sg.biz.yahoo.com Friday March 21, 1:12 AM By Maria Daly Of DOW JONES NEWSWIRES

LONDON (Dow Jones)--European stocks ended mostly lower in thin volume Thursday as investors reacted with caution to news that the war in Iraq had begun.

At the close, London's FTSE-100 Share Index was up 0.01% at 3765.7, while Paris's CAC-40 Index fell 1.5% to 2794.83. At 1657 GMT Frankfurt's Xetra Dax Index was 1.4% lower at 2578.85.

David Buik at Cantor Index said market volume was negligible on the first day of war in comparison with previous sessions, as the market remained preoccupied with watching battle progress in the Gulf.

U.S. President George Bush's statement Wednesday evening that war may be drawn out also caused investors to be sidelined. Traders commented that hopes for short conflict gave way to fears of a protracted campaign.

Economist Neil Parker at Royal Bank of Scotland said market sentiment is likely to continue being fueled by the drip-feed of news on Iraq as traders look for evidence of a quick U.S. victory.

He added that concern over use of chemical weapons is likely to unsettle sentiment and as troops move closer to Basra and Baghdad there is likely to be a heightened sense of unease. "In the current environment, investors are loathe to increase their exposure to risk," he said.

The assumption of a short successful war with Iraq is now being tested, said strategists at ABN Amro.

Morgan Stanley Chief Global Economist Stephen Roach warned that investors shouldn't conclude that U.S. military supremacy will lead to the perfect victory in Iraq.

"Courtesy of global terrorism, the proliferation of weapons of mass destruction, and the breakdown of once steadfast alliances, today's world is a far more unstable and much scarier place than it was in the aftermath of the Gulf War of 1991," he said in a note published Thursday.

Russian President Vladimir Putin Thursday demanded a quick end to the U.S.-led attack on Iraq, saying it was in no way justified and calling it a "big political mistake."

Analysts also warned that even if it is a short sharp war, any resultant "victory rally" may stall on the less- than-sparkling prospects for global economic recovery.

Friday's session is likely to remain closely tied to reports of military progress from the war zone, but markets may also experience volatility due to the expiration of derivative contracts across the region.

Most European markets will experience "double witching," which occurs when the contracts for stocks index futures and stock index options expire on the same day. Traders expect Friday's expiration of derivatives contracts to be extremely volatile.

"Tomorrow's trade could be dramatic to say the least, but in the meantime sentiment remains undecided," commented one London trader.

Oil stocks were higher in late trade after unconfirmed reports that two Iraq oil fields were on fire. However, gains were tempered as both Saudi Arabia and Venezuela have pledged to keep the oil flowing during wartime. BP ended up 0.7% at 417.25 pence in London.

Insurance stocks - one of the strongest performing sectors in recent sessions - reversed course Thursday.

Europe's largest insurer, Allianz, said it would raise at least EUR5 billion in a bumper rights issue and bond sale. Shares fell 8.9% to EUR59 in late trade, leading decliners in Frankfurt.

The rights issue, the biggest ever in Germany and the largest one to be underwritten, will boost the number of outstanding Allianz shares by as much as 50% from the current 243 million.

Separately, Munich Re, the world's largest reinsurer, said it and Allianz will reduce their reciprocal shareholdings to around 15%. Munich Re also said it intends shortly to strengthen its capital base through the issue of subordinated bonds. Shares fell 6.7% to EUR76.59.

French insurer Axa came under pressure after credit ratings agency Moody's downgraded the company's senior debt rating, warning that volatile stock markets could continue to affect profitability. Shares fell 4.8% to EUR11.7, leading decliners in Paris.

Other notable decliners included Sage Group, the U.K.'s largest maker of accounting software. Shares fell 12.1%, to 123 pence after UBS Warburg cut its rating on the company to reduce from neutral.

At 1657 GMT, the Dow Jones Stoxx Index of shares in European companies was trading down 0.6% at 178.22, while the Dow Jones Euro Stoxx Index, which tracks companies in countries that joined the single currency, fell 1.3% to 170.20.

The Dow Jones Euro Stoxx 50 Index was down 1.6% at 2152.7 and the Dow Jones Stoxx 50 Index was down 0.6% at 2223.9.

-By Maria Daly, Dow Jones Newswires; +44-20-7842-9308; maria.daly@dowjones.com

www.forbes.com Reuters, 03.20.03, 11:59 AM ET By Reuters Polling Unit

LONDON, March 20 (Reuters) - Fund managers expect the Iraq war to be over in a month but see little upside for equities or the dollar after the conflict ends, according to a Reuters poll.

