(Adds oil, gold settlement prices, European market close)
* Tech stocks, Berkshire Hathaway push Wall St higher
* Dollar gains, bond yields fall ahead of Powell's testimony
* Chinese stocks rally as Xi set to stay in power
By Herbert Lash
NEW YORK, Feb 26 (Reuters) - Global equity markets rose on Monday, with Wall Street surging 1 percent, while the dollar traded little changed as investors bet the new head of the U.S. Federal Reserve will steer a steady course on policy when he addresses lawmakers this week.
U.S. Treasury yields fell as traders reduced bearish bond positions ahead of new Fed Chairman Jerome Powell's testimony before Congress on Tuesday that 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 economy may be bigger than previously estimated and could slow inflation's rise, but only temporarily. Prices will eventually climb, he said.
Technology shares and Warren Buffett's Berkshire Hathaway drove gains on Wall Street while consumer staples and healthcare stocks pushed European bourses higher, led by Novartis, Unilever and Nestle.
The pace of Fed rate hikes has made investors skittish since the beginning of February and 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 0.75 percent 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 351.01 points, or 1.39 percent, to 25,661. The S&P 500 gained 26.28 points, or 0.96 percent, to 2,773.58 and the Nasdaq Composite added 72.51 points, or 0.99 percent, to 7,409.90.
Equity markets rose earlier in Asia, with Chinese stocks closing 1.2 percent higher after the ruling Communist Party set the stage for President Xi Jinping to stay in office indefinitely.
The dollar rose in choppy trade as the prospect the Fed will raise rates more than the three times it has signaled for 2018 has bolstered the U.S. currency the past few weeks.
"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 0.15 percent to $1.2311. The Japanese yen weakened 0.04 percent versus the greenback at 106.93 per dollar.
Germany's benchmark Bund yield briefly touched a one-month low and the benchmark 10-year U.S. Treasury yield slid after last week it reached a four-year high near 3 percent on concerns about growing inflation and 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 3/32 in price to push yields down to 2.8605 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.
Reporting by Herbert Lash, additional reporting by Sruthi Shankar in Bengaluru; Editing by Nick Zieminski