GLOBAL MARKETS-Stocks, euro rise on German ruling; gold off

* Gold drops a day after posting record high

* Swiss franc holds near central bank's target

* U.S. crude oil up more than 3 percent (Updates prices, adds comment, Nikkei futures)

By Rodrigo Campos

NEW YORK, Sept 7 (Reuters) - World stocks and the euro rallied on Wednesday and gold slid from a record high as a court ruling supported the German government's efforts to bail out the crisis-stricken euro zone.

The European debt crisis has grown more fraught in recent weeks and efforts within Germany to stop Europe's largest economy from helping to stabilize the region have pressured risky assets such as stocks.

The ruling from its top court cleared the way for Germany to contribute more to the euro zone's rescue fund. But it also gave the country's parliament a greater say over bailouts, which could potentially hamper Germany's ability to act decisively if the debt crisis worsens.

"This (ruling) just falls in the category of modestly positive news. But when you have a market that is so geared to any new development, even modestly positive news can have a great effect," said Rick Meckler, president of investment firm LibertyView Capital Management in New York.

The MSCI world equity index <.MIWD00000PUS> rose 2.8 percent a day after after hitting its lowest since Aug. 22. The index is still down about 9 percent for the year.

Gold prices fell as the sharp rally in stocks prompted investors to take profits after the precious metal's rally to record highs in the previous session. Spot gold dropped 2.6 percent to $1,811.60 in New York.

The euro gained 0.6 percent versus the U.S. dollar, boosted by the German court ruling, and the dollar index <.DXY> fell 0.6 percent against a basket of major currencies.

The German court decision "is an excuse to book some profits from the last few days but it's not really a game changer," said Omer Esiner, chief markets analyst at Commonwealth Foreign Exchange in Washington.

Global markets have been volatile of late as investors have periodically taken heart from signs that Europe has carved out a plan to deal with its sovereign debt crisis, but implementation has been rocky and slow.

Afflicted countries like Italy and Greece have been reluctant to push through austerity measures demanded by their partners, while other nations, such as Germany, have grown more reluctant to provide aid.

European stocks <.FTEU3> gained 3.1 percent, having hit a two-year low on Tuesday. U.S.-dollar denominated Nikkei futures rose 1.5 percent.

With little more than an hour of trading left on Wall Street, the S&P 500 <.SPX> was up 32.06 points, or 2.75 percent, at 1,197.30.

U.S. crude oil rose to a five-week high bolstered by the slow recovery in production after a tropical storm and the threat of further disruptions due to rough weather.

The Swiss franc, which along with gold had been the safe-haven of choice for investors, held close to the 1.20 per euro target set on Tuesday by the Swiss central bank to weaken the franc and prevent a recession.

U.S. President Barack Obama is due to lay out a job-creation package on Thursday and G7 finance ministers and central bankers meet in Marseilles, France this weekend to discuss measures to boost global economic growth.

"A lot of investors are thinking about the president's upcoming speech and whether or not he can say or do something that will be seen positively," LibertyView's Meckler said. "I don't think it will be bold enough; I don't think many investors want to be short before the speech."

U.S. Treasury debt prices fell as traders booked profits from a recent rally and as higher stocks undermined the safe-haven value of U.S. government debt.

The benchmark 10-year Treasury note was last trading 19/32 lower in price to yield 2.04 percent, up from 1.98 percent late Tuesday. (Reporting by Rodrigo Campos; additional reporting by Nick Olivari; editing by Dan Grebler)