Thursday's survey of 11 strategists at fund management companies in Europe, North America and Singapore gave mid-range and average forecasts for the war to last four weeks.

But most saw only limited gains for the benchmark U.S. stocks index, the S&P 500. The mid-range forecast was 890 in three months time, barely changed from Wednesday's close of 874.

"Although the stock market has moved so much already, in the end I don't think this market will be up more than five to seven percent for the year, because after all of the hostilities are over, there is still the issue of a weak U.S. economy," said Anthony Chan at Banc One Investment Advisors in Columbus, Ohio.

Some saw the dollar recouping some of its losses against the euro during the conflict but the consensus was for the U.S. currency to weaken to $1.09 per euro in three months' time, close to its recent lows.

"For now the dollar is getting some sympathy," said Avery Shenfeld at CIBC World Markets in Toronto. "But in terms of the economy, when this war is over it will still be weak and the (U.S. Federal Reserve) will have to cut rates again."

The mid-range forecasts were for the dollar to strengthen to $1.05 in a week and a month's time from current levels around $1.06, before weakening again. However forecasts for three months' time ranged from $1.02 to $1.12.

ONLY THE BEGINNING

Most strategists expected only a modest sell-off in U.S. government bonds and some expected 10-year yields to fall again once the conflict ends.

The mid-range forecasts were for the 10-year yield to be little change at around 4.0 percent in one week and one month, edging up to 4.20 percent in three months.

With oil prices already down sharply from pre-war highs of around $34 per barrel for Brent crude, strategists saw fairly minor scope for further falls. The median forecast was for Brent crude to ease to around $25 per barrel in three months from current levels around $26.50.

Asked how long they were assuming the main Iraq conflict would last, five analysts said four weeks with other responses ranging from two to 12 weeks.

But most voiced caution about whether a swift U.S. military victory would resolve market worries about geopolitical tensions and the economy.

"The equity market is in the process of pricing in a quickly expedited war," said Nigel Richardson at AXA Investment Managers in London. "The biggest fear for the market is...that resistance goes on for longer than they anticipate."

Bahi Ghulrib at ABN Amro Asset Management in London said that besides Iraq, markets faced worries about fundamental weakness in major economies and a long list of global tensions.

"There are many problems around the world -- North Korea, Saudi Arabia, Pakistan, Cuba, Venezuela...," he said. "Iraq is only the beginning, not the end."

(Additional reporting by Pratima Desai and Joanne Russell in London, and Svea Herbst in Boston)

www.mortgage101.com Thursday, March 20, 2003 By Frank O'Brien Inman News Features

Last year, the average price of a new house in Canada rose 4.1 percent, the highest annual increase in nearly 15 years, according to Statistics Canada.

Yet a unique convergence of global events could cause the price of new homes in Canada to rise much faster this year, according to industry associations and economists.

The oil-industry strike in Venezuela, for example, has already forced up the price of asphalt roofing products and threatens to cause a North American-wide shortage. Asphalt shingles are the most widely used roofing product in Canada, nailed on an estimated seven out of every 10 new houses. Venezuela supplies about 90 percent of the crude oil used for asphalt, notes the U.S.-based National Roofing Contractors Association (NRCA).

"Prices may increase on the order of $30 to $50 per ton, or roughly 15 to 20 percent above their current levels," NRCA executive vice-president William A. Good warned in a February bulletin to members. Contractors were advised to include provisions in on-going contracts to "deal with volatile pricing."

As the price of crude oil increased, there has been heavy demand for paving asphalt, leaving roofing asphalt in shorter supply. There is generally less refining capacity today than in recent years, and there are other products produced at refineries that are more profitable than asphalt shingles, Good explained.

This January asphalt roofing material prices increased from 3 percent to 5 percent in Canada, but as yet there is no shortage of material.

Most builders are more worried about the cost of wood.

Prices for lumber, the most widely used building material by far, have rebounded from the low levels of 2002, notes Toronto economist Peter Andersen, who presented a paper at February’s Canadian Home Builder Association national conference. "Lumber prices appear likely to continue to increase," Andersen said.

Lumber prices have been bouncing over the past year due to a duty on Canadian softwoods heading into the United States. At first a glut of wood appeared on the market as Canadian mills tried to beat the duty. When the U.S. housing market slowed, the price of lumber fell. Lately, Canadian suppliers have cut back on production, but Canadian housing starts surprised most analysts and hit the highest level in 13 years this January. The result is rising costs for two-by-fours and other building lumber.

