UPDATE 8-Oil slips as dollar rises on euro zone, Korea

                                
 * Dollar, treasuries up on Korean incident, pressure oil
                                
 * Irish debt, contagion fear pressure euro, weigh on oil
                                
 * U.S. oil inventory draw down expected, supportive to oil
                                
 * Coming up: API oil inventory data, 4:30 p.m. EST Tuesday
 (Recasts, updates with settlement prices and market activity)
                                
 By Robert Gibbons
                                
 NEW YORK, Nov 23 (Reuters) - Oil slipped on Tuesday in
choppy trading as fears of an escalating euro zone crisis and a
North Korean attack on a South Korean island triggered a rally
in the dollar, though revived buying interest attracted when
oil fell to a session low near $80 limited losses.
                                
 The dollar index <.DXY> posted its strongest rise in over a
month as uncertainty over Ireland's willingness to adopt an
austerity budget threatened to deepen the political crisis and
after North Korea fired artillery at South Korea in one of the
heaviest attacks since the 1953 cease fire. [ID:nL3E6MN0SQ]
                                
 "Markets are under pressure on North and South Korea
fighting, as there seems to be a flight to dollars. Concerns
about Ireland debt didn't go away. So far crude has held the
$80 area," said Tom Bentz, broker at BNP Paribas Commodity
Futures Inc.
                                
 Oil bounced off lows and briefly turned positive as many
traders were cautious about being short ahead of the U.S.
Thanksgiving holiday on Thursday and amid expectations weekly
oil inventory reports will show stockpiles fell last week.
                                
 U.S. crude oil for January delivery <CLc1> fell 49 cents to
settle at $81.25 a barrel. Oil bounced from an early intraday
low of $80.28 and total U.S. trading volume rose from Monday,
but remained 23 percent below the 30-day average.
                                
 In London, ICE January Brent crude <LCOc1> fell 71 cents to
$83.25 a barrel.
                                
 "We are concluding that a portion of today's strong
recovery was prompted by a renewed entry of speculative capital
back into the long side following the liquidation phase of the
past couple of weeks," Jim Ritterbusch, president at
Ritterbusch & Associates, wrote in a note.
                                
 After weeks of whipsaw trading amid expectations over the
Federal Reserve's quantitative easing policy, then fears of
Chinese monetary tightening and concerns about Europe, oil
prices have traded in a narrow band the past five days, with
volumes slumping as the year-end approaches.
                                
 The European Union urged Ireland to adopt an austerity
budget in order to receive an EU/IMF bailout. [ID:nLDE6AL2AG]
                                
 German Chancellor Angela Merkel said Ireland's crisis was
different to Greece's but just as worrying and the euro was in
an "exceptionally serious" situation. [ID:nBAT005787].
                                
 The euro plunged to a seven-week low against the dollar and
fell 2 percent versus the yen on growing worries the euro
zone's debt crisis could spread beyond Ireland. [USD/]
                                
 The EU situation and the Korean incident overshadowed
reports showing the U.S. economy grew faster than previously
estimated in the third quarter, though existing home sales fell
more than expected in October. [ID:nN2399302]
                                
 Prices showed little reaction to the release of minutes
from the Fed's November policy meeting, which showed officials
considered a number of options before settling on buying $600
billion in Treasuries.
                                
 World equities also fell while 10-year Treasury futures
<TYc1> rose as the tensions between the two Koreas added to
global economic worry. [MKTS/GLOB] [US/]
                                
 OIL INVENTORIES
                                
 Oil prices received some support from the expectations that
weekly oil inventory reports will show lower crude stocks.
                                
 U.S. crude oil stockpiles were expected to have fallen 2.1
million barrels in the week to Nov. 12, according to a Reuters
analyst survey. [EIA/S]
                                
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 Map showing the location of the artillery exchange on the
Korean peninsula: http://link.reuters.com/wyh76q
                                
 Graphic of the components of Reuters-Jefferies CRB Index of
commodities: http://link.reuters.com/kew48n
                                
 Links to stories on Europe's debt crisis: [nLDE68T0MG]
                                
 ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
                                
 The gasoline crack spread also narrowed for a second day,
falling to $5.96 intraday and U.S. gasoline futures <RBc1> also
remained under pressure.
                                
 "All the refinery restarts in New York Harbor area still
putting pressure on products, mostly RBOB (gasoline)," said
Bentz.
 (Additional reporting by Gene Ramos in New York, Christopher
Johnson in London and Florence Tan in Singapore; Editing by
Marguerita Choy)