NEW YORK (Reuters) - "The dollar slid to a 15-year low against major currencies on Friday as data showed U.S. payrolls fell last month for the first time in four years, raising recession fears and pressure for the Federal Reserve to cut interest rates.

      Traders dumped the dollar after the government said the U.S economy shed 4,000 net jobs last month, the first contraction in employment since August 2003. It also revised downward estimated job gains for June and July.

      The payrolls data followed a larger-than-expected decline in July pending home sales reported earlier this week -- more evidence that a credit crunch that began with losses on bonds tied to risky U.S. mortgages was starting to put the brakes on growth.

      "The jobs data is simply horrific and fans the most pessimistic fears," said Marc Chandler, chief global currency strategist with Brown Brothers Harriman in New York. "The housing market woes will undermine the U.S. consumer, push the U.S. economy into recession and drag down growth in much of the rest of the world."

      Traders have been increasing their bets that the Fed will cut its 5.25 percent benchmark interest rate by a half percentage point when it meets on September 18.

      "The Fed cannot keep ignoring the fact that the subprime and credit crisis has indeed hit the real economy," said Kathy Lien, senior currency strategist at DailyFX.com in New York.

      "Americans are feeling the pain, and this will translate into weak consumer spending, which will drive speculation for a possible recession," she said.

      The dollar index (.DXY: Quote, Profile, Research), which measures the greenback against a basket of major currencies, tumbled to a 15-year low.

      The Bottom Line:  Stick a fork in us, we're done.

      U.S. crude settled up 40 cents at $76.70 per barrel, after falling as low as $75.63 earlier. London Brent crude settled 30 cents higher at $75.07 a barrel.

      The price of oil has climbed close to the all-time record $78.77 a barrel struck on August 1 amid refinery problems in the United States, Middle East tensions and output cuts by the Organization of Petroleum Exporting Countries.

      But the rally has been tempered by economic troubles that analysts fear could undermine future demand for oil.

      U.S. employers cut payrolls by 4,000 jobs in August, the first reduction in four years, compared with economists' forecasts for an increase of 110,000 jobs. The data sent the dollar and world stock markets tumbling.

      "This may be the canary in the coal mine as far as demand (is concerned) going forward," said John Kilduff, senior vice president at MF Global.

      "Certainly, in the past years with high oil prices we've always pointed to employment numbers holding up as a reason oil demand was not being hit."

      Oil prices rose Thursday after a U.S. government report showed U.S. crude inventories fell by a higher-than-expected 3.9 million barrels last week.

       Houston (National Geographic) - "The seemingly spic-and-span rooms where NASA assembles its spacecraft aren't quite as clean as experts had thought, a new study suggests. A surprising diversity of bacteria thrive in at least three of the space agency's so-called clean rooms, genetic testing has revealed.

      NASA experts go to great lengths to keep these rooms immaculate by sealing them from the outside environment, continually filtering the air, and cleaning the insides.

      The aim is to protect the spacecraft's surface from dust and bacteria, while protecting other planets from Earthly microbes. 

Bacteria Bonanza

      In the past, the most common method of finding bacteria was to capture samples, take them back to a lab, and try to grow a culture.

      However, of all the bacteria out there, "the fraction that you can grow in a lab is about one percent," said study leader Kasthuri Venkateswaran of NASA's Jet Propulsion Laboratory at the California Institute of Technology.

      The rest we have not yet found a way to grow outside of their native environments.

      So Venkateswaran and colleagues applied a sensitive technique that can find traces of genetic material from bacteria—even from those species that won't grow in the petri dish.

      "To get a more global picture, we need[ed] to use DNA fingerprinting," he said.

      The researchers took samples from clean rooms at three NASA sites: the Jet Propulsion Laboratory in Pasadena, California; the Kennedy Space Flight Center in Cape Canaveral, Florida; and the Johnson Space Center in Houston, Texas.

      But there is a catch. The same fields that surround Jagels' house on the great plains may be bringing new money to rural America, but they are also helping to push up the price of bread in Manchester, tortillas in Mexico City and beer in Madrid. As a direct result of what is happening in places like Nebraska, Kansas, Indiana and Oklahoma, food aid for the poorest people in southern Africa, pork in China and beef in Britain are all more expensive.

      Challenged by President George Bush to produce 35bn gallons of non-fossil transport fuels by 2017 to reduce US dependency on imported oil, the Jagels family and thousands of farmers like them are patriotically turning the corn belt of America from the bread basket of the world into an enormous fuel tank. Only a year ago, their maize mostly went to cattle feed or was exported as food aid. Come harvest time in September, almost all will end up at the new plant at Carleton, where it will be fermented to make ethanol, a clear, colourless alcohol consumed, not by people, but by cars.

      The era of "agrofuels" has arrived, and the scale of the changes it is already forcing on farming and markets around the world is immense. In Nebraska alone, an extra million acres of maize have been planted this year, and the state boasts it will produce 1bn gallons of ethanol. Across the US, 20% of the whole maize crop went to ethanol last year. How much is that? Just 2% of US automobile use.

