(BN) Brazil Finds More Signs of Oil at Libra Offshore Field

Brazil Finds More Signs of Oil at Libra Offshore Field
2010-12-28 13:05:06.361 GMT


    (Updates with Libra reserve estimates in third paragraph.)

By Peter Millard
    Dec. 28 (Bloomberg) -- Brazil found more evidence of oil at
the government's Libra offshore field, which may be the largest
oil discovery in the America's in more than three decades.
    Brazil's oil regulator, known as the ANP, found a second
layer of hydrocarbons at Libra, according to records on its
website dated Dec. 27. The regulator first discovered oil at the
field in late October.
    Libra is estimated to hold as much as 15 billion barrels of
recoverable oil, which would eclipse Brazil's total current
reserve base and make it the biggest find in the Americas since
Mexico discovered Cantarell in 1976. The estimate disclosed by
the ANP in October means Libra may hold almost twice as much oil
as state-controlled Petroleo Brasileiro SA's nearby Tupi field.
    Libra is the first field the government plans to auction
next year under the country's new concession model, Magda
Chambriard, a director at ANP, said in September. Petrobras, as
the Rio de Janeiro-based producer is known, will operate all new
concessions in the so-called pre-salt area where Libra and Tupi
were discovered.

For Related News and Information:
Top Latin America Stories: TOPL <GO>
Company Financial Analyis: PETR4 BZ <Equity> FA <GO>

--Editors: Carlos Caminada, James Attwood.

To contact the reporter on this story:
Peter Millard in Rio de Janeiro at +55-21-2125-2531 or
pmillard1@bloomberg.net

To contact the editor responsible for this story:
Carlos Caminada at +55-21-2125-2536 or
ccaminada1@bloomberg.net

(BN) Petrobras May Trail Bovespa as BlackRock Favors Banks & Homebuilders

Petrobras May Trail Bovespa as BlackRock Favors Banks (Update1)
2010-12-22 15:51:11.945 GMT


    (Updates trading starting in fourth paragraph.)

By Fabiola Moura and Eric Martin
    Dec. 22 (Bloomberg) -- Petroleo Brasileiro SA, the biggest
drag on Brazil's benchmark stock index this year, may trail the
Bovespa in 2011 on investors' concern the oil producer's
investments will crimp profits, according to BlackRock Inc.
    Will Landers, who oversees the $1.05 billion Latin America
Fund at the world's biggest asset-management firm, said he sold
Petrobras as the stock plunged 30 percent in 2010 and remains
"underweight" heading to next year. Banks and homebuilders are
the most attractive industries in Brazil, poised to benefit from
rising domestic demand, Landers, 41, said in an interview.
    Petrobras "has become a bit of a show-me story," said
Landers, whose Latin America Fund returned an average 20 percent
a year over the past five years, better than 90 percent of
competitors, according to data compiled by Bloomberg. "For next
year, I think most of the overhang or most of the issues with
Petrobras are done in terms of its underperformance, but it
doesn't mean I think it is going to be an outperformer."
    The Bovespa will probably climb 32 percent from yesterday's
close to a record 90,000 next year, Landers said at Bloomberg's
headquarters in New York yesterday. The index is down 1 percent
this year, the only decline among benchmark measures in the
Americas, data compiled by Bloomberg show. The Bovespa lost 0.5
percent to 67,909.84 at 10:38 a.m. New York time today.
Petrobras preferred shares dropped 0.3 percent to 25.52 reais.

                   Financials, Real Estate

    Profit for companies in the Bovespa will probably rise 24
percent next year on a per-share basis, according to the average
projections of analysts surveyed by Bloomberg. The index trades
for 10.3 times analysts' 2011 earnings estimates as of Dec. 17,
less than the 11.3 price-to-earnings ratio for the MSCI Emerging
Markets Index, weekly data compiled by Bloomberg show.
    Financial and real-estate stocks should benefit from the
country's economic growth even as interest rates climb in 2011,
as borrowing costs remain historically low, Landers said.
Brazil's benchmark Selic rate, currently at 10.75 percent, was
as high as 26.5 percent in 2003.
    "Some sectors have been overly penalized with this
interest-rate concern," he said. "The homebuilders look very
attractive here, because they have come down quite a bit. The
banks have continued to underperform even though they make a lot
of money, they are very profitable during periods of interest
rates going up. Those are the two sectors within the domestic
side that we like the best for the beginning of the year."

