New rumbling from Chilean volcano worries experts

Reuters: [2008-05-15 23:11:00]

By Monica Vargas

SANTIAGO, May 15 (Reuters) - Chile's Chaiten volcano groaned, rumbled and shuddered on Thursday, raising new concerns among authorities, as lightning bolts pierced the huge clouds of hot ash hovering ominously above its crater.

Chile's National Emergency Office, ONEMI, said heavy ash kept shooting from the volcano in southern Chile as it generated small tremors.

On the ground, heavy flooding hit the area around Chaiten as falling ash swelled rivers, overflowing their banks.

"There's been additional volcanic activity that we're really worried about," regional governor Sergio Galilea told reporters.

The Chaiten volcano, 760 miles (1,220 km) south of the capital Santiago, started erupting on May 2 for the first time in thousands of years, spewing ash, gas and molten rock into the air.

The government on Wednesday declared the town of Chaiten, only six miles (10 km) from the erupting volcano, off-limits for three months and reported that about 90 percent of the town had been flooded by the Blanco and Raya Rivers.

"The flooding has receded in terms of water. But there's a lot of material left, more mud than water," Galilea said.

Rains are normal during the southern hemispheric winter in Patagonia, but the deluge of volcanic ash has caused nearby rivers to breach their banks.

No deaths have resulted, but thousands of people have been evacuated within a 30-mile (48-km) radius, including the 4,500 residents of Chaiten.

The column of ash above the volcano, kept aloft by the pressure of constant eruptions, rose as high as 20 miles (32 km) early in the eruption but has since fallen back to about 4.5 miles (7 km).

"The decision to evacuate was very opportune, as was the decision to keep the zone clear for now," said chief government spokesman Francisco Vidal after a meeting with President Michelle Bachelet on Thursday.

Chile's chain of some 2,000 volcanoes -- 500 of them potentially active -- is world's second-largest after Indonesia's. (Additional reporting by Damian Wroclavsky; Writing by Lisa Yulkowski; Editing by Eric Walsh) ((lisa.yulkowski@thomsonreuters.com; +56-2 370-4290; Reuters Messaging: monica.vargas.reuters.com@reuters.net)) Keywords: CHILE VOLCANO/

U.S. reassures Brazil on territorial waters, fleet

Reuters: [2008-05-15 23:01:00]

By Raymond Colitt

BRASILIA, May 15 (Reuters) - The United States will respect Brazil's maritime claims, including offshore oil reserves, and will use a new naval fleet in Latin America mostly for peaceful purposes, the U.S. commander for the region said on Thursday.

The head of Brazil's oil market regulator had said on Wednesday he was worried the United States might contest the country's rights over huge oil reserves lying in a so-called exclusive economic zone.

"The United States will respect the territorial seas and exclusive economic zones of nations of the world," Adm. James Stavridis, head of the U.S. Southern Command, told reporters in Brasilia when asked about Brazil's concern.

The 1994 United Nations Convention on the Law of the Sea, which the United States has signed but not ratified, says coastal states have exclusive economic zones extending 200 nautical miles (370 km), where they enjoy exclusive rights over all natural resources.

The U.S. Fourth Fleet, which the Navy is re-establishing 58 years after decommissioning it, will help combat drug trafficking in Latin America and the Caribbean, Stavridis said at the end of a defense conference.

But this did not indicate an upsurge in counter-narcotics operations, Stavridis said.

"It is not an offensive force in any way," he said.

Acknowledging the fleet had been "a subject of concern" in the region, the admiral said it would mainly support peacekeeping missions, aid in natural disasters, provide humanitarian relief and take part in naval exercises.

"The largest ship that will work for the Fourth Fleet is a hospital ship," Stavridis said.

