Russian Gazprom's recent deal to buy natural gas from Azerbaijan will not endanger Europe's flagship pipeline project Nabucco, Turkey's Foreign Minister Ahmet Davutoglu said here Friday.

"One must not think that these projects will have any reciprocal effect on each other, or influence each other in a negative way," Davutoglu said during a visit to Romania.

"We do not see these energy projects as competing projects, we believe all these projects can serve our interests regarding energy," he added during a joint press conference with his Romanian counterpart Cristian Diaconescu.

Russian gas giant Gazprom clinched a deal Monday to buy natural gas from ex-Soviet Azerbaijan, casting doubts on the viability of the European Union's long-delayed Nabucco project, for which Azerbaijan is seen as a crucial potential provider.

Nabucco is aimed at reducing Europe's energy reliance on Moscow by finding other sources of gas.

Davutoglu insisted however Friday that Nabucco was a "priority" and a "very important, strategic project" for his country.

He added he was convinced that it will "ensure cooperation between the participating states and will solve the general energy problem that faces mankind."

EU nations and Turkey said Friday they will sign a key intergovernmental agreement on Nabucco in Ankara on July 13.

The agreement is due to be signed by Austria, Bulgaria, Hungary, Romania and Turkey, all countries through which Nabucco will flow.

Turkish officials confirmed Friday that a key intergovernmental agreement on the European Union's Nabucco gas pipeline will be signed on July 13 in Ankara.

"I can confirm that we have sent invitations to the related parties for the signing of the agreement on July 13 in Ankara," Nabi Avci, an advisor to Prime Minister Recep Tayyip Erdogan, told AFP.

A government official, who requested anonymity, said Erdogan was expected to host the ceremony.

Earlier, Energy Minister Taner Yildiz said that "the technical negotiations have come to an end," but would not give a date for the signing of the accord.

The 3,300-kilometre (2,000-mile) Nabucco pipeline is due to bring gas from the Caspian Sea to Austria via Turkey, Bulgaria, Romania and Hungary, while bypassing Russia, in a bid to reduce Europe's energy dependence on Moscow.

The project, planned to become operational in 2014, is estimated to cost 7.9 billion euros (10.6 billion dollars).

It is in direct competition with Russia's South Stream project, developed by Russia's gas giant Gazprom and Italy's Eni, and which will channel Russian gas through Bulgaria to Western Europe under the Black Sea.

Critics have questioned the adequacy of gas sources for Nabucco, and the project was cast into further doubt in May when key gas suppliers Turkmenistan, Kazakhstan and Uzbekistan held off their support at a meeting in Prague.

Germany will help Bosnia to develop its energy sector and improve environmental standards with financing worth 53.5 million euros (74.9 million dollars), the government said Thursday.

Under a deal signed in Sarajevo the financing will comprise 22.5 million euros in grants, as well as favorable loans totalling 31 million euros from state-owned German bank KfW, a finance ministry statement said.

The funding is to be allocated towards the building of Bosnia's first wind farm, improvements in waste water disposal and upgrading hydro-power plants and the country's power distribution network.

EU nations and Turkey said Friday they will sign a key intergovernmental agreement in Ankara on July 13 on Europe's flagship Nabucco gas pipeline project, but key issues still need to be resolved.

Turkish officials said that invitations had been sent to the relevant parties and one official in Ankara told AFP on condition of anonymity that Turkish Prime Minister Recep Tayyip Erdogan would host the signing ceremony.

Foreign Minister Ahmet Davutoglu said on a visit to Romania that Nabucco, which is planned to reduce Europe's dependency on Russian gas imports, was a "priority" and a "very important, strategic project" for his country.

He added that it would "ensure cooperation between the participating states and will solve the general energy problem that faces mankind."

The European Commission, which is not a signatory to the agreement but has been a key proponent of the pipeline and could sign up as an observer once legal details are ironed out it, confirmed that it had been invited.

"The commission has received an invitation to the signing ceremony of the intergovernmental agreement on the Nabucco pipeline on July 13 in Ankara," a spokesman on energy issues told reporters.

He declined to provide details about the agreement, saying only that it would provide a legal framework including deciding on the allocation of gas for each country that the pipeline would go through.

The agreement is due to be signed by Austria, Bulgaria, Hungary, Romania and Turkey, all the countries through which Nabucco will flow.

The 3,300-kilometre (2,000-mile) pipeline is to pump gas from the Caspian Sea to Austria while bypassing Russia -- the main source of Europe's gas.

The project is planned to become operational in 2014 and estimated to cost 7.9 billion euros (10.6 billion dollars).

It is in direct competition with Russia's South Stream project, developed by Russian gas giant Gazprom and Italy's Eni, which will channel Russian gas through Bulgaria to Western Europe under the Black Sea.

Critics have questioned the availability of gas sources for Nabucco, and the project was cast into further doubt in May when key gas suppliers Turkmenistan, Kazakhstan and Uzbekistan held off their support at a meeting in Prague.

Russia also raised concern among Nabucco proponents when it clinched a key deal to buy gas from Azerbaijan, another gas-rich Caspian Sea state.

The signing of the agreement between Nabucco's shareholders has been delayed by Turkey's demands to use a percentage of Nabucco's capacity of 31 billion cubic metres of gas for domestic use or even for re-export.

There was no clear confirmation on Friday from either side that the issue had been resolved.

Turkish officials visiting Brussels last week also hinted they might back off from the deal if EU accession talks are further delayed.

Turkey has so far opened only 11 out of 35 negotiation chapters with the EU. The chapter on energy significantly remains blocked.

A diplomatic source close to the Swedish EU Presidency told AFP in Brussels that opening this chapter by end-2009 will be a difficult task due to rising anti-Turkish feelings within the bloc.

"We talk about Nabucco but at the same time the chapter on energy is not discussed. Why not talk about it?" Turkey's Erdogan asked during a visit to Brussels last month.

"This is the reason why we have difficulties (with Nabucco). Our European friends have a unilateral approach to this issue," seeking Ankara's support but giving nothing in return, he added.

A key intergovernmental agreement on the European Union's Nabucco gas pipeline will be signed on July 13 in Turkey, Bulgaria's Economy and Energy Minister Petar Dimitrov told journalists Friday.

"The intergovernmental agreement on Nabucco pipeline project will be signed in Turkey on July 13," Dimitrov was quoted by his spokesman Alexander Todorov as saying in the eastern city of Varna.

Serbia, home to a reactor once deemed the world's most dangerous, reached an agreement Friday on nuclear energy cooperation with the United Nations atomic agency, a report said.

Signed by visiting International Atomic Energy Agency (IAEA) chief Mohamed ElBaradei and Deputy Prime Minister Bozidar Djelic, the memorandum is in addition to an existing agreement on inspections of nuclear facilities.

"This protocol demonstrates that the international community can count on Serbia in the fight against terrorism and against nuclear proliferation," the two said in a joint statement quoted by Beta news agency.

ElBaradei and Djelic signed the agreement during a meeting in Belgrade during which they discussed the disposal of waste from the Vinca Nuclear Institute east of the Serbian capital.

Serbia said in June it plans to ship to Russia a huge amount of spent nuclear fuel from a Vinca reactor which the IAEA reportedly described as the world's most dangerous in 2006 because of its pollution and terror threat.

Spain will announce Thursday it will allow the country's oldest nuclear reactor to operate until 2013, two years beyond its intended 40-year lifespan, industry and environmental sources said.

A decision to extend the life of the Garona plant in northern Spain would be a U-turn for Socialist Prime Minister Jose Luis Rodriguez Zapatero who had vowed to gradually phase out nuclear power.

The plant's operating permit expires on Sunday but the president of Spanish utilities association UNESA told radio Cadena Ser that the government would allow it to operate "until 2013". It had been designed to function only until 2011.

Carlos Bravo, head of Greenpeace Spain's nuclear campaign, also said the government had decided to extend the life of the plant, one of Spain's six nuclear power plants, until 2013.

"The green credentials which the head of the government enjoyed have ended," he said.

Industry Minister Miguel Sebastian is scheduled to announce the government's decision on the plant at 6:00pm (1600 GMT).

Earlier, Zapatero told public radio RNE "the solution will be reasonable, reasoned, balanced and responsible" but would likely be criticised by both sides of the debate over the use of nuclear power.

Only one other nuclear plant in Europe that is older than Garona which is located in England and it is set to close in 2011, he added.

"It is an old plant, designed with decades-old technology, and we have to very much bear that in mind when thinking of our country's future," he said without elaborating.

Spain's six nuclear power plants produce around 20 percent of the country's electricity.

Garona is run by Nuclenor, which is jointly owned by Spain's two biggest utilities, Iberdrola and Endesa.

Bolivian President Evo Morales on Saturday hinted that parts of the country's energy and rail sectors, currently backed by foreign capital, could soon be nationalized.

"It is true we have not fulfilled all our promises, we still have railways and we still have energy," Morales said in reference to vows of nationalizing the industries.

The leftist leader indicated the government did not have enough money to allow nationalization to take place immediately, but hinted a move in that direction might be in the offing.

"There will be surprises... I don't want to announce anything yet, I am not sleeping, sometimes it is just about counting the money."

Bolivia's electricity sector, thought to be the target of Morales' comments, is dominated by Spanish firms Iberdrola and Red Electrica, French firm GDF Suez and Britain's Rurelec.

Since taking office in 2006, Morales has nationalized firms in the hydrocarbon, mining and telecommunication sectors.

Russia will fulfill all its contractual gas export commitments to the European Union, President Dmitry Medvedev told Euronews television Tuesday.

"We will respect all our obligations as the principal provider of hydrocarbons to Europe," Medvedev said, a day after Brussels opted to postpone talks on a strategic partnership covering energy, diplomatic and military ties with the Kremlin by way of response to the five-day war in Georgia.

Medvedev said European consumers, and by extension capitals, need have no fears of a "cold winter," as "no-one wants to see that."

Russian Prime Minister Vladimir Putin said Sunday that Russia would seek to "diversify" its energy export interests.

"We have no intention of limiting (energy exports) in any way; we will abide strictly by our contractual obligations," Putin had said.

"But we are going to enlarge and diversify our export possibilities for these products which are so essential to the global economy."

Russia supplies a quarter of the EU's gas needs, as well as a part of its oil requirements.

Two giant Chinese oil companies are interested in buying a 30-percent stake in an affiliate of Spanish oil major Repsol, media reported Friday.

The China National Petroleum Corp (CNPC) and China National Offshore Oil Corp (CNOOC) are ready to pay four billion euros (5.6 billion euros) for the stake in YPF, Repsol's Argentine affiliate, the ABC newspaper said, quoting sources close to Repsol.

It said that an offer is expected in the coming weeks.

CNPC is China's largest energy producer and CNOOC its biggest offshore oil and gas producer.

Repsol YPF announced Thursday it had received interest but no firm offers for a minority stake in YPF.

ABC said talks were continuing through the bank Goldman Sachs, which has been in touch with a number of Asian groups, of which CNPC and CNOOC appear the most interested.

Repsol bought YPF in 1999 for 15 billion dollars in what was the biggest sale of the privatisation programme of then Argentine president Carlos Menem.

Last year, it sold a 14.9 percent stake to Argentina's Grupo Petersen in a deal which included a buy option for an additional 10 percent.

China's government-backed oil companies are jostling with each other to make landmark overseas acquisitions, seizing on the economic crisis -- and the accompanying low asset prices -- in a bid to feed the country's rapidly expanding economy.

Nepal was hit by transport chaos Monday with buses and taxis off the roads in a strike over rising fuel prices and falling revenues.

Nepal's state-owned fuel supplier raised prices by up to 27 percent earlier this month to keep pace with surging global crude prices, but the government barred transport operators from raising fares by more than 25 percent.

Dinesh Bhandari, an official from the Nepal Transport Entrepreneurs' National Federation, said operators had been left out of pocket.

"The government should allow us to increase the fare up to 35 percent," he said.

The strike left commuters in Kathmandu and travellers across the country stranded.

Nepal relies on India for all of its fuel supplies and the land-locked Himalayan country's state-run fuel supplier has been selling fuel at a loss for years, building up millions of dollars in debt.

China's largest energy producer, China National Petroleum Corp (CNPC), on Wednesday began work on a major oil pipeline in southwestern Chad, state media reported here.

The pipeline, due to become operational in 2011, will transport crude from Koudalwa field some 300 kilometres south of N'Djamena to the Djarmaya refinery north of the capital.

The planned cost of the project has not been disclosed.

"Chadians have waited a long time for this opportunity," President Idriss Deby Itno was quoted as saying at the inauguration ceremony.

Deby added that he hoped oil resources can "contribute to economic development and the battle against poverty in our country."

Energy-hungry China has boosted its presence in Africa in recent years, primarily in a bid to guarantee oil supplies for its rapidly growing economy.

CNPC first invested in Chad in 2003, three years before Beijing re-established diplomatic relations with N'Djamena.

Chad, which only began to produce oil in 2003, currently produces around 170,000 barrels per day. Deby's office said the southwestern Chari-Baguirmi region is estimated to eventually be able to produce 60,000 bpd.

Oil prices eased in Asia on Thursday after a stronger-than-expected US energy stockpiles report offset market worries over tensions in the oil-rich Middle East, dealers said.

New York's main futures contract, light sweet crude for delivery in November, was 11 cents lower at 87.29 dollars a barrel in late morning trade.

"I think reality is coming back into play here," said Steve Rowles, an analyst with CFC Seymour in Hong Kong.

After six straight sessions of rising prices in New York, the contract finished lower there on Wednesday, settling at 87.40 dollars per barrel after spiking to a new high of 89.00 dollars in intra-day trade.

The fresh peak came just after the Turkish parliament voted to allow military strikes against Kurdish rebels based in northern Iraq.

Brent crude for December delivery was 36 cents lower at 82.77 dollars a barrel.

The Brent November contract expired on Tuesday after hitting an all-time high of 84.49 dollars.

Tensions along the Turkey-Iraq border helped oil prices gain more than four dollars this week before their pullback.

"The worst-case scenario was plaguing the market," Rowles said.

