* Euro gains ahead of Ecofin meeting, EU summit * IMF denies in talks with Italy on financing * Investors wary, focus on debt auctions By Julie Haviv NEW YORK, Nov 28 (Reuters) - The euro rose from a seven-week low on Monday on hopes of progress on the sovereign debt crisis, but gains are tenuous given a slew of upcoming events could cast doubt on the likelihood of decisive action. Hefty debt supply from Italy and Spain, a euro zone finance ministers meeting starting on Tuesday as well as a European Union summit on December 9 should prove pivotal for the euro and risk-correlated currencies. Earlier reports about IMF funding for Italy, since denied by the IMF, initially encouraged investors to unwind bearish positions in the common currency. Germany will propose that euro zone countries set up national funds to house debt exceeding the EU's limit of 60 percent of gross domestic product (GDP) as part of a drive to restore confidence in Europe's finances, Finance Minister Wolfgang Schaeuble said. Officials said Germany and France were exploring radical methods of securing deeper and more rapid fiscal integration among euro zone countries. "We have had bouts of optimism several times in the past year and they ended in tears," said Steven Englander, head of G10 strategy at CitiFX, a division of Citigroup, in New York. "There has been a more active discussion about how to handle the debt crisis than there was a month ago, but upcoming events will be key to whether this wave of optimism is sustainable." The euro was last up 0.7 percent to $1.3324, having climbed to almost $1.3400. Steady selling had driven the currency down 7 percent from a high on Oct. 27 to a trough on Friday. Signs of life in the U.S. consumer despite poor jobs and housing markets added to risk appetite. with U.S. retailers racking up record sales over the Thanksgiving weekend, an industry trade group said on Sunday.. Nevertheless, euro negatives abound. In particular, the fiscal integration plans seem to be focusing on AAA-rated euro zone sovereigns, leaving Italy and Spain largely unaccounted for. Additionally, any push for EU treaty changes needed for the creation of broader fiscal union could face some strong opposition by various euro zone and EU countries. This could mean that ECB support for weaker euro zone bond markets may not be as forthcoming as investors hope.FOCUS ON AUCTIONS Analysts point to the risk from debt auctions this week that follow high-profile disappointments at some recent sales. Belgium had to pay a much higher price to issue 10-year debt on Tuesday.Sales to follow by Italy, France and Spain all have the potential to highlight the severity of the funding problems facing many euro zone countries. "The euro looks very vulnerable in a week where there is an awful amount of (debt) supply from euro zone countries. Trade will be directional and will be based on how the response is to these auctions," said Jane Foley, senior currency analyst at Rabobank in London. Italian 10-year spreads over German bunds narrowed on Monday with dealers citing support from the European Central Bank. Against the yen, the dollar rose 0.3 percent to 78.98 yen while it lost 0.9 percent against the Swiss franc to trade at 0.9224 francs . Commodity currencies outperformed the euro, with the Australian dollar jumping more than 2 percent on the day to $0.9916 , having hit a one-week high. The New Zealand dollar was also up more than 2 percent at $0.7545.