* Gold hits a one-week high on security concerns
* Escalating Korea tension not positive for Asia growth
By Pratima Desai
LONDON, Nov 23 Commodity markets buckled on
Tuesday as worries over an exchange of artillery fire between
North and South Korea and concern that Ireland's debt problems
could spread in the euro zone sent the dollar higher.
Crude oil and copper slipped after North Korea fired
artillery shells at a South Korean island, hitting a military
base and drawing return fire, prompting a flight to safe assets
such as gold and U.S. Treasury bonds. [ID:nL3E6MN09Z]
"You'll certainly see selling in risk-based markets like
equities and commodities until we get a better read on events,"
said Mark Pervan, ANZ senior commodities analyst in Melbourne.
"There should be reasonable support for gold although we
often see a firmer dollar as the initial reaction to risk and
lower gold prices, but industrial metals might get hit."
U.S. crude for January CLc1 shed 47 cents to $81.27 a
barrel by 1151 GMT, after dropping 71 cents on Monday. ICE Brent
LCOc1 was down 54 cents to $83.41 a barrel.
Olivier Jakob at Petromatrix said covering of short
positions -- bets on lower prices -- ahead of a long weekend was
normal. The U.S. Thanksgiving holiday is on Thursday with many
traditionally extending their break to make a long weekend.
"The recent political uncertainties in Ireland and the
military escalation between North and South Korea would plead
for reduction of risk," Jakob said.
"Given that the main area of growth is out of emerging Asia,
the escalation of tensions between North and South Korea is not
a positive development for oil markets."
For a map showing where the artillery exchange took place
between the two Koreas click:
For a graphic of the components of Reuters Jeffries CRB
Index of commodities, click:
The euro came under pressure as political uncertainty in
Ireland and worries about other heavily indebted members of the
16-nation euro zone doused optimism over a bailout plan for
Dublin. [FRX/] [MKTS/GLOB]
"There is some readjustment going on in commodity prices --
to do with the dollar," said Ian Morley, chairman of fund
consultancy Wentworth Hall.
"Commodity prices were too high, though people are worried
about inflation, that is why they have been buying commodities.
Fears of hyperinflation have been triggered by the vast
amounts of liquidity pumped into the global economy by
governments and central banks in the aftermath of the 2008
financial meltdown, particularly by the United States, the
world's largest economy.
Commodities often move in the opposite direction to the
dollar. A rising U.S. currency makes dollar-denominated
commodities cheaper for holders of other currencies.
Spot gold XAU= was down at $1,361.89 a troy ounce from
$1,366.09 late on Monday. U.S. gold futures GCZ0 rose 0.4
percent to $1,364.10 an ounce.
Earlier spot gold touched a session high of $1,369.75 an
ounce, its highest in more than a week as investors fretted
about security in Asia. That compares with a record high of
$1,424.10 on November 9.
Benchmark copper CMCU3 on the London Metal Exchange fell
to a one-week low of $8,050 a tonne from $8,290 on Monday.
The metal used in power and construction was last at $8,100
a tonne compared with a record high of $8,966 a tonne on
"Whenever there is a correction it presents a buying
opportunity," said Societe Generale analyst David Wilson.
"No one in China is worried about rate hikes slowing down
demand for metal... Speaking to copper producers, they all have
full order books. Even the tier four cities are on a huge
building spree and it's not slowing down."
Korean exchange, Irish debt hit markets: [ID:nL3E6MN07F]
Two Koreas exchange fire at sea border: [ID:nTOE6AM01Q]
Factbox on Korean peninsula military forces:[ID:nL3E6MN0EJ]
Factbox on N. Korea's nuclear programme: [ID:nTOE6AK00L]
(Additional reporting by Nicholas Trevethan; editing by