Turkish legislators on Wednesday approved a government motion seeking a one-year authorisation for one or more incursions into Iraq but the motion leaves it up to the government to determine the timing and scope of the operation and the number of troops to be sent.

A comment on Wednesday by US President George W. Bush highlighted uncertainties in the Middle East. He said he has warned world leaders they must prevent crude producer Iran from getting nuclear weapons "if you're interested in avoiding World War III."

Abdalla Salem El-Badri, chief of the Organisation of the Petroleum Exporting Countries (OPEC), expressed "concern" on Tuesday at surging prices but argued they did not reflect the true state of supply and demand.

The US Department of Energy (DoE) said Wednesday that American crude reserves jumped 1.8 million barrels in the week ending October 12, beating analyst forecasts of 1.05 million.

Stockpiles of distillates, which include diesel and heating oils, leapt by 1.0 million barrels, confounding market expectations of a drop of 750,000 barrels.

"The DoE's report is bearish. The builds in both gasoline and crude oil stockpiles were greater than forecast, and the build in distillate inventories was unexpected. Meanwhile, the demand numbers continue to look very weak," Eric Wittenauer, an analyst at AG Edwards, said during US trading hours.

China said Thursday it was "firmly" opposed to provisions in a new US clean energy bill that will make it easier to impose trade penalties on nations that reject limits to globe-warming pollution.

"China is firmly opposed to such measures," vice foreign minister He Yafei told reporters in Beijing.

"We are firmly against such attempts to advance trade protectionism under the pretext of climate change. It is not conducive to world economic recovery. It serves nobody's interests."

On Friday, the US House of Representatives narrowly passed legislation to limit pollution blamed for global warming, handing President Barack Obama a hard-fought major victory.

Lawmakers voted for the first time in US history to limit heat-trapping carbon emissions and shift the US economy to cleaner energy.

However, after the House of Representatives passed the legislation, Obama said he did not want the bill to be used to impose trade penalties on countries in the interest of curbing global warming, The New York Times reported.

The newspaper said Obama had told reporters at the White House that at a time when the global economy is still deep in recession, he thought "we have to be very careful about sending any protectionist signals out there."

The US Senate has still to vote on the energy bill.

China has shown increasing concern in recent years about the consequences of global warming.

But as part of ongoing global negotiations to replace the Kyoto Protocol when it expires in 2012, China has said the bulk of the responsibility for emissions cuts lies with developed nations.

Oil prices eased slightly in Asia on Wednesday but remained above 87 dollars per barrel in a market focussed on a potential Turkish incursion into northern Iraq.

While expressing concern at the price rise, the chief of the OPEC oil cartel said the world oil market remains well supplied.

New York's main oil futures contract, light sweet crude for delivery in November, was 23 cents lower in afternoon trade at 87.38 dollars per barrel.

In US trade on Tuesday, oil struck a record intra-day high of 88.20 dollars before dropping back to settle above 87 dollars for the first time, at 87.61 dollars per barrel.

On Monday it jumped more than two dollars.

Brent crude oil for December delivery was 23 cents lower at 83.32 dollars per barrel.

In London trade on Tuesday, Brent for November delivery advanced 1.41 dollars to settle at 84.16 dollars, after earlier hitting an all-time high of 84.49 during the session.

Oil prices surged as investors fixated on Turkey, where the parliament is expected to adopt a government motion on Wednesday to allow cross-border operations against bases of the Kurdistan Workers Party (PKK) in Iraq.

The White House has urged Turkey to refrain from any unilateral action that could further destabilise Iraq, while Iraq's deputy prime minister warned of "grave consequences" for the stability of his country and the region.

Steve Rowles, an analyst with CFC Seymour in Hong Kong, said the market has not been as worried over a geopolitical issue since last July when Israel and Hezbollah guerrillas battled in Lebanon.

That conflict led oil to spike to a then-record above 78 dollars per barrel.

Rowles said that while it is difficult to predict how the current tensions will play out, "I just think that overall the tensions will eventually subside."

Rowles said that Iraq "isn't the oil producer that it once was."

Abdalla Salem El-Badri, chief of the Organisation of the Petroleum Exporting Countries (OPEC), said Tuesday that the cartel was "concerned" at the price spike but argued current levels did not reflect the true state of supply and demand.

The market is "very well supplied," he said.

Rowles said he agreed. He said a weekly US Department of Energy report on inventories, to be issued later Wednesday, was expected to show a build up in crude stocks.

In the broader context he noted that the Atlantic Ocean hurricane season, which poses a potential threat to oil installations, is drawing to a close, and forecasts are for a relatively mild North American winter.

"Where is the problem?" he asked.

But Sucden analyst Michael Davies, commenting during US trading hours, said the surge in prices came amid "geopolitical and supply worries."

Many of Iraq's largest oil fields are located in the north of the troubled country.

The European Commission urged EU states on Thursday to prepare for a possible gas supply crisis by filling storage tanks ahead of the peak winter demand period.

Highly dependent on Russian gas shipped through Ukraine, EU countries are closely monitoring Kiev's efforts to pay for supplies needed to fill its storage tanks ahead of winter, eager to avoid the kind of cut-off seen in January.

"The January 2009 crisis highlighted the vulnerability of the EU to supply disruptions," the commission said after chairing a meeting with European gas experts.

"A number of member states are overwhelmingly dependent on one single supplier and one single supply route.

"In the light of the uncertain gas storage situation in Ukraine, the commission in particular recommended the member states to be better prepared for the coming winter period and to fill their gas storages from all possible available sources," it added.

Kiev is seeking 4.2 billion euros (5.9 billion dollars) in loans from international lenders to help pay for Russian gas supplies needed to fill Ukraine's storage facilities ahead of the winter to avert a new crisis.

However, an EU official has said that Ukraine is likely to get only half that amount.

The European Union is particularly interested in seeing that the tanks get filled because a quarter of its gas consumption is met with Russian supplies, 80 percent of which transits through Ukraine's pipeline network.

Many EU countries saw their supplies of Russian gas cut in the dead of winter in January as Russia and Ukraine locked heads in a payments dispute.

The Nam Theun 2 hydropower development, Laos's largest infrastructure project, has delivered its first test energy to a Thai firm, the World Bank said Friday.

Last week's test delivery to the Electricity Generating Authority of Thailand sent a total of 60 megawatts to the transmission line that exports electricity to Laos's neighbour, the Bank said.

About 95 percent of production will be sold to Thailand, earning Laos revenues estimated at almost two billion dollars over 25 years, which the communist country pledged to spend on poverty reduction.

The World Bank, which is backing the development, said construction of the electro-mechanical works are nearly complete and the project is expected to start commercial operation at the end of the year.

A spokesman for the power company said last month the project was behind schedule but the company was hopeful lost time could be made up.

The development in central Laos on the Nam Theun River, a tributary of the Mekong, required about 8,000 workers and relocation of 6,301 villagers, the spokesman said.

After years of opposition from environmentalists, work on the 1.45-billion-dollar Lao-French-Thai project began in November 2005. It will have a generating capacity of 1,070 megawatts.

The planned Nord Stream gas pipeline moved a step forward Thursday after a Finnish environment agency approved the project but told its backers to provide more information on potential environmental damage.

The 1,220-kilometre (760-mile) pipeline, which would deliver energy from Russia to Germany, needs the green light from Finland, Sweden and Denmark before building can begin as it will run close to their Baltic coastlines.

The Uusimaa regional enviromental authority said Nord Stream AG, a partnership between Russian state-run energy giant Gazprom and Germany's E.On Ruhrgas and BASF-Wintershall, must conduct "further investigations" into pollution damage, maritime safety and the impact on sealife nature among other things.

"We are committed to provide the further information that authorities have asked from us," Nord Stream spokesman Sebastian Sass told reporters.

This step is important as the Finnish government could not give the go-ahead to the project before the environmental agency had reported its findings.

A separate environmental planning authority must also review Nord Stream's plans before building can begin.

Once completed, Nord Stream will run under the Baltic Sea from the Russian port city of Vyborg to Greifswald, in northern Germany.

Prime Minister Matti Vanhanen said last month that the government would decide possibly in late September if it will give Nord Stream permission to use Finland's economic zone in the Baltic Sea to build the pipeline.

Russia and Germany have expressed strong support for the project estimated to cost some 7.4 billion euros (10.5 billion dollars) and Nord Stream hopes to have approval from Finland, Sweden and Denmark by the end of this year.

If that happens, building could start on pipeline in 2010 and some deliveries could be made at the end of 2010.

After 20 years investing in renewable energy, the small Austrian town of Guessing, a model of energy self-sufficiency, is spreading its pioneering technology far and wide.

A town of 4,300 inhabitants near the Hungarian border, Guessing launched into renewable energy in the early 1990s and now produces more than it can consume.

The latest project, opened last week, is a one-megawatt plant capable of producing gas from wood chips.

According to its backers, this gas can be used in normal gas networks, urban heating systems, and cars or power stations that work on gas.

The technology, developed jointly with Switzerland, has already attracted attention from major energy companies.

"Vattenfall (from Sweden), EDF (France) and E.ON (Germany) are all interested in the plant," Guessing's mayor Peter Vadasz noted proudly.

A similar plant to the one in Guessing -- which can heat 150 homes on a cold winter's day -- but 25 times more powerful is already in the works in Goeteborg, Sweden.

About 20 years ago, Guessing was still a sleepy town in the eastern Austrian province of Burgenland, but its foray into renewable energy soon turned it into a pioneer.

Located in a region of crop fields and forests, Guessing used its assets -- biomass and sunshine -- to pull itself out of its economic stagnation. Since 1996, this project has been coordinated by the European Centre for Renewable Energy (EEE) and co-financed by the European Union.

After discarding wind power for lack of breezes, researchers developed a number of techniques to produce heat, electricity and agrofuel using maize, rapeseed, agricultural waste, wood or sunshine.

-- The town now produces more energy than it can use --

Guessing now covers all its heating and electricity needs thanks to a network of small units with a total capacity of six megawatts. And since 2005, the small town has been producing more energy than it can use.

"We produce 120 million kilowatt-hours of heating every year, and 45 million kilowatt-hours of electricity," said EEE director Reinhard Koch.

Sales of electricity also brought in 6.7 million euros (9.4 million dollars) last year.

"A total 1,100 jobs have been created in the last 12 years," added Vadasz, who has won every re-election since 1992.

"Since the price of heating is determined by the town, we've been able to incite companies financially to settle down here. We have re-invested to renew the town," he said.

Guessing's model, which is partly based on its ability to export its innovative technologies, has not been spared by the global economic crisis: one company specialised in photovoltaics -- solar cells -- is due to sack half its employees due to a drop in demand.

But the small town's ideas have nevertheless spread in the surrounding area.

The surrounding country, whose total population is 28,000, hopes to become energy self-sufficient by the end of 2010 with the development of several dozen more small power plants if the government passes a law proposal providing incentives, noted Koch.

That would cut CO2 emissions in the district by 85 percent, he added.

Guessing's model has also raised interest farther afield and in early May, Vadasz presented his town's model to the United Nations in Vienna.

"Sri Lanka's environment minister is coming to visit us," the mayor added proudly.

Researchers, meanwhile, are already looking for new energy sources. After gas, they now hope to produce diesel and petrol from wood.

The aim is to create an agrofuel that will not endanger food production. First experiments will be held in a few months time.

Oil slipped further in Asian trade Monday as investors continued to worry over the state of the US economy, the world's biggest energy user, analysts said.

New York's main contract, light sweet crude for August delivery dropped 70 cents to 68.46 dollars a barrel while Brent North Sea crude for August delivery sank 68 cents to 68.24 dollars.

Both contracts closed lower Friday.

"Oil pricing is under pressure from concerns regarding the weak oil demand in the US," said Victor Shum, a Singapore-based analyst with energy consultancy Purvin and Gertz.

Crude fell at the end of last week during US trading hours after official data released Friday showed spending by American consumers rose a weak 0.3 percent in May from April, supported mainly by a massive government stimulus.

Personal savings rate shot up to a 16-year high, indicating consumers were wary of spending amid rising unemployment and plummeting home values, the data showed.

The report by the Commerce Department is widely watched because consumer spending accounts for two-thirds of US economic activity and is considered key to recovery from the severe recession that began in December 2007.

Crude prices have spiked up in recent weeks, boosted in part by the weak US dollar which means lower oil cost for purchasers using foreign currencies.

New unrest in oil-producing Nigeria was another factor which saw crude prices rising above 71 dollars at one stage during intra-day trading Friday, analysts said.

"Oil markets continue to monitor developments in Nigeria. In recent weeks, militants have attacked oil industry infrastructure in Nigeria," said David Moore, a commodity strategist with the Commonwealth Bank of Australia in Sydney.

Nigeria, once Africa's leading oil producer, has seen its oil production affected by militants who claim they are fighting for a fairer share of oil wealth for impoverished communities in the Niger Delta.

The African country now produces about 1.8 million barrels of oil a day compared with 2.6 million in 2006.

China on Wednesday defended its restrictions on the export of some raw materials, which have sparked a US and EU trade action, saying they are in line with World Trade Organization (WTO) rules.

The United States and the European Union a day earlier filed a complaint with the WTO after Beijing put curbs on shipments of a number of materials including bauxite, coke and silicon metal.

They said the mix of quotas, export duties and minimum export prices were "in clear breach of international trade rules" and "troubling" as some of the materials cannot be found elsewhere.

But China said the policy was aimed at protecting the environment and broke no WTO regulations.

"The relevant export policies of the Chinese side are mainly intended to protect the environment and natural resources," the commerce ministry said in a statement faxed to AFP.

"The Chinese side deems the relevant policies are consistent with WTO rules."

It gave no further information.

The two Western powers called for WTO dispute settlement consultations with China regarding the restraints.

The launch of consultations is only the first step in the litigation process at the WTO, and is intended to explore whether an amicable solution is possible.

This can last up to 60 days and if no solution appears the plaintiffs can move to establish a WTO panel for a formal ruling.

World tea prices have rocketed but along misty tea-growing mountain slopes in Sri Lanka's central hills, farmers are facing disaster.

