Goldman analyst Adrianne Shapira and her team upgraded Pier 1 to buy from neutral and added the stock to the firm’s Americas Conviction List. Goldman raised its price target on the stock by $3, to $10.50. Optimistic Forecast

Any glimmers of hope are welcome at Fort Worth (Texas)-based Pier 1. Recent results have been discouraging. The company posted a loss of 14 cents per share in its February quarter, vs. a loss of 4 cents one year earlier, on an 11% drop in same-store sales amid a difficult environment for home-furnishings merchants. Pier 1 is changing its merchandise mix to lure shoppers back into its stores, but will also be closing some stores and cutting staff.

Shapira took an upbeat tone in a June 12 Goldman research note: “After years of expensive [market] share losses dragging down EBITDA [earnings before interest, taxes, depreciation, and amortization], we believe a critical inflection point is being ushered in by (1) a new management team armed with a turnaround plan and (2) increased shareholder vocalism.”

Investors reacted positively to the Goldman note, and the stock moved up by 8.8% on June 13, to $8.50—near its highest level in the past year.

Goldman is more optimistic than the rest of the Street that Pier 1 can improve its results. The firm’s forecast for fiscal 2007 EBITDA of a $50 million loss and a loss per share of 68 cents is better than the Street consensus forecast of losses of $81 million and $1 per share, respectively. “We believe incremental cost savings across PIR’s labor and supply chain exist,” Shapira writes in the research note.

Goldman notes that first-quarter results are scheduled to be released on June 21, ahead of the company’s shareholder meeting on June 28, and it expects the stock to react positively as the company clears excess inventory and perhaps makes further cost-cutting announcements in the first quarter. Goldman also thinks the company may ease up on marketing spending and could sell its headquarters in the second half of the fiscal year. In fiscal 2008, the firm thinks same-store sales could stabilize and merchandise margins begin to improve. S&P Expects Volatility

Standard & Poor’s Equity Research takes a dimmer view of the shares. In an April research report, S&P said that despite Pier 1’s “slightly encouraging” February quarter results, “we believe the company’s turnaround will be lengthy and will include several hiccoughs along the way.” S&P thinks Pier 1 is having problems driving traffic due to difficult macroeconomic conditions and an increasingly competitive retail environment.

Despite the negatives, S&P believes that Pier 1 could be acquired, and it expects the shares to be volatile over the near term. S&P has a hold rating and an $8 price target on the shares. (S&P, like BusinessWeek, is a unit of The McGraw-Hill Companies. (http://www.businessweek.com/ticker/)).

Kaplan last week pleaded not guilty to racketeering and conspiracy charges stemming from the British online gambling company’s acceptance of wagers from U.S. bettors.

The company’s plea “should put an end to the BetonSports illegal gambling empire,” U.S. Attorney Catherine Hanaway said yesterday in St. Louis.

The deal may end the London-based company’s legal troubles in the U.S. Last July, prosecutors unsealed a 22-count indictment against the company and 11 individuals, including Kaplan and then-Chief Executive Officer David Carruthers.

In November, the company consented to a ban on its U.S. operations, ending a parallel civil lawsuit by the government.

BetonSports’ attorney Jeffrey Demerath didn’t return a call.

The plea was entered before U.S. District Judge Carol Jackson in St. Louis, Hanaway’s spokeswoman Terri Dougherty said. The company was accused of violating U.S. laws barring the electronic transmission of wagers across state and international borders. It also charged the individuals with racketeering conspiracy.

Kaplan, 48, entered his plea earlier this month in St. Louis federal court, 10 months after U.S. prosecutors unsealed their indictment. He was apprehended at a hotel in the Dominican Republic in March.

All talk of match-fixing, poison, and killers waiting in the shadows was dismissed by Lucius Thomas, the Jamaican police commissioner, and Mark Shields, the British police officer who is his deputy.

After three months, acres of newsprint and rampant speculation, Mr Thomas announced that Woolmer, an overweight man in his 60s with diabetes and heart problems, had suffered what perhaps was always a far more likely fate: death by natural causes.

But none of the men responsible for launching the costly murder inquiry, involving scores of police officers taking hundreds of statements, DNA samples and fingerprints, resigned from their posts yesterday. Neither Mr Thomas nor Mr Shields would concede that the affair had been embarrassing for the Jamaican police service. “I don’t know what is embarrassing about it,” said Mr Thomas.

But Inzamam-ul-Haq, the Pakistan cricket captain during the World Cup, condemned the Jamaican police’s handling of Woolmer’s death. Inzamam, who was questioned at length by the police investigating what they thought was murder, told the Guardian: “We were convinced from the start that it was a natural death. I feel that the Jamaican police and the doctors misrepresented the investigation. At an international level in cricket this should never have happened.

“It’s not a matter of me wanting an apology. Nothing could diminish the tension and hassle I suffered.”

Mr Woolmer was found dead in his hotel room by a chambermaid on March 18, the day after his team were knocked out of the cricket World Cup by Ireland in the biggest shock of the tournament’s history.

Mr Shields, the former Met officer who led the inquiry, said it was not the police’s job to publicly second-guess the written findings of a pathologist, in this case that of Dr Ere Seshaiah, the government pathologist who stated that Woolmer had been strangled on the evidence that the hyoid bone in his neck was broken.

Mr Shields admitted that it was he who had stated early on he was “100% sure” that Woolmer had been murdered because there was evidence in the hotel room pointing to that conclusion. But he said that was no reason for him to step down.

“I would ask why?” he said. “We conducted a thorough, professional investigation. We were given facts in the beginning which we took at face value. We had to conduct an investigation. We cannot publicly second-guess a pathologist and his opinion, our job is to investigate.”

Asked to account for his comments about the compelling evidence in the room, he said he was referring to a pillow in the room which could have been used during the strangulation and would have accounted for the fact there were no marks on Woolmer’s neck. Other evidence found included a pool of vomit.

