Nell McKenzie

LONDON (Reuters) - The dollar fell broadly on Monday, while European stocks rose after incoming U.S. administration officials said President-elect Donald Trump would halt tariffs at his inauguration later in the day.

European stocks held firm in positive territory in afternoon trade after the Wall Street Journal reported that Trump would not impose import tariffs immediately after being sworn in later Monday.

The pan-European Stoxx 600 index rose 0.3%, and the region's major indexes were all up about 0.5%. The MSCI World Index was last up 0.4%.

The U.S. dollar plunged as much as 1.3% at one point, with particularly severe losses against the currencies of the U.S.'s largest trading partners, such as the Canadian dollar, Mexican peso, euro and yuan.

Trump was sworn in at noon ET (1700 GMT) and promised "a new day of American strength" at a rally on Sunday.

He stoked expectations of an immediate series of executive orders and on Friday launched a digital token as a reminder of his unpredictability, which surged above $70 and then as traders became Restless and slipped to around $50.

Monday is a U.S. holiday, so the first reaction from financial markets to his inauguration is likely to be felt in currency trading and then in Asian trading on Tuesday.

Euro zone bond yields were steady as of 1518 GMT.

"Over the past two weeks, we've seen the new administration present two conflicting views - a hardliner on tariffs and a push for action," said Frédéric Ducrozette, head of macroeconomic research at Pictet Wealth Management. People with more market-friendly practices.”

"So this perception that the door is open for negotiations is important. But it doesn't tell us where we will end up and I will wait for details on the scope of the tariffs, which sectors will be affected," he said, adding: The fact that he may choose a gradual approach is an encouraging sign."

The U.S. dollar fell 1.15% against the Canadian dollar to C$1.4319 and fell 1.4% against the Mexican peso.

Trump has threatened to impose tariffs of up to 10% on global imports, up to 60% on Chinese goods, and a 25% import surcharge on Canadian and Mexican products. Trade experts say these tariffs will disrupt trade flows and increase cost and incur retaliation.

The yuan itself strengthened sharply in the offshore market, causing USD/USD to fall nearly 1% on the day to 7.274.

The Australian dollar, which can serve as a more liquid alternative to the yuan, rose 1.2% on the day to $0.6262. Meanwhile, the euro rose 1.3% on the day to $1.0401, recording one of its largest one-day gains since late 2023.

The story continues