Despite production shortfalls coupled with increased demand making the daily cuppa dearer, the men and women who toil the land have little reason to cheer, for they must uproot tea bushes desiccated by a severe drought.

Tea farmer N. K. Atapattu, 42, picked a crop of nearly 2,000 kilograms (4,409 pounds) of tea leaves from his small plot last year but the crop is sharply down in the first quarter of this year.

The tea harvest fell more than 50 percent in the first three months of the year on the highlands, according to official figures, and Atapattu and his fellow farmers are praying for better weather.

Nalini Aluthgama, 61, says her newly planted home plot at the village of Kotmale, some 170 kilometres (106 miles) east of Colombo by road, is devastated.

"I have just removed over 100 dead tea bushes," Aluthgama said while volunteers joined in to uproot the dead wood. "Most of my plants are about three years old and they don't give much of a crop."

The volunteers get a token two dollars a day for working on the tea plots.

Dhammika Manaweera, 42, the secretary of a local tea farming association, says all her 53-strong membership have suffered because of the drought.

The British charity Oxfam has been helping the local community to learn more about new techniques in tea growing and get the maximum from their inputs, but when it comes to weather, they are helpless.

"We have taken these farmers to experts and taught them good agricultural practices, but they don't have income security because of uncertain weather," said Oxfam's Tharanga Godallage.

This is an area where climate change is affecting an entire community uprooted 25 years ago to make way for a hydro-irrigation reservoir which inundated their traditional farmlands.

"We were re-settled here in 1984. We had a drought in 1988 but this time it is worse," Manaweera said. "We have started replacing the dead tea bushes, hoping for rain. We are getting some right now but if there is too much of rain, it will also ruin us."

Small-time farmers are a vital component in Sri Lanka's tea industry, the country's largest foreign exchange earning commodity, and the authorities are taking their plight seriously.

An hour's drive along a narrow road through hill slopes is Sri Lanka's Tea Research Institute, which is trying to develop new types of drought-resistant tea bushes.

"There was frost damage on the crop earlier this year," said TRI director Sarath Abeysinghe. "It was frosty early in the morning and very dry and hot during the day. It could be attributed to global climate change. We can't predict the weather anymore."

The TRI is using artificial pollination to develop cultivars from the tea bush, botanically known as Camellia sinensis, to withstand harsh weather, but coming up with a successful variety could take decades.

He said the distinctive aromatic flavour of tea usually produced in the mountainous regions during February and March had been ruined by the drought.

The teas, known as Dimbula, are hot sellers among buyers in Japan and Germany.

"There have been times when we were not able to get a quality season because of the erratic weather," he said. "But this year has been worse."

The chief plant breeder at the TRI, Kumudini Gunasekare, said drought resistant cultivars are being developed by her team to address the new issue of climate change.

"Earlier we were concentrating mainly on enhancing yields -- drought was not an issue then -- but we are now focusing on drought-tolerant varieties," Gunasekare said.

World tea prices have risen by about 35 percent in the past year and supermarket prices are set to rise another 10 percent in June, but small farmers in Sri Lanka who account for more than two thirds of the country's production have not benefited.

Sri Lanka earned a record 1.23 billion dollars from tea exports in 2008 thanks to the global commodity boom in the first half last year, but the party is now over.

The drought means that the subsistence farmers will not benefit from the rising prices and the troubles ahead are not something they can forget with a refreshing cup of tea.

The IEA saw the risk of oil supply strains recede to 2013 at the earliest with demand growing sluggishly as many economies recovered only slowly from recession, in a report on Monday.

The International Energy Agency (IEA) said in its Mid-Term Oil Market Report that world oil demand would rise by an average 0.6 percent a year in 2008-2014, sharply less than the 1.6 percent forecast in its 2008 mid-term report.

"Relative to the medium term profiles presented in previous years, this scenario paints a delayed picture of threatened 'supply crunch' later in the projected period," it said.

The IEA, the energy-monitoring arm of the 30-nation Organization for Economic Cooperation and Development, had warned in April that oversupply of oil was crimping investment in new fields for the day when demand recovers.

It said in Monday's report that although weak demand could hold off a crunch, tighter supply forecasts for 2013 and 2014 raised the prospect of an "increasingly volatile" market in that period.

But the agency said that the economic outlook was uncertain and that according to an alternative growth model, yearly average demand could actually decline over the next few years if economic recovery took longer than forecast.

A steady erosion in world steel output since the start of the year slowed in May, when production declined at a weaker annual pace than in April, the World Steel Association said Friday.

Production in May was down 21 percent compared to May 2008, better than an annual output decline in April of 23.6 percent.

The association also said output in the first five months of the year to May fell 22 percent in the face of a global economic contraction that has reduced activity in the construction, automobile and aerospace industries.

The World Steel Association which represents 180 steel producers accounting for 85 percent of world output, said steel production in May came to 95.6 million tonnes.

China, after two months of declines, managed to reverse the trend in May, when production edged up 0.6 percent to 46.5 million tonnes compared with the same month in 2008.

But Asia as a whole saw output slide 7.0 percent in May, largely due to production declines in Japan.

Output in May fell 44.8 percent in the European Union, 33.6 percent in Russia and the former Soviet republics and 47.8 percent in North America.

Production in 2008 was down 1.2 percent at 1.329 billion tonnes after gains of 7.6 percent in 2007 and 9.1 percent in 2006, according to the World Steel Association.

World oil prices dropped below 105 dollars in Asian trade on Monday amid continuing concerns that energy demand would be affected by a slowing US economy, dealers said.

In afternoon trade, New York's main oil futures contract, light sweet crude for delivery in May, was 81 cents lower at 104.81 dollars per barrel.

The contract closed at 105.62 dollars per barrel during floor trading on Friday at the New York Mercantile Exchange.

Brent North Sea crude for May delivery fell 35 cents to 103.42 dollars a barrel, after settling at 103.77 in London on Friday.

Oil prices fell Friday after the United States Commerce Department reported that the US economy, the world's biggest oil consumer, grew at a tepid 0.6 percent in the fourth quarter last year.

Jason Feer, vice-president and general manager of energy market analysts Argus Media Ltd, said that because of an economic downturn in the United States, uncertainty clouds demand for oil over the next couple of months.

"The inventories overhang combined with softening demand is the reason for significant drops in pricing," he said in Singapore.

Economic output moderated in the fourth quarter during a widespread housing market downturn and as a related credit squeeze in the US banking system broadened in the final months of last year.

The credit crunch has worsened in recent months and a growing number of economists believe the US economy has now fallen into a recession.

Economic momentum slowed despite the US Federal Reserve's interest rate cuts. Since September, Fed policymakers have slashed the short-term federal funds rate to 2.25 percent from 5.25 percent in a bid to shore up growth.

Amid global supply disruptions, New York crude hit a record intraday high of 111.80 dollars on March 17 while London Brent scored a historic peak of 108.02 dollars earlier in March.

Hong Kong gold prices opened lower on Monday at 929.40-930.40 US dollars an ounce, down from Friday's close of 932.50-933.50 dollars.

Beijing has suspended buying non-ferrous metals for state reserves after government stockpiling led to a surge in prices, Chinese media reported.

China has been building its inventories of metals, including 235,000 tonnes of copper, over recent months, Caijing magazine reported on its website over the weekend, citing Yu Dongming, an official with the state economic planner.

China also bought 590,000 tonnes of aluminium, 159,000 tonnes of zinc, 30 tonnes of indium and 5,000 tonnes of titanium, said Yu, who works in the National Development and Reform Commission's industry department.

"In the current market situation, aluminium firms have already started to make profits and non-ferrous metals prices have rebounded," he was quoted as saying.

"It's had the expected effect and, given these circumstances, we don't expect the state will continue to build its reserves."

Yu added that middlemen, rather than domestic companies that the government intended to support, had unexpectedly become "the biggest beneficiary" of Beijing's buying spree.

China has been buying up crude oil, copper, coal and a host of other key raw materials despite the financial slump having slashed demand for the exports responsible for the Asian giant's once ravenous appetite.

The State Reserve Bureau has been stockpiling, but so too have producers, distributors and other speculators hoping to profit from an expected rise in prices once the world economy starts to recover, analysts say.

Oil prices hit new record highs Tuesday amid heightened concerns about a potential Turkish incursion into oil-rich northern Iraq to attack Kurdish rebels.

New York's main oil futures contract, light sweet crude for delivery in November, closed above 87 dollars per barrel for the first time after striking a record 88.20 dollars in intraday trading.

The benchmark New York contract gained 1.48 dollars to settle at a record 87.61 dollars. On Monday it jumped more than two dollars a barrel.

In London, Brent North Sea crude for November advanced 1.41 dollars to settle at 84.16 dollars, after earlier hitting an all-time high of 84.49 dollars during the session.

Oil prices surged as investors fixated on Turkey, where the parliament was expected to approve a government motion to allow cross-border raids into Iraq for one year to root out the Kurdistan Workers Party (PKK).

"A good portion of the gains can be tied to the escalation in tensions between Turkey and Kurdish rebels, which has added a sizable geopolitical risk premium into prices over the last several trading sessions," said Michael Fitzpatrick, an analyst at MF Global.

The PKK, considered a terrorist group by Turkey and much of the international community, has been fighting for Kurdish self-rule in southeast Turkey since 1984.

The potential of a military conflict had the oil market on edge.

"This raises concerns any such action will jeopardize and possibly disrupt Northern Iraqi oil flows or flows through the Baku-Ceyhan pipeline across Turkey. If geopolitical tensions escalate further, prices have the potential to test 90 dollars this week," Fitzpatrick said.

Many of Iraq's largest oil fields are located in the north of the troubled country.

"The tensions in Turkey are the main driver here," said Nas Nijjar, a trader at CMC Markets.

"Now we have potential (supply) problems on top of that going into the winter."

Prices were additionally supported by concerns over potentially stretched global energy supplies, particularly during the forthcoming northern hemisphere winter, when demand for heating fuel hits a peak.

"Crude futures surged higher (on Tuesday), reaching fresh record highs in London and New York on continuing speculative and fund buying, amid persistent geopolitical and supply worries," said Sucden analyst Michael Davies.

OPEC chief Abdalla Salem El-Badri said the cartel was "concerned" at the price spike but argued that current levels did not reflect the true state of supply and demand in the market.

The Organization of the Petroleum Exporting Countries "is carefully watching developments in the oil market and has observed with concern the recent escalation in oil prices," OPEC chief El-Badri said in a statement.

"While (OPEC) does not favor oil prices at this level, it strongly believes that fundamentals are not supporting current higher prices and that the market is very well supplied," he added.

Dealers had been spooked Monday when OPEC cut its fourth-quarter non-OPEC production outlook by 110,000 barrels per day.

According to OPEC data, Iraq produced about 2.0 million barrels of crude per day in August. Before April 2003, it pumped an estimated 2.8 million bpd.

burs-vs/rl

The United States accused China Tuesday of pursuing a "troubling" industrial policy as it launched WTO action with the European Union against the Asian giant for restricting raw materials exports.

The two Western powers requested World Trade Organization (WTO) dispute settlement consultations with China regarding Beijing's export restraints on numerous important raw materials.

"China's measures appear to be part of a troubling industrial policy aimed at providing substantial competitive advantages for the Chinese industries using these inputs," US Trade Representative Ron Kirk told reporters in Washington.

The materials at issue were bauxite, coke, fluorspar, magnesium, manganese, silicon metal, silicon carbide, yellow phosphorus, and zinc -- key inputs for numerous downstream products in the steel, aluminum, and chemical sectors across the globe.

China is top global producer of these materials.

"We are going to the WTO today to enforce our rights, so we can provide American manufacturers with a fair competitive environment and put more American workers back on the job," Kirk said.

"China is a leading global producer and exporter of the raw materials in question, and access to these materials is critical for US industrial manufacturers."

He added that the United States "is very concerned that China appears to be restricting the exports of these materials for the benefit of their domestic industries, despite strong WTO rules designed to discipline export restraints."

European demand for steel, after shrinking by a third this year, should rise about 14 percent in 2010 as an inventory draw-down by steel users comes to an end, the European Confederation of Iron and Steel Industries (Eurofer) said on Thursday.

"In 2010 the stock cycle reversing to slightly positive will result in apparent steel consumption growing by almost 14 percent," the agency said in a statement.

Apparent steel consumption is determined by subtracting steel exports from domestic production and imports.

The current economic downturn and de-stocking by such steel-using sectors as construction and auto manufacturing has eroded steel consumption and will continue to do so in the third quarter, according to Eurofer.

The confederation for this year is forecasting a drop in apparent steel consumption of nearly 33 percent compared with 2008. Consumption was down 43 percent in the first six months.

But the federation said that beginning in the fourth quarter, the market should begin to show a slight rebound "as the negative effect of the stock cycle begins to ease."

"We finally see a little light at the end of the tunnel," said Eurofer director general Gordon Moffat.

The European Union and the United States on Tuesday launched WTO action against China, accusing it of restricting raw materials exports to feed its domestic market.

"The European Union has today requested WTO consultations with China regarding China's export restrictions on a number of key raw materials, which it considers are in clear breach of international trade rules," the EU commission said in a statement.

In Washington, US Trade Representative Ron Kirk accused China of pursuing a "troubling" industrial policy.

The two Western powers requested World Trade Organization (WTO) dispute settlement consultations with China regarding Beijing's export restraints.

"China's measures appear to be part of a troubling industrial policy aimed at providing substantial competitive advantages for the Chinese industries using these inputs," Kirk told reporters in Washington.

European industries have raised concerns for a number of years on such export restrictions -- quotas, export duties and minimum export prices -- which China applies on key raw materials, including yellow phosphorous, bauxite, coke, magnesium, silicon metal and zinc.

These materials are used notably in the aeronautics industry or in the production of steel, chemicals and semi-conductors and some cannot be found elsewhere.

EU Trade Commissioner Catherine Ashton complained: "The Chinese restrictions on raw materials distort competition and increase global prices, making things even more difficult for our companies in this economic downturn."

She added: "I hope that we can find an amicable solution to this issue through the consultation process."

