Jan. 30 (Bloomberg) -- Fidel Castro appeared today on Cuban state television for the first time in three months, walking and chatting with Venezuelan President Hugo Chavez. His appearance came amid speculation that he was ill and near death.

``As I said before, this is far from being a lost battle,'' the 80-year-old Castro, dressed in a sweatsuit, told Chavez in the video. Cuban authorities have kept the nature of his illness secret. Earlier reports said he suffered from complications from surgery on his intestine.

Today's footage showed Chavez scoffing at rumors the Cuban leader was dying or dead. The video, which state television said was filmed yesterday, also showed Castro speaking briefly with Chavez about the environment and browsing papers on trade agreements between their countries.

Today's video was the sixth since he underwent surgery. Castro appeared thinner and his face was drawn in an Oct. 28 television appearance. Speculation about his health had intensified since July 31, when he handed control of the government to his brother, Raul. It was the first time he ceded control of Cuba.

``He's recovered well,'' Chavez said in the video. ``We talked for two hours. He's in a good mood, with lots of clarity of ideas and analysis.''

Castro and Chavez met for more than two hours, according to a statement by the Cuban government newswire sent via e-mail to Bloomberg News. In the footage, both leaders urged their people to continue fighting capitalism.

Life in Cuba

Daily life in Cuba has changed little since Castro's surgery. The economy last year expanded 12.5 percent, the fastest pace of growth since Castro took over in a communist revolution in 1959, according to data from the island's Economy Ministry. Foreign inflows from investment in the oil, nickel and tourism industries may have peaked, according to the agency.

Castro and Chavez have been close friends since December 1994, when Chavez visited Cuba. In Venezuela, Chavez is seeking economic and political changes he says will lead the country to socialism, such as having the government take over companies in the telephone, electric and oil industries.

In today's footage, the two men repeated their motto in front of the camera: ``We will triumph. Fatherland, socialism or death.'' Chavez returned today to Caracas, the TV station said.

Chavez has reached out repeatedly to Cuba during Castro's illness. The two countries signed 16 agreements Jan. 24, giving Cuba access to Venezuela's new satellite and increasing the number of joint ventures between the two countries.

Today's video also showed Hugo Chavez's brother, Adan Chavez, who is Venezuela's education minister and former ambassador to Cuba.

Castro's Illness

Before today's footage, Spanish newspaper El Pais reported Jan. 16 that Castro suffered from diverticulitis, a type of intestinal inflammation. The report cited doctors at Gregorio Maranon hospital it didn't identify.

Jose Luis Garcia Sabrido, chief surgeon at Gregorio Maranon hospital in Madrid, said after visiting Castro in December that he was suffering from ``post-operative problems'' following an operation.

The Associated Press, citing a U.S. official it didn't identify, reported Jan. 16 that U.S. intelligence agencies expected Castro to die within two months.

U.S. government agencies, including the Coast Guard, held drills in mid-December to deal with the possibility of a post- Castro exodus from the island. The Coast Guard plans a larger exercise in March, Lieutenant Commander Chris O'Neil, a spokesman, said in an interview this month.

To contact the reporters on this story: Guillermo Parra-Bernal in Caracas at gparra@bloomberg.net; Steven Bodzin in San Francisco at sbodzin@bloomberg.net.

Last Updated: January 30, 2007 21:57 EST