By Sebastian Tong LONDON, Nov 12 (Reuters) - Mounting fears over Irish debt rattled emerging markets on Friday, while Dubai debt insurance premiums spiked to a two-month high after news a state-owned firm had missed payments on two loans in recent weeks. In Turkey, the lira steadied after slipping to a two-week low after a surprise cut in its overnight borrowing rates. The resurgence of concerns over euro zone sovereign debt weighed on emerging assets for the third successive session. Feverish market speculation that Ireland was on the brink of seeking a Greek-style bailout was little cooled after a reassurance from European Union leaders that bondholders would not be forced to write down the value of their bond holdings in the event of a new euro zone bailout. "It's definitely the dominant factor. The biggest concern is the potential impact of a euro zone debt restructuring on the financial sector in Europe," said Citi emerging markets strategist Luis Costa. "Even if we see an orderly restructuring, there would be a lot of damage to financial investors." By 1150 GMT, the emerging equities benchmark had sunk 1.4 percent, on track for its biggest weekly fall in nearly three months. Emerging sovereign debt narrowed 1 basis point to trade at 240 bps over U.S. Treasuries. Data showing a German-backed revival in central European manufacturing and exports failed to rouse the region's bourses and this was reflected by the Thomson Reuters emerging European stock index which traded flat. Czech shares slipped to their lowest levels in nearly six weeks while Hungarian shares rebounded 1.7 percent from two straight days of losses to hover at four month lows. Romanian shares fell 1.3 percent to their weakest levels in two month. DUBAI DEBT Meanwhile, the cost of insuring Dubai sovereign debt spiked up by 30 bps from Thursday's close to a two-month high following a Reuters report that state-backed financial services firm Dubai Group had missed two repayments on two separate loans. The news comes just two months after flagship conglomerate Dubai World reached a $25 billion restructuring deal with creditors in September. "This news should serve to remind the market that stress remains elevated in large parts of Dubai Inc. (extending further to corporates, banks and contractors) and that complacency may not be warranted in the United Arab Emirates," said Bank of America-Merrill Lynch in a note. Central European currencies were mostly on a firmer footing against the euro, which wavered on uncertainty over Ireland. This allowed the forint to edge 0.3 percent higher against the euro though the unit remained near its weakest level to the common currency in around three weeks. Russia's rouble snapped a five-day winning streak against its dollar-euro basket as oil prices slipped below the 25-month high reached in the previous session. Israel's shekel slipped to a 6-1/2 week low versus the dollar. The lira firmed 0.6 against the dollar after sinking 1.5 percent on Thursday after the Turkish central bank cut overnight borrowing rates by 400 bps to encourage investors to hold lira deposits for longer. "On balance we do not think that the lira outlook has shifted fundamentally, as demand and interest rate differentials continue to remain wide," Goldman Sachs analyst Ahmet Akarli said in a research report. "But some short-term underperformance is possible, given the uncertainty over how aggressive the central bank will be in adjusting domestic liquidity conditions in response to accelerating capital inflows." (Additional reporting by Michel Rose; editing by Sujata Rao) Keywords: MARKETS EMERGING Emerging Markets Prices from Reuters Equities Latest Net Chg % Chg % Chg on year Morgan Stanley Emrg Mkt Indx 1123.12 -15.72 -1.38 +13.51 Czech Rep 1144.70 +4.10 +0.36 +2.45 Poland 2716.56 -9.92 -0.36 +13.72 Hungary 22069.47 +361.57 +1.67 +3.97 Romania 5103.01 -66.80 -1.29 +8.79 Russia 1611.60 -17.77 -1.09 +11.56 South Africa 28047.41 -60.09 -0.21 +12.20 Turkey 69192.34 -892.61 -1.27 +30.98 China 2985.43 -162.31 -5.16 -8.90 India 20156.89 -432.20 -2.10 +15.41 Currencies Latest Prev Local Local close currency currency % change % change in 2010 Czech Rep 24.60 24.61 +0.01 +6.98 Poland 3.92 3.93 +0.07 +4.57 Hungary 275.81 276.62 +0.29 -1.98 Romania 4.29 4.28 -0.04 -1.14 Russia 35.89 35.68 -0.58 +1.11 South Africa 6.94 6.92 -0.39 +6.45 Kenya 80.45 80.40 -0.06 -5.90 Israel 3.67 3.66 -0.25 +3.19 Turkey 1.43 1.44 +0.20 +4.33 Brazil 1.72 1.72 -0.25 +1.33 Mexico 12.26 12.26 -0.00 +6.53 Debt Index Strip Spd Chg %Rtn Index Sov'gn Debt EMBI+ 240 -1 -0.18 570.04 H All data taken from Reuters at 1151 GMT. 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