www.forbes.com Reuters, 02.02.03, 5:51 PM ET By Susan Schneider

NEW YORK, Feb 2 (Reuters) - Emerging sovereign debt is set for a mixed and troubled week as investors await fresh signals from the United States on the timing of a possible military strike against Iraq, as well as clues to how much international support the nation may have if it goes to war.

Brazil may provide a ray of hope in the midst of the war worries with the government's release of a 2003 primary budget surplus target, widely expected to rise from the 2002 goal, but analysts said the key events would unfold on the geopolitical front.

A key focus for investors will be U.S. Secretary of State Colin Powell's visit to the United Nations Security Council on Wednesday, when he has said he will provide evidence that Iraq possesses banned weapons.

"The reaction of global financial markets (to the global environment) will set the tone for emerging markets, and in particular for Brazil," which is vulnerable to increased risk aversion among investors because of its reliance on capital flows, said Graham Stock, head of sovereign strategy for Latin America at J.P. Morgan.

The Iraq uncertainty has sunk U.S. equities and battered the dollar in recent weeks as investors worry a protracted conflict would pummel an already tepid U.S. economy. The feeble U.S. markets have also weighed on Latin America's currencies and sovereign bonds, erasing a piece of an early January rally inspired by optimism for Brazil's new president and fresh, turn-of-the-year funds.

"The sooner the war happens and is over, the better for the market," said Ricardo Amorim, head of Latin American research at research firm IDEAGlobal. "What can scare the market is if there is any kind of sign after a war starts that it may take longer" than expected.

Another piece of the war puzzle is the magnitude of international support. Investors will be looking for clues that the United States can convince a deeply divided Europe to join an Iraqi mission since it would improve the chances of a shorter war. So far, a number of countries say there is insufficient evidence to justify an attack on Iraq.

"The stronger the coalition, the more likely it is that the war is going to be fast," said Amorim.

Within emerging markets themselves, Brazil is set to be the key focus. Finance Minister Antonio Palocci is widely expected to peg the primary surplus goal above last year's goal of 3.75 percent of gross domestic product, a move that would cement confidence by showing rookie President Luiz Inacio Lula da Silva is sincere about bolstering Brazil's financial health.

"They've suggested it will be between 4.2 percent and 4.5 percent (of GDP), so we would expect it to come in that range," said Stock. "If it comes in toward the bottom end of that range there's room for some disappointment, but that doesn't mean that the final result at the end of the year won't be stronger," Stock added. "What we've seen in the last few years is the government outperforming these targets."

MIXED VIEW OF VENEZUELA Venezuela remains on investors' radars as they look for signs of a resolution to a two-month strike waged by foes of resident Hugo Chavez, said analysts.

The shutdown has strangled oil production, once the source of half the government's revenues, and fueled investor fears the cash-strapped Chavez administration may not have the cash to pay its debts.

But even though oil workers are maintaining their protest, Chavez's use of replacement crews has helped recover some of Venezuela's oil output, allaying such fears. Some restaurants, stores and businesses have also rolled back their participation in the strike in a bid to avert bankruptcy.

While the strike's easing spells good news for Venezuela's finances, it carries a negative note for investors hoping Chavez would be forced from office. The loss of strike momentum suggests Chavez, whose anti-free market sentiment has not made him popular on Wall Strike, is likely to remain firmly in power for the medium-term, said analysts.

On Sunday, Chavez declared victory over the strike while the opposition turned out to sign a petition for early elections.

www.forbes.com Reuters, 02.02.03, 5:51 PM ET By Susan Schneider

NEW YORK, Feb 2 (Reuters) - Emerging sovereign debt is set for a mixed and troubled week as investors await fresh signals from the United States on the timing of a possible military strike against Iraq, as well as clues to how much international support the nation may have if it goes to war.

Brazil may provide a ray of hope in the midst of the war worries with the government's release of a 2003 primary budget surplus target, widely expected to rise from the 2002 goal, but analysts said the key events would unfold on the geopolitical front.

A key focus for investors will be U.S. Secretary of State Colin Powell's visit to the United Nations Security Council on Wednesday, when he has said he will provide evidence that Iraq possesses banned weapons.

"The reaction of global financial markets (to the global environment) will set the tone for emerging markets, and in particular for Brazil," which is vulnerable to increased risk aversion among investors because of its reliance on capital flows, said Graham Stock, head of sovereign strategy for Latin America at J.P. Morgan.

The Iraq uncertainty has sunk U.S. equities and battered the dollar in recent weeks as investors worry a protracted conflict would pummel an already tepid U.S. economy. The feeble U.S. markets have also weighed on Latin America's currencies and sovereign bonds, erasing a piece of an early January rally inspired by optimism for Brazil's new president and fresh, turn-of-the-year funds.

