10:41 PM
Irish debt woes hit Euro
Addison Ray
By Kevin Plumberg
HONG KONG | Fri Nov 12, 2010 12:32am EST
HONG KONG (Reuters) - The euro extended losses on Friday on fears Ireland may need a bailout just like Greece, while commodities eased as the U.S. dollar rose, hitting the pause button on a rally that pushed copper to record highs.
Traders slowed their selling of euros a bit after knocking the currency down 4 cents in the past week, squaring up before a statement about Ireland that may be issued by Britain and France later in the day.
Asian stock markets were mostly lower as traders took profits on gains this week heading into the weekend.
The possibility of a bailout for Ireland has significantly widened the difference of bond yields of high-risk European countries over those of Germany, and overshadowed a Group of 20 leaders' summit in Seoul, where a breakthrough on resolving global economic imbalances amid incongruent policies looked unattainable.
"The effects of euro zone peripheral bond concerns are spreading through euro zone markets and hitting risk appetite in the process. The euro is a clear casualty, having dropped further against the U.S. dollar and versus other currencies," Mitul Kotecha, global head of currency strategy with Credit Agricole CIB in Hong Kong.
The resurgence of fears about Europe's sovereign debt has added to a shift back into dollars and out of riskier assets.
The euro was down 0.3 percent against the U.S. dollar at $1.3625 after tumbling 0.9 percent on Thursday.
A close below the 200-week moving average of $1.3647 is a grim omen for the euro and paves the way to the next obstacle lower at $1.3558, the September 30 low.
The dollar was down 0.2 percent against the yen, at 82.34 yen.
The dollar has been rebounding ever since the Federal Reserve unveiled its $600 billion plan to buy Treasuries last week Wednesday. The dollar index .DXY, which measures the dollar's performance against a basket of other major currencies, has risen 3.2 percent since then to a 5-week high.
Commodities traders had barely blinked at the dollar's gains earlier in the week but prices succumbed to profit taking on Friday.
Analysts, however, were still looking for bullish moves in metals markets next year.
The rolling 30-day correlation between the U.S. dollar index and the Reuters-Jefferies index of 19 commodities .CRB has moved from -0.90 at the beginning of November to -0.22 on Thursday.
Three-month copper traded on the London Metal Exchange was down 1 percent to $8,732 a tonne after hitting a record high of $8,966 on Thursday.
Some analysts though still think copper prices could trek up to as high as $11,500 next year.
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