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UPDATE 1-Ukraine May CPI to dip from April's 3.1 pct-minister

Reuters: [2008-05-17 17:34:00]

(adds quotes, details)

By Natalya Zinets

KIEV, May 17 (Reuters) - Ukraine's inflation rate will slow in May from April's 3.1 percent and the government will do everything it can to combat soaring prices, Economy Minister Bodan Danylyshyn told Reuters on Saturday.

His deputy, Iryna Kryuchkova, suggested price rises, which soared to just under 30 percent year-on-year last month, could even be negative in July and August given the prospect of a good harvest.

Fuelled by a record month-on-month rise of 3.8 percent in March, consumer price inflation has hit a cumulative 13.1 percent over the first four months of the year -- far exceeding a government target of 9.6 percent for the entire year.

"In May, it will be lower than it was in April," Danylyshyn said on the sidelines of an investment conference held in conjunction with the EBRD's annual meeting.

"And we will do everything so that it turns out that way."

Prime Minister Yulia Tymoshenko has said that price rises in the first two weeks of May stood at less than half the level recorded in the same period in April.

Officials attribute the steep increases to rises in food prices. Tymoshenko, who took office last December, also says she has inherited inflation patterns from the previous government and its pre-election increases in social benefits.

But a senior central bank official said steep rises in the price of gas imported from Russia and continued hikes towards a European market price had also impacted inflation. Ukraine now pays $179.5 per 1,000 cubic metres, from $50 in 2005.

Ihor Shumylo, director of executive director of economic issues at the central bank said he expected the gas price to rise by 50 percent in the coming years.

"Everyone knows that sooner or later Ukraine will have pay the European price," he told journalists.

Russia's gas export monopoly Gazprom <GAZP.MM> currently sells gas to its European customers at around $400. Prices fluctuate together with global prices for refined products with a lag of six to nine months.

Ukraine's inflation hit 16.6 percent throughout 2007 against 11.6 percent the pervious year. Consumer prices leapt in March, accelerating at their fastest pace since 1999. Between January and April year-on-year price growth reached 30.2 percent.

FOOD PRICES BLAMED

Prices began their rapid rise after a bad harvest last year, which boosted food costs -- 50-60 percent of the CPI basket.

Danylyshyn said the government was maintaining price controls to guard against "unjustified" increases. Other measures have included using Ukraine's state reserves of cheaper products to keep increases to a minimum.

With food prices accounting for 50-60 percent of the statistical consumer basket, the government believes a good harvest will bring down inflation figures.

"We have for the moment no reason to believe that we will have any problems with farm output. There is optimism about a good harvest," Kryuchkova said.

"This will affect food prices. We have had years with deflation in July and August and that may be the case this year. We have not ruled it out. It's in our forecasts."

But she said slow movement in extending credits to companies posed an even bigger threat to the economy.

"It is the stupor in routine credits to companies that is now slowing down normal economic development," she said. "It could be higher."

Kryuchkova said the growth forecast of 6.8 percent -- compared to 7.6 percent last year -- was unchanged.

"We will have the lowest GDP figures and the highest inflation figures in the first half. The situation can change in the second half," she said.

"I believe we will have some sort of stabilisation for several months and then growth rates will start moving up."

Experts polled by Reuters are less optimistic than the government in their forecasts -- predicting inflation of up to 21.6 percent for the year and growth of 6.0 percent. ((Kiev bureau; +380 44 244 9150; additional reporting by Sabina Zawadzki; writing by Ron Popeski; Editing by Nick Edwards; Reuters Messaging:ronald.popeski@reuters.com@reuters.net))

WRAPUP 13-Thousands flee on China lake bank fears

Reuters: [2008-05-17 16:57:00]

* Rescue work resumes after false rumours

* President Hu Jintao inspects Wenchuan rocked by aftershock

* Ammonia leak contained (Recasts, adds details and quotes)

By Chris Buckley and John Ruwitch

BEICHUAN, China, May 17 (Reuters) - Thousands of Chinese fled their homes on Saturday amid fears a lake could burst its banks, hampering rescue efforts after the deadliest earthquake in more than three decades killed about 29,000 people.

Rescue workers returned to Beichuan county, near the epicentre of the quake, in Sichuan province, but many residents were too frightened to return, nervous about a lake formed after aftershocks triggered landslides blocking the flow of a river.

"After briefly evacuating, rescue work returned to normal at Beichuan," an official Web site (www.china.com.cn) said, blaming the evacuation on a false alarm.

A paramilitary officer had told Reuters earlier that the likelihood of the lake bursting its banks was "extremely big".

The situation was "very dangerous because there are still tremors causing landslides that could damage the dam", said Luo Gang, a building worker who left the southeastern port city of Xiamen and rushed home to look for his missing fiancee. Rescue work had been complicated by bad weather, treacherous terrain and hundreds of aftershocks.

"Although the time for the best chance of rescue ... has passed, saving lives remains the top priority of our work," President Hu Jintao told distraught survivors just over a week after a jubilant China celebrated the Olympic torch relay reaching the summit of Mount Everest.

As the weather becomes warmer, survivors were worried about hygiene and asked questions about their longer-term future.

"What we don't need now is more instant noodles," said truck driver Wang Jianhong in the city of Dujiangyan. "We want to know now what will happen with our lives."

There has been growing concern about the safety of dams and reservoirs which have been weakened in the mountainous province of Sichuan, an area about the size of Spain.