"The sooner the war happens and is over, the better for the market," said Ricardo Amorim, head of Latin American research at research firm IDEAGlobal. "What can scare the market is if there is any kind of sign after a war starts that it may take longer" than expected.

Another piece of the war puzzle is the magnitude of international support. Investors will be looking for clues that the United States can convince a deeply divided Europe to join an Iraqi mission since it would improve the chances of a shorter war. So far, a number of countries say there is insufficient evidence to justify an attack on Iraq.

"The stronger the coalition, the more likely it is that the war is going to be fast," said Amorim.

Within emerging markets themselves, Brazil is set to be the key focus. Finance Minister Antonio Palocci is widely expected to peg the primary surplus goal above last year's goal of 3.75 percent of gross domestic product, a move that would cement confidence by showing rookie President Luiz Inacio Lula da Silva is sincere about bolstering Brazil's financial health.

"They've suggested it will be between 4.2 percent and 4.5 percent (of GDP), so we would expect it to come in that range," said Stock. "If it comes in toward the bottom end of that range there's room for some disappointment, but that doesn't mean that the final result at the end of the year won't be stronger," Stock added. "What we've seen in the last few years is the government outperforming these targets."

MIXED VIEW OF VENEZUELA Venezuela remains on investors' radars as they look for signs of a resolution to a two-month strike waged by foes of resident Hugo Chavez, said analysts.

The shutdown has strangled oil production, once the source of half the government's revenues, and fueled investor fears the cash-strapped Chavez administration may not have the cash to pay its debts.

But even though oil workers are maintaining their protest, Chavez's use of replacement crews has helped recover some of Venezuela's oil output, allaying such fears. Some restaurants, stores and businesses have also rolled back their participation in the strike in a bid to avert bankruptcy.

While the strike's easing spells good news for Venezuela's finances, it carries a negative note for investors hoping Chavez would be forced from office. The loss of strike momentum suggests Chavez, whose anti-free market sentiment has not made him popular on Wall Strike, is likely to remain firmly in power for the medium-term, said analysts.

On Sunday, Chavez declared victory over the strike while the opposition turned out to sign a petition for early elections.

www.voanews.com VOA News 02 Feb 2003, 22:41 UTC

Venezuelan President Hugo Chavez has declared victory over a grueling two-month national strike aimed at his ouster.

President ChavezDuring his weekly news program, Mr. Chavez said his government had secured "a popular victory" over his political foes. He again promised to punish strike organizers for attempting to destroy Venezuela.

But his opponents were far from conceding defeat Sunday, as thousands of Venezuelans across the country lined up to sign a petition demanding early elections.

Under the constitution, organizers need signatures from 15 percent, or about 1.8 million people, of the country's registered voters to call early elections.

Earlier, organizers of Venezuela's opposition strike said they will ease the work stoppage because of the damage to businesses and jobs. But, they say the strike will continue in the vital oil industry.

The opposition campaign follows an appeal by a six-nation "Friends of Venezuela" group, for a democratic, electoral solution to end the crisis. Envoys from the United States, Brazil, Mexico, Chile, Spain and Portugal are urging Mr. Chavez and his opponents to settle their differences in negotiations brokered by the Organization of American States.

www.sacbee.com By STEPHEN IXER, Associated Press

Published 2:59 p.m. PST Sunday, February 2, 2003 CARACAS, Venezuela (AP) - President Hugo Chavez declared victory Sunday after his opponents agreed to ease a two-month national strike, but thousands of Venezuelans still lined up for a petition drive seeking his ouster.

Strike organizers, who began the protest Dec. 2 to pressure Chavez into accepting a referendum on his rule, said Friday they would ease the work stoppage, already waning, this week to protect businesses from bankruptcy.

However, the strike will continue in the vital oil industry, where production was cut from 3 million barrels a day to 150,000 at the height of the strike. Chavez said Sunday the government boosted production to 1.8 million barrels a day, but striking workers put the number at 1 million.

"Today is a victorious day," the president said in his weekly television and radio program. "We have beaten once and for all a new destabilizing attempt, a new malevolent and criminal attempt to sink Venezuela."

But opposition leaders - who accuse Chavez of ruining the economy with leftist policies and trying to accumulate too much power - were far from conceding defeat.

Thousands waited hours in the tropical sun Sunday to sign petitions at tables across Venezuela in support of various measures renouncing Chavez's government and seeking his ouster.

Four people were injured, including two police officers, when Chavez supporters threw stones, fireworks and tear gas canisters near two petition tables in downtown Caracas, police chief Henry Vivas said. A car belonging to a private, local television channel also was set alight.

The opposition hopes one petition in particular - a constitutional amendment reducing Chavez's term from six to four years - will succeed, paving the way for general elections later this year.

Under the constitution, organizers need signatures from 15 percent, or about 1.8 million, of the country's 12 million registered voters - a number they expect to surpass easily.