Mr Shields said the fact that the Jamaican police set up a review by Met officers and called in second and third opinions from the British Home Office pathologist Dr Nat Carey and two other experts showed they were being thorough.

Although the pathologists involved did not conduct a second postmortem examination, digital photographs and X-rays of the first analysis and the hyoid bone in question were sent to Dr Carey and the other experts. “They all formed the opinion that the bone was not fractured,” Mr Shields said. “We have stated today that his [Dr Seshaiah’s] report was incorrect.”

Asked if it would not have been better to keep the initial findings private until further investigations were made, he said in an ideal world that might have been so. “But I had to consider the circumstances … every step of the inquiry became the subject of media speculation.”

The decision to reveal the findings of the pathologist’s report was a “collective” one. He added that withholding the information would undoubtedly have led to accusations of a cover-up.

Mr Thomas said his officers had investigated allegations that match-fixing had been at play, and found no evidence. There was also no evidence that Mr Woolmer had been poisoned. After releasing Dr Seshaiah’s findings - that Mr Woolmer had been asphyxiated by strangulation - police launched a murder inquiry. But behind the scenes they sent the results to Dr Carey in the UK, and two other experts, one in South Africa and one in Canada, all of whom disputed the findings and said the death was as a result of natural causes. The last expert gave their findings last week. Dr Seshaiah was not available for comment last night. An aide in his office in Kingston said: “Dr Seshaiah is not here, he is carrying out a postmortem at the moment. We don’t know whether he wants to say anything or not.”

Neither Mr Shields nor Mr Thomas would comment on Dr Seshaiah’s credibility. They referred all questions to Gilbert Scott, permanent secretary in Jamaica’s department for national security. Mr Scott was contacted but made no comment.

In South Africa, Mr Woolmer’s wife, Gill, and her two sons, said they were relieved to learn that no foul play had been involved. Mrs Woolmer thanked the Jamaican police and Mr Shields in person for the way they had treated her family and asked to be allowed to grieve.

Additional reporting by Ross Sheil in Kingston

Timeline: The murder that wasn’t

March 17: Ireland beat Pakistan in Jamaica. Bob Woolmer tells a press conference: “I’d like to sleep on my future as coach of Pakistan.”

March 18: Early in the morning Woolmer emails his wife in Cape Town. 10.45am: Woolmer is found unconscious in his hotel room by a chambermaid. Midday: Woolmer is pronounced dead

March 19: First post mortem results inconclusive. Police say they are treating the death as suspicious

March 22: Jamaican police question and fingerprint every member of the Pakistan squad as reports that a broken bone has been found in Woolmer’s neck. Jamaican police commissioner says tests showed the cause of death as asphyxia as a result of strangulation

March 23: Speculation that Woolmer was involved in match fixing

March 31: Jamaican police accept an offer of help from the UK police

April 3: UK officers and a senior British pathologist arrive in Jamaica

April 29: BBC’s Panorama programme claims Woolmer was poisoned as well as strangled

May 4: Woolmer’s remains are cremated in South Africa

May 15: Dr Nat Carey, a British Home Office pathologist concludes that Woolmer died of heart failure

June 4: Jamaican police say they are awaiting the results of a third pathology report into Woolmer’s death

June 12: Jamaican police announce Woolmer was not murdered

On Thursday, the Dow Jones industrial average edged down 9.22 points, or 0.07%, to 12,567.93. The broader Standard & Poor’s 500 index fell 4.25 points, or 0.3%, to 1,426.37. The tech-heavy Nasdaq composite slid 36.21 points, or 1.46%, to 2,443.21.

NYSE breadth was negative, with 20 issues declining for every 13 advancing. Nasdaq breadth was 22-9 negative on the exchange’s heaviest volume so far this year.

Investors were sifting through a barrage of firm economic data Thursday. The U.S. consumer price index, or CPI, rose 0.5% in December, while the core CPI rose 0.2%. The headline gain was larger than expected, says Action Economics.

The Philadelphia Fed’s index of regional manufacturing activity added to the solid economic news. The Philly Fed index rebounded to 8.3 in January, much better than expected, from a revised -2.3 in December.

Meanwhile, U.S. housing starts climbed 4.5% to a 1.642 million rate in December, from a downwardly revised 1.572 million in November. In addition, U.S. jobless claims fell 8,000 to 290,000 in the week ended Jan. 13, from a downwardly revised 298,000 a week earlier.

The numbers may keep the Fed on hold with a bias toward further interest-rate hikes, some analysts say. “Interest rates will continue to be pressured higher, but the process should be slow,” says Tom Sowanik, chief investment officer at Clearbrook Research, a part of Clearbrook Financial. “Stocks will respond to earnings, and the earnings appear to be coming in strong once again.”

In Washington, Bernanke’s prepared remarks to the Senate Banking Committee focused on fiscal policy, saying the nation faces huge problems with entitlements for the elderly. The Fed chief avoided discussion of the economic outlook or monetary policy.

Looking ahead, Friday’s economic docket holds a preliminary reading for the University of Michigan’s consumer sentiment index.

The tech sector paced the stock market’s losses Thursday. Shares of Apple (http://www.businessweek.com/ticker/) fell after the tech bellwether said second-quarter sales will be as much as $4.9 billion, less than analysts forecast. J.P. Morgan downgraded the stock from overweight to neutral.

Oil prices tumbled, weighing on corresponding shares. In the energy markets, February West Texas Intermediate crude oil futures skidded $1.76 to $50.48 a barrel, briefly dipping below $50, after an inventory report showing an unexpectedly large increase in supplies.

In earnings news, Merrill Lynch (http://www.businessweek.com/ticker/) was lower despite pulling near a 52-week high in intraday trading after the company reported fourth-quarter profit that topped Wall Street expectations.

