* Stocks lower despite Irish financial bailout
* Euro falls on worries of spreading debt problems
* US debt prices rise on risk-aversion, Fed purchases
(Update with U.S. markets' open)
By Manuela Badawy and Naomi Tajitsu
NEW YORK/LONDON, Nov 22 (Reuters) - U.S. stocks fell while
the dollar rose against the euro on Monday as initial optimism
over Ireland's debt bailout gave way to concerns about the
government's future and problems elsewhere in the euro zone.
Safe-haven U.S. government bond prices rose with help from
another round of debt purchases by the Federal Reserve under
its latest plan to aid the U.S. economy.
Gold, oil and other commodities slipped. The euro was off
after it had earlier benefited from Ireland's rescue by the
European Union and the International Monetary Fund aimed at
shoring up its banking and budget crisis.
But the unpopular Irish government began to unravel after a
call by Ireland's junior party for an early election in
January, with the budget in doubt. For details, see
[].
In addition, investors worried the rescue might not be
effective in the long term and wouldn't stop markets from
targeting Portugal, also facing severe debt problems.
[].
"The risk of Ireland is somewhat off the table, but it puts
the risk onto Portugal and possibly Spain, which represents a
much bigger risk for the euro," said Omer Esiner, chief market
analyst at Commonwealth Foreign Exchange in Washington.
Market participants say Portugal may be the next country
forced to seek a bailout, which could reignite concerns about
the stability of the euro zone.
The dollar was up against a basket of currencies, with the
U.S. Dollar Index <.DXY> up 0.06 percent at 78.552.
The euro <EUR=> was down 0.25 percent at $1.365. Against the
Japanese yen, the dollar <JPY=> was down 0.01 percent at
83.44.
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For an overview of Europe's debt struggles, click:
http://r.reuters.com/hyb65p
For an interactive euro zone debt crisis timeline, click:
http://link.reuters.com/nyx95q
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STOCKS SLIP
World stocks fell slightly on uncertainty about the outcome
of Ireland's debt bailout and possible contagion of debt
problems to Portugal and Spain.
The MSCI world equity index <.MIWD00000PUS> was off 0.5
percent while U.S. stocks fell, with the Dow Jones industrial
average <> easing 83 points, or 0.7 percent, at 11,119.
The Standard & Poor's 500 Index <.SPX> fell 8 points, or
0.6 percent, at 1,192 while the Nasdaq Composite Index <>
was off 2 points at 2,516.
Bucking the trend, Apple Inc <AAPL.O> and Amazon.com Inc
<AMZN.O> rose.
Trading volume is expected to be down this week in light of
the U.S. Thanksgiving Day holiday on Thursday.
The FTSEurofirst 300 <> index of top European shares
was down 0.7 percent while the Nikkei average <> ended the
day up almost 1 percent, to a fresh five-month closing high as
receding worries about the yen's strength encouraged a shift
back to Japanese shares by foreign investors.
The cost of insuring Irish sovereign debt against default
rose on political uncertainty, and other peripheral euro zone
credit default swaps were also higher.
The loan package for Ireland is expected to total 80
billion to 90 billion euros while the government puts the
finishing touches to a 15 billion euro ($20.5 billion)
austerity plan.
"Once we have the detail, we will see how well it works.
But I am a little bit afraid that attention will shift towards
Portugal and Spain," said Philippe Gijsels, head of research at
BNP Paribas Fortis Global Markets in Brussels.
U.S. Treasuries rose as investors turned to safe-haven
government debt before another round of government debt
purchases by the Fed.
The benchmark 10-year U.S. Treasury note <US10YT=RR> was up
11/32, with the yield at 2.835 percent. The 2-year U.S.
Treasury note <US2YT=RR> was unchanged with the yield at 0.518
percent. The 30-year U.S. Treasury bond <US30YT=RR> was up
26/32, with the yield at 4.197 percent.
The Fed on Monday will buy $7 billion to $9 billion of
Treasuries in the 10-year maturity range as part of its
quantitative easing program.
While the Fed will be buying again, the Treasury will be
selling, offering $35 billion of 2-year notes as part of $99
billion of securities sales during the holiday-shortened week.
In energy and commodities prices, crude oil <CLc1> fell 71
cents, or 0.87 percent, to $81.27 per barrel.
Spot gold prices <XAU=> fell $2.00, or 0.15 percent, to
$1351.00 an ounce, as the pick-up in the dollar undermined
demand from investors for perceived safe-haven assets such as
gold, which tends to weaken when the U.S. currency rises.
(Additional reporting by Nick Olivari, Chris Reese and Chuck
Mikolajczak in New York, Atul Prakash and William James in
London; Editing by Kenneth Barry)
