(Adds oil settlement, close of U.S. markets)
* U.S. stocks gain in choppy trade after mixed showing earlier
* Russian shares, rouble rebound, as sanctions don't bite
* U.S. short-term yields steady after touching 6-month high
* Dollar edges higher against euro, gold gains slightly
By Barani Krishnan
NEW YORK, March 25 Global equity markets advanced in choppy trade on Tuesday following robust U.S. consumer confidence data, while Russian assets rose after major industrialized nations warned of additional sanctions without committing to a particular action.
U.S. consumer confidence rose more than expected in March, climbing to its highest level since January 2008. The report was the latest in a string of positive reads on the U.S. economy supporting the view that softness earlier this year was related to inclement weather and not economic weakness.
A rebound in some so-called "momentum" stocks suggested that while concerns persist about geopolitical tensions over Ukraine and slowing growth in China, investors are not so bearish on equities as to sell them wholesale.
The CBOE Volatility Index, a gauge of investor anxiety, fell 7.09 percent and remains at historical lows.
Biotech shares were particularly volatile, moving up again by afternoon after erasing gains shortly after the open. Some Internet stocks were up after Monday's mauling.
"Momentum stocks took all the punches Monday, with biotech especially and social media stocks taking a thumping. In short, last year's winners are falling hardest as investors run scared," said Andrew Wilkinson, chief market analyst at Interactive Brokers LLC in Greenwich, Connecticut.
"However, as we look at the pattern of investor interest expressed through options trading, there are few signs that derivative traders are prepared to throw in the towel."
Facebook Inc was the second-most-active equity option on Tuesday, with largest open interest seen in $70 calls that expire in April and May. The stock rose 1.2 percent to $64.89. Call options are generally viewed as bullish bets, expecting the stock to move higher.
Investor spirits brightened after a meeting of Western leaders ended with little more than fist-shaking at Russia and news emerged that Moscow's and Kiev's foreign ministers had held an impromptu first meeting.
U.S. President Barack Obama and his allies agreed to hold off on more damaging economic sanctions against Russia unless Moscow goes beyond the seizure of Crimea. Sanctions have been imposed, but investors say asset freezes have had little effect.
Shares in Moscow rose, with the Micex Index gaining 2 percent, while the rouble gained 1.5 percent against the dollar.
The Dow Jones industrial average closed up 91.19 points, or 0.56 percent, at 16,367.88. The S&P 500 gained 8.19 points, or 0.44 percent, to 1,865.63 and the Nasdaq Composite added 7.883 points, or 0.19 percent, to 4,234.268.
The rebound was an indication that while concerns persist about geopolitical tensions in Ukraine and slowing growth in China, investors were not bearish on equities wholesale.
A measure of world equity markets, MSCI's all-country world index, edged up 0.6 percent.
Long-dated U.S. debt prices fell and short-dated Treasury prices rose, interrupting a four-day trend in which shorter-dated debt weakened more quickly than longer-term bonds.
Two-year and five-year notes have been the worst performers since Fed chief Janet Yellen's remarks that the central bank could raise rates six months after its current bond-buying program ends, suggesting a potential hike by spring of 2015.
That has flattened the yield curve, narrowing the difference between short- and long-dated securities, which suggests more concern about higher rates and a bit less confidence in long-term growth.
Philadelphia Fed President Charles Plosser, a notably hawkish member of the Fed who has argued for an end to its monthly bond buying program, told CNBC that Yellen had not made a mistake on her timing for a rate hike.
"We've moved a lot since Yellen's press conference last Wednesday," said Charles Comiskey, head of Treasuries trading at Bank of Nova Scotia in New York. "The flattener is a crowded trade, you are seeing people taking off some positions for event risk."
Five-year U.S. Treasuries' yields were steady at 1.7307 percent after the Treasury sold $32 billion in new two-year notes to solid demand.
Two-year Treasuries, the most sensitive to interest rate changes, rose 1/32 in price to yield 0.4291 percent after reaching a six-month high of 0.4650 percent on Monday.
The benchmark 10-year U.S. Treasury note fell 3/32 in price to yield 2.7462 percent.
The euro dipped after ECB hawk and Bundesbank chief Jens Weidmann said it was not out of the question for the ECB to buy assets to combat super-low inflation.
European shares rebounded in anticipation of stimulus measures from the European Central Bank. The FTSEurofirst 300 index of regional shares closed up 1.3 percent in its biggest one-day gain since a 2 percent rise on March 4.
Adding to the upbeat mood was talk China may launch fresh stimulus to keep up the pace of its economic growth.
"There is a perception that China will look to do some more stimulus," said Michael Hewson, an analyst at CMC Markets. "Personally I think those expectations are way overdone but if the market believes it, then that is all that matters."
The dollar moved higher against most major currencies as the euro and yen came under pressure, along with a number of emerging market currencies.
The euro was last at 1.3823 versus an early low of $1.3750. The comments by Bundesbank's Weidmann, together with a below-forecast German Ifo business sentiment survey, also pushed down yields on euro zone government bonds.
U.S. COMEX gold futures for April delivery settled up 20 cents at $1,311.40 an ounce.
Brent crude oil futures rose on renewed geopolitical risk over Russia and supply disruptions in Nigeria and Libya, while U.S. crude was pressured by a stronger U.S. dollar.
Brent crude rose 18 cents to settle at $106.99 a barrel. U.S. crude rose as much as 77 cents early in the session but reversed gains to settle down 41 cents at $99.19 a barrel on a stronger U.S. dollar.
(Additional reporting by Marc Jones in London; Editing by Larry King, Susan Fenton and Dan Grebler)