NEW YORK (Reuters) -Global stocks rallied on Monday, led by gains in U.S. stocks, while U.S. Treasury yields climbed after reports that President Donald Trump's tariff plan may use a more targeted approach than previously thought, boosting risk appetite. 

Trump's administration is likely to exclude a set of sector-specific tariffs while applying reciprocal levies on April 2, the Wall Street Journal and Bloomberg reported.

"Investors are experiencing a slight sigh of relief, but at the same time they are cynical about how long this may last," said Sam Stovall, chief investment strategist at CFRA Research.

"The causes of this manufactured correction have not evaporated. They are tariffs and what the impact of tariffs could be on economic growth, inflation and corporate profits."

Equities have been under pressure in recent weeks, weighed down by uncertainty over the potential levies and the damage they could inflict on the global economy as well as corporate profits.

A string of economic indicators has also pointed to cooling consumer sentiment as tariff concerns grew. 

Data on Monday showed S&P Global's flash U.S. Composite PMI Output Index, which tracks the manufacturing and services sectors, increased to 53.5 this month from 51.6 in February. A reading above 50 indicates expansion. 

However, concerns about tariffs and the sharp cuts in government spending continued to dent sentiment, as the survey's business confidence measure dropped to the second lowest reading since 2022.

The Dow Jones Industrial Average rose 597.97 points, or 1.42%, to 42,583.32, the S&P 500 rose 100.01 points, or 1.76%, to 5,767.57 and the Nasdaq Composite rose 404.54 points, or 2.27%, to 18,188.59. Nasdaq touched its highest level since March 7.

MSCI's gauge of stocks across the globe gained 9.84 points, or 1.17%, to 851.83 after hitting a two-week high of 852.39.

The MSCI index had fallen nearly 8% from its mid-February record through its March 13 closing low, before snapping a four-week string of declines last week. 

Tariff uncertainty still weighed on other global stock indexes, however, and the pan-European STOXX 600 index closed down 0.13%.

European shares had risen earlier in the session after HCOB's preliminary composite euro zone Purchasing Managers' Index, compiled by S&P Global, rose to 50.4 this month from February's 50.2, its highest since August.

Trump still plans to impose new reciprocal tariffs next week, but questions remain about the size of the duties and which countries will be targeted.

In addition, Trump said on Monday that any country that buys oil or gas from Venezuela will pay a 25% tariff on exports to the United States.

The possibility of more targeted tariffs boosted U.S. Treasury yields, with the yield on benchmark U.S. 10-year notes up 8.7 basis points to 4.339%, its biggest jump since February 12, after registering a slight increase last week to end a four-week run of declines.

Atlanta Federal Reserve President Raphael Bostic said he sees slower progress on inflation in coming months, and now expects the Fed to cut its benchmark interest rate by only a quarter of a percentage point by the end of this year.

The dollar index, which measures the greenback against a basket of currencies, rose 0.26% to 104.30, with the euro down 0.12% at $1.0801.

The dollar was last up 1.54% at 37.956 against the Turkish lira, after a Turkish court jailed Istanbul Mayor Ekrem Imamoglu, President Tayyip Erdogan's main political rival, pending trial on corruption charges in a move that sparked the country's biggest protests in more than a decade.

Against the Japanese yen, the dollar strengthened 0.9% to 150.65 while Sterling edged up 0.01% to $1.2916.

U.S. crude gained 1.22% to settle at $69.11 a barrel and Brent settled at $73 per barrel, up 1.16% on the day, as Trump announced the 25% tariff on countries that buy oil and gas from Venezuela.

(Reporting by Chuck Mikolajczak, additional reporting by Noel Randweich in San Francisco, Karen Brettell in New York, Sruthi Shankar and Johann M Cherian in BengaluruEditing by William Maclean and Peter Graff and Sandra Maler)