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European shares are expected to open lower, extending losses for the fourth session, hurt by concerns over Ireland's debt woes and a sell-off in metal prices.

Bargain hunting in early Asian trade quickly gave way to more selling as Chinese stocks .SSEC struggled following a 5.2 percent slide on Friday, when fears China will lift rates gripped markets.

Analysts expect more market volatility toward the year-end as Chinese authorities are seen taking further steps to keep in check liquidity in the financial system.

"An imminent interest rate rise after recent bank reserve increase is still very likely," said a trader at a Shanghai securities house.

Reversing earlier gains, the MSCI index of Asia Pacific stocks outside Japan .MIAPJ0000PUS fell 0.7 percent to reach lows not seen since November 1. On Friday, the index slid 1.9 percent to post its biggest one-day percentage fall since late June.

There was also little clarity on Ireland's funding problems after the country did not rule out the possibility it may have to turn to Europe for help in dealing with its debt crisis, but said no application had been made for assistance yet.

Markets drew no comfort from the G20 and APEC meetings, which left leaders of the world's most powerful economies little closer to agreeing on how to prevent fresh crises.

Many analysts said markets had been due for a pullback regardless, as profit taking set in after a two-month-long rally and traders prepared to close their books heading into the year-end.

Australia's S&P/ASX 200 index .AXJO slipped 0.1 percent, Hong Kong's Hang Seng index .HSI shed 0.2 percent while the Shanghai Composite Index .SSEC was up 0.2 percent, having drifted in and out of negative territory.

Japan's Nikkei average .N225, however, climbed 1.1 percent as exporters such as Canon Inc (7751.T) benefited from a weaker yen and data showing Japan's economic growth accelerated in the third quarter spurred investors to buy on dips.

BHP Billiton (BHP.AX) fell 0.4 percent as investors took profits on earlier gains after the top global miner scrapped its $39 billion bid for Potash Corp (POT.TO) and said it would return $4.2 billion to investors through a share buy-back.

Some investors also described the buy-back as modest.

U.S. YIELDS CLIMB

The dollar reversed losses against a basket of major currencies .DXY, climbing 0.2 percent after the 10-year Treasury note yield rose to a two-month high at 2.823 percent.

BHP (BLT.L), conceding defeat for the third straight time on a major proposed acquisition, signaled with its revived share buyback that it had limited opportunities for other big buys.

Shareholders will be eager to hear what further growth prospects the company will chase with its cash pile when BHP Chief Executive Marius Kloppers fronts the group's annual meeting in Australia on Tuesday.

"Certainly the best investment is probably in themselves at the moment," said Brendan James, a partner at BHP shareholder Perennial Growth, referring to the prospect of a bigger buyback.

Canada blocked BHP's bid for the world's largest fertilizer maker on November 3 and gave BHP a month to prove the takeover would benefit Canada.

"Unfortunately, despite having received all required anti-trust clearances for the offer, we have not been able to obtain clearance under the Investment Canada Act and have accordingly decided to withdraw the offer," BHP Chief Executive Marius Kloppers said in a statement.

It will be tough for the world's largest miner to chase other major buys, given its size and dominance in most of its markets.

"I think the regulatory environment is very difficult to negotiate when you are as big as BHP," said Tim Schroeders, a portfolio manager at Pengana Capital, who has shares in BHP.

"They have been very ambitious in terms of the size of deals that have been proposed and that makes it very difficult to fly under the radar in terms of the regulatory process."

NO CLEAR BENEFITS

BHP said Ottawa was asking for too many concessions beyond the more than $1 billion worth of undertakings the company had already offered as benefits to Canada.

In the first public comments on why Ottawa blocked BHP, Canadian Industry Minister Tony Clement said it was partly because BHP lacked expertise in potash mining and marketing, so it was not clear the deal would benefit Canada.

"BHP did not demonstrate to my satisfaction that their plans to market potash would enhance Canada's already prosperous position to compete internationally," he told reporters in Toronto after BHP withdrew its bid.

He acknowledged the rejection was controversial and said Canada continued to welcome foreign investment.

"Our government recognizes, however, that there may be ways to improve the review process," Clement said.

The potential investment from SAIC is part of a surge in investor interest in GM that is expected to push the pricing of its shares to $29 or above in the U.S. automaker's initial public offering, one of the sources said.

Another source said SAIC, GM's partner in China, would take a stake of around 1 percent in the automaker, majority owned by the U.S. Treasury after a bailout last year.

An investment of just over $500 million would represent about 1 percent of the common stock in GM if the IPO prices at the high end of the proposed range this week.

Apart from further cementing their tie-up in China, SAIC was also taking part in the deal to gain access to GM's sales networks outside China, including in Europe, one source told Reuters.

SAIC Chairman Hu Maoyuan had said previously the automaker will revive production at its UK plant and make MG cars available in Britain and the rest of the European Union in 2011 as part of its move to revive the acquired British marquee.

"That would be a great help for the Chinese automaker which had aimed to start selling its MG cars in Europe next year," said another industry source.

SAIC's shares traded in Shanghai rose 1.1 percent to 18.2 yuan, outperforming a 0.5 percent fall in the benchmark index .SSEC.

