Uncertainty about just how close European Union leaders will come to solving the euro zone debt crisis kept many markets trading in a tight range on Tuesday.

World stocks, including European shares, were slightly higher and the euro was flat. Both, however, remained close to recent highs.

EU leaders are to meet on Wednesday with tentative plans in place for Greece's debt to be reduced, European banks to be recapitalised and the euro zone's EFSF rescue fund to be increased to provide partial insurance for sovereign bonds.

But the agreements and how far they go remain under discussion, causing some nerves on financial markets.

Adding to the uncertainty, German lawmakers secured a full parliamentary vote on any euro zone crisis measures negotiated, a move that risks delaying Europe's response to its two-year debt problems.

Whilst official comments have stated that good progress is being made, behind the scenes things look a little shakier, Capital Spreads dealer Jonathan Sudaria said.

Investors are also becoming concerned about the impact of the crisis on overall European growth, although news that German consumer morale unexpectedly rose going into November will have provided some succour.

MSCI's all-country world stock index <.MIWD00000PUS> was up 0.1 percent, close to highs last seen at the beginning of September. Hopes for a euro zone settlement have boosted stocks in recent weeks.

The pan-European FTSEurofirst 300 <.FTEU3> was up about the same. Strong corporate results from the likes of oil and gas firm BG Group and Deutsche Bank , which both beat forecasts, helped underpin the market, after its recent two-day rally.

Earlier, Japan's Nikkei <.N225> closed down 0.9 percent as the domestic corporate earnings season began.

EURO SLIPS

The euro was flat on the day but still held near a six-week high against the dollar hit on Monday, supported by market expectations for European leaders to come up with an agreement.

The yen also hovered just shy of a record high against the dollar, leaving investors nervous about possible intervention by the Japanese authorities to stem the currency's rise.

The euro was at $1.3930.

It will be difficult for the euro to break above $1.40 ahead of the meeting. People are happy to sit on their positions awaiting any outcome, said Niels Christensen, currency strategist at Nordea in Copenhagen.

The indications are that there is a will to solve the problem, which is maybe not a huge leap but it's a step ahead not backwards.

German Bund futures ticked lower.

Traders and strategists said they expected the bond market to remain volatile going into Wednesday's summit, with thin volumes adding to the potential for sharp market moves.

(Additional reporting by Simon Jessop, Jessica Mortimer and Emelia Sithome-Matarise; editing by Anna Willard)

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