* U.S. shares fall, commodity and energy shares drop
* Irish debt concerns ease as EU leaders offer reassurance
* Euro up from six-week low, European shares slip
* Chinese shares drop sharply, heightened concern on rates
(Updates with U.S. markets' close, adds comment)
By Daniel Bases
NEW YORK, Nov 12 (Reuters) - Investors had few places to
hide on Friday as stocks, bonds, and commodities fell on fears
China may raise interest rates while Ireland's dubious debt
position forced European leaders to leap to Dublin's defense.
U.S. stocks snapped a five week winning streak, ending
lower as commodity and energy shares took a beating on concerns
that changes in Chinese monetary policy might slow the pace of
its voracious appetite for raw materials.
The euro was given a reprieve, rising from six-week lows as
officials reiterated to bondholders they would not be forced to
take losses in the event of a new euro zone bailout.
[]
"The fact that euro zone officials said Irish bond holders
don't have to take a haircut on their existing positions is
supportive for the euro," said Omer Esiner, chief market
analyst at Commonwealth Foreign Exchange.
U.S. Treasuries' prices fell sharply after the first day of
purchases by the U.S. Federal Reserve as part of its new $600
billion bond-buying program to stimulate the U.S. economy.
The Fed bought $7.23 billion in Treasury paper maturing in
four to six years on Friday.
"Investors are trying to readjust rates to a better
economic outlook and the prospect of no further QE after the
current program of asset purchases," said Cary Leahey,
economist at Decision Economics in New York.
Benchmark 10-year U.S. Treasury losses tripled after the
results, falling a 45/32 of a point in price and pushing the
yield to a two month high of 2.79 percent <US10YT=RR>.
Spot gold and crude oil prices suffered their biggest drop
in a month, despite the U.S. dollar's weakness.
At the close, the Dow Jones industrial average <> fell
90.52 points, or 0.80 percent, at 11,192.58. The Standard &
Poor's 500 Index <.SPX> lost 14.33 points, or 1.18 percent, at
1,199.21. The Nasdaq Composite Index <> dropped 37.31
points, or 1.46 percent, at 2,518.21.
For the week, the Dow industrials and S&P 500 lost 2.1
percent while the Nasdaq lost 2.35 percent.
The pan-European FTSEurofirst 300 <> index of top
shares closed down 0.43 percent at 1,103.99 points.
Shanghai's stock market <> suffered the worst loss in
over 14 months after rumors swept through the market that
further monetary tightening was imminent to stem rising Chinese
prices, especially in the housing sector. []
"The whole commodity complex is exceptionally weak after
the overnight action in China, and we need to see how it all
plays out," said Tom Samuels, managing partner at Palantir
Capital Management in Houston. "This may be the first seed of
doubt about the healing power of (quantitative easing)."
Tokyo's Nikkei 225 index <> fell 1.4 percent from a
4-1/2 month closing high in the previous session.
Looking broadly, the MSCI All-Country World index
<.MIWD00000PUS> fell 1.03 percent.
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For more on Ireland's debt woes, click []
For more on the G20, see []
For more about the selloff in China, click []
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RUMOR AND DENIAL
Ireland's debt problems, much like the rest of peripheral
Europe, are keeping investors on edge despite the denial from
leaders that bondholders were at risk.
Sources told Reuters on Friday that Ireland is in talks to
tap emergency funds from the European Financial Stability
Facility that would allow investors to avoid taking a loss on
their investments. []
"The rumors that the EU may come out with a support package
for Ireland have led to a bout of short-covering. Investors are
very short Ireland," said Nick Stamenkovic, an interest rate
strategist at RIA Capital Markets.
"Most of the long-term players will just be sitting on the
sidelines. There's so much volatility in the market, they don't
want to get involved until the situation clarifies," he said.
The premium demanded to hold Irish 10-year bonds over
German bonds narrowed from record high levels. []
In the currency markets, the euro was up 0.22 percent at
$1.3685 against the dollar <EUR=>, having earlier hit a
six-week low of $1.3573 on EBS trading platform.
The dollar cut its losses versus the yen, pulling just
above even on the day at 82.54 <JPY=>. Against major
currencies, the greenback fell 0.09 percent at 78.15 <.DXY>.
Crude oil <CLc1> settled down $2.93, to $84.88 per barrel.
Spot gold prices <XAU=> lost $40.71 to $1368.19 an ounce.
(Additional reporting by Julie Haviv, Angela Moon, Jessica
Mortimer, Anirban Nag, Emelia Sithole-Matarise, Jan
Strupczewski, Lorraine Turner, Padraic Halpin, Joanne Frearson,
Aiko Hayashi, Chikafumi Hodo, Emily Flitter, Farah Master, Nick
Olivari, and Chuck Mikolajczak; Editing by Andrew Hay)
