* European debt concerns not quelled, stocks drop
* Flight-to-safety trade boosts U.S. Treasuries, USD
* Euro hits 2-month low versus U.S. dollar
* Yen weakness gives Japanese exporters life, lifts Nikkei
(Updates prices, adds comment, European market close)
By Daniel Bases
NEW YORK, Nov 29 (Reuters) - Global stocks fell and the greenback
rose as investor optimism about Ireland's 85-billion-euro ($115 bln)
debt bailout grew stale, exposing the unappetizing prospect Europe's
fiscal problems will linger.
The safety trade's early domination on Monday faded as U.S.
Treasury price gains, as well as the U.S. dollar's advances, were
trimmed, giving some space for gold and oil prices to rebound.
Evidence of promising U.S. consumer spending for the end-of-year
holiday shopping season is providing little counterweight so far.
Retail stocks had moved higher in anticipation of the weekend sales,
leaving them vulnerable to a sell-off. []
"This seems to be more of a macro sell-off based on fears of
what's happening in Europe," said Angel Mata, managing director of
listed equity trading at Stifel Nicolaus Capital Markets in
Baltimore.
"A lot of people don't understand the ramifications here. If
Europe is having these systemic problems, it brings the question of
whether our economic recovery is put on hold." Mata said.
While France and Germany hailed the Irish bailout as a rescue of
the euro and set a course for a permanent debt resolution system, the
currency dropped to a two-month low against the U.S. dollar.
[]
The rescue package was designed both to help Ireland and to stop
a rolling crisis from moving on to Portugal and, perhaps, Spain.
Yields on Irish government bonds are higher than Friday's close and
off their lows seen in early trade after the agreement was sealed on
Sunday.
The spreads between Spanish and Italian bonds versus their German
equivalent widened to euro-lifetime highs as optimism for the Irish
deal waned.
Credit default swap costs on Portugal and Spain both hit record
highs on Monday on fears that they may be next in line to struggle
with their debt.
In midday New York trade, the Dow Jones industrial average <>
fell 115.91 points, or 1.04 percent, to 10,976.09, slipping below the
psychologically significant 11,000 mark. The Standard & Poor's 500
Index <.SPX> lost 10.31 points, or 0.87 percent, to 1,179.09. The
Nasdaq Composite Index <> dropped 28.17 points, or 1.11 percent,
to 2,506.39.
European shares closed at a seven-week low, with banks among the
casualties. The FTSEurofirst 300 <> index of top European
shares slid 1.6 percent to 1,069.24.
Japan's Nikkei benchmark index <> closed at a five-month
high as the weakening yen helped support the shares of the country's
big exporting companies. []
MSCI'S All-Country World Index <.MIWD00000PUS> fell 0.99
percent.
EURO SLUMP, TREASURIES RISE
The euro's respite was brief in the early hours of Monday's
global trading day. The deal for Ireland, endorsed by the EU finance
ministers, also includes provisions that could make private
bondholders share the burden of restructuring sovereign debt after
2013. []
After rising as high as $1.3302 <EUR=>, one euro bought $1.3097
-- or 1.08 percent less than what could be exchanged on Friday.
"Investors are concerned that European policy-makers are putting
out brush fires rather than solving the issue at hand," said Paresh
Upadhyaya, head of Americas G10 FX Strategy at Bank of America
Merrill Lynch in New York.
"Investors are rightly concerned about contagion. This bailout
may resolve Ireland's problems, but it doesn't address that of
Portugal and Spain," Upadhyaya said.
The dollar rose 0.71 percent to 80.930 against a basket of major
trading-partner currencies <.DXY>.
The greenback rose 0.24 percent to 84.30 yen <JPY=>.
Sentiment remained fragile with a sale of Italian bonds meeting
lukewarm demand and highlighting investors' unease about euro-zone
debt. []
The spread between the Italian 10-year BTP and the German 10-year
Bund widened to 195 basis points, according to Tradeweb data. The
spread between Spanish 10-year bonds and the German 10-year Bund
widened to 276 basis points, 22 basis points up on the day.
The benchmark 10-year U.S. Treasury note <US10YT=RR> rose 10/32
of a point in price, pushing the yield down to 2.835 percent. U.S.
Federal Reserve purchases, part of the central bank's quantitative
easing program, were also cited as a reason for the gains.
[]
Spot gold <XAU=> rose $4.82 to $1,366.55 an ounce, while U.S.
crude oil for January delivery <CLc1> rose $1.59, or 1.9 percent, to
$85.36 per barrel.
(Reporting and writing by Daniel Bases; Additional reporting by
Jeremy Gaunt, Kirsten Donovan, Anirban Nag, Atul Prakash, Karen
Brettell, Amanda Cooper, Gertrude Chavez-Dreyfuss; Editing by Jan
Paschal)
