By Mohammed Abbas

  BENGHAZI, Libya (Reuters) - Libyan leader Muammar Gaddafi's forces pushed into the rebel-held city of Benghazi on Saturday, defying world demands for an immediate ceasefire and forcing rebels to retreat.

  The advance into Libya's second city of 670,000 people appeared to be an attempt to pre-empt Western military intervention which diplomats say will come only after an international meeting on Paris later on Saturday.

  A Libyan rebel spokesman said Gaddafi's forces had entered Benghazi while a Reuters witness saw a jet circling over the city shot down and at least one separate explosion near the rebel movement's headquarters in the city.

  " They have entered Benghazi from the west. Where are the Western powers? They said they could strike within hours," rebel military spokesman Khalid al-Sayeh told Reuters.

  Gaddafi said Western powers had no right to intervene.

  " This is injustice, this is clear aggression," government spokesman Mussa Ibrahim quoted Gaddafi as saying in a letter to France, Britain and the United Nations. " You will regret it if you take a step towards interfering in our internal affairs."

  The Libyan government blamed the rebels, who it says are members of al Qaeda, for breaking the ceasefire around Benghazi.

  As explosions shook Benghazi, rebel fighters said they were being forced to retreat from the outskirts of the city, but later claimed victory after holding back the advance, as they have in other towns they eventually lost to government troops.

  " We revolutionaries have taken control of four tanks inside Benghazi. Rebel forces have pushed Gaddafi's forces out of Benghazi," said Nasr al-Kikili, a lawyer who works for the rebel media centre in Benghazi, as crowds celebrated by firing guns in the air and parading on top of a tank.

  Earlier, an unidentified fighter jet was shot down over Benghazi.

  " I saw the plane circle around, come out of the clouds, head towards an apparent target, and then it was hit and went straight down in flames and a huge billow of black smoke went up," Reuters correspondent Angus MacSwan said.

  " It seems it was attacking the Benghazi military barracks."

  REBEL CITY DOUBTS WEST

  Benghazi residents were angry at the West's delay. " Europe and America have sold us out. We have been hearing bombing all night, and they have been doing nothing. Why? we have no one to help us but God," said Hassan Marouf, 58, standing outside the door of his house in Benghazi.

  " Us men are not afraid to die, but I have women and children inside and they are crying and in tears. Help us."

  The French ambassador to the United Nations said he thought Western powers would not take military action till after the Paris meeting, attended by U.S. Secretary of State Hillary Clinton and Arab leaders.

  " Everything is ready but the decision is now a political one," said a French government source. " It's clear we have to move quickly."

  Clinton, British Prime Minister David Cameron and French President Nicolas Sarkozy met each other ahead of the wider talks, a move which could indicate Western military action may start slightly sooner.

  Ambassadors from the 28 NATO states adjourned a meeting in Brussels on Saturday to discuss possible NATO involvement in policing Libyan skies till after the talks in Paris.

  Meanwhile, rebels said Libyan jets had bombed the road to Benghazi airport and elsewhere on the outskirts.

  " They have just entered Benghazi and they are flanking us with tanks, missiles and mortars," Fathi Abidi, a rebel supporter who works on logistics, said at the western entrance to the city where about three quarters of million people live.

  He pointed to a black smoke plume on the city's boundaries.

  Inside the city, residents set up make-shift barricades with furniture, benches, road signs and even a barbecue in one case at intervals along main streets. Each barricade was manned by half a dozen rebels, but only about half of those were armed.

  Elsewhere in the city, rebels reported skirmishes and strikes by Gaddafi forces.

  " Fighter jets bombed the road to the airport and there's been an air strike on the Abu Hadi district on the outskirts," Mohammed Dwo, a hospital worker and a rebel supporter, told Reuters.

  " ATTACKS MUST STOP"

  Within hours of President Barack Obama saying the terms of a U.N. resolution meant to end fighting in Libya were non-negotiable, his U.N. envoy Susan Rice, asked by CNN whether Gaddafi was in violation of these terms, said: " Yes, he is."

  Obama made clear any military action would aim to change conditions across Libya -- rather than just in the rebel-held east -- by calling on Gaddafi's forces to pull back from the western cities of Zawiyah and Misrata as well as from the east.

