His half-brother Crown Prince Abdullah, de facto ruler for a decade, was swiftly anointed his successor and powerful Defence Minister Sultan bin Abdul Aziz was chosen as crown prince of the ultra-conservative Gulf kingdom.

King Abdullah, also prime minister, announced that all existing cabinet ministers would remain in place as officials moved to reassure jittery oil markets.

Medical sources said King Fahd, believed to be aged 84 and married five times, died in hospital at dawn, 23 years after he took the throne to lead the country through oil crises, wars and the deadly menace of Islamic extremism.

"With deep sorrow and pain, the royal court... mourns the death of The Custodian of the Two Holy Mosques King Fahd due to illness," said an official statement read out on state television.

King Fahd had been frail since suffering a debilitating stroke in 1995 and had delegated the running of the kingdom to Crown Prince Abdullah.

Members of the royal family have pledged allegiance to Abdullah. An official ceremony confirming him as king is due to be held tomorrow.

King Fahd's funeral is scheduled for today.

Defence Minister Prince Sultan is next in line to the throne after Abdullah, his half-brother, and was named crown prince.

A Saudi source said the kingdom's oil policy would not change after King Fahd's death.

Diplomats said they did not expect major changes in Saudi foreign policy under King Abdullah, who as crown prince has been running the day to day affairs of the Gulf Arab country since Fahd suffered a debilitating stroke in 1995.

US crude oil jumped up almost 50 cents a barrel after reports the king had died.

The Saudi stock market, the largest Arab bourse, suspended trading, a broker said.

Fahd, who was believed to be 83 and had been in poor health, had entered hospital on May 27 with acute pneumonia.

The Associated Press news agency says the king died early yesterday at the King Faisal Specialist Hospital in the capital, Riyadh.

"The royal family members have acknowledged Crown Prince Abdullah as sovereign of the country ... after which the Custodian of the Two Holy Mosques and ruler of Saudi Arabia King Abdullah bin Abdul Aziz chose Prince Sultan as crown prince and the family members acknowledged that," the statement said.

In the past two years, the kingdom has faced a violent al-Qaeda campaign to end seven decades of his royal family's rule in Saudi Arabia, home to Islam's holiest shrines.

The portly, goateed Fahd inadvertently helped fuel the rise of Islamic extremism by making concessions to hard-liners in an effort to boost his Islamic credentials. But he also brought the kingdom closer to the United States and agreed to a step that enraged many conservatives: basing US troops on Saudi soil after the 1990 Iraqi invasion of Kuwait.

In his last years, the sickly Fahd was mostly a figurehead as the close relationship he nurtured with Washington deteriorated after the Sept. 11 terror attacks. Fifteen of the 19 hijackers were Saudis, and many in the United States blamed the kingdom's strict Wahhabi school of Islam for fuelling terrorism.

Fahd, born in Riyadh in 1923, was proclaimed the fifth king of Saudi Arabia on June 13, 1982 at the height of Saudi Arabia's petrodollar boom, but his 23-year reign was marked by three regional wars and al-Qaeda militancy in his final years.

He assumed the throne just three years after two events in 1979 that would fuel extremism in Saudi Arabia: Ayatollah Ruhollah Khomeini founded the strictly religious Islamic Republic in Iran just across the Persian Gulf, and radical Muslims briefly took over the holy mosque in Makkah, proclaiming the Saudi royal family not Islamic enough to rule.

Those developments, coupled with Fahd's reputation as a former gambler and womaniser, made the liberal-leaning king move toward appeasing the powerful Saudi religious establishment, including the morals police who enforce strict social codes that oblige women to wear veils and ban men and women from mingling.

France's President Jacques Chirac expressed "profound sadness" at the news in a message of condolence to the Saudi government.

UN Secretary General Kofi Annan on Monday paid tribute to Saudi monarch King Fahd and expressed sadness at his death.

"Under King Fahd's leadership, the country witnessed remarkable progress in areas ranging from industrial development to education," said Annan in a statement issued by his spokesman's office.

His death drew expressions of sadness from many Arab nations, with Jordan announcing a 40-day mourning period and officials jetting to Saudi Arabia to attend his funeral on Tuesday.

In Cairo, an Arab League official said this week's Arab summit in Egypt may be postponed following the death of King Fahd and consultations on the meeting will take place in the next few hours.

In a bid to reassure oil markets, where prices topped 61 dollars after Fahd's death was announced, a Saudi official said there would be no change in the oil policy of the world's top producer and exporter.

"Saudi Arabia will not change its oil policy and will work on providing the oil supplies needed by world markets and is keen on avoiding troubles," said the official.

(Reuters, AFP, AP, BBC Online)

Bangladesh observes nat'l mourning today Bangladesh has announced a one-day national mourning at the death of Saudi King Fahd Bin Abdul Aziz Al-Saud.