Soviet Foreign Minister Eduard Shevardnadze said Tuesday that the Persian Gulf could be on the verge of war, and he hinted at a possible U.N. military operation in the region.

As Shevardnadze addressed the 45th General Assembly, the Security Council prepared to vote on extending the embargo on Iraq to the air.The financial markets, meanwhile, reflected world pessimism over the possibilty of a settlement in the near future to the Persian Gulf crisis. Gold prices rose to $15 an ounce in Hong Kong, helped the New York Stock Exchange hit a 14-month low and had oil prices flirting with $40 a barrel.

The General Assembly has become a forum for world leaders to vent their rage at Baghdad.

In his speech Tuesday, Shevardnadze referred to Aug. 2, the date of the Kuwait invasion, as "Black Thursday."

"Iraq flagrantly violated the United Nations Charter, the principles of international law, the universally recognized norms of morality and the standards of civilized behavior," Shevardnadze said. He noted that "the United Nations has the power to suppress `acts of aggression.' "

Up until the invasion, the Soviet Union was Iraq's strongest ally. But the Soviets have firmly sided with the U.S.-led effort to isolate and pressure the Baghdad government.

"War may break out on the gulf region any day, any moment," Shevardnadze warned.

On Monday, French President Francois Mitterrand issued a strong message to Iraq. "There is no compromise as long as Iraq does not comply with resolutions of the Security Council and withdraw from Kuwait. The sovereignty of that country is not negotiable," he said.

But he also held out the possibility of peace. "If Iraq were to withdraw its troops and free the hostages, everything might be possible," Mitterrand said.

Although every foreign leader who spoke Monday joined Mitterrand in assailing Iraq, President Saddam Hussein did not appear to be backing down. The French Foreign Ministry said Tuesday that Iraqi soldiers have taken two new French nationals hostage in Kuwait and transported them to an unknown destination.

Iraq also said Tuesday it will put Bush on trial Oct. 15 for "crimes against the peoples of the world."

Iraq first announced its plan to try Bush on Sept. 12, shortly after Western officials suggested Saddam be tried for crimes against humanity for the use of chemical weapons in 1988 against Iraq's minority Kurdish population.

Baghdad accuses Bush of planning a war against Iraq, attempting genocide by sponsoring U.N. sanctions and committing aggressionagainst Panama and Grenada, according to Hamid Al-Rawi, chairman of Iraq's bar association and head of a panel preparing for the trial.

Al-Rawi said the trial would be an "international process" with witnesses from other countries and Arab and non-Arab jurists. It would be conducted on the same basis as the Nuremberg trials of Nazi war criminals following World War II, he said.

Bush's tough message to Saddam

Bush issued his own tough message Monday. After speaking to about 150 representatives of Arab-American groups in Washington, he was asked why he would not talk directly with Saddam.

The president said Iraq would have to first pull out of Kuwait, restore the former Kuwaiti leadership and assure the safety of Americans.

"We're not going to yield one inch on those provisions," he said.

Asked why the United States was depriving the children of Iraq of food in the international trade embargo, the president said the Iraqi government would not permit relief organizations to send in supervised food shipments.

"I am much less interested in feeding Saddam Hussein's army at this point," he said.

Iraq `will never surrender Kuwait'

On Sunday, Saddam declared he would rather go to war than let a U.N.-ordered trade embargo "strangle" his country. A day later he insisted that "Kuwait belongs to Iraq and we will never give it up even if we have to fight over it for a thousand years."

His comments have caused jitters in financial markets.

As leaders from Brazil, Argentina, Poland and Indonesia condemned Baghdad Monday at the United Nations, Iraq's U.N. ambassador, Abdul Amir Al-Anbari, listened impassively from his seat.

Turkish president visits U.S.

Bush met Tuesday with one of his first allies in his effort to isolate Saddam, Turkish President Turgut Ozal.

Turkey agreed soon after Iraq's invasion to shut down a pipeline carrying Iraqi oil to Turkey - even though the decision posed a big economic hardship.

Later, Bush was to discuss his "burden-sharing" plan for paying the cost of the gulf operation at the annual meeting of the International Monetary Fund.