By Natsuko Waki
LONDON, Oct 17 (Reuters) - World stocks held near a 1-1/2 month high on Monday as expectations for solid third-quarter earnings and hopes for a resolution to the euro zone debt crisis supported risky assets, but gains were limited due to caution ahead of a key EU summit.
Wall Street was set for a steady open later after U.S. stock jumped on Friday following stronger-than-expected earnings from Google . More Q3 results are due later this week.
But the euro fell back and German government bonds bounced higher as caution set in, with German Finance Minister Schaeuble saying a forthcoming EU summit would not yield a definitive solution to the region's debt crisis.
G20 finance ministers and central bankers said at a meeting in Paris that they expected euro zone leaders to "decisively address the current challenges through a comprehensive plan" at a European Union summit on Oct. 23.
With anticipation for a bold policy initiative running high, investors are preferring to unwind overly pessimistic positions although they were aware of a room for disappointment.
"The question now is whether one should be fading this rally into a potential disappointment on Oct. 23, as most investors we speak to believe, or remain in 'buying the dips' mode. We continue with the latter," JP Morgan analyst Mislav Matejka said.
"The key investor concern is regarding euro bank deleveraging and its impact on the economy. We ... note that only a third of bank assets are used to lend to the private economy."
The MSCI world equity index rose 0.3 percent, hitting levels not seen since late August. The index gained 5.4 percent last week, its biggest weekly gain since July 2009, and has rebounded nearly 14 percent since hitting a 15-month low earlier this month.
U.S. stock futures were unchanged on the day
European stocks rose 0.8 percent while emerging stocks gained 1.5 percent.
U.S. crude oil
Bund futures
The euro lost 0.8 percent to $1.3777 , having hit a one-month high near $1.39 on Friday.
"The euro will probably go above $1.40 as we go through this week, but we could see a 'buy the rumour, sell the fact' response next week," said Steve Barrow, head of G10 currency research at Standard Bank.
"My bias would be to sell into any strength, but not aggressively".
The dollar rose 0.4 percent against a basket of major currencies. (Editing by Anna Willard)