GLOBAL MARKETS-Stocks edge up, US dollar dips as tariff uncertainty weighs

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Dollar dips after hitting three-week high

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Stocks rise modestly after strong rally

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German business sentiment improves

(Updates to afternoon U.S. trading)

By Chuck Mikolajczak

NEW YORK, March 25 (Reuters) -

Global stocks were slightly higher on Tuesday, after a sharp rally in the prior session on hopes U.S. President Donald Trump would take a more measured approach on tariffs than feared, while the dollar eased from a three-week high.

European shares paced the advance, while stocks on Wall Street oscillated between modest gains and declines 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.

"There's a little bit of paralysis with market participants not knowing what to do because they don't know what policy is going to go into place," said Charles Ashley, portfolio manger at Catalyst Funds.

"We want to position ourselves to be insulated to the worst case scenario but at the same time we still look for opportunity."

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 fell 16.74 points, or 0.05%, to 42,566.58, the S&P 500 rose 0.94 points, or 0.02%, to 5,768.62 and the Nasdaq Composite rose 34.72 points, or 0.19%, to 18,223.91. MSCI's gauge of stocks across the globe rose 1.23 points, or 0.14%, to 852.96 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, fell 0.2% to 104.09 after climbing to a three-week high of 104.46.

The euro was up 0.07% at $1.0808.

Against the Japanese yen, the dollar weakened 0.64% to 149.74 while sterling strengthened 0.32% to $1.2962.

U.S. Treasury yields were slightly lower as investors also assessed the impact tariffs could have 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 towards 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 only sees one cut of 25 basis points from the Fed this year. The yield on benchmark U.S. 10-year notes dipped 2.7 basis points to 4.304%. Yields slightly 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 fell 0.33% to $68.88 a barrel and Brent fell to $72.90 per barrel, down 0.14% on the day.

(Reporting by Chuck Mikolajczak, additional reporting by Reporting by Pranav Kashyap and Johann M Cherian in Bangalore; Editing by Sharon Singleton and Deepa Babington)