news.ft.com By Nerma Jelacic in London Published: February 5 2003 12:26 | Last Updated: February 5 2003 16:33

Gold prices slipped off their highs in Wednesday afternoon trade as Colin Powell, the US secretary of state, presented his case against Iraq to the United Nations' security council.

Earlier in the day the commodity soared to its highest level in more than six years as investors searched for safety amid heightened fears of the inevitability of a US-led war with Iraq.

In his address, Mr Powell claimed that Saddam Hussein, the Iraqi president, had made no effort to disarm "as required by the international community".

"How much longer are we willing to put up with Iraq's non-compliance, before we as a council, as the United Nations say, 'enough, enough'," he said.

Gold was quoted at $380 a troy ounce in London, down from the morning fix of $385 a troy ounce but still up from the previous session's fix of $376.55 an ounce. Wednesday morning's fix was the highest since September 1996.

The spot market gold price reached a high of $388.50 an ounce, up from levels around $378.65 in New York trade on Tuesday.

The commodity has gained more than $10 this week and 12 per cent since the beginning of this year. Gold, traditionally a safe-haven asset in times of uncertainty, was also helped by a weakening in the dollar. The dollar fell close to a four-year low against the euro on Wednesday.

Investors also looked for safety in oil markets, pushing Brent crude futures for March delivery up 37 cents to $31.46 per barrel on London's International Petroleum Exchange, off a high of $31.60.

Reports that Opec is considering reducing its output added to the bullish pressure on the crude price.

Iran's oil minister said on Tuesday that if Iraq and Venezuela sustain production the cartel would have to cut output in the second quarter.

Crude oil has made some hefty gains on the back of the twin uncertainties of war in the Gulf and the threat of disruption to exports from the oil-rich region, and the 63-day general strike that crippled Venezuela's exports.

townsvillebulletin.news.com.au 05feb03

WAR jitters sent local share prices decisively lower today ahead of US Secretary of State Colin Powell's UN presentation on Iraq, weighing heavily on world markets as gold prices surged. The benchmark S&P/ASX 200 index fell 18.6 points to 2928.0, while the all ordinaries index declined a similar amount to 2907.5 at 1213 AEDT.

On the Sydney Futures Exchange, the March share price index contract was down 19 points to 2915.0 - a 13 point discount to the underlying index - on a volume of 5113 contracts.

The sirens of war and weak corporate guidance undermined markets, with investors selling off or staying on the sidelines until a clearer picture emerged on a timetable for US action over Iraq, unloading stocks and collecting profits from a previous two-day rally.

Analysts said there was little reason to buy ahead of the UN address.

In London, shares in Britain's biggest companies ended the day mired in the red, hammered lower by weak financial stocks and a warning by spirits group Allied Domecq that its earnings growth had stalled.

The FTSE 100 benchmark index ended down 99.3 points, or 2.7 per cent, at 3590.1, erasing most of its 122-point gain yesterday. Other European markets also slumped. The DJ Stoxx 50 index of leading euro-zone shares plunged 3.81 per cent to 2184.23 points.

The Dow Jones industrial average lost 92.09 points, or 1.14 per cent, falling to 8016.92, while the tech-heavy Nasdaq shed 17.79, or 1.34 per cent, to close at 1306 points.

The broader Standard and Poor's 500 was 14.79 points lower, or 1.71 per cent, at 845.53.

Powell was to present the US case against Iraq at a special UN Security Council meeting. But he said it would not include "smoking gun" evidence of Iraqi malfeasance but a "convincing case" that Baghdad continues to defy UN disarmament demands.

Shaw Stockbroking head dealer James Spiteri said the market remained cautious but had picked up from earlier lows.

"The market is predictably weak, although it has come off its earlier lows, it is just slightly improving," Mr Spiteri said.

At 1222 AEDT, AMP tumbled 23 cents, or 2.5 per cent to $8.97 after reaching a record low of $8.95 in earlier trade.

Mr Spiteri said the drop was because of AMP's exposure to the UK market which fell sharply overnight.

"There was a weaker UK market overnight ... (and AMP) may be forced to raise more money as provisions against commitments in the UK," he said.

"There is also a little bit of scepticism over global insurance players after overnight in the US the American Insurance Group said it had not taken into account sufficient provisions."

Mr Spiteri said the banking sector was also predictably weaker, with ANZ shares shedding 23 cents to $16.92 at 1227 AEDT.

