ANTIQUES SHOPS

But cordial relations could grow strained later this year when Iraq vaults past Iran to become OPEC's second biggest producer after Saudi Arabia.

A bold oil expansion programme has already pushed Baghdad to 3 million barrels per day (bpd) - a level last pumped before Iraq invaded Kuwait in 1990 - and just a touch below Iran, where output has sunk to 20-year lows because of Western sanctions.

Size matters in the Organization of the Petroleum Exporting Countries, where high production and reserves mean influence. Baghdad and Tehran sparred over OPEC quotas during the 1980s, while they fought each other in an eight-year war.

But relations have warmed since the overthrow of Saddam Hussein and the Shi'ite-ruled neighbours are now firmly aligned as OPEC price hawks in the same camp as Venezuela and Algeria.

That pits them against the Gulf Arab price moderates in OPEC - Saudi Arabia, Kuwait and the United Arab Emirates.

"This is a sign of the times," said Raad Alkadiri of Washington consultancy PFC Energy of Iran and Iraq. "There's been cooperation between them on oil matters for years, although they haven't been lined up together in OPEC,"

A mutual need for oil above $110 a barrel to balance their budgets is expected to prompt Iran and Iraq to call for Saudi Arabia, pumping its highest in decades, to cut back when producers meet in Vienna on Thursday.

Oil has fallen $30 since March to below $100 as oil stocks build and the economy wobbles. That falls short of the $100-$120 range that Iraqi Oil Minister and current OPEC President Abdul Kareem Luaibi says is reasonable.

"In terms of politics, it makes total sense. Everything Iraq does is driven by its internal crisis and it needs Iran's support. If Tehran asks for Baghdad's help, Iraq will deliver," said Alkadiri.

As internal foes test his survival skills, Iraqi Prime Minister Nuri al-Maliki's OPEC policy instructions to his oil minister are being driven by domestic politics.

And with its ally Syria on the brink of civil war and under Western sanctions for its nuclear programme, Iran wants to avoid instability in Iraq and is using its influence to thwart efforts to unseat Maliki.

So when Iran's Oil Minister Rostam Qasemi visited Maliki in Baghdad last week, Maliki ordered the oil ministry to adopt a unified position with Iran on OPEC production levels, say Iraqi oil sources.

That will mean Iraqi support for Iran at OPEC this week in calling for Saudi Arabia to rein in output to support prices.

IRAN, IRAQ WANT SAUDI TO CUT

Its output stymied by Western sanctions, Iran says lofty production from Saudi Arabia and its Gulf Arab allies Kuwait and the United Arab Emirates has caused prices to fall.

Tehran will be a leading voice among those calling on OPEC to cut supply back to the 30 million barrels per day ceiling agreed in December, well below current output of 31.6 million. Saudi Arabia accounts for 10 million bpd of that.

Iraq agrees that supply is too high. There is scope for the pair to build an alliance to compete with Gulf Arab producers long-accustomed to getting their way in OPEC. Iran and Iraq combined with others in OPEC a year ago when the Gulf Arabs failed to get backing to raise output.

Venezuela and Algeria, also traditional price hawks, will support calls for Saudi to cut back at this week's OPEC meeting.

But cooperation between Iraq and Iran has it limits. Rivalry is already evident in the race for OPEC's secretary-general post, where both - along with Saudi Arabia and Ecuador - are fielding contenders.

More of a threat, though, is Iraq's growing production. In April, Iraq exported more crude than in any month since it invaded Kuwait in 1990 - helping to offset the loss of supply from Iran because of sanctions.

Iraqi oil growth started in earnest in 2010, after Baghdad secured a series of service contracts with companies such as BP, Exxon Mobil, Eni and Royal Dutch Shell.

Since then production, held back by decades of wars and sanctions, has risen 600,000 bpd to 3 million bpd. Exports to world markets are now running at 2.4 to 2.5 million bpd - easily overtaking Iran's sales of around 1.6 million bpd.