China's government would have to approve the SAIC investment before Wednesday for it to go forward as part of GM's IPO, the sources said.

GM had no comment, while SAIC representatives declined to comment. China's commerce ministry could not be reached immediately.

Talks between the two sides have been under way for more than two months and have covered a range of topics including the deepened cooperation in the development of electric vehicles and support for SAIC's ambitions to move beyond the China market, sources have said.

At one point last week, U.S. and Chinese officials became involved in the discussions between GM and SAIC, the person said.

That reflects the government ownership stake in both automakers and the potential U.S. political sensitivity around a Chinese investment in GM, a company still seen as an icon of American industry, the person said.

Until this week's expected IPO, the U.S. Treasury will hold almost 61 percent of GM as a result of the Obama administration's decision to fund the top U.S. automaker's restructuring in a 2009 bankruptcy.

The U.S. Treasury had no immediate comment.

A data-heavy week could give investors hard evidence to justify a rally that lifted the S&P 500 16.8 percent from its August 31 close to the 2010 closing high hit November 5.

But the index has been unable to move above 1,228, a key resistance level, and its chart is brewing a double-top formation, a very bearish signal.

"We're susceptible to a pullback if we don't get any clarity on fiscal policy and if any of this economic data disappoints next week," said John Lynch, chief equity strategist at Wells Fargo Funds Management in Charlotte, North Carolina.

"I would think you're going to see some, not all, smart money pull their investment (out of stocks) the closer we get to 1,228. These guys recognize we still have above 9 percent unemployment, sovereign credit risks, a consumer deleveraging and no clarity as to what businesses should do with their cash."

Last week, the Dow Jones industrial average .DJI and the Standard & Poor's 500 index .SPX each fell 2.2 percent. The Nasdaq Composite index .IXIC lost 2.4 percent.

The S&P 500 brushed the 61.8 percent retracement of its slide from the historic highs in 2007 to the low in March 2009.

This was the second time the index backed away from the 1,228 area and its chart could be drawing a bearish "double top" formation. The last retreat from that level, in April, was the start of a correction that took the S&P to its 2010 low in July.

The S&P 500 dipped on Friday below its 20-day moving average for the first time since September 1, but managed to close above it in a sign that that level, currently just above 1,194, could provide strong technical support.

LET'S TALK ABOUT TAXES

Investors will closely watch a meeting on Thursday between U.S. President Barack Obama and congressional leaders to discuss policy, including tax cuts.

Republicans will take control of the House of Representatives starting in January following their strong gains in the November 2 elections. They have vowed to force a full extension of all tax cuts enacted during the administration of former President George W. Bush. Otherwise, the tax cuts expire at the end of 2010.

Most of Obama's Democrats favor extending tax cuts only for the first $200,000 of income of individuals and $250,000 for families.

"Bush tax cuts are very important for the market," said Michael Yoshikami, president and chief investment strategist at YCMNET Advisors in Walnut Creek, California.

"If they're not renewed, that could cost 0.75 percentage point per year in GDP (growth). I don't think any other proposal would have that kind of significant impact. If dividend taxes were raised, that would be a still important but more minor issue," he said.

EU sources over the past two days said that talks on possible aid were under way and that Ireland was unlikely to hold out without assistance.

The European Union is keen for Ireland to accept aid, sources have said, to avert a Greek-style scenario where budget problems in one country plunge the entire euro zone into crisis.

Irish minister of enterprise, trade and innovation Batt O'Keeffe told national broadcaster RTE that Ireland was not like Greece in that it was funded until mid-2011 and that it was not discussing any bailout package with the European Union.

"No. It hasn't arisen. We have every confidence that we will be able to manage this economy," he said. "It's been a very hard-won sovereignty for this country and this government is not going to give over that sovereignty to anyone.

He added that the International Monetary Fund had stated it believed Ireland could manage on its own.

Germany, the EU's chief paymaster, said it was not exerting pressure on Ireland to accept aid.

EU sources said the range of aid under discussion was 45-90 billion euros ($63-123 billion), depending on whether Ireland needed support for its banking sector, driven into debt by the financial crisis and a property market crash.

Such aid, if it were needed, could come from an initial EU bailout mechanism or from the 440 billion euro European Financial Stability Facility (EFSF) set up after Greece was forced to seek help in May.

PORTUGAL STILL UNDER SCRUTINY

The source said Dublin was not keen on applying for emergency funding, but that it may not have a choice if it came under renewed attack in financial markets.

Ireland has blamed Germany for aggravating its woes by pushing the idea of asset value reductions or "haircuts" for private bondholders in a future rescue mechanism from 2013 which sent spreads wider on bonds of euro zone peripheral nations.

German Chancellor Angela Merkel was quoted as saying at last week's G20 meeting that markets must understand that politicians cannot keep asking taxpayers to pay for losses incurred by investors when markets turn against them.

Ireland's borrowing costs shot to record highs in the past week on concerns about a deficit set to hit 32 percent of gross domestic product this year and worries private bondholders could be forced to take such "haircuts" on their holdings.

The focus on Ireland has not helped ease pressure elsewhere in the euro zone periphery.