Asian shares fell and the euro slipped to a 3-week low on Thursday as another delay in cementing a crucial bailout for Greece underscored how far Europe is from resolving a debt crisis that threatens the stability of the financial system.

A three-hour teleconference between euro zone finance ministers failed to resolve all the issues surrounding a second aid package for Athens, putting off any decision on the matter until Monday at the earliest.

It's not clear whether Athens will be able to secure funds needed to redeem bonds on March 20, said Sumino Kamei, senior analyst at Bank of Tokyo-Mitsubishi UFJ.

Financial bookmakers expected European stocks to follow Asian shares lower, with financial spreadbetters calling the main indexes in London <.FTSE>, Paris <.FCHI> and Frankfurt <.GDAXI> to open down by 0.8 percent to 1 percent. <.EU> <.L>

U.S. Treasuries and the dollar edged up as investors sought safety, while riskier commodities lost ground.

It ... seems that the market is in review mode now after the strong gains in risk assets with investors re-assessing the risks/rewards and reviewing strategies, said Chris Weston, an institutional dealer at IG Markets in Melbourne.

MSCI's broadest index of Asia Pacific shares outside Japan <.MIAPJ0000PUS> fell 1.5 percent, more than wiping out all the gains made in the previous session, when riskier assets such as stocks and emerging Asian currencies rose broadly on hopes Athens would finally be granted the rescue funds.

Japan's Nikkei <.N225> outperformed its Asian peers to record a six-month high, before losing steam to close down 0.2 percent. <.T>

The euro slid 0.4 percent to touch a 3-week low near $1.30 as uncertainty over the bailout package put the single currency under renewed pressure.

Reflecting deep-rooted mistrust of Greece's commitment to deliver reforms in exchange for the rescue, several EU sources said on Wednesday that euro zone finance officials were examining ways of delaying part or even all of the second bailout program while still avoiding a disorderly default.

Delays could possibly last until after the country holds an election expected in April, they said.

A debt swap agreement between Greece and private-sector holders of Greek bonds, however, could go ahead, possibly allowing Greece to avoid missing the March 20 deadline to pay a 14.5 billion euro bond redemption payment.

Greece said it has met all the conditions set by the European Union and the International Monetary Fund for a 130-billion-euro rescue fund needed to meet the vital debt repayment date in March.

As well as hitting stocks, the jitters over Europe put other riskier assets under pressure. Copper lost more than 1.5 percent and oil also fell, while the commodity-linked Australian dollar edged down.

Asian credit markets weakened, another sign of faltering confidence, with the spreads on the iTraxx Asia ex-Japan investment grade index widening by about 5 basis points.

The safe-haven dollar rose 0.2 percent against a basket of major currencies <.DXY>, while the yield on benchmark 10-year Treasury debt eased to 1.91 percent from 1.93 percent in late U.S. trade.

TIRED, NOT AFRAID

But while markets fell, the drop appeared to be limited.

The weakness was neither intense nor broad-based enough to resemble a 'risk-off' event; markets seemed tired, but not afraid, Barclays Capital said in a note.

Data on Wednesday showed the euro zone economy shrank at the end of 2011 and a mild recession was likely as the debt-stricken south reels under the weight of the sovereign debt crisis. Bigger economies France and Germany may remain resilient.

On Wall Street, the CBOE Volatility index VIX <.VIX> or fear gauge, while hovering near a 1-month high, appeared to be capped. The index measures expected volatility in the S&P 500 index <.SPX> over the next 30 days, and its rise is regarded as a sign of increased risk aversion.

Analysts say markets are vulnerable to some corrections after rising since the start of the year in a move largely due to global liquidity injections from central banks aimed at containing the debt crisis and supporting economic growth.

MSCI's Asia ex-Japan stock index has risen nearly 14 percent this year, while the Nikkei has added 9.5 percent and the S&P 500 Index <.SPX> 7 percent.

Gold has gained 10 percent and U.S. crude has climbed nearly 11 percent.

U.S. crude eased 0.3 percent to $101.48 a barrel on Thursday after gaining more than a dollar the day before. Brent crude was little changed around $118.90, after scaling an 8-month high on Wednesday on concerns over supply disruptions.

U.S. data showed a solid underpinning for the economic recovery on Wednesday, with U.S. manufacturing output rising in January, a gauge of factory activity in New York state hitting a 1-1/2-year high in February and optimism among home builders approaching a five-year high this month.

But U.S. stocks eased about half a percent after the Federal Reserve's minutes from its January meeting showed some officials were concerned over high unemployment.

(Additional reporting by Mari Saito in Tokyo and Alex Richardson in Singapore; Editing by Richard Borsuk)

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