Brazil is not concerned about the new fleet, Brazilian Adm. Marcos Martins Torres said. (Editing by Mohammad Zargham) ((ray.colitt@reuters.com; +5561 3426-7021)) Keywords: BRAZIL USA/MILITARY

TAKE A LOOK-Argentina farm crisis

Reuters: [2008-05-15 22:55:00]

    Farmers in Argentina last week launched their second strike in as many 
months, halting grain sales and disrupting shipments. At issue is a new 
sliding-scale tax system that pins export taxes to international prices, 
raising levies on soybeans to about 40 percent at current prices from the 
previous fixed rate of 35 percent. Argentina is the world's No. 2 corn 
exporter, the third-biggest soy supplier and the No. 4 provider of wheat and 
beef. To read Reuters stories on this issue, please double-click on the codes 
in the brackets below.  
    
 LATEST STORIES  
> Argentine farmers say likely to extend strike            [ID:nN15312266] 
> Argentine farmers to decide whether to extend strike     [ID:nN14522537] 
> Argentine leader makes unity appeal amid farm strike     [ID:nN15300048] 
> Farmers press offer in Argentine farm strike             [ID:nN14284480] 
 
 BACKGROUND 
> Argentine farmers say open to talks, exports normal      [ID:nN13383762] 
> Argentine farmers turn to governors in tax conflict      [ID:nN12338090] 
> Conflict to cut Argentine 08-09 wheat area - exchange    [ID:nN09513784] 
> Argentine farmers, gov't trade blame over strike         [ID:nN09500426] 
> Argentina's farm rebel says in for the long haul         [ID:nN09385504] 
> Argentine leader firm on farm strike, faces risks        [ID:nN08354248] 
> Argentine farmers start new wave of protests             [ID:nN08382602] 
> Strike threat looms over Argentine farm talks            [ID:nN07561425] 
> Argentine farm talks stumble on export taxes             [ID:nN06475948] 
> New Argentine economy chief to stay on course            [ID:nN25216935] 
 
 FACTBOX 
> Argentine agriculture and the farm conflict              [ID:nN07365278] 
> Argentina's grains export taxes                          [ID:nN08384458] 
 ((Chicago commodities desk, + 312 408-8144)) 
Keywords: ARGENTINA FARMERS/  
    

Argentine soy market paralyzed as strike continues

Reuters: [2008-05-15 22:50:00]

    BUENOS AIRES, May 15 (Reuters) - Argentine soy's closing 
prices and trends on Thursday: 
    
    * In the main grain port of Rosario, no grains were traded 
on Thursday due to a strike by farmers. 
    * On May 6, the last day that prices were listed in 
Rosario, soy changed hands for 910 pesos per tonne. 
    * On Thursday, a farm leader said farmers were likely to 
continue their strike against higher taxes on grains exports 
because the government has not agreed to negotiate changes in 
the tax. 
    * Chicago Board of Trade soybean features slid  on Thursday 
as crude oil slipped, while traders also tracked developments 
in Argentina. 
 (Reporting by Maximilian Heath; Writing by Kevin Gray; Editing 
by Walter Bagley) 
 ((kevin.gray@thomsonreuters.com; + 54-11-4510-4505; Reuters 
Messaging: kevin.gray.reuters.com@reuters.net)) 
 
For the latest news and prices, click on the items in 
brackets: 
Argentine grain/oilseed prices  <GBRA>-D 
Daily Argentine grain fixings   <RPPA> 
Argentina FOB export prices     <GRAIN/AR01> 
Argentina grain/oilseed exports <GRAT> 
Argentine domestic oilseed/wheat industry <GRAU> 
Argentine MAT futures           <BCC/FUTEX1> 
ROFEX-Rosario Futures Exchange  <ROFEX> 
RELATED NEWS AND OTHER TOPICS: 
Argentine crop progress            [GRA/AR] 
Argentine wheat export commitments [WHE/AR] 
Argentine corn export commitments  [COR/AR] 
All Grains news [GRA] All Grains & Oilseeds news [GRO] 
All commodities news [C] World grain weather updates [GRO-WEA] 
SPEED GUIDES: 
<COMMODS> <GRAIN/SUM> <MEAL/SUM> <CEREAL1> <OILSEED1> 
Reuters Financial Glossary:  http://glossary.reuters.com 
Keywords: MARKETS ARGENTINA/GRAINS 
    

