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LONDON (Thomson Financial) - Oil held onto earlier gains as fears over the US economic slowdown were overshadowed by lingering worries the standoff between ExxonMobil and Venezuela could worsen, further disrupting US supply.

"At the moment, various short term supply fears are still overwhelming economic worries," said Sucden analyst Andrey Kryuchenkov. He added, however, that economic worries could yet take centre stage again.

"Any more negative economic news or disappointing data could quickly turn market participants' attention back to economic fears, while future gains in crude prices would be capped in this case," he said.

Oil prices were on a downtrend for much of January amid fears a US economic slowdown will crimp demand for crude, especially if it spills over into the broader economy.

They have recovered sharply over the past week, however, partly because markets have taken the view that the view the ExxonMobil-Venenzuela spat still poses a serious risk to US supplies.

At 4.40 pm, New York's WTI crude for March delivery was up 50 cents at 96.00 usd a barrel, in quiet trade with US players away for the Presidents Day holiday.

In London, Brent crude for April delivery was up 28 cents at 94.91 usd per barrel.

Venezuela President Hugo Chavez said on Sunday his country could sue ExxonMobil for unpaid taxes. He also said he would cut off all US oil exports if Washington "attacks Venezuela or tries to harm us".

US oil giant ExxonMobil is currently in arbitration with Venezuelan state oil company PDVSA over the nationalisation of assets in which it had an interest.

Its successful bid to freeze assets held by PDVSA in the European courts last week led Chavez to threaten to cut off oil supplies to the US.

Chavez has since settled for cutting oil exports only to ExxonMobil. The reduction to date is not significant, as Middle East producers have assured the US they can make up for the Venezuelan short-fall.

All the same, oil market players remain concerned the reduction could become significant if the dispute intensifies. Venezuela is the fourth-largest supplier of crude to the US.

Elsewhere, speculation oil cartel OPEC could cut output quotas at its upcoming March meeting -- after Iranian oil minister Gholamhossein Nozari mooted the possibility over the weekend -- was also lending some support to the market.

Speaking to reporters in Tehran, Nozari said "in the normal course of events" a production cut in March would be expected, although he reiterated the cartel would closely review the market before making a decision.

Both Iran and Venezuela have previously called for a reduction in output to protect prices. Although oil remains near its all-time high above 100 usd a barrel, the sliding value of the US dollar has cut oil vendors' spending power overseas, they say.

However, with the US facing a recession, which could potentially affect wider global growth, the cartel is unlikely to pile on further economic pressure by pushing oil prices higher still, analysts said.

The US will pressure its OPEC allies -- most notably Saudi Arabia, the organisation's biggest producer and de facto leader -- not to cut production, which is also likely to have some influence on the final decision.

LONDON (Thomson Financial) - The pound recovered some ground but remained sharply lower on the day after the UK government's plans to nationalise Northern Rock.

With other major currencies range-bound in quiet trade due to the US public holiday, the pound has been in focus following yesterday's surprise decision by Chancellor of the Exchequer Alistair Darling to take the troubled mortgage lender into public ownership.

Earlier the pound fell to a two-week low against the euro of 0.7521 stg and a one-week low against the dollar as news the stricken bank will be taken into public ownership heightened investors' concerns about the prospects for the UK economy.

"The pound was sold from today's European open, on the back of the continent's absorption of yesterday's Northern Rock nationalisation announcement," said Robert Howard, analyst at Thomson IFR Markets.

Meanwhile, relatively downbeat comments from Bank of England rate setter Tim Besley also weighed on the UK currency. The external Monetary Policy Committee member acknowledged inflation was set to rise in the coming months but also noted tighter credit conditions could lead to a fall in consumption.

Besley is generally seen as a hawkish member of the MPC, so highlighting the downside risks to consumer spending were seen by analysts as being particularly significant.

Meanwhile, the dollar was steady against the euro with trade quiet due to the US marking Presidents' Day.

The dollar fell heavily last week after US Federal Reserve chairman Ben Bernanke kept the door open for further cuts in interest rates due to continuing signs of trouble in the US economy.

It recovered some of these losses in early trade this morning but analysts are doubtful whether this will last over the rest of the week as fears about the prospect of a US recession mount.

On Friday, the University of Michigan consumer sentiment dropped by 11 points to its lowest level since Feb 1992, with previous falls of that magnitude generally seen as a prelude to recession.

"These weak US economic reports served to reverse the more optimistic attitude towards the economy which had been triggered by

stronger-than-expected retail sales earlier in the week," noted NAB Capital strategist John Kyriakopoulos.