                        Fiscal Outlook

    Brazil's benchmark interest rate may be raised to 12.5
percent next year as the central bank tries to tame inflationary
pressures, Landers said.
    "There are some headwinds," Landers said. "We have to
keep an eye on the Copom and see how much interest rates will go
up," he added, referring to Brazil's monetary policy committee.
    Investors in Latin America's largest economy will also wait
to see the new administration's 2011 budget and how much
President-elect Dilma Rousseff is willing to cut spending,
including funds for state development bank BNDES, Landers said.
    "They need to slow down growth to keep inflation under
control, to tighten up the fiscal side a little bit, get a lot
of credit from the market and eventually allow interest rates to
come down," he said.
    The Brazilian financial system is liquid and the country's
regulators are "vigilant," Landers said. He considers the
bailout needed for Banco Panamericano SA a "one-case deal."

                     Petrobras Valuation

    Panamericano, the country's 21st-largest bank by assets,
got a 2.5 billion-real ($1.5 billion) bailout loan last month
from its controlling shareholder, Silvio Santos, after the
central bank said it found accounting irregularities related to
sales of pools of loans. Prosecutors later began an
investigation into alleged fraud at Panamericano.
    Panamericano doesn't comment on ongoing investigations,
said a spokesman at the bank's external press agency in Sao
Paulo.
    "At the end of the day, if any company wants to be
fraudulent, it is very hard to catch until it comes out,'
Landers said. "There is not much you can do about it."
    Petrobras, the world's third-biggest oil company by market
value, trades for 8 times estimated 2011 earnings, compared with
an average of 9 times profit for the 26 oil and gas companies in
the FTSE All-Share Oil & Gas Index, Bloomberg data show. Exxon
Mobil Corp., the largest oil company, fetches 11 times profits.

                        Oil Production

    Petrobras, which is state controlled, had a "horrible
year" in corporate governance, Landers said, citing its sale of
$70 billion in stock on Sept. 24 to help finance $224 billion in
offshore field development and refining capacity growth through
2014. The company, based in Rio de Janeiro, is developing the
offshore Tupi field and may take a minimum stake of 30 percent
in the government's Libra field, the Americas' biggest oil
discoveries since Mexico's Cantarell in 1976.
    Tupi and Libra, which may hold as much as 8 billion barrels
and 15 billion barrels, respectively, are in a deep-water region
known as the pre-salt along Brazil's coast. Petrobras Chief
Executive Officer Jose Sergio Gabrielli plans to double output
to 5.38 million barrels a day by 2020, from 2.7 million barrels
in 2010.
    "The asset base that Petrobras has is terrific," Landers
said.
    As part of the share sale, Petrobras issued about $42.5
billion of stock to Brazil's government in exchange for the
rights to develop 5 billion barrels of oil reserves.
    Brazilian President Luiz Inacio Lula da Silva is tightening
the state's grip on the domestic oil industry after Tupi was
discovered. He says Brazil is relying on the country's oil
wealth to fight poverty in the nation of 192 million people.
    "They have to prove that they can generate appropriate
rates of return," Landers said. "Their plans are very
ambitious, to double production of oil over the next 10 years.
If they can achieve that, it is going to be transformational for
Brazil. But it is going to be costly for Petrobras."

