* European debt concerns not quelled, stocks drop
* Flight-to-safety trade boosts U.S. Treasuries, USD
* Euro hits 2-month low versus U.S. dollar
* Yen weakness gives Japanese exporters life, boosts Nikkei
(Updates with U.S. market open, data, comment, changes dateline,
byline)
By Daniel Bases
NEW YORK, Nov 29 (Reuters) - Global stocks fell as investors
lunged for the safety of U.S. Treasuries on Monday, unconvinced
Europe has solved its debt problems with the 85-billion-euro ($115
bln) Irish bailout.
Evidence of promising U.S. consumer spending for the end-of-year
holiday shopping season is providing little counterweight so far.
[]
Spot gold weakened as the dollar rose, but the front-month U.S.
crude oil futures contract fell from an early two-week high although
it managed to hold most of its gains for the day.
While France and Germany hailed the Irish bailout as a rescue of
the euro and set a course for a permanent debt resolution system, the
currency dropped to a two-month low against the U.S. dollar.
[]
The rescue package was designed both to help Ireland and to stop
a rolling crisis from moving on to Portugal and, perhaps, Spain.
Yields on Irish government bonds are higher than Friday's close and
off their lows seen in early trade after the agreement was sealed on
Sunday.
"The total 'risk on' trade is still not back, even though there
was this announcement," said Ira Jersey, interest-rate strategist at
Credit Suisse in New York.
"I think part of it was that the Irish, Spanish and Portuguese
market didn't react the way some people thought they would, with
spreads going wider," he said. "That kept a little bit of a bid in
Treasuries."
U.S. Treasury prices advanced, but were off earlier highs.
The spreads between Spanish and Italian bonds versus their German
equivalent widened to euro-lifetime highs as optimism for the Irish
deal waned.
Credit default swaps protecting Ireland's debt rose by around 9
basis points in cost on Monday to 612 basis points, or $612,000 per
year to insure $10 million in debt for five years, according to
Markit Intraday.
In late morning New York trade, the Dow Jones industrial average
<> fell 135.66 points, or 1.22 percent, to 10,956.34 - dropping
below the psychologically significant 11,000 mark. The Standard &
Poor's 500 Index <.SPX> lost 11.83 points, or 0.99 percent, to
1,177.57. The Nasdaq Composite Index <> dropped 31.05 points, or
1.23 percent, to 2,503.51.
European shares extended losses on fear the bleeding of cash to
repay debt in the peripheral economies may not be stemmed. The
FTSEurofirst 300 <> index of top European shares slid 1.36
percent to 1,071.91 points.
Japan's Nikkei benchmark index <> closed at a five-month
high as the weakening yen helped support the shares of the country's
big exporting companies. []
MSCI'S All-Country World Index <.MIWD00000PUS> fell 1.03
percent.
EURO SLUMP, TREASURIES RISE
The euro's respite was brief in the early hours of Monday's
global trading day. The deal for Ireland, endorsed by the EU finance
ministers, also includes provisions that could make private
bondholders share the burden of restructuring sovereign debt after
2013. []
After rising as high as $1.3302 <EUR=>, one euro bought $1.3093
-- or 1.11 percent less than what could be exchanged on Friday.
"The markets remain concerned about prospects in the euro zone,"
said Matthew Strauss, senior currency strategist at RBC Capital in
Toronto. "If Spain were to apply for a bailout, that would require a
bigger amount because of the size of its economy. And this continues
to weigh on the euro."
The dollar rose 0.73 percent to 80.942 against a basket of major
trading-partner currencies <.DXY>.
The greenback rose 0.24 percent to 84.30 yen <JPY=>.
Sentiment remained fragile with a sale of Italian bonds meeting
lukewarm demand and highlighting investors' unease about euro-zone
debt. []
The spread between the Italian 10-year BTP and the German 10-year
Bund widened to 195 basis points, according to Tradeweb data. The
spread between Spanish 10-year bonds and the German 10-year Bund
widened to 276 basis points, 22 basis points up on the day.
The benchmark 10-year U.S. Treasury note rose 8/32 of a point in
price, pushing the yield down to 2.842 percent. Buying ahead of $39
billion in purchases by the U.S. Federal Reserve, as part of its
quantitative easing program, was also cited as a reason for the
gains.
Spot gold <XAU=> fell $4.08 to $1,359.90 an ounce, while U.S.
crude oil for January delivery <CLc1> rose $1.26, or 1.5 percent, to
$85.02 per barrel
(Reporting and writing by Daniel Bases; Additional reporting by
Jeremy Gaunt, Kirsten Donovan, Anirban Nag, Atul Prakash, Karen
Brettell, Amanda Cooper, Gertrude Chavez-Dreyfuss; Editing by Jan
Paschal)