"Supply issues are currently the main problem facing new home builders," Andersen explained, "Skilled labor shortages, outright shortages of certain building materials and shortages in the availability of land are cited as problems."

There are other global pressures that are hitting home. Threats of a new Gulf War – it may be underway as you read this – are partly to blame for driving the cost of gasoline in Canada to record highs this year. Further, fears of terrorists have increased freight delays at the U.S.-Canada border. All this impacts on the price of transporting building materials – and the end price of a new house.

Finally, the threat of global warming has convinced Canada to sign the Kyoto Accord, which will soon force all new homes to be built to the toughest energy conservation standards in the world. Under federal government proposals, all new homes would have to meet R-2000 standards by 2010. R-2000 homes use about the half the energy of a conventional house. This will result in higher costs to new home buyers to cover everything from more efficient appliances to high-performance windows and extra insulation.

The bottom line for new home buyers: get the best deal you can today because it appears that prices can only go higher.

Frank O'Brien can be reached at fobrien@dccnet.com.

www.globeandmail.com By PATRICK BRETHOUR Thursday, March 20, 2003 - Page B1

S&P/TSX 22.1 6475.58 DJIA 21.15 8286.6 S&P500 1.82 875.84 Nasdaq 5.7 1402.77 Venture -3.72 1059.3 DJUK .06 152.58 Nikkei 144.01 8195.05 HSeng 35.97 9194.56 DJ Net 1.27 43.87 Gold (NY) -3.20 333.00 Oil (NY) -1.24 28.12 CRB Index -0.85 234.17 30 yr Can. +0.02 5.60 30 yr U.S. +0.05 4.96 CDN$ buys US$ +0.0009 0.6764 Yen +0.0300 81.1900 Euro -0.0011 0.6367 US$ buys CDN$ -0.0020 1.4784 Yen -0.1200 120.0300 Euro -0.0029 0.9413

CALGARY -- The spectre of an energy crisis is fading as crude plunged below $30 (U.S.) a barrel for the first time in three months yesterday and other energy prices retreated from record-breaking highs.

For months, oil prices have soared as the market fixated on the dire scenario of an attack by the United States against Iraq pushing already low crude inventories to critical levels, and leading to shortages of gasoline, heating oil and jet fuel.

Now, those fears are evaporating. Stores of crude oil are rising, if only slightly, and the United States is entering a period of relatively low demand for oil, the lull between the winter heating season and the summer, when gasoline consumption peaks.

And millions of barrels of oil are headed from Saudi Arabian ports to the east coast of North America, as the biggest member of the Organization of Petroleum Exporting Countries pumps crude at near-peak production.

Crude oil fell $1.79 to $29.88 a barrel yesterday on the New York Mercantile Exchange, the first time it has closed below the $30 mark since mid-December, when prices began to soar in response to production shortfalls from Venezuela and the rising threat of a war against Iraq. Over the past week, crude has dropped more than $9 a barrel.

Natural gas prices, too, have fallen sharply -- they are down nearly 45 per cent from their late February high -- as frigid weather in eastern North America has given way to spring temperatures.

And pump prices, which hit a record high last week in Canada, are finally starting to ease as the cost of crude moderates.

Another upward spike in the price of oil is possible, but it will be driven by facts -- such as Saddam Hussein destroying Iraqi oil fields during war with the United States -- not inchoate fears, said Vincent Lauerman, global energy analyst at the Canadian Energy Research Institute in Calgary.

"It's the surprise that is going to cause prices to jump back up."

Even if Iraqi sabotage or a terrorist attack does cause oil prices to spike, crude likely will not rise beyond $40 a barrel, Mr. Lauerman said.

Such a rise would be short of the high set in the prelude to the Persian Gulf war 12 years ago, and well short of the predictions of a surge past $50 a barrel that some analysts were floating earlier this month.

Crude is now within OPEC's pricing band for the first time this year, although it is at the upper threshold of that range.

Some analysts are concerned that the market, in shrugging off its fatalism, is now overindulging on optimism in assuming that a U.S. assault on Iraq will be quick and relatively painless. "They are pricing things for perfection right now," said Phil Flynn, a senior energy trader at Chicago-based Alaron Trading Corp.

For now, however, oil is on the decline -- and deflating the bubble in pump prices.

The national average cost of regular gasoline in Canada, after hitting a record high last Tuesday, dropped sharply this week, declining 4.4 cents a litre to 79.6 cents, according to a weekly survey from M.J. Ervin & Associates Inc.