  " All attacks against civilians must stop," Obama said, a day after the U.N. Security Council passed a resolution authorising international military intervention.

  " Gaddafi must stop his troops from advancing on Benghazi, pull them back from Ajdabiya, Misrata and Zawiyah, and establish water, electricity and gas supplies to all areas. Humanitarian assistance must be allowed to reach the people of Libya ...

  " Let me be clear, these terms are not negotiable... If Gaddafi does not comply ... the resolution will be enforced through military action."

  Libyan government forces fired artillery shells into the rebel-held city of Misrata early and pro-Gaddafi snipers killed two people in the city on Saturday, and water supplies were still cut off, residents said.

  (Reporting by Mohammed Abbas and Angus MacSwan in Benghazi, Tom Perry in Cairo, Maria Golovnina and Michael Georgy in Tripoli, Hamid Ould Ahmed and Christian Lowe in Algiers Writing by Jon Hemming Editing by Giles Elgood)

* G7 launches first coordinated intervention since 2000

  * Yen dives in Asia but decline eases in U.S., Europe

  * Traders bracing for extended intervention campaign (Adds IMM data, comment updates prices)

  By Wanfeng Zhou

  NEW YORK, March 18 (Reuters) - The Group of Seven on Friday launched its first coordinated currency market intervention since 2000 and pledged to do more if needed to rein in a soaring yen, but investors betting on a sustained decline in the Japanese currency could be disappointed.

  Both the Federal Reserve and Bank of Canada said they had sold yen, bolstering European and Japanese efforts to weaken the currency and calm markets after Japan's devastating earthquake, tsunami and unfolding nuclear crisis.

  The dollar rose nearly 4 percent to 82.00 yen on trading platform EBS < JPY=EBS> in European trade, but hedge funds and other speculative accounts tested official resolve by buying into the yen sell-off. The dollar last traded at 80.58 yen, though still up 2.4 percent on the day.

  " We still think that there will be appreciation pressure on the yen," said David Mann, head of research, Americas, at Standard Chartered in New York. " I would expect strong defense of 80. We can't rule out testing below that and then seeing intervention push it back higher again."

  C.J. Gavsie, director of FX sales at BMO Capital Markets in Toronto, said since North American trading hours began, there had been " straightforward pressure to be buying yen and selling dollars, which is exactly the opposite" of what central banks were trying to achieve. As a result, the dollar quickly retreated below 81 yen.

  Tokyo market estimates had the Bank of Japan selling some 2 trillion yen ($25 billion) over the course of the day. Nomura Securities estimated the European Central Bank intervened to the tune of about 5 billion euros ($7.1 billion).

  The Bank of Canada was estimated to have spent around C$100 million to C$150 million ($101.5 million to $152.3 million), according to BMO Capital.

  Expectations that Japanese retail and corporate investors would start bringing money home for rebuilding after the disaster drove the yen up this week. So did heavy selling by margin traders who were forced to unwind positions funded with cheaply borrowed yen as risk aversion spiked.

  While official yen-selling could continue for weeks, analysts emphasized that the main goal of intervention is to reduce volatility but not necessarily to weaken a currency.

  Central banks " want to make sure the speculative element is at a minimum," said David Watt, senior currency strategist at RBC Capital Markets in Toronto. " And they want to make sure that operationally, the market will always have another side."

  YEN LONGS TO FALL

  Net yen long positions rose to 30,230 contracts from last week's 16,656 contracts, data from the Commodity Futures Trading Commission showed on Friday. Analysts expect yen longs to drop after Friday's intervention. For more, see [ID:nN18138930]

  Technical analysts noted upside targets around Monday's peak of 82.45, followed by the 100-day moving average of 82.61 and 83.30, the intraday high from last Friday. Nomura currency strategists said the 82.70-83.00 range would be an " ideal level" for computer-driven model accounts to buy dollars.

  Giuseppe Manieri, principal of Premium Currency Advisors, said Friday's closing level is important. " If it is on the higher side of the weekly bar," it might mean a reversal.

  " For now on the long-term side nothing has changed, the trend is still heavily downwards," he said. Zurich-based Premium Currency Advisors has $875 million under management.

