(Adds Europe opening, updates prices)
* European shares open up, Asia steady
* Euro near two-month lows on debt crisis
* Nikkei down; JGB futures gain
* Flight to safety supports gold
By Alex Richardson
SINGAPORE, Nov 24 (Reuters) - Shares in Asia and Europe
steadied on Wednesday from a sell-off following North Korea's
deadly shelling of a South Korean island, but tension on the
divided peninsula supported safe-haven assets such as gold and
Japanese government bonds.
The euro clawed away from a two-month low, but remained on
the back foot amid concerns that a rescue package for Ireland
would not be enough to stop a debt crisis from picking off
more of the euro zone's most heavily indebted nations.
European stock markets rose from a six-week closing low,
with the FTSEurofirst 300 up 0.4 percent in early
trade. London's FTSE 100 rose 0.7 percent, Germany's
DAX 0.5 percent and France's CAC 40 0.6
percent.
S&P 500 futures <SPc1> rose 0.4 percent, pointing to a
possible bounce in U.S. markets later in the day.
While Tuesday's artillery attack was one of the most
serious incidents on the peninsula since the end of the Korean
War in 1953, market reactions to North Korean sabre-rattling
or outright aggression have tended to be short-lived.
[]
The Korean won recouped most of its early losses to
finish down around 0.5 percent on the day and South Korean
stock <KSc1> and bond <KTBc1> futures rose, indicating longer
term investors saw a chance to snap up bargains.
Seoul's benchmark index finished down only 0.2
percent, off earlier lows, with foreign investors net buyers
of stocks.
"Korea trades at a discount to the region on a valuation
basis ... If you look back at the last five years when we've
had scares they were all seen as buying opportunities," said
Todd Martin, Asia equity strategist with Societe Generale.
"The rule among hedge funds and long-only funds is that
you let the market sell off and watch for your entry point."
Japan's Nikkei share average fell 0.8 percent,
retreating from a five-month high and catching up with
regional markets after a break for a public holiday on
Tuesday.
MSCI's broadest index of Asia Pacific shares outside Japan
was flat, with gains in Hong Kong ,
Shanghai and Singapore offsetting falls in
Australia and South Korea.
U.S. stocks slid on Tuesday, rattled by the Korean
flare-up and debt woes in Europe, to which U.S. banks have
significant exposure. The S&P 500 index dropped 1.4
percent and the CBOE Volatility Index , Wall Street's
"fear gauge", jumped 12.3 percent, its largest daily
percentage gain in more than three months.
Japanese government bond futures bounced from a two-month
low, with the 10-year benchmark <2JGBv1> up 0.14 point.
"Tensions in Korea are debt-positive in the short-run,
spurring investors away from riskier assets," said Koichi Ono,
a senior strategist at Daiwa Securities Capital Markets.
EYES ON IRISH
Currency markets remained more focused on Europe, where
Ireland's beleaguered coalition was due later in the day to
set out a four-year plan to save 15 billion euros through
spending cuts and tax increases.
The bursting of a property bubble has taken Ireland's
banks to the brink if collapse and shredded the finances of a
government that agreed to back the lenders' liabilities.
Now investors fear a debt crisis that had already swamped
Greece will spread further. The premium on Spanish government
bond yields over German benchmarks rose to a euro lifetime
high on Tuesday.
"Perhaps the market may be already expecting Portugal to
ask for some sort of help. But if Spain also needs a rescue,
that would be a big blow to the euro," said Ayako Sera, market
strategist at Sumotomo Trust and Banking.
The euro slumped 1.9 percent on Tuesday to as low
as $1.3359 and was trading around $1.3390 on Wednesday. A
downgrade for Ireland from ratings agency Standard and Poor's
did not dent the euro further, indicating it may have found
support for now.
"The fact the euro didn't fall further on the downgrade
suggests the euro's drop may be over, at least for the
short-term," said Sumino Kamei, a senior analyst at the Bank
of Tokyo-Mitsubishi UFJ. []
The dollar index , which measures its performance
against a basket of currency, eased 0.2 percent on the day,
but remained not far from an eight-week high hit on Tuesday.
Gold was steady around $1,377 an ounce after
reaching a 1-1/2 week high of $1,382 in the previous session.
U.S. crude oil futures <CLc1> rose 44 cents, around 0.5
percent, to $81.69 a barrel.
Copper rose more than 1 percent in London and
Shanghai SCFc3, recouping most of Tuesday's losses, but
sentiment remained brittle amid concerns over Korea, the
European debt crisis and the prospect of more Chinese monetary
policy tightening.
"There is a lot of anxiety around, the inclination is to
run for cover at any hint of a problem," said one trader in
Hong Kong. "Our strategy is to keep positions light and be
ready to get out quickly."
(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 Kim Coghill)