IBM (http://www.businessweek.com/ticker/) was among companies set to announce quarterly results after the bell. Companies reporting earnings Friday include Citigroup (http://www.businessweek.com/ticker/), General Electric (http://www.businessweek.com/ticker/) and Motorola (http://www.businessweek.com/ticker/).

On the M&A front, GE reportedly plans to buy part of Abbott Laboratories’ (http://www.businessweek.com/ticker/) diagnostic-equipment unit for about $8 billion.

Rite Aid (http://www.businessweek.com/ticker/) shareholders approved the drugstore chain’s acquisition of 1,850 Brooks and Eckerd stores from the Jean Coutu Group.

Among Thursday’s other stocks in the news, Electronic Arts (http://www.businessweek.com/ticker/) was higher after Citigroup raised its recommendation on the stock from hold to buy.

Shares of Intuit (http://www.businessweek.com/ticker/) rose after Citigroup upgraded the software maker from hold to buy.

European markets finished mixed, paring early gains. The FTSE-100 index in London rose 5.8 points, or 0.09%, to 6,210.3. Germany’s DAX index fell 12.08 points, or 0.18%, to 6,689.62. In Paris, the CAC 40 index was down 6.74 points, or 0.12%, to 5,555.04.

Asian markets ended higher. In Japan, the Nikkei 225 index gained 109.58 points, or 0.63%, to 17,370.93. In Hong Kong, the Hang Seng index climbed 212.94 points, or 1.06%, to 20,277.51. Korea’s Kospi index advanced 3.73 points, or 0.27%, to 1,383.21.

Treasury Market

Treasury yields ticked lower after a round of solid economic data. The 10-year note rose in price to 99-01/32 for a yield of 4.75%, while the 30-year bond advanced to 94-22/32 for a yield of 4.84%. A late rally in prices possibly reflected short covering after recent losses, says S&P.

Abu Dujana, Indonesia’s most-wanted Islamic militant, was detained along with seven other suspected terrorists in raids on the country’s main island of Java over the weekend, said police spokesman Sisno Adiwinoto.

The capture of Dujana, an Afghan-trained militant who police say once had links with al-Qaida, is a major victory in the fight against terrorism in Indonesia, a secular nation with the world’s largest Muslim population.

“With this arrest we have successfully stopped acts of terrorism in the future,” said Mr Adiwinoto. “He was a key figure in the terrorist network in Indonesia.” Mr Adiwinoto said Dujana, 37, was being held at undisclosed location.

Police confirmed his identity using dental and DNA samples, he said.

Under the country’s anti-terror law, police can hold a suspect for several weeks without charging them. Jemaah Islamiyah members have been blamed for four attacks on western targets in Indonesia in recent years, including the Bali nightclub attacks that killed 202 people, mostly foreign tourists and a 2003 suicide blast at a hotel.

The group, which police say received funds and direction from al-Qaida in the early 2000s, has also been blamed for attacks in the Philippines, while Malaysia and Singapore have arrested several dozen alleged members in recent years.

Adiwinoto said Dujana played a major role in “almost all” the bombings in Indonesia.

“It is a very significant arrest. It is a major triumph for police,” said leading Jemaah Islamiyah analyst Sidney Jones. “If he will talk, he will be able to give police absolutely rock solid data about everything there is to know about JI.”

Mr Adiwinoto said Dujana’s good Arabic language skills meant he forged close ties with al-Qaida commanders in Afghanistan in the late 1980s and 1990s and - like scores of other militants - personally met Osama bin Laden. “He can assemble bombs and he can recruit members, so he is more important than” other key terror suspects Noordin Top, who remains at large, and Azahari bin Husin, who was shot and killed in a raid in 2005, he said.

Analysts say scores of arrests and raids have weakened Jemaah Islamiyah, and that it is now splintered into several cells. They say most of its estimated 1,000 members do not agree that bombing “soft” civilian target helps the group in its aim of implementing an Islamic state in Indonesia.

The last major terrorist attack in Indonesia was in 2005.

Police say Dujana, who like most of the hardcore members of Jemaah Islamiyah fled to Malaysia in the 1990s to avoid a crackdown by former dictator Suharto, become head of Jemaah Islamiyah four years ago.

Abu Rusdan, the man police say Dujana replaced as head of Jemaah Islamiyah, was arrested in 2003 and sentenced to three-and-a-half years in jail for hiding one of the militants convicted in the Bali blasts.

Indonesia has not made membership of Jemaah Islamiyah a criminal offence.

Clusters of advertising boards have become a familiar sight to tourists and locals outside shops and cafes in the Capital’s Old Town.

But now community councillors are calling for a “zero tolerance” policy on the boards, which they say are littering pavements. They blame the council for failing to enforce existing rules - which state that advertising boards should not cause an obstruction - and say the only practical solution is a ban.

But traders have reacted furiously, saying small businesses cannot afford to be hit by more regulations.

The Old Town Community Council voted unanimously to call for the crackdown at a meeting last week. They are writing to the city council, demanding action to preserve the appearance of the city centre.

Chairman Bill Cowen, who also runs Costume HaHa in the Grassmarket, said: “Going down the High Street is like running a hurdles race. People have to walk on the road because there are too many on the pavement.

“We think they should be totally banned. The policing of them has been a complete failure. Business people will do anything to get around the regulations. This is the season when tourists start falling over them. There’s a serious public safety aspect. When it’s windy, one could easily fall on a child.”

Edinburgh City Council wardens only ask shopkeepers to move their boards if they think they are causing an obstruction.

A licensing scheme was proposed last year, following a string of complaints, but this was never brought in. Bruce Borthwick, an Old Town community councillor, said this would be difficult to enforce.

He said: “It’s become a sort of arms race between shops. Now it’s got to the stage where it’s a considerable obstruction to the free movement of pedestrians.”

