By Saeed Azhar, Kanchana Chakravarty and Sukriti Gupta

NEW YORK (Reuters) -The S&P 500 index closed higher on Monday as investors were still optimistic over trade talks between the United States and its trading partners despite President Donald Trump's latest salvo to double tariffs on imported steel and aluminum.

Trump said late on Friday he planned to increase tariffs on imported steel and aluminum to 50% from 25% starting Wednesday, just hours after he accused China of violating an agreement.

China said on Monday that U.S. President Donald Trump's accusations that Beijing had violated the consensus reached in Geneva trade talks were "groundless" and promised to take forceful measures to safeguard its interests.

The Trump administration wants countries to provide their best offer on trade negotiations by Wednesday as officials seek to accelerate talks with multiple partners ahead of a U.S.-imposed deadline in just five weeks, according to a draft letter to negotiating partners viewed by Reuters.

"Markets see the latest round of tariff threats and ramped up rhetoric against China, the EU, and steel as nudges to move negotiations towards the finish line," said Jamie Cox, managing partner at Harris Financial Group.

Shares of U.S. steel companies rose, led by Cleveland-Cliffs , which surged 23%. Other steel-makers also rose, including Nucor and Steel Dynamics.

However, shares of automakers dropped, with Ford down almost 3.9% and General Motors also falling by a similar percentage.

The increased levies risk deepening Trump's global trade war, and dousing enthusiasm in markets stemming from the U.S. president's softer trade stance that drove a recovery in risky assets last month.

A temporary relief on some levies on China and a rollback of steep tariff threats on the European Union, along with strong earnings and an improving economic picture helped the benchmark S&P 500 log its best monthly performance in 18 months in May.

The Dow Jones Industrial Average rose 35.41 points, or 0.08%, to 42,305.48, the S&P 500 gained 24.25 points, or 0.41%, to 5,935.94 and the Nasdaq Composite gained 128.85 points, or 0.67%, to 19,242.61.

The S&P in May had tallied its biggest monthly increase since November 2023.

U.S.-listed energy stocks advanced after producer group OPEC+ kept output increases in July at the same level as the previous two months.

Among technology stocks, Nvidia rose 1.7% and Meta gained 3.6%.

Tesla fell 1.1% after it reported lower monthly sales for Portugal, Denmark and Sweden.

The Institute for Supply Management's (ISM) survey showed U.S. manufacturing contracted for a third straight month in May and suppliers took longer to deliver inputs amid tariffs, potentially signaling looming shortages of some goods.