GLOBAL MARKETS-Shares edge up on ECB plan but doubts linger

* European share edge to new four-month highs

* Spanish bond yields hover just below critical 7 pct level

* Euro steadies below one-month highs vs. dollar

By Richard Hubbard and Marc Jones

LONDON, Aug 6 (Reuters) - European shares inched to fresh four-month highs on Monday although cautious financial markets awaited greater clarity on the next steps in Europe's three-year debt crisis, while the euro steadied below a one-month peak.

Markets enjoyed a strong finish to last week after robust U.S. jobs data eased concerns about global growth, and the Frankfurt-based European Central Bank sketched out a plan for a new wave of bond purchases aimed at helping to calm the euro zone's turmoil.

But with Germany yet to approve Europe's new rescue fund, Spain's 10-year bond yields dangerously high and Greece still to secure new bailout funds, investors remained worried about what could happen next.

"The market has been rallying on expectations that Spain and Italy will request assistance but this will take some time, so markets are waiting to see what happens," said Danske Bank economist Anders Møller Lumholtz. "How long it could take will be influenced by how much pressure there is in the market."

"We currently think it could be a couple of weeks or more, but it will also depend on any details coming out of Frankfurt on the bond buying programme and also what reaction the market has to it," he added.

With European stocks crawling up, U.S shares looked likely to follow suit and add to a 3-month high hit at the end of last week. The MSCI World Index, which captures the world's biggest stock markets, was up 0.42 percent to its highest level since early May.

In another sign of the wait-and-see mood, oil prices fell roughly a $1 a barrel, with buyers caught between euro zone hopes and still struggling growth in many large economies. Gold nudged back up after a four-day drop.

The euro zone's problems remain the focus for many major investors. The ECB promised last week to stabilise the bloc's bond markets but tensions remain as details of exactly how to achieve this have yet to be settled.

Those unresolved questions saw the euro treading water at lunchtime in Europe at $1.2380, having made significant gains in recent days.

Greece also continued to niggle. Inspectors from the International Monetary Fund, the European Commission and the European Central Bank - known as the troika - concluded a visit to Athens on Sunday, saying they would return in September to give their final verdict.

MARKETS PAUSE

In Spain, Prime Minister Mariano Rajoy appears to be manoeuvring the country towards a full sovereign aid package. ID:nL6E8J3LTC]

After the gains of the past week, European equities continued to tick higher on Monday. The FTSEurofirst 300 index of top European company shares edged up to a new four month high of 1,084.18 points.

Last week's rally was the ninth consecutive weekly gain for the main the European index.

Bucking the trend, the euro was below a peak of $1.2444 hit in Asian trade, which was its strongest level since July 5.

"When you think about the fact that something positive will probably materialise even if it takes some time, the euro could see a bit of a rebound," said Hiroshi Maeba, head of FX trading Japan for UBS in Tokyo.

But traders in Europe were more sceptical. "We haven't had any concrete improvement in the situation in the euro zone," said Niels Christensen, currency strategist at Nordea in Copenhagen.

German government bond prices were edging higher, but again this followed last week's selloff, with many traders worried about the uncertainties over what steps political leaders might take next.

"I guess everybody is keeping their positions (minor) because we are seeing roller coaster moves that nobody can explain," said Charles Berry, a trader at Landesbank Baden-Wuerttemberg. "Volatility will be high, that's the only thing I can guarantee."

Ten-year German bond yields were down 4.9 basis points at 1.38 percent, not too far from a record low of 1.126 percent hit in July.

Spanish 10-year government bonds extended Friday's rally but remained close to 7 percent levels, beyond which funding costs are perceived to be unaffordable over the long term.

Ten-year Spanish yields fell 12 basis points to 6.81 percent, while for two year maturities, where any ECB bond buying would be concentrated, yields were down more sharply at 3.43 percent.