www.nzherald.co.nz 12.03.2003 8.30 am

NEW YORK - Oil prices fell on Tuesday (NY time) as Opec producers sought to reassure markets they could avert a supply shortage in the event of war in Iraq while the US called for a UN vote this week that could authorize war.

US light crude was down 82 cents, or 2 per cent, at USUS$36.45 a barrel, below its recent peak of USUS$39.99. Oil prices set a record high of USUS$41.15 a barrel during the 1990-91 Gulf crisis.

London benchmark Brent for April fell 44 cents to USUS$33.25 a barrel.

Prices fell as the Organisation of the Petroleum Exporting Countries, which control's around 60 per cent of world crude exports, pledged during a ministerial meeting in Vienna that it was ready to fill any disruption in supply.

While the group's official communique was expected to avoid any reference to Iraq, traders took Opec's stance to mean that it would make up for a likely halt to Iraq's oil exports if the United States launches an attack.

"There will be no shortage of oil," said Saudi Oil Minister Ali al-Naimi told reporters. "The test is, when the need is there, whether we will use the capacity or not and I can assure you we will."

Oil prices are up 20 per cent this year on concerns that a war in Iraq could upset oil supplies from the Middle East.

Efforts by Britain and the United States to give Iraq a March 17 ultimatum on scrapping weapons of mass destruction or face attack failed to draw widespread backing, forcing them to put off a vote in the Security Council until later this week.

Both France and Russia have said they would block the March 17 deadline. Other members of the 15-nation Security Council have suggested giving Iraq a further 45 days to comply.

Opec dashed hopes among consumer nations for a formal suspension of its output limits if war broke out. Instead, the cartel decided to maintain existing quotas of 24.5 million barrels per day (bpd), said Algerian Oil Minister Chakib Khelil.

"It doesn't really matter what Opec decides officially," said Gary Ross of New York consultancy PIRA Energy. "Saudi Arabia has made its policy clear. They've told customers they won't allow a shortage."

Saudi Arabia has lifted output sharply in recent weeks and analysts say it is now pumping more than 9 million bpd of its 10.5 million bpd capacity.

Delegates said the group's official communique would stress that Opec already has done a lot to ensure adequate supplies by filling shortages from strike-bound Venezuela.

Severe disruption to Venezuelan supplies since early December 2002 has helped push oil stocks to the lowest level since 1975, and pushed heating oil and natural gas prices during a severe northern winter to record highs.

Forecasts for milder temperatures next week in the US Northeast, the world's largest regional heating oil market, also helped pressure prices on Tuesday.

With most in Opec already pumping to the limit, the cartel would be stretched to cover the loss of Baghdad's 1.7 million barrels daily to the 77 million bpd world market.

Kuwait in addition may close up to 700,000 bpd capacity near its northern border with Iraq, where US troops are poised for war.

sg.biz.yahoo.com Wednesday March 12, 2:17 AM By Allison Bisbey Colter Of DOW JONES NEWSWIRES

NEW YORK (Dow Jones)--The California Public Employees Retirement System has completed the sale of stocks in three emerging markets it decided to shun last year on the advice of a consultant.

Indonesia, Malaysia and Thailand were excluded from Calpers' investment universe in connection with the pension plan's decision last year to move $1.1 billion of its $1.6 billion of emerging market assets from a passively managed portfolio to three active money managers - AllianceBernstein, Dimensional Fund Advisors and Genesis Asset Managers Ltd.

The $125 billion pension plan also adopted a new policy of investing only in stocks of countries that meet strict criteria for political stability, financial transparency and labor standards.

As a result, Hungary and Poland were added to the list of permissible countries, while Indonesia, Malaysia and Thailand were deleted.

The Philippines was initially struck from the list of permissible countries as well, but Calpers decided to retain its investments in that country after public officials provided evidence that the economy was solid.

Despite concerns raised by its consultant Wilshire Associates, the pension fund affirmed its decision to remain in the Philippines at a board meeting last month.

Other investable markets include Argentina, Brazil, Chile, Czech Republic, Hungary, Israel, Jordan, Mexico, Peru, Poland, South Africa, South Korea, Taiwan and Turkey.

Calpers is also shunning investments in India, Morocco, Sri Lanka, Columbia, China, Egypt, Pakistan, Russia and Venezuela.

Calpers bought and sold stocks in four tranches over a six-month period from July through December 2002, according to information posted on its Web site this week. A total of $873.2 million of stocks were acquired and $750.1 million of stocks were sold. Another $231.9 million in stocks were transferred from Calpers' internally managed emerging-market index fund to the outside investment managers.

The pension fund didn't disclose how much it bought or sold in individual markets. However, spokesman Brad Pacheco said Calpers' $30 million of Philippine investments were unaffected by the transition. "None of the assets had been sold by the time we changed our policy to include the Philippines," he said.

AllianceBernstein, Dimensional Fund Advisors and Genesis Asset Managers each now manage about $400 million for Calpers.

