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* U.S. to slap 10 pct tariff on $200 bln of Chinese goods
* China to levy duties on $60 bln worth of U.S. goods
* Apple, Amazon up; Tech stocks broadly higher
* General Mills falls on sales, margins miss
* Indexes up: Dow 0.58 pct, S&P 0.86 pct, Nasdaq 0.86 pct (Adds comments, updates to early afternoon)
By Shreyashi Sanyal
Sept 18 (Reuters) - U.S. stocks rallied on Tuesday, led by gains in Apple and Amazon, as investors judged the latest tit-for-tat tariffs between the United States and China as less damaging than expected.
The Trump administration's selection of a lower 10 percent tariff and exclusion of Apple from the list of new tariffs convinced market players that it was going easy and giving U.S. companies enough time to prepare for a changing trade environment.
China's retaliation only included $60 billion worth of U.S. goods and reduced the level of tariffs it would collect, convincing some that Beijing was running out of options to hit back.
"Markets are looking at China's retaliation in a way that it wasn't as bad as expected and that is a win, which is part of the reason why we are seeing a rally today," said Paul Nolte, portfolio manager at Kingsview Asset Management in Chicago.
The benchmark S&P 500 and the Nasdaq were on track for their biggest percentage gain in nearly three weeks. The S&P was about 9 points away from hitting a record high.
"Investors right now are comfortable saying 'buy', realizing that the trade conflict hasn't had much of an impact on the broader economy in the past six months," Nolte added.
At 12:57 a.m. ET the Dow Jones Industrial Average was up 151.87 points, or 0.58 percent, at 26,213.99, the S&P 500 was up 17.15 points, or 0.59 percent, at 2,905.95 and the Nasdaq Composite was up 68.17 points, or 0.86 percent, at 7,963.96.
The tech index, which dropped 1.4 percent on Monday ahead of the tariff announcement, climbed 0.84 percent, lifted by a 0.4 percent gain in Apple.
The consumer discretionary sector gained 1.12 percent, boosted by a 1.9 percent gain in Amazon.com Inc .
Members of the FAANG group, such as Netflix and Google parent Alphabet were higher.
Eight of the 11 major S&P sectors rose. The energy sector was up 0.83 percent, after oil prices climbed on signs that the OPEC may not be prepared to raise output.
The financial sector rose 0.47 percent, aided by a rise in U.S. Treasury yields as investors continued to price in more interest rate hikes by the Federal Reserve and after news of tit-for-tat tariffs had little impact on the bond markets.
General Mills tumbled 8 percent, the most on the S&P, after the Cheerios cereal maker fell short of sales and margins estimates.
Advancing issues outnumbered decliners for a 1.39-to-1 ratio on the NYSE and a 1.67-to-1 ratio on the Nasdaq.
The S&P index recorded 28 new 52-week highs and three new lows, while the Nasdaq recorded 44 new highs and 65 new lows. (Reporting by Shreyashi Sanyal in Bengaluru; Editing by Sriraj Kalluvila and Shounak Dasgupta)