Reuters, 12.30.02, 12:49 PM ET By Denise Duclaux

NEW YORK, Dec 30 (Reuters) - The broad market seesawed near unchanged in feather-light trading on Monday with nervous investors hugging the sidelines as global tensions simmer at the tail-end of a brutal year on Wall Street.

Technology stocks dropped, pressured by semiconductor makers like giant Intel Corp. (nasdaq: INTC - news - people) after a research group said growth in global chip sales slowed in November from October.

"Most people will be happy when this year is over," said Edgar Peters, chief investment officer at PanAgora Asset Management, which manages $13 billion. "Investors are confused."

This week starts with the last two trading sessions of 2002 before the stock market shuts on Wednesday -- New Year's Day. Wall Street is limping toward its first three-year losing streak since 1939-41, while the blue-chip Dow is headed to its worst December performance since 1931.

Fears of a U.S. war against Iraq are rippling across the globe. North Korea added to the world's concerns last week after saying it pressing on with plans to reactivate a mothballed nuclear research facility.

In another eruption of global unrest, a gunman shot dead an American doctor and two of her American colleagues in Yemen on Monday in what officials called an "Islamic extremist" attack.

"The geopolitical situation does not lend itself to create confidence to put money at risk," said Paul Cherney, a market analyst at S&P Marketscope. "At any time you could have a headline that forces short-term traders to become sellers."

The Dow Jones industrial average <.DJI> ticked up 15.78 points, or 0.19 percent, to 8,319. The broad Standard & Poor's 500 Index <.SPX> was up 0.77 points, or 0.09 percent, at 876. The technology-laced Nasdaq Composite Index <.IXIC> slumped 13.02 points, or 0.97 percent, to 1,335, on track for its fourth down session.

Declining stocks edged out advancers by a ratio of 8 to 7 on the New York Stock Exchange and 11 to 5 on Nasdaq. More than 496 million shares were traded on the Big Board and more than 549 million shares on Nasdaq in light volume.

"The news on the geopolitical front is decidedly negative," said Stanley Nabi, managing director at Credit Suisse Asset Management, which manages about $269 billion globally. "This is creating a huge amount of uncertainty among corporate managers. They can't focus on what they are going to spend and when they are going to spend it until this cloud lifts."

CHIP STOCKS SLUMP Chip stocks fell after research group World Semiconductor Trade Statistics said global chip sales slowed to 1.3 percent in November from October, well below average growth for the month. Chip sales growth could slow further if early indications are correct that consumers have become morecautious since a relatively buoyant Thanksgiving in late November.

The Philadelphia Stock Exchange's semiconductor index <.SOXX> slumped 2.55 percent. Intel fell 51 cents to $15.89. Semiconductor equipment maker Applied Materials (nasdaq: AMAT - news - people) lost 22 cents to $13.30. Chip supplied Advanced Micro Devices (nyse: AMAT - news - people) shed 8 cents to $6.27. Oil stocks eked out gains at midsession although oil prices fell after OPEC indicated its readiness to fill in supply gaps caused by a long strike in Venezuela. Prices had earlier hit a new two-year high as possibility for war in Iraq and the continued strike in Venezuela put oil-supply jitters on traders' front burner.

Exxon Mobil Corp. (nyse: XOM - news - people), the world's largest publicly traded oil company, advanced 29 cents to $34.93. ChevronTexaco (nyse: XOM - news - people) rose 66 cents to $66.56. Amerada Hess Corp. (nyse: XOM - news - people) rose 60 cents to $55.26. ConocoPhillips (nyse: XOM - news - people) added 29 cents to $48.11. The recent surge in prices bodes well for oil companies, but higher energy prices could cut profits for the rest of Corporate America.

Wal-Mart Stores Inc. (nyse: WMT - news - people), the world's biggest retailer, ticked up 83 cents to $49.99. The Dow component said it expects December sales at its U.S. Wal-Mart discount stores open at least a year to be up 3 percent, while its Sam's Club warehouse stores.

But Home Depot Inc. (nyse: HD - news - people), the world's largest home-improvement store and a Dow member, fell 37 cents to $23.40. This holiday season is forecast to be the weakest one on record for U.S. retailers.

International Business Machines Corp. (nyse: IBM - news - people) lost $1.27 to $76.09, dragging on the Dow. Bank J. P. Morgan Chase and Co. (nyse: IBM - news - people) said it signed a seven-year contract for information technology services with IBM in a deal worth more than $5 billion. J.P. Morgan, another Dow member, added 9 cents to $23.89. (With additional reporting by Doris Frankel)

Breaking News By Fred Pals Of DOW JONES NEWSWIRES

CARACAS (Dow Jones)--Venezuelan oil refining, export and production operations should return to normal by the end of next month, the nation's oil minister told foreign reporters at a briefing Monday, noting that the strike-plagued country is currently producing between 600,000 and 700,000 barrels per day of crude oil.

