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Rising Prices Dominate Osaka Oil Conference - 2002-09-23

The world's major oil producers and importers wrap up a conference in Japan with Asian nations saying they may stockpile emergency oil reserves in case fuel supplies are disrupted by a possible war against Iraq. Also in Japan, government officials pledge to end the country's deflation and DaimlerChrysler makes heavy investments in South Korean and Japanese auto manufacturers.

The Global Energy Forum met in Osaka, Japan, with rising oil prices dominating discussions.

The 10-member Association of Southeast Asian Nations (ASEAN), together with China, South Korea and Japan, discussed the possibility of creating emergency reserves in the region to lessen their vulnerability to a price spike.

The threat of a U.S. military strike against Iraq has been driving up oil prices and import-dependent Asia is worried that a war could disrupt supplies.

No decisions have been made, but several plans are under consideration, including using the vast Philippines Subic Bay port area to stockpile oil.

Most industrialized nations have emergency reserves.

Also in Japan, the Council on Economic and Fiscal Policy chaired by the Japanese Prime Minister met last Friday and urged government to stabilize the nation's financial system, by pushing through an emergency measures to solve the problem of non-performing loans at debt-strapped Japanese banks.

Heizo Takenaka, State Minister for Economic and Fiscal Policy said steps to reduce bad loans are meant to reassure investors. The value of bad loans has risen quickly over the past six months and is estimated to be over $350 billion.

The Bank of Japan unveiled a plan on Wednesday to help Japanese banks by buying some of their massive shareholdings, which have fallen sharply in value.

DaimlerChrysler, the world's largest truck maker, will pump more than a billion dollars into two major Asian truck and bus manufacturers. Under an arrangement announced on Friday, DaimlerChrysler will take 40-50 percent stakes in the commercial vehicle businesses of both Mitsubishi and Hyundai Motors.

The automaker also is talking with Chinese vehicle maker First Automotive Works about building trucks at its plants.

The company hopes to capitalize on Asia's fast-growing market for commercial vehicles, which is projected to account for more than half of the world market during the next decade.