For Related News and Information:
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Bloomberg News in Portuguese: NH PBN <GO>

--With assistance from Alexander Ragir in Rio de Janeiro.
Editor: Brendan Walsh

To contact the reporters on this story:
Fabiola Moura in New York at +1-212-617-5772 or
fdemoura@bloomberg.net;
Eric Martin in New York at +1-212-617-5383 or
emartin21@bloomberg.net

To contact the editor responsible for this story:
Alan Mirabella at 1-212-617-4149 or amirabella@bloomberg.net

(BN) Petrobras’s $40 Billion Debt Plan Sparks Selloff: Brazil Credit

Petrobras's $40 Billion Debt Plan Sparks Selloff: Brazil Credit
2010-12-09 11:28:52.230 GMT

 By Camila Russo and Tal Barak Harif
    Dec. 9 (Bloomberg) -- Petroleo Brasileiro SA's bond yields
are climbing the most in 12 months after Brazil's state-
controlled oil company said it plans to boost debt by as much as
60 percent to $107 billion over the next four years.
    The yield on the company's 5.75 percent dollar bonds due in
2020 jumped 81 basis points in the past month to 4.88 percent,
according to data compiled by Bloomberg. Yields on emerging-
market corporate bonds climbed 40 basis points, or 0.40
percentage point, during the same period, JPMorgan Chase & Co.
data show.
    Chief Executive Officer Jose Sergio Gabrielli said in Rio
de Janeiro on Dec. 7 the company plans to raise between $30
billion and $40 billion of new debt over the next four years to
finance the biggest investment plan in the oil industry.
Petrobras, which has $67 billion of total debt, hasn't issued
bonds this year after selling $6.75 billion in international
markets in 2009, according to Bloomberg data.
    "Investors are betting that they're going to see a lot of
new supply of Petrobras debt," Jack Deino, who oversees about
$1.6 billion of emerging-market debt at Invesco Inc. in New
York, said in a telephone interview. "That's why they're
underperforming. There's also uncertainty on when they're going
to get the new supply and how much of it."
    Petrobras's bonds yielded 112 basis points more than
similar-maturity government notes on Dec. 7, the biggest gap
since August, according to Bloomberg data. The yield is 129
basis points lower than the 2020 dollar bonds of OAO Gazprom,
Russia's gas export monopoly, which climbed 31 basis points in
November and are yielding 6.312 percent today, data compiled by
Bloomberg show.

                        Share Sale

    Rio de Janeiro-based Petrobras plans to fund investments in
coming years through bond sales and bank loans after holding the
world's biggest stock offering in September, Gabrielli told
reporters in Sao Paulo on Dec. 6. The company, which sold $70
billion of shares on Sept. 24, aims to invest $224 billion
through 2014 to develop reserves along Brazil's coast.
    Petrobras shares dropped 9.2 percent in the past month,
leaving them down 32 percent this year.
    The company needs to roll over $38 billion of debt through
2014 as it seeks to double production over the next decade,
Gabrielli said on Nov. 9.
    "Statements by Gabrielli have definitely had an impact,"
Juan Cruz, a corporate bond analyst with Barclays Plc in New
York, said in a telephone interview. "Investors are demanding
to get paid more because of the uncertainty."
    Petrobras doesn't have any "defined plans" right now to
sell bonds, Gabrielli said yesterday. The company's press office
declined to comment in an e-mailed statement.
    The company's $6.75 billion of overseas debt offerings in
2009 was more than the $5.55 billion it raised over the previous
10 years, according to Bloomberg data.

                        Oil Bill

    Brazilian President-elect Dilma Rousseff, 62, plans to
reappoint Gabrielli, a Boston University-trained economist, as
chief executive of Petrobras, a government official briefed on
the decision said on Dec. 7. She takes office Jan. 1.
    Brazil's lower house of Congress approved on Dec. 1 new oil
regulations that will increase government control over the
energy industry and reduce competition against Petrobras. The
regulations will allow the company to be the sole operator of
oil fields where licenses haven't yet been auctioned. Petrobras
will be able to explore every field in areas designated
"strategic."
    President Luiz Inacio Lula da Silva, who sent the bill to
congress, may sign it this month.