The Old Town Association’s Honorary president, Anya Ansel, said the association was writing to the council. She said: “We feel very strongly about A-boards. The whole of the pavement is cluttered with them. It is a World Heritage Site, but the boards are very unsightly, as well as dangerous. They’re a nuisance and they’re using up public space.

“We’ve been fighting this battle for years. Occasionally the council makes a small gesture but they have never enforced it. We feel there shouldn’t be any at all. The only place for them would be if a business is down a close, such as the Brass Rubbing Centre.”

But Thom McCarthy, manager of Golden Books and Gifts on the Royal Mile, said a ban would be another blow for small businesses.

He said: “The A-board is important for our business, although there is a lot of rubbish outside people’s shops. One shop has four mannequins, and there are baskets selling tartan Nessies. If they’re going to control it, then they would have to have the same rules for everybody.

“An A-board makes a big difference to a person’s business. It’s a form of advertising. If they ban them, it’s going to hit the turnover of small shops. People are already struggling as it is.”

A council spokeswoman said: “The use of A-boards is one way businesses can promote themselves. However, these signs must not cause any obstruction or risks to public safety.

“If we become aware of a sign that is creating a hazard we will work with the business responsible to resolve the issue.

“If the issue cannot be resolved then enforcement action will be taken and the sign will be removed.”

The remarks came in an interview with the prince and his older brother William to be broadcast by NBC next Monday, which was intended to advertise the charity concert that will be held to mark the 10th anniversary of Diana’s death at the end of August.

The interviewer, Matt Lauer, had been warned that discussing the accident was off limits - the long-delayed inquests into the princess’s death and that of her companion Dodi Fayed are due to open later this year.

But he was rewarded by some of the most open remarks the princes have ever made about the effect their mother’s death has had on them.

In extracts released yesterday, Harry says: “You know, when people think about it, they think about her death. They think about how wrong it was. They think about whatever happened … whatever happened in that tunnel, you know, no one will ever know.”

Asked whether he had stopped wondering, the prince replied: “I’ll never stop wondering about that.”

Clarence House officials stressed that the remarks meant that the prince would never stop wondering whether the crash in the Alma Tunnel in Paris could have been prevented and he was not speculating about the crash itself.

Pointing to the princes’ positive reaction to the exhaustive police inquiry conducted by the former Metropolitan police commissioner Lord Stevens, a spokesman said: “Of course Prince Harry and Prince William will always be thinking a lot about what happened that night and whether the accident could have been avoided. But they have never doubted their mother’s death was an accident.

“When the Stevens report came out last December they said they hoped its conclusive findings would put an end to the speculation.”

Prince Harry, who was 12 at the time of the crash, said: “Over the last 10 years I personally feel as though she has been…she’s always there. She’s always been a constant reminder to both of us and everybody else…it’s weird because I think when she passed away there was never that time, there was never that sort of lull. There was never that sort of peace and quiet for any of us - the fact that her face was always splattered on the paper the whole time.”

Both princes said the time had passed really slowly. Prince William added: “There’s not a day goes by I don’t think about it once in the day. And so for us it is very slow and it’s a lot - it has been a long time.”

Elsewhere in the interview, the princes spoke of their desire to be normal, about their image in America, their friends and what they would have done if they had not been princes: in William’s case, flying helicopters and for Harry, living in Africa. He said: “I’d, you know, like to spend all my time out there. It would be a humanitarian aspect and as well as a sort of safari aspect. I would have to get a job. So it would probably be a safari guide.”

William said: “It’s a really tricky question. I guess I’d like to fly helicopters, definitely. I’d like to be some sort of heli pilot, you know, working for the UN maybe or something like that. I’d have to be doing something active - outside and doing sort of fun stuff but with an edge to helping people.” He admitted he had given up an earlier ambition to be a policeman.

An announcement of the results of the talks was to be made at a joint news conference later Wednesday in New York, the Tokyo Stock Exchange said in a statement.

The TSE’s president, Taizo Nishimuro, was in New York for talks with the NYSE Group’s chief executive, John Thain, about forging more expansive cooperation between the two exchanges.

Toru Onoda, a spokesman for the TSE, confirmed Tuesday that the two bourses completed negotiations.

The move comes as major exchanges in the world race to find partners and attract more investors.

The agreement will allow both exchanges to cooperate on everything from joint stock listings, technology, and the development of new products. Further, it sets into motion the possibility of a true combination once Japan’s biggest stock exchange becomes a public company in 2009.

The alliance comes within weeks of the NYSE’s acquisition of the Paris-based stock exchange operator Euronext NV, which was quickly followed by the purchase of a stake in India’s National Stock Market.

Abu Dujana, Indonesia’s most-wanted Islamic militant, was detained along with seven other suspected terrorists in raids on the country’s main island of Java over the weekend, said police spokesman Sisno Adiwinoto.

The capture of Dujana, an Afghan-trained militant who police say once had links with al-Qaida, is a major victory in the fight against terrorism in Indonesia, a secular nation with the world’s largest Muslim population.

“With this arrest we have successfully stopped acts of terrorism in the future,” said Mr Adiwinoto. “He was a key figure in the terrorist network in Indonesia.” Mr Adiwinoto said Dujana, 37, was being held at undisclosed location.

Police confirmed his identity using dental and DNA samples, he said.

Under the country’s anti-terror law, police can hold a suspect for several weeks without charging them. Jemaah Islamiyah members have been blamed for four attacks on western targets in Indonesia in recent years, including the Bali nightclub attacks that killed 202 people, mostly foreign tourists and a 2003 suicide blast at a hotel.

The group, which police say received funds and direction from al-Qaida in the early 2000s, has also been blamed for attacks in the Philippines, while Malaysia and Singapore have arrested several dozen alleged members in recent years.

Adiwinoto said Dujana played a major role in “almost all” the bombings in Indonesia.

“It is a very significant arrest. It is a major triumph for police,” said leading Jemaah Islamiyah analyst Sidney Jones. “If he will talk, he will be able to give police absolutely rock solid data about everything there is to know about JI.”

