British retailers start online sales early

 British retailers have brought forward their Christmas clearance sales online in the hope that shoppers will log on to buy bargains and offset lackluster spending in stores.
Marks & Spencer launched its sale online at midday on Monday, it said on its website, while department store John Lewis said it would cut online prices when its stores close at 1700 GMT. Debenhams has already started its online sale.
Retailers in recent years have started sales online on Christmas Day, ahead of the clearances in stores from Boxing Day, but are increasingly launching their online offers before Christmas after delivery deadlines for the day have passed.
Hard-pressed shoppers have been leaving it later to buy presents in the hope that retailers would slash prices, the British Retail Consortium said.
It was forecasting that 5 billion pounds ($8.1 billion) would be spent in the shops on Saturday and Sunday combined, the last weekend before Christmas.
Richard Dodd, the BRC's head of Media and Campaigns, said weekend trading had met expectations.
"Christmas, ultimately once all the final sums are done, will turn out to be acceptable but not exceptional," he said.
He said the sector expected a modest increase in cash spending against a year go, but not necessarily any significant increase in real terms once inflation was stripped out.
Many British families' budgets are stretched, according to a survey from Markit that showed the biggest deterioration in household finances for seven months.
Analyst Howard Archer at IHS Global Insight said the weakening in household finances could not come at a worse time for retailers, and it highlighted why many people appeared to have been careful in their Christmas shopping this year.
"The suspicion has to be that consumers will be especially keen to take advantage of genuine major bargains in the sales to acquire items that they cannot otherwise afford or are reluctant to make at the moment," he said.
"However, we suspect that people will likely to be more careful in buying - or reluctant to buy - items that they don't really want or need in the sales."

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China may require real name registration for internet access

 China may require internet users to register with their real names when signing up to network providers, state media said on Tuesday, extending a policy already in force with microblogs in a bid to curb what officials call rumors and vulgarity.
A law being discussed this week would mean people would have to present their government-issued identity cards when signing contracts for fixed line and mobile internet access, state-run newspapers said.
"The law should escort the development of the internet to protect people's interest," Communist Party mouthpiece the People's Daily said in a front page commentary, echoing similar calls carried in state media over the past week.
"Only that way can our internet be healthier, more cultured and safer."
Many users say the restrictions are clearly aimed at further muzzling the often scathing, raucous - and perhaps most significantly, anonymous - online chatter in a country where the Internet offers a rare opportunity for open debate.
It could also prevent people from exposing corruption online if they fear retribution from officials, said some users.
It was unclear how the rules would be different from existing regulations as state media has provided only vague details and in practice customers have long had to present identity papers when signing contracts with internet providers.
Earlier this year, the government began forcing users of Sina Corp's wildly successful Weibo microblogging platform to register their real names.
The government says such a system is needed to prevent people making malicious and anonymous accusations online and that many other countries already have such rules.
"It would also be the biggest step backwards since 1989," wrote one indignant Weibo user, in apparent reference to the 1989 pro-democracy protests bloodily suppressed by the army.
Chinese internet users have long had to cope with extensive censorship, especially over politically sensitive topics like human rights, and popular foreign sites Facebook, Twitter and Google-owned YouTube are blocked.
Despite periodic calls for political reform, the ruling Communist Party has shown no sign of loosening its grip on power and brooks no dissent to its authority.

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Tajikistan blocks scores of websites as election looms

