Jan 22 (Reuters) - Indian shares advanced on Thursday, tracking a rebound in global equities after U.S. President Donald Trump stepped back from threats to impose tariffs on eight European countries as leverage to seize Greenland and ruled out the use of force.

The Nifty 50 rose 1.09% to 25,430.3, while the BSE Sensex added 1.03% to 82,751.95 as of 9:48 a.m. IST.

All 16 major sectors logged gains. The broader small-caps and mid-caps rose about 1.5% and 1.8%, respectively.

The U.S. S&P 500 posted its biggest one-day percentage gain in two months on Wednesday after the sharpest equities selloff in three months a day earlier. Asian markets rose 1.1%, while safe-haven gold eased after scaling a record peak in the previous session. [MKTS/GLOB]

"The message that the U.S. would refrain from imposing tariffs on Europe takes away the threat of a U.S.-Europe trade war, which was dragging markets down," said VK Vijayakumar, chief investment strategist at Geojit Investments.

"The consequent relief rally in the domestic market today can be significant since there are about 2 lakh (200,000) short contracts, and the construct is right for short-covering."

A report by Moneycontrol quoted Trump saying that the U.S. is "going to have a good deal (with India)", signalling movement on trade talks between the two countries.

Indian benchmarks had lost 2% each over the previous three sessions, on Trump's threats to acquire Greenland and reignite a trade war with the EU, and amid relentless foreign selling and tepid corporate earnings.  

Among stocks, Dr. Reddy's Laboratories climbed 4.3% after reporting a quarterly profit beat. The drugmaker said that it has received approval from the local regulator to manufacture and sell the generic version of the diabetes drug Ozempic.

Zomato's parent company Eternal jumped 3.3% after a quarterly profit jump.

Tata Motors Commercial Vehicles gained 3.2% after Nomura initiated coverage with "buy" rating, citing improving demand.

(Reporting by Bharath Rajeswaran and Vivek Kumar M in Bengaluru; Editing by Rashmi Aich and Mrigank Dhaniwala)

By Bharath Rajeswaran and Vivek Kumar M