                   'Harder To Justify'

    "Even if the regulation secures assets, the risk is
actually higher because it means more spending and the cash flow
takes a few years to start coming in," Eduardo Suarez, an
emerging-markets strategist at RBC Capital Markets in Toronto,
said in a telephone interview. "It's much harder to justify
Petrobras being rated higher than the government now that the
government controls 60 percent of the stock."
    Petrobras is rated Baa1 by Moody's Investor Service, the
third-lowest investment grade and two steps above the Brazilian
government's Baa3 grade.
    Gabrielli said in a May 3 interview in Sao Paulo that the
company doesn't plan to sell bonds this year because it's
reaching the "upper limits" of debt ratios before putting
credit ratings at risk.
    Messages left for Moody's analyst Thomas Coleman in New
York and Milena Zaniboni in Sao Paulo at S&P were not returned.
    Concern European countries may have to restructure their
debts after bailouts for Ireland and Greece prompted investors
to shun Petrobras's bonds in the past few weeks, according to
Jansen Moura, a corporate bond analyst with BCP Securities in
Rio de Janeiro.
    "It has absolutely more to do with global concerns than
Petrobras fundamentals," he said in a telephone interview. "As
soon as the market is a little bit more comfortable with
Europe's situation and other macroeconomic points, things might
calm down a bit and yields can come back."

                        Default Swaps

    The extra yield investors demand to own Brazilian
government dollar bonds instead of U.S. Treasuries narrowed 3
basis points to 165 at 6:22 a.m. New York time, according to
JPMorgan's EMBI+ index.
    The cost of protecting Brazilian bonds against default for
five years climbed 3 basis points to 109, according to CMA.
Credit-default swaps pay the buyer face value in exchange for
the underlying securities or the cash equivalent should a
government or company fail to adhere to its debt agreements.
    The real was little changed at 1.6896 per dollar.
    The yield on the overnight interest-rate futures contract
due in January 2012 fell 4 basis points to 12.03 percent.

                        Tupi, Libra

    Petrobras is developing the offshore Tupi field and may
take a minimum stake of 30 percent in the government's Libra
field, the Americas' biggest oil discoveries since Mexico's
Cantarell in 1976. Tupi and Libra, which may hold as much as 8
billion barrels and 15 billion barrels, respectively, are in a
deep-water region known as the pre-salt along Brazil's coast.
    The company will invest about $7 billion to $8 billion
through 2014 in deepwater fields that it purchased from the
government in exchange for new stock, Chief Financial Officer
Almir Barbassa said last month.
    Petrobras's bonds are also lagging behind Brazilian
corporate bonds in the past month. Yields on debt sold by
Brazilian companies climbed 37 basis points during that period,
according to JPMorgan.
    "Changes to the capital expenditure program will be the
most important factor moving forward," RBC's Suarez said.

For Related News and Information:
Brazil Credit Market Stories: NI BZCREDIT <GO>
Top Emerging-Market News: TOP EM <GO>
Most-Read News on Brazil: MNI BRAZIL <GO>
Bloomberg News in Portuguese: NH PBN <GO>

--With assistance by Gabrielle Coppola in New York, Peter
Millard in Rio de Janeiro, Maria Luiza Rabello in Brasilia and
Denis Maternovsky in Moscow. Editors: Lester Pimentel, Brendan
Walsh

To contact the reporters on this story:
Camila Russo in New York at +1-312-493-9048 or
crusso15@bloomberg.net;
Tal Barak Harif in New York at +1-212-617-3026 or
tbarak@bloomberg.net

To contact the editor responsible for this story:
David Papadopoulos at +1-212-617-5105 or
papadopoulos@bloomberg.net