By the end of the year, production too should be outpacing Iran's, down this year from 3.5 million to 3.1 million bpd, threatening to erode Tehran's role as an oil power.

"It will be an historic development that will cause friction," said Mehdi Varzi, a former official of the National Iranian Oil Co.

"Volume matters in OPEC and Iran's star will be on the decline unless measures are taken to reverse the decline in Iranian oil production," said Varzi, who now runs an energy consultancy in the UK.

IRAQ 4 MBPD BY 2014?

Iraq's oil expansion, still in its infancy, has elicited varying degrees of scorn and concern from neighbouring OPEC giants.

Western and Iraqi geologists say Iraq has enough oil in the ground to produce to its target of 12 million bpd, but infrastructure bottlenecks, red tape and a lumbering bureaucracy make that impossible by a contractual deadline of 2017.

Production of 6 million bpd - enough to put Iraq a long way ahead of all but Saudi Arabia in OPEC - could be reached by the end of the decade, some say.

"It's one issue that Saudi Arabia and Iran can agree on: Iraq's production should never get too high," says a former Iraqi oil official.

As if to prove that point - following the success of its licensing rounds, Iraq raised its estimated oil reserves to 143.1 billion barrels. A week later, Iran trumped it with a new figure of 150.31 billion barrels.

At some stage, Iraq will need to negotiate a sizable OPEC quota to reflect its potential, although Luaibi said it was not a subject for discussion yet. "Now the parameters have all changed," he said.

The quota debate will draw in Iran, which before the 1990-1991 Gulf War had parity with Iraq. Some OPEC veterans see the issue coming to a head when Iraqi output hits about 4 million bpd, on a par with Iran's theoretical full capacity.

That point could be reached in 2014 if all goes to plan. Iraqi oil officials say exports will gradually rise by up to 200,000 bpd during the second half of this year taking production to 3.2 million bpd.

Iraq's oil minister says shipments next year will rise to 2.9 million bpd - boosting production including oil used domestically to 3.4 million bpd.

Some cast doubt on whether Iraq will be able to sustain the pace given the obstacles ahead.

"Iraq and the international oil companies have done an amazing job, but Baghdad's ingenuity has its limits. It's a mug's game in the short term to bet against rising production, but a sustainable rise will be challenged by events," said Alkadiri.

But those involved in the oilfield mega-projects have faith in the qualified success of Iraq's oil development.

"The Iraqis are masters of squeezing everything out of what they have," said a senior Western oil executive.

(editing by Richard Mably)

Public funding for the Games has increased to 9.3 billion pounds, more than double the figure anticipated when London was awarded them in 2005. The Olympics are being held at a time of deep spending cuts by the Conservative-led government.

"We are becoming increasingly certain that we can deliver these Games for under 9 billion and if we could do that, that would be a remarkable achievement," Sports Minister Hugh Robertson told reporters on Wednesday.

The government has made an additional 19 million pounds available to help manage crowds at venues and revelers in central London during the July 27-August 12 Games after the success of last week's Diamond Jubilee celebrations.

"Nobody knows how many people are simply going to turn up. London is going to be the place this summer - if the rain holds off - to come and have a party," Robertson said.

The numbers of visitors to central London during last week's celebrations to mark Queen Elizabeth's 60 years on the throne had "surprised on the upside", Robertson said, noting enthusiasm for the Olympic torch on its relay through the British isles.

TRANSPORT STRAIN

The minister said that London's much criticized public transport system would not buckle under the strain. Londoners are being encouraged to work from home or change their working hours to help ease the pressure.

"We are confident that the transport plan absolutely will hold," he said, adding that there would inevitably be queues at bottlenecks on the underground and other rail systems.

Robertson ruled out using any of the remaining contingency funds to pay off London bus drivers who are threatening to strike in a dispute over bonuses for work during the Games.

"The hope and expectation is that this will be sorted out before the Games start. Most people realize this is a great national moment and they don't want to mess it up," he said.