Last week China defended its moves to restrict exports of some raw materials, saying it was acting to protect the environment.

"Taxing exports of some high energy-consuming and pollutant goods is to improve the world's trade environment and China's export structure, and to further enhance environmental protection measures," China's commerce ministry spokesman Yao Jian said then.

However Kirk complained that the actions "are hurting American steel, aluminum and chemical manufacturers among other industries that desperately need these materials to make their products."

"These actions also endanger thousands of jobs in America for those employed in these important sectors," he added.

In its accession to the WTO, China agreed to restrict the number of products subject to export tariffs.

China "expressly made the commitment that it would not engage in this type of behaviour," Kirk said.

Beijing's policy appeared to be aimed at creating "unfair preferences for Chinese industries" by making raw materials cheaper to them, thereby skewing costs right along the supply chain, he added.

European industries are dependent on imports of raw materials, and are therefore vulnerable to distortions in world commodities markets.

"Currently there is no level playing field for European industry with their Chinese competitors," the commission said.

"Once these resources are placed on the market, we believe they should be available without discrimination to domestic or foreign buyers. This is not the case today."

The launch of consultations is only the first step in the litigation process at the WTO.

It is intended to explore whether an amicable solution is possible.

This can last up to 60 days and if no such solution appears then the EU commission can move to establish a WTO panel for a formal ruling in the row.

Hong Kong gold prices closed higher on Tuesday at 942.00-943.00 US dollars an ounce, up from Monday's close of 939.50-940.50 US dollars.

It opened at 939.00-940.00 dollars.

Gold has long had a special attraction for Indians. Loaded with cultural and religious significance, it is considered an auspicious metal and a visible sign of wealth and prosperity.

But trading in the sought-after commodity is now changing, as one company looks to secure a better deal for the millions of ordinary Indians who buy and sell the precious yellow metal for weddings and annual festivals.

National Spot Exchange Ltd, controlled by markets firm Financial Technologies India Ltd, has set up a new electronic system that looks to guarantee gold bullion prices and quality.

"What we're trying to do is to create a market so that Indians can sell gold by way of converting into gold bars or gold coins and sell it on," said National Spot Exchange's managing director and chief executive Anjani Sinha.

"At a spot exchange we can fix their price, quote the price and it's guaranteed by supply and demand. They can quote their buying price and their selling price," he told AFP at the company's offices in suburban north Mumbai.

India is the world's biggest consumer of gold, importing between 700 and 800 tonnes of the metal every year or 20 percent of global demand.

The country's gold imports have slowed in recent months due to the world economic downturn, which has pushed up prices as investors seek a safe haven from the financial uncertainty.

In January, the peak of the lavish wedding and gift-giving season, India imported only 1.8 tonnes of gold, down from 14 tonnes in the first month of 2008.

In April, the Bombay Bullion Association said that -- for the first time in more than a decade -- there were no imports at all in February and March.

Even so, Indian households are still believed to have a massive 20,000 to 25,000 tonnes of gold stashed away.

But while a market exists for imported bullion, there is no mechanism for the resale of gold jewellery and its conversion back into bars once it enters the domestic market.

As a result, ordinary Indians are forced to use merchants who commonly charge a hefty commission to melt down their gold jewellery and sell it on at a premium.

Introducing a more standardised, transparent market will cut out the middleman and be beneficial for both the consumer and the Indian economy as a whole, said Sinha.

"This market has been created basically for dealing in quality, certified standard gold," he said.

"The consumer is more in control and not dependent on somebody else when he goes to a jewellery merchant where you can't quote your own selling price."

Daily prices are linked to those at the London Bullion Market. On its first day on May 30, the spot exchange in India's financial capital traded about 50 kilograms of gold.

Selling prices were in the region of 14,450 rupees (302 dollars) per 10 grams on Friday.

To guarantee quality, the exchange, in conjunction with the Indian Bullion Markets Association, is auditing refineries that melt down jewellery into international standard "995" purity, meaning it is 995/1,000 parts pure gold.

Four refineries -- two in Mumbai and two in Ahmedabad, in nearby Gujarat state -- have already been approved. It is hoped to have 15 approved refineries by the end of the year.

Sinha's aim, like that for other commodities traded in similar ways at the company, such as cotton, is to create a common domestic market, accessible across India to get a better price for the fabled Indian "common man".

"Our pitch has been if you want this market to grow further, with integrity and credibility, you have to bring transparency into the system," he explained.

Hong Kong gold prices opened higher on Friday at 941.50-942.50 US dollars an ounce, up from Thursday's close of 933.50-934.50 dollars.

Hong Kong gold prices closed lower on Monday at 926.00-927.00 US dollars an ounce, down from Friday's close of 932.50-933.50 dollars.

It opened at 929.40-930.40 dollars.

Sri Lanka, one of the world's biggest tea growers, saw export volumes slide by 17 percent in the five months to May due to a drought-damaged crop, the state-run Sri Lanka Tea Board said Friday.

Tea is the South Asian island nation's biggest foreign exchange earner after garments and is a vital source of revenue as it recovers from nearly four decades of war with ethnic Tamil Tiger rebels.

Exports were down to 107.8 million kilos (237.2 million pounds) from January to May, with earnings of 384.61 million dollars, compared to 444.9 million dollars over the same period in 2008.

"A severe drought in the first quarter of this year reduced our crop output. We had less teas to export," Tea Board chief Lalith Hettiarachchi told AFP.

Russia and former Soviet republics are the biggest buyers of Sri Lankan teas.

Sri Lanka's chief rivals in the tea export market are Kenya and India.

Its export earnings hit a record 1.23 billion dollars in 2008, up from 1.02 billion dollars in 2007.

The World Bank has launched a programme to help cities in developing countries achieve economic growth and high quality living standards without damaging the environment.

With around 90 percent of urban growth worldwide taking place in developing nations and at a rapid pace, city planners are in a race against time to put in place the right policies that will benefit future generations, the bank said.

"Urbanisation in developing countries may be the single greatest change in our century," it said in a book outlining how the bank can help cities achieve economic growth and still have clean air and water and expansive greenery.

The programme was developed by an international team of experts from urban planning, transport, energy water and waste management and draws from the experiences of well-managed cities around the world.

It incorporates the best practices from model cities such as Singapore, Stockholm in Sweden, Yokohama in Japan and Curitiba in Brazil.

In cooperation with the bank, other cities in developing countries can implement these practices, principles and other practical methods and tools in accordance with their own local conditions.

The programme complements the bank's efforts to promote sustainable development and help cut greenhouse gas emissions blamed for climate change.

Entitled "Ecological Cities as Economic Cities", the book cites projections that developing countries will treble their entire built-up urban area from 200,000 square kilometres (77,220 square miles) to 600,000 square km (231,661 square miles) between 2000 and 2030.

"One could say we are building a 'whole new world' at about 10 times the speed in countries with severe resource constraints," says the book, launched in Singapore at the weekend.

The rise of urban centres cannot be avoided because on average about 75 percent of global economic production takes place in cities, the book says.

In many developing countries the share of urban centres in the total national economic output is over 60 percent, it notes.

But while urbanisation has helped lift millions of people out of poverty, it has also led to an "unprecedented consumption and loss of natural resources", the book says.

Lack of planning and an explosion in population growth has led to pollution, urban blight, poor water and sanitation conditions and the mushrooming of slum areas.

"Calculations already show that if developing countries urbanise and consume resources as developed countries have, an ecological resource base as large as four planet Earths would be needed to sustain growth," the book says.

It adds however that cities like Singapore, Stockholm, Yokohama and Curitiba have shown that economic growth, high-quality living standards and protection of the environment can go together.

The book notes that many of the solutions adopted by these cities "are affordable even when budgets are limited, and they generate returns including direct benefits to the poor".

Yumiko Noda, the deputy mayor of Yokohama, said at a seminar on "liveable cities" held in Singapore to coincide with the book's launching that citizens' involvement was crucial to a city's success.

Yokohama in 2001 planned to cut the city's waste by 30 percent within 10 years but achieved its goal in just five years.

This has saved the city money and also slashed its carbon dioxide emissions, she said.

Jim Adams, World Bank vice president for East Asia and the Pacific, said the pace of urbanisation has highlighted the urgency for an integrated economic and ecological approach to development.

"There is only a short space of time in which to make an impact on how this development takes place," he said in a statement.

Japanese candidate Yukiya Amano said Thursday he was 'very pleased' after he won the race to head the International Atomic Energy Agency.

"This afternoon I have received the support from 23 countries which is the necessary number of votes to be selected as the next director general of the IAEA," Amano told journalists. "I am very pleased for this support."

Amano scraped through to victory in the sixth round of voting on Thursday, when 23 of the IAEA's 35 board members voted in his favour, 11 voted against and one country abstained.

He had been competing against South African ambassador Abdul Samad Minty.

The election process is not over, however.

Under the rules of procedure, all 145 IAEA member states are to meet again on Friday afternoon where they will formally appoint Amano "by acclamation".

But he will not be officially named until the IAEA's General Conference give its green light in September.

"If I have the privilege of being elected as the new director general of the IAEA, I will do my utmost to enhance the welfare of the human beings and ensure sustainable development through the peaceful use of nuclear energy," Amano said Thursday.

"Also, as a national coming from Japan, I'll do my utmost to prevent the spread of nuclear weapons. In order to do that, solidarity of all the member states countries from North, from South, from East and West is absolutely necessary."

German Chancellor Angela Merkel flew to Washington Thursday for talks with US President Barack Obama on the international economic crisis and climate protection.

Merkel told reporters before embarking on the two-day trip that she and Obama would also cover Iran, North Korea and Afghanistan and preparations for next month's Group of Eight summit in Italy.

She said she also hoped to clear a few obstacles on the road toward a landmark United Nations treaty on climate change in Copenhagen in December during her stay in the United States, the world's biggest emitter of greenhouse gases.

"It is about comparing notes on how we can achieve a deal in Copenhagen," she said.

"A lot has happened in the United States of America on this issue but there is still an enormous amount of work to do."

Merkel said there were also differences on new international rules for financial markets and against protectionism ahead of the G8 summit July 8-10 and a meeting of the Group of 20 industralised nations in Pittsburgh in September.

"We will have to surmount some difficulties to work toward fiscally sustainable development in the economy," Merkel said.

"We have to draw the right lessons from the economic crisis. The American president, Barack Obama, is of the same opinion."

Senior aides to the chancellor said this week that Merkel would like to hear Obama's "exit strategy" out of massive public spending to grapple with the economic crisis, with the spectre of runaway global inflation looming large.

It will be Merkel's first visit to Washington since Obama took office in January but her stop at the White House Friday will mark their third one-on-one talks this year.

Despite the flurry of meetings, most recently in the eastern German city of Dresden this month, Obama and Merkel have had to work to dispel rumours of friction between them.

A close advisor to the conservative chancellor, who had warm personal relations with Obama's predecessor George W. Bush, expressed exasperation with the persistent rumours in the US and German press.

"Merkel will not take part in a contest to see who gets along best with the American president," the advisor said on condition of anonymity.

President Nicolas Sarkozy on Wednesday held the first meeting of his reshuffled cabinet. Here is the full list of ministers and junior ministers in the new government.

Prime Minister: Francois Fillon

Minister of state for Ecology, Energy, Sustainable Development and Climate Change Negotiations: Jean-Louis Borloo

Minister of state for Justice: Michele Alliot-Marie

Minister for the Interior, Overseas Departments and Territorial Administration: Brice Hortefeux

Minister of Foreign and European Affairs: Bernard Kouchner

Minister for the Economy, Finance and Employment: Christine Lagarde

Minister of Defence: Herve Morin

Minister for Culture and Communication: Frederic Mitterrand

Minister for Immigration, Integration and National Identity: Eric Besson

Minister for Agriculture, Fisheries and Food: Bruno Le Maire

Minister for Labour, Social Relations and Solidarity: Xavier Darcos

Minister for National Education and Government Spokesman: Luc Chatel

Minister for Higher Education and Research: Valerie Pecresse

Minister for Health, Youth and Sports: Roselyne Bachelot

Minister in charge of the government's economic recovery plan: Patrick Devedjian

Minister for the Budget, Public Finances and the Civil Service: Eric Woerth

Minister for Town and Country Planning and Rural Affairs: Michel Mercier

Junior interior minister: Alain Marleix

Junior trade minister: Christian Estrosi

Junior justice minister: Jean-Marie Bockel

Junior labour minister: Laurent Wauquiez

Junior minister of European and foreign affairs: Pierre Lellouche

Junior ecology minister: Chantal Jouanno

Junior minister responsible for the digital economy: Nathalie Kosciusko-Morizet

Junior minister for housing and urban affairs: Benoist Apparu

Junior minister responsible for relations with parliament: Henri de Raincourt

Junior minister responsible for developing the Paris region: Christian Blanc

Junior minister responsible for overseas departments: Marie-Luce Penchard

Junior minister responsible for foreign trade: Anne-Marie Idrac

Junior minister for ecology and sustainable development: Valerie Letard

Junior minister responsible for transport: Dominique Bussereau

Junior minister responsible for the family and solidarity: Nadine Morano

Junior minister responsible for the elderly: Nora Berra

Junior responsible for trade, tourism, consumer affairs and small businesses: Herve Novelli

Junior minister responsible for urban affairs: Fadela Amara

High commissioner responsible for fighting poverty: Martin Hirsch

Junior minister for youth and sports: Rama Yade

Junior minister responsible for foreign aid and francophony: Alain Joyandet

Junior minister responsible for veterans' affairs: Hubert Falco

The political crisis in Niger could affect its ties with the European Union, EU Development Commissioner Louis Michel warned Tuesday, voicing concern at events there.

"I am very concerned at the evolution of the political situation in Niger," said Michel in a statement.

"This is a country which has enjoyed internal stability for the last 10 years and today everything risks being brought into question," he warned.

Niger President Mamadou Tandja, a 71-year-old retired army colonel whose legal tenure expires in December, is fighting to retain the country's top job.

He has scrapped the national constitutional court a month after he dissolved a parliament that had challenged him.