      "Probably hasn't looked any better than it looks right now," Jerry Stahr, another Nebraskan farmer, told his local paper recently.

      Jagels and Stahr are part of a global green rush, one of the greatest shifts that world agriculture has seen in decades. As the US, Europe, China, Japan and other countries commit themselves to using 10% or more alternative automobile fuels, farmers everywhere are rushing to grow maize, sugar cane, palm oil and oil seed rape, all of which can be turned into ethanol or other biofuels for automobiles. But that means getting out of other crops.

      The scale of the change is boggling. The Indian government says it wants to plant 35m acres (140,000 sq km) of biofuel crops, Brazil as much as 300m acres (1.2m sq km). Southern Africa is being touted as the future Middle East of biofuels, with as much as 1bn acres (4m sq km) of land ready to be converted to crops such as Jatropha curcas (physic nut), a tough shrub that can be grown on poor land. Indonesia has said it intends to overtake Malaysia and increase its palm oil production from 16m acres (64,000 sq km) now to 65m acres (260,000 sq km) in 2025.

      While this may be marginally better for carbon emissions and energy security, it is proving horrendous for food prices and anyone who stands in the way of a rampant new industry. A year or two ago, almost all the land where maize is now being grown to make ethanol in the US was being farmed for human or animal food. And because America exports most of the world's maize, its price has doubled in 10 months, and wheat has risen about 50%.

      The effect on agriculture in the UK is price increases all round. "The world price [of maize] has doubled," says Mark Hill, food partner at the business advisory firm Deloitte. "In June, wheat prices across the US and Europe hit their highest levels in more than a decade. These price hikes are likely to trigger inflation in food prices, as processors are forced to pay increased costs for basic ingredients such as corn and wheat."

      UK flour millers, for example, need 5.5m tonnes of wheat to produce the 12m loaves sold each day in the UK. The majority of this wheat is grown in the UK, and in the last year milling wheat prices moved from around £100 a tonne to £200 a tonne. Hovis raised the price of a standard loaf from 93p to 99p in February and has said more increases are on the way. In France, consumers have also been warned that their beloved baguette will become more expensive.

      The era of cheap food is over, says Hill. World commodity prices of sugar, milk and cocoa have all surged, prompting the biggest increase in retail food prices in three decades in some countries. "Meat, too, will cost more because chicken and pigs are fed largely on grain," says Hill. "And while anyone growing grains will be better off, dairy and livestock producers may well struggle in this environment."

      But the surge in demand for agrofuels such as ethanol is hitting the poor and the environment the hardest. The UN World Food Programme, which feeds about 90m people mostly with US maize, reckons that 850m people around the world are already undernourished. There will soon be more because the price of food aid has increased 20% in just a year. Meanwhile, Indian food prices have risen 11% in a year, the price of the staple tortilla quadrupled in Mexico in February and crowds of 75,000 people came on to the streets in protest. South Africa has seen food-price rises of nearly 17%, and China was forced to halt all new planting of corn for ethanol after staple foods such as pork soared by 42% last year.

      In the US, where nearly 40 million people are below the official poverty line, the Department of Agriculture recently predicted a 10% rise in the price of chicken. The prices of bread, beef, eggs and milk rose 7.5 % in July, the highest monthly rise in 25 years.

      "The competition for grain between the world's 800 million motorists, who want to maintain their mobility, and its two billion poorest people, who are simply trying to survive, is emerging as an epic issue," says Lester Brown, president of the Washington-based Worldwatch Institute thinktank, and author of the book Who Will Feed China?

      It is not going to get any better, says Brown. The UN's World Food Organisation predicts that demand for biofuels will grow by 170% in the next three years. A separate report from the OECD, the club of the world's 30 richest countries, suggested food-price rises of between 20% and 50% over the next decade, and the head of Nestlé, the world's largest food processor, said prices would remain high as far as anyone could see ahead.

      A "perfect storm" of ecological and social factors appears to be gathering force, threatening vast numbers of people with food shortages and price rises. Even as the world's big farmers are pulling out of producing food for people and animals, the global population is rising by 87 million people a year; developing countries such as China and India are switching to meat-based diets that need more land; and climate change is starting to hit food producers hard. Recent reports in the journals Science and Nature suggest that one-third of ocean fisheries are in collapse, two-thirds will be in collapse by 2025, and all major ocean fisheries may be virtually gone by 2048. "Global grain supplies will drop to their lowest levels on record this year. Outside of wartime, they have not been this low in a century, perhaps longer," says the US Department of Agriculture.

      In seven of the past eight years the world has actually grown less grain than it consumed, says Brown. World stocks of grain - that is, the food held in reserve for times of emergency - are now sufficient for just over 50 days. According to experts, we are in "the post- food-surplus era".

      The food crisis, Brown warns, is only just beginning. What worries him as much as the new competition between food and fuel is that the booming Chinese and Indian populations - the two largest nations in the world, with nearly 40% of the world's population between them - are giving up their traditional vegetable-rich diets to adopt typical "American" diets that contain more meat and dairy products. Meat demand in China has quadrupled in 30 years, and in India, milk and egg products are increasingly popular.

