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Even though European authorities agreed to lend Ireland 85 billion euros ($115 billion) on Sunday in the hope it would assure investors that all European nations can repay their debts, the Asian market was cool to the deal.

The euro fell to a two-month low of $1.3183 as investors worried European authorities might not have the means to rescue all fiscally-poor European nations including Portugal and especially Spain, whose economy is much bigger than Ireland's.

"There are still lingering worries about the rest of the countries, including Portugal and Spain," said Lorraine Tan, the director of Asian equity research at Standard & Poor's.

"It does raise risk worries and there are less people willing to take risk at this stage."

The price action in stock and currency markets said as much.

The euro struggled at $1.3224 in mid-day Asian trade, a good way from a high of $1.3345 struck after the Irish aid was announced.

Nervous investors turned instead to the U.S. dollar, considered a safer asset because it is widely traded. The dollar index .DXY hit a two-month high of 80.652, and rose against the yen to a two-month peak above 84.18 yen.

The overall cautious tone kept Asian stocks vacillating between modest gains and losses.

By mid-day, the MSCI Asian stock index outside Japan .MIAPJ0000PUS was little changed even though U.S. stock futures were buoyant, with S&P 500 futures up 0.5 percent.

Japan's Nikkei .N225 was the region's best performer with a 0.8 percent rise. But traders noted the market was thin, suggesting buyers were prudent nonetheless, especially with tensions on the Korean peninsula still bubbling.

The reaction in the commodity markets were more mixed.

Oil managed to brush aside the firmer dollar to rise past $84 toward a two-week high <O/R> as some thought the Irish deal bode well for energy demand.

Copper prices, an essential ingredient for industrial work, were steady while iron ore prices hovered at 6-1/2-month peaks. Iron ore is needed to make steel and is considered a barometer for the state of economic activity.

Gold, on the other hand, which tends to be in demand when investors shy away from risk, was a shade firmer at $1,363.19.

(Editing by Kim Coghill)

Euro zone ministers -- acting under pressure to prevent the crisis of confidence in the region's finances from engulfing Portugal and Spain -- also backed a long-term mechanism intended to prevent the debt crisis from tearing the zone apart.

Noyer, the first member of the ECB's policy council to speak after euro zone ministers sealed an 85 billion euro ($115 billion) loan package for Ireland on Sunday, said he was confident the deal would bring down Dublin's borrowing costs to more normal levels.

"There is no reason to doubt the recovery plans of the two countries," Noyer said in a speech in Tokyo, referring to Ireland and Greece.

But market reaction showed investors thought the crisis that started with Greece's budget blow-out more than a year ago was far from over.

The euro rose slightly against the dollar in early Asian trading on Monday, but quickly slipped back to two month lows.

"I don't think this is going to be a silver bullet. I think there are still going to be some question marks on Portugal and Spain," said Peter Westaway, chief economist at brokers Nomura.

One of the questions that has been dogging markets for weeks and helped drive Ireland off the cliff was whether and under what circumstances private bondholders could be made to take losses, or "haircuts," on euro zone government debt.

The new European Stability Mechanism outlined on Sunday would make private investors share the pain in the case of a debt default or restructuring, but it would apply only to debt issued after 2013.

Noyer, who is also governor of the Bank of France, said that he believed even then it should remain only a theoretical possibility.

"As far as I'm concerned, I exclude that there will be haircuts in the future. It will be a major objective of all members of EU to do everything necessary to be in a position to fully honor their debts in the future.

European officials have been at pains to play down the links between Ireland and Portugal, widely seen as the next euro zone "domino" at risk. Troubles in Portugal could quickly spill over to Spain because of their close economic ties.

Noyer joined the chorus on Monday, saying Portugal was making good progress in consolidating its public finances.

With anxiety rattling bond markets, the Irish government had been under intense pressure to accept a bailout despite repeatedly saying in recent weeks it did not need one.

"This agreement is necessary for our country and our people. The final agreed program represents the best available deal for Ireland," Irish Prime Minister Brian Cowen said.