Michel said he hoped to express his concerns directly to Tandja and "remind him that the decisions taken in recent days bring seriously into question the essential elements of the Cotonou Agreement, signed by the European Union and Niger, which could have direct consequences on our cooperation."

The Cotonou Agreement is a partnership deal between the European Union and members of the African, Caribbean and Pacific Group of States aimed at tackling poverty while contributing to sustainable development.

A green economy backed by a green industry should be the goal of all states as they try to cope with climate change and the economic crisis, experts said Monday at the start of a UN conference.

"The current global financial and economic crisis must be used to our advantage to bring about a green energy revolution," said Kandeh K. Yumkella, director-general of the UN Industrial Development Organization (UNIDO).

The three-day meet was to pave the way "towards a low-carbon global 'green economy' powered by 'green industry'," he added.

UNIDO and the Vienna-based International Institute for Applied Systems Analysis (IIASA) were among the organisers of the Vienna Energy Conference.

"We are facing a convergence of challenges that require a fundamental transformation of energy systems," said IIAASA director Detlof von Winterfeldt.

"'Business-as-usual' solutions are not an option," he added.

"The magnitude, pace, and scale of the impact of climate change is greater than predicted, even as recently as a couple of years ago."

For von Winterfeldt, the economic crisis was an opportunity to secure further investments in renewable energy.

More than 100 billion dollars (72 billion euros) were currently invested every year in renewable energy, he said: but that needed to be increased three-fold.

"We have an opportunity in the several stimulus packages introduced by many countries in response to the global financial and economic crisis," he concluded.

Improving energy resources was also crucial in helping poor countries, said Rajendra Pachauri, chairman of the Intergovernmental Panel on Climate Change, which won the 2007 Nobel Peace Prize.

"Providing an adequate supply of energy to the poor should be a key priority. Without it there can be no talk about eliminating poverty in the world," he added.

Some 500 ministers, experts and economists from developing and industrial countries are in Vienna to discuss energy issues, sustainable development and environmental threats in the context of the economic crisis.

The conference, which runs until Wednesday, was also organised with the help of the Austrian government and the Global Forum on Sustainable Energy.

Access to affordable high-speed Internet and mobile phone service are key to economic growth and job creation in developing countries, the World Bank said in a report released on Tuesday.

The report, Information and Communications for Development 2009, found that for every 10 percentage-point increase in high-speed Internet connections there is an increase in economic growth of 1.3 percentage points.

"Internet users in developing countries increased tenfold from 2000 to 2007, and there are now over four billion mobile phone subscribers in developing countries," said Mohsen Khalil, World Bank group director for global information and communication technologies.

"These technologies offer tremendous opportunities," Khalil said. "Governments can work with the private sector to accelerate rollout of broadband networks, and to extend access to low-income consumers."

The report identified the mobile platform as the "single most powerful way to reach and deliver public and private services to hundreds of millions of people in remote and rural areas across the developing world."

Broadband provides the basis for local information technology (IT) services industries which create youth employment, increase productivity and exports, and promote social inclusion, it said.

"Currently though, few people in developing economies have access to broadband networks," the report said. "In 2007, an average of less than five percent of the population of low-income economies was connected to broadband networks, and that was mostly in urban centers."

"Access to broadband completes the information foundation for a modern economy and should be a priority in national development plans," said Katherine Sierra, World Bank vice president for sustainable development.

"Governments can play a key role in expanding broadband access by policies and incentives that encourage competition and private investment," she said.

The World Bank supports information and communications technology projects in more than 100 countries with a portfolio of more than three billion dollars.

India on Monday confirmed a huge increase in military spending and offered sweeping benefits to the police, linking the ongoing drive to ramp up national security to economic development.

Finance Minister Pranab Mukherjee hiked the defence budget for the financial year to March 2010 by 24 percent to 1.42 trillion rupees (28.4 billion dollars) to partly fund a programme to modernise India's 1.23-million-strong military.

The size of the increase had been flagged in a pre-election interim budget in February.

An attack by Islamist militants in Mumbai in November that left 166 people dead also prompted Mukherjee to grant additional funds for the paramilitary and state police.

New Delhi blamed "official agencies" in Pakistan for the carnage in Mumbai but conceded the 10 militants who came undetected by the sea took advantage of India's antiquated maritime security and chinks in intelligence networks.

In addition to the defence budget, Mukherjee sanctioned an additional 143 million dollars for the paramilitary and said he will also spend 456 million dollars more to strengthen border security during the current fiscal year.

"Significant augmentation in the strength of the paramilitary forces is being done," Mukherjee said, adding the government will build 100,000 houses for troopers to "boost morale".

In a bid to stem discontent of retired soldiers from spilling into the ranks, he promised an attractive pension programme for 1.2 million ex-military personnel who in recent months had taken their agitation to the streets.

Prime Minister Manmohan Singh said the security modernisation programme was crucial to the unhindered development of Asia's third largest economy.

"Law and order is a pre-requisite to sustainable development... so the modernisation of our intelligence is a must," Singh told Doordarshan national television.

India's army is clamouring for helicopters, artillery, armour and infantry while the airforce is on the verge of buying 126 warjets worth almost 12 billion dollars and the navy wants an aircraft carrier.

India, the biggest weapons buyer among emerging countries and which has imported military hardware worth 28 billion dollars since 2000, plans to sign further contracts estimated at up to 30 billion dollars in the next few years.

But strategy expert Uday Bhaskar noted the lion's share of the funds will be taken up by wages and pensions and said: "The current defence allocation may look good but it will not enhance the capability of the military in any way."

Veteran Japanese diplomat Yukiya Amano won the contest on Thursday to head the International Atomic Energy Agency, giving him a pivotal role in dealing with Iran's nuclear ambitions.

Tokyo's current envoy to the UN nuclear watchdog was chosen after six rounds of voting when he scraped together the requisite two-thirds majority with backing of 23 of the 35 board members. Eleven voted against and one abstained.

Seen as the Western states' candidate to succeed outgoing director-general Mohamed ElBaradei, Amano had been running against South African ambassador Abdul Samad Minty, the perceived favourite among developing countries.

Under the rules of procedure, all 145 IAEA member states are to meet again on Friday where they will formally appoint Amano "by acclamation" and his appointment will need the final go-ahead at a general conference in September.

Speaking to reporters after the vote, Amano said he was determined to prevent nuclear proliferation and saw a unified approach among IAEA members as crucial to achieving that goal.

"If I have the privilege of being elected as the new director general of the IAEA, I will do my utmost to enhance the welfare of the human beings and ensure sustainable development through the peaceful use of nuclear energy," he said.

"Also, as a national coming from Japan, I'll do my utmost to prevent the spread of nuclear weapons. In order to do that, solidarity of all the member states countries from North, from South, from East and West is absolutely necessary."

Amano was born on May 9, 1947, two years after the United States dropped its atomic bombs on the Japanese cities of Hiroshima and Nagasaki.

He graduated from Tokyo University's law faculty before joining the foreign ministry in 1972.

In 1993, Amano was named director of the ministry's nuclear energy division and then appointed director-general for arms control and scientific affairs before moving to the disarmament, nonproliferation and science department.

He also took part in negotiations for major arms control instruments, including the Nuclear Non-Proliferation Treaty (NPT) reviews and the Comprehensive Test-Ban Treaty (CTBT).

Amano will inherit a very difficult job when the Egyptian ElBaradei steps down in November after three four-year terms as IAEA director general.

The IAEA recently released two new reports which showed it had made little progress in its probes into the alleged illicit nuclear activities in Iran and Syria.

Iran is defying the UN Security Council and amassing low-enriched uranium which the United States and its allies fear could play a crucial role in building a nuclear weapon.

In an interview with AFP earlier this year, Amano said he did not expect any quick breakthrough on Iran although he expressed hope that Barack Obama's election as US president would ease some of the tensions.

"The Iran dossier has been with IAEA for years. The roots of it date back decades. So, I'm not expecting a quick fix," he said in February.

International efforts to negotiate an end to North Korea's nuclear weapons programmes have virtually collapsed and the Stalinist state conducted what it claimed was a nuclear test last month.

Pyongyang further ratcheted up tensions on Thursday by firing two short-range missiles.

Amano will also have to persuade IAEA member countries to contribute more money to the agency.

While the voting appeared to indicate fundamental splits within the IAEA, board chairwoman Taous Feroukhi odenied there was a deep North-South divide.

"I don't see we have two camps," the Algerian said, as she announced the results.

"As in a national election, you have to make a choice. And it's very difficult to choose between two good candidates."

During his term in office, ElBaradei, who won the Nobel Peace Prize in 2005 for his work at the IAEA, has been criticized for his comments and accused of politicizing the agency.

China plans to dramatically increase its use of wind and solar power, aiming to generate up to one fifth of its energy from renewable sources by 2020, a senior official told Britain's Guardian newspaper.

"We are now formulating a plan for development of renewable energy," Zhang Xiaoqiang, vice-chairman of China's national development and reform commission, said in an interview in London published Wednesday.

"We can be sure we will exceed the 15 percent target. We will at least reach 18 percent. Personally I think we could reach the target of having renewables provide 20 percent of total energy consumption."

China's stated goal is for 15 percent of its energy consumption in 2020 to come from renewable sources, which Beijing says include large hydropower projects and nuclear plants.

The Guardian reported Zhang as saying that a significant part of China's economic stimulus package would be invested into low-carbon investment, and that accompanying reforms would see increased demand for renewable energy.

"Due to the impact of the global financial crisis, people are all talking about green and sustainable development," Zhang told the paper.

"Enterprises and government at all levels are showing more enthusiasm for the development of solar for power generation, and the Chinese government is now considering rolling out more stimulus policies for the development of solar power."

US climate envoy Todd Stern met with top Chinese officials in Beijing this week to press for a commitment to cutting greenhouse gas emissions under the next treaty on global warming, to be hammered out in Copenhagen in December.

In a meeting on Monday, Vice Premier Li Keqiang reiterated to Stern that developing countries like China should be held to a different standard, according to a statement posted on the Chinese foreign ministry's website.

Zhang said China was pursuing a "constructive and a positive role" in negotiations for Copenhagen, and as part of the agreement, developing countries would have to pursue a "sustainable development path."

He added that China was open to the idea of limits on the carbon intensity of its economy, or setting restrictions on its emissions per unit of output.

Men trying to keep several wives happy and women competing with co-wives for their husbands' attentions has led to a boom in the sale of herbal aphrodisiacs in predominantly Muslim northern Nigeria.

"Demand for sex stimulants has been unprecedented in the last four years," herbalist Sule Adamu told AFP in his dingy office on the outskirts of Kano.

Adamu, who has 40 years in the business, reckons his clients, mostly men, have more than tripled in number since 2005.

Women not satisfied with their husband's sexual performance also come for the drugs if their husbands are embarrassed to do so.

"Women also go for aphrodisiacs to make them appealing to their husbands. Mothers provide sex stimulants to their newly-wed daughters to aid them satisfy their grooms' sexual desires, said Hafsat Musa Baba of Kano-based Sustainable Development Centre (SUDIC), a reproductive health NGO.

Talatu Jatau, 53, has been selling aphrodisiacs for women, known simply as "women's stuff", in Kano for six years and makes a good living from it.

Every other month, she brings a bag-load of "women's stuff" from Zamfara state, 400 kilometres (250 miles) away and sells it in less than a week to women in purdah.

Lami Bello, 28, has been using women's herbal sex stimulants since she met her boyfriend three years ago.

"I have a very virile boyfriend who is so affectionate that I don't want to lose him. I realised the only way to keep him to myself is to satisfy his sexual urge; that is why I use aphrodisiacs and the experience has been worthwhile," she said with a smile.

Herbal aphrodisiacs are displayed everywhere in this city of some four million -- in markets, bus stations, offices and even outside mosques.

Itinerant vendors advertise their wares using megaphones and loudspeakers hoisted on car roofs or on two-wheeler carts.

The drugs come in all forms -- liquid, jelly and powder and are taken orally or rubbed on the penis.

The recipes are handed down from father to son and are a jealously guarded secret.

Haruna Usman, 39, has been using herbal stimulants for five years and says his sex life has greatly improved over that period.

-- Husband must prove 'manliness' to keep peace with wives --

"Before I began using the herbs I could only make love to my wife once a week due to low libido but now I make love not less than five times a week. And each time we do it three or four times over," he said.

"People have the notion that manliness is gauged by how sexually virile a man is, which explains the increase in the demand for sex improving drugs", said Mairo Bello of Adolescent Health and Information Project (AHIP), a Kano-based NGO.

Being a conservative Islamic society, Kano is largely polygamous with men taking as many as four wives, the maximum Islam allows.

With the wives competing for affection, the husband must prove his "manliness" to each of them to maintain peace in the home, SUDIC's Baba said.

Conventional aphrodisiacs such as Viagra, Cialis and Levitra are available in big drugstores in the city but many people prefer the herbs which are cheaper. A four-tablet pack of Viagra costs 27 dollars while a handful of herbs which lasts the user several days costs no more than two dollars.

Although users of local sex stimulants believe they are safer because they are herbal, side effects from sustained erection still occur in many cases.

Adamu concedes some of his clients come back to him with prolonged erection after using the aphrodisiacs, but says he treats the condition with a dose of herbal antidote.

Abubakar Abdullahi, a consultant urologist, says the prolonged erection side effect can do lasting damage.

"Half of those who experience this side effect become impotent once the erection subsides with or without medication," said Abdullahi, who has handled several such cases.

For the moment traditional medicine is not regulated anywhere in Nigeria, although legislation is pending.

Legislation or no legislation, Sammani Maimukulli, 50, now steers clear of herbal sex stimulants.

"I stopped using them seven years ago," he told AFP.

"I was given a strong potion by a herbalist and after taking it I became aroused but the erection refused to subside even after I made love to my three wives," he recounted.

"For four days my penis stayed erect and I had to be admitted to Ahmadu Bello Teaching Hospital in Zaria (140 kilometers away) where doctors told me that I stood the risk of becoming impotent.

"I stayed for more than a week and it cost me 50,000 naira (340 dollars). Since then I have refrained from any sex stimulant."