"By next week, production should stand at 1.2 million barrels per day and I think we can reestablish all operations within a month," Rafael Ramirez said.

Ramirez said the government is currently giving priority to ensuring the domestic supply of gasoline before focussing on the export of crude and refined products. But Ramirez said that the massive 930,000 b/d Paraguana refinery complex, which produces mostly for the U.S. market, should be restarted within three weeks. It will take probably another two to three weeks to take the plant back to full capacity, he added.

The 130,000 b/d El Palito refinery is the first that should be back at full capacity, within ten days, he said. The 200,000 b/d Puerto La Cruz refinery is now at 80% of its capacity, Ramirez said.

"For some time, we will have distortions on the world oil markets due to this situation," he added. Early Monday on the New York Mercantile Exchange, crude hit an intraday high of $33.45 per barrel, the highest level in more than two years as the situation in Venezuela, coupled with the threat of war in Iraq, supported rising prices.

Industry observers are questioning the government's production figures, claiming that output only stands at slightly less than 200,000 b/d while refinery operations are down for the most part.

A nationwide strike that entered its fifth week on Monday has crippled the oil industry, and there seems to be no end in sight to the standoff. President Hugo Chavez reiterated Sunday he wouldn't give in to the opposition's demand that he resign from his post.

Before the strike began, Venezuela's total oil output was around 3 million b/d.

(MORE) Dow Jones Newswires 12-30-02 1147ET

With the planned restart of refineries and the import of gasoline from Trinidad, Brazil and PdVSA's Isla refinery in Curacao, Ramirez said the gasoline deficit will come to an end in the next couple of days.

The government may, however, need to continue imports of gasoline throughout January. "But we've already won this battle," he added.

He further said the government is taking control of all installations with replacement crews. The government is also trying to persuade technicians and administrative staff to stay on the job or go back to work if they've been on strike.

Now that more trained personnel have been hired to replace striking dock crew, Ramirez noted that a pool of major insurance companies have declared Venezuelan ports safe. That makes loading procedures and shipments of crude and refined products possible.

The government will first empty storage facilities that are now fully filled. "And if we manage to handle more shipments, we've removed the bottleneck for the refineries," he said. During the past few weeks, the government was forced to cut refinery operations as shipments were not taking place and storage facilities were full.

Ramirez said the strike has resulted in a loss of $2 billion for the country due to lost revenue and damage to oil installations.

He noted that the government now will profoundly shake up PdVSA. "The company as we've known it won't return," he said. Some 90 managers have already been fired while the dismissal of another 200 is being evaluated.

Ramirez added the government won't hesitate to cut more jobs due to an "excess in bureaucracy." He said about 6,000 people are employed in Caracas and Maracaibo. "We now find out that that is not needed," he said.

In the first week of January, an international consultancy firm should have a study ready on PdVSA's organizational structure.

Company president Ali Rodriguez is now managing PdVSA while managers Felix Rodriguez and Luis Marin report to Rodriguez and handle operations in the east and west of the country.

Ramirez declined to comment on whether the government is mulling the sale of its wholly-owned U.S. subsidiary retailing chain Citgo. "You can't say the idea of having Citgo is bad, but you can discuss the entire refinery structure as we have it now," he said. PdVSA has a vast refinery network in the U.S., Europe and the Caribbean.

Ramirez further said that some members of the Organization of Petroleum Exporting Countries, or OPEC, have supported Venezuela by supplying "here and there some extra oil." Ramirez declined to provide further details.

He also said he was in constant consultations with officials of the U.S. government to resolve supply problems. Venezuela, the world's fifth-largest exporter of oil, is one of the main suppliers of crude oil and refined products to the U.S.

Analysts have said oil prices could spike even further if the disruption of Venezuelan oil supply continues throughout January and the U.S. decides to invade Iraq.

By Fred Pals, Dow Jones Newswires; 58212-5641339; fred.pals@dowjones.com;

(END) Dow Jones Newswires 12-30-02 1319ET

Monday, December 30, 2002

America's energy policy is basically unsound because it relies too heavily on foreign oil. Conservation measures including reasonable mileage standards that reflect the improved technology available to the automotive industry is the best way to address the problems. Better use of renewable fuel sources could aid the United States agricultural sector and help end over reliance on foreign oil.

The recent political problems in Venezuela which resulted in an oil stoppage have focused attention on the imbalances in the fuel policy of the United States. Venezuela is a member of the international oil cartel, the Organization of Petroleum Exporting Countries.

Nearly half of U.S. oil imports come from OPEC nations, including Venezuela. A little less than half of OPEC imports come from the Persian Gulf, where the United States is nearing war with Iraq. That raises questions about the reliability of that source of oil.