Mr Adiwinoto said Dujana’s good Arabic language skills meant he forged close ties with al-Qaida commanders in Afghanistan in the late 1980s and 1990s and - like scores of other militants - personally met Osama bin Laden. “He can assemble bombs and he can recruit members, so he is more important than” other key terror suspects Noordin Top, who remains at large, and Azahari bin Husin, who was shot and killed in a raid in 2005, he said.

Analysts say scores of arrests and raids have weakened Jemaah Islamiyah, and that it is now splintered into several cells. They say most of its estimated 1,000 members do not agree that bombing “soft” civilian target helps the group in its aim of implementing an Islamic state in Indonesia.

The last major terrorist attack in Indonesia was in 2005.

Police say Dujana, who like most of the hardcore members of Jemaah Islamiyah fled to Malaysia in the 1990s to avoid a crackdown by former dictator Suharto, become head of Jemaah Islamiyah four years ago.

Abu Rusdan, the man police say Dujana replaced as head of Jemaah Islamiyah, was arrested in 2003 and sentenced to three-and-a-half years in jail for hiding one of the militants convicted in the Bali blasts.

Indonesia has not made membership of Jemaah Islamiyah a criminal offence.

Ramirez singled out Italy’s Eni and France’s Total SA as two of the companies that have not reached an agreement with state-run Venezuelan petroleum firm PDVSA for the turnover of majority control of their operations in the country.

“Two corporations, namely Eni and Total, refused to accept the terms established,” Ramirez said.

He said the companies have until June 26 to come to terms with PDVSA. In the past, Ramirez has threatened non-compliant foreign firms with the use of military force to take over operations in Venezuela were they to miss a deadline for state plans to take majority control.

“Negotiations have stalled for some time and, as proven in other recent nationalization cases, the government can be expected to present a last-minute ‘take it or leave proposal’” to firms operating in Venezuela, read a recent report by Latin Sources.

Venezuela’s ambitious plans for taking majority control of its most-lucrative resources began earlier this year with the inauguration of populist President Hugo Chavez to a second term in office.

Chavez announced then his intention to revert Venezuela’s oil and gas sectors back to majority state control, an announcement that sent shockwaves through the international petroleum sector, causing global price spikes and raising eyebrows in Washington.

Making good on his word, Venezuela on May 1 assumed majority control over the oil-rich Orinoco Belt, where several foreign energy firms invested millions in setting up operations there.

The takeover stipulated that PDVSA has at least a 60 percent share of the projects pumping heavy crude once dominated by foreign firms such as BP PLC, Chevron and Total. Those firms and others would be given fair market value for controlling interest of the projects, Chavez said.

Only ConocoPhillips did not sign a majority takeover agreement by the deadline, prompting Ramirez to threaten the company with expulsion from the country without compensation.

Venezuela hit the Houston-based company with a hefty bill for back taxes on a project co-owned by ConocoPhillips and PDVSA totaling $465 million. ConocoPhillips also owes $50 million in back taxes on another project, said energy officials. Both bills are said to date back to 2003-2005.

U.S. firm Chevron Corp. was also hit with a hefty bill for back taxes totaling a reported $29 million.

In another move interpreted by analysts as an effort to rein in reluctant foreign oil and gas firms, PDVSA took over day-to-day operations of 18 oil rigs run by foreign companies.

Meanwhile, PDVSA announced Tuesday it planned to expand its exploration operations to Vietnam, as well as nearby Argentina and Bolivia.

In Vietnam, PDVSA is reportedly interested in potential offshore sites, though it already rejected two sites offered by Vietnam following a review of a recent geological survey.

Venezuela has also established strong ties with China. Last month Ramirez announced Venezuela would buy 13 new oil rigs from a Chinese supplier, drawing relations between the two countries closer still.

Over the past several years Chavez has worked steadfastly to improve Venezuelan-Sino ties, particularly when it comes to oil.

In August 2006 he traveled to China to finalize a deal with Beijing for the construction of 24 drilling rigs in Venezuela and the purchase of 18 oil tankers with a $1.8 billion price tag.

Earlier that year Chavez said Venezuela would like to increase oil sales to China to 300,000 barrels per day by the end of the year. Other officials in Venezuela said the increase would reach 200,000 bpd, up from the 150,000 bpd now.

Since assuming office in 1998, Chavez has courted China and other markets like India and even expressed willingness to sell fuel to North Korea. He has also cultivated closer ties with Iran, drawing sharp criticism from Washington and increased concerns about the foreign-policy leanings of the Venezuelan president.

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(e-mail: energy@upi.com)

Iran is holding talks to construct five refinery projects in Asian countries with a total capacity of 1.1 million barrels per day.

Seyed Kazem Vaziri Hamaneh, Iranian petroleum minister, said there is no timeline for when the projects are expected to be completed.

Iranian firms are planning to construct five refineries in four countries: Indonesia, Malaysia, Singapore and China, the New Straits Times of Malaysia reported.

Seyed Kazem said some of the project details have been finalized, while others are still being discussed.

“There is no specific timetable,” he told reporters after delivering a keynote address on the political and economic scenario facing the energy industry at the 12th Annual Asia Oil & Gas Conference in Kuala Lumpur Monday.

He said the partnerships are “to bring to the Asian countries the synergy for mutual relationships as we provide them with the crude oil.”

The contracts are worth billions. In Indonesia, for example, PT Pertamina and the National Iranian Oil Refinery & Distribution Co. are reportedly proposing to build a $5.3 billion refinery with a 300,000 bpd capacity, the report said.

BP moves forward Gulf of Mexico project

BP is moving forward on the development of its latest deepwater Gulf of Mexico oil and gas discovery Isabela with a subsea tieback to the nearby Na Kika floating production platform, according to media reports.

Transocean’s semi-submersible Deepwater Horizon discovered oil and gas in 6,500 feet of water in Mississippi Canyon block 562.