  Paresh Upadhyaya, strategist at BofA Merrill Lynch, said it may require a move toward higher interest rates in the United States to sustain downward yen momentum.

  " For intervention to be successful, it needs to be followed by policy action," he said. " If the Fed starts openly debating exiting quantitative easing, that would move interest rate differentials sharply in favor of the dollar against the yen."

  CURRENCY OPTIONS

  As the dollar rebounded, it became cheaper to hedge against further yen gains. Implied volatility on one-month dollar/yen options stood at 13.15 percent, down from 21 percent on Thursday.

  In currency ETF options, volume on the CurrencyShares Japanese Yen Trust < FXY.P> was four times the average daily turnover with about 15,000 puts and 5,811 calls traded, according to options analytics firm Trade Alert.

  Options on the Proshares UltraShort Yen Fund < YCS.P> turned busy for a second straight session. Overall volume of the fund was 6.6 times the average daily levels with about 13,000 calls and 430 puts traded on Friday, according to Trade Alert.

  The euro hit a session high around 115.56 yen < EURJPY=R> before easing to 114.36, up about 3.4 percent.

  The euro rose to a four-month high against the dollar of around $1.4185 < EUR=EBS> after the intervention in euro/yen. (Additional reporting by Steven C. Johnson and Gertrude Chavez-Dreyfuss in New York, Doris Frankel in Chicago, Claire Sibonney and Ka Yan Ng in Toronto, and Martin de Sa'Pinto in Zurich editing by Dan Grebler)

MANAMA (Reuters) - Bahrain reduced curfew times by four hours on Saturday and said ministries and schools would return to normal working hours after a crackdown on mainly Shi'ite protesters raised tensions in the oil-producing region.

  Bahrain has arrested at least seven opposition leaders and driven pro-democracy demonstrators from the streets after weeks of protests that prompted its king to declare martial law and draw in troops from fellow Sunni-ruled Saudi Arabia.

  The unrest brought Bahrain's economy to a virtual standstill and schools and universities were closed to prevent sectarian clashes that had begun to erupt daily.

  Earlier this week, Bahrain imposed a curfew on large swathes of the capital Manama from 4 p.m. to 4 a.m., later reducing those hours in some areas.

  The curfew now runs from 8 p.m. to 4 a.m. from Seef Mall, through the Pearl roundabout and the financial district to the diplomatic area.

  " The education ministry calls on all the employees of the ministry, schools, nurseries and higher education institutes, both public and private, ... to return to work starting from Sunday March 20," it said in a statement on Bahrain News Agency.

  It said students would be given a date soon to return to schools and universities.

By Robert Gibbons

  NEW YORK (Reuters) - Oil prices slipped on Friday after two days of gains, as Libya declared a ceasefire, easing for the moment the threat of a Western air attack that could escalate the conflict and further damage oil facilities.

  Oil closed out a volatile week with yet another day of below-average trading activity, as dealers remained reluctant to place big bets in the face of Japan's ongoing nuclear crisis and doubts that Muammar Gaddafi's truce would bring any swift resolution to the month-long rebellion.

  Another increase in China's rate reserve requirements and continued unrest in countries bordering top oil exporter Saudi Arabia further clouded the picture, keeping implied volatility levels near their highest since June.

  Brent crude futures for May delivery fell 97 cents to settle at $113.93 a barrel, falling sharply from an earlier $117.29 peak after Libya's foreign minister declared " an immediate stop to all military operations."

  Despite Friday's price drop, Brent crude ended the week up nearly 1 percent, after Japan's earthquake a week ago pressured prices.

  U.S. crude futures for April delivery fell 35 cents to settle at $101.07 a barrel, off their high of $103.66, but finding support just above the $100-a-barrel level. U.S crude dipped only 9 cents from the prior week.

  U.S. trading volume just above 600,000 lots, near or below that level for the third time this week, underscored the deep uncertainty facing the market. Traders have liquidated around 5 percent of their positions since last Friday, when open interest in U.S. crude reached a record 1.6 million lots.

  Speculators cut their net-long positions in U.S. crude futures in the week to March 15, easing from a record high the previous Tuesday, the U.S. Commodities Futures Trading Commission said.

