* Wall Street opens down, commodity and energy shares drop
* Irish debt concerns ease as EU leaders offer reassurance
* Euro up from six-week low, European shares slip
* Chinese shares drop sharply, heightened concern on rates (Updates with U.S. markets, changes dateline from LONDON, byline)
By Daniel Bases
NEW YORK, Nov 12 (Reuters) - Irish debt concerns and the potential for Chinese rate hikes to fight off inflation knocked stocks, bonds and commodity prices lower on Friday as investors booked profits heading into the weekend.
The euro, however, was given a reprieve, rising from six-week lows as European leaders reiterated to bondholders they would not be forced to take losses in any debt restructuring.
"The fact that euro zone officials said Irish bond holders don't have to take a haircut on their existing positions is supportive for the euro," said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange.
A statement from France, Germany, Italy, Spain and Britain, issued at the Group of 20 summit in Seoul said bondholders would not be forced to write down their bond holdings in the event of a new euro-zone bailout. [ID:nTOE6AB04P]
U.S. Treasuries' prices remained lower during the first purchases by the Federal Reserve as part of its new $600 billion bond-buying program to stimulate the U.S. economy.
Benchmark 10-year U.S. Treasuries fell 17/32 of a point in
price, driving the yield up to 2.69 percent
Materials and commodity-related shares led the downturn in U.S. markets. Spot gold and crude oil prices suffered their biggest drop in a month.
At midmorning, the Dow Jones industrial average <.DJI> was down 88.17 points, or 0.78 percent, at 11,194.93. The Standard & Poor's 500 Index <.SPX> was down 13.14 points, or 1.08 percent, at 1,200.40. The Nasdaq Composite Index <.IXIC> was down 28.02 points, or 1.10 percent, at 2,527.50.
The pan-European FTSEurofirst 300 <.FTEU3> index of top shares was down 0.69 percent at 1,101.08 points.
Shanghai's stock market <.SSEC> suffered the worst loss in over 14 months after rumors swept through the market that further monetary tightening was imminent to stem rising Chinese prices, especially in the housing sector. [ID:nTST000631]
Tokyo's Nikkei 225 index <.N225> fell 1.4 percent from a 4-1/2 month closing high in the previous session.
Looking broadly, the MSCI All-Country World index
<.MIWD00000PUS> fell 1.02 percent.
For more on Ireland's debt woes, click [ID:nTOE6AB04P]
For more on the G20, see [ID:nN11196971]
For more about the selloff in China, click [ID:nTOE6AB04G]
RUMOR AND DENIAL
Ireland's debt problems, much like the rest of peripheral Europe, are keeping investors on edge despite the denial from leaders that bondholders were at risk.
Sources told Reuters on Friday that Ireland is in talks to tap emergency funds from the European Financial Stability Facility that would allow investors to avoid taking a loss on their investments. [ID:nBRU011130]
The premium demanded to hold Irish 10-year bonds over German bonds narrowed from record high levels.
Spreads between 10-year Irish bond yields and German benchmarks fell nearly 100 basis points, ending a fierce two-week bout of peripheral debt selling which has raised concerns about the stability of the currency zone and hammered the euro. [ID:nLDE6AB0UX]
But nervousness about Ireland and other troubles in peripheral euro zone countries kept yield spreads elevated, with the premium for holding Spanish and Italian over German bonds rising to euro lifetime highs in early trade.
"On the G20 we should get more communication over the weekend. I don't think we can expect the world will be fixed, but what we want is a feeling that the worst will be avoided," Philip Isherwood, European equities strategist at Evolution Securities, said.
In the currency markets, the euro was up 0.43 percent at
$1.3686 against the dollar
The dollar fell 0.25 percent to 82.31 against the yen
U.S. light sweet crude oil