It makes sense for this country to reduce its reliance on foreign oil, which accounts for more than 60 percent of what we use. The best way is to cut consumption, and the best way for that to happen is for the U.S. government to set reasonable, and better, mileage targets for vehicles driven in the United States.

The technology is available. A recent article in the MIT Technology Review magazine details minor changes in traditional gasoline engines that would nearly double the average mileage in sports utility vehicles to more than 40 miles per gallon without any reduction in engine power. The article estimates that the changes would add as much as $1,000 to the price of an average SUV - or somewhere around 5 percent of a low-cost SUV.

In addition to better technology, renewable energy sources are available. American agricultural products, such as corn and soybeans, can be made into fuel but it will take government encouragement, through subsidies or pricing strategies such as tax breaks, to get more of those products to a wider market. One thing the government could easily do is to insist that all government vehicles run on biofuel or biofuel mixtures. A few state governments have done that.

Even as technology and renewable fuel sources are developed, important research must continue into other alternative systems, including electric-gasoline hybrids and hydrogen fuel cells. Practical and affordable alternative systems that will maintain the power that Americans want may still be a few years away.

The government has to give automakers an incentive for using available technology and a penalty for not increasing overall fuel mileage. Yet instead of this, the Bush administration this year signaled that declining fuel mileage was all right by largely replacing the standards for increasing mileage that have been in place for a quarter century. That will lead to even more dependence on foreign oil and a search for more oil in previously untapped places in this country.

No matter how Venezuela's situation is resolved, it is another example of why the United States needs to make conservation and use of better technology a serious part of its energy plan.

Reuters, 12.30.02, 12:03 PM ET By Paul Richardson

LONDON, Dec 30 (Reuters) - European shares clambered to a higher finish on Monday lifted by a rise in auto stocks, such as DaimlerChrysler <DCXGn.DE>, and supported by safe-haven buying from investors positioning themselves for an uncertain year ahead.

Energy stocks, including BP <BP.L>, drew support from a rise in oil prices to fresh 15-month highs amid worries about a looming war in Iraq, and an uncertain economic and earnings outlook lured investors into defensives such as basic resources and food.

"The oil price is getting people slightly nervous about what it means for the economic recovery, but it's doing favours for oils and commodities," said Merrill Lynch European equity strategist Khuram Chaudhry.

"We're also seeing people moving into defensives partly as they look at how to position themselves going into next year," Chaudhry added.

By the 1630 GMT close, the FTSE Eurotop 300 index <.FTEU3> was up one percent at 850.92 points, as the narrower DJ Stoxx 50 index <.STOXX50E> rose 0.9 percent to 2,386.41 points.

The benchmark index is set to end 2002 down about 33 percent, having been dented by dismal company earnings, sluggish economic growth, U.S. corporate scandals and geopolitical tensions in Iraq and North Korea during the year.

On Wall Street, the Dow Jones industrial average <.DJI> was down 0.3 percent as the tech-laced Nasdaq Composite <.IXIC> slipped 1.1 percent.

Traders in Europe described volumes as paltry, with many investors already away for the New Year holiday on Wednesday when all European financial markets will be closed.

OILS, AUTOS LEAD Strategists said investors had favoured safe haven sectors on the day and would continue do so until there was some resolution on Iraq, and until there was some visibility on corporate earnings and the economic outlook in 2003.

Energy stocks were among the main beneficiaries, buoyed by a rise in oil prices, as traders bet on a U.S. attack on Iraq early next year and as supplies from OPEC nation Venezuela remained cut off by a strike.

Heavyweight BP added 2.2 percent, Italy's ENI <ENI.MI> rose 1.7 percent and TotalFinaElf <TOTF.PA> added 1.9 percent. Near-dated Brent futures were trading up 1.7 percent at $30.70.

The traditionally defensive food/beverage sector, basic resources and utilities also gained, with food leader Nestle <NESZn.VX> up 2.1 percent and UK drinks giant Diageo adding 2.8 percent.

Among basic resources stocks, German steel and engineering group Thyssenkrupp added 6.2 percent on reports that the Chinese government was close to deciding on a second Transrapid high speed railway, which it would help build. In utilities, Spain's Iberdrola <IBE.MC> added 2.8 percent, Germany's E.ON <EONG.DE> rose 0.8 percent and Britain's Scottish & Southern Energy <SSE.L> climbed 3.2 percent. Elsewhere, the auto sector was lifted by a 3.3 percent rise in sector leader DaimlerChrysler. The U.S.-German carmaking giant was bolstered by news over the weekend that its Mercedes unit expects 2002 sales to have at least matched those of the previous year. Volkswagen <VOWG.DE> and BMW <BMWG.DE> drew comfort from the report and rose 2.9 percent and 3.4 percent respectively. Gert Jan Geels, a fund manager at Amsterdam-based Eureffect, said that while investors were worrying about factors such as Iraq and high oil prices, stocks could be poised to rally if investors' worst fears did not materialise. "If you take a look at Iraq, North Korea, oil and the dollar's move, it looks like the worst is priced in," he said. "In my view, if any of these or all of these factors are not as bleak as people think they might be, we might see a relief rally of something like 15 to 20 percent," Geels added. Copyright 2002, Reuters News Service

