Many investors suffered a bout of pre-summit uncertainty on Tuesday a day before a crucial meeting of European Union leaders to solve the euro zone debt crisis.

World stocks were flat, but European shares dipped and the euro was slightly weaker.

EU leaders are to meet on Wednesday with tentative plans in place for Greece's debt to be reduced, European banks to be recapitalized 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 succor.

MSCI's all-country world stock index was flat -- down around 7 percent for the year to date -- with its emerging market index <.MSCIEF> up 0.6 percent on the day.

But the pan-European FTSEurofirst 300 <.FTEU3> was down a quarter of a percent.

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

EURO SLIPS

The euro edged lower but still held near a six-week high against the dollar hit the previous day, 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 $1.3910.

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 nudged up on the uncertainty.

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)

Japan European union