* Global equities rise on hopes European leaders to act
* Euro gains against U.S dollar as risk sentiment improves
* US debt prices fall, German bonds rise as crisis festers
* Brent crude prices pare gains on weak demand forecast (Adds fresh prices)
By Herbert Lash
NEW YORK, Sept 13 (Reuters) - Global stocks and the euro edged higher on Tuesday on hopes Europe's top powers will supply fresh support for Greece, though uncertainty coursed through markets as the Greek debt crisis remained unresolved.
German Chancellor Angela Merkel sought to quash talk of an imminent Greek default but market confidence suffered another blow when Italy had to pay the highest yield since it joined the euro zone in 1999 to sell five-year bonds. For details see:[ID:nL5E7KD1TR]
A Reuters report quoting a Greek government official as saying that Greek, German and French leaders would hold a conference call on Wednesday helped buoy the euro and underpin optimism in European equity markets. Two German government sources confirmed the plans. [ID:nL5E7KD29C][ID:nB4E7K9007]
"The market is still very much focused on the euro. We are back to watching headlines and it seems like there are more rumors than fact," said David Watt, senior currency strategist, at RBC Capital Markets in Toronto.
"In general, it's still a very cautious backdrop and it's hard to see a sustained back-up in the euro and even for that matter a sustained back-up in the European stock markets," he added.
The euro EUR= rose 0.1 percent to $1.3676 against the U.S. dollar. Against the yen the euro fell to a low of 104.37 EURJPY=EBS before moving back to 105.12, down 0.3 percent.
European stocks rallied from two-year lows to end higher, although the sharp rise in Italy's borrowing costs and simmering fears of a Greek default kept gains in check. [ID:nP6E7KC093]
The FTSEurofirst 300 .FTEU3 index of top European shares closed up 1.06 percent at 900.43 points.
Banking stocks bounced back in what was mostly seen as a technical rally, with Societe Generale (SOGN.PA) rising 15 percent and Deutsche Bank (DBKGn.DE) gaining 8.2 percent.
"The question is not 'if' indexes will revisit March 2009 lows, but 'when,'" said Vincent Ganne, technical analyst at TradingSat. "Is it going to happen in the next two weeks or in December? Hard to say."
MSCI's all-country world equity index rose 0.4 percent.
The Nasdaq and Standard & Poor's 500 Index rose, while the Dow Jones industrial average fell slightly.
Brian Battle, a trader at Performance Trust Capital Partners in Chicago, said stocks were being pulled by those who see them as overvauled given the economy is on the cusp of recession, and those who say stocks are historically cheap.
"We're going to wrestle around and remain range-bound until we figure out which theory is true," Battle said.
The Dow Jones industrial average .DJI was down 20.74 points, or 0.19 percent, at 11,040.38. The Standard & Poor's 500 Index .SPX was up 2.41 points, or 0.21 percent, at 1,164.68. The Nasdaq Composite Index .IXIC was up 14.53 points, or 0.58 percent, at 2,509.62.
Consumer staple shares were the biggest decliners, weighed by Best Buy Co Inc (BBY.N), which fell to a new 52-week low following weak quarterly results.
Oracle Corp ORCL.O, Intel Corp (INTC.O) and Apple Inc (AAPL.O) were among the top boosts to the Nasdaq,
U.S. Treasury prices fell ahead of a 10-year note auction while yields on benchmark German Bund DE10YT=TWEB set a historic low at 1.68 percent before paring gains as investors sought safety in government debt.[ID:nS1E78C0OL]
The benchmark 10-year U.S. Treasury note US10YT=RR was down 12/32 in price to yield 1.99 percent.
Talk that Merkel and French President Nicolas Sarkozy would make a statement on Greece later in the day buoyed market sentiment but Sarkozy's office denied the speculation.
Brent crude prices pared early gains and fell below $112 a barrel after the International Energy Agency cut its estimate for demand growth and raised its supply forecast. The IEA said Libyan crude oil production capacity would come back sooner than expected and there were signs that OPEC output was continuing to grow.
Brent LCOc1 was 86 cents lower at $111.39 a barrel. But U.S. crude rose, with the October contract up 96 cents to $89.15.
Gold prices rose in volatile trade after briefly extending the previous session's 2.5 percent slide below $1,800 an ounce.
Spot gold prices XAU= rose $15.45 to $1,828.70 an ounce. (Reporting by Emily Flitter, Ryan Vlastelica, Chuck Mikolajczak and Gertrude Chavez-Dreyfuss in New York; Neal Armstrong, Jessica Donati and Jan Harvey in London; Blaise Robinson in Paris; Writing by Herbert Lash; Editing by Leslie Adler)