www.forbes.com Reuters, 01.12.03, 7:23 PM ET By Hugh Bronstein

NEW YORK, Jan 12 (Reuters) - Latin American sovereign bonds were expected to trade flat this week while investors keep an eye on Venezuela, the market's wild card, where a six-week-old national strike has hobbled the world's No. 5 oil exporter.

As they have since the strike began on Dec. 2, investors are left guessing when the work stoppage will end and what fiscal wreckage will be left in its wake. The strikers are calling for fresh elections, hoping to put an end to the controversial presidency of Hugo Chavez.

Some analysts and investors on Sunday said the strike must be reaching a "breaking point," but Jim Barrineau, a vice president in emerging markets research at Alliance Capital Management, warned the market not to hold its breath.

"A negotiated agreement is probably still weeks away because I don't see where either side has room to compromise," he said.

Venezuelan total returns have already dropped 7 percent in January while the market as a whole, as judged by JP Morgan's Emerging Markets Bond Index Plus, has risen 1.7 percent.

Barrineau said he expects the nation's bond prices to keep falling in the days to come. Other New York-based analysts were more optimistic.

"I think something is going to break in Venezuela over the next week or so," said Joe Portera, global fixed income director at MacKay Shields, a New York-based investment management company.

The United States on Friday said it supports forming a group of key regional nations who could nudge both sides to an electoral solution to end their bitter impasse. U.S. officials said they hoped to bolster talks brokered by the Organization of American States that have so far failed to reach an accord.

"I'm optimistic about the United States finally getting involved," Portera said. "We actually added a bit to our Venezuela bond holdings over the last week because we think things had gotten overdone in terms of selling."

As long as the situation does not worsen, Portera noted that the government appears to have enough reserves to keep paying its bond service on time.

Chavez, notorious on Wall Street for his failed economic policies and anti-capitalist rhetoric, was elected in 1998 vowing to wrest control from the country's corrupt elite and enact reforms to help the poor. But opposition has grown amid charges the president wants to establish a Cuban-style authoritarian state.

The country's constitution allows for a binding recall vote half way through a president's term, which in Chavez's case would be after August. Opposition leaders say that is too far away and they want to go ahead with a nonbinding referendum on Chavez's rule scheduled by electoral authorities for Feb 2.

But Chavez says the February poll would be unconstitutional and and that he will ignore its result, even if he loses. He says he will abide by the outcome of the later referendum.

Venezuelan troops fired tear gas on Sunday to force back tens of thousands of anti-government protesters in Caracas. Chavez threatened take over the country's banks, which last week held a 48-hour stoppage.

But the banks will reopen on Monday, continuing the restricted service hours they have adopted since the strike began on Dec 2. "The Venezuelan strike has played out in a way that has been more damaging than people expected," said David Roberts, senior international economist at Banc of America Securities.

"The pressures are so severe that the situation must be reaching a breaking point," he added.

BRAZIL SEEN STEADY TO HIGHER Investors will also keep an eye this week on Brazil, Latin America's biggest economy, where the new president, Luiz Inacio Lula da Silva, last week mapped out his strategy for reforming the country's public pension system.

"A few details are leaking out," Barrineau said. "It looks like it could be a pretty aggressive plan and that's one factor that could keep a good tone in the market."

Changes to the social security system could soothe worries about Brazil's $260 billion debt load.

Investors fled Brazilian bonds last summer when it started to appear likely that Lula, who had lost the previous three presidential elections, would win October's vote.

The former metal worker was notorious on Wall Street for suggesting years ago that the government default on its debt in order to redirect money toward the nation's poor.

But Brazilian total returns are up 6.88 percent so far this month as Lula's government has delivered market-friendly policy signals, including the pension reform effort.

Copyright 2003, Reuters News Service

www.voanews.com VOA News 12 Jan 2003, 22:23 UTC

OPEC headquarters, ViennaVenezuelan soldiers have fired tear gas at tens of thousands of opposition supporters marching on a heavily-guarded military base in Caracas.

The military show of force injured at least 19 protesters, including a newspaper photographer hit by rubber bullets.

Sunday's march was in support of a general strike aimed at forcing President Hugo Chavez to resign or order early elections. The six-week strike as crippled Venezuela's economy and choked off oil production by what was once the world's fifth-largest oil exporter.

The Organization of Petroleum Exporting Countries said Sunday it will boost oil production to make up for the drop in Venezuelan exports that has increased world oil prices to a two-year high of $33 per barrel.

The cartel says nine of its 11 member nations will raise oil production, boosting overall OPEC output from 23 million barrels a day to 24.5 million.

Meanwhile, President Chavez accused his opponents of being "fascists" in his weekly radio and television address Sunday. He also threatened to revoke the broadcast licenses of private stations that are fiercely critical of his rule. Mr. Chavez, who has refused to resign, vowed Saturday to break the general strike that began December second.

A protest at the military complex in Caracas on January third ended in clashes with Chavez supporters that left two people dead and more than a dozen wounded.

icwales.icnetwork.co.uk Jan 13 2003 The Western Mail - The National Newspaper Of Wales   OPEC needs to compensate for a shortfall in oil exports from Venezuela but it shouldn't change its output target of 23 million barrels a day, the group's most influential oil minister said yesterday.

An increase in the target "would really flood the market", Saudi Arabian Oil Minister Ali Naimi said before an emergency meeting of the Organisation of Petroleum Exporting Countries in Vienna.

