reuters.com Wed January 29, 2003 09:48 AM ET

ORLANDO, Fla. (Reuters) - Tupperware Corp TUP.N , direct marketer for household storage containers, said on Wednesday that profit fell as economic weakness in Latin America and Asia cut into sales.

Tupperware, known for its "Tupperware parties" at which sales representatives demonstrate products in people's homes, receives more than two-thirds of its sales outside the United States and has faced difficulty in Mexico, Venezuela, Korea and the Philippines.

At the same time, reported sales have been boosted by gains in the euro against the dollar.

The company, posted profit of $34.5 million, or 59 cents a share, compared with $28.5 million, or 48 cents a share, a year ago.

But earnings were only 50 cents a share in the quarter when profits from nonoperating items, like land development and the sale of a facility, are excluded, matching analysts' estimates posted on Thomson First Call.

Sales fell 2 percent to $321 million. Sales fell 54 percent to $21.5 in Latin American, where economic difficulties in Mexico and political turmoil and a general strike in Venezuela have weighed on results.

The company said it expects profit of $1.50 to $1.60 a share in 2003. The company had profit of $1.54 a share in 2002, but only $1.30 a share when nonoperating items are excluded. The company expects a 1 cent to 8 cents a share increase in earnings from operations, 6 cents from foreign currency and 13 cents to 18 cents from profits on land development.

Analysts forecast profit of $1.31 to $1.40 cents a share, excluding some unusual items, with an average of $1.38, according to market research firm Thomson First Call.

www.atimes.com

In the next few weeks, the struggling global economy may be put to the test if Washington chooses to invade Iraq. There are many economic risks involved in bombing Baghdad, the most important being a spike in oil prices. With oil prices already over US$30 a barrel, increased pressure has been put on the global economy as more money is spent on importing oil.

Should the United States attack Iraq, there is a real possibility that Middle East oil shipments will be disrupted. US oil inventories are already running low due to the nearly two-month long Petroleos de Venezuela oil strike in Venezuela. While it takes only one week for Venezuelan oil exports to reach the United States, it takes four to five weeks for them to arrive from the Middle East.

During an American attack on Iraq, an errant bomb could destroy or interfere with oil operations, halting Iraq's 1-2 million barrels per day (bpd) in exports. Compounding the American threat, Iraqi leader Saddam Hussein could opt to damage his own oilfields by ordering troops to light them on fire, as was done to Kuwait in 1991.

In order to prevent a rise in oil prices, any reduction in Iraqi oil exports will need to be compensated by an increase in oil exports from OPEC nations and non-OPEC nations alike. However, most OPEC nations are already producing at capacity, such as Indonesia and Qatar; the biggest oil producers outside of OPEC - Russia, Norway and Mexico - cannot increase their output since their pumps are already running at full capacity.

This likely scenario has worried economists; it could result in oil prices as high as $40 a barrel, possibly causing extensive damage to the global economy. However, the Bush administration believes that the end result of the invasion will be economic growth rather than economic recession. The fate of the economy will rest on how fast the United States can get oil flowing again after the war; once oil production has stabilized again, the United States will likely be able to increase capacity by updating Iraq's oil infrastructure.

While before the Gulf War, Iraq was exporting 3.5 million barrels per day, it is predicted that Iraq may be able to increase production up to 5 million bpd with US assistance. Larry Lindsey, former top economic adviser to President George W Bush, supported this prediction in a statement last fall, "When there is regime change in Iraq, you could add three million to five million barrels [per day] of production to world supply. The successful prosecution of the war would be good for the economy." Indeed, this scenario would provide a boon to the global economy by increasing oil supply, dropping prices down to $15 to $20 a barrel.

But successful "regime change" might not be as easy as it seems. Iraq's oil infrastructure is already in bad shape and the prediction is that it will take five to 10 years for Iraqi oil output to reach such levels, if at all; in addition, there is no guarantee that the new Iraqi government will be willing to export such an inflated amount of oil. However, any new administration will most likely be installed and protected by US troops, thus reducing the government's actual independence from Washington.

The other most dangerous scenario is whether an invasion by Washington will heighten tensions in the Middle East in such a way that militant groups will attack oil interests when the US and global economy are most vulnerable. Indeed, if militants inside Saudi Arabia attempted to sabotage major oil facilities within the country, limiting exports, oil prices would skyrocket since other nations would not be able to supplement the amount of oil Saudi Arabia exports.

This would possibly send oil prices to over $50 a barrel, or cause prices to become static at $40 a barrel for many months. Indeed, Gary Hufbauer, of the Institute for International Economics, stated in the Baltimore Sun last October that a sustained rise in oil prices at a level of $45 or $50 a barrel could "turn [the economies of] the United States and Japan into a recession".

