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European stock markets also looked set to rise, with Britain's FTSE 100 seen up 0.2 percent and Germany's DAX called 0.3 percent higher.

But weakness in U.S. S&P futures could blunt any gains. The September contract was down 0.5 percent by 1:45 a.m. EDT.

Most in the market do not expect the meeting between French President Nicolas Sarkozy and German Chancellor Angela Merkel at 10 a.m. EDT on Tuesday to lead to substantial progress in solving the euro zone's debt troubles.

The German government sees no major breakthrough at the Paris talks, a spokesman said on Monday, while the French president's office said the creation of common euro zone bonds will not be on the agenda.

"Sovereign debt concerns remain a persistent negative for the (euro), as the EU's latest attempt at delivering a comprehensive solution to the region's vulnerabilities has disappointed investors," analysts at Standard Chartered said in a research note.

The euro slipped slightly to $1.4414, after holding just below a three-week high against the dollar earlier in the morning and after rising 1.4 percent on Monday ahead of the summit.

Traders were also awaiting German and euro zone second-quarter GDP data at 2 a.m. EDT and 5 a.m. EDT, respectively.

Japan's Nikkei was little changed, giving up earlier gains, while MSCI's index of Asia ex-Japan stocks rose 1 percent, largely as Korean shares caught up to regional gains on Monday, when Seoul markets were closed for a holiday.

EURO

Many experts say the only way to ensure affordable financing for the euro zone's most struggling, debt-laden countries would be for the bloc to issue joint eurobonds.

But even if a common euro zone bond were issued, it would not end the euro zone's debt woes at a stroke.

"There still hasn't been debate about just how much issuance would be possible and just how much issuance the German public would be okay with," said Makoto Noji, senior bond and currency strategist for SMBC Nikko Securities in Tokyo.

The dollar index against a basket of major currencies edge dup 0.2 percent.

Against the yen, the dollar traded around 76.84, down from more than 80 yen earlier in August.

EQUITIES

Asian shares drew succor on Tuesday from news that Google has offered to buy Motorola Mobility Holdings Inc for about $12.5 billion. The deal helped push up major Wall Street indexes by as much as 2.2 percent.

The MSCI Asia ex-Japan index had lost around 14 percent over the past two weeks, part of a global market rout in which billions of dollars were wiped off share indexes.

Pranay Gupta, chief investment officer Asia Pacific at ING Investment Management, said Asia's corporate sector is struggling despite the region's strong economic fundamentals, due to debt woes in the United States and Europe, and the appreciation of Asian currencies.

"The anomaly that we have today is that companies in Asia are facing a much more uphill struggle both on the sales front and on the margins front given that demand from the West is waning," he said.

He said that the ING Investors Dashboard Pan-Asia (ex-Japan) Sentiment Index, a measure of private investor confidence in the region, had dropped 11 percent in the second quarter compared to last year's third quarter.

The S&P 500 last week hit its lowest in nearly a year after the first-ever downgrade of U.S. sovereign credit ratings, but have since rebounded almost as sharply.

Gold, seen by many as a safe store of value in turbulent financial markets, is one of the best-performing assets this year. It traded at $1,765 per ounce on Tuesday, down a touch from Monday's close and around $50 off its peak.

U.S. crude oil futures slipped 58 cents to $87.30 per barrel after a $2 rise on Monday.

(Additional reporting by Masayuki Kitano, Frederik Richter and Kevin Plumberg; Editing by Kim Coghill)

French President Nicolas Sarkozy and German Chancellor Angela Merkel meet in Paris from 1400 GMT (10 a.m. EDT) to discuss what further measures they can take to contain Europe's debt crisis, which is now spreading to the continent's core. A joint news conference is due at 1600 GMT (12 p.m. EDT).

Italy has been forced to ramp up its austerity measures and financial market jitters hit France last week with French banks' shares subject to panic selling on rumors that the country could be next to lose its prized AAA debt rating.

Many experts say the only way to ensure affordable financing for the bloc's most financially distressed countries would be for the euro area to issue joint eurobonds -- although officials in Paris and Berlin said Tuesday's talks would not address that possibility.

Although the German government has long opposed the idea, support is beginning to emerge, with the country's export association saying on Monday that all other means of fighting the crisis had run out.

Italian Economy Minister Giulio Tremonti said on Saturday that eurobonds would be the best solution to Europe's debt crisis , and some economists say that the euro zone will inevitably come around to accepting the idea.

"EURO ZONE COLLAPSE"

French economist Jacques Delpla, who co-authored a paper proposing how eurobonds could work, said the euro zone faced collapse unless leaders went beyond an agreement reached at a July 21 emergency summit on the debt crisis.

"If we just stick to the July 21 agreement then, before the end of the year, there will be no euro zone, unless the ECB buys everything that's problematic."

Eurobonds aside, Sarkozy and Merkel will focus on proposals to improve the euro zone's economic governance, which they told fellow leaders in the bloc at last month's summit that they would issue by the end of August.

