LONDON - Wall Street stock futures surged, the dollar rallied and gold prices slumped on Monday as US and Chinese officials pledged to slash reciprocal tariffs in a move that swept trade war fears out of global markets, at least for now.

Following weekend talks in Geneva, a joint US-China statement on Monday said that both sides would drop trade levies imposed since US President Donald Trump's April 2 tariff blitz.

Futures tracking Wall Street's S&P 500 index were 2.6 percent higher and contracts following the Nasdaq 100 index jumped 3.8 percent, setting the tech-heavy US stock index up for its best trading day in more than a month.

An index tracking the dollar against other major currencies rose further from last month's three-year trough, with a 0.9 percent gain. Japan's yen, typically seen as a safe haven, dropped 1.5 percent against the US currency to 147.08 and the euro fell 1.1 percent to $1.1131.

In early European trading, Germany's DAX share index rose 1.5 percent to a record high, the regional STOXX 600 added 1.1 percent and Italy's FTSE MIB gained more than 2 percent to its highest since 2007.

US Treasury Secretary Scott Bessent told reporters the two sides had agreed on a 90-day pause on measures and that tariffs would come down by over 100 percentage points to 10 percent.

"The magnitude of this tariff reduction is larger than expected. This reflects both sides recognizing the economic reality that tariffs will hit global growth and negotiation is a better option going forward," said Tai Hui, APAC chief market strategist at JPMorgan Asset Management in Hong Kong.

"The 90-day period may not be sufficient for the two sides to reach a detailed agreement, but it keeps the pressure on the negotiation process," Hui added.

World stock markets had already recovered back to levels where they traded ahead of Trump's April 2 tariff announcement before Monday's statement.

An easing in geopolitical tensions also boosted the mood, as a fragile ceasefire held between India and Pakistan and Ukrainian President Volodymyr Zelenskiy said he was ready to meet Vladimir Putin in Turkey on Thursday for talks.

The spot gold price dropped 3 percent, while Brent crude oil futures were more than 3.3 percent higher at $64.14 a barrel and US West Texas Intermediate (WTI) crude futures gained 3.5 percent to $63.14.

Trump's erratic trade policies sparked fears for the US economy, with investors looking to earnings due on Thursday from retail giant Walmart to see if shelves had started to empty of Chinese goods.

The 10-year US Treasury yield hit a one-month high of 4.447 percent, up 7 basis points on the day, as demand for the safe-haven asset dropped.

Germany's equivalent Bund yield rose by the same amount to 2.622 percent, a fresh one-month high.