* U.S. shares fall, 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 European markets' close, U.S. Fed bond
purchases)
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.
U.S. stocks were off 1 percent after five straight weekly
gains as commodity and energy shares took a beating on concerns
that changes in Chinese monetary policy might slow the pace of
its voracious appetite for raw materials.
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 the event of a new
euro zone bailout. []
"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.
U.S. Treasuries' prices fell sharply after the first day of
purchases by the U.S. Federal Reserve as part of its new $600
billion bond-buying program to stimulate the U.S. economy.
"Bears are still in charge," said Lou Brien, market
strategist at DRW Trading in Chicago. "They were waiting for
the purchase results and saw no surprises. Then they started
selling again."
Losses for benchmark 10-year U.S. Treasuries doubled after
the results, falling a full point in price and pushing the
yield to a two month high of 2.745 percent <US10YT=RR>.
Spot gold and crude oil prices suffered their biggest drop
in a month, despite the U.S. dollar's weakness.
In the afternoon, the Dow Jones industrial average <>
was down 109.33 points, or 0.97 percent, at 11,173.77. The
Standard & Poor's 500 Index <.SPX> was down 16.38 points, or
1.35 percent, at 1,197.16. The Nasdaq Composite Index <>
was down 43.60 points, or 1.71 percent, at 2,511.92.
The pan-European FTSEurofirst 300 <> index of top
shares closed down 0.43 percent at 1,103.99 points.
Shanghai's stock market <> 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. []
Tokyo's Nikkei 225 index <> 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 1.22 percent.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
For more on Ireland's debt woes, click []
For more on the G20, see []
For more about the selloff in China, click []
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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. []
"The rumors that the EU may come out with a support package
for Ireland has led to a bout of short-covering. Investors are
very short Ireland," said Nick Stamenkovic, an interest rate
strategist at RIA Capital Markets.
"Most of the long-term players will just be sitting on the
sidelines. There's so much volatility in the market, they don't
want to get involved until the situation clarifies," he said.
The premium demanded to hold Irish 10-year bonds over
German bonds narrowed from record high levels. []
In the currency markets, the euro was up 0.22 percent at
$1.3685 against the dollar <EUR=>, having earlier hit a
six-week low of $1.3573 on EBS trading platform.
The dollar cut its losses versus the yen, pulling just
above even on the day at 82.54 <JPY=>. Against major
currencies, the greenback fell 0.09 percent at 78.15 <.DXY>.
Crude oil <CLc1> fell $3.05, to $84.76 per barrel. Spot
gold prices <XAU=> lost $44.30 to $1364.60 an ounce.
(Additional reporting by Jessica Mortimer, Anirban Nag, Emelia
Sithole-Matarise, 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)