The effect of the economic crisis, together with sustainable development, were at the centre of talks between Group of Eight (G8) countries and six emerging countries here on Thursday.

"The impact of the economic crisis on developing countries, and sustainable development, are the central themes," the Italian foreign ministry said.

On sustainable development, "the purpose is to harmonise cooperation efforts and coordinate them in different areas of development -- education, the environment, health, food safety -- so as to make the most of available resources," the ministry said.

"At the recent G20 summit (of leading nations) in London measures were announced which, we hope, will soon bring a response to the difficulties which developing countries are going to face.

"However, a lot remains to be done, particularly for the weakest and most indebted countries."

Italy has promised that "Africa will have a front-line role and will have the chance to make its voice heard in Rome (during the development talks) as well as during the G8 summit" at Aquila in the centre of the country July 8-10.

The right-wing government headed by Prime Minister Silvio Berlusconi has decided to broaden the the G8 development discussion to include Brazil, China, India, Mexico, South Africa and Egypt.

He has also invited the Organisation of African Unity and the New Partnership for African Development (NEPAD).

Representatives from several UN bodies, such as the Food and Agriculture Organization, The World Food Program and the World Health Organization, and the World Bank, are also taking part.

A map-making project aimed at protecting the pygmy communities of the Republic of Congo was launched on Thursday, the Rainforest Foundation organisation said.

The project, run in partnership with the government and the Congolese Observatory for Human Rights (OCDH), will help pygmies map the forest resources available to them, said programme manager Francesca Thornberry.

The map they draw up should form a basis for protecting the pygmies' access to local resources and integrate them into sustainable development plans for the forest.

The British organisation is also working in the Democratic Republic of Congo and Cameroon to promote the well-being of pygmy communities there.

Congo has a population of 3.6 million of which 10 percent are pygmies.

Arab states will rejoin the Mediterranean Union which has been frozen since the Gaza war in December-January, an Arab League official said Wednesday, despite reservations about sitting down with Israel.

"The whole Arab group will participate in the next meetings. We will not be the ones to block the process," Mohammed al-Nasseri, who heads the Euro-Arab cooperation department at the Arab League, told AFP.

He said Arab members, which include the Palestinians, would attend the July 7 meeting in Brussels to formally announce the 43-member union's relaunch.

The Arab members will first attend a Euro-Mediterranean ministerial meeting in Paris on Thursday on sustainable development, Nasseri said.

Launched at a Paris summit in July, the Union groups EU member states with countries in North Africa, the Balkans, Arab world as well as Israel in a bid to foster cooperation in one of the world's most volatile regions.

But the project has been the victim of Israel's onslaught against the Palestinian Islamist Hamas rulers of Gaza that ended on January 18 as Arab countries refused to sit next to Israel.

A global climate change deal in Copenhagen is crucial to ensure that world trade becomes a catalyst for the greening of the economy rather than an obstacle, trade and environmental chiefs said Friday.

"Business as usual will not prevail," said UN Environment Programme Executive Director Achim Steiner at the launch of a joint report on climate change with the World Trade Organisation.

"The transition to a green economy is the backdrop against which trade must evolve," he told WTO member states at a meeting in Geneva.

Steiner and WTO Director General Pascal Lamy underlined the potentially defining impact on the shape of the world economy of ongoing but separate negotiations on opening up trade and tackling global warming.

"With a challenge of this magnitude, multilateral cooperation is crucial and a successful conclusion to the ongoing climate change negotiations is the first step to achieving sustainable development for future generations," they said in a statement.

Attempts to forge a new deal on global warming in Copenhagen in December are foundering.

Meanwhile, the Doha round of talks at the WTO has virtually ground to a halt in its long-running bid to expand free trade, mainly to help developing nations.

The report underlined that although free trade could increase carbon emissions by stimulating economic activity, it could also help to reduce global warming by increasing the circulation of technologies to mitigate or adapt to climate change.

But the report on Trade and Climate Change also pointed to potential legal hurdles in WTO rules that could hamper incentives like carbon taxes, emissions trading or subsidies aimed at cutting emissions - all potential ingredients of a Copenhagen deal.

In the absence of a coherent international approach, those measures could be regarded as trade distorting and ruled as illegal depending on the way an individual country applies them.

"In my view the sequence is Copenhagen first," said Lamy. "That's where the bulk of the problem lies."

Kinshasa and Brazzaville, the only two world capitals to sit on opposite banks of a river, have unveiled an ambitious plan to link themselves by bridge over the mighty Congo river.

The Democratic Republic of Congo's planning minister, Olivier Kamitatu, and the Republic of Congo-Brazzaville's Integration Minister Justin Baly Megot, signed an accord late Wednesday on spanning the mile-wide river with a bridge.

Under the terms of the agreement, the road-and-rail bridge will be 95 percent financed by the African Development Bank, with the remaining 5.0 percent coming from the two countries.

Neither side provided details of the projected cost of the project, nor of a deadline for completion.

The bridge "will assure regularity and security of supply to Kinshasa and to Brazzaville as well as promoting sub-regional integration," said Kamitatu, in comments carried by the daily Le Potentiel.

Baly Megot said the project will be an "integrated effort to benefit our populations".

The project was first mooted in the 1970s, but repeatedly put on the back burner because of each country's divergent economic interests.

Drivers on London Underground trains have started reading out quotes from thinkers like Jean-Paul Sartre and Mahatma Gandhi in a bid to cheer up passengers, officials said Thursday.

As well as the usual announcements urging passengers to "mind the gap" and warning of delays, Piccadilly Line drivers are now also quoting philosophy over the public announcement system in a move broadly welcomed by passengers.

The quotes include "Everyone should be respected, but no-one idolised" (Albert Einstein), "An ounce of action is worth a ton of theory" (Friedrich Engels) and "Nothing is worth more than this day" (Johann von Goethe).

They come from a book of quotations compiled by artist Jeremy Deller which has been given to drivers as part of an initiative to promote art on the London Underground, also known as the Tube.

Poems are already regularly posted up inside Tube carriages in space usually used for advertisements.

Transport for London, which runs the Tube, said in a statement it hoped the move would "lift the moods of those travelling on the Piccadilly Line".

Deller, though, highlighted the importance of drivers using appropriate quotes at appropriate times.

For example, if a train was stuck in a tunnel, "there's one that probably isn't good, it's by Jean-Paul Sartre, which is 'Hell is other people'," Deller told the BBC.

"But I suspect one by Gandhi would be great, which is 'There's more to life than increasing its speed', which I think might calm people down slightly".

Improving Africa's ramshackle roads could unleash hundreds of billions of dollars in regional trade and spur much-needed economic integration between African states, a UN thinktank said on Thursday.

The UN Conference on Trade and Development (UNCTAD) said in a report that infrastructure development was one of the keys to open trade within Africa, especially in light of the economic slump.

"One important response for Africa to the current crisis would be deeper regional integration which would address the long standing structural deficiencies of the African economy," said senior UNCTAD official Habib Ouane.

The report estimated that a 32 billion dollar investment in improving African cross-border road networks could generate 250 billion dollars of trade in 15 years.

Regional trade in the eight-nation West African Economic and Monetary Union could be tripled simply by paving the roads between its member states.

Trade among African economies represents just nine percent of their total exports, half the proportion found in Latin America and barely a fifth of what is achieved in highly-integrated Europe, according to UNCTAD.

"Africa has by far the most fragmented market and the economic obstacles are very diversified," said Ouane, pointing to the continent's reliance on volatile commodities exports and the poor quality of infrastructure.

The report urged African nations to take the opportunity of the global slump -- which is depressing development assistance, imports and direct investment -- to deepen their own economic ties.

The International Monetary Fund has forecast that Africa's economic growth will drop to about two percent this year, about a third of its recent average.

On Wednesday, Senegal's President Abdoulaye Wade called on European nations to boost their aid to Africa, warning that African nations might turn to Brazil, China and India for economic help.

The Senegalese leader notably regretted a lack of help to re-develop transport networks in Africa that largely date back to the colonial era.

But the trend Wade predicted was already under way, according to the UN thinktank.

"China alone in 2006 has invested more in African infrastructure than the World Bank," Ouane told journalists.

The report stressed that services such as construction, telecommunications and tourism were also a key ingredient of successful regional integration.

"Currently, most African countries are unable to provide domestically the quantity or quality of producer services demanded by local producers and exporters, thus undermining competitiveness," UNCTAD said.

The continent also needs the harmonised policies that would come with integration, rather than the loose approach that smaller African sub-regional groupings brought in recent years, it added.

Sao Paulo on Wednesday unveiled plans to introduce Latin America's first hydrogen-powered bus, which from August will plough the city's thronged streets, spewing water vapor instead of carbon dioxide.

The first prototype is scheduled to enter service next month, with trials expected to end in 2011.

"Brazil is one of five countries in the world that have mastered this technology and that has developed a hydrogen-powered bus," Sao Paulo's governor Jose Serra said presenting the plan.

As part of the trial three more hydrogen buses will be built as well as a hydrogen production facility.

The vehicles will be able to travel 300 kilometers (186 miles) on 45 kilograms (99 pounds) of hydrogen stored in the bus's nine tanks, and 40 kilometers (24 miles) more using battery power.

At the beginning of 2008 Sao Paulo, with 11 million inhabitants, had six million vehicles.

Austrian construction company Strabag is to build a stretch of the A2 east-west highway in Poland by 2012 for 1.5 billion euros (2.24 billion dollars), Strabag's consortium said Tuesday.

The 106-kilometre (66-mile) motorway section will link Swiecko, on Poland's western border with Germany, to the town of Nowy Tomysl in western Poland, linking German motorways to the existing central Polish Poznan-Konin highway.

Set to host the Euro 2012 UEFA cup finals, Poland is scrambling to modernise its largely communist-era, often dangerous, national road network prior to kick-off.

The contract was signed Monday in Warsaw by the Polish Treasury with the Autostrada Wielkopolska AWSA II consortium.

Construction is to begin in July. The European Investment Bank is to provide one billion euros in financing for the project.

Romania will get a 370-million-euro (517-million-dollar) loan from the European Investment Bank to build a new metro line in Bucharest, Transport Minister Radu Berceanu said Saturday.

"We hope that the financing for all the work will come from the bank," said Berceanu following a meeting with the vice president of the institution, Matthias Kollatz-Ahnen.

Set to cost around 700 million euros (980 million dollars), the route will link the city centre with a west suburb. The new line, the fifth in the city, will cover nine kilometres (5.5 miles) and have 14 stations.

Berceanu also said he had "finalised the details" of a 300-million-euro (420-million-dollar) loan which Bucharest is going to take from the Japan Bank for International Cooperation with the aim of constructing a sixth metro line.

He added the Japanese firm Itochu is considering working on the line, which will go to Bucharest-Otopeni airport.

Bucharest is the only Romanian city with an underground transport system and its first line was opened in 1979.

New laws requiring disabled pedestrians to wear traffic signs have met with frustration and derision in Indonesia, where in the eyes of the law cars have taken priority over people.

The laws will do nothing to improve road safety or ease the traffic that is choking the life out of the capital city of some 12 million people, and serve only to highlight official incompetence, analysts said.

Within five years, if nothing changes, experts predict Jakarta will reach total gridlock, with every main road and backstreet clogged with barely moving, pollution-spewing cars.

That's too late for the long-awaited urban rail link known as the Mass Rapid Transit (MRT), which has only just entered the design stage and won't be operational until 2016 at the earliest.

"Just like a big flood, Jakarta could be paralysed. The city's mobility will die," University of Indonesia researcher Nyoman Teguh Prasidha said.

Instead of requiring level footpaths and ramps, lawmakers voted unanimously this month to demand disabled people wear signs announcing their condition so motorists won't run them down as they cross the street.

Experts say the new traffic law is sadly typical of a country which for decades has allowed cars and an obsession with car ownership to run rampant over basic imperatives of urban planning.

"It is strange when handicapped people are asked to carry extra burdens and obligations," Institute of Transportation Studies (Instran) chairman Darmaningtyas said.

"The law is a triumph for the automotive industry. It's completely useless for alleviating the traffic problem."

The number of motor vehicles including motorcycles in greater Jakarta has almost tripled in the past eight years to 9.52 million. Meanwhile road space has grown less than one percent annually since 2004, according to the Indonesian Transport Society.

"Traffic congestion is like cancer," Institute for Transportation and Development Policy specialist Harya Setyaka said.

"This cancer has developed over 30 years as Jakarta begins to develop haphazardly beyond its carrying capacity."

A 2004 study by the Japan International Cooperation Agency found that traffic jams cost Jakarta some 8.3 trillion rupiah (822 million dollars) a year in extra fuel consumption, lost productivity and health impact.

They also cost lives.

"I once had a critical patient who died because we got stuck in traffic," ambulance driver Hasanudin said. "But the family wasn't angry -- there's nothing they can do about the traffic."

The political elite doesn't seem too worried either -- they move around the city escorted by traffic-clearing police with sirens blaring.

Better still, the super rich hire helicopter taxis to fly from meeting to meeting.

"It's no longer a luxury but more of a necessity for business people," said Maria Goretti Lioba, marketing manager for helicopter taxi service Air Pacific.

The company operates two helicopters and carries 50 passengers a month. "Our business is thriving," Lioba said.

An initial plan to expand Jakarta's colonial-era rail network by adding an inner-city skyrail has stalled due to mismanagement and funding problems.

Headless concrete pillars for the skyrail still adorn parts of the city, serving only as giant monuments to decades of failed planning and short-sightedness.

Construction of the MRT -- a single 14.5-kilometre (nine-mile) line from the densely populated south to the centre of the city -- will begin in 2011. The Japan-backed project is scheduled to cost 1.5 billion dollars.

Manpalagupta Sitorus, spokesman for MRT Jakarta company which is owned by Jakarta province, said the MRT would carry 400,000 passengers a day by 2020.

"The main idea of having MRT is to change people's habits from using private vehicles to using mass public transport," he said.

But the MRT alone will not be enough to end Jakarta's traffic nightmare, he said.

"Supporting policies such as limiting the inflow of private vehicles are still needed to slash congestion," he said.

