Nov. 27 (Bloomberg) -- Venezuelan president Hugo Chavez summoned home his ambassador to Colombia and called his Colombian counterpart a ``sad pawn'' of the U.S., escalating a conflict that is threatening the neighbors' trade and diplomacy.

Ambassador Pavel Rondon was recalled for consultations about ``recent events,'' according to a statement on the foreign ministry's Web site. It gave no additional details. Chavez later spoke at a military base and said President Alvaro Uribe was a spokesman of the U.S. ``empire.''

Chavez turned on Uribe Nov. 25, calling him a ``liar'' after the Colombian leader rescinded permission for Chavez to negotiate with Colombia's biggest guerrilla group in a bid to free 45 hostages. Since then, the two leaders have traded insults, with Uribe accusing Chavez of attempting to spread an ``expansionist'' socialist agenda across the continent.

``The attacks are very personal and will be very hard to come back from,'' said Adam Isacson, director of the Colombia program at the Center for International Policy in Washington. ``This will require international intervention to get them to sit down and work this out.''

Colombian stocks have dropped since the presidents traded barbs, with shares of exporters the hardest hit. Venezuela and Colombia are each other's second-biggest trading partner.

Textile exporter Cia. Colombiana de Tejidos SA, based in Medellin, headed for its steepest two-day fall in 18 months amid concern over its business in Venezuela. Colombia's benchmark stock index fell for a second day, declining 0.6 percent to 11,211.77 at 1:11 p.m. New York time.

`Worse for Colombia'

``An end to relations will have a severe impact on both economies, most probably worse for Colombia,'' Rupert Stebbings, head of international sales in Bogota at Interbolsa SA, Colombia's biggest brokerage, wrote in a note to investors.

Colombia has had a $1.8 billion trade surplus with Venezuela so far this year, Interbolsa reported.

The row with Uribe began after Chavez directly contacted Colombia's army commander to discuss his efforts to help secure the release of hostages being held by the Revolutionary Armed Forces of Colombia, or FARC.

Chavez may be trying to ``play the nationalist card'' before a referendum in Venezuela on Dec. 2 on his plan to overhaul the country's constitution to further implement socialism, said Isacson, with the Center for International Policy.

Colombian Foreign Minister Fernando Araujo said his government doesn't plan to pull its ambassador in retaliation. ``We will monitor the situation to see what will happen and then take decisions,'' Araujo, himself held captive six years by the FARC, told reporters in comments broadcast by RCN television.

Chavez returned accusations of expansionism today by saying that it was the U.S. with the expansionist agenda.

``The empire is the one with the expansionist agenda, and you are the instrument of this empire in Latin America,'' Chavez said, addressing Uribe.

To contact the reporters on this story: Matthew Walter in Sao Paulo at mwalter4@bloomberg.net; Helen Murphy in Bogota at Hmurphy1@bloomberg.net.

Last Updated: November 27, 2007 18:43 EST