Because the discovery already lies near the BP-operated Na Kika platform, BP is planning to install subsea lines from Isabela to the Na Kika platform to start production before the end of 2009.

“Isabela is an excellent addition to our portfolio of discoveries in the Gulf of Mexico,” said Dave Rainey, BP’s vice president of Gulf of Mexico exploration.

“It is likely to be tied back to our Na Kika production platform, helping to maximize the value of that infrastructure,” he said.

Argentina denies talks to buy YPF unit

Argentina’s Ministry of Planning said state-owned companies are not holding talks with Spain’s Repsol for the purchase of its Argentinean unit YPF, as reported in the local media.

Repsol is looking for a local partner to buy a stake in YPF. The ministry said the operation is subject to government approval, since Argentina retained a “golden share” when YPF was privatized in the 1990s, and estimated that the deal will be closed in five weeks.

The Spanish oil company wants to sell 25 percent of YPF to an Argentinean investor and another 20 percent in a new share issue on Buenos Aires Stock Exchange.

According to the press, Repsol may plan to consolidate all of its Latin American assets and operations under the YPF division. This would comprise oil and gas fields and refineries in Argentina, Bolivia, Brazil, Chile, Colombia, Cuba, Ecuador and Venezuela.

Repsol YPF is engaged in exploration and production of oil, natural gas and derivates in Latin America, where it concentrates 50 percent of its assets.

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Closing oil prices, June 12, 3 p.m. London

Brent crude oil: $69.16

West Texas Intermediate crude oil: $65.77

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(e-mail: AMihailescu@upi.com)

British ministers have signed up Croatia, Slovenia, Cyprus and Greece to join an anti-whaling coalition at the International Whaling Commission’s annual conference, which begins today in Anchorage, Alaska. Two more anti-whaling nations, Costa Rica and Peru, have also been persuaded by Britain to pay their membership dues to allow them to vote.

The initiative potentially tips the balance against Japanese diplomacy aimed at lifting the 25-year-old moratorium on commercial whaling.

Japan is seeking to reverse resolutions to protect whales, to weaken conservation measures and to encourage the trade in whale products. To the horror of more than 150 international anti-whaling groups, pro-whaling countries led by Japan gained a simple majority of votes at the IWC meeting last year, but not the 75% required to guarantee a return to commercial whaling. Britain and its allies are now making a concerted attempt to reverse even last year’s simple majority.

Japan has been accused of using multi-million-dollar fishing aid packages to swing the IWC. Last year it admitted paying 617m yen (2.58m) to St Kitts & Nevis, the small Caribbean country that hosted the 2006 IWC conference. Nicaragua was awarded nearly $17m (8.53m), and Palau, a Pacific island state, was given $8.1m. All three countries, which were not members of the IWC before, voted with Japan at the conference. The pro-whalers won by one vote.

Britain’s efforts to win the voting maths are being helped by Lord Ashcroft, a major donor to and treasurer of the Conservative party from 1998 to 2001, who has commissioned a television advertising campaign voiced by the newsreader Sir Trevor McDonald which he hopes will persuade six small Caribbean countries to switch sides and oppose Japan at the meeting.

The environment minister Ben Bradshaw said: “We hope our diplomacy will be enough but we won’t actually know until the meeting starts. Whaling politics is like poker. You do not know exactly who will turn up at the IWC meetings. Countries can always shuffle in at the last minute.”

The Japanese government, which intends to kill 50 endangered humpback whales and nearly 1,000 others for “scientific” purposes in the Antarctic whale sanctuary this year, is expected to respond to Britain’s diplomatic push by trying to persuade other countries to join the IWC. It is targeting Algeria and Tanzania.

Yesterday the British government repeated allegations that Japan bribed small countries with aid money. “You only have to go round the Caribbean to see all these fisheries plants [paid for by the Japanese aid programme]. They are all mothballed. They are clearly linked to whaling votes,” said Mr Bradshaw.

Japan strongly denied using aid money to influence whaling votes, arguing that it was one of the largest aid givers in the world and supported these countries for other reasons. However, critics point out that many of the commission’s newest members have no history of whaling and several, including Mongolia and Mali, have no coastlines. It has been estimated that Japan has given more than $750m in fisheries aid to what are now pro-whaling countries in the last 12 years.

Lord Ashcroft, who has business links with Belize, a whaling country in central America, is trying to win over Antigua, Dominica, Grenada, St Kitts, St Lucia, and St Vincent. Last year they received nearly $300m from Japan, much of it in the form of fisheries aid.

Earlier this year, Japan invited all 72 IWC members to Tokyo to prepare the organisation for a return to commercial whaling and trade. It is believed that it paid for most of its 21 small-country allies to attend.

Some 26 anti-whaling countries, including the UK, New Zealand, Australia, the US and Argentina, boycotted the meeting, which was not sanctioned by the IWC.

Part of Britain’s diplomatic push has been a brochure produced by the Department for the Environment, Food and Rural Affairs with a foreword by Sir David Attenborough and Tony Blair.

It was sent earlier this year to 60 countries which are not members of the whaling commission but which British diplomats had identified as possible waverers. It is understood there was concerted lobbying of new EU countries and Turkey, which is eager to join the EU and has long been supported by Britain. “There is no humane way to kill a whale at sea. Collective action by nations across the globe is needed to protect whales for future generations,” Sir David wrote in the brochure.

“It’s a different approach to diplomacy. You could call it a fishing trip,” said a British diplomat yesterday. “The Japanese tend to be more direct. But it has been a serious play to get governments to concentrate their minds on whales as a global resource.

“The Japanese will undoubtedly have had a meeting to get their troops in order before the Alaska meeting. I am expecting [them to have] some new recruits but they normally appear only at the last minute.”