Mired in recession, Britain sees the Games as a showcase for its business potential. However, credit ratings agency Moody's said last month that hosting the world's biggest sporting event would give the economy and British companies only a short-term boost.

Robertson said Britain's success in winning the right to host future sports events was a tangible economic benefit.

"If you look at the number of major sports events that are now coming to this country in the period after 2012, British sport has never had a period like this," he said.

"There is at least one major competition and a series of other world championships to come here every year, running through pretty much until 2020."

Glasgow will stage the Commonwealth Games in 2014, England hosts the rugby union World Cup in 2015 and the world athletics championships will be held at the Olympic Stadium in east London in 2017.

Security fears around the Games were heightened when a protester jumped into the Thames in April during the annual Oxford-Cambridge university boat race.

Seeking to deter a repeat, Robertson stressed the sheer physical danger of stepping into the path of speeding Olympic cyclists.

"If any idiot runs out in front of the road race, they are risking committing suicide," he said.

($1 = 0.6432 British pounds)

(Editing by Alison Wildey)

The ambitious plan to liberalize internet addresses attracted 1,930 applications, almost half of them from north America, with Web giants Amazon and Google applying for dozens of domains including .cloud, .buy and .book.

The liberalisation of top-level domains beyond the fewer than two dozen in existence - dominated by .com, .org and .net - is intended to stimulate competition and innovation by giving organizations more control over their Web presence.

Critics say the new suffixes are unlikely to catch on, and some trademark owners have complained that the move is causing them unnecessary expense - at $185,000 per application plus running costs - to defend their online turf.

Previous small-scale experiments in liberalizing domains led to low take-up of suffixes such as .museum, .jobs and .travel.

"At the highest level, this is all about creating competition to .com," said Jonathan Robinson, non-executive director of internet registry services company Afilias, which has applied for more than 100 new domains on behalf of clients.

"That's where short, memorable, distinctive three-letter type terms become very interesting," said Robinson, whose organization already provides key infrastructure for .org, .info and .mobi.

Competing applications were received for 231 domain names. The most popular were .app with 13 bids, .home with 11, and .inc with 12.

Technology giant Apple's claim to .apple was uncontested by the Apple music label or anyone else.

"The big names of the Internet have either invested massively or not at all," said Stuart Durham, European sales director for Melbourne IT, which has handled 150 applications on behalf of clients.

"There appear to be no applications from Facebook or Twitter. There are different strategies in play here and some big gambles."

Just 17 applications were received from Africa, and 116 for names in non-Latin alphabets. Expanding the Internet beyond the Latin alphabet was one of the original reasons behind the liberalisation drive, which began seven years ago.

ICANN will now spend the rest of the year assessing the applications, with contested domains going to auction where more than one party has a legitimate claim. The first new domains are likely to come online in the first half of 2013.

Some critics, including senior figures at Google, have warned that the liberalisation risks effectively privatizing the Internet by giving already powerful Web players more scope to control portions of it.

"Our concern is that this could lead to more Facebook-style walled gardens as big brands seek to keep you in their own areas of the Internet," said Stephen Ewart, marketing manager for Names.co.uk, a British domain-name registrar.

"Make no mistake, this change to the domain name world will lead to more competition and consumer choice, but it could also be viewed as a silent privatization of the Web - for better or worse," he said.

The project is a key test for U.S. non-profit organization the Internet Corporation for Assigned Names and Numbers (ICANN), whose authority to administer the Web's naming systems is being challenged by emerging nations who say it is too U.S.-centric.

"The plan we have delivered is solid and fair," ICANN Chief Executive Rod Beckstrom told journalists at a news conference in London. "It is our fundamental obligation to increase innovation and consumer choice."

Nations including China, Russia and Brazil are pushing for ICANN's functions to be transferred to a body such as the United Nations, in which governments would have more control.

ICANN is set to net some $350 million from the liberalisation project - about five times its annual budget.

Beckstrom said the organization had priced the applications to cover its costs and that the use of any surplus would be decided by its community - which includes Internet companies, governments and ordinary citizens.

(Editing by David Cowell)