By Caroline Valetkevitch NEW YORK, Oct 19 (Reuters) - World stocks and the euro rose on Wednesday on renewed hopes that European leaders will make progress on the euro zone debt crisis this weekend, though disappointing Apple earnings slowed Wall Street's advance. U.S. Treasuries declined as the optimism that policymakers may be able to contain the debt crisis curbed any safety bid. Rising risk appetite on hopes for a resolution of the debt crisis has helped stocks in recent weeks. A report in Britain's Guardian newspaper late Tuesday that France and Germany had agreed on a deal to increase the euro zone bailout fund's firepower five-fold contributed to the more positive mood. Two senior EU officials, including a spokesman for the German finance minister, later denied the reported agreement. But the market reaction underscored the frenzy of speculation and hopes that Europe will truly make progress on reining in the debt crisis at a key EU summit set for Sunday. "It seems the pendulum is swinging again towards a more optimistic take on that meeting and the expansion of the EFSF " said Vassili Serebriakov, senior currency strategist at Wells Fargo in New York, referring to the euro zone bailout fund, the European Financial Stability Facility. The benchmark U.S. Standard & Poor's 500 was up slightly. Gains in chip maker Intel and insurer Travelers Cos. helped offset the decline in Apple shares. Apple fell 3.6 percent to $407 after its results, reported after the market close on Tuesday, missed estimates for the first time in years as it sold far fewer iPhones than expected. The Dow Jones industrial average was up 33.53 points, or 0.29 percent, at 11,610.58. The Standard & Poor's 500 Index was up 1.49 points, or 0.12 percent, at 1,226.87. The Nasdaq Composite Index was down 10.47 points, or 0.39 percent, at 2,646.96. Intel Corp shares climbed 3.9 percent after it forecast quarterly revenue above Wall Street's expectations, and Travelers advanced 4.9 percent after it said its pricing across all insurance lines is stronger. World stocks as measured by the MSCI index were up 0.6 percent, while the FTSEurofirst 300 index of top European shares was up 0.6 percent. European banking shares bounded on the revived hopes for progress at the upcoming EU summit. BNP Paribas jumped 7 percent, while Deutsche Bank shares gained 4 percent. The European Union summit to be held on Sunday is being considered a make-or-break meeting on resolving the Greek debt crisis that threatens to engulf the entire euro zone. The euro recovered as investors shrugged off a credit ratings cut on Spain. The euro was last up 0.5 percent at $1.3811 . The dollar index , which measures the U.S. currency against six major currencies, was down 0.4 percent. Ratings agency Moody's late on Tuesday cut Spain's sovereign rating by two notches, citing the country's vulnerability to the euro zone debt crisis. A day earlier Moody's issued a warning on France, saying it would scrutinize its stable outlook on the country's triple-A credit rating. Despite the downgrade, the cost of insuring against a Spanish default fell, according to monitor Markit. Italian credit default swap prices also narrowed, falling 14 basis points to 435 basis points. U.S. Treasury prices declined, in line with the fall in other bond markets. Benchmark 10-year notes fell 2/32 in price to yield 2.18 percent . Benchmark yields were well off Tuesday's low of 2.077 percent, which was the lowest since Oct. 7. Safe-haven gold also fell, as did Brent crude oil future. Spot gold was bid at $1,650.10 a troy ounce at 1353 GMT, from $1,658.64 an ounce late in New York on Tuesday, having fallen back from an earlier session high at $1,664.89.

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