      In itself, this is no problem, say Brown and others, except that it means an accelerated demand for water to grow more food. It takes 7kg of grain to produce 1kg of beef, and increased demand will require huge amounts of grain-growing land. Much of this, of course, will need to be irrigated. "Water tables are now falling in countries that contain over half the world's people," Brown points out. "While numerous analysts and policymakers are concerned about a future of water shortages, few have connected the dots to see that a future of water shortages means a future of food shortages."

      New figures from the World Bank, he says, show that 15% of the world's present food supplies, on which 160 million people depend, are being grown with water drawn from rapidly depleting underground sources or from rivers that are drying up. In large areas of China and India, the water table has fallen catastrophically.

      Scientists are becoming increasingly alarmed. Earlier this year, water specialists from hundreds of institutes around the world published the biggest ever assessment of water and food. Their conclusions were chilling. With the earth's water, land and human resources, it would be possible to produce enough food for the future, they said. "But it is probable that today's food production and environmental trends will lead to crises in many parts of the world," said David Molden, deputy director general of the International Water Management Institute.

      Climate change, meanwhile, is leading to more intense rains, unpredictable storms, longer-lasting droughts, and interrupted seasons. In Britain, the recent floods will result in a shortage of vegetables such as potatoes and peas, and cereals such as wheat. This comes on top of a 4.9% rise in food prices in the year to May - well over consumer price inflation - and a 9.6% hike in vegetable prices.

      Britain can get by, but elsewhere climate change is proving disastrous. "I met leaders from Madagascar reeling from seven cyclones in the first six months of the year," Josette Sheeran, new director of the World Food Programme, told colleagues in Rome recently. "I asked them when the season ends and was told that such questions are becoming more difficult to answer. Farmers know that predictable patterns in weather are becoming a thing of the past. How does the global food supply system deal with such changing risk?"

      The answer is: with ever greater difficulty. The Intergovernmental Panel on Climate Change predicts that rain-dependent agriculture could be cut in half by 2020 as a result of climate change. "Anything even close to a 50% reduction in yields would obviously pose huge problems," said Sheeran. Within a week, Lesotho had declared a food emergency after the worst drought in 30 years and greatly reduced harvests in neighbouring South Africa pushed prices well beyond the reach of most of the population..."

      The Bottom Line:  More and more money is buying less and less food, just as less and less water is growing less and less food.  More and more people are putting demand on less and less of a supply of food.  See where this picture is going?

      London (MSNBC) - "Worldwide spending by companies on oil and gas projects increased to a record high last year, but resulted in a minimal increase in global reserves, according to a new study released Wednesday.

      John S. Herold, an oil and gas research firm, and Harrison Lovegrove, an industry advisory group, found that spending by the 228 global oil and gas companies surveyed increased 45 per cent to $401bn in 2006.

      The report, which covered oil giants such as ExxonMobil as well as smaller independent exploration and production companies, stated that the record capital spending generated only a 2 per cent increase in reserve volumes to 263bn barrels of oil equivalent.

      The report's sponsors said the gap between spending and reserve replacement reflected the higher costs of production at maturing fields with declining output. Oil and gas companies are also finding it more difficult to access new reserves in some countries, they said.

      "Given the maturities of the basins and the limited access to some of the more prolific hydrocarbons basins, the costs keep going up and it gets harder to find and replace reserves," said Rodney Schmidt, managing director of Harrison Lovegrove.

      The report validated recent research by the International Energy Agency, the energy watchdog for industrialised countries, which in July put forward the possibility of a global oil supply "crunch" in five years' time.

      The IEA said supply was falling faster than expected in mature oil and gas producing areas, such as the North Sea and the Gulf of Mexico, while some new projects were facing long delays.

      International oil companies are facing greater difficulties building up reserves in the former Soviet Union and Latin America, where governments are looking to exert greater control over local resources.

      Mexico (BBC) - "At least 100 people are now believed to have been killed by Hurricane Felix in Nicaragua and Honduras, officials say.

      The storm hit land in north-eastern Nicaragua on Tuesday as a maximum strength category five storm.

      It has since dissipated, but dozens of people are still missing and the death toll is expected to rise as rescuers search the open seas and remote jungle.

      Tens of thousands of people have been left homeless, but emergency aid is beginning to reach affected areas.

      In Honduras, 52 Miskito Indians have been washed ashore alive, government officials said.

      They had been swept off a tiny island and survived the storm by clinging to planks and lifebuoys.

      Fishing communities of Miskito Indians live on island reefs along the Honduran-Nicaraguan border..."

      NEW YORK (Reuters) - "Stocks fell on Wednesday after reports showed the housing slump was deepening and spreading to the job market while slowing consumer spending.

      Investor concerns about the health of the U.S. consumer were exacerbated when Costco Wholesale Corp (COST.O: Quote, Profile, Research),reported sales for August that fell short of expectations and Apple Inc (AAPL.O: Quote, Profile, Research) announced big price cuts on its new iPhones in an effort to spur sales.