But prices later retreat after OPEC hints at output increase to stem shortage from Venezuela. December 30, 2002: 4:28 PM EST

NEW YORK (CNN/Money) - Crude oil prices jumped to their highest level in two years Monday but later retreated after OPEC signaled it may raise output to plug any shortfalls in world supply stemming from the protracted strike in Venezuela.

U.S. light crude for delivery in February fell $1.35 to $31.37 after jumping to $33.63, the highest since Dec. 1, 2000. In London, Brent crude futures slipped 50 cents to $29.66 a barrel, also paring earlier gains.

The Organization of the Petroleum Exporting Countries (OPEC), which controls two-thirds of world crude exports, was set to raise output by at least 500,000 barrels a day unless oil prices drop heavily in the next two weeks, according to Reuters.

An informal OPEC agreement stipulates that output be raised if prices for a basket of cartel crude oil stay over $28 a barrel for 20 working days. The basket was priced at $31.06 Friday, its ninth day over the $28 level. Unless prices fall sharply, it will have stayed over $28 for 20 working days by Jan. 15.

But some analysts questioned whether OPEC's move was anything but a short-term relief strategy until the crisis in Venezuela is resolved.

Paul Cheng, an oil analyst with Lehman Brothers, said that Venezuela and Iraq together contribute more than 3 million barrels a day of global oil output, compared with OPEC's idle oil capacity of 3 million barrels a day.

"If the strike in Venezuela continues, and if the U.S. goes into Iraq and disrupts the oil exports, then OPEC's idle capacity is not enough to fill the shortfall," Cheng said. "I think oil prices will continue to rise until at least Venezuela is resolved."

Meanwhile, gold prices fell after rising sharply the past two weeks as investors flocked to this "safe haven" amid global uncertainty. Gold for February delivery fell $5.70 to $344.00 in New York. Gold has gained about $27 in December, with many analysts pointing out that the price hike could portend rising inflation. Standoff in Venezuela

Venezuelan opposition leaders extended the ongoing strike into its 29th day Monday, aimed at forcing the resignation of President Hugo Chavez and triggering early elections.

The strike has largely closed down oil production and refineries in the world's fifth-largest exporter and choked off overseas sales to 20 percent of normal levels. Last week, the nation took the unusual step of importing oil from Brazil.

A tough-talking Chavez said Sunday he had no plans to step down, and he vowed to break the strike, which has slashed crude production to about 200,000 barrels per day from more than 3 million barrels per day in November.

The Venezuela strike and speculation about war with Iraq has added more than $5 to a barrel of crude in December and prices are now $10-to-$13 above levels at the beginning of the year, raising concerns that high energy bills may stymie global economic recovery.

"Remember that oil disruption is a genuine bullish indicator for the commodity," said Peter Gignoux, oil analyst with Salomon Smith Barney in London. The Venezuelan strike is going on longer than we would have thought and President Chavez is playing his cards badly."

But Gignoux said OPEC's involvement may give relief to rising U.S. oil prices, although not immediately.

"For the U.S., Venezuela is a short-hold crude. That means that it takes about 5 to 6 days for the shipment to reach the United States. But oil shipment from Saudi Arabia, for example, would take about 45 days. I think the price hike in reaction to Venezuela is a short-term phenomenon. That situation will have to resolve itself soon. The bigger issue is Iraq."

In recent developments, Washington ordered more U.S. troops, aircraft and ships to head to the Gulf starting next month in preparation for a possible war against Baghdad as U.N. arms inspectors continued to search for evidence that Iraq has stockpiled biological, chemical or nuclear weapons.

U.S. Secretary of State Colin Powell said Washington had not yet decided whether to attack Iraq to force it to disarm weapons of mass destruction, but was taking "prudent action" to be ready to do whatever might be required.

U.S. defense officials also confirmed that Saudi Arabia had agreed to let the United States use its air bases and an important operations center at Prince Sultan air base outside Riyadh for defensive purposes in any possible war with Iraq.

"The last time the U.S. was engaged militarily in Iraq, oil prices shot up to about $42 a barrel," Gignoux added.

Shares of oil stocks ChevronTexaco (CVX: up $0.75 to $66.65, Research, Estimates), ExxonMobil (XOM: up $0.11 to $34.75, Research, Estimates), Unocal (UCL: up $0.41 to $30.53, Research, Estimates) moved higher Monday.