GLOBAL MARKETS-Global stocks, euro waver as Europe fears rule

* European bond proposal initially lifts risk appetite

* Stocks, euro waver as debt crisis remains uncontained

* U.S. debt prices rise as safe-haven appeal returns (Adds fresh prices)

By Herbert Lash

NEW YORK, Sept 14 (Reuters) - The euro and world equities struggled to eke out gains on Wednesday as efforts by European leaders to cap the region's escalating debt crisis failed to quell investor fears.

Early optimism over steps to create euro zone bonds faded, causing equity markets and the euro to see-saw. A delay in starting a scheduled conference call among German, French and Greek leaders added to investors' angst and a topsy-turvy market.

"There's a fair degree of uncertainty ahead of those debt talks," said Joe Manimbo, senior market analyst at Travelex Global Business Payments in Washington.

U.S. government debt prices rose on the market uncertainty, even as stocks on Wall Street and the euro recovered after retreating earlier in the session.

The euro bounced off of session lows after Austria's finance ministry said a vote over upgrading the European Financial Stability Facility -- the euro zone's bailout fund -- which an Austrian parliamentary committee failed to approve, would win legislative backing.

The euro last traded at $1.3705 , up 0.2 percent on the day.

Wall Street also rebounded.

The Dow Jones industrial average <.DJI> was up 12.33 points, or 0.11 percent, at 11,118.18. The Standard & Poor's 500 Index <.SPX> was up 3.35 points, or 0.29 percent, at 1,176.22. The Nasdaq Composite Index <.IXIC> was up 16.02 points, or 0.63 percent, at 2,548.17.

MSCI's all-country world equity index rose 0.1 percent, and Europe managed to close higher. The FTSEurofirst 300 .FTEU3 index of top European shares finished up 1.5 percent at 913.62 points.

U.S. Treasuries edged higher. Benchmark 10-year notes rose 3/32 in price to yield 2.0 percent.

Moody's Investors Service downgraded two of France's largest banks, but the ratings cut was smaller than expected and did not include a third bank, as many had feared. [ID:nL3E7KE09F]

Investors backed away from their initial enthusiasm over comments by the president of the European Union's executive body, who said it was presenting options for euro area bonds. Investors surmised it may not be enough to snuff the crisis. (Reporting by Angela Moon, Emily Flitter in New York; Kirsten Donovan, Simon Falush, Brian Gorman and Tricia Wright in London; Writing by Herbert Lash; Editing by Leslie Adler)

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