      Retail and technology shares fell broadly, with the Nasdaq snapping a four-session winning streak.

      The Dow Jones industrial average (.DJI: Quote, Profile, Research) was down 143.39 points, or 1.07 percent, at 13,305.47. The Standard & Poor's 500 Index (.SPX: Quote, Profile, Research) was down 17.13 points, or 1.15 percent, at 1,472.29. The Nasdaq Composite Index (.IXIC: Quote, Profile, Research) was down 24.29 points, or 0.92 percent, at 2,605.95.

      Evidence of possible trouble for the economy came from reports showing that pending sales of previously owned homes plunged by a record 12.2 percent in July and that private employers hired the fewest workers in more than four years in August.

      "Coming into the session, there was profit-taking due in part to the ongoing uncertainty with regard to the health of the credit markets. That selling accelerated after the weaker-than-expected home sales report," said Michael Malone, trading analyst with Cowen & Co. in New York.

      Citigroup Inc (C.N: Quote, Profile, Research) fell 2.6 percent to $46 and was the top drag on the S&P 500 index after The Wall Street Journal said Citi and other banks could face financial exposure due to affiliated investment units that have issued short-term debt.

      Shares of home builders declined, with the Dow Jones home construction index down 4.3 percent.

      The Bottom Line:  Just the beginning of the credit-crunch fallout.

      SINGAPORE (Reuters) - "Oil prices rose to $76 a barrel on Thursday, buoyed by expectations that U.S. crude and gasoline inventories fell last week.

      U.S. crude (CLc1: Quote, Profile, Research) rose 33 cents to $76.06 a barrel by 9:44 p.m. EDT, after a high of $76.25 and gains of 65 cents on Wednesday. London Brent crude (LCOc1: Quote, Profile, Research) was up 21 cents at $74.55 a barrel.

      U.S. crude oil stocks are expected to have slipped 500,000 barrels in the week to August 31, after Hurricane Dean disrupted Mexican oil exports, while gasoline stocks were seen falling 1.3 million barrels in U.S. government data due later on Thursday, according to a Reuters poll of analysts <EIA/S>.

      "The expectations are for quite a fall and with prices going where they are going, you've really got to get that now, or there will be a disappointment," said Tobin Gorey, a commodities strategist at Australia's Commonwealth Bank.

      The supply worries were compounded by expectations that oil cartel OPEC will maintain its output curb when it meets on September 11 in Vienna.

      Most OPEC members have said that the recent rally in oil prices is due to a shortage of refined products and an output boost would only add to what they call comfortable stock levels.

      Traders are also keeping an eye on the storm season in the Gulf of Mexico, with the Colorado State University forecasting that the rest of the 2007 Atlantic hurricane season would be busy.

      Prices this week have climbed towards a record high of $78.77 hit on August 1, as Hurricane Felix threatened the Gulf of Mexico, but Felix has since been downgraded to a tropical depression after hitting Honduras, and is not seen affecting Mexico's major oilfields..."

      Berlin (BBC) — "Three men have been arrested in Germany on suspicion of planning a "massive" attack on US facilities in the country, officials have said.

       Federal prosecutor Monika Harms said the three had trained at camps in Pakistan and procured some 700kg (1,500lbs) of chemicals for explosives.

       She said the accused had sought to target facilities visited by Americans, such as nightclubs, pubs or airports.

       Defence Minister Franz Josef Jung said the men had posed "an imminent threat".

       Media reports said the men were planning attacks against a US military base in Ramstein and Frankfurt airport.

       The US praised the actions of the German government and said the incident showed everyone needed to be vigilant in finding "terrorists".

      WASHINGTON (Fox) —  "The Chinese government hacked a noncritical Defense Department computer system in June, a Pentagon source told FOX News on Tuesday.

      Pentagon investigators could not definitively link the cyber attack to the Chinese military, the source said, but the technology was sophisticated enough that it indicated to Pentagon officials — as well as those in charge of computer security — that it came from within the Chinese government.

      The source's information directly contradicts Chinese claims earlier Tuesday, in which officials called the allegations "groundless." The Chinese government, officials said, opposes cyber crime.

      "It's a safe assumption that the technology was resident in the state," the source told FOX. It was a "complicated attack."

      "These hacking attacks go on everyday but this was a more complicated attack with more sophisticated technology that broke through the current firewalls," the Pentagon source said. "It's a constant game of cat and mouse. This was a wake-up call for us."

      The source added that the area hacked was not a very important one. It was a section of the office of the Defense secretary that deals with policy and administrative matters comprised of all unclassified e-mail accounts. The source added that the area is not significant to any operational security.

      The Pentagon computers were taken off line for about 3 weeks, according to Pentagon spokesman Bryan Whitman.

      The Pentagon is also reviewing its policy on BlackBerry devices given the threat of cyber attacks. Officials said Tuesday that the military is pursuing a sophisticated way to protect the handy wireless devices, and that the department is likely going to be expanding their use.

      The Financial Times, citing unnamed officials, reported Monday that the People's Liberation Army hacked into a computer system in the office of Defense Secretary Robert Gates in June. The attack forced officials to take down the network for more than a week, the report said.