Analysts said carry trades are likely to remain in vogue in these uncertain economic times. The yen and the Swiss franc are traditionally used in carry trades -- when a low-yielding currency is sold to finance investment in higher-yielding economies.

"In the present environment of significant risk-aversion we still feel that the yen and the Swiss franc will be the better performers amongst the major currencies," said Steve Barrow, currency strategist at Bear Stearns.

"Dollar/yen is expected to slide to around 100 yen this year and dollar/Swiss should fall to parity," he added.

London 1600 GMT London 1235 GMT

US dollar

yen 108.17 down from 108.22

sfr 1.1020 up from 1.1039

Euro

usd 1.4650 up from 1.4623

yen 158.50 up from 158.27

sfr 1.6145 down from 1.6146

stg 0.7506 up from 0.7456

Sterling

usd 1.9512 up from 1.9493

yen 211.18 up from 210.94

sfr 2.1501 down from 2.1521

Australian dollar

usd 0.9123 up from 0.9115

stg 0.4673 down from 0.4675

yen 98.65 up from 98.63

LONDON (Thomson Financial) - European government bonds continued to slide as stock markets rose strongly in the absence of any US trading, closed for President's Day.

The rise in prices is partly magnified by a lack of trading volume as US markets remain closed, but the improved sentiment has caused some profit-taking on the gains made last week.

Analysts say this may continue into tomorrow, when economic data will once again be scarce, leaving the stock market to drive bond prices.

"Whether the good mood will prevail of course remains to be seen; but a lack of A-list US economic data releases this week could mean that fears of a US recession -- whose odds have undoubtedly shortened following Friday's poor batch of US economic figures -- may linger on in investors' minds," said Neil Mellor at Bank of New York Mellon.

The markets are pricing in about 100 basis points-worth of cuts by the Federal Reserve by year-end, a view that has been cemented by the weak US economic data last week.

Looking at the days to come, the US will remain a key focal point, with inflation, housing starts and the Fed minutes due on Wednesday.

John Davies at WestLB believes the overall trend in US economic data "will continue to signal a recession."

"Growth in consumer prices probably accelerated again in January due to the higher energy prices... (but) the Fed will continue to weight growth risks more heavily than inflation risks," said Davies.

In both the US and Europe, bond prices will continue to show a steepening in their yield curve -- as shorter-dated maturities perform better than longer-dated ones on views that interest rates will be cut in the short-term.

In the UK, gilts were also lower, tracking the wider economy in the wake of the news that Northern Rock PLC, the troubled bank, will be nationalised.

Stephen Lewis at Insinger de Beaufort believes there will be little impact on debt markets.

"A more significant issue than Northern Rock for gilts-holders is the ongoing debate about the future liabilities of defined benefit pension schemes," he said.

The UK Pensions Regulator will publish proposals this week to reform the pensions benefit plans to account for greater longevity of beneficiaries, effectively increasing liabilities for pension funds by six to eight percent.

"More funds are, therefore, likely to be channeled into gilts than would otherwise have been the case," said Lewis.

At Yield Change on

1555 GMT pct previous close

March euribor future (Liffe) 95.66 dn 0.01

June euribor future (Liffe) 96.04 dn 0.05

GERMANY

March bund future (Eurex) 116.02 dn 0.41

4.00 pct Jan 2018 govt bond 99.94 4.00 dn 0.39

FRANCE

4.25 pct Oct 2017 govt bond 100.95 4.13 dn 0.39

ITALY

5.25 pct Feb 2018 govt bond 101.31 4.38 dn 0.28

UK

March gilt future 109.25 dn 0.25

5.00 pct March 2018 govt bond 102.88 4.64 dn 0.29

March short sterling future 94.37 dn 0.01

June short sterling future 94.77 dn 0.04

LONDON (Thomson Financial) - Copper surged to a 4-month high amid ongoing worries over sharp declines in LME inventories and as a rebound in demand from China, the world's largest user of the metal, boosted sentiment.

MF Global analyst Ed Meir said gains in copper could be sustained through the week as it is very light on the US macro economic calendar, meaning concerns over the economic decline there will remain sidelined.

US markets are closed today for the President's Day holiday, while the remainer of the week sees the release of January inflation data, as well as housing and building starts.

In any case, traders have pushed aside worries over US growth and falling copper demand there, to focus on fundamental factors like the ongoing decline in LME inventories.

The LME said in a daily report today that copper stocks held in its warehouses fell by 6,275 tonnes to total 144,375 tonnes. Stocks are now at their lowest since mid-October.

