* European debt concerns linger, stocks drop
* Flight-to-safety trade boosts U.S. Treasuries, USD
* Euro hits 2-month low versus U.S. dollar
* Nikkei futures point to higher open for Tokyo shares
(Updates prices, adds comment, U.S. market close)
By Daniel Bases
NEW YORK, Nov 29 (Reuters) - Global stocks fell and the greenback
rose as investors' optimism about Ireland's 85-billion-euro ($115
bln) debt bailout waned, exposing the unappetizing prospect that
Europe's fiscal problems will linger.
U.S. Treasuries benefited from both the concerns about Europe's
financial health as well as from bond purchases by the U.S. Federal
Reserve as part of its quantitative easing program.
Share prices in Tokyo are poised to open higher, extending
Monday's five-month closing high. Nikkei futures in Chicago <NKc1>
are up 40 points at 10,105.
The euro hit a two-month nadir against the greenback, cutting
back gold's gains for the day.
But U.S. crude oil futures <CLc1> rebounded, rallying more than 2
percent to settle above $85 a barrel, as a rally in gasoline and
heating oil futures -- plus tensions in the Korean peninsula --
helped spur demand for crude.
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,
which were better than expected. So on Monday, investors took some
profits in the retail sector. []
"Tell me what the euro's going to do and I'll tell you where the
(stock) market is going to go," said Michael James, senior trader at
regional investment bank Wedbush Morgan in Los Angeles.
By the close, the Dow Jones industrial average <> fell 39.51
points, or 0.36 percent, to 11,052.49. The Standard & Poor's 500
Index <.SPX> lost 1.64 points, or 0.14 percent, to 1,187.76. The
Nasdaq Composite Index <> dropped 9.34 points, or 0.37 percent,
to 2,525.22.
U.S. bank and energy stocks outperformed the wider market. The
KBW bank index rose 1.1 percent, helped by Bank of America <BAC.N>,
which climbed 1.5 percent to $11.31,
France and Germany hailed Sunday's Irish bailout as a rescue of
the euro and set a course for a permanent debt resolution system.
[]
The rescue package was designed both to help Ireland and to stop
a rolling crisis from moving on to Portugal and, perhaps, Spain.
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.
European shares closed at nearly an eight-week low, with banks
among the casualties. The FTSEurofirst 300 <> index of top
European shares slid 1.6 percent to end at 1,069.24. The STOXX 600
banking index <.SX7P> fell 1.29 percent.
Japan's Nikkei benchmark index <> closed on Monday at a
five-month high. [] MSCI'S All-Country World Index
<.MIWD00000PUS> fell 0.68 percent.
EURO SLUMPS, 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 to $1.3302 <EUR=>, one euro bought $1.3132 -- or
0.88 percent less than what could be exchanged on Friday.
Analysts expect further losses in the euro, given the uncertainty
surrounding the fiscal outlook of the region's peripheral countries.
The next key target is $1.30 after the euro fell below the 200-day
moving average around $1.3130.
"There is a real possibility the euro could hit $1.30 by the end
of the week," said Omer Esiner, chief market analyst at Commonwealth
Foreign Exchange in Washington D.C.
"Given the momentum already in place, the euro will likely be
between $1.29 and 1.32 at the end of the year," he said.
The dollar rose 0.60 percent to 80.836 against a basket of major
trading-partner currencies <.DXY>.
The greenback rose 0.17 percent to 84.24 yen <JPY=>.
The benchmark 10-year U.S. Treasury note <US10YT=RR> rose 12/32
of a point in price, pushing the yield down to 2.828 percent.
Sentiment remained fragile, with a sale of Italian bonds meeting
lukewarm demand and highlighting investors' unease about euro-zone
debt. []
Irish bond yields reversed an early fall to end the day higher at
9.6 percent and on course to complete the largest monthly rise since
at least 1992, according to Reuters data.
The rising likelihood that Portugal and possibly other euro zone
states will require expensive bailouts and increase the burden on
Germany, hit Bund futures <FGBLc1> which settled 28 ticks lower at
127.07.
U.S. December gold futures <GCZ0> rose $3.60 to settle at $1,366
an ounce.
U.S. crude oil for January delivery <CLc1> added $1.97, or
2.35percent, to settle at $85.73 a barrel, not far below its intraday
high.
(Reporting and writing by Daniel Bases; Additional reporting by
Julie Haviv, Frank Tang, Gene Ramos, Edward Krudy, Jeremy Gaunt,
Kirsten Donovan, Anirban Nag, Atul Prakash, Karen Brettell, Amanda
Cooper, Gertrude Chavez-Dreyfuss; Editing by Jan Paschal)
