* Treasuries, dollar up on Korean artillery exchange
* Irish debt crisis puts euro under pressure
* Asian stocks fall, following Wall Street decline
* Metals, oil fall on dollar strength
By Alex Richardson
SINGAPORE, Nov 23 (Reuters) - The dollar and U.S.
Treasuries rose and U.S. stock futures fell on Tuesday after a
major exchange of artillery fire on the Korean peninsula.
The euro, stocks and commodities also fell as a bailout
for Ireland failed to allay fears of a wider crisis.
North Korean artillery fired dozens of shells onto a South
Korean island near their disputed sea border, wounding several
people, setting fire to buildings and prompting a return of
fire by the South, Seoul's military and media reported.
[]
Seoul's financial markets had already closed but
international markets reacted, with the dollar up 0.4 percent
on the day against a basket of currency. The dollar index
rose from 78.77 before the reports to a
session high of 79.07.
U.S. 10-year Treasury futures, a traditional safe haven,
were up 0.4 percent <TYc1> on the day and U.S. S&P
500 stock index futures were down 0.9 percent
<SPc1> . The won tumbled in offshore markets
and the yen eased.
European markets were seen opening mixed, with the Korean
drama adding to concerns about the euro zone.
As Beijing tightens monetary policy to rein in
inflation, worries of faltering Chinese demand for raw
materials -- in the short term at least -- knocked metals
prices and were another factor hammering shares, particular in
resource-focused Australia.
"Investors seem unable to move beyond European debt
contagion fears and concerns of further China policy
tightening," said IG Markets strategist Ben Potter.
The euro had initially spiked on Monday on news of a
European Union and International Monetary Fund bailout for
Ireland, where a property bust has pushed the nation's banks
to the brink of collapse and blown a hole in the public
finances.
But it swiftly reversed course as the coalition government
in Dublin, deeply unpopular after presiding over the implosion
of an economy dubbed the "Celtic Tiger" for its double-digit
growth in the late 1990s, looked to be facing a struggle to
pass an austerity budget that is a condition of the aid.
[]
The single currency was driven back below $1.36 on
Tuesday as the Irish turmoil stoked fears that a crisis that
has already engulfed Greece will spread to other indebted euro
zone nations, with Portugal and Spain in nervous bond
investors' sights.
"They've addressed the Greek problem, they're addressing
the Irish problem, people are now questioning where is the
next one ... the political turmoil in Ireland also doesn't
help," said Grant Turley, strategist at ANZ in Sydney.
Asian stock markets fell, following declines on Wall
Street the previous day, with MSCI's index of Asia Pacific
shares outside Japan shedding 1.9
percent. Tokyo markets were closed for a holiday.
Australian shares lost 1.2 percent to
hit a seven-week low. Banks and miners led the retreat, with
National Australia Bank down 1.8 percent
and BHP Billiton off 1.7 percent.
The biggest stock market falls were in Hong Kong
and Shanghai , down 2.4
percent and 1.9 percent respectively, where investors dumped
mining and metals stocks.
Moves by the authorities to cool the property market
continued to weigh in Hong Kong, where the property sub-index
fell 3 percent.
On Monday U.S. financial stocks had slid on fears of
exposure to Europe's debt woes and concerns about a broad
insider trading probe. The KBW bank index
fell 1.5 percent and JPMorgan Chase & Co
fell 2.3 percent.
DOWNSIDE RISK
The euro traded around $1.3555, below
Monday's session trough of $1.3574. The single currency had
risen as high as $1.3786 on Monday.
"The fact that sentiment turned so quickly, that the Irish
government is heading towards an election and that Moody's
talked about downgrading Ireland are all not helping," said
Greg Gibbs, strategist at RBS.
"It reveals a lack of underlying demand for European
sovereign and financial assets and point to the downside risk
for the euro."
Against the yen, the euro slipped to around 113.40
from two-week highs near 115.0 yen.
A stronger dollar often weighs on commodity markets,
making assets priced in the U.S. currency more expensive for
holders of other currencies.
U.S. crude oil futures lost 50 cents, or around 0.6
percent, to trade at $81.24 a barrel, gold
fell around 0.5 percent and copper and zinc were also
weaker.
(To read Reuters Global Investing Blog click on
http://blogs.reuters.com/globalinvesting; for the MacroScope
Blog click on http://blogs.reuters.com/macroscope; for Hedge
Fund Blog Hub click on http://blogs.reuters.com/hedgehub)
(Editing by David Fox)
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