New York, Nov 9 (Reuters) - U.S. stocks rose sharply on Wednesday, bouncing from a dramatic overnight sell-off as investors digested Donald Trump’s surprise win in the U.S. presidential election, though the Mexican peso was battered.

After sharp declines in U.S. stock futures overnight and in Asian shares, equity investor panic appeared to ease but bond investors pushed up Treasury yields as they worried Trump’s policies would ultimately weaken the dollar and hike inflation.

U.S. 30-year Treasury bond yields rose to more than nine-month highs bolstered by expectations that Trump will enact protectionist trade policies. The bond yields, which move inversely to prices, gained more than 14 basis points, the sharpest rise since early December. Benchmark U.S. 10-year note yields also advanced, climbing to eight-month peaks.

The U.S. dollar was up 0.6 percent against a basket of major currencies after falling 2 percent earlier in the day. Trump’s victory speech calmed investors who hoped his tone will be more balanced than what they’d seen during the election campaign, said Charles St-Arnaud, senior strategist and economist at Nomura Securities International Inc in London.

Mexico’s peso recovered some ground after falling to a record low. The peso has been particularly vulnerable to Trump’s threats to rip up a free trade agreement with Mexico and to tax money sent home by migrants to pay for building a border wall.

The three major U.S. stock indexes turned positive while investors piled in to financial stocks and healthcare stocks on hopes for less onerous regulations in those sectors than they had feared from a Hillary Clinton presidency.

“If you take Trump’s policies at face value, they are favorable for economic growth and inflation,” said David Lefkowitz, senior equity strategist at UBS Wealth Management Americas in New York.

He cited Trump’s promises for lower taxes, infrastructure and defense spending, less regulation and higher trade barriers, as long as those barriers do not dent growth too much.

Investors also recalled that the market’s decline after Britain voted in June to leave the European Union was short-lived and was ultimately seen as a buying opportunity.

But some money managers talked about near-term uncertainty as the world waits until January’s inauguration for more concrete details of what a Trump presidency means.

“The market needs to hear more from him; they need to hear who is going to be in the Cabinet and whether these people are credible,” Quincy Krosby, market strategist at Prudential Financial in Newark, New Jersey.

At 12:32 p.m. (1732 GMT), the Dow Jones industrial average was up 155.59 points, or 0.85 percent, to 18,488.33, the S&P 500 had gained 14.36 points, or 0.67 percent, to 2,153.92 and the Nasdaq Composite had added 30.07 points, or 0.58 percent, to 5,223.55.

Pledges by Trump in his victory speech that he would forge strong relations with other big nations helped ease some concerns of heavy tariffs being slapped on imports to the United States and a starkly more aggressive geopolitical attitude.

UNCERTAINTY

Emerging markets bore the brunt of the impact of Trump’s victory, with Mexico’s peso still down 8 percent after falling more than 13 percent to hit a record low overnight.

European stocks closed up 1.6 percent after having fallen as much as 2.3 percent. In comparison the index fell 9 percent after the Brexit vote in June.

MSCI’s broadest index of Asia-Pacific stocks outside Japan had ended down 2.3 percent and the Nikkei in Tokyo closing down 5.4 percent.

In commodity markets, safe-haven gold sharply pared its gains. It was nearly flat at $1,276.80 an ounce after climbing as much as 4.9 percent to $1,337.40.

Oil prices recovered along with U.S. equities, with Brent crude up 1.4 percent at $46.66 a barrel and U.S. crude up 1.5 percent at $45.65.

(Additional reporting by Chuck Mikolajczak, Caroline Valetkevitch, Gertrude Chavez-Dreyfuss and Karen Brettel in New York, Marc Jones in London, and Wayne Cole in Sydney; Editing by Chizu Nomiyama and James Dalgleish)