NEW YORK (Reuters) - Global equities rose on Monday, with Wall Street surging more than 1 percent, while the dollar was little changed as investors bet the new head of the Federal Reserve will steer a steady course on policy when he addresses U.S. lawmakers this week.

U.S. Treasury yields fell as traders reduced bearish bond positions ahead of Fed Chairman Jerome Powell’s testimony before Congress on Tuesday. It will be his first major address since taking over from Janet Yellen earlier this month.

Euro zone government bond yields fell further after European Central Bank chief Mario Draghi said slack in the region’s economy may be greater than previously estimated and could slow inflation’s rise, though only temporarily. Prices will eventually climb, he said.

Technology shares and Warren Buffett’s Berkshire Hathaway drove gains on Wall Street, with Berkshire up after Buffett said the conglomerate is “more inclined” to use excess cash to buy back shares than pay dividends. Consumer staples and healthcare stocks pushed European bourses higher, led by Novartis, Unilever and Nestle.

Since the beginning of February, investor skittishness about the pace of Fed interest rate hikes has weighed on stock markets worldwide.

But most traders believe Powell will stay the course and gradually raise interest rates, despite indications inflation is perking up.

“There’s some talk of (Powell) being a little more open to tolerating inflation running above the 2 percent target. The focus will be to see if he is indeed open to that and the rationale behind it,” said Aaron Clark, portfolio manager at GW&K Investment Management.

MSCI’s gauge of equity market performance in 47 countries gained 0.82 percent to close at 528.40 and the pan-European FTSEurofirst 300 index of leading regional shares closed up 0.48 percent at 1,500.00.

On Wall Street, the Dow Jones Industrial Average rose 399.28 points, or 1.58 percent, to 25,709.27. The S&P 500 gained 32.3 points, or 1.18 percent, to 2,779.6, and the Nasdaq Composite added 84.07 points, or 1.15 percent, to 7,421.46.

FILE PHOTO: Traders work on the floor of the New York Stock Exchange shortly after the opening bell in New York, U.S., February 21, 2018. REUTERS/Lucas Jackson

Earlier, equity markets rose in Asia. Chinese stocks closed 1.2 percent higher after the ruling Communist Party set the stage for President Xi Jinping to stay in office indefinitely.

The dollar traded near break-even ahead of a slew of U.S. economic data and events this week, including Powell’s testimony, which could determine whether the greenback’s recent recovery from a three-year low can be sustained.

“If Powell suggests that the Federal Reserve could raise U.S. interest rates four times in 2018, it could be seen as a positive sign for the U.S. dollar,” said Jameel Ahmad, global head of currency strategy and market research at online brokerage FXTM.

The dollar index fell 0.04 percent, with the euro up 0.16 percent to $1.2313. The Japanese yen weakened 0.06 percent versus the greenback at 106.96 per dollar.

Germany’s benchmark Bund yield briefly touched a one-month low and the benchmark 10-year U.S. Treasury yield slid after it reached a four-year high last week, near 3 percent, on concerns about growing inflation and the growing U.S. government deficit.

The 10-year Bund yield touched a one-month low at 0.639 percent before steadying at around 0.65 percent.

The 10-year U.S. Treasury note last rose 2/32 in price to push the yield down to 2.8642 percent.

Oil hit three-week highs, supported by strong U.S. demand and comments from Saudi Arabia that it would continue to curb production in line with efforts by the Organization of the Petroleum Exporting Countries to cut global supplies.

U.S. crude rose 36 cents to settle at $63.91 per barrel, and Brent gained 19 cents to settle at $67.50 per barrel.

Gold futures rose $2.50 an ounce to settle at $1,332.80.