* Equities rebound, but euro sentiment still negative
* Concerns about tight dollar funding weigh
* U.S. durable goods orders surge in April (Adds quote, U.S. data, updates prices, changes byline, dateline; previous LONDON)
By Gertrude Chavez-Dreyfuss
NEW YORK, May 26 (Reuters) - The euro slid for a third straight session against the dollar on Wednesday, still pressured by nagging fears that the European debt crisis could hurt global growth prospects.
Concerns about tighter dollar funding conditions, with three-month dollar interbank rates hitting a fresh 10-month high on Wednesday, and a surprisingly lackluster German debt auction also weighed on the euro, analysts said.
Despite such a negative backdrop, the euro remains in a narrow trading range, with a rebound in global stocks helping limit the euro's losses. In recent weeks, the euro has become a proxy for risk appetite, given Europe's debt crisis, rising or falling in tandem with global stocks.
"There is still a deeply negative sentiment toward the euro due to the debt situation in Europe, the issue with Spain over the weekend and how investors are bracing for the possibility that other banks in the region may follow suit and may need a bailout," said Joe Manimbo, senior market analyst at Travelex Global Business Payments in Washington.
In early New York trading, the euro fell 0.8 percent against the dollar to $1.2271. It recovered from a low of $1.2172 on Tuesday when investors pulled back sharply from riskier assets. The euro hit a trough of $1.2143 last week, its lowest since April 2006.
Data showing U.S. durable goods orders surged in April further boosted the dollar against the euro.
"I think you have to average the last two months' worth of durables data and it's definitely better than expected and consistent with the economy growing at a 3 to 4 percent pace this year," said Michael Woolfolk, senior currency strategist at BNY Mellon in New York.
"The economy is unimpeded by the turmoil in Europe for now. After the flash crash, perspectives changed, and the market was willing to view problems in Europe as potentially dangerous for global growth. I think that's still premature at this stage."
Earlier, the euro suffered after Federal Reserve Chairman Ben Bernanke said the U.S central bank's dollar funding facility was unlikely to last forever. That partly dimmed risk appetite, although the impact was short-lived.
Speaking in Tokyo, Bernanke said dollar swap lines, which were reinstated as the Greek debt crisis escalated, played an important role in stabilizing markets but that the Fed did not want to provide a permanent service.
U.S. Treasury Secretary Timothy Geithner will meet his new UK counterpart George Osborne and Bank of England Governor Mervyn King in London on Wednesday before traveling to Frankfurt for dinner with European Central Bank President Jean-Claude Trichet.
Geithner is expected to discuss the debt crisis in Europe, which has led to global market turmoil in the past few weeks.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up slightly at 86.833.
Against the yen, the euro was down nearly 0.8 percent at 110.77 yen. On Tuesday, it tumbled to 108.83 on trading platform EBS, its lowest since November 2001.
The dollar was little changed against the yen at 90.27 yen. (Additional reporting by Steven C. Johnson in New York and Tamawa Desai in London; Editing by James Dalgleish)