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The euro had initially spiked on Monday on news of a European Union and International Monetary Fund bailout for Ireland, where a property bust has pushed the nation's banks to the brink of collapse and blown a hole in the public finances.

But it swiftly reversed course as the coalition government in Dublin, deeply unpopular after presiding over the implosion of an economy dubbed the "Celtic Tiger" for its double-digit growth in the late 1990s, looked to be facing a struggle to pass an austerity budget that is a condition of the aid.

The single currency dived back below $1.36 on Tuesday as the Irish turmoil stoked fears that a crisis that has already engulfed Greece will spread to other indebted euro zone nations, with Portugal and Spain in nervous bond investors' sights.

"They've addressed the Greek problem, they're addressing the Irish problem, people are now questioning where is the next one ... the political turmoil in Ireland also doesn't help," said Grant Turley, strategist at ANZ in Sydney.

Asian stock markets fell, following declines on Wall Street the previous day, with MSCI's index of Asia Pacific shares outside Japan .MIAPJ0000PUS shedding 1.2 percent. Tokyo markets were closed for a holiday.

The biggest stock market falls were in Hong Kong .HSI and Shanghai .SSEC, down 1.7 percent and 2.3 percent respectively. Moves by the authorities to cool the property market continued to weigh in Hong Kong, where the property sub-index .HSNP fell 2.6 percent. .HK .SS

On Monday U.S. financial stocks had slid on fears of exposure to Europe's debt woes and concerns about a broad insider trading probe. The KBW bank index .KBX fell 1.5 percent and JPMorgan Chase & Co (JPM.N) fell 2.3 percent. .N

DOWNSIDE RISK

The euro traded around $1.3575, having fallen as low as $1.3551 to surpass Monday's session trough of $1.3574. The single currency had risen as high as $1.3786 on Monday.

"The fact that sentiment turned so quickly, that the Irish government is heading toward an election and that Moody's talked about downgrading Ireland are all not helping," said Greg Gibbs, strategist at RBS.

"It reveals a lack of underlying demand for European sovereign and financial assets and point to the downside risk for the euro."

Against the yen, the euro slipped to around 113.10 from two-week highs near 115.0 yen.

The dollar rose 0.2 percent against a basket of currencies .DXY and bought 83.35 yen, down a little from Monday's high.

A stronger dollar often weighs on commodity markets, making assets priced in the U.S. currency more expensive for holders of other currencies.

U.S. crude oil futures lost 34 cents, or around 0.4 percent, to trade at $81.40 a barrel, and gold and copper were also weaker.

U.S. Treasuries, traditionally regarded by investors as the safest of asset, remained in demand, with the yield on the benchmark 10-year note creeping lower.

Strong commercial computer, server and storage sales spurred better-than-expected quarterly results for HP, easing fears that the No. 1 technology company by sales was distracted by internal turmoil. Former chief Mark Hurd departed in August after accusations of sexual harassment.

HP, the world's No. 1 PC maker, shrugged off the government spending cuts that have plagued Cisco Systems Inc. (CSCO.O).

Apotheker, who took over November 1, reassured Wall Street by sounding a predictably confident note on HP's prospects.

"He was solid. He did exactly what he needed to do," said Gleacher & Co analyst Brian Marshall. "Coupled with the strong financial performance, it made for a good quarter."

Apotheker joked he may have set a world record for travel the past few weeks as he jetted around the globe to familiarize himself with HP's sprawling business.

He provided few details about his strategy to deal with cutthroat competition in a consolidating technology sector. He did reaffirm that central themes will be software, now 3 percent of HP's business, and research spending.

"I am particularly committed to continue our focus on operational efficiency. However, you need to invest to create sustainable operating leverage. We need to do this on a continuing basis," he said.

Under Hurd, HP became known for cost control rather than investment. Analysts said Apotheker must restore stability and poise after a tumultuous four months that saw Hurd's departure and a nasty spat with one-time partner Oracle Corp (ORCL.O).

Apotheker stuck close to his script on a conference call with analysts. The German executive highlighted HP's strengths and opportunities and said he needed time to learn the company's ins and outs. He had little to say about the Oracle row other than to label it a distraction.

ASSUAGING FEARS

HP's results helped assuage fears that public sector budget cuts were beginning to hurt technology providers. HP did warn that "uneven" consumer performance has affected its outlook. Consumer markets comprise roughly a quarter of its revenue.