  Prices partly pared losses after President Barack Obama warned Gaddafi to comply with U.N. demands for a no-fly zone or else face consequences that include military action, echoing comments from France and Britain that came amid reports of continued attacks on rebel-held towns..

  " This does not mean we are near a resolution of the situation in Libya. We may be facing the possibility of an entrenched status quo between pro- and anti-Gaddafi groups," said Harry Tchilinguirian, an analyst at BNP Paribas.

  " This only maintains the uncertainty in terms of when we will eventually have a full resumption of production in Libya."

  VOLATILE MIDDLE EAST

  While Libya's conflict pushed markets around, unrest in the Middle East also provided uncertainty.

  Yemen's president declared a state of emergency after at least 25 protesters were killed at an anti-government rally.

  In Syria, a violent crackdown killed at least three demonstrators on Friday.

  A crackdown by authorities in Bahrain against Shi'ite protesters demanding reform from the Sunni monarchy drew criticism from the United States and Iran.

  Sunni-ruled Saudi Arabia, OPEC's top oil exporter, sent troops into Bahrain this week along with other forces from the Gulf Cooperation Council.

  Eyeing the region's growing unrest, Saudi Arabia's King Abdullah announced on Friday $93 billion in handouts and boosted its security apparatus, but he made no mention of a long-awaited cabinet reshuffle.

  Implied volatility, a gauge of how much prices are likely to fluctuate based on options trading, spiked as the Libyan conflict erupted a month ago, and has remained elevated since then. At-the-money volatility stood at just above 40 percent on Thursday, just off a peak 42.7 a week ago.

  JAPAN'S NUCLEAR CRISIS

  Oil prices came under pressure earlier in he day after China's central bank said it would raise lenders' required reserves, another move to rein in inflation that could dampen oil demand.

  Japan's earthquake and tsunami a week ago, and the resulting nuclear reactor crisis, caused oil prices to ease some, after unrest in the Middle East and North Africa drove oil prices to a 2-1/2-year highs, with Brent nearing $120 last month.

  Risk-averse sentiment increased as Japan struggled to prevent catastrophic radiation releases from its quake-damaged nuclear reactors, even as oil investors tried to assess the short- and long-term impact the disasters will have on oil demand and economic activity.

BEIJING, March 19 (Reuters) - Nouriel Roubini, best known for predicting the U.S. housing meltdown, said he expects Japan's central bank to ease monetary policy further by buying more government debt in the wake of the earthquake.

  Roubini, one of Wall Street's most closely followed economists, said the Bank of Japan (BoJ) would have to set aside more money to buy bonds from the government to help pay for Japan's reconstruction works.

  The BoJ's future purchases of government bonds, also known as quantitative easing (QE), are likely to be larger than the amount that was unveiled this week, Roubini said on the sidelines of a conference in Beijing.

  " They have already done QE I, QE II, now there will be a third round, and the third round might be larger than the smaller amount of quantitative easing that they have done so far," he told Reuters.

  The BoJ doubled the cash it sets aside for buying assets such as government bonds on Monday to 10 trillion yen ($124.1 billion) in an emergency move to shore up confidence in crisis-stricken Japan.

  That was the second round of quantitative easing unveiled by the BoJ since October, when it first set aside a pool of 5 trillion yen to buy assets to partly rein in the yen.

  " They need their massive fiscal stimulus for rebuilding, but they are starting with a very large public deficit and with a very large stock of debt," Roubini said.

  " Once their deficit becomes much larger, and they need it to build parts of the country that are damaged, then the BoJ is going to be starting another round of easing - QE III," he said.

  Analysts have estimated that the earthquake and nuclear emergency could cost Japan up to $200 billion, or about 4 percent of its gross domestic product.

  Such a bill would strain Japan's already fragile fiscal health. Its government is one of the world's most indebted. The public debt is twice the size of the $5.3 trillion economy, and the fiscal deficit is about 9 percent of GDP.

  But Roubini said massive reconstruction spending could lift Japan's economy later this year, jolting it from a slump in production in the near term caused by factory shutdowns in the aftermath of the quake.

  That means the world's third-largest economy could escape a recession, he said.

