<a href=asia.reuters.com>Asia Reuters Wed April 16, 2003 08:31 AM ET

WASHINGTON (Reuters) - A sharp rise in energy costs pushed U.S. consumer prices up in March but there was little sign of inflation pressures elsewhere in the economy, the government said on Wednesday.

The Consumer Price Index, the most popular gauge of U.S. inflation, rose 0.3 percent last month, the Labor Department said. However, excluding volatile food and energy prices, the CPI was flat -- the tamest reading on so-called core inflation since it was last unchanged in February 1999.

Economists polled by Reuters had expected the CPI to rise 0.4 percent and the core index to edge up 0.2 percent.

The department said a 4.6 percent surge in energy costs accounted for more than 90 percent of the increase in the overall CPI.

While energy prices have risen at an annual rate of nearly 77 percent over the last three months as oil prices spiked, economists expect them to begin moving lower soon now that the war in Iraq is all but over.

Closely watched core inflation has barely budged in recent months. Over the 12 months ended in March, it has risen just 1.7 percent, matching February's rise which was the smallest in 37 years.

The core CPI advanced at just a 0.8 percent annual rate in the first quarter, a sharp slowdown from the 1.9 percent increase registered last year. "Smaller increases in the indexes for shelter and medical care, coupled with a larger decrease in the index for apparel, were largely responsible for the deceleration," the department said.

It said gasoline prices jumped 4.1 percent last month, while the cost of fuel oil increased 9.8 percent and natural gas prices rose 14.8 percent.

However, gasoline prices have moved down in recent weeks. According to a government report released on Monday, prices at the pump have fallen 13.3 cents to an average $1.595 a gallon from the record high reached four weeks ago, just before the start of the U.S.-led war against Iraq.

Economists expect that decline to show in the April CPI report to be released next month.

Crude oil prices had risen sharply at the start of the year as a workers' strike in oil-rich Venezuela cut into supplies and worries mounted about the potential for further disruptions as the U.S. launched a war against Iraq. However, prices began to move lower shortly before the United States started bombing Baghdad.

<a href=www.vheadline.com>Venezuela's Electronic News Posted: Monday, April 14, 2003 By: VenAmCham

VenAmCham's Jose Gregorio Pineda (chief economist) and Jose Gabriel Angarita (economist) write: Venezuela's unemployment will undoubtedly rise to extremely high levels by the end of this year. That prediction is based on the severe difficulties being experienced by the country's private sector, which will be reflected in still more lost jobs.

In the first place, after 2002 ended with a historically unprecedented 8.9% contraction provoked by intense political conflict and poor government economic policy management, an economic climate extremely adverse to business activity has sprung up and has only worsened since the foreign exchange market was shut down on January 21, 2003.

The effects of last year's experience, and those of this year to date, have yet to be reversed; quite the contrary, they have continued and will go on making themselves felt due to the large number of companies with serious operating problems (many have had to shut down). In addition to business, the hardest hit economic sector has been labor, as workers find it increasingly difficult to hold onto their jobs and those already unemployed have less and less of a chance to rejoin the labor market.

Out of the economy's total supply of labor (the 11.7 million members of the Economically Active Population-EAP) according to the National Institute of Statistics (INE), 1.8 million people had no jobs at the end of 2002. Not only that, but the proportion of people working in the economy's informal sector reached 51.2% in the last quarter of 2002, meaning according to the INE that more than 5 million people were doing low-productivity work such as street vending or working in firms with fewer than five employees, as household employees, salespeople, craftsmen, taxi drivers, painters, or carpenters.

The distortions now burdening the economy, the high level of government intervention in economic activity, and the population's falling consumption and purchasing power only make it clearer that labor conditions will continue worsening over the rest of the year. By our estimates, unemployment will reach the 23% to 25% range in 2003, reflecting over 2.5 million unemployed workers. This spreading unemployment, on top of working people's low purchasing power, will deprive more and more Venezuelan households of access to the basic consumption basket (food and services-utilities), which now costs about 600,000 bolivares per month.