"We're looking for the fastest way to get out of this crisis," said Freddy Hurtado, 56, an advertising agent who complained of poor business even before the strike began. "Given that the president is the cause of the crisis, we're going to get rid of him with our signatures."

The amendment was one of two proposals made by Nobel Peace Prize winner and former U.S. President Jimmy Carter. The other calls for a recall referendum on Chavez's rule halfway through his six-year term, in August.

Chavez has indicated he is open to both solutions, but said Sunday he never would give in to his opponents, whom he labeled "coup-plotters, fascists and terrorists." He vowed to hold strike leaders accountable in the courts and again threatened private media outlets, which he accuses of supporting opposition efforts.

Oil makes up a third of Venezuela's economy and provides half of government income. Before the strike, Venezuela was the world's fifth-largest oil exporter and a major supplier to the United States.

The strike has cost the nation at least $4 billion in lost oil revenues alone by government estimates. The Santander Central Hispano investment bank has warned that the economy could shrink by as much as 40 percent in the first quarter of this year.

The extent of a continued work stoppage in the industry was unclear. Some 35,000 of the oil industry's 40,000 workers originally joined the strike, but the government has said most of them are back at work.

Most small businesses never joined the strike, and many companies that closed because of security concerns have reopened their doors in recent days. Those that remained closed - including factories, malls and franchise restaurants - were urged to open this week for restricted hours, strike leaders said.

europe.cnn.com Sunday, February 2, 2003 Posted: 2337 GMT

CARACAS, Venezuela (Reuters) -- Hundreds of thousands of foes of Venezuelan President Hugo Chavez signed a petition calling for early elections on Sunday, while the leftist leader declared victory over a two-month opposition strike and demanded punishment for its organizers.

The signing campaign, organized as a nationwide poll, was the latest opposition challenge to the populist president nine weeks into a grueling strike which has failed to oust him but has crippled the oil-reliant economy.

One opposition leader, Antonio Ledezma, said he expected more than 4 million signatures backing a petition requesting a constitutional amendment to shorten Chavez's rule and trigger immediate elections.

But there was no independent confirmation of the numbers and the poll was privately organized by foes of the president.

State oil firm employees whose walkout slashed output and exports since December 2 in the world's No. 5 oil exporter were maintaining their stoppage in the vital petroleum industry.

But a confident Chavez announced that oil production was fast approaching 2 million barrels per day (bpd), around two thirds of pre-strike levels. Oil strikers put output lower, just over a million bpd, but they acknowledged it was rising.

Opposition leaders have scaled back the strike in non-oil areas. Shops and businesses across the country, many facing bankruptcy, have already reopened. Private banks and schools are also resuming normal operations.

"There is no strike here. We faced a terrorist coup plan and we've already defeated it," left-wing former paratrooper Chavez said in a broadcast on state radio and television.

He called on opposition leaders to abandon their efforts to oust him. "You've been defeated, recognize it," he said.

But leaders of the stoppage in the oil industry vowed no let up. "We will continue with the strike until our objectives are achieved," sacked state oil executive Juan Fernandez said.

Venezuela's oil-reliant economy is reeling from the impact of the strike and the government has announced stringent budget cuts and foreign exchange controls.

As Chavez spoke, opponents turned out in large numbers to cast a symbolic vote against his rule, which marked its fourth anniversary Sunday. They crowded polling points around the country to sign petitions seeking early elections, condemning the president and supporting defiant oil industry strikers.

The president said his government had scored a "popular victory" over the strikers, whom he called "terrorists."

"I demand in the name of the people the application of implacable justice against the traitors of the nation," he said in his weekly radio and television show, "Hello President."

His call for punishment could complicate international efforts to broker a solution to the crisis, which has rocked oil markets already nervous over a possible U.S. war on Iraq.

A potential major obstacle to a political agreement on elections is the fate of striking employees of the state oil giant PDVSA, more than 5,000 of whom have been fired.

Opposition leaders are demanding they be reinstated as part of any negotiated deal, but Chavez, who has replaced them with troops and loyal personnel, has refused an amnesty.

A "group of friends" appealed Friday for a peaceful end to the conflict through elections. Envoys from the United States, Brazil, Mexico, Chile, Spain and Portugal urged Chavez and his opponents to settle their differences in ongoing negotiations brokered by the Organization of American States.

Near one opposition polling point in Caracas, police fired tear gas and shotgun pellets to disperse Chavez supporters who pelted petition signers with stones and fireworks. Two policemen and two other people were slightly injured.

To trigger the constitutional mechanism for an early poll this year, the opposition needs to collect the signatures of at least 15 percent of the nation's nearly 12 million voters -- around 1.8 million signatures. Chavez rejects early elections, saying the opposition must wait until August when the constitution would allow a binding referendum on his rule