(BN) Blackstone’s Byron Wien Says S&P 500 May Rally to Record in 2011

By Rita Nazareth
    Dec. 8 (Bloomberg) -- The Standard & Poor's 500 Index may
rise at least 28 percent through next year to a record as
corporate profits and the economy improve, according to Byron
Wien, the vice chairman of Blackstone Advisory Services.
    In January, Wien wrote in his annual "Ten Surprises" list
of predictions that the S&P 500 would finish 2010 unchanged at
1,115.10. It has gained 9.7 percent this year through yesterday.
The index will extend the advance into 2011 and may reach its
all-time high of 1,565.15, reached in October 2007, Wien said.
    That "isn't crazy," Wien, 77, said in a telephone
interview from New York. "It's certainly possible. Things are
improving. You'll have earnings over $90 a share for 2011. As
people become comfortable with the fact that calamity is not in
store, they will be willing to take more risk."
    The S&P 500, which closed at 1,223.75 yesterday, near its
two-year high of 1,225.85 reached Nov. 5, rose 20 percent from
this year's low in July amid improving corporate earnings and
the Federal Reserve's plan to pump more money into the economy
to stimulate growth. More than 70 percent of S&P 500 companies
beat the average analyst profit estimate for the sixth straight
quarter.
    Strategists surveyed by Bloomberg have a median estimate of
$91 in earnings per share for S&P 500 companies next year,
compared with than the $84 projected for 2010. They see the S&P
500 rallying to 1,325 by the end of 2011, according to the
median projection. Forecasts range from 1,200 to 1,550.

                   Profit Margin Expansion

    Wien, the former chief U.S. strategist for Morgan Stanley,
said gross domestic product growth will exceed economists'
projections for next year. The U.S. economy, which contracted
2.6 percent in 2009, is expected to grow 2.7 percent this year
and 2.5 percent in 2011, according to the median forecast of 63
economists surveyed by Bloomberg. In January, Wien forecast that
GDP would expand 5 percent this year.
    "I was optimistic about 2010 and the economy did not turn
out that well," he said. "The economy is improving. There are
more favorable signs on the economy than unfavorable ones."
    The S&P 500 advanced 3 percent last week after a record
increase in sales of existing homes, retail sales that topped
projections and reports showing an expansion in Chinese and
European manufacturing. Stocks pared gains on Dec. 3 after
government data showed that the jobless rate advanced to the
highest since April last month, rising to 9.8 percent.

                     'An Aberration'

    "I view that report as an aberration," Wien said about
the November unemployment data. "I'm not willing to say that's
the beginning of a new upward trend. The figures next month
might be more favorable."
    As the economy improves, Wien says economically sensitive
companies, especially those in technology, commodities and
industrial, and companies that rely on consumer discretionary
spending, should benefit.
    Wien also said investors should invest 10 percent of their
assets in large, multinational companies in developed markets.
In his December 2010 "Market Commentary", he said Coca-Cola
Co., General Electric Co., Unilever NV and Siemens AG have
"great products, strong brands and promising prospects."
    The strategist, who said in January that financial-services
stocks would beat the market, is less optimistic on the
industry's prospects in 2011. The KBW Bank Index has risen 12
percent so far this year, outpacing the S&P 500.

                 'Neutral' on Financials

    "I'm sort of neutral on them," Wien said. "There's some
good news, their earnings are improving. On the other hand,
conforming to the new regulatory requirements in Basel III will
hamper profitability."
    Wien, who correctly predicted rallies in equities, gold and
oil last year, called the recession in 2001. With the Fed's
benchmark rate at a 10-year high of 6.5 percent, he predicted a
series of interest rate cuts that began with a surprise
reduction by the central bank on Jan. 3, 2001.
    He was less prescient during previous bull markets, saying
the Dow Jones Industrial Average would fall in 1997 and 1998.
The gauge rose 23 percent in 1997 and 16 percent a year later.
    On Nov. 3, the Fed said it will buy an additional $600
billion of Treasuries in a second round of so-called
quantitative easing, and Wien said there could be more to come.
    "They will keep on easing," he said. "That's the only
tool left to them right now. They can't have any fiscal
stimulus. They will never get that through. There would be more
of quantitative easing if the unemployment rate is persistently
rising. Hopefully, that won't be the case. I'm not sure QE2 or
QE3 would do that much good."

