GLOBAL MARKETS-Irish debt worries ease, euro up, stocks fall

                                
  
                                
 * Wall Street opens down, commodity and energy shares drop
                                
 * Irish debt concerns ease as EU leaders offer reassurance
                                
 * Euro up from six-week low, European shares slip
                                
 * Chinese shares drop sharply, heightened concern on rates
 (Updates with U.S. markets, changes dateline from LONDON,
byline)
                                
 By Daniel Bases
                                
 NEW YORK, Nov 12 (Reuters) - Irish debt concerns and the
potential for Chinese rate hikes to fight off inflation knocked
stocks, bonds and commodity prices lower on Friday as investors
booked profits heading into the weekend.
                                
 The euro, however, was given a reprieve, rising from
six-week lows as European leaders reiterated to bondholders
they would not be forced to take losses in any debt
restructuring.
                                
 "The fact that euro zone officials said Irish bond holders
don't have to take a haircut on their existing positions is
supportive for the euro," said Omer Esiner, chief market
analyst at Commonwealth Foreign Exchange.
                                
 A statement from France, Germany, Italy, Spain and Britain,
issued at the Group of 20 summit in Seoul said bondholders
would not be forced to write down their bond holdings in the
event of a new euro-zone bailout. [ID:nTOE6AB04P]
                                
 U.S. Treasuries' prices remained lower during the first
purchases by the Federal Reserve as part of its new $600
billion bond-buying program to stimulate the U.S. economy.
                                
 Benchmark 10-year U.S. Treasuries fell 17/32 of a point in
price, driving the yield up to 2.69 percent <US10YT=RR>.
                                
 Materials and commodity-related shares led the downturn in
U.S. markets. Spot gold and crude oil prices suffered their
biggest drop in a month.
                                
 At midmorning, the Dow Jones industrial average <.DJI> was
down 88.17 points, or 0.78 percent, at 11,194.93. The Standard
& Poor's 500 Index <.SPX> was down 13.14 points, or 1.08
percent, at 1,200.40. The Nasdaq Composite Index  <.IXIC> was
down 28.02 points, or 1.10 percent, at 2,527.50.
                                
 The pan-European FTSEurofirst 300 <.FTEU3> index of top
shares was down 0.69 percent at 1,101.08 points.
                                
 Shanghai's stock market <.SSEC> suffered the worst loss in
over 14 months after rumors swept through the market that
further monetary tightening was imminent to stem rising Chinese
 prices, especially in the housing sector. [ID:nTST000631]
                                
 Tokyo's Nikkei 225 index <.N225> fell 1.4 percent from a
4-1/2 month closing high in the previous session.
                                
 Looking broadly, the MSCI All-Country World index
<.MIWD00000PUS> fell 1.02 percent.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
For more on Ireland's debt woes, click [ID:nTOE6AB04P]
For more on the G20, see [ID:nN11196971]
For more about the selloff in China, click [ID:nTOE6AB04G]
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 RUMOR AND DENIAL
                                
 Ireland's debt problems, much like the rest of peripheral
Europe, are keeping investors on edge despite the denial from
leaders that bondholders were at risk.
                                
 Sources told Reuters on Friday that Ireland is in talks to
tap emergency funds from the European Financial Stability
Facility that would allow investors to avoid taking a loss on
their investments. [ID:nBRU011130]
                                
 The premium demanded to hold Irish 10-year bonds over
German bonds narrowed from record high levels.
                                
 Spreads between 10-year Irish bond yields and German
benchmarks fell nearly 100 basis points, ending a fierce
two-week bout of peripheral debt selling which has raised
concerns about the stability of the currency zone and hammered
the euro. [ID:nLDE6AB0UX]
                                
 But nervousness about Ireland and other troubles in
peripheral euro zone countries kept yield spreads elevated,
with the premium for holding Spanish and Italian over German
bonds rising to euro lifetime highs in early trade.
                                
 "On the G20 we should get more communication over the
weekend. I don't think we can expect the world will be fixed,
but what we want is a feeling that the worst will be avoided,"
Philip Isherwood, European equities strategist at Evolution
Securities, said.
                                
 In the currency markets, the euro was up 0.43 percent at
$1.3686 against the dollar <EUR=>, having earlier hit a
six-week low of 1.3573 on EBS trading platform.
                                
 The dollar fell 0.25 percent to 82.31 against the yen
<JPY=>. Against major currencies, the greenback was off 0.32
percent at 77.965 <.DXY>.
                                
 U.S. light sweet crude oil <CLc1> fell $2.26, to $85.55 per
barrel, and spot gold prices <XAU=> fell $31.16 to $1377.70.
 (Additional reporting by Jessica Mortimer, Anirban Nag,
Kirsten Donovan, Jan Strupczewski, Lorraine Turner, Padraic
Halpin, Joanne Frearson, Aiko Hayashi, Chikafumi Hodo, Emily
Flitter, Farah Master, Nick Olivari, and Chuck Mikolajczak;
Editing by Kenneth Barry)