GLOBAL MARKETS-EU progress, US growth prospects lifts stocks

                                
 * U.S. stocks rise on growth outlook
                                
 * Euro and yen slightly firmer against dollar
                                
 * Gold prices dip as uncertainty eases
                                
 (Updates with U.S. market close, Nikkei futures)
                                
 By Alina Selyukh
                                
 NEW YORK, Dec 16 (Reuters) - World stocks ended slightly
higher, U.S. bond yields slipped, and the euro was firmer on
Thursday after European leaders agreed to change the EU treaty
to create a permanent financial safety net.
                                
 More signs the U.S. economic recovery was gaining traction
and progress in Congress on passing President Obama's tax plan
also relieved uncertainty in securities markets.
                                
 "Recent events do bode well for positive economic
sentiment, said James Barnes, portfolio manager at National
Penn Investors Trust Co in Wyomissing, Pennsylvania.
                                
 The Dow Jones industrial average <.DJI> gained 41.78
points, or 0.36 percent, to 11,499.25. The Standard & Poor's
500 Index <.SPX> rose 7.64 points, or 0.62 percent, to
1,242.87, and the Nasdaq Composite Index <.IXIC> climbed 20.09
points, or 0.77 percent, to 2,637.31.
                                
 U.S. stocks were also buoyed by a bullish forecast by FedEx
Corp <FDX.N> which is deemed an economic bellwether. The
package shipping firm reported unexpectedly strong holiday
volumes despite lower-than-expected quarterly profit and
revenue, sending its shares up almost 2.0 percent.
                                
 Although worries about the EU credit troubles weighed on
sentiment, the FTSEurofirst 300 <.FTEU3> index of top European
shares tested this week's 26-month highs and closed 0.4 percent
higher.
                                
 "The risk of contagion continues to play on investors'
minds and that is certainly one of the biggest macro risks that
you can point to as you look towards 2011," said Henk Potts,
equity strategist at Barclays Wealth.
                                
 "But the corporate picture still looks very bright, the
trend towards higher profits continues and public policy should
remain shareholder-friendly. The name of the game is to try and
hold onto the gains seen over the past couple of weeks."
                                
 The MSCI's all-country world stock index <.MIWD00000PUS>
ended up 0.07 percent and the Thomson Reuters global stock
index <.TRXFLDGLPU> was up 0.5 percent at market close in New
York.
                                
 Stocks in Tokyo were seen opening slightly lower on Friday
though, with the December futures contract that trades in
Chicago for the Nikkei 225 <0#NK:> flat at 10,375.
                                
 EURO ZONE CREDIT RISKS STILL EYED
                                
 Worries over European sovereign debt saw euro zone bond
yields rise after Spain paid a hefty premium at its final bond
auction of the year.
                                
 Moody's, which put Spain on credit downgrade watch on
Wednesday, made a similar announcement on Greece on Thursday,
saying it may take Greece's already "junk" credit rating down
if the country didn't stabilize its finances.
                                
 However, the European Central Bank moved to increase its
financial firepower to fight the euro zone debt crisis on
Thursday, and European leaders agreed to change the EU treaty
to create a permanent financial safety net. [ID:nLDE6BE29I]
                                
 U.S. Treasury yields ended lower but not before testing new
seven month highs as investors took profits on positions taken
ahead of the Federal Reserves new bond purchase program in
November.
                                
 Ten-year notes <US10YT=RR> were last up 20/32 in price to
yield 3.44 percent, down from 3.52 percent late on Wednesday.
                                
 The euro rose against the U.S. dollar, but remained
vulnerable to selling, traders said, despite moves by European
leaders to establish a permanent mechanism to resolve sovereign
debt problems.
                                
 "Market participants continue to reduce exposure to the
euro," said Samarjit Shankar, managing director of global FX
strategy at BNY Mellon in Boston.
                                
 "The ongoing policy discord about measures required more
urgently to tackle contagion is spooking investors," he said.
                                
  The euro rose 0.2 percent to $1.3236 after falling to a
session trough of $1.3181 on trading platform EBS <EUR=EBS>.
                                
 With the euro gaining, the dollar also slipped against a
basket of major trading-partner currencies <.DXY>, shedding
0.25 percent to 80.064. Against the Japanese yen, the dollar
<JPY=> declined 0.27 percent to 84.02.
                                
 Greater confidence about the global economy sent spot gold
prices <XAU=> down $9.60, or 0.70 percent, to $1369.80.
Similarly, U.S. crude oil <2CLc1> dipped 0.82 percent, to
$87.89 per barrel.
                                
 (Additional reporting by Ryan Vlastelica, Karen Brettell,
Wanfeng Zhou, Ellen Freilich and Leah Schnurr in New York, and
Emily Flitter, William James, and Jan Harvey in London)