* Euro hits six-week lows; Ireland woes weigh
* Nikkei reverses into losses after hitting five-month peaks
* Firm U.S. dollar drags on commodities
By Koh Gui Qing
SYDNEY, Nov 16 (Reuters) - The euro briefly hit six-week lows against the dollar on Tuesday and Asian stocks slid as concerns Ireland may not repay its debt encouraged investors to take profits after a strong autumn rally.
Another sharp sell-off in Chinese stocks in late trade also unnerved some investors and led them to wonder if prices of riskier assets were turning lower for good.
The tepid mood in equity market spilled into Europe. Britain's FTSE 100 <.FTSE> fell 0.7 percent and France's CAC 40 <.FCHI> lost 0.8 percent.
The Shanghai Composite Index <.SSEC> slid 4.3 percent at one point as investors, worried China may further tighten monetary policy, sold blue-chip bank and energy shares. [.SS]
"The swings in China are radical in the last few days," said Jackson Wong, an investment manager at Tanrich Securities in Hong Kong. "People are still trying to figure out if this is the beginning of a downtrend."
The overall cautious tone kept the MSCI Asian stock index outside Japan <.MIAPJ0000PUS> down 0.1 percent, an insignificant move compared to its 16 percent jump since early September.
Japan's Nikkei <.N225> initially bucked the downdraft and rose to five-month highs, but it too eventually succumbed to end down 0.3 percent. [.T]
Uncertainty over whether Ireland, faced with record borrowing costs, needs to be bailed out by its euro zone partners to pay its debts also did little for the market mood.
As it is, Ireland's woes have raised borrowing costs for other fiscally strapped euro zone nations such as Spain and Portugal. Euro zone officials are set to meet later to try to find a way to end Ireland's debt crisis. [ID:nLDE6AE2AI]
The euro fell as far as $1.3560
But the dollar stayed firm on the day and depressed prices
of most commodities. Oil
Yet, some analysts thought the latest pull-back in prices had less to do with a reassesment of market risks, and more to do with investors wanting to take profits and cut stretched bets.
"The European markets could potentially cause contagion pressures to erupt if people start liquidating. But realistically the dynamic within Asia remains very strong," said Peter Redward, the head of emerging Asia research at Barclays in Singapore.
Underscoring Asia's sturdy economic growth, the South Korean central bank raised interest rates on Tuesday and hinted there could be more hikes to come. [ID:nTOE6AF01X]
That Asia is tightening policy is a world away from the United States, where a Fed official said on Tuesday an exit from the present super-loose policy may be "years away".
RISING US YIELDS
For some, the recent creep up in U.S. Treasury yields is among the more startling turn in the market as it could choke off a recovery in the U.S. economy by raising borrowing costs.
For now, analysts said the sell-off in Treasuries was driven by profit-taking and uncertainty over whether the Fed would ultimately buy the $600 billion worth of bonds it had promised.
"Somewhere down the track, especially if the U.S. dollar does continue to rise and U.S. yields do continue to back up, the economic recovery may begin to stall again," said Greg Gibbs, an analyst at RBS in Sydney.
The 10-year Treasury yield
It stood at 2.90 percent in late Asian trade. Some traders expected it would eventually grind towards four-month highs of 3 percent.
Rising U.S. yields bodes well for the U.S. dollar however, as it reduces its allure as a funding currency for carry trades.
The yield gap of 10-year U.S. Treasuries over 10-year
Japanese government bonds is near a three-month high of 190
basis points.