Should the two largest global economies - the United States and Japan - enter a recession, or even suffer further economic setback due to increased oil prices, it would greatly add to the misery of other suffering states and impact emerging market economies.

South American states, for instance, have had difficulty accessing global capital markets due to the economic uncertainty in Brazil - which has been flirting with economic disaster - and the recent economic meltdown of Argentina. Paraguay and Uruguay too have been hit by their neighbors' economic troubles, with the former suffering from low tax revenues and a stagnant economy. If the global economy were to deteriorate, it could create a scenario where Argentina would have to default on its debts to the International Monetary Fund. If Argentina were to default, and other countries soon followed, it would compromise the Fund's own financial position and economic assistance to needy economies would falter, further spiraling the world economy toward a grave future.

Along with South America, Asia will also be pushed into economic disaster should oil prices spike for a prolonged period. In addition to putting Japan into recession, South Korea, fraught with its own economic woes due to a rapid increase in real estate prices and unemployment, is also vulnerable. Seoul cannot rely on domestic spending to stimulate its economy due to ballooning household debt, a situation that increased oil prices would only exacerbate.

Singapore, too, is walking on the edge of economic demise. Narrowly missing a double-dip recession this last year, weak demand for the city-state's key electronics exports and manufactured goods led to further job losses, ballooning its unemployment level to a 15- year high.

Therefore, these concerns will be carefully weighed by the Bush administration as they consider whether or not to invade Iraq. With the global economy in such a precarious position, Washington will be hedging its bets; a war will either provide great economic gains, or colossal economic ruin.

The Power and Interest News Report (PINR) is an analysis-based publication that seeks to, as objectively as possible, provide insight into various conflicts, regions and points of interest around the globe. PINR approaches a subject based on the powers and interests involved, leaving the moral judgments to the reader. PINR seeks to inform rather than persuade. This report may be reproduced, reprinted or broadcast provided that any such reproduction identifies the original source, www.pinr.com. All comments should be directed to content@pinr.com.

www.sfgate.com Tuesday, January 28, 2003

(01-28) 16:49 PST MEXICO CITY (AP) --

Mexican stocks closed little changed Tuesday, posting marginal losses as investors took a cautious stance ahead of U.S. President George W. Bush's State of the Union address.

The market's key IPC index closed down a modest 3.63 points, or less than 0.1 percent, to 5,919.70 points. At the end of 2002, the IPC stood at 6,127.09.

Volume improved to 75.4 million shares worth 949.4 million pesos, compared with Monday's light 48.1 million shares worth 572.4 million pesos.

Investors were looking to Bush's State of the Union address late Tuesday for any details regarding military buildup in the Middle East and the economic status of Mexico's top trading partner.

Among individual issues, market bellwether Telmex L shares closed up 0.4 percent, or 7 centavos, to 16.57 with 7.5 million shares traded. Its wireless sister company America Movil L shares rose also 0.4 percent, or 3 centavos, to 7.59. Among top losers was conglomerate Grupo Carso A1 shares, down 4.6 percent to 24.10 pesos.

SAO PAULO, Brazil (AP) -- Brazilian stock prices ended flat Tuesday, with many traders sitting on the sidelines and waiting for the State of the Union address from U.S. President George W. Bush. The speech is expected to signal a timeline for a possible U.S.-led war against Iraq.

Local assets have slipped over the past two weeks on war worries. That trend continued Tuesday with the main Sao Paulo index losing 0.12 percent to 10,516 points.

Among stocks, steel maker Gourd's shares lost 1 percent to close at 29.50 reals despite estimates the company will close the year with 850 million reals in net profit.

Bellwether Telemar's shares finished virtually unchanged at 26.14 reals, while Bardes bank's shares lost 0.9 percent after the financial services giant said it would acquire the Brazilian asset management arm of JP Moorage Chase. Oil giant Petrobras lost 1.3 percent to 44.65 after several weeks of gains on rising petroleum prices.

SANTIAGO, Chile (AP) -- Chilean share prices closed higher in a technical bounce Tuesday after several losing sessions, with the market awaiting U.S. President George W. Bush's State of the Union speech for further direction.

The blue chip IPSA index ended up 0.7 percent at 988.84 points, from 982.17 Monday. The broader-based IGPA index edged up 0.2 percent to 4,956.17 from 4,948.75.

Volume totaled 5.86 billion pesos, compared with 5.79 billion Monday.

