GLOBAL MARKETS-Global stocks, oil struggle on GDP, Korea ship

* Wall St ends about flat after news of Korea incident

* Euro climbs on news of accord on Greece safety net

* Oil falls to $80 as U.S. GDP data dents bullish mood (Updates with close of U.S.)

By Herbert Lash and Jennifer Ablan

NEW YORK, March 26 (Reuters) - Global stocks pared gains and government debt edged higher on Friday after the sinking of a South Korean naval ship unsettled a market that was uncertain about a standby financial aid plan for debt-stricken Greece.

Seoul played down suggestions that North Korea may have attacked the ship with more than 100 crew on board, which sank near the disputed maritime border with the North. Several people died in the sinking, caused by an unexplained hole. For details see: [ID:nTOE62P0AI]

Market sentiment turned quickly on news of the sinking. But global stocks later recovered losses and U.S. stocks closed near break-even, with the Dow and S&P 500 slightly higher.

MSCI's all-country stock index <.MIWD00000PUS> rose 0.16 percent.

The Chicago Board Option Exchange's volatility index <.VIX>, an inverse indicator of sentiment, fell 3.4 percent, on the belief markets will remain relatively calm in the near-term. The index had traded higher on news of the Korean ship.

Data that showed U.S. economic growth in the fourth quarter of 2009 was slightly less brisk than the government had previously estimated also weighed on sentiment in the stock market. [ID:nN26185940]

"With details still unclear about South Korea and the GDP number getting revised downward, it's no wonder that the market sold off a little," said Michael Pento, senior market strategist at Delta Global Advisors in Huntington Beach, California. [ID:nN26139120]

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For a graphic on U.S. GDP and payrolls see: Economic growth resumes. Will jobs follow? http://link.reuters.com/ves45j

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The Dow Jones industrial average <.DJI> closed up 9.15 points, or 0.08 percent, at 10,850.36. The Standard & Poor's 500 Index <.SPX> was up 0.86 points, or 0.07 percent, at 1,166.59. The Nasdaq Composite Index <.IXIC> was down 2.28 points, or 0.10 percent, at 2,395.13.

The Korean incident curbed enthusiasm about a deal unveiled late Thursday under which Greece would receive both bilateral loans from its euro zone partners and International Monetary Fund funding if Athens faced severe difficulties. [ID:nLDE62N2R1]

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For a graphic on the euro zone crisis see http://graphics.thomsonreuters.com/0210/EUROZONE_REPORT.html

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The euro rose broadly after euro-zone leaders agreed on the safety net for Greece, although uncertainties remained over the country's long-term fiscal soundness. [ID:nN26141303]

The euro was up 1 percent against the dollar at $1.3412.

The package reduced some of the biggest risks on Greece and the euro responded to that, said Daniel, Katzive, a director for global foreign exchange at Credit Suisse in New York.

But the plan did not alleviate longer-term worries about Greece and other fiscally vulnerable economies in the region, such as Portugal and Spain, limiting the euro's gains.

"Ultimately, the markets remain apprehensive over their fiscal situation and it will be hard for the euro to gain real traction against the dollar in the short term," Katzive said.

The dollar was down against a basket of major currencies, with the U.S. Dollar Index <.DXY> down 0.63 percent at 81.599.

Against the yen, the dollar was down 0.23 percent at 92.47.

U.S. Treasuries rose, pulling benchmark yields down from nine-month highs, as the market attempted to stabilize after a series of poorly-bid debt auctions pummeled the bond market and in the wake of the Korean ship's sinking. [ID:nN26209748]

The benchmark 10-year U.S. Treasury note was up 7/32 in price to yield 3.86 percent.

Oil prices fell below $80 a barrel on the GDP data and as the Greek financial aid plan failed to quell concern over a fragile economic recovery. [ID:nSGE62P08C]

"You had the GDP revised lower and there's still concern about the euro and the euro zone economy," said Richard Ilczyszyn, senior market strategist at Lind-Waldock in Chicago.

U.S. crude for May delivery settled at $80.00 per barrel, down 53 cents, reversing gains earlier in the day.

ICE Brent settled at $79.29, down 32 cents.

Gold rose, reclaiming $1,100 an ounce as the euro rally on the Greece aid deal boosted investor sentiment. [ID:nLDE62P0MS]

U.S. April gold futures in New York settled up $11.40 at $1,104.30 an ounce. (Reporting by Ellis Mnyandu, Ryan Vlastelica, Vivianne Rodrigues, Ellen Freilich, Burton Frierson and Frank Tang in New York; Jo Winterbottom in London; writing by Herbert Lash; Editing by Leslie Adler)