Opec called the meeting last week hoping to calm fears of supply problems caused by a strike in Venezuela begun on December 2 by political opponents seeking to oust President Hugo Chavez. The strike has slashed the country's exports by about 2m barrels a day. Venezuela is normally Opec's third-largest producer and a major oil supplier to the United States.

Opec pumps about a third of the world's crude supplies, which total 79m barrels a day.

Naimi acknowledged the Venezuelan strike has deprived the market of crude. "I care about what the market needs," he said.

But he added that Opec's production ceiling of 23m barrels a day should remain unchanged.

Crude prices surged in recent weeks but fell in anticipation of Opec's boosting production.

story.news.yahoo.com Sun Jan 12, 5:06 PM ET By BRUCE STANLEY, AP Business Writer

VIENNA, Austria - OPEC (news - web sites) members agreed Sunday to boost the cartel's oil production target by 6.5 percent to stabilize a world market jittery over a crisis in Venezuela and the possibility of war in Iraq.

The increase of 1.5 million barrels a day — to 24.5 million barrels — would take effect Feb. 1, OPEC President Abdullah bin Hamad Al Attiyah told a news conference at the group's headquarters in Vienna.

Al Attiyah confirmed that the Organization of Petroleum Exporting Countries wants to keep prices of its benchmark blend of crudes at $22-$28 per barrel. Friday prices hovered around $30.

Earlier in the day, Saudi Arabian Oil Minister Ali Naimi said the ceiling should remain at 23 million barrels. Saudi Arabia is OPEC's most influential member and has the bulk of the cartel's spare production capacity.

OPEC said it wanted to calm fears of a supply crunch caused by an ongoing strike in Venezuela. The agreed output hike was near the upper end of what analysts expected.

The strike, launched Dec. 2 by political opponents seeking to oust President Hugo Chavez, has slashed Venezuela's exports by about 2 million barrels a day. Venezuela normally is OPEC's third-largest producer and a major oil supplier to the United States.

"OPEC is trying to send a very strong message that it will do its utmost to stabilize demand and supply," Al Attiyah said after delegates reached their decision in informal talks.

"Now we will wait for the market to react."

The United States praised the move, saying the hike would support economic growth and stability.

"It's a global oil market and the more oil on the market the better for all," U.S. Energy Department spokeswoman Jeanne Lopatto said Sunday. "Instability in the oil market hurts producing and consuming countries alike."

However, Al Attiyah said the arrangement would be only temporary. When Venezuela resumes its normal level of exports, the group's members will meet again to reassess its production target, he said.

It appeared the actual increase in output would be somewhat smaller than 1.5 million barrels a day, as Venezuela is unable now to use its higher quota.

The suddenness of OPEC's decision to call the meeting reflects its surprise at the deterioration in market conditions. Oil ministers for four of the group's 11 members could not make it because of prior commitments.

A fifth minister, Libya's Abdulhafid Mahmoud Zlitni, was due to arrive Sunday but canceled his trip because a sandstorm prevented his plane from leaving the Libyan capital, Tripoli.

Crude prices surged in recent weeks but then fell sharply in anticipation of OPEC's boosting production. Fears about a possible U.S.-led war against Iraq have put upward pressure on world prices.

Al Attiyah insisted that OPEC had not been pressured by the United States or other importers to approve a large increase in production.

OPEC's new production ceiling will be shared among 10 members, but not Iraq. Although it is the 11th member, Iraq does not participate in the group's production agreements because the United Nations (news - web sites) oversees its exports under sanctions dating to the 1991 Persian Gulf War (news - web sites).

OPEC pumps about a third of the world's crude supplies, which total 79 million barrels a day.

Venezuela resisted the Saudi plan for fear of losing market share to OPEC partners that have spare capacity, said Ali Rodriguez, head of the state-run Venezuelan oil company Petroleos de Venezuela S.A.

Rodriguez, speaking at a separate news conference, said his company aimed to increase its production by February to 2.5 million barrels a day from its current, constrained level of 700,000 barrels. Other delegates expressed doubt that Venezuela could restore output so quickly.

The main message for the oil market is that "there will be more barrels," said Yasser Elguindi of Medley Global Advisers, a New York consultancy.

But, "I think this is a very confusing and difficult message, and it will take a while for the market to work out the logistics of it," Elguindi added.

Iraq has the second-biggest oil reserves after Saudi Arabia, and there has been a steady buildup of U.S. troops in the Persian Gulf.

On the New York Mercantile Exchange, February contracts of light, sweet crude futures fell 31 cents Friday to close at $31.68. On London's International Petroleum Exchange, February Brent crude ended at $29.67 a barrel, up 3 cents.

OPEC announced its final decision at a hurriedly called news conference after canceling plans for a formal meeting.

www.forbes.com Reuters, 01.12.03, 7:15 PM ET

SINGAPORE, Jan 13 (Reuters) - NYMEX crude futures fell 48 cents in opening off-hours dealings on Monday after the OPEC producers' cartel agreed to increase daily production by 1.5 million barrels to make up for strike-bound Venezuelan barrels.

Front-month February crude opened 38 cents down at $31.30 a barrel, and quickly skated to an early session low at $31.20.

The Organisation of the Petroleum Exporting Countries agreed on Sunday to increase output by almost seven percent to fill a supply gap left by the opposition-led strike in Venezuela, which has taken two million barrels per day out of the world market.

The cartel's official production ceiling stands at 24.5 million bpd for the 10 members bound by quotas, effective February 1.

OPEC's 11th member, Iraq, exports crude under the United Nations' oil-for-food programme and is excluded from the group's official quotas.

Copyright 2003, Reuters News Service