LONDON: Gold eased on Tuesday as weakness in the euro stemming from the European debt crisis offset any potential price gains from a major exchange of artillery fire on the Korean peninsula . Conviction is growing in the financial markets that the European Union's joint bailout of Ireland with the IMF will not be enough to quash fears that Portugal and possibly Spain could become the next target of fixed-income investors' anxiety. The euro remained under pressure as the coalition government in Dublin looked to be facing a struggle to pass an austerity budget that is a condition of financial aid, while Spanish bond yields rose, reflecting fears of contagion from the Irish debt crisis. With the U.S. currency reaping the benefit from the euro's decline, gold priced in dollars fell 0.4 percent to $1,360.15 an ounce by 1212 GMT, versus $1,366.09 late on Monday and down from a session high of $1,369.75. U.S. gold futures rose 0.1 percent to $1,359.40. "As for gold, the downside is likely to remain well supported as uncertainty over euro zone economies remains and further weakness in the single currency cannot be ruled out," said Andrey Kryuchenkov, analyst at VTB Capital. "Should troubles in the monetary union escalate as optimism over the Irish bailout evaporates, we could well see a renewed run to gold's safe haven appeal." Gold priced in euros was at 1,004.73 euros an ounce, up about 0.2 percent on the day, having broken through the 1,000-euro mark on Monday for the first time in a week. Gold's traditional inverse relation to the U.S. dollar broke down in May this year when the euro zone's debt problems became apparent, prompting investors to dump the single European currency.

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