* U.S. stocks end up 1 pct after gaining 2 pct earlier
* Oil, gold rally, leading broad commodities rebound
* Markets may stay rocky on euro-zone woes, weak data
(Recasts with late selling, updates prices to close)
By Barani Krishnan
NEW YORK, Sept 27 (Reuters) - U.S. stocks rose for a third straight day on Tuesday and oil prices jumped on rising hopes European leaders will beef up the euro zone's rescue fund and tackle the region's debt crisis.
The euro also rose for a third straight day as multiple reports showed officials considering plans to make its bailout fund many times larger and to recapitalize banks. For details, see [ID:nL5E7KR1CV] and [ID:nL5E7KR0T5]
But volatility yet again ruled the day on conflicting reports suggesting European officials are considering bold new action to solve the crisis but there are deep disagreements.
The sharp focus on Europe will remain as the region's sovereign debt crisis threatens to sink banks across the euro zone and bring the regional economy to a halt.
"Once we get some resolution of the European sovereign debt issues, we will regain focus on what's going on in our economic data stream, and that hasn't been a pretty picture this past month or so," said Art Hogan, managing director at Lazard Capital Markets in New York.
U.S. Treasuries prices slipped as demand for safe havens ebbed, helping the yield on the benchmark 10-year note to rise back to near 2 percent. [USD/] [US/]
Stocks on Wall Street were up as much 2 percent most of the day before finishing just over 1 percent higher as sharp selling into the market's close showed investors' nervousness.
The drop in momentum caused global equities, as tracked by the MSCI all-country world stock index, to narrowly miss their biggest gains in 14 months.
Some investors had cautioned about a possible swing in stocks even as Wall Street surged earlier on Tuesday on portfolio rebalancing before the third quarter's close and buying in response to European debt crisis.
"All these end-of-quarter issues are amplifying the moves that we've been seeing in stocks," said Paul Simon, chief investment officer at Tactical Allocation Group in Birmingham, Michigan. "I don't have a lot of faith in the moves we've been seeing."
The Dow Jones industrial average <.DJI> closed up 146.83 points, or 1.33 percent, at 11,190.69. The Standard & Poor's 500 Index <.SPX> rose 12.43 points, or 1.07 percent, at 1,175.38. The Nasdaq Composite Index <.IXIC> finished up 30.14 points, or 1.20 percent, at 2,546.83
The MSCI all-country world stock index <.MIWD00000PUS> settled up 2.85 percent, its highest daily gain in nearly seven weeks. It was on track earlier for its biggest day since May 2010.
European shares notched their largest percentage gain since May 2010 and were on to track for their biggest weekly gain since July 2009. The pan-European FTSEurofirst 300 <.FTEU3> index of top shares gained 4.6 percent to close at 938.38 points.
Bank stocks featured among the best performers, with the STOXX Europe 600 banks index <.SX7P> up 6.8 percent. Bank stocks are still down 30.4 percent so far this year.
The run-up in stocks followed weekend meetings of the International Monetary Fund in Washington which signaled European policy-makers were acting to contain Greece's debt problems.
BEWARE OF MORE VOLATILITY
Some remained pessimistic about progress the euro zone could make on the crisis.
"Nothing has drastically changed. We get conversations around how we can get out of this mess -- and those are good. We need those," said Michael Sansoterra, portfolio manager of the RidgeWorth Large Cap Growth Fund in Atlanta, Georgia.
"But we've yet to see any concrete action. Actions speak louder than words, so we'll flail about until we get some action."
Some officials said plans were under way to boost the assets available to help cut Greece's debts and recapitalize banks.
But Germany said there were no plans to increase the size of the fund for a regional bailout. Berlin faces a key vote on Thursday to increase the facility's scope. [ID:nLDE78P01H]
Economic data took a back seat to the events in Europe.
U.S. consumer confidence remained at depressed levels in September and a gauge of labor market conditions deteriorated to its worst since 1983, the Conference Board reported.
A separate report showed U.S. single-family home prices were unchanged in July on a seasonally adjusted basis. The data suggested home prices were stabilizing, though a recovery in the housing market remains a long way off. [ID:nS1E78Q0I3]
On the commodities front, U.S. crude oil
The spot price of gold
The 19-commodity Reuters/Jefferies CRB Index <.CRB> climbed 2.7 percent. (Additional reporting by Chuck Mikolajczak in New York and Jeremy Gaunt, Jessica Mortimer and Atul Prakash in London; Editing by Padraic Cassidy, Leslie Adler, Jan Paschal and Andrew Hay)