* Euro zone talks awaited, markets expect Irish bailout
* World stocks set to fall for seventh straight session
* Possible Chinese tightening weighs on commodities
* For a TAKE A LOOK on Ireland, click on []
(Updates with European markets close)
By Walter Brandimarte
NEW YORK, Nov 16 (Reuters) - World stocks fell for the
seventh straight session on Tuesday as growing tensions about
Europe's debt problems and expectations of tighter credit in
China weighed on commodity prices and hurt investor sentiment.
The U.S. dollar remained at a seven-week high against major
currencies as anxiety about the outcome of Ireland's debt
crisis sent the euro below $1.35.
Ireland's bond yields rose while euro zone finance
ministers discussed in Brussels a solution for the crisis. The
officials were weighing a rescue package of 80 billion to 100
billion euros for the country, the Wall Street Journal
reported, but Dublin resisted a state bailout, saying that only
its banks may need help.
"There's a global concern that if Ireland needs aid, it
could become a domino effect with other countries," said Cort
Gwon, director of trading strategies and research at FBN
Securities in New York.
"Especially at such a sensitive time in the economy to have
a setback in Europe could mean a setback for the rest of the
world, too."
The premium investors demand to hold Irish government bonds
rather than German benchmarks <IE10YT=RR> <DE10YT=RR> widened
to 587.5 basis points from around 562 basis points at Monday's
settlement. The cost of insuring against debt default in
Ireland, Portugal and Greece also crept higher.
World stocks fell 2.08 percent according to the MSCI
All-Country World Index <.MIWD00000PUS>. The index has lost
more than 4.0 percent since Nov. 5, when it closed higher for
the last time.
In Europe, the FTSEurofirst 300 <> index of top
shares ended down 2.3 percent at 1,086.61 points.
The Dow Jones industrial average <> was down 199.09
points, or 1.78 percent, at 11,002.88, while the Standard &
Poor's 500 Index <.SPX> lost 20.86 points, or 1.74 percent, to
1,176.89. The Nasdaq Composite Index <> declined 43.73
points, or 1.74 percent, at 2,470.09.
The euro <EUR=> slipped 0.77 percent to $1.3478 as anxiety
about Ireland eclipsed a stronger-than-expected reading of
German ZEW institute's economic sentiment index.
"What's the driving the euro is just all the sovereign risk
out of Europe," said Jack Iles, a portfolio manager at MFC
Global Investment Management in Boston. "That's driving
sentiment across the board for risk assets and that probably
will not go away in the next 48 hours."
The dollar rose 1.0 percent versus a basket of major
currencies, according to the U.S. Dollar Index <.DXY>.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Euro zone debt graphic: http://r.reuters.com/hyb65p
Ireland's bailout graphic: http://r.reuters.com/wuv48p
FX futures positioning: http://r.reuters.com/kus26k
ECB bond buy graphic: http://r.reuters.com/zeq88n
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
CHINESE TIGHTENING
Chinese shares <> sank nearly 4.0 percent to a
one-month low on reports that China will unveil food price
controls and crack down on commodity speculation to contain
inflationary pressure. []
The reports increased expectations that China will further
tighten monetary policy to help fight inflation. Commodity
prices fell as a result, as China is one of the world's top
consumers of raw materials.
U.S. crude oil prices <CLc1> lost 2.77 percent to $82.51
per barrel, while spot gold prices <XAU=> fell 1.95 percent, to
$1,342.40.
The Reuters/Jefferies CRB Index <.CRB> of commodities
futures was down 2.73 percent.
Benchmark 10-year U.S. Treasury yields <US10YT=RR>
recovered from Monday's selloff and rose 11/32 in price,
sending the yield down to 2.9188 percent.
Investors bought Treasuries again on news that core U.S.
producer prices fell unexpectedly in October, supporting the
case for the Federal Reserve's program of bond repurchases.
(Additional reporting by Ryan Vlastelica, Ellen Freilich and
Nick Olivari; Editing by Kenneth Barry)
