* Euro extends decline toward $1.36 on Irish fiscal crisis
* Commodities broadly retreat as U.S. dollar rebounds
* Copper bulls still see the rally continuing later
* Asian stocks shed up to 0.9 percent on profit taking
By Kevin Plumberg
HONG KONG, Nov 12 (Reuters) - The euro fell on Friday on
fears that Ireland may need a bailout just like Greece, while a
sharp decline in commodities and stock prices hastened a broad
retreat from risky assets.
Asian stocks were broadly lower, led by a 5 percent drop in
the Shanghai composite index -- its biggest single-day decline
since May -- on lingering talk of more interest rate increases
and a scramble out of resource-related shares.
Plain old profit taking was also the culprit after a
months'-long rally in many markets.
This year has been difficult for many investors because of
the sudden shifts in risk taking on everything from the
sovereign debt crisis in Europe, fears of both a slowdown and
overheating in China and worries about the U.S. double dipping
back into recession, causing havoc to trading strategies.
As a result, many investors may be prone to take profits --
or losses -- and wait for 2011.
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For more on the Ireland's debt woes, click
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For more on the G20's struggle for progress, click
[]
For more about the selloff in China, click
[]
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The possibility of a government bailout for Ireland has
significantly widened the difference of bond yields of
high-risk European countries over those of Germany, and
overshadowed a Group of 20 leaders' summit in Seoul, where a
breakthrough on resolving economic imbalances amid incongruent
policies appeared unattainable. []
"The effects of euro zone peripheral bond concerns are
spreading through euro zone markets and hitting risk appetite
in the process. The euro is a clear casualty, having dropped
further against the U.S. dollar and versus other currencies,"
Mitul Kotecha, global head of currency strategy with Credit
Agricole CIB in Hong Kong.
The resurgence of fears about Europe's sovereign debt has
added to a shift back into dollars and out of riskier assets.
Traders slowed their selling of euros a bit after knocking
the currency down 4 cents in the past week, squaring up before
a statement about Ireland that may be issued by Britain and
France later in the day. []
The euro was down 0.3 percent against the U.S. dollar at
$1.3625 <EUR=> after tumbling 0.9 percent on Thursday.
A close below the 200-week moving average of $1.3647 is a
grim omen for the euro and paves the way to the next obstacle
lower at $1.3558, the Sept. 30 low.
The dollar was down 0.2 percent against the yen, at 82.34
yen <JPY=>.
The dollar has been rebounding ever since the Federal
Reserve unveiled its $600 billion plan to buy Treasuries last
week Wednesday. The dollar index <.DXY>, which measures the
dollar's performance against a basket of other major
currencies, has risen 3.3 percent since then to a 5-week high.
COMMODITISED NEWS
Commodities traders had barely blinked at the dollar's
gains earlier in the week but prices succumbed to profit taking
on Friday. Historical chart patterns also suggested a deeper
move lower was in the cards for metals.
Three-month copper traded on the London Metal Exchange was
down 2.2 percent to $8,630.50 a tonne <CMCU3> after hitting a
record high of $8,966 on Thursday.
The corrective move lower could ultimately continue to
$8,553, the 50 percent retracement of the rise to $8,966 from
$8,140.
U.S. crude futures fell 1.8 percent to $86.31 a barrel
<CLc1>, though were still up 5.9 percent so far in November,
having risen for the past two months.
Equities in Asia were mostly softer, with mainland Chinese
markets chalking up the biggest declines, though strategists
were generally not concerned about the longer-term outlook.
"Dollar strong, Asia weak. I think there's much beyond
that," Markus Rosgen, Asia equity strategist with Citi in Hong
Kong, said.
"After this week, investors just don't want to hold a lot
of inventory over the weekend ... So sell on Friday and come
back Monday."
The MSCI index of Asia Pacific stocks outside Japan was
down 1.7 percent <.MIAPJ0000PUS>, with financials and telecom
sectors under the most selling pressure. The index is on the
way to its biggest weekly drop since July, down 3.2 percent.
It has had a strong inverse relationship with the dollar
over the past few months, with the rolling 90-day correlation
between the MSCI index and the dollar index at -0.95, meaning
basically when one falls, the other rises and vice versa.
The Hang Seng index <> was down 1.6 percent, with bank
stocks weighing on the market.
Japan's Nikkei share average was down 1.4 percent <>
but was still poised to post a 1 percent rise on the week.
Some stocks such as Canon Inc <7751.T> that led the Nikkei
higher this week were the main drags on Friday, suggesting
profit taking was an element weighing on the market.
(Additional reporting by Reuters FX Analyst Krishna Kumar)
(Editing by Kim Coghill)