South Korea will spend more than three billion dollars expanding Incheon International Airport to help it compete better with regional rivals, officials said Monday.

Work on the four trillion won (3.12 billion dollar) project will start in 2011 and finish by 2015, the ministry of land, transport and maritime affairs said in a statement.

A second passenger terminal will be built and existing facilities including the cargo terminal expanded.

The airport, now capable of handling 44 million passengers and 4.5 million tonnes of cargo per year, will be able to handle 62 million passengers and 5.8 million tonnes annually once the expansion is complete, the ministry said.

It said the aim is to turn the country's major international gateway into a hub for Northeast Asia.

The project is expected to generate around 80,000 new jobs, the ministry said.

Incheon topped a global poll of best airports conducted by consultancy group Skytrax and released this month.

Irish low-cost airline Ryanair is to order or take firm options on up to 300 new aircraft from Boeing or Airbus by the end of the year, its boss Michael O'Leary said in an interview to be published Monday.

He told German weekly magazine Der Spiegel that Ryanair, which announced a net loss earlier this month, wanted to double its operating profit this year.

Saying that cut-price operators always benefitted from a recession, in aviation or trade, O'Leary said Ryanair would be seeking to take advantage of low prices from manufacturers.

"That is why we want to order from Boeing or Airbus, or take firm options on, up to 300 new planes by the end of the year," he said.

Ryanair, which currently operates some 190 aircraft, all Boeing 737s, will be carrying up to 150 million passengers a year by 2017, compared with 58.5 million last year, O'Leary predicted.

The flamboyant airline boss also told Der Spiegel that recent remarks expressing interest in acquiring German flag-carrier Lufthansa were not a joke, but gave no details.

On June 2 Ryanair reported an annual net loss of 169 million euros (239 million dollars) that it blamed on high fuel costs and a large writedown on its stake in Aer Lingus.

The loss, suffered in the 12 months to the end of March, compared with net profit of 390.71 million euros in the group's previous financial year.

It predicted it would bounce back into the black in the current financial year with net profits of 200-300 million euros thanks to lower fuel costs.

Last week Ryanair said it would cut 650 more jobs in Ireland, blaming the move on government hikes in taxes amid a deep recession in the eurozone member nation.

And on Tuesday it said was freezing the expansion of bases in Britain in protest at government tax measures and high charges levied by airport operator BAA.

"Ryanair will switch its growth to other EU countries where low cost airports are growing and where governments are welcoming tourists not taxing them," O'Leary said.

Greece on Wednesday said it would erect an electrified fence along a major highway in the north that has claimed the lives of several of the region's protected brown bears.

"We have decided to install a strong enclosure and electrified wiring to avoid accidents involving bears," Environment and Public Works Minister George Souflias told reporters.

"We will also put up special signs to inform drivers that they are passing through a natural habitat," he said.

Around 200 brown bears are believed to live in Greece, mainly in the mountain range of Pindos in the northwest and Rodopi in the northeast.

Nineteen of them have died in road accidents in the past decade, including three this spring, in the northwestern region of Kastoria where the new Egnatia Odos motorway was recently completed, according to the Arktouros group which specialises in monitoring and protecting the Greek bear population.

Souflias on Wednesday said the highway cost an additional 100 million euros (139 million dollars) to create barriers, bridges and tunnels for the bears, but the animals found ways to circumvent them.

"Nobody had predicted that the animal would push the barriers aside," he said.

Fruit trees will also be planted in the area to entice the bears and keep them from nearing inhabited areas in search of food, the minister said.

A work stoppage by Greek air traffic staff on Thursday that will shut down all airports for four hours will disrupt flights through the country, Greece's two main airlines said on Wednesday.

The two airlines, Olympic and Aegean, said they would scrap 43 flights including several to international destinations due to the four-hour work stoppage called over air traffic management technical issues.

Recently-privatised Olympic Airlines said it would cancel 32 return flights, including services to Istanbul, Frankfurt, Larnaca, London, Moscow, Milan, Paris, Brussels, Rome, Munich, Amsterdam, Berlin, Madrid and Bucharest.

The dominant Greek operator also said it would modify departure schedules for Toronto and New York.

Aegean Airlines said it will delay a flight to Sofia and another 10 to domestic destinations because of the 8am-12pm stoppage (0500 to 0900 GMT).

Britain's government said Wednesday it would temporarily nationalise the country's loss-making east coast railway line rail, stripping operator National Express Group of its franchise to run the route.

Rail and bus operator National Express had earlier announced that it was not willing to support the service, which has suffered sliding passenger numbers and dwindling revenues because of the recession.

The group, which failed in its attempts to renegotiate the franchise deal with the government, said it would relinquish control later this year.

"I have therefore established a publicly-owned company, which will take over this franchise from the point at which National Express East Coast ceases to operate," said British Transport Minister Andrew Adonis.

"We will agree an orderly handover with National Express. Until that date, National Express will operate services on the current basis; after that date the new public company will do so."

Adonis added that the government intended to seek a new franchise operator from the end of 2010.

The east coast main line railway connects London and Edinburgh via destinations including Peterborough, Doncaster, Leeds, York and Newcastle.

In a further blow, National Express also announced the departure of its chief executive Richard Bowker, who negotiated the east coast franchise deal in 2007.

Earlier this week, the embattled group snubbed a takeover approach from rival British transport operator FirstGroup.

Rival Cyprus leaders agreed in UN-brokered talks on Friday to open a new crossing point across the long-divided eastern Mediterranean island.

The new passage will be the seventh enabling travel between areas held by the internationally recognised Greek Cypriot government and the breakaway Turkish Cypriot north, and will serve one of the remoter parts of the island.

Linking the government-held village of Kato Pyrgos in the northwestern Tillyria region with Limnitis (Yesilyirmak in Turkish) in the north, the new crossing will create much better transport links with the capital Nicosia for Kato Pyrgos residents.

The Greek Cypriots had demanded its opening as a confidence-building measure to help advance reunification talks relaunched last September.

But the talks between Cyprus President Demetris Christofias and Turkish Cypriot leader Mehmet Ali Talat stumbled in May over Turkish Cypriot demands for the crossing to be used to provide fuel to the Turkish military-controlled enclave of Kokkina (Erenkoy in Turkish) further along the coast.

As a compromise on Friday, the Greek Cypriots agreed that they will provide power to the enclave in return for the opening of the crossing.

"Arrangements will be made to open the Limnitis crossing," Christofias said after his latest meeting with Talat.

"Checkpoints will need to be placed on both sides so the crossing could take a little time to open," he added.

The deal comes just one day after European Commission President Jose Manuel Barroso visited the island and held talks with the two leaders, both together and individually.

Barroso on Friday welcomed the move, calling it "very good news and an excellent response to the call I made yesterday to both leaders to agree on confidence-building measures and move forward in the negotiations to reunify the country."

Speaking as Turkish Prime Minister Recep Tayyip Erdogan was meeting EU officials in Brussels seeking to revitalise his country's bid for EU membership, Barroso called it "a promising step in the overall settlement process."

"I believe that there is a unique chance this year to bring an end to this long-running conflict on European soil and this chance must be taken," he urged.

Turkey's European Union aspirations have been bogged down, in part due to its failure to deal normally with EU member Cyprus.

Britain's government said Wednesday it would temporarily nationalise the country's loss-making east coast railway line, stripping operator National Express Group of its franchise to run the route.

Rail and bus operator National Express had earlier announced that it was not willing to support the service, which has suffered sliding passenger numbers and dwindling revenues because of the recession.

The group, which failed in its attempts to renegotiate the franchise deal with the government, said it would relinquish control later this year.

Transport Minister Andrew Adonis said he had set up a publicly-owned company which would take over the franchise from when National Express East Coast stops operating.

He also warned that the firm could lose its two other rail franchises as a result, adding: "It is simply unacceptable to reap the benefits of contracts when times are good, only to walk away from them when times become more challenging."

Adonis added that the government intended to seek a new franchise operator from the end of 2010.

The east coast main line railway connects London and Edinburgh via destinations including Peterborough, Doncaster, Leeds, York and Newcastle.

In a further blow, National Express also announced the departure of its chief executive Richard Bowker, who negotiated the east coast franchise deal in 2007.

Earlier this week, the embattled group snubbed a takeover approach from rival British transport operator FirstGroup.

Britain's railways were privatised in the 1990s, one of the last of a wave of sell-offs of state assets by the then Conservative government.

Albanian Prime Minister Sali Berisha on Thursday inaugurated a stretch of a highway linking Kosovo to a sea port in a ceremony just days ahead of general elections here.

Berisha, who was joined by Turkish counterpart Recep Tayyip Erdogan, hailed the project as one that would end the "partition of the Albanian nation" and a "road of development for the entire Balkans."

The 60-kilometre (35 miles) stretch of the highway presented on Thursday -- valued at one billion euros (1.4 billion dollars) -- was constructed by the American-Turkish consortium Bechtel-Enka.

Once completed, the highway will eventually link the Albanian port of Durres with Pristina, the capital of ethnic Albanian-majority Kosovo.

The ceremony was held in the final phase of campaigning ahead of Sunday's Albanian general elections, closely contested by Berisha's Democratic Party and the opposition Socialists led by Tirana Mayor Edi Rama.

The highway works have already provoked a fierce dispute during campaigning, with the Socialists accusing the government of numerous irregularities notably during the tender process.

The cost of the works has increased considerably, from the initially planned 500 million euros up to one billion euros (700 million dollars up to 1.4 billion dollars).

The highway -- which also includes a tunnel already built last year -- is expected to shorten the trip between Tirana and Pristina from eight to three hours.

Various stretches are due to be completed by the year's end or in early 2010.

Kosovo unilaterally declared independence from Serbia in February last year and was promptly recognised by Albania, Turkey and the United States. Its statehood has been rejected as illegal by Serbia and its ally Russia.

Albanian authorities hope the new road will increase trade between Albania and Kosovo.

"Albania also hopes that the construction of this road would bring up a higher number of Kosovo Albanian tourists" to the Albanian coast, said Tourism Minister Arjan Turku.

Hong Kong gold prices closed lower on Monday at 926.00-927.00 US dollars an ounce, down from Friday's close of 932.50-933.50 dollars.

It opened at 929.40-930.40 dollars.

Hong Kong gold prices opened lower on Monday at 929.40-930.40 US dollars an ounce, down from Friday's close of 932.50-933.50 dollars.

Gold has long had a special attraction for Indians. Loaded with cultural and religious significance, it is considered an auspicious metal and a visible sign of wealth and prosperity.

But trading in the sought-after commodity is now changing, as one company looks to secure a better deal for the millions of ordinary Indians who buy and sell the precious yellow metal for weddings and annual festivals.

National Spot Exchange Ltd, controlled by markets firm Financial Technologies India Ltd, has set up a new electronic system that looks to guarantee gold bullion prices and quality.

"What we're trying to do is to create a market so that Indians can sell gold by way of converting into gold bars or gold coins and sell it on," said National Spot Exchange's managing director and chief executive Anjani Sinha.

"At a spot exchange we can fix their price, quote the price and it's guaranteed by supply and demand. They can quote their buying price and their selling price," he told AFP at the company's offices in suburban north Mumbai.

India is the world's biggest consumer of gold, importing between 700 and 800 tonnes of the metal every year or 20 percent of global demand.

The country's gold imports have slowed in recent months due to the world economic downturn, which has pushed up prices as investors seek a safe haven from the financial uncertainty.

In January, the peak of the lavish wedding and gift-giving season, India imported only 1.8 tonnes of gold, down from 14 tonnes in the first month of 2008.

In April, the Bombay Bullion Association said that -- for the first time in more than a decade -- there were no imports at all in February and March.

Even so, Indian households are still believed to have a massive 20,000 to 25,000 tonnes of gold stashed away.

But while a market exists for imported bullion, there is no mechanism for the resale of gold jewellery and its conversion back into bars once it enters the domestic market.

As a result, ordinary Indians are forced to use merchants who commonly charge a hefty commission to melt down their gold jewellery and sell it on at a premium.

Introducing a more standardised, transparent market will cut out the middleman and be beneficial for both the consumer and the Indian economy as a whole, said Sinha.

"This market has been created basically for dealing in quality, certified standard gold," he said.

"The consumer is more in control and not dependent on somebody else when he goes to a jewellery merchant where you can't quote your own selling price."

Daily prices are linked to those at the London Bullion Market. On its first day on May 30, the spot exchange in India's financial capital traded about 50 kilograms of gold.

Selling prices were in the region of 14,450 rupees (302 dollars) per 10 grams on Friday.

To guarantee quality, the exchange, in conjunction with the Indian Bullion Markets Association, is auditing refineries that melt down jewellery into international standard "995" purity, meaning it is 995/1,000 parts pure gold.

Four refineries -- two in Mumbai and two in Ahmedabad, in nearby Gujarat state -- have already been approved. It is hoped to have 15 approved refineries by the end of the year.

Sinha's aim, like that for other commodities traded in similar ways at the company, such as cotton, is to create a common domestic market, accessible across India to get a better price for the fabled Indian "common man".

"Our pitch has been if you want this market to grow further, with integrity and credibility, you have to bring transparency into the system," he explained.

Sri Lanka, one of the world's biggest tea growers, saw export volumes slide by 17 percent in the five months to May due to a drought-damaged crop, the state-run Sri Lanka Tea Board said Friday.

Tea is the South Asian island nation's biggest foreign exchange earner after garments and is a vital source of revenue as it recovers from nearly four decades of war with ethnic Tamil Tiger rebels.

Exports were down to 107.8 million kilos (237.2 million pounds) from January to May, with earnings of 384.61 million dollars, compared to 444.9 million dollars over the same period in 2008.

"A severe drought in the first quarter of this year reduced our crop output. We had less teas to export," Tea Board chief Lalith Hettiarachchi told AFP.

Russia and former Soviet republics are the biggest buyers of Sri Lankan teas.

Sri Lanka's chief rivals in the tea export market are Kenya and India.

Its export earnings hit a record 1.23 billion dollars in 2008, up from 1.02 billion dollars in 2007.

