Euro zone finance ministers, the International Monetary Fund and the European Central Bank will gather again on Monday after nearly 12 hours of talks through the night failed to reach a consensus on how to bring Greece's debt down.

Since the meeting ended, French Finance Minister Pierre Moscovici said a deal was just "a whisker away", while European paymaster Germany said a plan to provide Greece with funding until 2016 was being developed.

The euro, which initially fell 0.5 percent after the meeting on Greece broke up, recovered slightly to be down 0.3 percent at $1.2775.

"The old worries about the euro zone show investor sentiment remains on a knife edge", said Richard Hunter, head of UK equities at Hargreaves Lansdown.

The euro area's blue chip stock index, the Euro STOXX 50 .STOXX50E, fell 0.3 percent at the start of trading, but recovered some of the losses to stand down 0.2 percent at 2,504.57 points. .EU

In the main European centres the German DAX .GDAXI was down 0.1 percent, while France's CAC-40 .FCHI and London's FTSE 100 .FTSE were down 0.2 percent. .L

Efforts by politicians to convince markets a deal was possible on Monday also led to a reversal in demand for safe-haven German bonds, and the main Bund futures contract erased all its gains to be down 3 ticks at 142.35.

FED WARNING

World equity markets had already been rocked before the Greek delay by a warning from Federal Reserve Chairman Ben Bernanke on Tuesday that the central bank lacked the tools to cushion the impact of a potential U.S. fiscal crisis.

The Fed chief said worries over how the current budget negotiations, aimed at preventing a series of mandatory tax increases and spending cuts early next year, had already damaged growth in the world's largest economy.

Bernanke's comments snapped a two-day rally on Wall Street, but gains in Asian markets and the recovery in European shares left MSCI world equity index .MIWD00000PUS unchanged at around 324 points.

U.S. stock futures were down 0.2 percent, pointing to another weak day on Wall Street when it opens for its last session before the Thanksgiving holiday.

Asian shares had initially fallen in reaction to the Greek news but recovered to close with small gains due to a rise in mainland Chinese markets and in Tokyo.

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS gained 0.3 percent, while Japan's Nikkei stock average .N225 closed up 0.9 percent at a two month-high.

YEN WEAKNESS

The Nikkei's gains came as shares in exporters rose after the yen hit a seven-month low against the dollar on expectations that a new government will aggressively push the Bank of Japan to expand monetary stimulus.

The yen hit a low of 82.12 to the dollar, its weakest level since early April.

The euro's decline and the weaker Japanese yen lifted the dollar by 0.3 percent against a basket of key currencies .DXY, which weighed on commodities such as gold, which fell 0.25 percent to $1,723.40 an ounce.

In the oil market Brent crude was steady near $110 per barrel as any concerns about the lack of aid to Greece were offset by fears of supply disruption from the Middle East, where Palestinians and Israelis continued to trade rockets and air strikes despite overnight truce talks.

"There are opposing forces where the uncertainty in Europe and the United States meets with the bullish uncertainty in the Middle East ... so I think we're going to see a volatile market," said Jeremy Friesen, commodity strategist at Societe Generale in Hong Kong.

Brent crude futures were up 15 cents at $109.98 a barrel, off an earlier session-high of $110.55. U.S. crude rose 19 cents to $86.94.

(Additional reporting by Jessica Jaganathan; Editing by Will Waterman)

• A Permanent Economic Emergency