  " If they start the reconstruction fast enough, the policy stimulus might lead to a recovery of growth," Roubini said. " There are downside risks to Japanese growth, but I would not necessarily predict another real recession for now." (Reporting by Koh Gui Qing, editing by Jane Baird)

NEW YORK, March 18 (Reuters) - U.S. stocks rallied on Friday after a week of volatility, but light trading volume suggested investors are still reluctant to make big bets due to turmoil in the Middle East and Japan's nuclear crisis.

  The Dow Jones industrial average was up 83.93 points, or 0.71 percent, at 11,858.52, according to the latest available figures. The Standard & Poor's 500 Index was up 5.49 points, or 0.43 percent, at 1,279.21. The Nasdaq Composite Index was up 7.62 points, or 0.29 percent, at 2,643.67.

  For the week, the Dow was down 1.5 percent, the S& P fell 1.9 percent and the Nasdaq lost 2.6 percent. (Reporting by Angela Moon, Editing by Kenneth Barry)

BERLIN (Reuters) - German Chancellor Angela Merkel called on Saturday for the European Union to set common safety standards for nuclear power stations following Japan's crisis.

  Merkel, who ordered the closure this week of seven old nuclear plants in Germany, said she would raise the issue at an EU summit on March 24-25.

  In a podcast on her website, Merkel noted that the EU had set common standards for many things right down to the size of apples and shape of bananas.

  " We could also talk about uniform safety standards for all European nuclear power stations because everyone in Europe would be affected to the same extent by an accident at a nuclear power station in Europe," she said.

  Environment Minister Norbert Roettgen is considering drastic safety measures to be implemented at German nuclear plants which could make them commercially unviable, sources in Merkel's coalition said on Friday. [nLDE72H16G]

  Roettgen discussed with coalition partners a ministry paper offering " preliminary thoughts" on possible standards that few of Germany's 17 nuclear plants currently fulfil, they said.

  Merkel praised European Energy Commissioner Guenther Oettinger for summoning nuclear power plant operators and regulators to discuss safety after last week's earthquake and tsunami which caused the crisis at Japan's Fukushima complex.

  " We have to decide what we can learn from this catastrophe," said Merkel, who suspended this week her nuclear policy which the coalition agreed only last autumn.

  All seven plants, which began operating before 1980, will undergo safety checks during the three month moratorium. The opposition has accused Merkel of staging the policy U-turn to avoid defeat in a series of regional elections this month.

  (Writing by David Stamp)

* Funds seen adding long positions in grains

  * Japan crisis stabilizing one week after quake

  * Corn rebounds, up nearly 4 percent on week (Updates with closing prices, analyst comments)

  By Suzanne Cosgrove

  CHICAGO, March 18 (Reuters) - U.S. grain futures soared on Friday as investors regained their appetite for risk, with corn posting a two-day gain of nearly 11 percent as concerns eased about the market impact of the crisis in Japan.

  On the week, nearby U.S. corn futures ended 3.7 percent higher, soybeans up 2.7 percent and wheat up 4.0 percent.

  Funds helped bolster bullish momentum, buying an estimated 30,000 corn contracts on Friday, in addition to 8,000 soybean futures and 4,000 wheat contacts, sources at the Chicago Board of Trade said.

  Data released after the close underscored that shift back into grains after a slide that began even before Japan suffered a massive earthquake and tsunami one week ago.

  The Commodity Futures Trading Commission's Commitments of Traders report for the week to March 15 showed speculators had cut their net long positions in CBOT corn futures and options to their lowest since Aug. 10 just before this week's rebound.

  " Worry about Japan eased a bit," said Mark Schultz, chief analyst at Northstar Commodity Investments Co in Minneapolis. " Although we're not over the hump," he added, referring to Japan's nuclear crisis and recovery from the quake.

  " In the meantime, end-users were able to secure corn to turn everything they feed it to profitable," Schultz added. For example, if end-users secured corn on Tuesday or Wednesday, they were able to make money on their cattle, hogs, or even poultry, he said.

  In addition, worries over potential loss of demand from Japan, the No. 1 buyer of corn, dissipated amid talk on Thursday that China may have been buying corn on the price setback, Schultz said.