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(Boston-AP) -- Experts have been hoping that once the Iraq war was over companies would start spending money on previously postponed projects. Now they aren't so sure.

For one thing, the war may not have a clearly defined end. For another, the economy is weak, and lots of companies are still working through debt and excess inventory.

A telecommunication equipment supplier near Boston says he doesn't see that the war is what's holding customers back. And another executive at a software company in Virginia says the war just gave people a good reason to do what they were already doing -- and that businesses weren't spending money.

Economists say their big-picture analysis paints the same picture. A Merrill Lynch survey of executives at 75 U-S and 25 European companies found that 17 percent planned to slow spending if war broke out, and that 90 percent said a quick end to the war wouldn't cause their information technology spending to accelerate.

(Los Angeles-AP) -- "Anger Management" bullied its way to the top spot at the box office in its debut weekend. That's according to Sunday's studio estimates.

The Adam Sandler and Jack Nicholson comedy revived the box office after four straight slumping weekends as the top 12 movies took in nearly 87 (m) million dollars, up 6 percent from the same weekend last year.

"Anger Management" had the highest gross ever for a movie opening in April, beating the previous record of just over 36 (m) million set by last year's "The Scorpion King."

"Anger Management" grossed more than the rest of the top 12 combined. Last weekend's number one, "Phone Booth," fell to second place with 7-point-5 (m) million. "What a Girl Wants" came in third with 6-point-7 (m) million.

<a href=www.business2.com>Business 2.0 By Cybele Weisser, March 2003 Issue

The U.S. economy runs on oil. No other commodity exerts as much leverage over the nation's financial health. Petroleum pervades everything from the obvious--gasoline, heating oil, jet fuel--to crayons, toothpaste and DVDs, not to mention working its way into the cost of transporting all the food and goods we produce and consume. No surprise then that spikes in the price of oil have preceded the past four recessions.

In normal times, the current slowdown in world economies would mean less demand for oil and thus lower prices. But these are far from normal times. As worries about a war with Iraq have mounted over the past year, the price of oil has jumped 65%, from $20 to $33 a barrel. Then in December a massive strike crippled the oil industry in Venezuela, the third-largest U.S. supplier. Throw in an unusually cold winter in the Northeast, and U.S. inventories of crude oil are now 44% below where they stood a year ago.

The situation could change quickly with a U.S. victory over Iraq. But don't start celebrating yet. It's true that oil prices plunged quickly after the Gulf War, but world oil markets and the supply equation are very different today. To help you make sense of the volatile energy markets, here's a look at how rising oil prices are affecting our economy and where prices may be headed in the months to come. Plus, in the box below, we discuss four energy stocks that are well positioned to thrive in the coming year.

The economic punch

Despite the fact that the U.S. economy is more energy-efficient than it was 20 years ago, we consume 26% of the world's oil--about 20 million barrels a day, up from 15 million two decades ago. Just 43% of that oil is produced domestically, down from 77% in the early '70s, according to the American Petroleum Institute.

The most visible evidence of higher oil prices is at the gas pump. Over the past year the price of gasoline has risen more than 37%, from $1.12 to $1.53 a gallon. Factor in the 33% spike in home heating oil prices over the past year, and Americans are collectively spending $50 billion more on gasoline and heating oil than they were a year ago, says Economy.com's Mark Zandi.

This acts like a major tax increase, cutting into consumer spending. And "if people see high oil prices as a symbol of bad times, they stop spending," says Lehman Brothers' chief economist Ethan Harris. Our struggling economy, which has been buoyed by continued consumer spending, can ill afford such a hit. "If we get to $40 a barrel and stay there for a couple of months, we'll be back in recession," predicts Zandi.

Higher oil prices also take a bite out of profits in energy-intensive industries. Airlines, which have little ability to pass on higher jet fuel prices, are hardest hit. But trucking, shipping and manufacturing industries such as chemicals, paper and steel take blows too. For example, chemical giant DuPont said recently that every 10% increase in the price of oil and gas decreases its net income by $165 million. And finally, there's the impact of oil prices outside the U.S. Countries such as Japan, Germany and France import all of their oil, so they are highly vulnerable to price increases. This hits the U.S. economy indirectly via lower revenue from exports. Overall, economists calculate that every $10-a-barrel oil price increase that sticks for a year reduces economic growth by 0.5%.

