* Euro remains under pressure on fears debt crisis may
spread
* Stocks give up more ground on profit taking before year
end
* U.S. Treasuries firm, gold edges up on safe haven support
By Sanjeev Miglani
SINGAPORE, Nov 30 (Reuters) - The euro struggled on
Tuesday and Asian stocks fell as fears that Ireland's fiscal
problems could spread to other weak euro zone countries
weighed on investor sentiment.
Adding to the bearish tone, data early in the day showed
factories in Japan and South Korea cut output in October,
highlighting the fragile nature of the global economic
recovery heading into 2011. []
The euro ticked up in early trade but quickly retreated to
$1.3100, just below late U.S. levels. Selling intensified
after it broke through its crucial 200-day moving average at
$1.3128.
Dealers said the single currency may pull back further on
fears that Portugal and Spain may be the next fiscally weak
European countries to be engulfed by the region's debt
problems, after a rescue package was agreed for Ireland at the
weekend.
Italian and Spanish 10-year
bond yields jumped by more than 20 basis points on Monday --
their biggest daily rise in more than a decade -- highlighting
the lack of confidence in the European Union's ability to deal
with the crisis.
"You probably have more selling to come through. Movements
in European bond yields were savage last night ... and that's a
reflection of the concern that is evident in the market. I
don't think this is over just yet," said Richard Grace,
a currency strategist at Commonwealth Bank.
The euro has fallen about 6 percent against the
dollar this month alone and is on track for its biggest
monthly fall since May, when it fell 7.5 percent.
Uncertainty over Europe and profit taking ahead of the
year end also continued to erode confidence in equities, with
Japan's Nikkei sliding 1.9 percent and the MSCI
ex-Japan index falling 0.7 percent.
China's key stock index fell 3.1 percent by
midday, weighing on Hong Kong , as tight liquidity in
the domestic money market and fears of more central bank
policy tightening prompted retail investors to sell heavily
weighted financial and resource stocks.
Purchasing managers surveys on Wednesday are expected to
show China's manufacturing sector continued to expand at a
solid rate in November, but stronger-than-expected readings
could prompt authorities to take more aggressive tightening
steps to curb inflationary pressures.[]
"Investors are dumping shares because they are afraid of
rate increases down the road," said Alfred Chan, chief dealer
at Pearl Investment. "Banks are not going to be lending money
as liberally as they wish because the government has capped
lending for next year. Corporate earnings will be restricted."
U.S. Treasuries rose in Asia, adding to the previous day's
rally, as investors turned to government debt as a safe haven
from the recent flare-up in volatility.
Spot gold was a touch higher at $1,367 an ounce,
while oil prices gave up some of their Monday gains to trade
down 54 cents at $85.19 per barrel. NYMEX crude futures <CLc1>
rose more than 2 percent on Monday off the back of a rally in
heating fuel after cold weather gripped Europe.
(Editing by Kim Coghill)
(Sanjeev Miglani@ThomsonReuters.com; Reuters Messaging
sanjeev.miglani.reuters.com@reuters.net; +65 6870 3815))
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