European demand for steel, after shrinking by a third this year, should rise about 14 percent in 2010 as an inventory draw-down by steel users comes to an end, the European Confederation of Iron and Steel Industries (Eurofer) said on Thursday.

"In 2010 the stock cycle reversing to slightly positive will result in apparent steel consumption growing by almost 14 percent," the agency said in a statement.

Apparent steel consumption is determined by subtracting steel exports from domestic production and imports.

The current economic downturn and de-stocking by such steel-using sectors as construction and auto manufacturing has eroded steel consumption and will continue to do so in the third quarter, according to Eurofer.

The confederation for this year is forecasting a drop in apparent steel consumption of nearly 33 percent compared with 2008. Consumption was down 43 percent in the first six months.

But the federation said that beginning in the fourth quarter, the market should begin to show a slight rebound "as the negative effect of the stock cycle begins to ease."

"We finally see a little light at the end of the tunnel," said Eurofer director general Gordon Moffat.

Hong Kong gold prices closed higher on Tuesday at 942.00-943.00 US dollars an ounce, up from Monday's close of 939.50-940.50 US dollars.

It opened at 939.00-940.00 dollars.

The IEA saw the risk of oil supply strains recede to 2013 at the earliest with demand growing sluggishly as many economies recovered only slowly from recession, in a report on Monday.

The International Energy Agency (IEA) said in its Mid-Term Oil Market Report that world oil demand would rise by an average 0.6 percent a year in 2008-2014, sharply less than the 1.6 percent forecast in its 2008 mid-term report.

"Relative to the medium term profiles presented in previous years, this scenario paints a delayed picture of threatened 'supply crunch' later in the projected period," it said.

The IEA, the energy-monitoring arm of the 30-nation Organization for Economic Cooperation and Development, had warned in April that oversupply of oil was crimping investment in new fields for the day when demand recovers.

It said in Monday's report that although weak demand could hold off a crunch, tighter supply forecasts for 2013 and 2014 raised the prospect of an "increasingly volatile" market in that period.

But the agency said that the economic outlook was uncertain and that according to an alternative growth model, yearly average demand could actually decline over the next few years if economic recovery took longer than forecast.

Beijing has suspended buying non-ferrous metals for state reserves after government stockpiling led to a surge in prices, Chinese media reported.

China has been building its inventories of metals, including 235,000 tonnes of copper, over recent months, Caijing magazine reported on its website over the weekend, citing Yu Dongming, an official with the state economic planner.

China also bought 590,000 tonnes of aluminium, 159,000 tonnes of zinc, 30 tonnes of indium and 5,000 tonnes of titanium, said Yu, who works in the National Development and Reform Commission's industry department.

"In the current market situation, aluminium firms have already started to make profits and non-ferrous metals prices have rebounded," he was quoted as saying.

"It's had the expected effect and, given these circumstances, we don't expect the state will continue to build its reserves."

Yu added that middlemen, rather than domestic companies that the government intended to support, had unexpectedly become "the biggest beneficiary" of Beijing's buying spree.

China has been buying up crude oil, copper, coal and a host of other key raw materials despite the financial slump having slashed demand for the exports responsible for the Asian giant's once ravenous appetite.

The State Reserve Bureau has been stockpiling, but so too have producers, distributors and other speculators hoping to profit from an expected rise in prices once the world economy starts to recover, analysts say.

Oil slipped further in Asian trade Monday as investors continued to worry over the state of the US economy, the world's biggest energy user, analysts said.

New York's main contract, light sweet crude for August delivery dropped 70 cents to 68.46 dollars a barrel while Brent North Sea crude for August delivery sank 68 cents to 68.24 dollars.

Both contracts closed lower Friday.

"Oil pricing is under pressure from concerns regarding the weak oil demand in the US," said Victor Shum, a Singapore-based analyst with energy consultancy Purvin and Gertz.

Crude fell at the end of last week during US trading hours after official data released Friday showed spending by American consumers rose a weak 0.3 percent in May from April, supported mainly by a massive government stimulus.

Personal savings rate shot up to a 16-year high, indicating consumers were wary of spending amid rising unemployment and plummeting home values, the data showed.

The report by the Commerce Department is widely watched because consumer spending accounts for two-thirds of US economic activity and is considered key to recovery from the severe recession that began in December 2007.

Crude prices have spiked up in recent weeks, boosted in part by the weak US dollar which means lower oil cost for purchasers using foreign currencies.

New unrest in oil-producing Nigeria was another factor which saw crude prices rising above 71 dollars at one stage during intra-day trading Friday, analysts said.

"Oil markets continue to monitor developments in Nigeria. In recent weeks, militants have attacked oil industry infrastructure in Nigeria," said David Moore, a commodity strategist with the Commonwealth Bank of Australia in Sydney.

Nigeria, once Africa's leading oil producer, has seen its oil production affected by militants who claim they are fighting for a fairer share of oil wealth for impoverished communities in the Niger Delta.

The African country now produces about 1.8 million barrels of oil a day compared with 2.6 million in 2006.

World tea prices have rocketed but along misty tea-growing mountain slopes in Sri Lanka's central hills, farmers are facing disaster.

Despite production shortfalls coupled with increased demand making the daily cuppa dearer, the men and women who toil the land have little reason to cheer, for they must uproot tea bushes desiccated by a severe drought.

Tea farmer N. K. Atapattu, 42, picked a crop of nearly 2,000 kilograms (4,409 pounds) of tea leaves from his small plot last year but the crop is sharply down in the first quarter of this year.

The tea harvest fell more than 50 percent in the first three months of the year on the highlands, according to official figures, and Atapattu and his fellow farmers are praying for better weather.

Nalini Aluthgama, 61, says her newly planted home plot at the village of Kotmale, some 170 kilometres (106 miles) east of Colombo by road, is devastated.

"I have just removed over 100 dead tea bushes," Aluthgama said while volunteers joined in to uproot the dead wood. "Most of my plants are about three years old and they don't give much of a crop."

The volunteers get a token two dollars a day for working on the tea plots.

Dhammika Manaweera, 42, the secretary of a local tea farming association, says all her 53-strong membership have suffered because of the drought.

The British charity Oxfam has been helping the local community to learn more about new techniques in tea growing and get the maximum from their inputs, but when it comes to weather, they are helpless.

"We have taken these farmers to experts and taught them good agricultural practices, but they don't have income security because of uncertain weather," said Oxfam's Tharanga Godallage.

This is an area where climate change is affecting an entire community uprooted 25 years ago to make way for a hydro-irrigation reservoir which inundated their traditional farmlands.

"We were re-settled here in 1984. We had a drought in 1988 but this time it is worse," Manaweera said. "We have started replacing the dead tea bushes, hoping for rain. We are getting some right now but if there is too much of rain, it will also ruin us."

Small-time farmers are a vital component in Sri Lanka's tea industry, the country's largest foreign exchange earning commodity, and the authorities are taking their plight seriously.

An hour's drive along a narrow road through hill slopes is Sri Lanka's Tea Research Institute, which is trying to develop new types of drought-resistant tea bushes.

"There was frost damage on the crop earlier this year," said TRI director Sarath Abeysinghe. "It was frosty early in the morning and very dry and hot during the day. It could be attributed to global climate change. We can't predict the weather anymore."

The TRI is using artificial pollination to develop cultivars from the tea bush, botanically known as Camellia sinensis, to withstand harsh weather, but coming up with a successful variety could take decades.

He said the distinctive aromatic flavour of tea usually produced in the mountainous regions during February and March had been ruined by the drought.

The teas, known as Dimbula, are hot sellers among buyers in Japan and Germany.

"There have been times when we were not able to get a quality season because of the erratic weather," he said. "But this year has been worse."

The chief plant breeder at the TRI, Kumudini Gunasekare, said drought resistant cultivars are being developed by her team to address the new issue of climate change.

"Earlier we were concentrating mainly on enhancing yields -- drought was not an issue then -- but we are now focusing on drought-tolerant varieties," Gunasekare said.

World tea prices have risen by about 35 percent in the past year and supermarket prices are set to rise another 10 percent in June, but small farmers in Sri Lanka who account for more than two thirds of the country's production have not benefited.

Sri Lanka earned a record 1.23 billion dollars from tea exports in 2008 thanks to the global commodity boom in the first half last year, but the party is now over.

The drought means that the subsistence farmers will not benefit from the rising prices and the troubles ahead are not something they can forget with a refreshing cup of tea.

Hong Kong gold prices opened higher on Friday at 941.50-942.50 US dollars an ounce, up from Thursday's close of 933.50-934.50 dollars.

China on Wednesday defended its restrictions on the export of some raw materials, which have sparked a US and EU trade action, saying they are in line with World Trade Organization (WTO) rules.

The United States and the European Union a day earlier filed a complaint with the WTO after Beijing put curbs on shipments of a number of materials including bauxite, coke and silicon metal.

They said the mix of quotas, export duties and minimum export prices were "in clear breach of international trade rules" and "troubling" as some of the materials cannot be found elsewhere.

But China said the policy was aimed at protecting the environment and broke no WTO regulations.

"The relevant export policies of the Chinese side are mainly intended to protect the environment and natural resources," the commerce ministry said in a statement faxed to AFP.

"The Chinese side deems the relevant policies are consistent with WTO rules."

It gave no further information.

The two Western powers called for WTO dispute settlement consultations with China regarding the restraints.

The launch of consultations is only the first step in the litigation process at the WTO, and is intended to explore whether an amicable solution is possible.

This can last up to 60 days and if no solution appears the plaintiffs can move to establish a WTO panel for a formal ruling.

The European Union and the United States on Tuesday launched WTO action against China, accusing it of restricting raw materials exports to feed its domestic market.

"The European Union has today requested WTO consultations with China regarding China's export restrictions on a number of key raw materials, which it considers are in clear breach of international trade rules," the EU commission said in a statement.

In Washington, US Trade Representative Ron Kirk accused China of pursuing a "troubling" industrial policy.

The two Western powers requested World Trade Organization (WTO) dispute settlement consultations with China regarding Beijing's export restraints.

"China's measures appear to be part of a troubling industrial policy aimed at providing substantial competitive advantages for the Chinese industries using these inputs," Kirk told reporters in Washington.

European industries have raised concerns for a number of years on such export restrictions -- quotas, export duties and minimum export prices -- which China applies on key raw materials, including yellow phosphorous, bauxite, coke, magnesium, silicon metal and zinc.

These materials are used notably in the aeronautics industry or in the production of steel, chemicals and semi-conductors and some cannot be found elsewhere.

EU Trade Commissioner Catherine Ashton complained: "The Chinese restrictions on raw materials distort competition and increase global prices, making things even more difficult for our companies in this economic downturn."

She added: "I hope that we can find an amicable solution to this issue through the consultation process."

Last week China defended its moves to restrict exports of some raw materials, saying it was acting to protect the environment.

"Taxing exports of some high energy-consuming and pollutant goods is to improve the world's trade environment and China's export structure, and to further enhance environmental protection measures," China's commerce ministry spokesman Yao Jian said then.

However Kirk complained that the actions "are hurting American steel, aluminum and chemical manufacturers among other industries that desperately need these materials to make their products."

"These actions also endanger thousands of jobs in America for those employed in these important sectors," he added.

In its accession to the WTO, China agreed to restrict the number of products subject to export tariffs.

China "expressly made the commitment that it would not engage in this type of behaviour," Kirk said.

Beijing's policy appeared to be aimed at creating "unfair preferences for Chinese industries" by making raw materials cheaper to them, thereby skewing costs right along the supply chain, he added.

European industries are dependent on imports of raw materials, and are therefore vulnerable to distortions in world commodities markets.

"Currently there is no level playing field for European industry with their Chinese competitors," the commission said.

"Once these resources are placed on the market, we believe they should be available without discrimination to domestic or foreign buyers. This is not the case today."

The launch of consultations is only the first step in the litigation process at the WTO.

It is intended to explore whether an amicable solution is possible.

This can last up to 60 days and if no such solution appears then the EU commission can move to establish a WTO panel for a formal ruling in the row.

The United States accused China Tuesday of pursuing a "troubling" industrial policy as it launched WTO action with the European Union against the Asian giant for restricting raw materials exports.

The two Western powers requested World Trade Organization (WTO) dispute settlement consultations with China regarding Beijing's export restraints on numerous important raw materials.

"China's measures appear to be part of a troubling industrial policy aimed at providing substantial competitive advantages for the Chinese industries using these inputs," US Trade Representative Ron Kirk told reporters in Washington.

The materials at issue were bauxite, coke, fluorspar, magnesium, manganese, silicon metal, silicon carbide, yellow phosphorus, and zinc -- key inputs for numerous downstream products in the steel, aluminum, and chemical sectors across the globe.

China is top global producer of these materials.

"We are going to the WTO today to enforce our rights, so we can provide American manufacturers with a fair competitive environment and put more American workers back on the job," Kirk said.

"China is a leading global producer and exporter of the raw materials in question, and access to these materials is critical for US industrial manufacturers."

He added that the United States "is very concerned that China appears to be restricting the exports of these materials for the benefit of their domestic industries, despite strong WTO rules designed to discipline export restraints."

A steady erosion in world steel output since the start of the year slowed in May, when production declined at a weaker annual pace than in April, the World Steel Association said Friday.

Production in May was down 21 percent compared to May 2008, better than an annual output decline in April of 23.6 percent.

The association also said output in the first five months of the year to May fell 22 percent in the face of a global economic contraction that has reduced activity in the construction, automobile and aerospace industries.

The World Steel Association which represents 180 steel producers accounting for 85 percent of world output, said steel production in May came to 95.6 million tonnes.

China, after two months of declines, managed to reverse the trend in May, when production edged up 0.6 percent to 46.5 million tonnes compared with the same month in 2008.

But Asia as a whole saw output slide 7.0 percent in May, largely due to production declines in Japan.

Output in May fell 44.8 percent in the European Union, 33.6 percent in Russia and the former Soviet republics and 47.8 percent in North America.

Production in 2008 was down 1.2 percent at 1.329 billion tonnes after gains of 7.6 percent in 2007 and 9.1 percent in 2006, according to the World Steel Association.