Hunters and hunted

The IWC allows “aboriginal whaling” when there is an unbroken tradition, and only for subsistence purposes:

Greenland (Denmark) Inuit whalers kill around 170 whales a year

US Nine indigenous communities in Alaska can take around 50 bowhead whales a year

Russia Communities in Russia’s far east can take up to 140 gray whales

Canada Left IWC in 1982. A few Inuit groups hunt whales. No figures for 2007 available

Japan In 2005-06 Japan’s whalers killed 853 minke and 10 fin whales from the Antarctic. This year it will start hunting 50 humpback whales

Norway Quota of 1,052 minke whales set for 2007 whaling season

Iceland Icelandic whalers no longer bound by IWC but can hunt 30 minke whales and nine fin whales in 2007

Caribbean Communities in Grenada, Dominica, St Lucia and St Vincent hunt 400 short-finned pilot whales and a few humpback whales a year

Indonesia Two Indonesian communities still hunt whales. In one peak year, 56 sperm whales were caught.

Faroes (Denmark) Around 950 long-finned pilot whales killed annually. Other species hunted include northern bottlenose whale

So there is plenty of market chatter at the moment about the fate of Hong Kong’s dollar peg which has been fixed at 7.80 to the greenback since 1983. Back then, it was introduced to stem capital flight caused by uncertainty over the former British colony’s future. The Hong Kong Monetary Authority, which acts as a sort of central bank, spent billions for currency interventions to defend the peg during the Asia financial crisis a decade ago and says it has no intention of tampering with the peg now. Here’s a quick overview of the situation:

What is the likelihood Hong Kong will abandon or adjust the peg anytime soon?

Almost zero, since there is little need to. Consider that back in 2002 when Leung and Tung Chee-hwa. then Hong Kong’s chief executive, considered scrapping the peg, the local economy was in grim shape. Hong Kong property prices were plunging, deflation gripped the economy, and the government was running a budget deficit of $8.1 billion.

Flash forward five years to today: Property prices are buoyant, inflation is mild, and the government is expected to register a budget surplus of $7 billion this fiscal year. Furthermore, the currency can trade five Hong Kong cents on either side of the peg, i.e., between 7.75 and 7.85, but monetary authorities have always managed to keep trading within this band.

Has Hong Kong suffered economically from tying its currency to the changing fortunes of the U.S. dollar?

Though the Hong Kong economy took a hit during the Asian crisis when its defense of the peg caused several years of price deflation, in recent years the arrangement has worked fine. It’s true that Hong Kong monetary authorities in theory must keep its interest rates in sync with the U.S. Federal Reserve, but the reality is that the cost of borrowing in both economies has diverged by as much as 150 basis points at times. So Hong Kong has more flexibility than is sometimes assumed to adjust its monetary policy to economic realities on the ground.

Wouldn’t Hong Kong be better off pegging its currency to the Chinese renminbi?

It’s true that China is Hong Kong biggest trading partner and the long-term outlook for the mainland economy is phenomenal. Yet the reality is that most of the international trade in goods and services is transacted in U.S. dollars. Also, any sort of renminbi peg for Hong Kong is technically impossible until China adopts a freely convertible currency and lifts its capital controls. That is probably many years away from happening.

How vulnerable is Hong Kong to a speculative attack on its currency now?

The Hong Kong Monetary Authority has about $136 billion in foreign reserves, roughly seven times the currency in circulation. Hong Kong successfully maintained the peg throughout the Asian financial crisis when the currency was arguably highly overvalued compared to other regional currencies. The fact that Hong Kong has so rigorously defended the peg for more than two decades is in itself a bulwark against rampant speculation.

What would happen if Hong Kong abandoned the peg?

One big advantage of the peg has been the relative certainty about the direction of the Hong Kong dollar, and that has made the former British territory a good financial center for the region. The virtual absence of currency risk has been one of Hong Kong’s biggest selling points. Volatility in the exchange rate could lead to potential capital flight, and could push downward pressure on stocks and property prices.

One such moment occurred this week when the latest polling intelligence was released to gasps of astonishment. The figures showed that Rudolph Giuliani had pulled ahead of his main rival, Senator John McCain of Arizona, by 23%, and is in front of the leading Democrat contender, Hillary Clinton, confounding critics who portray the former mayor of New York as unelectable.

Mr Giuliani sought to capitalise on this good news yesterday when he addressed the people he most needs to convince if he is to secure the Republican nomination early next year - members of the socially conservative wing of the party, holding its annual get-together in Washington.

That he was invited to address the meeting at all is in itself a sign of how far his star has risen. Two years ago the Conservative Political Action Conference, as the gathering is called, rebuffed this pro-abortion, pro-gun control, and pro-homosexuality New Yorker.

The simple explanation for his success is his image as the nation’s hero of 9/11. He did not mention his role on September 11 directly in his speech yesterday, but it was the unspoken theme. “What we all need to do, is to understand that America has the right ideas. We should not be embarrassed about ourselves,” he said. “We shouldn’t have our heads down. Every single one of our problems has to be solved from our strengths. And we have great strength. We are the luckiest people in the world. We have freedom.”

The story of what Mr Giuliani did on September 11 is the stuff of legend: how he was told of the first plane hitting the Twin Towers while at breakfast and hurried to the site; how he made a harrowing march through the dust and raining ash of the stricken buildings; and how he addressed the people of New York with a message of hope while George Bush was nowhere to be seen.

That day, famously, turned him into America’s mayor, earned him an honorary British knighthood and the title of Time person of the year, and elicited comparisons to Winston Churchill. The glow has sustained him ever since.

After he left City Hall less than four months after the attacks on New York, he become a mainstay of the speaker circuit. In 146 trips to various parts of the US he has built up a fan base, as well as earning the loyalty of at least 170 Republican politicians for whom he has campaigned - two valuable weapons in his would-be presidential armoury.