At 3.18 pm, LME copper for 3 month delivery was up at 7,930 usd a tonne against 7,730 usd at the close Friday, having earlier hit a 4-month peak of 7,965 tonnes.

Meir said LME copper stocks are being eroded because of a ramp up in Chinese copper imports, which were up 6 pct in January from December to 239,000 tonnes.

Although the increase in imports has helped spark a sharp build up in copper stocks in Shanghai, players are for now holding out for sustained strong demand from China, the world's largest copper consumer.

"China is still consuming and importing healthy amounts of copper," said UBS analyst Robin Bhar. "This shows China has an appetite for copper and that is always going to lend some support (to prices)."

Strong demand from China and falling LME inventories have underpinned copper and other metals in the year to date and helped overshadow worries that demand might wane if the US economy slows further.

Elsewhere, aluminium was up at 2,824 usd a tonne against 2,820 usd at the close Friday, when the metal hit a 9-month high of 2,873 usd amid ongoing jitters over possible supply outages in South Africa.

The country, which is the eighth largest aluminium producer in the world, is currently in the grips of a power crisis that last month led to a complete shutdown of mine output for 5 days.

Although state utility Eskom is currently reviewing plans to buy 45 mln tonnes of coal, in a bid to stave off the crisis, there is growing doubt over the efficacy of the move.

"Eskom is reluctant to purchase the coal at the spot export price, which is three to four times higher its average purchase price, and is in talks to pay somewhere in between the two levels".

"Meanwhile, the company is still weighing up various options and has still not ruled out the possibility of power buy-backs from major industrial and mining companies," said Standard Bank analyst Leon Westgate.

Last week, reports that Eskom was considering a complete buy-back of power from three aluminium smelters in South Africa and Mozambique sparked a sharp price rally.

Up to 1.5 mln ounces of aluminium output could be lost this year if the smelters are shut down. As things stand, industrial users have been forced to cut power usage to 90 pct of normal needs.

Meanwhile over in China, some 650,000 tonnes of output might be lost this year as a result of reduced output in recent weeks, linked to power shortages sparked by severe winter storms.

Although supply from China is starting to recover, the outlook in South Africa is not nearly as bright, with Eskom itself admitting the power shortages will be in place until 2012.

In other metals, lead was up at 3,007 usd against 2,970 usd, supported by a 275 tonne decline in LME inventories, while tin rose to 17,050 usd a tonne from 16,850 usd amid a 185 tonne drop in inventories held by the LME.

Gains in zinc, on the other hand, were capped by a further 575 tonne increase in LME inventories that kept stocks at their highest points since October 2006.

Three month zinc was flat at 2,360 usd a tonne, while nickel bucked the rising trend in metals, falling to 27,501 usd against 27,625 usd amid an increase of 216 tonnes in LME inventories.

LONDON (Thomson Financial) - INTERBANK OFFERED RATES

OVERNIGHT 5.33

1 WEEK 5.35

1 MONTH 5.55

2 MONTHS 5.60

3 MONTHS 5.65

4 MONTHS 5.63

5 MONTHS 5.61

6 MONTHS 5.60

9 MONTHS 5.53

12 MONTHS 5.46

DEPO CDs

1 MONTH 5.55 - 5.47

2 MONTHS 5.60 - 5.52

3 MONTHS 5.65 - 5.57

4 MONTHS 5.63 - 5.55

5 MONTHS 5.61 - 5.53

6 MONTHS 5.60 - 5.52

9 MONTHS 5.53 - 5.43

12 MONTHS 5.46 - 5.36

CLEARER CDs

1 MONTH 5.55 - 5.47

2 MONTHS 5.60 - 5.52

3 MONTHS 5.65 - 5.57

4 MONTHS 5.63 - 5.55

5 MONTHS 5.61 - 5.53

6 MONTHS 5.60 - 5.52

9 MONTHS 5.53 - 5.43

12 MONTHS 5.46 - 5.36

LOCAL AUTHORITY DEPOSITS

2 DAYS 5.25

7 DAYS 5.28

1 MONTH 5.53

3 MONTHS 5.65

6 MONTHS 5.60

12 MONTHS 5.50

EURODOLLAR DEPOSIT

OVERNIGHT 3.13 - 3.06

7 DAYS 3.15 - 3.10

1 MONTH 3.15 - 3.10

3 MONTHS 3.08 - 3.03

6 MONTHS 3.00 - 2.92

12 MONTHS 2.87 - 2.77

EURODOLLAR CDs

1 MONTH 3.06

3 MONTHS 3.00

6 MONTHS 2.91

12 MONTHS 2.73

Local authority rates provided by Tradition