(Updates with Europe opening)
* Treasuries, dollar up on Korean artillery exchange
* Irish debt crisis puts euro under pressure
* European, Asian stocks fall, U.S. futures down
* Metals, oil fall on dollar strength
By Alex Richardson
SINGAPORE, Nov 23 (Reuters) - The dollar rose broadly,
U.S. Treasuries gained and European and Asian shares and U.S.
stock futures fell on Tuesday after a major exchange of
artillery fire on the Korean peninsula.
The euro and commodities also dropped as a bailout for
debt-soaked Ireland failed to allay fears of a wider euro zone
crisis.
North Korean artillery fired dozens of shells onto a South
Korean island near their disputed sea border, killing one
marine, setting fire to buildings and prompting a return of
fire by the South, Seoul's military and media reported.
[]
"The market was already quite nervous given the failure of
the Irish bailout package to calm sentiment towards other
peripheral countries," said Mirza Baig, senior currency
strategist with Deutsche Bank in Singapore.
"Bad news on geopolitics may add fuel to this trend
towards position-squaring."
Seoul's financial markets closed as news was still
filtering through 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 79.12.
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> . Gold , another safe haven, reversed
earlier losses to jump to a one-week high.
The Korean won tumbled in offshore markets
and the yen eased.
European markets, which financial bookmakers had been
calling flat before the Korean news broke, opened down, with
the FTSEurofirst 300 down 0.4 percent, Britain's FTSE
100 down 0.6 percent and France's CAC down 0.7
percent.
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.
SHARES DIVE
Asian stock markets that were still trading when the
Korean news broke extended the day's losses, pushing MSCI's
index of Asia Pacific shares outside Japan
down 2.2 percent. Tokyo markets were
closed for a holiday.
Shares in Hong Kong and Mumbai fell more
then 2 percent.
Australian shares , which closed earlier, 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.
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.
The euro traded around $1.3565, 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 113.50
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 62 cents, or nearly 0.8
percent, to trade at $81.12 a barrel, gold
fell around 0.5 percent and copper and zinc were also
weaker.
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http://blogs.reuters.com/globalinvesting; for the MacroScope
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(Editing by Tomasz Janowski)
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