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--Editors: Joanna Ossinger, Chris Nagi

To contact the reporter on this story:
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(BN) Aspirin Cuts Death Rates From Range of Cancers, Researchers Say

By Chris Kay
    Dec. 7 (Bloomberg) -- Aspirin, a century-old medicine known
to relieve pain and prevent blood clots, also reduces the risk
of death from a variety of cancers, researchers said.
    Taking 75 milligrams of aspirin a day for more than five
years cut deaths from cancer by 20 percent, according to the
study published in The Lancet medical journal today. The
researchers found the pill was associated with a reduced risk of
death from esophageal, colorectal, lung and prostate cancers.
    The findings, based on data from eight trials involving
25,570 patients, expand on previous studies that found aspirin
lowered the risk of colon cancer. More studies are needed before
aspirin, which can increase the risk of internal bleeding,
should be recommended for cancer prevention, said the
researchers, led by Peter Rothwell, professor of clinical
neurology at the John Radcliffe Hospital in Oxford, England.
    "I have been taking aspirin for several years," Rothwell,
who founded the Stroke Prevention Research Unit at the
University of Oxford, told reporters in London yesterday. "I
personally believe this."
    The risk of death after 20 years was lowered in patients
who took aspirin by 60 percent for esophageal cancer, 40 percent
for colorectal cancer, 30 percent for lung cancer and about 10
percent for prostate cancer. Aspirin doses greater than 75
milligrams didn't appear to increase the benefit. The data came
from trials whose main purpose was to determine aspirin's effect
on cardiovascular risks such as heart attack and stroke.

                       Medical Guidelines

    Healthy middle-aged men and women may benefit the most from
taking aspirin over a long period, and medical guidelines ''may
be updated on the back of these results," Rothwell, 46, said.
    "The benefit is likely to be less at 75 to 80 because
those cancers that will kill you will have already developed,"
he said.
    Aspirin blocks prostaglandins, which are involved in a
range of functions such as the contraction of blood vessels and
inflammation. The eight trials reviewed by Rothwell and his
colleagues looked at the effects of aspirin on cardiovascular
disease.
    Taking aspirin almost doubles the risk of internal bleeding
to one in every 2,000 to 3,000 people, Peter Elwood, an
epidemiologist at Cardiff University who has published 300
research papers over 50 years, told reporters in London. That
doesn't increase the number of deaths, and the chance of cancer
or stroke outweighs the risk from bleeding, he said.
    "The man on the street knows betting odds," said Elwood,
80, who has been taking aspirin since 1974 and wasn't involved
in the study. People should "evaluate the risks for
themselves."

                         Colon Cancer

    A low daily dose of aspirin taken over an average of six
years reduced colon cancer risk by 24 percent and the likelihood
of dying from the disease by 35 percent, according to a separate
study authored by Rothwell published in October by The Lancet. A
trial published in the medical journal Gut in September found
that 75 milligrams of aspirin taken daily lowered the risk of
colon cancer by 22 percent after just one year.
    The effects of the drug over a longer period are unknown,
and further data on the risks of taking aspirin for tumors that
affect women, such as breast cancer, is needed, Rothwell said.
    "The problem is you can't do a 30-year trial," he said.
"It's tough to do a trial and keep patients compliant for more
than a few years."
    The authors of the study plan to publish further research
into the link between aspirin and cancer prevention next year,
they said in an e-mailed statement.
    The researchers funded the study through their own budgets.
Rothwell and his four co-authors disclosed to the journal that
they had individually received payments from drugmakers
including AstraZeneca Plc, Bayer AG, Boehringer Ingelheim GmbH,
Sanofi-Aventis SA, Bristol-Myers Squibb Co. and Servier
Laboratories Ltd. that were unrelated to the study. Bayer, based
in Leverkusen, Germany, is the inventor of aspirin.
    "This study remains a very important new development in
our understanding of how to prevent cancer in general,"
Alastair Watson, a professor of translational medicine at the
University of East Anglia who wasn't involved in the study, said
in an e-mailed statement.

