GLOBAL MARKETS-Global stocks edge up, oil falls ahead of OPEC

* Global stocks edge higher as U.S. stocks waver

* Oil drops after OPEC says demand contracting fast

* Chinese comments on credit-worthiness weigh on bonds

(Recasts with U.S. markets, changes dateline; previous LONDON)

By Herbert Lash

NEW YORK, March 13 (Reuters) - Global stocks edged higher in choppy trade on Friday for a fourth straight day, taking away a safety bid for the dollar and U.S. government debt, but investor sentiment on Wall Street remained far from buoyant.

Stocks around the world as measured by MSCI's all-country stock index <.MIWD00000PUS> were on track to post one of their best weeks in 20 years, up about 8 percent for the week.

The banking sector pushed European stocks higher after comments from Citigroup and Bank of America they would not need more U.S. government money.

Oil fell to almost $46 a barrel as the stock market dropped and traders awaited potential further production cutbacks from a meeting of the Organization of Petroleum Exporting Countries this weekend in Vienna.

U.S. stocks traded near break-even. A decline would snap their best three-day romp since late November. Hopes of recovery in the ailing banking system had propelled stocks higher, but lingering doubts dampened the rally.

Banking shares weighed on U.S. equity markets. The S&P financial index <.GSPF> shed 1.2 percent, while the KBW Bank index <.BKX> fell 3 percent.

"There's no tangible news (on banks), just profit taking off of huge moves this week," said Bobby Harrington, head of block trading for UBS in Stamford, Connecticut.

Before 2 p.m., the Dow Jones industrial average <.DJI> was up 2.47 points, or 0.03 percent, at 7,172.53. The Standard & Poor's 500 Index <.SPX> was down 0.41 points, or 0.05 percent, at 750.33. The Nasdaq Composite Index <.IXIC> was down 5.75 points, or 0.40 percent, at 1,420.35.

Citigroup gained 6 percent after Chairman Richard Parsons told Reuters late on Thursday the bank did not need more government aid. But long-standing worries about how to clean up banks' toxic assets resurfaced, taking the steam out of a morning rally on Wall Street.

European shares rose for a fourth straight day. The FTSEurofirst 300 <.FTEU3> index of top European companies closed 0.8 percent higher at 702.12 points, its first close above 700 since the end of February.

The dollar rose against the euro in choppy trade as market sentiment turned negative with the fall in U.S. stocks, prompting a safe-haven retreat to the U.S. currency.

Better-than-expected U.S. economic data and signs that the U.S. banking sector may be stabilizing helped U.S. stocks gain early in the session.

"The dollar rally here versus the euro is all about stocks. Sentiment has turned in fits and starts," said Brian Dolan, chief currency strategist at Forex.com in Bedminster, New Jersey.

"All that is happening right now is a reality check and investors are asking whether this is really the bottom here. But conviction is really low and that's why we're seeing perpetual setbacks like this," he added.

The dollar rose against a basket of majorcurrencies, with the U.S. Dollar Index <.DXY> up 0.02 percent at 87.491. Against the yen, the dollar was up 0.28 percent at 98.03.

The euro fell 0.17 percent to $1.2887.

U.S. Treasury debt prices turned higher after the week's mammoth rally in stocks ran out of steam.

Euro zone government bonds fell, pushing futures to a one-month low, as rising European stock prices helped to whet risk appetite and prompt investors to dump less-risky fixed income assets in volatile trade. [ID:nLD939710]

U.S. Treasuries also wavered. Stark remarks on U.S. credit-worthiness from Chinese Premier Wen Jiabao, who expressed anxiety over the "security of our assets," rattled markets and weighed on debt.

"I really don't think you're going to see a true floor in this market until we get a comprehensive plan on the finance sector," said Peter Jankovskis, director of research at OakBrook Investments LLC in Lisle, Illinois.

The benchmark 10-year U.S. Treasury note fell 5/32 to yield 2.88 percent. The 2-year U.S. Treasury note gained 2/32 in price to yield 0.98 percent.

U.S. crude futures slipped in choppy trading on weak demand forecasts from the Organization of Petroleum Exporting Countries and the International Energy Agency. But the market was cautious ahead of a possible output cut when OPEC meets Sunday.

Some analysts said the energy markets appeared tracking Wall Street, which fell back after early gains on growing confidence of a stabilization in the banking sector.

U.S. light sweet crude oil fell 1.98 percent to $46.10 a barrel.

Spot gold prices rose 0.12 percent to $927.75 an ounce.

Overnight in Asia stocks rose, with Japan's Nikkei <.N225> gaining 5.1 percent, its biggest weekly gain of the year. The MSCI index of Asia Pacific stocks outside Japan <.MIAPJ0000PUS> rose 3.2 percent. (Reporting by Ellis Mnyandu, Gertrude Chavez-Dreyfuss, Pedro Nicolaci da Costa and Burton Frierson in New York; Doug Palmer in Washington; Joanne Frearson, Paul Lauener and Jan Harvey in London; and Marcin Grajewski in Brussels; writing by Herbert Lash, Editing by Chizu Nomiyama)