Chile's particular exposure to a conflict lies in its position as an importer of more than 80 percent of its crude oil, and due to the potential slowdown to growth a war might inflict on its main industrialized trading partners, hitting Chilean exports.

Among individual shares, utilities holding Enersis rebounded 3.3 percent to 59, while its Endesa Chile unit climbed 1 percent to 184.90 pesos.

CARACAS, Venezuela (AP) -- The Venezuelan stock market ended mostly unchanged Tuesday in thin trade.

The IBC General Stock Index closing 1.5 percent higher at 8,983 points.

Telephone giant CA Nacional Telefonos de Venezuela, or CANTV, ended 6 percent higher at 3,205 bolivars, on a rough equivalent of about ,000 in volume.

The stock exchange, which reopened for the first time Monday since the beginning of a two-month general strike, will operate for only 2-1/2 hours each day to continue showing support for the strike.

Strike leaders have refused to call off the action until President Hugo Chavez, whose term runs out in 2007, agrees to early elections.

BUENOS AIRES, Argentina (AP) -- Argentine stocks closed higher Tuesday, with the Merval index registering a 1.5 percent increase to end at 555.46 points, compared to 548.19 points on Monday.

A total of 32 shares finished higher, 17 ended lower and seven were unchanged on a total volume of 29.13 million pesos.

www.therecord.com Wednesday January 28, 2003 - 18:34:45 EST MALCOLM MORRISON AP

Traders negotiate a deal in the Euro Currency Futures pit at the Chicago Mercantile Exchange. (Stephen J. Carrera/AP) Audio clip: The Business Minute TORONTO (CP) - Cautious buying of beaten-down stocks lifted markets Tuesday ahead of the U.S. president's state of the union address in the evening.

Some positive economic news and corporate earnings reports sent the Dow Jones industrial average 99.28 points higher to 8,088.84, after it had lost 141.5 points Monday to close under 8,000 for the first time since Oct. 14. Toronto's S&P/TSX composite index was held back by weakness in technology and energy stocks but managed a gain of 13.57 points to 6,570.09. Nortel lost 13 cents to $3.50.

Mining giant Noranda sank 41 cents to $14.55 after saying it is taking a $630-million writedown as it shuts down a new magnesium plant in Quebec for at least a year. Brascan, which owns 40 per cent of Noranda, slipped 23 cents to $31.40.

The Canadian dollar continued to drop as investors took some profits from the dollar's runup of about 2.5 cents from Dec. 31 to a six-year high last Friday on the prospect of higher interest rates and U.S. dollar weakness. The loonie finished down 0.16 cent at 65.43 cents US, after losing as much as 0.51 cent at midday.

"It's nothing sinister," said Steve Butler, director of foreign exchange trading at Scotia Capital Markets.

"We've seen a variety of sort of bigger players, more along the lines of fund managers, taking profits on some long Canada positions."

The TSX Venture Exchange lost 3.54 points to 1,114.42.

The Nasdaq composite was up 16.91 points at 1,342.18 and the S&P 500 gained 11.06 at 858.54.

The market's gains were modest compared with the steep declines in recent sessions, a sign that investors were wary of big commitments ahead of President George W. Bush's speech on the state of the world.

Investors are hoping for a clearer indication of what action the U.S. intends to take against Iraq and what plans Bush has to fix an ailing economy.

"The overall environment is still very risky one to hold stocks and I think people are just jobbing the market, getting in and out quickly and not taking on long-term views," said Jeff Cheah, market strategist at MMS in Toronto.

"The prospects for war are very real and the outcome ranges from the most optimistic to the most pessimistic, but in between, until we get to that event, there's a lot of question marks regarding what kind of outcome the current tension would bring to the financial markets."

On the economic front, new data showed that U.S. consumer confidence continued to take a hit because of war fears and pessimism over the job market.

The Conference Board consumer confidence index dropped to 79 from a revised 80.7 in December. Analysts had been expecting a bigger decline.

That report was counterbalanced by another showing new home sales in the U.S. hit a record high in December to close out the best year ever as the lowest interest rates in four decades enticed home buyers.

Consumer giant Procter and Gamble exceeded expectations in posting net income of $1.49 billion US in its second quarter, compared with $1.3 billion US a year ago. Its shares rose $1.95 to $85 US.

Xerox jumped $1.40, or more than 15 per cent, to $9.45 US after the business machines maker reported it earned $19 million US in the fourth quarter, much better than expected.

Pharmaceutical giant Merck & Co. was also a favourite after fourth-quarter profits rose two per cent to $1.89 billion, matching expectations. Its shares finished $2.64 higher to $54.50 US.