National Australia Bank shares gave up 20 cents to $31.33, Westpac shed 15 cents to $13.81 and Commonwealth Bank lost 15 cents to $26.23.

Media stocks were also down. News Corp was down 25 cents to $11.06 while the preferred scrip lost 22 cents to $9.24 at 1229 AEDT.

In other stocks Kerry Packer's PBL gave up two cents at $8.33 while Fairfax was four cents lower at $2.98.

Gold prices surged overnight, climbing to six-year highs as war jitters continued.

The spot price of gold in Sydney gained $US7.425 to $US383.55 per fine ounce at 1238 AEDT.

Gold stocks rallied on the back of the increase, with Newcrest Mining gaining two cents to $6.65, Sons of Gwalia lifted three cents to $2.31 and Lihir Gold surged four cents, or 2.63 per cent, to $1.56.

The resources sector was weaker. At 1244 AEDT, BHP Billiton fell two cents to $9.10, Rio Tinto lost 16 cents to $32.75 and Woodside Petroleum dropped 10 cents at $11.17.

The retail sector was mixed. David Jones was steady at $1.07, Woolworths fell six cents to $11.70 and Coles Myer was five cents weaker at $6.25 at 1249 AEDT.

In other news, grain handler and marketer GrainCorp lifted more than three per cent, or 34 cents, to $10.30 after the company said it was talking about a possible merger with the unlisted Grainco Australia.

Specialist broadband telco, Uecomm's shares fell 0.5 of a cent to 15.5 cents after reporting a $5.5 million loss in 2002 an improvement from the $55.2 million loss recorded the previous year.

The maker of the iconic Hills clothes hoist, Hills Industries' shares gained one cent to $3.25 after booking a $13.977 million net profit for the first half, compared to $12.166 million in the previous corresponding period.

The top traded stock by volume was Lihir Gold with 10.87 million shares changing hands worth $17.07 million.

Preliminary national turnover was 359.56 million shares worth $724.3 million, with 321 rising, 481 falling and 336 steady at 1258 AEDT.

"It's a very thin market, not a lot of volume. There is too much negative sentiment going into the speech. We're going into war and everyone knows it," Michael Driscoll, head of listed trading at Bear Stearns in the US.

On the corporate front, a shock $US1.8 billion ($3.04 billion) charge from insurer American International Group and news from Goodyear that it is eliminating its fourth-quarter dividend further undermined Wall St sentiment.

World oil prices bubbled higher as nerves tightened. New York's benchmark light sweet crude March-dated futures, which had slumped in early trade after the end of Venezuela's general strike, reversed course to end 82 cents higher at $US33.58 a barrel in New York.

In London, reference Brent North Sea crude oil for March delivery, which also had declined earlier, rose 83 cents to $US31.08 per barrel. AAP, AP, AFP

www.timesdaily.com The Associated Press February 04. 2003 6:12PM

Crude oil futures ended sharply higher Tuesday, as petroleum-products rallied and traders covered short positions ahead of Secretary of State Colin Powell's appearance Wednesday at the United Nations. On the New York Mercantile Exchange, nearby March crude futures rose 82 cents to close at $33.58 a barrel. March heating oil rose 4.38 cents to close at 96.19 cents a gallon, while March gasoline jumped 4.38 cents to close at $1.006 a gallon. On London's International Petroleum Exchange, March Brent settled up 84 cents at $31.09 a barrel. Natural gas for February delivery fell .04 cent to settle at $5.762 per 1,000 cubic feet. There is "anticipation that Colin Powell's presentation to the U.N. Security Council on Wednesday will bring the U.S., if not the world, one step closer to war with Iraq," said Tim Evans, an analyst at IFR Pegasus. Powell is expected to present U.S. intelligence showing that Iraq hasn't fully disclosed its weapons program and isn't cooperating with weapons inspectors. The Bush administration is relying on the Powell presentation to win over skeptics in the Security Council, where key members remain opposed to the use of force against Iraq. Using photographs of mobile biological weapons labs and transcripts of intercepted Iraqi conversations, Powell will try to make the case that diplomacy and inspections have nearly run their course. Chief U.N. inspector Hans Blix, meanwhile, warned Iraq that it's "five minutes to midnight" and pleaded with the Iraqi regime to show that it is cooperating. Blix told a news conference that Iraq should take seriously U.S. warnings that the diplomatic window is closing and the prospect of military action is looming. A key question will be whether the U.S. will ask the Security Council for a resolution authorizing the use of force. Britain, America's closest ally, wants an authorization resolution, but the Bush administration has said it retains the right to attack Iraq without a second resolution. If the U.S. opts to seek a second Security Council resolution, "military action will be held off for a little longer, and it could take some of the war premium out of the market," said Tom Bentz, an analyst at BNP Paribas. Powell's report to the Security Council will dominate the headlines Wednesday. But traders will also be scrutinizing weekly inventory data from the American Petroleum Institute and the Department of Energy. For the first time in weeks, analysts are expecting the data to show a build in U.S. crude oil inventories, thanks to a surge in imports and low refinery utilization. Most analysts surveyed by Dow Jones Newswires expect crude stocks to show an average build of 2 million barrels for the week ended Jan. 31, as Venezuelan shipments to the U.S. continue to rise. Venezuelan oil output has climbed to 1.25 million barrels a day, according to dissident staff at state monopoly Petroleos de Venezuela SA. The increase in Venezuelan production could prompt the Organization of Petroleum Exporting Countries to consider an output cut in March, OPEC President Abdullah bin Hamad al-Attiyah said Tuesday. But analysts and some OPEC officials say that much will depend on whether there is a war in Iraq and how much oil production is disrupted as a result.