Best-and worst-case scenarios

What's the best-case scenario for oil prices today? Ideally, the conflict in Iraq will be short and successful, as it was in 1991, and prices will again fall dramatically. If a friendly regime is installed, there could be an even more significant effect in the long run, since Iraq is sitting on the second-largest reserve of oil after Saudi Arabia. Worst-case scenario? A war drags on and the conflict spreads across the Middle East, pushing the price of oil as high as $50 a barrel or more. "An ugly playing out of events in Iraq--a long, drawn-out war--could put the entire global economy in recession," warns Lehman Brothers' Harris.

But even if a war is resolved quickly, oil prices might not react as they did after the Gulf War. Then, "the market was swimming in oil," and the price of oil fell back to $20 within days, says Sarah Emerson, an economist with the Energy Security Analysis Institute (ESAI). But now, whatever excess supply other members of the Organization of Petroleum Exporting Countries (OPEC) bring to the market is only compensating for the loss of supply from Venezuela. Furthermore, when Venezuela's crisis is over, its operations could take up to six months to completely restart, says Charles Ober, manager of T. Rowe Price's New Era fund. Increased production in Iraq isn't likely to flood the market either, he adds, since Iraq doesn't have the infrastructure to ramp up production to levels that would add a huge amount of oil quickly.

Taking all of this into account, ESAI predicts that oil will average $29 a barrel in the year's first half, 34% above the normal range of $18 to $20, and that it will stay above $25 for the rest of '03. What does that mean for companies in the sector? For giants like ExxonMobil, probably not much: Higher prices help some divisions while hurting others, so the impact is mildly positive overall. But higher prices almost always encourage the Big Oil companies to spend more on exploration and production, which is a boon to pure-play oil and gas drillers and oil service companies. And while oil is in the spotlight now, investors shouldn't forget about the opportunity in natural gas. With North American gas reserves depleting at the rate of 30% a year, domestic gas drillers should receive "extensive capital investment," says Standard & Poor's analyst Tina Vital.   In the Spotlight The Middle East The world's richest source of oil is also a hotbed of political instability. Will a victory for coalition troops bring peace to the Middle East and some measure of calm to the global economy? That's no easy question to answer, but knowing more about the region will help you decide for yourself. The Web Guide contains essential research on 19 Middle Eastern countries -- from Bahrain to Iraq to Israel to Yemen. Plus, we've gathered business information on the area, including the latest tech news and the top Web markets and incubators.

Friday 11.04.2003, CET 06:20 <a href=www.swissinfo.org>swissinfo March 24, 2003 1:55 PM

Switzerland’s largest bank, UBS, has said it will transfer frozen Iraqi-held deposits in the United States to US authorities.   UBS said the funds, blocked in 1990 under United Nations sanctions, had been confiscated by the US Treasury and would be transferred to the US government soon.

Swiss neutrality comes under the spotlight   The confiscation is part of an order last week from the Treasury Department to 17 banks in the US.

The total money involved, said to be about $1.74 billion (SFr2.41 billion) without interest, comes from transactions between US oil firms and the Iraqi state oil company, the UBS spokesman added.

He declined to reveal how much cash was involved in UBS’s case but confirmed it was likely to be in the millions of dollars.   Reconstruction   The US has pledged to use most of the money for a fund earmarked for rebuilding and providing humanitarian aid to the Iraqi population.

The Swiss foreign ministry on Friday reported that Washington had asked Switzerland to freeze any bank accounts held by Iraq’s President Saddam Hussein and his associates.

There has been no official reply, but the Swiss finance minister said earlier this month that there were no signs that Saddam Hussein had accounts in the country.

“That statement is still valid. We have no indications that he had money in Switzerland,” said Foreign Ministry spokesman Livio Zanolari.

“But you can never rule anything out,” he added.