* European stocks, euro give up gains
* German parliament passes bill to beef up euro rescue fund
* Clears first of many hurdles towards a crisis solution
By Anirban Nag
LONDON, Sept 29 (Reuters) - European shares and the euro pared modest gains on Thursday as relief from German parliamentary approval of new powers for the euro zone's rescue fund proved short-lived and markets refocused on broader concerns linked to the region's debt crisis.
Lawmakers in Berlin backed a beefed-up bailout fund by a large majority in what was Chancellor Angela Merkel's biggest test since she took power six years ago, one she passed without needing to rely on opposition parties.
That eased worries of a politically damaging rebellion against Merkel within the ruling coalition, but pressure on euro zone policymakers to frame a much stronger response to the crisis remains acute, amid doubts whether German politicians have any appetite left to extend the rescue fund even further.
"As expected, the German parliament has voted through the EFSF," said Louise Cooper, markets analyst at BGC Partners. "However this is just a step in a very long journey to an (as yet) unknown destination."
The pan-European FTSEurofirst 300 index of top shares was down 0.2 percent at 925.14 points, having risen immediately after news of the German vote. Their losses also pulled world stocks as measured by the MSCI index lower.
U.S. stock index futures pointed to a higher open on Wall
Street, with futures for the S&P 500
The euro was up 0.5 percent at around $1.3613, but slipped from around $1.3678 after the bill was passed.
MORE HURDLES
More hurdles towards an effective solution to the debt crisis remain in place, with the threat of a Greek default very much on the horizon.
Talks between the European Union, IMF and Athens on the next aid tranche on Thursday will see if Greece has done enough to avoid running out of cash.
Despite the latest bounce, the euro has lost nearly 7 percent against the dollar this quarter, hammered by mounting worries over the prospect of a Greek default and constant bickering by policymakers.
"Beyond this vote nothing has changed and we're awaiting a more comprehensive response from euro zone policymakers," said Lee Hardman, currency analyst at BTM-UFJ. "The relief rally in the euro over the past week has been built on unsustainable foundations."
The failure to find a definitive solution to the crisis has led to worries about contagion engulfing bigger euro zone economies like Italy and Spain and triggered concerns about the health of the European banking system.
The German Bund future
"I think it's overly optimistic to think that the whole crisis is over and therefore the safe-haven status of the Bund is lost. I wouldn't expect to see the Bund yield much higher than where we are in the short term," said Elisabeth Afseth, fixed income analyst at Evolution Securities. (Additional reporting by Jon Hopkins, Neal Armstong and Ana Nicolaci da Costa; Editing by Patrick Graham, John Stonestreet)