In Sichuan and neighbouring Chongqing, 17 reservoirs were damaged, with some dams cracked or leaking water. Several are on the Min river, which tumbles through the worst-hit areas between the Tibetan plateau and the Sichuan plain.

The Lianhehua dam, built in the late 1950s northwest of Dujiangyan, showed cracks big enough to put a fist in.

PEOPLE TENSE

"When the dam is in this shape, we cannot feel relaxed," said farmer Feng Binggui who has moved from his village below the dam into the hills.

China has said it expects the final death toll from Monday's 7.9 magnitude earthquake to exceed 50,000. About 4.8 million people have lost their homes and the days are numbered in which survivors can be found.

Cabinet spokesman Guo Weimin, taking a long pause to compose himself as he read from an updated casualty report at a news conference, put the death toll so far at 28,881.

Premier Wen Jiabao said the quake was "the biggest and most destructive" since before the Communist revolution of 1949 and the quick response had helped reduce casualties.

That compares even with the 1976 tremor in the northern city of Tangshan which killed up to 300,000 people.

Hong Kong cable television said some 1.2 million people were also evacuated from Qingchuan, 90 km (55 miles) northeast of Beichuan, as rising waters threatened to burst a lake's banks. But there was no independent confirmation of this.

Sichuan Vice-Governor Li Chengyun said more than 188,100 people have been injured and about 10,600 people remain buried under rubble. About 2.6 million tents are needed to shelter 4.8 million displaced residents, he added.

A cable repair worker was killed on Saturday, three months before Beijing hosts the summer Olympics, when hit by rocks as a moderate aftershock hit Lixian county.

President Hu lauded rescue workers for their bravery in Wenchuan, epicentre of the quake, when an aftershock struck.

In a glimmer of hope that more people could be found alive, 33 people were rescued in Beichuan, including a 69-year-old villager who had been buried for 119 hours. Troops evacuated 18 scientists trapped in a forest in nearby Mianzhu.

China is on precautionary alert against possible radiation leaks, a government Web site said. The country's chief nuclear weapons research lab is in Mianyang, along with several secret atomic sites, but there are no nuclear power stations.

China has sent 150,000 troops to the disaster area, but roads buckled by the quake and blocked by landslides have made it hard for supplies and rescuers to reach the worst-hit areas.

Offers of help have flooded in and foreign rescue teams from Japan, Russia, Taiwan, South Korea and Singapore have arrived. Donations topped 6 billion yuan ($857 million). (Additional reporting by Guo Shipeng and Benjamin Kang Lim in Beijing and Donny Kwok in Hong Kong; Writing by Benjamin Kang Lim; Editing by Peter Millership) ((For more stories on China's quake, click on [ID:nSP209165] or follow the link to Reuters AlertNet http://www.alertnet.org. For full coverage of the quake in China, click on www.reuters.com/news/globalcoverage/china)) ((benjamin.lim@reuters.com; +8610 6627-1212; Reuters Messaging: benjamin.lim.reuters.com@reuters.net))

Keywords: QUAKE/

China fights animal disease spread in quake areas

Reuters: [2008-05-17 15:52:00]

(Repeats to fix headline)

BEIJING, May 17 (Reuters) - An earthquake that killed at least 29,000 people in China also badly hurt livestock and crops in Sichuan province, and disinfection teams are spreading out to prevent more damage, officials said on Saturday.

The earthquake killed about 792,000 of Sichuan's estimated 60 million pigs, Li Jinxiang, head of the veterinary department at the Ministry of Agriculture, told reporters.

However, the number of breeding sows nationwide is up on last year, which could help stave off inflation, he told Reuters.

Rescue work is still going on for thousands buried in rubble after the May 12 quake, but with bodies in mass graves and water supplies disrupted, efforts now also include disinfection campaigns to prevent disease spreading among animals and people.

Poultry made up most of the 12.5 million birds and livestock killed by Monday's quake.

The quake has damaged infrastructure just ahead of the hot, humid summer, the peak season for diseases such as swine flu or blue ear pig disease, which decimated the hog population in 2007.

"Preventing disease is one of our largest responsibilities," Li said at a news conference in Beijing.

Li told Reuters the breeding sow population was now about 20 percent more nationwide than it was this time last year, when disease and poor profits discouraged breeding, helping to feed inflation which is now running at a nearly 12-year high.

The quake badly damaged fish farms and about 15 percent of vegetable production in the afflicted areas near the epicentre, the officials said. As many as 50,000 greenhouses were damaged.

Sichuan accounts for nearly 15 percent of China's rapeseed production, nearly 7 percent of summer grains and 5 percent of vegetables.

Although a national surplus of fertiliser should be able to make up for fertiliser plants damaged in industrial towns such as Shifang, damage to irrigation infrastructure would be harder to overcome, the officials said. Sichuan is releasing water from reservoirs to reduce pressure on weakened dams.

"Some rice paddies may have to be turned into dry fields this summer," said Wei Chaoan, vice minister of agriculture.

"Maybe, as this develops, many other problems will appear, including some we don't know about yet." (Reporting by Lucy Hornby; editing by Philippa Fletcher) ((lucy.hornby@thomsonreuters.com; +86 10 6627-1269; Reuters Messaging: lucy.hornby.reuters.com@reuters.net))

Keywords: QUAKE AGRICULTURE

Food supplies threatened by China quake

Reuters: [2008-05-17 15:34:00]