In particular, they could discuss holding regular euro zone summits, as France has long sought, or ways of improving peer monitoring of fiscal policies.

At the July summit, euro zone leaders agreed to a second bailout package for Greece and to give their European Financial Stability Facility rescue fund broader powers, but the moves provided only a brief respite in the debt crisis.

Economist Frederic Bonnevay at French think-tank Institut Montaigne said more radical measures were needed even if they did not include eurobonds for now.

"The size and powers of the EFSF need to be expanded dramatically -- that's a secret to no-one," he said, suggesting that its firepower should be raised to as much as one trillion euros from 440 billion euros ($635 billion) currently.

Sarkozy, who broke off his summer holiday last week to deal with the market meltdown in French stocks, is to meet with Prime Minister Francois Fillon over lunch to fine tune France's position before he meets Merkel.

(Additional reporting by Nicholas Vinocur and Patrick Vignal; Editing by Jon Boyle)

The acquisition of one of the mobile telecommunications industry's most storied names is Google co-founder Larry Page's boldest move since taking over as CEO in April, launching the Internet giant into a lower-margin manufacturing business and pitting it against many of the 38 other handset companies that now use its Android software.

Motorola Inc was split this year into two: Motorola Mobility, which got the faster-growing cellphone and TV set-top box businesses; and Motorola Solutions, which sells gear like walkie-talkies to corporate and government clients.

Google is paying a massive 63 percent premium to gain access to one of the mobile phone industry's largest patent libraries. The company had been under pressure to build a patent portfolio after losing out to Apple, Microsoft Corp and others in a recent auction of bankrupt Nortel's assets.

Unlike the Nortel deal and others, the fact that Google avoided having to compete in an auction for Motorola by engaging in exclusive negotiations for the company underscores the pressure it was under to bolster its patent portfolio. Paying such a rich premium even though it was the only buyer dovetails with analysts' view that the increasingly litigious posture its competitors have taken over intellectual property left the Internet search giant with no choice but to pay up.

"No matter how you think about this, you have to look at it through the spectrum of the Android ecosystem under incredible attack from an IP (intellectual property) perspective. And this is Google going out and trying to fix that," said W.P. Stewart Advisors Chief Investment Officer Jim Tierney. "The biggest implication here is that Google wants Android to be one of the dominant phone operating systems for years to come."

Wall Street quickly anointed Microsoft a winner in this deal, with Windows benefiting should the move spur current Android partners to explore other options.

The deal also stoked speculation that struggling Nokia and Research in Motion would become takeover targets themselves, sending Nokia's shares up 17.35 percent and RIM's up 10.3 percent.

Google made its first foray into hardware by co-developing the Nexus One phone with HTC in 2010 -- an effort that met mixed results. Monday's deal, however, could mark the start of a shift to an Apple-style model, integrating mobile hardware with underlying software.

"Google decided to cross the Rubicon on the device side," said Fred Huet, head of telecoms and media consultancy Greenwich Consulting. "There has been growing frustration (at Google) about the lack and speed of internet centric devices.

"With Nexus they tried to show the industry what they thought was the right evolution for handsets and it did not have an impact .... With the patents they make sure that Android stays strong."

THE MORE THINGS CHANGE ...

The acquisition is likely to draw even closer regulatory scrutiny than usual, with the search leader already the subject of antitrust inquiries. Experts will want to review how it affects mobile industry competition.

But the deal -- which took Wall Street by surprise -- appears to mark a shift in strategy from Google's traditional Internet search and advertising empire and forays into video and social networking.

"The danger is that other handset makers feel disenfranchised," said Nomura Securities global technology specialist Richard Windsor. "Motorola is the weaker player. This could actually collapse the entire community."

Page, who also launched the ambitious Google+ social network since taking over as CEO, reassured investors on Monday this would not happen, saying Motorola will be run as a separate company licensing Android software in the same way as rivals like HTC Corp and LG Electronics.

Phone makers including Samsung officially said they welcomed a deal that will aid their own legal battles, but some analysts questioned the sincerity of those claims, noting that rival companies would now be unlikely to heavily promote Android since it would benefit a direct competitor.

Andy Lees, president of the Windows Phone Division at Microsoft, said in a statement that, "Investing in a broad and truly open mobile ecosystem is important for the industry and consumers alike, and Windows Phone is now the only platform that does so with equal opportunity for all partners."

Some analysts also doubt that Google will continue manufacturing handsets in the long term.

"We don't think they necessarily want to be in the handset business. They want those patents first and foremost," said Brian Pitz, an analyst at UBS. "This is really a game of protection."

Analysts say that Google's rivals are likely to continue to enforce their patent rights on mobile devices through legal means. Microsoft, for instance, recently settled a lawsuit with HTC over the Taiwanese company's Android devices. Oracle is also seeking billions of dollars from Google for infringing on Java patents. Analysts expect Apple to continue its increasingly effective patent war against its rivals as well, which could hurt Google by potentially raising licensing costs that need to be paid to Apple.

