Stocks edge higher, US dollar slips as tariff uncertainty weighs

NEW YORK (Reuters) - Global stocks were slightly higher on Tuesday, after a sharp rally in the prior session on hopes that U.S. President Donald Trump would take a more measured approach on tariffs, while the dollar edged down from a three-week high.

European shares paced the advance, while stocks on Wall Street closed with a minor climb after alternating between modest gains and losses throughout the session, in the wake of a sharp climb on Monday after Trump indicated that not all of his threatened levies would be imposed on April 2 and some countries may get breaks.

"Consumers are still pessimistic about their income prospects, they're still worried about tariffs," said Vinny Bleau, director of fixed-income capital markets at Raymond James in Memphis, Tennessee.

"The narrative seems to be shifting more toward the fact that tariffs are going to impact growth more than inflation."

After initially opening higher, U.S. stocks lost ground after a reading on consumer confidence from the Conference Board fell 7.2 points to 92.9 in March, below the 94.0 estimate, the latest in a string of sentiment readings that have shown cooling.

The Dow Jones Industrial Average rose 4.18 points, or 0.01%, to 42,587.50, the S&P 500 added 9.08 points, or 0.16%, to 5,776.65 and the Nasdaq Composite gained 83.26 points, or 0.46%, to 18,271.86. 

MSCI's gauge of stocks across the globe rose 1.74 points, or 0.2%, to 853.47 while the pan-European STOXX 600 index closed up 0.67%, buoyed by a survey from the Ifo Institute that showed German business morale rose in March.

Stocks have shown signs of bottoming in recent days, after coming under pressure due to uncertainty over the tariff outlook and the potential to slow the global economy and dent corporate profits.

The dollar index, which has strengthened on the tariff expectations and which measures the greenback against a basket of currencies, shed 0.1% to 104.19 after climbing to a three-week high of 104.46.

The euro was down 0.06% at $1.0793.

Against the Japanese yen, the dollar weakened 0.54% to 149.88 while sterling strengthened 0.18% to $1.2942.

U.S. Treasury yields were slightly lower as investors also assessed the possible impact of tariffs on the Federal Reserve's monetary policy.

Fed Governor Adriana Kugler said the central bank's current policy remains restrictive and well-positioned, but progress toward the 2% inflation goal has slowed and the latest move higher in goods inflation data is "unhelpful."

Federal Reserve Bank of New York President John Williams said firms and households are "experiencing heightened uncertainty" about what lies ahead for the economy.

The comments come after Atlanta Federal Reserve President Raphael Bostic said on Monday he sees only one cut of 25 basis points from the Fed this year.

The yield on benchmark U.S. 10-year notes dipped 1.6 basis points to 4.315%. Yields briefly extended declines after a sale of $69 billion in two-year notes.

Crude prices reversed an earlier advance after the U.S. reached separate agreements with Ukraine and Russia to ensure safe navigation in the Black Sea and to implement a ban on attacks by the two countries on each other's energy facilities.

U.S. crude settled down 0.16% at $69 a barrel and Brent settled at $73.02 per barrel, up 0.03% on the day.

(Reporting by Chuck Mikolajczak in New York, additional reporting by Gertrude Chavez-Dreyfuss and Douglas Gillison in Ne York, and Pranav Kashyap and Johann M Cherian in Bengaluru; Editing by Sharon Singleton, Deepa Babington and Matthew Lewis)