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.

www.rapidcityjournal.com By ALEXANDRA OLSON

Soldiers in riot gear blocked the entrance to a park outside a military base Sunday as opponents of President Hugo Chavez prepared to march on the site, where rioting left two dead and dozens injured two weeks ago.

The march is aimed at persuading the military to support a 42-day-old strike that has paralyzed the world's fifth-largest oil exporter but hasn't rattled Chavez's resolve to stay in power.

The military _ purged of dissidents after a brief April coup _ has supported Chavez, with troops seizing oil tankers, commandeering gasoline trucks and locking striking workers out of oil installations. Top commanders have professed their loyalty to the government. Dozens of soldiers used barbed wire and armored personnel carriers to block the entrance to Los Proceres park, outside the Fort Tiuna military base. The park is one of eight security zones in Caracas as decreed by Chavez. Protests are banned in those areas unless authorized by the defense ministry.

A few residents protested the show of force, chanting, "The government will fall!"

"This is totally out of proportion. It's no way to control a march," said Carlos Melo, of the opposition Democratic Coordinator movement. "If the government thinks these trucks and weapons are going to stop us, it won't."

Venezuela's largest labor confederation, business chamber and opposition parties called for the strike on Dec. 2 to demand that Chavez resign and call early elections if he loses a nonbinding referendum on his rule.

The National Elections Council scheduled the referendum for Feb. 2 after accepting an opposition petition signed by 2 million people. Chavez says the vote would be unconstitutional, and his supporters have challenged it in the Supreme Court. He was elected in 1998 and re-elected in 2000, and his term ends in 2007. Opponents accuse the president of running roughshod over democratic institutions and wrecking the economy with leftist policies. The opposition has staged dozens of street marches, called for a tax boycott and held a two-day bank strike last week.

Chavez has threatened to order troops to seize food production plants that are participating in the strike and to fire or jail striking teachers and have soldiers take over their duties.

He already has fired 1,000 oil workers after some 30,000 of 40,000 workers joined the strike, which has caused fuel shortages and slowed oil exports to a trickle.

The strike is costing the country an estimated $70 million a day.

On Jan. 3, Chavez supporters and opponents clashed while police fired tear gas to keep the sides apart during an opposition march on Los Proceres. Two Chavez supporters died after being shot and at least 78 were injured, five with gunshot wounds. It was unclear who fired on marchers.

Police also intervened Saturday when Chavez supporters blocked the route of a planned opposition march through the streets of Maracay, the military's nerve center, and on Margarita island off Venezuela's coast.

The country's crude output is estimated at about 400,000 barrels a day, compared with the pre-strike level of 3 million barrels. Exports are a fifth of the 2.5 million barrels a day the country usually produces.

The country's $100 billion economy shrank an estimated 8 percent in 2002, largely due to constant political instability. Inflation has surpassed 30 percent while unemployment reaches 17 percent. Negotiations sponsored by the Organization of American States have produced few results.

asia.reuters.com Sun January 12, 2003 05:41 PM ET By Tom Ashby

VIENNA (Reuters) - Embattled Venezuelan officials on Sunday accused striking oil workers of sabotaging the country's energy industry, while assuring fellow OPEC states the government would restore output swiftly.

State oil company chief Ali Rodriguez said he would start criminal prosecutions against workers he said had sabotaged oilfields, refineries and computer systems during the six-week-old strike that has brought the industry to its knees.

"There are criminal and civil cases to answer in this and of course we will apply the law in Venezuela," Rodriguez told a press conference after an OPEC meeting in the Austrian capital.

Striking executives of Petroleos de Venezuela, many of whom have now been sacked by Rodriguez, say incompetence by replacement workers is to blame for a recent spate of accidents, including oil spills in the western Lake Maracaibo.

The Organization of the Petroleum Exporting Countries met on Sunday in emergency session to deal with the Venezuelan stoppage, lifting quotas by 1.5 million barrels a day, seven percent.

In response to Venezuelan assurances that output would resume swiftly, OPEC included the South American country in the production hike despite its current inability to fill its quota.

OPEC President Abdullah al-Attiyah said OPEC was hopeful that Venezuela would return to full production soon and said the other cartel members would reverse the hike when that happened.

OUTPUT SLUMP

Opposition oil executives said output fell below half a million barrels per day last week, from more than three million in November. Government officials peg it closer to a million.

"Internal market distribution is being normalized, we have managed to free up port operations and we have drawn down stocks whose build-up had blocked production," Rodriguez said.

"This has helped a sustained rise in output, so this month we should achieve our objectives."

Oil Minister Rafael Ramirez said oil output should rise to two million barrels per day by the end of January and 2.5 million by mid-February.

Asked if Venezuela would pump its full 2.8 million bpd quota by the end of February, Rodriguez replied: "Not totally because damage has been very great and we don't know if there has been sabotage in some wells, so we have to be very careful."

The government has repeatedly failed to meet previous deadlines for restarting the industry, and still faces a major obstacle from a crashed central computer system. Striking workers say Venezuela will take months to get back to quota. "There has been electronic sabotage and sabotage on valves because the campaign is aimed at causing accidents, and we have to take anti-sabotage measures to start up safely," said Rodriguez, a former OPEC secretary-general.

The United States welcomed OPEC's big output hike, having lost some 13 percent of its imports from Venezuela.

The country's main oil refineries have ground to a virtual halt, export terminals have drastically reduced loadings and long lines have formed at gasoline stations, while Venezuela resorts to importing fuel.

Rodriguez said the small El Palito refinery was now being started again after a seal blew in last week's attempt to restore the flow of refined products to the domestic market. Rodriguez said the country's largest refinery complex at Amuay-Cardon had been shut down incorrectly by striking workers, leaving deposits of asphalt and sulphur in some units.

Nevertheless, he said operations there would resume in two or three weeks.

"Our objective is to re-establish basic production this month and restart the refineries to satisfy the internal market because we are importing gasoline at prices far above what we sell it at, which is creating losses for the company," Rodriguez said.