* Euro zone concern adds to North Korea jitters
* U.S.-South Korea naval exercises keep tension high
* Declines seen limited if no fresh gunfire
By Yoo Choonsik and Jungyoun Park
SEOUL, Nov 29 (Reuters) - Markets in Seoul will remain under pressure on Monday as traders digest a rescue package for Ireland while keeping an eye on tension at home after North Korea's heavy artillery shelling on a South Korean island last week.
South Korean stocks trading in U.S. markets fell more than 2 percent on Friday while the 1-month won fell more than half a percent against the dollar in offshore non-deliverable forward trade as investors opted to stay away for now.
Analysts said optimism the latest military tension with highly unpredictable North Korea would not lead to all-out war and sound prospects for the South Korean economy would help limit losses barring a fresh clash.
"Two negatives, mainly those of the European debt crisis and South Korea's heightened geopolitical risks, will pressure the market," said Lawrence Kim, analyst at Woori Investment & Securities.
A U.S. nuclear-powered aircraft carrier stayed off the west coast of South Korea as forces from the two countries entered the second day of joint exercises aimed at deterring further provocations from Pyongyang.
Regional powers were considering a call by China for emergency talks, which came on Sunday in the face of global pressure on Beijing to take a more aggressive role in the standoff.
"Unless we go to war, which is highly unlikely and the most dramatic scenario, geopolitical risks will ease eventually," Kim said, adding that the U.S. holiday shopping season had got off to a robust start, which is good for South Korean exports.
The European Union's bailout of Ireland however is unlikely to halt expectations that the euro zone debt crisis will spread to Portugal, or provide reassurance that a firewall can be built around Spain.
The BNY Mellon index of leading South Korean ADRs fell 2.14 percent on Friday, underperforming a 1.6 percent fall in the wider overseas shares index or a 0.85 percent decline in the Dow Jones Industrial Average.
The 1-month won non-deliverable forwards fell to 1,167 per dollar by the close of New York trade on Friday from around 1,160 at the end of Seoul trading. (Editing by Nick Macfie)