* Uncertainty on fiscal assistance plan for Greece
* Markets unconvinced a bailout would solve Greek problems
* Bernanke outlines measures to withdraw stimulus, dlr up (Adds comments, updates prices)
By Wanfeng Zhou
NEW YORK, Feb 10 (Reuters) - The euro fell against the dollar on Wednesday, weighed down by uncertainty a day before a European Union summit about a possible bailout of debt-strapped Greece.
The dollar gained after U.S. Federal Reserve Chairman Ben Bernanke said policy makers may raise the discount rate "before long," boosting expectations the U.S. central bank would start tightening monetary policy earlier than its major counterparts. See [ID:nWEQ003786]
"There's a lot of vacillation on the part of policy makers, and there's a lot of uncertainty leading to the European ministers' meeting tomorrow about whether Germany would be able to help Greece or not," said Samarjit Shankar, managing director of global FX strategy at BNY Mellon in Boston.
"Over the next few weeks, we're looking for the downtrend in the euro to continue," Shankar said. He expects the euro to fall toward $1.35 by the end of the first quarter.
Finance ministers of the 16 countries in the euro zone and the head of the European Central Bank discussed Greece in a conference call on Wednesday, although they made no public comments.
Euro area finance officials said bilateral aid by individual European Union members, chiefly Germany and France, or guarantees for Greek debt issues appeared the most likely solution, but they cautioned that no decision was imminent on the form of assistance. See [ID:nLDE6190UP]
In late trading, the euro <EUR=> fell 0.4 percent to $1.3728, after hitting a session low of $1.3678, according to Reuters data.
The single currency had climbed a full 1 percent on Tuesday and pulled further away from an 8-1/2-month trough around $1.3580 hit last week.
Some analysts were unconvinced a bailout, if there were one, would solve all of Greece's problems. Concerns about the fiscal positions of similarly debt-impaired euro zone countries such as Portugal and Spain also made investors wary.
"I don't think the market is wholeheartedly embracing the idea that with a possible bailout, the worst is behind Greece or the euro zone," said Vassili Serebriakov, senior currency strategist at Wells Fargo in New York.
"Even if the bailout does come, it's probably a bad signal for the euro zone in the sense that seemingly bad behavior is being encouraged," he added.
In his most comprehensive description to date of how the Fed aims to withdraw its stimulus, Bernanke said the U.S. central bank could soon raise the discount rate it charges banks for emergency loans, but stressed that would not be akin to a tightening in monetary policy. See [ID:nN10166741]
"At the margin, the market is taking him as being slightly more hawkish," said Jacob Oubina, senior currency strategist at Forex.com in Bedminster, New Jersey.
"He said that the Fed may opt to raise the discount rate 'before long.' That's being construed as dollar-positive because it suggests the Fed will be more aggressive than, say, the ECB, or the Bank of England ... in terms of tightening policy."
The dollar reversed losses against the yen and last traded at 89.96 yen <JPY=>, up 0.4 percent.
Against a basket of currencies<.DXY>, the dollar index rose 0.3 percent to 80.080.
Sterling fell broadly after the Bank of England released dovish inflation forecasts and left open the door to extending quantitative easing. See [ID:nLDE61924L]
The pound last traded down 0.8 percent at $1.5579 <GBP=>, while the euro rose 0.4 percent to 88.10 pence <EURGBP=> (Additional reporting by Gertrude Chavez-Dreyfuss; Editing by Leslie Adler)