In a statement read to the press here, the president of the 15-nation Council, Denis Dangue Rewaka of Gabon, said that members of the Security Council "appeal to both sides for an end to inflammatory rhetoric."

"They urged both parties to comply immediately and in full with Security Council resolution 1227," which was adopted on February 10, 1999, the statement said.

"They expressed their dismay at the continuing fighting and loss of life," the statement said, "They also expressed concern about the humanitarian situation" in the Horn of Africa.

Meanwhile, "They reaffirmed that the OAU (the Organization of African Unity) Framework Agreement represents a viable and sound basis for the political settlement of this dispute," said the statement.

The Security Council members, voicing its welcome to the region by the U.N. special envoy, "reaffirmed the Council's support for the Secretary-General in coordination with OAU to promote a peaceful solution to the conflict," the statement said.

The statement was announced shortly after the closed-door consultations on the conflicts between Ethiopia and Eritrea, which featured the briefing on the latest development in the Horn of Africa by the U.N. special envoy, Mohamed Sahnoun.

The Security Council session kicked off after Ethiopia launched a dawn bombing raid on an Eritrean city Sunday, its second strikes in two days and a sign that a month of peace negotiations were floundering.

Shanoun, who just returned from a visit to the region, was seeking a ceasefire as a first step towards ending the war, U.N. sources said.

Ethiopia and Eritrea have been fighting over their 1,000-kilometer border, which was not clearly marked when Eritrea gained its independence from Ethiopia in 1993.

Zenawi told reporters after his second day of talks in Egypt with President Hosni Mubarak: ``Eritrea must withdraw from the region it occupied as a condition to holding talks. As long as Eritrea refuses to withdraw, the war will go on.''

Zenawi held consultations on Tuesday in Cairo and on Wednesday in the Red Sea resort of Sharm el-Sheikh with Mubarak, who is seeking ways based on an African initiative to end the border war between the two Horn of Africa states.

The conflict erupted in May and June last year and flared up again in February. Tens of thousands of soldiers are believed to have died in the ground and air war between the two states.

Eritrean President Isayas Afewerki told reporters in Cairo on Sunday after a meeting with Mubarak that he was willing to be flexible but not on the issue of territory.

Ethiopian jets bombed Eritrea's Red Sea port of Massawa and targets in two other areas of their disputed border at the weekend. Ethiopia said it had inflicted heavy damage.

Egyptian Foreign Minister Amr Moussa said Egypt was backing the Organisation of African Unity (OAU) initiative which aimed to secure a withdrawal of troops and a halt to the violence.

He said United Nations representatives were involved in the mediation effort and a forthcoming African summit would address the issue.

Both sides say they accept the broad outline of the OAU plan, which calls for demilitarisation of the border followed by demarcation of the frontier, but disagree on its details.

Asked about the possibility of a ceasefire, Zenawi said the OAU initiative comprised many articles and could only be adopted in its entirety.

Ethiopia says Eritrea must withdraw from contested areas it occupied in the first round of the war but Eritrea says it is only obliged to pull out of the Badme region, which it has done.

London robusta coffee futures closed $127 higher at $1,555 per tonne, having hit a peak of $1,575 during the day.

The New York arabica market, which started the rally overnight, was 2.85 cents up at 119.75 cents a lb, off a high of 121.00, at 1605 GMT. ``The funds in London are covering their short positions and the market has rallied...regardless of frost or not,'' one trader said.

Traders said the market was particularly jittery given the market impact of the last severe frost in Brazil, the world's leading producer. That was in 1994, when the London market jumped by almost 80 percent in a two-week period, culminating in a peak price of $4,085 a tonne on July 13.

Mike Palmerino of private forecaster Weather Services Corporation told Reuters, ``We do have high pressure building in central Argentina this morning...west of Buenos Aires.'' Palmerino said the situation was similar to the cold spell seen in early April. Storms were developing off the coast of Uruguay and were expected to move the cool high pressure area building in Argentina towards Brazil.

The coffee areas of northern Parana and southwestern Sao Paulo were seen vulnerable, particularly by Friday, but temperatures were not expected to drop below 4-6 degrees Celsius. However, if current weather trends continued, frosts were possible in June or July. The earliest crop-damaging frost in Brazil was recorded on May 30, 1979.

The Ethiopian Free Press Journalists' Association (EFJA) was awarded the International Press Institute's annual Free Media Pioneer Award today in Taipei in recognition of their struggle to promote press freedom and improve the standards of journalism in Ethiopia.