The long-stagnant U.S. labor market is perking up again, and November should register another solid round of job gains. At the same time, Ireland's plight has all but engulfed financial markets, just as Greece did in March, raising the specter of a regional domino-effect that might eventually imperil the U.S. recovery.

Disruptions in bank lending during the second quarter dented U.S. business confidence, leading to a summer lull in investment and hiring that many feared might send the country into a renewed slump.

Such a possibility appears to have been averted for now, but inklings of further trouble are not far from the horizon.

A Reuters poll on Wednesday showed that 34 out of 50 analysts surveyed believe Portugal, where unions held a general strike on Wednesday, will be forced to follow Ireland and seek a bailout.

If that occurred, fears could grow about Spain, which has an economy and debt bigger than Greece, Ireland and Portugal combined, according to Deutsche Bank. Investors might begin to worry about the future of the single currency area set up over 11 years ago and regarded a major success in its first decade of existence.

European Union and IMF help for Ireland will not settle concerns about deeper budget problems for the euro zone as a whole. For investors, an upcoming 750 million euro bill sale for Portugal could prove a major short-term test.

"Is there still a contagion effect? You bet," said Andrew Brenner, managing director at Guggenheim Partners in New York. "Is Portugal next? No. Spain is the real issue."

A further worsening of conditions in Europe, in turn, could have major implications for both China, which counts on the continent as a key destination for its exports, and the United States, whose banks have a high exposure to the debt of Europe's major financial institutions.

The European Central Bank will meet this week, but with the growth outlook for the continent mixed, analysts see no appetite for new policy steps. Indeed, talk of an eventual pullback in special liquidity facilities may resurface.

THE REAL THING?

At the very least, the U.S. recovery appears to be on a more solid footing. Weekly claims for jobless benefits have been trending down, sliding sharply to their lowest levels since mid-2008, before the financial crisis intensified.

The Labor Department's monthly tally of employment on Friday is expected to show a gain of 140,000 new positions for November. That's on top of October's surprisingly strong 151,000 increase.

The jobless rate, however, is not expected to budge from around 9.6 percent, where it has been stuck for several months.

"Labor force growth is ... expected to be stronger than normal for a time as many underemployed and discouraged workers start to make their way back," said Aaron Smith, a senior economist at Moody's Analytics in West Chester, Pennsylvania. "Thus net hiring has to pick up substantially before the unemployment rate can fall."

Fears that Europe's debt crisis could spiral out of control have pushed stocks off two-year highs hit earlier this month. Since November 5, the S&P has fallen 3.1 percent after running up 17 percent over the two months before that. At Friday's close, the S&P 500 was down 0.9 percent for the week, almost matching the Dow's 1 percent drop.

However, those fears have been countered by signs of a gathering recovery in the labor market at home. The government's nonfarm payrolls report on Friday is set to be another sign of a turnaround in hiring that could boost stocks through the end of the year.

Anecdotal evidence suggests holiday shopping got off to a good start. The S&P retail index .RLX rose more than 5 percent in the run up to "Black Friday," the day after Thanksgiving, when Americans traditionally take shopping malls by storm.

Retail stocks' gains are a sign of an increasingly bullish view of the U.S. consumer after a string of stronger indicators on jobs, sentiment and spending.

"The consumer is more confident and they are spending a bit more money, and I think retail as a whole is perking up," Gary Bradshaw, portfolio manager at Hodges Capital Management in Dallas said, adding that retail stocks "look relatively cheap to us, and I think sales are going to surprise to the upside."

Friday's payrolls report is expected to show the economy added 140,000 jobs in November, according to economists polled by Reuters. If that forecast is met, the jobs data will fit a pattern of growing strength in the labor market.

In October, companies hired at their fastest pace since April, the government's payrolls data showed, while the latest weekly initial claims for unemployment benefits have dropped to their lowest in over two years. November consumer sentiment rose to the highest level since June. October consumer spending also gained.

BLACK FRIDAY ANYTHING BUT BASIC

Early anecdotal evidence from Black Friday suggested shoppers were spending and that discounts were not as deep this year as last, potentially helping to lift retailers' margins as they look for the best holiday season in three years.

