* 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.
European shares rose in early trade, however, bouncing
back from eight-week closing lows in the previous session
after U.S. stocks finished softer but well off their lows
overnight.
The FTSEurofirst index of leading regional stocks
advanced 0.4 percent.
But financial markets in Asia were weighed down by
concerns over Europe's festering debt problems as well as data
showing Japanese and South Korean factories cut output last
month, highlighting the fragile nature of the global economic
recovery heading into 2011. []
Strong Asian growth, particularly in China, has been one
of the few bright spots for the world economy this year,
giving ailing developed economies a much-needed boost in
exports to the Far East and buoying commodity prices.
The euro wobbled but managed to hold above a 10-week low
of $1.3064 hit on Monday on trading platform EBS,
helped by short-term oversold technical signs. But it slid to
its lowest in 10 weeks against the yen and the Swiss franc
as investors moved into so-called safe-haven
currencies.
Dealers said the single currency may pull back further on
fears that Portugal and Spain may soon be the next fiscally
weak European countries to be engulfed by 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.
Profit taking ahead of the year-end also continued to erode
equities, with Japan's Nikkei sliding 1.9 percent and
the MSCI ex-Japan index falling 0.4 percent.
The Nikkei, though, still gained 8 percent in November,
its best monthly performance since March, helped by a global
rally in stocks which took off in late summer.
China's key stock index fell 1.6 percent to close
at a seven-week low, 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.
The Shanghai index has fallen 5.3 percent this month after
rising 12 percent in October.
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 slipped, retracing part of the sharp gains in the
previous session.
U.S. crude for January <CLc1> fell 18 cents to $85.55 a
barrel after rising $1.97 on Monday on the back of a rally in
heating fuel as 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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