The weekly snapshot of retail prices across the country is taken on Tuesday morning, so it may not fully capture this week's decline in crude prices, which are off more than $5 in the past two sessions.

Typically, a $1 decrease in the cost of oil leads to a 1-cent (Canadian) drop in the price of gasoline. On that basis, gasoline prices could be headed for another steep drop this week.

And not all cities across Canada saw prices drop over the past week: drivers in Victoria and Halifax, for instance, have yet to see gasoline decline, despite a fall in wholesale costs.

"We've seen it in some markets, and there could be more to come in others," said Cathy Hay, a senior associate at M.J. Ervin.

www.forbes.com Reuters, 03.19.03, 10:19 AM ET By Alexander Manda

LONDON, March 19 (Reuters) - Emerging market debt, which has returned a hefty seven percent to investors this year, may face selling pressure if war in Iraq is concluded quickly, as expected, due to falls in the prices of oil and safe-haven debt.

Oil has long been a key support for emerging economies, but prices are declining as war draws closer, apparently ending a drawn out period of geopolitical uncertainty.

Oil exports support Russian and Mexican government finances, whose bonds together are more than 40 percent of key emerging bond indices. A host of smaller credits also depend on oil.

"Credits like Russia, Ecuador, Venezuela, Mexico, Ecuador, Kazakhstan, Nigeria are going to experience changing perceptions about high oil prices," said Isaac Tabor, emerging market economist at Merrill Lynch in London.

Iraq has the world's second largest proven crude oil reserves and four of the world's top 10 oil exporters are its near neighbours.

Prices for benchmark Brent crude oil peaked at around $34 per barrel in early March, after climbing steadily since November, when the United Nations passed a resolution giving Iraqi President Saddam Hussein a final opportunity to disarm or face "serious consequences".

Iraq denies having weapons of mass destruction.

The U.S. has set a deadline of 0115 GMT on Thursday for Saddam and his sons to leave Iraq or face war, an offer Saddam has rejected.

BEWARE SLIDING OIL

"The first reaction on Russian bonds is going to be negative if the price fall is very sharp," Tabor said.

Russia's Urals crude benchmark has already fallen fast. At around $26 per barrel on Wednesday, it is now well below its March 10 peak of $33.54 per barrel.

Russian debt has already slipped a little. Its benchmark 2030 dollar bond <RUSGLB30=RR> was trading at 85.25 percent of face value on Wednesday, about two points lower than before oil prices began their fall.

But analysts said that even with a tumbling oil price, the Russian economy was unlikely to experience the sort of crisis that led to a painful currency devaluation and debt default in 1998.

"Russia should be well protected. Oil could go down to $14 or $15 per barrel, before it would hit fiscal or balance of payments difficulties," said Peter Botoucharov, emerging market economist at Commerzbank in London.

BEWARE FALLING T-BILLS

A quick war, which is widely forecast, is also likely to trigger a sell-off in safe-haven assets, including U.S. Treasury debt.

Treasury yields have already begun rising, with investors switching into rallying equity markets, after shrinking to historic lows as the threat of conflict in Iraq grew.

"The main risk (for Treasuries) is a super-sharp recovery in equities," said Michael Ganske, emerging debt fund manager at DWS Investments in Frankfurt.

But a prolonged equities rally could also pull cash out of emerging debt, which has benefited from buying by investors seeking higher returns than those offered by Treasuries, but unwilling to plunge into a very bearish stock market.

A Treasury sell-off could also have a secondary effect, in that it would reduce the value of collateral attached to some emerging market bonds, dulling their appeal for investors.

Brady bonds make up a large portion of the emerging debt market, including Brazil's C bond <BRAZILC=RR>, the most traded emerging debt instrument.

Named for former U.S. Treasury Secretary Nicholas Brady, such bonds were issued under a scheme to ease developing countries' debt burdens by repackaging defaulted loans into tradable bonds backed with U.S. Treasuries.

Collateralisation has helped boost demand for such debt this year, pushing prices higher.

Brazil's C bond has climbed to 78.125 percent of face value, up from 66.5 percent of face value at the start of the year.

Analysts said domestic investors especially were likely to sell if they saw Brady bonds losing value, even if the fall only reflects a slide in the U.S. Treasury collateral, rather than a higher perception of risk regarding the issuing country. "If Treasuries sell off massively it could trigger strong selling, because the locals trade on yield," said DWS's Gankse.

"For the local investor that is negative price action. They may get nervous and sell, (and) that could produce the momentum for a sharp sell off."