FOREX-Euro sheds gains vs dollar as financial markets fall

* Euro pares gains as U.S. bond and stock markets fall

* EU leaders reassure bondholders but fears persist

* China rate-hike talk hurts Aussie (Updates prices, adds quotes)

By Julie Haviv

NEW YORK, Nov 12 (Reuters) - The euro pared gains against the dollar on Friday, remaining near a six-week low, as roiling financial markets outweighed a move by European leaders to reassure nervous bondholders about the value of their holdings.

While the dollar benefited from the market turmoil, the Federal Reserve's quantitative easing will likely keep pressure on the greenback. Reuters reported that the Fed is unlikely to stop short of the full $600 billion bond-buying amount. [ID:nN12286341]

The euro was given an early reprieve as European leaders reiterated to bondholders they would not be forced to take losses in the event of a new euro-zone bailout, but a deluge of separate factors curtailed its upward momentum. [ID:nTOE6AB04P]

Irish debt concerns and the potential for Chinese rate hikes to fight off inflation knocked stocks, bonds and commodity prices lower as investors booked profits heading into the weekend. [N12148393]

"All of these joined forces to take the wind out of the euro's sails," said John Doyle, foreign exchange strategist at Tempus Consulting in Washington D.C.

"What we have overall is general risk aversion and the dollar has gained on the tail of that," he said.

The euro responded to steady buying by macro funds as the cost of insuring Irish, Spanish and Portuguese debt against default fell.

"All of the factors that weighed on the euro this week could carry over into next week, with the potential debt problems in Ireland and direction of equities likely at the forefront," Doyle said. "We could very well see a $1.35 by the end of the month."

The euro rose to a session high of $1.3777, well off the session low of $1.3573 on EBS. It last traded at $1.3693, up 0.3 percent .

At the session low, the euro/dollar broke through the 38.2 percent Fibonacci retracement level, at 1.3631, of the move from the August low to the November peak. The 50 percent retracement comes at 1.3431, with the 61.8 percent at 1.3232.

Speculation of a rescue package for Ireland added to the euro's allure earlier in the global session though the Irish Finance Ministry said market talk of a bailout package with the EU was untrue.

Two-thirds of economists and bond strategists polled by Reuters on Thursday said Ireland would seek international rescue funds before the end of next year. [ID:nLDE6AA0UH]

The euro has shed 2.5 percent this week, the biggest weekly loss in three months, as long positions built before the Fed's bond-buying decision last week have been unwound heading into the year-end book-closing season.

G-20 AND CHINA

Analysts said the communique from Group of 20 leaders meeting in Seoul was mildly positive as it agreed to tackle tensions that have threatened "currency wars" and trade protectionism. [ID:nSGE6AB00Y].

The G-20 seemed to give the green light to emerging countries with flexible currency regimes to impose capital controls.

G20 Take a Look [nN09105095]

Multimedia PDFs>>

G20 battle lines: http://r.reuters.com/jux34q

The Fed's gamble: http://r.reuters.com/cyh73q

Ireland's bailout challenge: http://r.reuters.com/wuv48p

The Australian dollar , a favorite among investors choosing to buy into growth, fell as low as $0.9825, its lowest since Nov. 1. It was last down 1.2 percent at $0.9861.

Media reports suggested China was planning to limit foreigners investing in its already speculative real estate sector while South Korea was planning capital controls.

The dollar fell 0.2 percent to 82.36 yen , with Japanese exporters selling into the dollar's recent bounce.

The euro fell to a two-month low against the yen in early trading, hitting 111.04 on EBS, but was last flat at 112.72. (Additional reporting by Nick Olivari in New York; Editing by Jan Paschal)