QUITO, Ecuador (Reuters) -- A volcano looming over Ecuador's capital Quito, on
                  Saturday was slowly spewing lava around its fiery crater, lessening the impact of an
                  expected eruption that would be its first in 339 years, officials said.

                  Scientists who flew over the Guagua Pichincha volcano, just eight miles (12 km)
                  from the Andean city of 1.2 million, said semi-solid lava was oozing out to build up a
                  thick lip, or "dome," around the crater.

                  This gradual release of pressure from the build-up of molten lava means the
                  amount of energy likely to be unleashed in the expected explosive eruption is
                  slowly being reduced, Quito Mayor Roque Sevilla said in a volcano update
                  broadcast on radio.

                  There was a 90 percent chance of an eruption in the next few days or
                  weeks, officials said, but no large-scale evacuations had been ordered in the
                  capital.

                  Scientists think an eruption would be unlikely to spill lava down the slopes of
                  the 16,000-foot (4,800 meter) high Guagua Pichincha, but could shower
                  Quito with dangerous volcanic ash. Some isolated parts of the city could
                  also be hit by flying molten rocks.

                  "I want to insist that Quito is not in danger," President Jamil Mahuad told
                  radio.

                  Some companies have moved their operations outside of Quito as a
                  precaution and street hawkers were doing good trade in cheap gas masks
                  designed to protect against gas or sulphur fumes.

                  On most days, prevailing winds would blow ash from an eruption away from
                  Quito, but bad weather during an eruption should shower large parts of the
                  city with up to almost a foot (up to 25 cm) of ash.

                  Rain, common in Quito at this time of year, would turn volcanic ash into mud
                  so heavy that poorly constructed roofs could collapse, and steep mountain
                  streets in the city would be in danger of mudslides.

                  The angry mountain, whose name means "the child Pichincha" in the
                  Quechua Indian language, shot out a 2.5-mile (4 km) column of steam on
                  Saturday, as rising lava vaporised groundwater.

                  The massive pressure inside the mountain has already triggered hundreds of
                  internal rock slides and lava movements that could soon destroy the growing
                  dome.

                  On Thursday, Quito was shaken by a mild earthquake caused by the
                  volcano's activity, and a light ash cloud rained down on a southern part of
                  the city last Monday.

                  Workers around the city on Saturday were piling up sandbags to absorb the
                  impact of possible mudslides. Officials were also visiting houses on very
                  steep streets, advising residents on whether they should evacuate their
                  homes.

                  In the towns of Lloa, Mindo and Nono near Guagua Pichincha, some 2,000
                  people have been evacuated.

                  In the capital, 400,000 students have been kept out of school as a
                  precaution.

                  The last time Guagua Pichincha erupted was in 1660, when it rained rocks
                  and ash on the then Spanish colonial city. Quito, set at 9,600 feet (2,900
                  meters) above sea level is surrounded by nine active volcanoes, in a region
                  known as "volcano alley."

                  A major volcanic eruption would merely be the latest catastrophe to beset
                  the country of 12 million, which has been brought to its knees by El Nino
                  storms and poor export prices. Ecuador this week become the first country
                  ever to default on its Brady bond foreign debt.

                  Brady securities were created in 1989 to give Latin American countries a
                  way out of the debt crisis. The bonds were created from defaulted bank
                  loans and were named after U.S. Treasury Secretary Nicholas Brady.

                     Copyright 1999 Reuters.