-By Allison Bisbey Colter, Dow Jones Newswires; allison.bisbey-colter@dowjones.com; 201-938-5298

www.forbes.com Reuters, 03.11.03, 1:08 PM ET CARACAS, Venezuela, March 11 (Reuters) - The Andean Development Corporation (CAF) approved on Tuesday a $100 million loan for Ecuador in the latest sign that its new government has won approval from multilateral lenders for its economic austerity program. The CAF, which is the regional financing arm of South America's Andean nations, said the 10-year-loan would have two years of grace. The International Monetary Fund has praised the economic policies of the new government of President Lucio Gutierrez who took office on Jan. 15. The IMF is expected to soon loan Ecuador around $200 million. The Andean nation has cut back on spending and frozen some wages in an effort to secure the loan which it needs to help pay close to $1.5 billion in debt principal in 2003. Ecuador is seen as strapped for cash after departing President Gustavo Noboa spent a windfall from high oil prices by boosting public-sector wages and leaving some $722 million in unpaid bills for the next administration. About 18 percent of CAF's loan portfolios are with Ecuador.

www.forbes.com Reuters, 03.11.03, 12:38 PM ET By Susan Schneider NEW YORK, March 11 (Reuters) - Brazilian sovereign bonds tread water on Tuesday, mirroring the country's domestic markets, as investors awaited further news on President Luiz Inacio Lula da Silva's reforms and a likely U.S.-led war in Iraq before extending the debt's heady recent rally. Brazil's share of J.P. Morgan's Emerging Market Bond Index Plus was little changed on the day, as the country's benchmark C bond <BRAZILC=RR> notched up gains of 0.5 point to 78.75 bid. The lukewarm day by the market's heavyweight kept the broader index flat in terms of daily returns. Brazilian debt has surged 15 percent higher since the start of the year, fired by optimism on Lula's planned reforms of the onerous tax and social security regimes. But with any congressional approval of the reforms months away, investors are taking a breather, said analysts. "The higher Brazil goes, the more vulnerable it is to profit-taking," said Siobhan Manning, Latin American debt strategist at Italian investment bank Caboto. "You want to price in the fact that the Lula risk was overdone, but you don't want to assume that it's going to be smooth sailing for the reforms because it's going to be a major challenge," she said. Lula, who took office on Jan. 1, was the source of heavy investor angst last year due to fear that his political inexperience and calls in previous campaigns for debt restructuring would spell chaos for the economy. While Brazil and the broader market have largely resisted the uncertainty surrounding a looming U.S.-led invasion of Iraq, investors have been unsettled by war worries, fearing a conflict would damage an already lukewarm U.S. economy. In Brazil, doubts about its high interest rates are also creeping into the market ahead of next week's meeting of the Central Bank's Monetary Policy Committee, said a trader. In a bid to stem rising prices, Brazil's Central Bank has hiked interest rates five times in as many months to leave the benchmark Selic rate at 26.5 percent in February. "Interest rates are high and they're probably going to go up again and I think people are starting to question that policy," said the trader. "Before they were just very happy that they were fighting inflation, but if you look behind it, it's going to make it very difficult for that country to grow." VENEZUELA TREKS HIGHER Venezuelan bonds, however, bucked the broader market's performance to coast 0.4 percent higher on the day, according to the EMBI-Plus. The country's DCB bond <VENDCB=RR> underpinned the move, climbing 0.5 point to 72.5 bid. The positive move came as investors took some comfort from the continued climb in Venezuela's oil production, the backbone of an economy otherwise crippled by a fierce recession. "We're seeing the oil numbers creeping up and creeping up and that's good for the country going forward, so maybe some people are just getting in front of that trend," said the trader. Crude output levels, pummeled in recent months by a general strike staged by foes of President Hugo Chavez, are now around 2.65 million barrels per day, according to Energy and Mines Minister Rafael Ramirez. The opposition has set output levels at a lower 1.9 million bpd, although the figure still represents an increase from earlier this year. Venezuela, normally the world's fifth-largest oil exporter, was pumping more than 3.1 million bpd before the strike. Turkey's bonds, under close scrutiny because of the pivotal role the nation could play in a war in Iraq, slipped 0.46 percent on the day as investors awaited news on whether the government would resubmit a motion to parliament allowing Iraq-bound U.S. troops to use Turkish territory. The approval of the U.S. troop request would open the door to billions of dollars in U.S. aid that would shield Turkey's fragile economy from a war's financial fallout.

www.wilmingtonstar.com changed: March 11. 2003 1:21PM

The Associated Press A mechanical failure will disrupt gasoline production at a Venezuelan refinery for at least two days, the refinery's manager said Tuesday. The failure Tuesday forced the shutdown of the catalytic cracker, the main gasoline producing unit at El Palito refinery in western Venezuela, Asdrubal Chavez told local Union Radio. Chavez said the problem should be fixed within 48 hours. El Palito has 20 days worth of stocks and the failure won't affect supply, he added. The cracker produces 60,000 barrels of gasoline a day, Chavez said. Venezuela is trying to recover from a two-month general strike to demand early elections or the resignation of President Hugo Chavez. The strike ended last month. Venezuela, which was the world's fifth-largest oil exporter before the strike, is still having to import gasoline to because of difficulties bringing refineries back online.