* Industrials lead Wall St rally after NAFTA deal
* Canadian dollar at four-month high, Mexican peso gains
* Gold dips on increased risk appetite; U.S. rate outlook
* Brent hits 2014 high ahead of Iran sanctions
* Graphic: World FX rates in 2018 http://tmsnrt.rs/2egbfVh (Updates with afternoon trading)
By Laila Kearney
NEW YORK, Oct 1 (Reuters) - A pact between the United States and Canada to rescue the trilateral NAFTA accord with Mexico drove up global stock markets and the Canadian dollar on Monday, while safe-haven assets took a hit.
The new United States-Mexico-Canada Agreement (USMCA) announced on Sunday preserves a $1.2 trillion open-trade zone that was on the brink of collapse after nearly a quarter century. Dow Jones Industrial Average .DJI rose 190.3 points, or 0.72 percent, to 26,648.61, the S&P 500 .SPX gained 12.93 points, or 0.44 percent, to 2,926.91 and the Nasdaq Composite .IXIC added 12.05 points, or 0.15 percent, to 8,058.40.
MSCI's gauge of stocks across the globe .MIWD00000PUS gained 0.20 percent.
"You've had this trade stuff hanging over the markets for a while, so any good news is positive," said Scott Brown, chief economist at Raymond James in St. Petersburg, Florida.
In currencies, the British pound rose against the U.S. dollar on a Bloomberg report that the UK government was proposing a compromise on the Irish border issue in Brexit talks. Canadian dollar CAD= strengthened against the U.S. dollar at a four-month high and the Mexican peso MXN= hit its highest in over seven weeks after the new trade agreement. is aimed at bringing more jobs into the United States, with Canada and Mexico accepting more restrictive commerce with the United States, their main export partner.
It also effectively maintains the current auto sector and largely spares Canada and Mexico from the prospect of U.S. tariffs on their vehicles, although it will make it harder for global auto makers to build cars cheaply in Mexico.
Shares of Ford F.N jumped 1.6 percent, while General Motors (NYSE:GM) GM.N gained 1.3 percent. Auto-part makers also climbed and the S&P 1500 auto parts & equipment index .SPCOMAUTP rose 0.38 percent, marking its first increase in seven sessions.
Industrial stocks .SPLCI jumped 1.1 percent and were on track for their best day in five weeks. pan-European FTSEurofirst 300 index .FTEU3 rose 0.22 percent. Italian stocks .FTMIB , which started the day with gains, closed down 0.5 percent. Friday, Italian stocks, bonds and the euro had all sold off on worries over a budget proposal from Italy's new anti-establishment government and fears that the European Union could reject the plan euro on Monday was also hit by worries about a rise in Italy's fiscal deficit, dropping below the $1.16 mark EUR= .
Also casting a shadow on markets were two surveys on Sunday that showed growth in Chinese manufacturing sputtered in September as domestic and export demand softened broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS closed 0.18 percent lower.
Following the trade deal news, yields on U.S. government bonds rose from Friday's close as traders sold the safe-haven debt for riskier assets. is a pretty significant risk-on tone following the new NAFTA agreement," said Mike Lorizio, senior fixed income trader at Manulife Asset Management in New York.
Gold dipped on the increased appetite for riskier assets. Spot gold XAU= dropped 0.2 percent to $1,189.79 an ounce. U.S. gold futures GCcv1 fell 0.23 percent to $1,193.40 an ounce. Brent oil neared its highest since November 2014 on Monday, driven by concern about a supply crunch once U.S. sanctions against Iran come into force next month. crude CLcv1 rose 1.94 percent to $74.67 per barrel and Brent LCOcv1 was last at $84.24, up 1.83 percent on the day.