Black Friday marks the start of the holiday spending when U.S. retailers traditionally turn a profit, or go into the black for the year.

The National Retail Federation said that nearly 60 million Americans planned to hit the stores over the weekend, while another 78 million might join the crowds of shoppers. The NRF will provide an update later on Sunday.

Retailers on the front lines will publish same-store sales data on Thursday when they will likely comment on the weekend's events.

"It seems the American consumer is back with a vengeance," said Kim Caughey Forrest, a senior equity research analyst at Fort Pitt Capital Group in Pittsburgh. "If we are to believe CEOs of retailers, they feel they can support margins with prices that are attracting consumers."

Shares of Amazon.com (AMZN.O), a favorite online retailer, have run up 12 percent since mid-November, and hit an all-time high of $177.25 in the middle of last week.

Finance ministers from the 16-nation euro zone, anxious to prevent financial market contagion from engulfing Portugal and Spain, met to endorse an emergency loan package to help Dublin cover bad bank debts and bridge a massive budget deficit.

A German government source said the ministers were also discussing Portugal and its possible need of an EU bailout.

Under pressure to take dramatic action to arrest a systemic threat to the euro, the leaders of Germany and France, the EU's two central powers, agreed in principle with top EU officials on the broad lines of a permanent crisis-resolution mechanism.

Crucially, private bond holders would be expected to share the burden of any future sovereign debt restructuring of a euro zone country on a case-by-case basis, the source said.

The heads of the European Commission, the European Central Bank, the European Council and euro zone finance ministers discussed the Franco-German proposal by telephone on Sunday.

All 27 EU finance ministers were expected to endorse the broad outlines of the longer-term plan before markets open in Asia on Monday, the source said.

"You know that we have a very serious situation, we have to do our utmost to protect the foundations of our economic recovery," EU Monetary Affairs Commissioner Olli Rehn told reporters on arrival for the Brussels talks.

He said ministers would go beyond endorsing the EU/IMF aid package for Ireland and "discuss the systemic response to this crisis." But it was unclear how much detail would be announced about a long-term financial safety net.

The lack of detail in an earlier Franco-German deal on a permanent crisis mechanism, agreed last month, and talk of private investors having to take losses, or "haircuts," on the value of sovereign bonds, helped drive Ireland over the cliff.

EU sources said a team of specialists from the Commission, the ECB and the International Monetary Fund had finalized a deal with Irish authorities in Dublin after 10 days of negotiations.

However, some key details, notably the interest rate and the term of the loans, expected to be between three and six years, would be finalized by ministers. French Economy Minister Christine Lagarde said the loans would total 85 billion euros.

"The assistance to Ireland is nearly done," she told reporters. "We just have a little fine-tuning to be done, notably on interest rates."

The EU sources said 35 billion euros was earmarked to help restructure and recapitalize Ireland's shattered banks while 50 billion euros would go to help fill the hole that guaranteeing bank debts has blown in public finances.

CONVINCE MARKETS

The planned sale of the 60 percent interest, which sources previously said was under discussion and which was for a price in line with analysts' estimates, brings to $21 billion the amount that BP has raised, or agreed sales on, in recent months.

BP has said it expects the costs of the Gulf of Mexico oil spill -- the United States' worst ever -- to hit $40 billion and said it would sell assets worth $25-$30 billion by the end of next year to pay for it.

Bridas already owns a 40 percent stake in Pan American Energy, which BP said was Argentina's second-largest producer of oil and gas.

Bridas was owned entirely by the family of Argentine tycoon Carlos Bulgheroni until CNOOC agreed to buy a 50 percent stake for $3.1 billion in March.

The 60 percent stake BP is selling represents reserves of 917 million barrels of oil equivalent (boe) and production of 143,000 boe per day.

The transaction excludes the shares of Pan American's Bolivian unit, BP said.

U.S. oil major Exxon Mobil Corp is seeking to sell its Argentine unit Esso, which controls hundreds of service stations and a refinery, local daily El Cronista reported last month.

(Editing by David Cowell)