      China denied the reports.

      "Some people make groundless accusations against China" that its military attacked the Pentagon, Chinese Foreign Ministry spokeswoman Jiang Yu said at a regular news briefing.

      "China has all along been opposed to and forbids criminal activities undermining computer networks, including hacking," she said. "China is ready to strengthen cooperation with other countries, including the U.S., in countering Internet crimes."

      It was the second time in two weeks that China was accused of hacking into a foreign government's computers. On the eve of German Chancellor Angela Merkel's visit to Beijing last week, the weekly Der Spiegel said computers at the Chancellery and three ministries had been infected with so-called Trojans, or spy programs.

      The report, which did not specify its sources, said Germany's domestic intelligence agency believed a group of hackers associated with the People's Liberation Army might have been behind the alleged hacking..."

      The Bottom Line:  If you ask me, this is an act of war; but that's just my opinion.  Let's not get hasty here.

      SINGAPORE (Reuters) - "Oil prices held above $75 a barrel on Wednesday as traders awaited data that is expected to show U.S. crude stocks fell last week and an OPEC meeting next week where supply is likely to remain unchanged.

      U.S. light crude for October delivery (CLc1: Quote, Profile, Research) inched 6 cents higher to $75.14 a barrel by 11:00 p.m. EDT, near Tuesday's one-month high of $75.25. London Brent crude (LCOc1: Quote, Profile, Research) rose 7 cents to $73.99.

      U.S. crude stocks probably fell by 400,000 barrels due to weather-related disruptions to imports, while gasoline stocks were seen falling 1.5 million barrels, a Reuters poll showed ahead of Thursday's U.S. government inventory report.

      "The focus is on the crude oil drawdown," said Tony Nunan at Mitsubishi Corp's risk management unit. "It's no secret that OPEC has been producing about a million barrels a day less than last year. But it's coming down from very high levels," he added.

      Some analysts have forecast global supply could struggle to keep up with demand later this year unless the Organization of Petroleum Exporting Countries ramps up oil production.

      Comments from OPEC members suggest the group is likely to leave policy unchanged at its meeting on September 11. Only Indonesia, OPEC's second smallest producer, has said it may propose an increase.

      OPEC, which sets supply limits for 10 of its 12 member countries, thinks raising output next week would just add to inventories that are already at a comfortable level, an OPEC source said on Tuesday.

      But the group may need to boost crude oil output by up to 1 million barrels per day (bpd) later in 2007, perhaps in December, should demand prove robust and inventories fall, the source said.

      LOS ANGELES (Fox) — "Scorching temperatures that have gripped Southern California for more than a week were blamed Tuesday for at least 13 deaths.

      As the heat wave entered its eighth day, authorities reported finding bodies in vehicles and apartments throughout the region.

      Twelve of the deaths occurred in Los Angeles County, said Capt. Ed Winter of the coroner's office. A 13th death was confirmed in San Bernardino County.

      In Los Angeles, an elderly couple was found in their apartment in the San Fernando Valley's Valley Village neighborhood Monday, where temperatures of 106 degrees were reported, authorities said. The man and woman, whose identities were withheld until their family could be notified, did not have air conditioning, Battalion Chief Peter Penesch said.

      San Bernardino County sheriff's deputies in Twentynine Palms on Sunday found the body of Michael Cuhna on the Marine Corps base there. His dehydrated and sunburned friend reported the Hesperia man missing a day earlier, according to a release from the sheriff's department.

      The friend told police the two were separated while illegally gathering scrap metal from the base. A preliminary coroner's report found Cuhna died as a result of exposure and dehydration..."

      FRANKFURT (Reuters) - "Global economic growth will take a hit as a result of the U.S. subprime mortgage crisis, says the chief executive of Deutsche Bank (DBKGn.DE: Quote, Profile, Research), Germany's biggest bank.

      "Growth, especially of private consumption in the United States, will suffer because of the housing crisis and that can naturally not go without negatively affecting the world economy overall," Josef Ackermann said in a guest column to be published in the German business daily Handelsblatt on Monday.

      Handelsblatt made a summary of Ackermann's text available to other media at the weekend.

      Ackermann said many banks and investors affected by the credit market turmoil that arose in the wake of the subprime crisis had apparently taken risks that exceeded their size and risk-bearing capacity.

      "This is, to say it clearly, above all negligence on the part of the managements of these houses," he said.

      The distribution of credit risks in the international financial system had not been transparent to supervisory authorities and market participants, he said.

      Deutsche Bank has shut down its proprietary credit trading desk in London and is laying off some of the 14-strong team, a source familiar with the matter said on Friday.

      Earlier last month a source close to Deutsche Bank told Reuters the bank was set to ditch its credit relative-value trading strategy used by the London proprietary trading desk after losses of about $135 million.

      The Bottom Line:  I wonder what the noise made by a huge failure would sound like.  We're hearing it now.

      LONDON (Reuters) - "Oil climbed further above $74 on Monday, within sight of its record high, as OPEC kept a lid on output in the run-up to its September 11 ministerial meeting.

