Venezuela's Chavez makes up with king of Spain

MADRID (Reuters) - Venezuelan President Hugo Chavez andSpain's King Juan Carlos shook hands and made up on Friday intheir first meeting since the monarch told the president to"shut up" at a summit in November.

Venezuela could supply Spain with a limited amount of cheapoil in return for investment in technology under the terms of adeal discussed by the two sides.

A relaxed Chavez joked "Why don't we go to the beach?" ashe met the smiling king in sunshine outside the royals' summerresidence on the island of Majorca.

But the outspoken Venezuelan leader, dressed in a dark suitand tie, failed to give the monarch a hug, after saying on hisweekly television show last Sunday he would like to.

Relations deteriorated between the two countries last yearafter the king shouted at Chavez: "Why don't you shut up?" whenChavez interrupted a speech by Spanish Prime Minister Jose LuisRodriguez Zapatero at the Ibero-American summit in Chile.

Footage of the outburst was beamed around the world,inspiring mobile phone ringtones, mugs and T-shirts.

At a later news conference in Madrid on Friday, Chavez saidthe king had given him a T-shirt depicting the incident duringtheir meeting.

"We caused a furore with that event. It (the T-shirt) is agood souvenir, to laugh at for the rest of our lives every timewe see it," he said.

Chavez flew to Madrid from Majorca later on Friday for abrief meeting with Zapatero and a working lunch to discussbusiness ties between the two countries, possible collaborationon energy and immigration.

During the lunch Chavez and Zapatero discussed a deal forVenezuela to supply 10,000 barrels of crude oil per day toSpain at $100 per barrel in exchange for technology andinfrastructure investment, a spokesman for the prime minister'soffice said.

Spanish businesses, including banks BBVA and Santander andoil company Repsol have an estimated $2.4 billion invested inthe oil-rich country.

"Thank you for the warmth with which you have received us,"Chavez said at a news conference on the steps of the primeminister's residence in Madrid.

The king's November outburst came after Chavez calledformer Spanish prime minister Jose Maria Aznar of theconservative PP party a "fascist", prompting Socialist Zapateroto ask for respect for an elected representative.

Minutes later a grim-faced king rose from his seat andstormed out of the forum.

Chavez later threatened to review diplomatic and businessties with former colonial power Spain, a major investor in theOPEC nation, and demanded a public apology from the king.

But relations have since thawed, with Chavez sending hisregards to the king during a meeting with Zapatero at a summitin Peru in May.

(Editing by Giles Elgood)