* Dollar, treasuries jump after North Korea shells South
* Irish debt crisis puts euro under heavy pressure <EUR=>
* U.S., European, Asian stocks fall
* Book-squaring before U.S. Thanksgiving accelerates decline
* Coming Up: API oil inventory data; 2130 GMT
(Adds detail, comment, updates prices)
By Christopher Johnson
LONDON, Nov 23 (Reuters) - Oil fell below $81 on Tuesday as
the dollar gained after an exchange of artillery fire between
North and South Korea and as the euro fell on fears Ireland's
debt crisis might lead to problems elsewhere in Europe.
North Korea fired dozens of artillery shells at a South
Korean island on Tuesday, killing two soldiers and prompting
return fire, in one of the heaviest attacks on the South since
the Korean War cease-fire in 1953. []
European and Asian stock markets as well as U.S. stock
futures fell while 10-year Treasury futures <TYc1> rose as
tensions between the two Koreas added to global economic worry.
U.S. crude for January <CLc1> fell $1.46 to a low of $80.28
per barrel but then recovered some ground and by 1411 GMT was
trading around $81, after losing 71 cents on Monday. ICE Brent
<LCOc1> was down $1 at $82.96 a barrel.
Oil and commodities often move inversely to the dollar,
partly because many of them are priced in the U.S. currency.
The euro came under further pressure as political
uncertainty in Ireland and worries about other heavily indebted
members of the 16-nation euro zone snuffed out optimism over a
bailout plan for Dublin. [] []
Analysts said the Korean shelling and Irish meltdown had
come at a time when risk aversion could be expected to rise
anyway ahead of the Thanksgiving weekend in the United States.
"REDUCTION OF RISK"
"We are in front of a very long weekend," Olivier Jakob at
Petromatrix said. "Long weekends usually lead to short-covering,
but the recent political uncertainties in Ireland and the
military escalation between North and South Korea would plead
for reduction of risk in front of the holidays."
"Given that the main area of growth is out of emerging Asia,
the escalation of tensions between North and South Korea is not
a positive development for oil markets," Jakob added.
Christopher Barret, global oil analyst at French bank Credit
Agricole, said the flight to safety in financial markets could
be hastened by end-year acounting by some funds.
"A lot of funds are clearing positions for reporting
purposes at this time of the year anyway and this will encourage
them to reduce exposure even more quickly," Barret said.
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For a map showing the loaction of the artillery exchange on
the Korean peninsula, click: http://link.reuters.com/wyh76q
For a graphic of the components of Reuters Jeffries CRB
Index of commodities, click: http://link.reuters.com/kew48n
For links to stories on Europe's debt crisis: []
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The European Union urged Ireland on Tuesday to adopt an
austerity budget on time in order to receive an EU/IMF bailout
despite calls for an immediate general election that could
disrupt the rescue. []
Expectations of a drawdown in U.S. crude stocks, reflecting
demand in the world's top energy consumer, could support prices.
Industry data from the United States due at 2130 GMT is
expected to show a third week of decline for crude inventories
following a surprise heavy drawdown in the previous week, a
Reuters poll showed on Monday. []
The market is also keeping an eye on the political situation
in Saudi Arabia as the country's ageing King Abdullah arrived in
the United States for medical treatment on Monday, while a frail
Crown Prince Sultan hurriedly returned from abroad to govern the
world's largest oil exporter. []
(Additional reporting by Florence Tan in Singapore; editing by
Keiron Henderson)