Emerging debt-Spreads widen on UST rally, Interpol decision

Reuters: [2008-05-15 22:28:00]

* Yield spreads widen due to U.S. Treasury rally

* Sovereign dollar bond prices hold ground

* Venezuelan credit hurt by Interpol authentication

By Daniel Bases

NEW YORK, May 15 (Reuters) - Emerging market assets gained ground on Thursday, with dollar bonds marginally higher and stock prices on growing hopes the U.S. financial market crisis has peaked.

A rally in U.S. Treasuries, based on soft May manufacturing data and a rise in the number of unemployed people remaining on government assistance after an initial week of jobless benefits, however, resulted in wider yield spreads for sovereign dollar debt.

"There is a certain sense that this phase of the financial crisis is winding down. Inflation remains the main problem at the moment," said Igor Arsenin, emerging markets debt strategist at Credit Suisse in New York.

(For more on the U.S. economy, click on [ID:nN15515443])

Key members of the U.S. Senate reached a deal on a sweeping housing rescue plan, sources told Reuters on Thursday. Progress on supplying aid to the ailing U.S. housing sector plus further accounting for bad mortgage-related investments by investment banks is raising hopes that financial markets might have a chance to start a recovery.

The Morgan Stanley Capital International's emerging markets stock index <.MSCIEF> was up 1.18 percent while the Latin American index <.MILA00000PUS> traded at record highs, up 1.31 percent on the day.

In the credit markets, the benchmark JP Morgan Emerging Markets Bond Index Plus <11EMJ><.JPMEMBIPLUS> yield spread widened by 6 basis points over stronger U.S. Treasuries to 261 basis points.

Spreads for Argentina's portion of the EMBI+ narrowed by 1 basis point to 558 basis points while total returns dropped 0.25 percent.

Argentina's bonds managed to hold onto a portion of their early gains on what appeared to be signs from President Cristina Fernandez that the government might be willing to resume talks with farmers currently on strike over a new sliding-scale export tax.

One leading farm figure, however, said on Thursday the strike is likely to continue.

Venezuela's bonds underperformed the market as oil prices fell and Interpol, the international police agency, said documents found on Colombian rebel computers were authentic but would not pass judgment on the actual contents.

Colombian charges that Venezuela and Ecuador supported the guerrillas but these two leftish governments dismiss the accusations as a U.S.-backed campaign to discredit them.

Venezuela's portion of the EMBI+ widened by 11 basis points to 668 basis points as total returns on the day fell 0.28 percent.

"The market traded better this morning, but into the afternoon, this Interpol report is putting pressure on Venezuela. I don't see why it should be a big deal but it's having a negative impact," said one senior trader at a German bank in New York.

"Trading volume is not great. Aside from Venezuela and Argentina, everything is pretty much steady as she goes," the trader added.

Looking ahead to Friday, Mexico's central bank is likely to leave interest rates unchanged at its policy-setting meeting. The benchmark interest rate is 7.50 percent <MXCBIR=ECI>.

"It looks like they will probably leave interest rates unchanged but will present a much more hawkish tone in their language in the communique ... Hawkish language would be positive for the peso and while it may not happen right away, a level of 10.40 to the dollar may be tested again," Arsenin said.

Separately, Turkey's benchmark sovereign bond slipped 0.25 of a point in price to bid 152.438, yielding 7.096 percent <TRGLB30=RR> on Thursday after the central bank raised interest rates in a move to undercut inflation pressures. The bank signaled further tightening could come. (Editing by Jan Paschal) ((daniel.bases@reuters.com; +1 646 223 6131; Reuters Messaging: daniel.bases.reuters.com@reuters.net))

Keywords: MARKETS EMERGINGDEBT/