  May wheat ended 12-3/4 cents a bushel higher at $7.23, and May corn up 37 cents at $6.83-1/2 after rising by the 45-cent expanded daily trading limit. May soybeans rose 27-1/4 cents to $13.62-1/2.

  Traders said sentiment had improved after the announcement of a ceasefire in Libya and on a stabilization of the situation in Japan, which had depressed grain markets amid concerns over the quake's impact on demand.

  " Japan has not canceled any orders for corn," while ports and feedmills in the south of the country were making up for damaged facilities in the north, said Richard Feltes, vice president of research for R.J. O'Brien.

  Feltes said market participants had been focusing on fundamentals as the U.S. spring season kicks off next week, with the Upper Great Plains slated for more unwanted snow.

  " It brings the market back to square one," which is that stocks are tight and good weather is needed, he said.

  Chicago Board of Trade corn traded up by the expanded limit of 45 cents per bushel after futures rose by the 30-cent limit on Thursday amid widespread rumors that China had bought up to 500,000 tonnes of corn from the United States.

  Those rumors remained in the market on Friday, but sources in the grain trade were unable to confirm any deals.

  Early gains were extended following the release of a private forecast for acreage, traders said.

  INFORMA ESTIMATES LIFT SOYBEANS

  Traders said Informa's estimates were particularly bullish for soybeans. Informa lowered its 2011 U.S. planted acreage forecast to 75.269 million from the 76.654 million seen in January.

  The gains in soybeans were led by new-crop November, which reflects that the plantings outlook had a bigger impact on new-crop contracts.

  Soybeans earlier found support from news of a nationwide trucker strike in Argentina planned for Monday, a time when harvesting of corn and beans is under way.

  The Informa corn acreage forecast, which trade sources pegged at 91.758 million, topped the forecaster's January view but was still below the U.S. Agriculture Department's prediction of 92 million acres. (Editing by Dale Hudson)

NEW YORK, March 18 (Reuters) - Intervention by the European Central Bank to weaken the yen was estimated to be around 5 billion euros, said James Pearson, global head of FX trading at Nomura Securities International in London.

  Pearson told a conference call on Friday that the figure was his rough estimate.

  ECB intervention was done through purchases of the euro versus the yen. As a result, euro/yen rose to 115.50 from 115 in fairly short order.

  The euro was last at 114.50 yen, up 3.5 percent on the day. (Reporting by Gertrude Chavez-Dreyfuss Editing by James Dalgleish)

By Maria Golovnina and Michael Georgy

  TRIPOLI (Reuters) - Libya said on Friday it would halt all military operations to protect its civilians and comply with a U.N. resolution, backtracking from a threat to root out rebels after Western powers warned of punitive action.

  The United Nations authorised a no-fly zone and attacks on forces loyal to Muammar Gaddafi, who had hours earlier vowed to crush Libya's revolt with " no mercy, no pity" .

  Foreign Minister Moussa Koussa said Libya was ready to open dialogue with all parties, without specifying who. He also said the no-fly zone would increase the suffering of Libyans and said authorising military action was " unacceptable" .

  Rebels, based in Benghazi, have said the only talks they will have is about how Gaddafi ends his 41 years in power. Ordinary Libyans in the east said they were sceptical about Koussa's remarks but said it suggested Gaddafi could be falling.

  In rapid about turn from the Libyan leader's threat on Thursday night, Koussa told reporters in Tripoli: " We decided on an immediate cease-fire and on an immediate stop to all military operations."

  France, which has been at the forefront of calls for a no-fly zone and military action, said it remained cautious after Koussa's comments, saying the threat on the ground in Libya had not been lifted.

  OFFER OF DIALOGUE

  " (Libya) takes great interest in protecting civilians," Koussa said, after Gaddafi's forces used warplanes, tanks and gunboats to retake territory rebels had controlled in the east and pummelled towns that rebelled in the west with heavy arms.

  Koussa also said Libya was committed " to offer humanitarian aid to (Libyans) and to respecting all human rights and abiding by international and humanitarian laws."

  Libya was " obliged to protect all foreigners and all of their assets," he said, adding Libya was acting in line with the U.N. Security Council resolution.

  Koussa also held out the offer of talks.

