* Euro falls to level not seen since last May on Greek woes
* Market awaits EU summit after euro zone talks fizzle
* Portugal downgrade heightens aversion to riskier assets
* Stronger dollar dents commodities, oil
By Nick Macfie
SINGAPORE, March 25 (Reuters) - The euro fell to a new 10-month low against the dollar on Thursday as Portugal's credit downgrade added to worries about debt in Greece and elsewhere in Europe, hitting riskier assets such as shares and commodities.
European stocks were expected to reflect the concerns about euro zone sovereign debt, with spreadbetters predicting Britain's FTSE 100 <.FTSE> would open 2 to 4 points lower, Germany's DAX <.GDAXI> would open 12 to 13 points lower and France's CAC-40 <.FCHI> would start trading unchanged.
Investors are waiting for an EU summit, beginning on Thursday, for signs of assistance for Athens after efforts to arrange a special euro zone meeting failed, with France and Germany discussing what role the IMF might play. [nLDE62N2R1]
"Germany does not want to have a meeting of euro zone leaders unless there is a definite chance for a deal," an EU diplomat said.
Worried by the signals this would send, another envoy said: "If there is no meeting of euro zone leaders, we can expect markets to see that negatively as a sign that the Europeans are unable to reach an agreement (on Greece)."
The euro fell below $1.3300, with triggered stop-loss orders exacerbating its decline. It dropped as far as $1.3283 on trading platform EBS, the lowest since May 2009, and was trading around $1.3305
The euro is expected to remain weak unless the EU manages to break the deadlock over how to help Greece, a trader at a Japanese bank said.
"Sentiment for the euro has further deteriorated as it still looks as if euro zone nations are in a state of chaos over a rescue plan," the trader said.
The MSCI index of Asian shares outside Japan <.MIAPJ0000PUS> fell 0.3 percent, with Hong Kong shedding more than 1 percent, as concerns about Europe prompted investors to move out of riskier assets.
But Japan's benchmark Nikkei average <.N225> edged up 0.13 percent as exporters such as Canon Inc <7751.T> were supported by a weaker yen, offsetting weakness in commodity related shares.
Lorraine Tan, director of Asia equity research at S&P in Singapore, pointed to Portugal and concern about other possible downgrades.
Regional issues such as worries about more policy tightening in China were also taking a toll on sentiment, she added.
"You have to take a mid-term view," she said. "The markets are at a crossroads" in need of additional impetus, such as an improving corporate outlook.
Khiem Do, head of the Asia multi-asset group at Baring Asset Management in Hong Kong, said the markets were worried about the "domino effect" of what happens in Greece if investors turn on other countries with shaky finances.
They were also "perhaps a little bit concerned about how long the monetary normalisation process is going to last in strong economies like India and China".
A survey of U.S. investment managers conducted by Russell Investments suggests enthusiasm for the markets voiced at the end of 2009 has waned slightly.
Most notably, manager bullishness dropped 21 percentage points for non-U.S. (developed market) equities in the company's quarterly survey.
"The pain experienced during the global financial crisis is still very vivid, and investment managers are reacting strongly to any negative news -- whether it be the developments in Greece or the marginally negative economic reports that began the year in the United States," said Erik Ogard, director, Client Investment Strategies, at Russell Investments.
Wall Street fell overnight as the Portugal downgrade and a weak U.S. Treasury note auction fanned worries about sovereign debt, eclipsing data showing U.S. durable goods orders rose for the third straight month, which confirmed its economic recovery was on course. [.N]
The Dow Jones industrial average <.DJI> closed down 0.48 percent, while the Standard & Poor's 500 Index <.SPX> was down 0.55 percent.
The dollar held its strength, underpinned by views that a rise in U.S. yields could come quickly on the prospect that the Federal Reserve will further unwind liquidity measures.
The dollar index, a gauge of its performance against other major currencies, was trading marginally higher at 82.002 <=USD> <.DXY>, after touching a 10-month high of 82.026 on Wednesday as the euro skidded.
Against the yen, the dollar slipped to 92.08 yen
Spot gold
U.S. crude for May delivery
Shanghai's benchmark third-month copper futures contract
Asian sovereign credit default spreads broadly widened on concerns about the fiscal health of euro zone countries. A weak response at an auction of U.S. Treasuries, to which much of the region's credits are benchmarked, also dragged on sentiment. [US/] (Additional reporting by Timothy Heritage in Brussels, Satomi Noguchi in Tokyo and Umesh Desai in Hong Kong) (Editing by Kim Coghill)