      Market participants were keeping watch of a potentially catastrophic Category 5 storm in the Atlantic Ocean. Current projections show it avoiding offshore U.S. oil and gas fields.

      U.S. crude was up 44 cents at $74.48 by 1:33 p.m. The U.S. Labor Day holiday shut the New York trading floor but electronic trade continued as usual.

      London Brent crude was 72 cents up at $73.44.

      OPEC kept oil production restricted in August, a Reuters survey found, suggesting the exporter group is intent on retaining output curbs when it gathers next week in Vienna.

      Consumer nations have been calling for more oil as the price climbs back towards its August 1 all-time high of $78.77. Oil analysts also say OPEC must boost supplies to keep pace with growing demand this winter.

      "...We believe that growing evidence that the oil market is tightening fast is the key force behind the recent push up in prices," said a Barclays Capital report.

      OPEC has repeatedly said shortfalls of refined products are not its problem and the world is amply supplied with crude.

     
      Washington D.C. (Fox) —  "A Pentagon computer network was taken down for more than a week after the Chinese military hacked into it in June, the Financial Times reported Monday.

A computer system serving the office of U.S. Defense Secretary Robert Gates is believed to be the victim of the cyber attack. While the Pentagon would not say who may have orchestrated the plot, a senior official told the Financial Times that the People’s Liberation Army may have been the culprit.

It is not clear how much data was downloaded from the system, but a person with knowledge of the attack told the Financial Times that most of the information was probably “unclassified.”

President George W. Bush is expected to meet with Chinese president Hu Jintao this week before the Apec summit in Australia..."

      MOSCOW (Reuters) - "Moscow is not prepared to bargain over Kosovo or Washington's plans for a missile shield in Europe and the West must understand this, Russian Foreign Minister Sergei Lavrov said on Monday.

      He said Kosovo, a Serbian province pressing for independence, and the U.S. plan to station parts of a missile shield in eastern Europe, represented for Russia "red lines" which must not be crossed.

      "It should be understood that we have red lines, that is where our national security or the world order is threatened," Lavrov said in a speech to students at the Moscow State Institute of International Affairs.

      "Russia is not bargaining and our partners should understand this," he said.

      Lavrov did not say what precisely would be unacceptable to Russia over Kosovo or the missile shield -- or if there was scope for compromise.

      Russia has strongly opposed a Western-backed proposal to set Kosovo on the path to independence from Belgrade. It says it will accept only a solution on the province's status backed by both Serbia and Kosovo's ethnic Albanian majority.

      Washington says its missile defense shield is needed to protect against possible rocket strikes from what it calls "rogue states" such as Iran and North Korea.

      But Russia says the shield is a threat to its own security. It has proposed an alternative scheme that would involve Moscow and Washington sharing radar data to create a collective missile defense system..."

      The Bottom Line:  The most stern word of warning from the Ruskies to date.  They definately sound like they mean business.  Cold War II; yep.

      Mexico (CNN) -- "Hurricane Felix has grown to a "potentially catastrophic" Category 5 storm packing winds up to 165 mph (270 kph), the National Hurricane Center said late Sunday.

      Category 5 is the fiercest class of hurricane, with storm surges greater than 18 feet above normal.

      The second hurricane of the Atlantic season, Felix prompted the Honduran government to issue a hurricane watch.

      As of 11 p.m. ET, Felix was 345 miles southeast of Kingston, Jamaica, and moving westward in the central Caribbean at 21 mph.

      A hurricane watch means that hurricane conditions are possible in the area within about 36 hours.

      The hurricane center called Felix "an extremely powerful" storm but said it "has a very small wind field," with hurricane-force winds currently extending outward up to only 25 miles from the storm's center.

      Although a tropical storm watch remained in effect Sunday night for Jamaica and Grand Cayman Island, all watches and storm warnings for the islands of Aruba, Bonaire and Curacao had been discontinued.

      Felix hit Aruba, Curacao and Bonaire with heavy winds and rain over the weekend. Thousands of tourists took shelter in hotels, The Associated Press reported.

      But Bonaire medical administrator Siomara Albertus said she was happy the storm wasn't as bad as she had anticipated. "Thankfully we didn't get a very bad storm," she told the AP. "My dog slept peacefully through the night."

     
      LOS ANGELES (Fox) —  "With temperatures expected to be well above 100 degrees again Sunday, California officials were appealing to residents to turn down their air conditioners and hold off on using major appliances until after dark.

      The blistering heat wave blanketing California continued to place tremendous strain on the power grid, as some 2,600 homes and businesses in Los Angeles remained without power Saturday after overloaded circuits knocked out power to thousands last week.

      Around the state, dozens of cooling centers have been opened in parks, libraries, senior centers and county fairgrounds.

      The heat wave wasn't the only extreme weather causing havoc in the state. The misery was being compounded by humidity as moisture moves in from the south, causing concerns about sudden thunderstorms. Flash-flood warnings have been issued for many valley, mountain and desert areas. A funnel cloud touched down in the Antelope Valley desert, but no one was hurt.