While Apple's iPhone leads in market prestige and is considered more innovative, Android has managed to quietly surpass it in market share. Android held a 43.4 percent share of the smartphone market at the end of the second quarter, ahead of Nokia's 22 percent, according to Gartner data. Apple ranked third with 18 percent, the data showed.

Shares of Motorola Mobility jumped more than 55 percent on the news, while Google shares fell by roughly 1 percent.

The deal values Motorola Mobility at $40 per share in cash, a 63 percent premium to its Friday closing price. The terms of the deal also features an unusually rich reverse breakup fee of $2.5 billion, according to a source close to the situation.

"It's a deal that will take time to pay off, but they have a lot of cash and they want to chase after profit," BGC Partners analyst Colin Gillis said.

The deal delivers a windfall for investors including Carl Icahn, Motorola's top shareholder with a stake of just over 11 percent. The activist shareholder had been urging Motorola to look into splitting off its patent business -- one of the biggest in the industry -- from its handset business, ranked eighth in the world by Gartner in terms of unit sales. In late July, Icahn even went so far as to estimate that Motorola could be worth $44 per share, or $13 billion in a sale.

Despite cashing out for $4 less than what he estimated the company was worth, Icahn said he was "quite happy with this result."

It's unclear how much Icahn spent on his stake in Motorola since he started scooping up shares in 2007, but regulatory filings indicate it may have been about $3 billion. His stake in Motorola Mobility is worth about $1.34 billion at the deal price, up by $520 million since Friday. Including his stake in Motorola Solutions, Icahn's total stake is about about $2.9 billion in the two companies.

INTO THE LIVING ROOM

As part of the deal, Google also gets Motorola's set-top box businesses, giving its nascent TV operation a much-needed boost by providing it with a more direct route into the home.

Bernstein analyst Craig Moffett noted that Google, a frequent disrupter of the pay-television market via its ownership of YouTube and launching of over-the-top TV products that allow consumers to get streaming video in the home, will now be one of its largest suppliers.

"It will be fascinating to see whether this tempers their enthusiasm for disruptive business models as they have to face the practical realities of satisfying their cable customers," said Moffett. "I think the cable industry would be delighted to see Google inside the tent."

Google said it expects the deal to close by the end of 2011 or early in 2012, and that it was confident it would gain the regulatory approvals required in the United States and Europe and the blessing of Motorola Mobility's shareholders.

Others aren't so sure.

"The legal question here is would this deal give Google the incentive to make Android less open or somehow discriminate against the other smart phone and tablet makers," said Beau W. Buffier, a lawyer with Shearman & Sterling LLP. "That will be the key issues in any review both here in the U.S. or in Europe."

The fact that the deal has the support of other major mobile device players who have a stake in the matter should help Google in the regulatory process.

Lazard advised Google on the deal, while Motorola used Centerview Partners and Frank Quattrone's Qatalyst Partners, sources told Reuters.

(Additional reporting by Sayantani Ghosh in Bangalore, Nadia Damouni, Phil Wahba and Franklin Paul in New York, Lilly Kuo in Washington; Writing by Edwin Chan; Editing by Peter Lauria, Richard Chang, Phil Berlowitz)

In its biggest deal to date, Google said it would pay $40 per share, a 63 percent premium to Motorola Mobility's Friday closing price on the New York Stock Exchange.

"What it says is that Google wants to provide a total experience that's hardware and software (like Apple)," said BGC Partners analyst Colin Gillis.

Shares of Motorola Mobility, which focuses on smartphone and TV set-top boxes, jumped 59 percent in premarket trade on Monday.

Google, maker of the Android mobile phone operating system software, has been forging ahead in the smartphone market but has been hampered by a lack of intellectual property in wireless telephony.

Earlier this month, fresh from losing a bid to buy thousands of patents from bankrupt Nortel, Google Chief Legal Officer David Drummond blasted Microsoft, Apple, Oracle and "other companies," accusing them of colluding to hamper the increasingly popular Android software by buying up patents.

The Motorola Mobility deal may represent a victory for activist investor Carl Icahn, Motorola's biggest shareholder. He has urged Motorola to consider splitting off its patent portfolio to cash in on surging interest in wireless technology. As of July, Icahn held an 11.36 percent stake in the company.

Google said the deal will close by the end of 2011 or early in 2012 and that it will run Motorola Mobility as a separate business.

Lazard advised Google on the deal, while Motorola used Centerview Partners and Frank Quattrone's Qatalyst Partners, sources told Reuters.

(Reporting by Franklin Paul in New York and Sayantani Ghosh in Bangalore; additional reporting by Nadia Damouni and Phil Wahba in Ne; Editing by Saumyadeb Chakrabarty and John Wallace)