Between 1993-1998, over 200 Ethiopian journalists each spent more than three months in prison for practising their profession. 12 journalists remain behind bars. Since its inception in 1993, "EFJA became the target of state repression," Kifle Mulat, President of the EFJA, said in accepting the award. "Its members became victims of constant harassment, intimidation, detention, arbitrary arrests and fines. In the process several EFJA members have lost their lives."

In presenting the award, Wilfred Kiboro, Managing Director and CEO of The Nation, Kenya, and IPI Board Member, said: "The EFJA serves as a beacon of hope in our continent, where sadly democratic principles and observance of human rights by many governments is still a dream."

For further information, contact IPI at Spiegelgasse 2, A-1010 Vienna, Austria, tel: +43 1 512 90 11, fax: +43 1 512 90 14, e-mail: Michael Kudlak at ipi.vienna@xpoint.at, or Peter Goff at info@freemedia.at, Internet site: www.freemedia.at.

But Ethiopian bombs destroyed Tsegay's house, and she and her two young children now live in a tent alongside thousands of other Eritreans displaced by another war in the Horn of Africa.

As it entered its second year this month, the border conflict between Ethiopia and Eritrea is at an impasse. Like so many of her neighbors, Tsegay despairs of ever finding peace.

``I never expected this war to last so long,'' she said at one of two camps housing 20,000 Eritreans near the western front. ``Maybe my own children will grow up to fight also.''

Government figures estimate 250,000 Eritreans and 300,000 Ethiopians have been displaced from their homes along the 620-mile ill-defined border since war erupted May 6, 1998. It isn't the first time the region has been riven by violence: Eritrean rebels fought a 30-year war against Ethiopia before finally winning independence in 1993.

Ethiopia has kept reporters away from its northern border region, and there have been few reports on the condition of residents there.

In Eritrea, the displaced have fled the border to escape artillery fire. But many still fear Ethiopian bombers, which have killed or wounded about 70 civilians since the war began.

Ethiopia and Eritrea blame each other for persecuting the other's citizens. Eritrea said this week that Ethiopia is preventing 10,000 Eritreans, whose property and assets have been confiscated, from leaving Ethiopia. Ethiopia has denied it.

The United States, the United Nations, Rwanda and the Organization of African Unity have tried to end the war. The U.N. Security Council and several Western nations have repeatedly urged a cease-fire. An OAU proposal that would have both sides withdraw from contested areas and submit to verification is touted as the best alternative.

Ethiopia claims Eritrea is refusing to commit to withdrawing troops from occupied areas. Eritrea says Ethiopia keeps adding names to the list of places they have to leave.

Egypt, Libya and Sudan, all vying for influence in the Horn, have recently taken the lead in mediation efforts. Ethiopian Prime Minister Meles Zenawi met Wednesday with Egyptian President Hosni Mubarak after visiting Moammar Gadhafi in Libya.

Eritrean President Isaias Afwerki met with the same two leaders earlier this month.

``There are sharp differences between them ... even the final shape of any possible solution or settlement has not been defined yet,'' Egyptian Foreign Minister Amr Moussa said after the Ethiopian's meeting with Mubarak. Sudan, which had been on bad terms with both countries, is fast mending relations, reportedly to outmaneuver Egypt.

Eritrea and Ethiopia have their own geopolitical designs in the region, reportedly backing different warlords in nearby Somalia in a bid to win influence.

Meanwhile, Ethiopian jets continue to bomb Eritrea, prompting fear, anger and despair among the people most affected by the war.

In western Eritrea, some of the displaced like Tsegaye live in camps where they have set up a makeshift market. Fearing more bombing, 7,000 other farmers and herders have sent up tents in forested areas away from the border where they are subject to malaria-bearing mosquitoes as well as isolation.

Letense Asrat and her family lost everything in an Ethiopian air raid on their once-bustling market town of Shambuko, six miles from the Ethiopian border in western Eritrea.

Now, they sit brewing tea or homemade beer to sell to soldiers passing along Shambuko's broad, dusty boulevard, where broken shop doors swing on their hinges or lie among rubble and broken glass.

Their 20,000 neighbors all fled, but Asrat said she could not bear to be dependent on others.

``People told me to wait to return because they think Shambuko will be bombed again,'' she said. ``Of course I am afraid, but I have no choice.''