      The statewide heat wave was expected to bring triple-digit temperatures through the Labor Day weekend.

      Highs were expected to reach 113 in Woodland Hills in the San Fernando Valley and well over 100 in many other valley and desert areas of Southern California.

      At the same time, unstable weather caused by monsoonal moisture from the south prompted concerns of sudden thunderstorms in valleys, mountains and deserts. A flash-flood watch was in effect through Saturday for those areas in San Bernardino, Riverside and San Diego counties.

      In San Bernardino National Forest, a lightening strike from a summer storm was suspected of sparking a wildfire Saturday. Officials said the 150-acre fire, dubbed the "Butler Fire," was burning on steep slopes near Butler Peak at the east end of Big Bear Lake, a reservoir 40 miles northeast of San Bernardino.

      The California Independent System Operator, which oversees the state's power grid, said no major shortages were expected through Monday. Still, it urged customers to continue conserving electricity by setting air conditioning thermostats higher and waiting to use major appliances until after dark.

      In Los Angeles, which has its own power system, blackouts were reported Friday night as demand overloaded some circuits. About 2,600 customers were still without electricity Saturday afternoon, most of them in the Eagle Rock area near downtown.

      There was "tremendous strain" on electrical transmission equipment because nights remain hot and people were running air conditioners around the clock, said Joe Ramallo, a spokesman for the Department of Water and Power.

      "I compare it to running a car at 100 mph for 24 hours," he said.

      The DWP said its power load peaked at 6,107 megawatts at midafternoon Friday, second only to its all-time record peak of 6,165 megawatts set on July 24, 2006.

      Around the state, dozens of cooling centers were open in parks, libraries, senior centers and county fairgrounds. The shelters were sparsely attended on Saturday and hospitals also reported few patients with heat-related problems, said Carol Singleton, a spokeswoman for the state Office of Emergency Services.

      However, she urged people to check on vulnerable neighbors, such as senior citizens, to make sure they were getting enough water.

      "That's really key, to look out for each other during this heat wave," she said..."

      JACKSON HOLE, Wyoming (Reuters) - "The weak housing market could topple the country into a full-blown recession and the Federal Reserve should slash interest rates aggressively, one of the country's most prominent economists warned on Saturday.

      "Lower interest rates now would help," Martin Feldstein, president of the influential National Bureau of Economic Research, told an annual retreat of central bankers and academics, including a number of senior Fed policy-makers.

      Feldstein, who warned of a "multiplier effect" from declining home prices and lower consumer spending, said a cut of as much as 100 basis points might be warranted.

      The symposium, hosted by the Federal Reserve Bank of Kansas City in the Grand Teton mountains, is examining the implications of a meltdown in the U.S. subprime mortgage market for borrowers with risky credit.

      Evidence the problems have spread to Europe and Australia has hit the availability of credit and roiled financial markets worldwide.

      Fed Chairman Ben Bernanke also attended the symposium but left before Feldstein made his remarks.

      In a speech on Friday, Bernanke said the Fed would not rescue investors from self-inflicted losses. But he said it would not stand by and allow innocent people to suffer from a wider slowdown, and would it act -- cutting interest rates -- if it was persuaded by the economic evidence.

      Financial futures indicate a 100 percent likelihood that the Fed will lower its overnight funds rate by a quarter percentage point to 5.0 percent when policy-makers next meet, on September 18.

      The Bottom Line:  Ugly, Ugly, Ugly.

      TEHRAN, Iran (AP) -- "Iran has reached its long-sought goal of running 3,000 centrifuges to enrich uranium for its nuclear program, Iranian President Mahmoud Ahmadinejad announced Sunday in a report on state media.

      The U.N. Security Council had threatened a third round of sanctions against the country if it did not freeze the uranium enrichment program -- which Iran maintains is for peaceful energy purposes, but the U.S. says is to hide a weapons program.

      "The West thought the Iranian nation would give in after just a resolution, but now we have taken another step in the nuclear progress and launched more than 3,000 centrifuge machines, installing a new cascade every week," the state television Web site quoted Ahmadinejad as saying.

      Still, Ahmadinejad's comments seemed at odds with independent assessments of the status of his country's enrichment program.

      As recently as Thursday, a report drawn up by International Atomic Energy Agency chief Mohamed ElBaradei, put the number of centrifuges enriching uranium at closer to 2,000 at its vast underground hall at Natanz.

      The 2,000 figure is an increase of a few hundred of the machines over May, when the IAEA last reported on Iran. Still the rate of expansion is much slower than a few months ago, when Tehran was assembling close to 200 centrifuges every two weeks.

      As well, Iran continued to produce only negligible amounts of nuclear fuel with its centrifuges, far below the level usable for nuclear warheads, the report said.

      "They have the knowledge to proceed much more quickly," said a U.N. official.

      While Iran has denied stalling, the official and others suggested it could have decided to proceed at a slower pace as it increases its cooperation with agency investigators looking at past suspicious activities so as to reduce any sentiment to impose new U.N. sanctions.

      Former U.N. nuclear inspector David Albright and Jacqueline Shire of the Washington-based Institute for Science and International Security said the slowdown could be a combination of both "technical difficulties" and "political considerations."