In Canada, TransCanada PipeLines had lower revenues but higher profits for 2002, and raised its dividend to by two cents to 27 cents. Its shares gained 14 cents to $22.82.

Quebec-based grocery store chain Metro Inc. posted a 16 per cent increase in quarterly earnings to $35.3 million as sales climbed to $1.3 billion. Its shares were marked up 22 cents to $18.27.

CGI Group rose 14 cents to $7.27 after the technology services company said quarterly earnings surged 21 per cent to $37 million. Revenue was up almost 15 per cent.

Ballard Power surged $1.70 to $16 on indications Bush would propose a significant increase in spending on research into fuel-cell cars.

Aside from Bush's speech, investors were looking ahead to a U.S. Federal Reserve Board monetary policy announcement Wednesday afternoon. While any interest-rate move is regarded as unlikely, the Fed may provide clues to the direction of the economy.

On the TSX, declines beat advances 609 to 488, with 210 issues unchanged.

The gold sector rose as the bullion price picked up 60 cents to $370 US an ounce. Placer Dome was ahead 40 cents to $17.80.

The energy sector was down, although the price of crude oil edged up 20 cents to $32.58 US a barrel in New York on Iraq war fears and Venezuela's continuing disorder. Shell Canada lost 92 cents to $46.06.

The financial sector finished higher with National Bank adding 58 cents to $31.83.

Canadian National Railway gained $1.10 to $61.93.

Toronto market volume was 202.8 million shares worth $2.35 billion.

The Nasdaq Canada index gained 1.02 points at 225.26.

www.forbes.com Reuters, 01.28.03, 12:47 PM ET By Pedro Nicolaci da Costa

NEW YORK, Jan 28 (Reuters) - Emerging market debt traded mostly flat on Tuesday as investors awaited concrete news about a possible war in Iraq and scanned global financial markets for a sense of direction.

After United Nations inspectors on Monday delivered a scolding but inconclusive report on their hunt for weapons of mass destruction within Iraq's borders, emerging markets were holding tight ahead of U.S. President George W. Bush's State of the Union address on Tuesday night.

J.P. Morgan's benchmark Emerging Markets Bond Index-Plus narrowed a meager 9 basis points to 742 over comparable safe-haven U.S. Treasuries. The spreads over comparable U.S. Treasuries are the premium investors demand to compensate for risk.

Fears that a conflict would dampen investors' appetite for risk and drive them out of emerging markets continues to stand as the backdrop for emerging debt trading, a scenario unlikely to change until there is a clear resolution to the standoff in Iraq.

"The external factors to emerging markets are what's on investors' minds at the moment," said Paul Masco, head of emerging market trading at Salomon Smith Barney.

Sinking U.S. stock markets, which have been flirting with three-month lows, pressure on a wobbly U.S. dollar and fears about Iraq have all been weighing on the market, Masco said.

In Brazil, where new President Luiz Inacio Lula da Silva is riding out his swift transition from Wall Street menace to market darling, benchmark C bonds <BRAZILC=RR> gained 0.5 points to 67.25 bid.

Investors continue to tip their hats to the policy reform efforts of the Workers Party economic team, but the geopolitical uncertainty surrounding Iraq has doused Brazil's valiant market comeback with cold water.

"The local fundamentals are quite positive, the measures taken so far are solid, the government is headed in the right direction," said Ricardo Amorim, head of Latin American debt strategy at IDEAglobal.

After posting strong gains in the first part of January, Brazil bonds are now up a paltry 0.9 percent on the year.

"The problem is that the future of Brazilian markets is going to depend as much on the internal fundamentals as on the possibility of war, and on that front, things aren't looking good," added Amorim.

Amorim said the growing likelihood of a U.S. attack on Iraq would undoubtedly dampen investors' appetite for risk and dull the allure of emerging markets. Meanwhile, in strife-torn Venezuela, where an opposition strike aimed at forcing President Hugo Chavez to resign entered its 58th day, officials were considering a fixed exchange rate as an attempt to stem rising capital flight.

The strike has crippled energy production in the world's fifth-largest oil exporter, but Chavez claims the opposition's resolve is starting to crack.

A shift in monetary policy would help preserve Venezuela's reserves and allow the country to repay its foreign debt. But analysts cautioned that fixed exchange rates had led a number of Latin American nations -- including crestfallen Argentina -- astray.

In other emerging market news, investors were awaiting a planned Peruvian bond deal of around $1 billion. The bond, which sources close to Peru's Economy Ministry said could carry a 12-year to 15-year maturity, may sell as soon as this week, analysts said.