www.bloomberg.com By Darren Boey

Sydney, Feb. 6 (Bloomberg) -- Australian stocks fell, paced by gold miners such as Newcrest Mining Ltd., after the price of the metal dropped on concern the U.S. failed to provide evidence to the United Nations to justify an attack on Iraq.

The S&P/ASX 200 dropped 15.50, or 0.5 percent, to 2903.20 as of 10:23 a.m. in Sydney. Five stocks declined for each that advanced. The broader All Ordinaries Index fell 0.5 percent to 2883.

Gold for April delivery fell 0.7 percent to $377.20 an ounce on the Comex division of the New York Mercantile Exchange.

Newcrest slid 19 cents, or 2.9 percent, to A$6.33. Croesus Mining NL slumped 4 cents, or 4.4 percent, to 86 cents. Lihir Gold Ltd. fell 5 cents, or 3.2 percent, to A$1.52.

New Zealand's stock market is closed for the Waitangi Day public holiday.

The following stocks are, or were, active. The stock symbols are in parentheses after the company names.

Australian stocks:

BHP Billiton (BHP AU ), which makes a third of its earnings from oil, gained 6 cents, or 0.7 percent, to A$9.15. Crude oil for March delivery gained 1 percent to $33.93 on the New York Mercantile Exchange, the highest closing price for a most- active contract since Nov. 29, 2000.

David Jones Ltd. (DJS AU ) added a cent, or 0.9 percent, to A$1.08. The department store owner said its second- quarter sales rose 3.4 percent to A$538.8 million ($318 million). It kept its full-year net income forecast of a 15 percent to 20 percent gain unchanged, the company said in a statement to the Australian Stock Exchange.

Goodman Fielder Ltd. (GMF AU ) climbed 6 cents, or 3.5 percent, to A$1.79. Goodman, the target of a hostile takeover offer from rival foodmaker Burns Philp & Co. (BPC AU ), rose as 3.8 percent of its shares changed hands. Credit Suisse First Boston, which is advising Burns Philp, bought 41 million of the 46 million Goodman Fielder shares traded so far today.

Macquarie Infrastructure Group (MIG AU ): The toll- road investor said average daily revenue from its M1 highway in Sydney, Australia's most populous city, rose 11 percent in January from a year ago.

www.online.ie Business & Finance 04 Feb 2003

The European Commission today warned that a rise in crude oil prices to an average USD34 per barrel could reduce growth in the euro zone by 0.2 percentage points this year and next year.

The latest Commission forecasts, which predicted an average 1.8pc growth in the eurozone, were based on the assumption of an average price of USD24 per barrel.

Oil prices have been rising steadily as the prospect of a US-led war with Iraq grows and last month's general strike in Venezuela cut production levels.

However, a strengthening of the euro is offsetting the impact of the crude price increase, which is also being tempered by a resumption of production by Venezuela, a Commission spokesman said.

Oil price rises "remain a concern" but are "compensated for to a certain extent by the increase" in the value of Europe's single currency, he said.

At 2.30 pm, Brent crude oil for March delivery was up 17c at USD30.42 a barrel.