* Stocks lower on new doubts about Ireland's budget crisis
* Euro also falls on worries of debt problem contagion
* US debt prices rise on risk-aversion, Fed purchases
(Update with U.S. markets' close, Nikkei futures)
By Manuela Badawy
NEW YORK, Nov 22 (Reuters) - 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.
Developments in the Irish sovereign debt crisis underpinned
a rise in prices of safe-haven U.S. government bond prices.
Gold also rose on safe-haven buying, but oil and other
commodities were pressured by a stronger dollar.
The euro reversed initial gains on Ireland's rescue by the
European Union and the International Monetary Fund, which was
aimed at tackling its banking and budget crisis.
But the unpopular Irish government coalition began to
unravel, a day after agreeing on the EU/IMF plan, casting doubt
on its ability to push through an austerity budget needed for
receiving the aid. For details, see [].
"That just adds to the uncertainty, creating political
turmoil at the time you have financial turmoil," said Scott
Marcouiller, chief technical market strategist at Wells Fargo
Advisors in St. Louis.
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, and
Spain. [].
"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 major currencies, with the U.S.
Dollar Index <.DXY> up 0.21 percent at 78.66.
The euro <EUR=> fell 0.44 percent at $1.3624. Against the
Japanese yen, the dollar <JPY=> fell 0.22 percent at 83.27.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
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 IN US MIXED, EUROPE DROP
World stocks fell on uncertainty about the outcome of
Ireland's debt bailout and the possibility of debt problems
spreading to Portugal and Spain.
The MSCI world equity index <.MIWD00000PUS> fell 0.25
percent while on Wall Street the Dow and S&P 500 stock gauges
ended lower.
The Dow Jones industrial average <> fell 24.97 points,
or 0.22 percent, at 11,178.58. The Standard & Poor's 500 Index
<.SPX> eased 1.89 points, or 0.16 percent, at 1,197.84.
But tech shares fared better, and the Nasdaq Composite
Index <> gained 13.90 points, or 0.55 percent, at
2,532.02 after an upgrade of chipmaker SanDisk Corp <SNDK.O> by
Robert W. Baird and upgrades of Amkor Technology Inc <AMKR.O>
and Teradyne Inc <TER.N> by Citigroup.
Trading volume was below the average for the year and is
expected to be light this week due to the U.S. Thanksgiving Day
holiday on Thursday.
The December futures contract for the Nikkei 225 stock
index <0#NK:> trading in Chicago fell 50 points to 9,280.
European shares fell on worries other euro zone peripheral
countries will need to be bailed out, with banks leading
declines. The FTSEurofirst 300 <> index of top European
shares closed down 0.7 percent
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 while Fed bond purchases also helped provide a
bid.
But putting a cap on gains was this week's $99 billion in
coupon-bearing supply. The Treasury auctioned $35 billion in
two-year notes in a strong sale. The yield of 0.52 percent was
above a record low of 0.40 percent in October.
The benchmark 10-year U.S. Treasury note <US10YT=RR> was up
19/32, with the yield at 2.8074 percent. The 2-year U.S.
Treasury note <US2YT=RR> was up 2/32, with the yield at 0.4683
percent. The 30-year U.S. Treasury bond <US30YT=RR> was up
19/32, with the yield at 4.208 percent.
The Federal Reserve bought $8.26 billion in 8-year to
10-year debt as part of its quantitative easing program that
will include a total of $600 billion of purchases by the middle
of next year.
In energy and commodities prices, U.S. crude <CLc1> settled
down 24 cents at $81.74 a barrel .
U.S. gold futures <GCZ0> settled up $5.50 at $1,357.80 an
ounce on safe-haven buying as fears arose that Ireland can
tackle its budget crisis and financial problems could spread to
other euro-zone nations. [].
(Additional reporting by Leah Schnurr, Nick Olivari, Chris
Reese and Chuck Mikolajczak in New York, Atul Prakash and
William James in London; Editing by Kenneth Barry)
