President Bush said Thursday he was reappointing Gen. Colin Powell to a second term as chairman of the Joint Chiefs of Staff. "I can

think of no one more qualified to lead our armed forces as we prepare them for the challenges of the 21st century," Bush said.Bush praised Powell for his advice and leadership during the invasion of Panama and the war against Iraq, and said the 54-year-old four-star general "has been at the forefront of planning for this critical restructuring" of the military.

Bush made the announcement before reporters in the Rose Garden, with Powell and Defense Secretary Dick Cheney at his side, and then took questions.

The president, while providing no details, said there has been progress made this week in arms control negotiations with the Soviet Union. He was equally vague when asked if the United States was willing to provide Soviet President Mikhail Gorbachev with $100 million in economic aid, saying only that he was working with allies on a plan to help the ailing Soviet economy.

Bush also faced persistent questions about the prospects for Middle East peace, seemingly no better after a fourth postwar trip to the region this month by Secretary of State James Baker.

Bush acknowledged that new Israeli settlements in the occupied territories were major obstacles to peace talks but also suggested there might be behind-the-scenes progress taking place.

The re-appointment of Powell to a second two-year term was no surprise, but came several weeks after publication of an eyebrow-raising book by Bob Woodward of the Washington Post which described Powell as favoring economic sanctions rather than military action to oust Iraq to withdraw from Kuwait.

Powell declined to comment, but Bush rushed to Powell's defense.

"He gave me sound advice, straightforward advice," Bush said. "I just want to be on the record - he speaks his mind, he did it openly."

"He told me the risks, he told me what was at stake in terms of human lives." Bush said he was angered with "revisionist" accounts that suggested he and Powell disagreed on the administration's gulf policy.

"The military advice he provided to me under pressure was absolutely remarkable," Bush said. "He has done a fantastic job,"

"I, of course, accept it gladly," Powell said of the re-appointment, which is subject to Senate confirmation.