GLOBAL MARKETS-Shares slip from 17-month highs, euro falls

* MSCI world equity index drops

* European, U.S. stocks step back from 17-month highs

* Greece worries weigh; euro hits 2-week low vs dollar

* Europe shares slip, tempered by weaker U.S. open

By Jessica Mortimer and Al Yoon

LONDON/NEW YORK, March 19 (Reuters) - Global shares slipped from near 17-month highs on Friday as weaker trading in the United States tempered strength in Europe banking stocks, while concerns over Greece's debt burden pushed the euro to a two-week low against the dollar.

An early boost to banks came as British lender Lloyds Banking Group said it would return to profit this year after two years of heavy losses, helped by lower bad debts and tight cost controls. For details see [ID:nLDE62I07H]

The MSCI world equity index <.MIWD00000PUS> fell 0.4 percent, and in Europe the FTSEurofirst 300 index <.FTEU3> dipped 0.2 percent after hitting a 17-month high of 1,076.29.

In U.S. equities trading by mid-morning, the Dow Jones industrial average <.DJI> was down 39.45 points, or 0.37 percent, at 10,739.72. The Standard & Poor's 500 Index <.SPX> was down 5.82 points, or 0.50 percent, at 1,160.01. The Nasdaq Composite Index <.IXIC> was down 16.98 points, or 0.71 percent, at 2,374.37.

"Even with a one-year rally of almost historical proportions, investors remain in a very skeptical market," Keith Springer, president of Capital Financial Advisory Services in Sacramento, California, said in a client note.

Some volatility is expected in the market because of "quadruple witching" -- the expiration of U.S. stock index futures, stock index options, stock options and individual stock futures -- later on Friday.

Palm Inc's stock fell 19 percent to $4.56 a day after it warned that quarterly revenue would fall far below expectations, as tepid demand for its smartphones left wireless carriers with piles of inventory. [ID:nN18254531]

GREECE WORRIES

Concerns over Greece and doubts over whether euro zone states will agree to any form of support package still weighed on sentiment, keeping the euro weak and hampering peripheral debt prices as traders waited for next week's European Union summit.

The euro zone currency , on track for its worst weekly performance since late January, fell 0.5 percent against the dollar to $1.3528, its lowest in more than two weeks, while increased risk aversion helped flows into the U.S. currency. The dollar <.DXY> rose 0.74 percent against a basket of major currencies to 80.820.

"I think the market doubts whether next week's summit will produce anything more specific in terms of a plan for Greece," said Chris Turner, head of FX strategy at ING.

Markets will be sensitive to further rhetoric on Greece's debt situation after Athens raised the stakes on Thursday in its quest for EU help, saying it could not achieve promised deficit cuts if borrowing costs remained so high. [ID:nLDE62I0AW]

Against the Japanese yen, the dollar gained 0.2 percent to 90.56 yen.

Bund futures were steady, while U.S. Treasury debt prices were little changed as traders anticipated the sale of $118 billion in debt next week. Benchmark 10-year note yields stood at 3.67 percent.

In energy and commodities prices, U.S. light sweet crude oil fell $1.95, or 2.3 percent, to $80.25 per barrel, weighed by gains in the U.S. dollar and and after an industry report suggested OPEC exports were rising.

Spot gold prices fell $19.20, or 1.7 percent, to $1,106.25 an ounce.

(Additional reporting by David Brett and Naomi Tajitsu in London and Rodrigo Campos in New York; Editing by Padraic Cassidy)