basket of currencies, while the euro was up 1.3 percent. The yen rose 0.1 percent against the dollar. The Aussie dollar was 0.2 percent lower against the greenback after Australia unexpectedly cut interest rates.

U.S. crude oil futures jumped 8.8 percent to $53.87 per barrel. Over the past four session it is up about 21 percent, the best four-day run for the commodity since January 2009. Brent crude added 7.4 percent to $58.80, boosted by the decline in the dollar as well as encouraging manufacturing data in the U.S.

Despite the day's rise, oil is still down more than 40 percent from highs reached in June. U.S. shares of BP Plc rose 3.3 percent to $41.17 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 0.8 percent on the day while silver rose 1 percent.

Earlier, Asian shares sagged on growth concerns. MSCI's broadest index of Asia-Pacific shares, excluding Japan <.MIAPJ0000PUS>, dipped 0.2 percent after weak U.S. data added to concerns about the state of the global economy. Japan's Nikkei <.N225> closed down 1.3 percent.

(Editing by James Dalgleish and Dan Grebler)

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