      "Iran likely has managed to learn how to operate individual centrifuges and cascades adequately. However, it still may be struggling to operate a large number of cascades at the same time in parallel," they wrote in a report e-mailed to The Associated Press.

      MIAMI, Florida (CNN) -- Hurricane Felix may become a major hurricane by Sunday night or early Monday, the National Hurricane Center said on Sunday.

      Packing top winds of 105 mph, the Category 2 Felix churned in the Caribbean just north of the popular vacation destination islands of Bonaire, Aruba and Curacao, the center said.

      A storm must reach Category 3 status, with winds of at least 111 mph, before the hurricane center labels it major.

      In its 11 a.m. ET update, the weather center said Felix was about 50 miles (75 kilometers) north of the island of Aruba and about 555 miles (895 kilometers) southeast of Jamaica's capital, Kingston.

      A hurricane watch was put in effect for those islands, meaning that hurricane conditions, including winds of more than 74 mph, are expected within 36 hours.

      The government of the Cayman Islands has issued a tropical storm watch for Grand Cayman -- meaning that tropical storm conditions are possible within 36 hours.

      The Jamaican government maintained a tropical storm watch.

      The NHC said Felix is expected to dump 2 to 4 inches of rain, possibly as much as 6 inches in isolated areas, over the Netherlands Antilles and parts of northwestern Venezuela and northern Colombia.

      JACKSON HOLE, WY. (Reuters) - "Weakness in the U.S. housing market could trigger an international slide in home prices that depresses the sector for years , a top housing specialist warned central bankers on Friday.

      "The United States, as the premier example of a capitalist economy, has the potential to lead price expectations down in many countries," said Robert Shiller, in a paper presented at the Kansas City Federal Reserve's monetary policy conference in the mountain resort of Jackson Hole, Wyoming.

      "It is not improbable that we will see such large real price declines extending over many years in major cities that have seen large increases," Shiller said.

      Central bankers, economists and academics from around the world have gathered here to discuss the relationship between housing and monetary policy against a backdrop of global financial turmoil. Fears about contagion from troubles in the U.S. subprime mortgage market have hit credit availability and threaten to slow economic growth.

      Shiller, a professor of economics and finance at Yale University, said the dramatic rise in house prices witnessed in a number of advanced economies created serious challenges, and it was very tough to predict what lay ahead.

      "The implications of this boom and its possible reversal in coming years stands as a serious issue for economic policy-makers. It may be hard to understand from past experience what to expect next, since the magnitude of the boom is unprecedented," he said in prepared remarks, released to the media prior to delivery.

      The decline in U.S. house prices picked up speed in the second quarter, falling 3.2 percent on the S&P/Case-Shiller national home price index after a 1.6 percent drop in the previous three months.

      A big part of the problem for policy-makers was the role of psychology in driving up house prices, leading to a speculative bubble that was much more prone to a swift correction impacting a number of otherwise unconnected housing markets.

      The Bottom Line:  How deep does this rabbit hole go?

      MOSCOW (Reuters) - "The Russian bear is showing its claws again, but how sharp are they?

      President Vladimir Putin has rattled the West with a wave of dramatic military announcements redolent of the Cold War.

      Long-range Russian bombers capable of carrying nuclear weapons are back on flying patrol around the world, prompting NATO fighters to scramble in response.

      New long-range missiles have been test-fired, one streaking from one end of Russia to the other in less than half an hour, according to official accounts.

      And the former Red Army is re-equipping itself, with defense spending growing 20-40 percent a year since Putin came to power in 2000, albeit from a low base after the ravages of the 1990s.

Should be West be worried ?

      "Overall, Russia's military capability is well below 50 percent of what the Soviet Union had," Peter Felstead, editor of Jane's defense Weekly, said in a telephone interview.

      "The bombers resuming flights was more a prestige thing and a diplomatic signal than real military posturing."

      Congo (BBC) - "More than 100 people have died because of a fever epidemic in the centre of the Democratic Republic of the Congo, health officials say.

       Many of the victims are people who have been in contact with the deceased, including medical staff, and who lack equipment to deal with the illness.

       The latest victim was a nurse at a local hospital. She died on Thursday after taking care of infected patients.

       Health officials say the medical staff had no masks and this put them at risk.

       Speaking from Kananga, the capital of West Kasai region, Dr Jean-Constantin Kanow said the illness had first started three months ago, when chickens and pigs started dying - but now people were also affected.

       The epidemic was affecting four villages: Kampungu, Makonono, Kaluamba and Mombo.

Funeral rites

       Traditionally, people in DR Congo wash dead bodies by hand.

       The doctor said that such funeral rites seemed to favour the transmission of the disease.

       He said many people who attended the recent funeral of a local chief had also died of fever and dehydration.

       The World Health Organisation has sent a team to take blood samples for analysis at laboratories specialising in haemorrhagic fever.

       DR Congo's last major Ebola outbreak killed more than 200 people in 1995 in Kikwit, about 400km (249 miles) west of the current outbreak.