But the closer he gets to formally announcing his intention to run for the White House, the louder the questions become about his fitness for office. There are the questions about his health as a survivor of prostate cancer, though he is fully recovered, and his relative lack of experience. There have only been two former mayors who went on to become president (Grover Cleveland, Buffalo, 1885; Calvin Coolidge, Northampton, 1923) and both had wider exposure to elected office than Mr Giuliani.

“Right now he’s basking in the glow of his 9/11 image,” said Thomas Mann, a senior fellow of the Brookings Institution in Washington. “But he faces six months of intense scrutiny in which Republicans are going to become much more familiar with his record.”

That process has begun, with two books and a documentary raking over his leadership - debunking his record as mayor, and even doubting his image as the hero of 9/11. His achievements during his two terms as mayor were impressive, notably the “zero tolerance” reduction in crime by 57%, and the cut in the murder rate, which fell by 65%. But, according to these critiques, the headlines obscured the backbiting that went on within City Hall under Mr Giuliani.

Flawed or Flawless?, a biography by Deborah and Gerald Strober compiled through interviews with people who knew and worked with him, contains several scathing references. Carol Bellamy, a New York state senator and former law school classmate of Mr Giuliani, told the authors: “There’s quite a difference between being strong and fighting all the time. It seemed that, if you could pick a fight or not pick a fight, he picked a fight.”

Giuliani Time, a new film by Kevin Keating, argues that his brand of politics polarised the city on racial lines, and increased the gap between rich and poor. It shows Ed Koch, Mr Giuliani’s predecessor but one as mayor, saying of him: “He uses the levers of power to punish any critic … That’s why I have referred to him as Pinochet, Caligula. Maybe it’s a combination of the two.”

The most excoriating analysis comes from Wayne Barrett, a senior editor at Village Voice, and Dan Collins in their book Grand Illusion. They argue that quite apart from being the hero of 9/11, which they call a myth, Mr Giuliani failed to prepare the city for a major attack, leaving it fatally exposed. They investigate the faulty radio systems which put firefighters’ lives at risk, and decry Mr Giuliani’s decision to place the city’s emergency command post, which should have been where the rescue mission was coordinated, in the worst possible position: 23 floors up the World Trade Centre, which was already known to be a favoured terrorist target.

Barrett believes that unless the other presidential candidates or the media begin seriously to question Mr Giuliani’s record on terrorism, nothing will stop him. “In a country that is increasingly devoted to spin, it has become almost unpatriotic to question his image as the 9/11 hero,” Barrett told the Guardian.

Mr Giuliani faces an uphill fight to convince the most active members of the Republican party, the social conservatives and religious right who traditionally mobilise much of the turnout in the primaries, that he is worthy of their support. In recent weeks he has been making awkward attempts to reposition himself on key social issues. He has invoked the name of his “hero”, Ronald Reagan. He has insisted he hates abortion, and would appoint conservative judges to uphold the fundamentals of the constitution.

He has tried too to shrug off the embarrassment of his three marriages, including the way his second wife Donna Hanover discovered he was leaving her when she heard him say so in a televised press conference (after which he sought refuge in the apartment of a gay couple). He told radio listeners in Iowa: “When voters start comparing people’s personal lives and the mistakes they’ve made, you know, we’re all going to come out as human beings.”

None of which satisfies the likes of Tim Wildmon, president of the Mississippi-based evangelical group American Family Association. “All America appreciated what Mayor Giuliani did for New York and the spirit of the country. But he is disqualified from receiving the support of social conservatives like me, because he’s totally opposed to what we stand for. ”

So despite this week’s polls Mr Giuliani still has a Catch-22 to overcome. He is undoubtedly hugely popular in the country at large, and may well be the Republicans’ best hope of holding on to the White House, partly because he comes across as a moderate. But that will count for nothing unless he can overcome the fundamentalist core of his own party, and convince them that the hero of 9/11 is no New York liberal.

The defence secretary, Des Browne, said yesterday Britain was “on course” to hand over to Iraqi control the extensive Basra Palace base next month when the UK’s military presence in the country is due to be cut by a further 500 troops, leaving a total of 5,000.

Mr Browne was careful, at a lunch with defence correspondents, not to describe the move as a certainty, preferring the term “probability”. The government’s position has been that it depends on the capability of Iraqi security forces to take on responsibility for security in Iraq’s second largest city.

However, Mr Browne said that “well over 80%” of attacks in Basra were now aimed at British forces. He described Iranian influence in southern Iraq as “very important”. Iran was supplying money and equipment to militia and insurgents attacking British troops, and specific types of improvised explosive devices were manufactured in Iran.

British military commanders are increasingly taking the view that the presence of their troops in southern Iraq is doing more harm than good. It emerged this week that senior British officers have produced plans to speed up the withdrawal of troops, allowing most to return home within 12 months or less.

Major General Jonathan Shaw, the British commander in Basra, was reported to have produced “tactical advice” pointing to UK success in training Iraqi security forces and stressing the risks of remaining in Basra too long. He is believed to suggest the withdrawal of almost all troops by the end of December, leaving only a small number of teams acting as advisers.

Mr Browne described Britain’s “overwatch” role - based in Basra’s airport - as a “time-limited relationship”. He added: “I do not believe we will have 5,000 troops in Iraq and 7,000 in Afghanistan in five years.”

General Sir Mike Jackson, the former head of the army, said setting a date for withdrawal from Iraq would be “about the worst thing we could do”. Giving evidence to the independent Iraq Commission, sponsored by the Foreign Policy Centre, he said UK forces should become “non-operational” when the country was secure and the Iraqi government ready, not according to a timetable.

He added: “And there should be no knee-jerk reactions to, dare I say, some domestic considerations.” Gen Jackson said: “I think it would be rather unclever to assume we could stay forever. There is a crossover between what you are doing to help and the level of consent as to the overall efficacy of what you are doing.”

The situation in Iraq could not be be solved by military means. The answer “will be a political solution between the competing power groups within Iraq”.