  Libya would " comply with the resolution in protecting civilians and the territorial unity of Libya, and therefore the country will open all channels of dialogue with all sides interested in the territorial unity of Libya," he said.

  Gaddafi had offered talks with rebels earlier in the conflict, but the rebels rejected talks that could leave him in power.

  " We express our deep regret regarding the resolution that included severe measures against the Libyans, including the no-fly zone which includes civilian flights, which will increase the suffering of the Libyan people," Koussa said, adding that civilian flights should have been exempted.

  " Libya also finds that it is very strange and unacceptable that the Security Council allows in its resolution for the use of military force and there are signs that this might indeed take place," he said, adding that this violated the U.N. charter and Libya's sovereignty.

  The U.N. Security Council passed a resolution endorsing a no-fly zone and authorised " all necessary measures" -- code for military action -- to protect civilians against Gaddafi's forces. (Additional reporting by Sherine El Madany and Marwa Awad in Cairo Writing by Edmund Blair Editing by Peter Graff)

(Refiles to add bullets)

  * Hang Seng up 0.07 pct on day, down 6 pct for week

  * Shanghai falls 0.9 pct for the week, up 0.3 pct Friday

  * Japan crisis keeps investors cautious

 

  By Yixin Chen and Clement Tan

  HONG KONG/SHANGHAI, March 18 (Reuters) - Hong Kong and China stocks closed marginally higher in thin Friday trade, as investors continued to worry about Japan and largely shrugged off a global move to help Tokyo restrain a soaring yen.

  The benchmark Hang Seng Index ended up 0.07 percent at 22,300.23 points, but 6 percent lower on the week, with China property issues leading gainers.

  China's main stock index, the Shanghai Composite closed up 0.3 percent at 2,906.9 points on Friday after a 1.1 percent fall on Thursday. For the week, that index fell 0.9 percent.

  Early Friday by Asian time, the Group of Seven rich nations announced joint intervention to keep the yen from being too strong. That helped the Nikkei gain 2.7 percent. But the Hang Seng's highest point Friday was only 0.75 up, and in the afternoon shares slipped as concern remained about Japan's nuclear crisis in the wake of the March 11 earthquake and tsunami.

 

  PROPERTY COUNTERS LEAD HK GAINS

  In Hong Kong, China Overseas Land & Investment Ltd , the country's largest developer by market value, climbed 6.5 percent, nearing a five-week high after announcing a strong net profit for the second half of 2010 and unveiling a plan to increase spending despite property tightening measures in China.

  Analysts said its strong earnings report gave fresh trading impetus after two recent blows, from Hong Kong banks beginning to raise mortgage rates and the Japan's earthquake.

  Other property counters also rose, including China Resources Land Ltd , up 6.46 percent, and Henderson Land Development Co Ltd , up 4.06 percent after 2010 net profit rose to HK$15.82 billion from HK$15.47 billion.

  But the Hang Seng Index failed to break its 200-day moving average of about 22,300 for a second consecutive day after briefly trading above that level at midday.

  Traders said a closing above this level and good trading volume are needed to encourage buyers to return to the market. But they expect the benchmark to hover between 22,000 and 22,800 until the Japan nuclear situation stablises.

 

  DOMESTIC CONCERNS CURTAIL SHANGHAI GAINS

  Turnover fell to its lowest level on the Shanghai Composite Index since Feb. 14 as investors remained wary of bold moves.

  Analysts said the most important influence on the index remains China's next step on tightening monetary policy. Japan's crisis sparked worries in some sectors but would not change the index's trend in the longer term, they said.

  " Overall, there are uncertainties and speculation in the market, not only about domestic monetary policy but the global situation," said Wen Lijun, an analyst at Nanjing Securities. " That makes investors very cautious."

  Salt producers, the biggest gainer on Thursday, underperformed after Chinese authorities told shoppers to stop panic buying of salt, which began after baseless rumours that the iodine in it can stop radiation sickness.

  Yunnan Salt & Chemical Industry Co tumbled 7.6 percent after jumping by the 10 percent daily limit on Thursday, while Inner Mongolia Lantai Industrial on Friday dropped its 10 percent daily limit. (Editing by Richard Borsuk)