* Sterling rises versus euro which toils on Greek bailout worries * Pound gains some support from declining QE expectations * But stays within sight of three-week low versus firmer dollar By Neal Armstrong LONDON, Feb 16 (Reuters) - Sterling gained against the euro on Thursday as the common currency suffered from delays to a second Greek bailout and the pound was also supported by fresh questions as to whether there would be further UK monetary stimulus. Sterling was down slightly on the day versus the dollar however and within sight of a three-week low hit earlier in the week when ratings agency Moody's put the UK's prized triple-A sovereign status on negative watch. The euro was last down 0.3 percent on the day at 83.00 pence. Support was at this month's low of 82.64, with traders saying a break below there would expose the year's low of 82.22. A three-hour teleconference between euro zone finance ministers late on Wednesday failed to resolve all the issues surrounding a second aid package for Athens, putting off any decision on the matter until Feb. 20 at the earliest "Time is definitely running out for Greece and that's been hitting the euro but we think euro/sterling could be getting stretched. Our fair value estimate is at 80 pence," said Ankita Dudani, currency strategist at RBS. The pound was garnering some support from the Bank of England's quarterly inflation report released the previous day when an upward revision to the BoE's two-year inflation forecast reduced expectations for more monetary stimulus. However, BoE Governor Mervyn King said there were downside risks to a UK economic recovery given the tight fiscal conditions at home and weakness in Britain's major trading partners. "The report wasn't hawkish enough to rule out more QE completely and our economists are sticking with a 50 billion pound extension in August," said Dudani. "It's slightly positive for sterling on the margins but there's still literally no growth to speak of in the UK." Sterling was down 0.1 percent against the dollar at $1.5670, not far from Tuesday's three-week low of $1.5644. A downturn in risk sentiment triggered by concerns over the Greek bailout delays hit riskier assets and lent the dollar broad support. The UK's high exposure and trade links to the euro zone were expected to limit sterling's gains and many analysts remain bearish about its prospects in the months ahead. "The market remains on course for $1.5603/1.5580, the 55-day moving average and the 50% retracement of the move up from January. We would expect to see the market consolidate around here but then look for a break lower," said Commerzbank technical analysts in a note. British consumer confidence rose in January to its highest level since August as people's view of the outlook six months ahead grew more upbeat, a survey by lender Nationwide showed on Thursday. The improvement in consumer morale supports the Bank of England's view that consumption will help underpin the economy later this year as a fall in inflation eases the squeeze on household budgets. (Editing by Anna Willard)

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