For Related News and Information:
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--Editors: Kristen Hallam, Phil Serafino

To contact the reporter on this story:
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Investment Fraud Arrests to Be Announced, U.S. Official

The Justice Department today will announce arrests in a crackdown on investment frauds including Ponzi schemes and stock market manipulations, according to a U.S. law enforcement official familiar with the ...
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(BN) Obama Calls Hu to Urge China Assist in Restraining North Korea

Obama Calls Hu to Urge China Assist in Restraining North Korea
2010-12-06 08:46:34.37 GMT


By Bloomberg News
    Dec. 6 (Bloomberg) -- President Barack Obama called Chinese
counterpart Hu Jintao to urge his help in communicating to North
Korea that its uranium-enrichment program and recent artillery
attack on a South Korean island are "unacceptable."
    Obama placed the call, made today Beijing time, to discuss
Korea tensions, the White House said in a statement. Both
leaders agreed to work together to make the peninsula free of
nuclear weapons, it said.
    The call coincided with the start of live-firing drills by
South Korea's military, similar to exercises held last month
that North Korea said prompted it to shell Yeonpyeong, killing
four people. China is North Korea's main ally, helping sustain
Kim Jong Il's regime with food, fuel and foreign currency.
    Obama "urged China to work with us and others to send a
clear message to North Korea that its provocations are
unacceptable," the White House said. Hu said all sides need to
be calm to prevent the situation from getting out of control,
the official Xinhua News Agency reported.
    The U.S., Japan and South Korea, China's three biggest
trading partners, have all urged officials in Beijing to use
their influence over North Korea to restrain its actions. The
U.S. and South Korea last week conducted naval exercises in the
sea between the peninsula and China.
    Today's South Korean drills cover 29 areas, including one
about 7 miles (11 kilometers) from Daecheong island close to the
disputed western border. A spokesman at the Joint Chiefs of
Staff in Seoul, who declined to be named citing military policy,
couldn't confirm whether all the drills had started on schedule.

               'Catastrophic Consequences'

    North Korea yesterday warned that the South risked
"catastrophic consequences" with the exercises. The government
"is so hell-bent on the moves to escalate the confrontation and
start a war that it is recklessly behaving bereft of reason,"
the state-run Korean Central News Agency said in a commentary.
    Tensions have risen on the Korean peninsula since North
Korea's Nov. 23 attack on Yeonpyeong, which also lies close to
the western maritime boundary. Prime Minister Kim Hwang Sik
reiterated today that South Korea will bolster its military
presence in border areas.
    North Korea fired artillery at the fishing community and
military outpost in the first shelling of South Korean soil
since the 1950-1953 war. It said it responded to provocation
after South Korea fired into waters each side claims.
    The North doesn't recognize the western sea border
demarcated by the United Nations after the war and demands it
should be redrawn to include Yeonpyeong and four neighboring
islands.

                     'Reckless Moves'

    North Korea two days ago blasted the U.S., South Korea and
Japan for "reckless moves" to create a military alliance that
threatens peace in North Asia. Secretary of State Hillary
Clinton will today host Japan's Foreign Minister Seiji Maehara
and South Korean counterpart Kim Sung Hwan in Washington to
discuss regional security.
    "The situation on the Korean Peninsula is getting tenser
as the days go by and the danger of a war is increasing hour by
hour," KCNA reported, citing a commentary in the state-run
Rodong newspaper. "The U.S. is giving spurs to an arms buildup
and preparations for a war."

For Related News and Information:
Asia government news: TNI ASIA GOV <GO>
Japanese Defense news: TNI JAPAN DEFENSE <GO>
Korean news: TOP KR <GO>

--Michael Forsythe, Bomi Lim, Jungmin Hong. Editors: Bill
Austin,

To contact the reporters on this story:
Bomi Lim in Seoul at +82-2-3702-1673 or
blim30@bloomberg.net;
Jungmin Hong in Seoul at +82-3702-1605 or
jhong47@bloomberg.net;
Michael Forsythe in Beijing at +86-10-6649-7580 or
mforsythe@bloomberg.net;

To contact the editor responsible for this story:
Bill Austin at +81-3-3201-8952 or
billaustin@bloomberg.net

A frente do monstrinho

eletricista, encanador o que for....sou liquidante faço tudo que estiver ao meu alcance, sempre, senão aprendo :P