GLOBAL MARKETS-Stocks, euro turn higher on ECB easing hopes

LONDON, Sept 26 (Reuters) - World stocks ticked higher and the euro bounced from an earlier 10-year trough against the yen on Monday as speculation that the European Central Bank might cut interest rates to help the economy countered concern over the euro zone debt crisis.

German government bonds fell broadly as safety-seeking flows waned. But concerns about the global economic slowdown have not gone away, with gold tumbling and copper suffering its biggest one-day drop since the 2008 financial crisis.

ECB Governing Council member Ewald Nowotny was quoted as saying that the possibility of interest rate cuts should not be ruled out. Germany's Ifo economist Klaus Abberger also said he expected the ECB to cut rates towards 1 percent, although the timing of it was not clear.

However, it was far from certain whether the ECB would indeed cut rates. Another ECB Governing Council member Yves Mersch said speculation of a sharp rate cut next month is "wild" .

Still, the easing speculation countered investor concerns about how effective Europe's latest steps to stop fallout from any Greek default, including finding ways to beef up their existing 440 billion euro rescue fund.

"We've seen a little bit of a hope in risk markets that the EU authorities are finally starting to put something in place to tackle the mounting funding problems in euro land," said Nick Stamenkovic, strategist at RIA Capital Markets.

"The Bund market may be just taking a slightly more cautious stance but underlying sentiment remains positive until we see further announcement from EU authorities to tackle these problems we don't see much downside for Bunds."

The MSCI world equity index erased earlier losses to stand up 0.3 percent on the day, having hit its lowest since July 2010 on Friday. The index has fallen more than 23 percent since hitting a three-year high in May and is also down 17 percent since January.

European stocks reversed losses to rise 2.7 percent. Emerging stocks were down 0.8 percent after hitting their weakest since September 2009 earlier.

U.S. stock futures were up around 1.4 percent SPc1, pointing to a firmer open on Wall Street later.

U.S. crude oil CLc1 were up 0.6 percent at $80.31 barrel.

Gold was set for its biggest three-day loss in 28 years of nearly 10 percent , while copper fell as much as 6.1 percent to $6,914 a tonne, its sharpest fall since October 2008.

Concerns over the potential impact of a Greek default, especially on the banking sector, and worries over a U.S. economic slowdown had been weighing on world stocks, fanning safety-seeking flows into top-rated government bonds.

Deep differences remain over whether the ECB should commit more of its massive resources to shoring up Europe's banks and help struggling euro zone member countries.

Bund futures FGBLc1 fell 57 ticks on the day.

The dollar was down 0.1 percent.

The euro fell as low as 101.90 yen and hit an eight-month low of $1.3361 , before trimming losses.

A smaller-than-expected decline in the Ifo index, which gauges German business morale, also helped sentiment a little.

"(A modest decline in) the Ifo index should dampen the current recession fears for the time being but sends at the same time a clear warning to German policymakers that the solid growth should not be taken for granted. Discussions on possible stimulus packages could be revived in a couple of months," said Carsten Brzeski, economist at ING. (Additional reporting by Emelia Sithole-Materise; Editing by Toby Chopra)