"Demand is not as bad as people had thought," said Wedbush Morgan Securities analyst Kaushik Roy. "After Cisco guided cautiously, people got nervous. Now it appears demand is not as bad."

HP raised its fiscal 2011 outlook, forecasting earnings excluding items of $5.16 to $5.26 a share on revenue of $132 billion to $133.5 billion.

For the current quarter, HP forecast an adjusted profit of 1.28 to $1.30 a share on revenue of $32.8 billion to $33 billion, above Wall Street's targets.

Diamondback Capital Management LLC and Level Global Investors LP, two Connecticut funds run by former managers of Steven Cohen's SAC Capital Advisors, were among those raided, according to the report.

Also raided was Boston-based Loch Capital Management, according to the report. Loch has had close ties with a witness who pleaded guilty in a separate insider trading probe centered on the Galleon Group hedge fund.

The raids come as federal prosecutors prepare to unveil a series of new insider trading cases against hedge fund traders, consultants and Wall Street bankers, several lawyers familiar with the investigation said.

This is on top of what prosecutors have described as the largest U.S. hedge fund insider trading case ever. That case is centered on Raj Rajaratnam's hedge fund Galleon Group, and has led to criminal or civil charges against at least 23 people since being announced just over one year ago.

"The Justice Department promised a more muscular approach to white-collar crime, and is delivering," said Eugene O'Donnell, a professor at the City University of New York's John Jay College of Criminal Justice.

FBI spokesman Richard Kolko on Monday said the agency had executed search warrants in connection with an ongoing investigation. He declined to discuss the nature of the probe or the targets. A different FBI spokesman confirmed a raid took place at a downtown Boston building housing Loch offices.

Started in 2005, Diamondback oversees roughly $5 billion of assets and is based in Stamford, Connecticut. Based in nearby Greenwich, Level Global has roughly $4 billion of assets and is run by SAC alumnus David Ganek. Loch once had more than $2 billion of assets.

None immediately returned requests for comment.

DETERRENCE

Lawyers familiar with the expanded probe said charges could be filed this year, and come in several cases rather than one large case targeting the hedge fund industry. The lawyers asked not to be named because the investigations are ongoing.

"Especially in this kind of a case, the end game is deterrence," O'Donnell said. "The number of prosecutions will always be small, but deterrence can have a multiplier effect that stops untold numbers of other people from doing this kind of conduct."

In the case centered on Galleon, 14 people have pleaded guilty to criminal charges, Rajaratnam and seven others have pleaded not guilty, and one is at large.

Among those to plead guilty is Steven Fortuna, a former managing director at Boston-based hedge fund S2 Capital LLC believed to be friends with Loch's co-founders, the twin brothers Timothy and Todd McSweeney.

Speaking last month to the New York City Bar Association, U.S. Attorney Preet Bharara in Manhattan called illegal insider trading a "rampant" and even growing problem that prosecutors need more tools to fight.

Nervousness about Ireland and the possibility it could lead to bigger problems in the euro zone has weighed on stocks in recent weeks. The resolution of a rescue should lead to short-term gains, analysts said.

Ireland, facing widespread public anger over its handling of the crisis, formally requested the aid on Sunday evening. The rescue is aimed at protecting Europe's wider financial stability.

"Investors will like it," said Richard Sichel, chief investment officer of Philadelphia Trust Co in Philadelphia, Pennsylvania. "But it doesn't make other problems go away, there will still be concerns out there."

S&P 500 futures rose 6.50 points to trade at 1,204.60.

The rescue is the second this year after the bailout of Greece in May, but will only quell concerns about Europe in the short term, analysts said.

It is still widely feared that Ireland's problems might spread to other members of the euro zone with large budget deficits, such as Spain and Portugal, threatening a systemic crisis.

The euro rose on news of the latest aid plan.

"I don't think markets in general are expecting the issue around not just Ireland, but the euro zone, to go away," said Peter Kenny, managing director at Knight Capital Group in Jersey City, New Jersey.

The major stock indexes finished little changed on Friday after China's central bank raised bank reserve requirements for the second time in two weeks, stepping up its fight to rein in prices in a move that could temper growth.

The S&P 500 settled just below 1,200 -- an important psychological level -- and analysts said if the benchmark index fails to break above that mark convincingly, it could trade in a tight range for the rest of the year.