World stocks hit a one-week high while the euro rose broadly on Thursday as investors looked to European Union leaders to lay the foundations for a financial rescue of Greece at a summit in Brussels.

Germany and France are expected to take the lead in sending a message that the EU will help Greece tackle its debt and deficit problems. But the structure, size and any conditions attached to a deal may not be worked out until next week.

Concerns over the debt crisis in Greece and other highly-indebted euro zone nations, along with expectations that U.S. interest rates would rise at some point, had weighed on the euro and global stocks in recent sessions.

Federal Reserve chairman Ben Bernanke said on Wednesday the Fed would likely begin tightening monetary policy by removing some of the cash from the financial system before it turns to raise benchmark short-term interest rates.

Ahead of the EU summit -- which European Central Bank President Jean-Claude Trichet is also expected to attend -- the premium investors demand for holding Greek and Spanish debt rather than safer German bonds fell and the cost of insuring Greek debt against default also eased.

All eyes on the EU meeting and what happens with the Greeks. It is all about a question of confidence today, said Justin Urquhart Stewart, director at Seven Investment Management.

The markets want to see signs that Europe can stand up and have a clear path ... We are looking for clarity of thought to stop any further worries that this is not just in the peripheral economies but other European areas. MSCI world equity index <.MIWD00000PUS> rose 0.6 percent while the FTSEurofirst 300 index <.FTEU3> gained 0.9 percent. Rio Tinto rose more than 4 percent after its second half profits beat analysts' forecasts.

The euro rose 0.2 percent to $1.3763 after hitting an 8-1/2 month low last week.

Emerging stocks <.MSCIEF> rose 1.1 percent.

U.S. crude oil rose a third of a percent to $74.79 a barrel after the U.S. Energy Information Administration raised forecasts on oil prices and world oil demand in 2010.

German government bond futures fell 40 ticks.

The dollar <.DXY> fell 0.2 percent against a basket of major currencies, erasing gains made after Bernanke's speech.

In his most comprehensive description to date of how the Fed aims to dismantle emergency economic support, Bernanke said the central bank could soon raise the discount rate it charges banks for emergency loans, but stressed that would not be akin to a tightening in monetary policy.

The U.S. is pointing toward normality. Thus it is no longer clear that the dollar is the most obvious funding currency for risky investment, RBS said in a note to clients.

(Additional reporting by Joanne Frearson; Editing by Ruth Pitchford)