 Tajikistan blocked access to more than 100 websites on Tuesday, in what a government source said was a dress rehearsal for a crackdown on online dissent before next year's election when President Imomali Rakhmon will again run for office.
Rakhmon, a 60-year-old former head of a Soviet cotton farm, has ruled the impoverished Central Asian nation of 7.5 million for 20 years. He has overseen constitutional amendments that allow him to seek a new seven-year term in November 2013.
The Internet remains the main platform where Tajiks can air grievances and criticize government policies at a time when the circulation of local newspapers is tiny and television is tightly controlled by the state.
Tajikistan's state communications service blocked 131 local and foreign Internet sites "for technical and maintenance works".
"Most probably, these works will be over in a week," Tatyana Kholmurodova, deputy head of the service, told Reuters. She declined to give the reason for the work, which cover even some sites with servers located abroad.
The blocked resources included Russia's popular social networking sites www.my.mail.ru and VKontakte (www.vk.com), as well as Tajik news site TJKnews.com and several local blogs.
"The government has ordered the communications service to test their ability to block dozens of sites at once, should such a need arise," a senior government official told Reuters on condition of anonymity.
"It is all about November 2013," he said, in a clear reference to the presidential election.
Other blocked websites included a Ukrainian soccer site, a Tajik rap music site, several local video-sharing sites and a pornography site.
VOLATILE NATION
Predominantly Muslim Tajikistan, which lies on a major transit route for Afghan drugs to Europe and Russia, remains volatile after a 1992-97 civil war in which Rakhmon's Moscow-backed secular government clashed with Islamist guerrillas.
Rakhmon justifies his authoritarian methods by saying he wants to oppose radical Islam. But some of his critics argue repression and poverty push many young Tajiks to embrace it.
Tighter Internet controls echo measures taken by other former Soviet republics of Central Asia, where authoritarian rulers are wary of the role social media played in revolutions in the Arab world and mass protests in Russia.
The government this year set up a volunteer-run body to monitor Internet use and reprimand those who openly criticize Rakhmon and other officials.
In November, Tajikistan blocked access to Facebook, saying it was spreading "mud and slander" about its veteran leader.
The authorities unblocked Facebook after concern was expressed by the United States and European Union, the main providers of humanitarian aid for Tajikistan, where almost a half of the population lives in abject poverty.
Asomiddin Asoyev, head of Tajikistan's association of Internet providers, said authorities were trying to create an illusion that there were no problems in Tajik society by silencing online criticism.
"This is self-deception," he told Reuters. "The best way of resolving a problem is its open discussion with civil society."
Moscow-based Central Asia expert Arkady Dubnov told Reuters that Rakhmon's authoritarian measures could lead to a backlash against the president in the election. "Trying to position itself as the main guarantor of stability through repression against Islamist activists, the Dushanbe government is actually achieving the reverse - people's trust in it is falling," he said.

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Netflix suffers Christmas Eve outage, points to Amazon

An outage at one of Amazon's web service centers hit users of Netflix Inc.'s streaming video service on Christmas Eve and was not fully resolved until Christmas day, a spokesman for the movie rental company said on Tuesday.
The outage impacted Netflix subscribers across Canada, Latin America and the United States, and affected various devices that enable users to stream movies and television shows from home, Netflix spokesman Joris Evers said. Such devices range from gaming consoles such as Nintendo Wii and PlayStation 3 to Blu-ray players.
Evers said that the issue was the result of an outage at an Amazon Web Services' cloud computing center in Virginia, and started at about 12:30 p.m. PST (2030 GMT) on Monday and was fully restored Tuesday morning, although streaming was available for most users late on Monday.
"We are investigating exactly what happened and how it could have been prevented," Evers said.
"We are happy that people opening gifts of Netflix or Netflix capable devices can watch TV shows and movies and apologize for any inconvenience caused last night," he added.
An outage at Amazon Web Services, or AWS, knocked out such sites as Reddit and Foursquare in April of last year.
Amazon Web Services was not immediately available for comment. Evers, the Netflix spokesman, declined to comment on the company's contracts with Amazon.

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Netflix blames Amazon for Christmas Eve outage

An outage at one of Amazon's web service centers hit users of Netflix Inc's streaming video service on Christmas Eve and was not fully resolved until Christmas Day, a spokesman for the movie rental company said on Tuesday.
The outage impacted Netflix subscribers across Canada, Latin America and the United States, and affected various devices that enable users to stream movies and television shows from home, Netflix spokesman Joris Evers said. Such devices range from gaming consoles like the Nintendo Wii and PlayStation 3 to Blu-ray DVD players.
Netflix, which is based in Los Gatos, California, has 30 million streaming subscribers worldwide, of which more than 27 million are in the Americas region that was exposed to the outage and could have potentially been affected, Evers said.
Evers said the issue was the result of an outage at an Amazon Web Services' cloud computing center in Virginia and started at about 12:30 p.m. PST (2030 GMT) on Monday and was fully restored before 8:00 a.m. PST Tuesday morning, although streaming was available for most users by 11:00 p.m. PST on Monday.
The event marks the latest in a series of outages from Amazon Web Services, with one occurring in April of last year that knocked out such sites as Reddit and Foursquare.
"We are investigating exactly what happened and how it could have been prevented," Evers of Netflix said.
"We are happy that people opening gifts of Netflix or Netflix capable devices can watch TV shows and movies and apologize for any inconvenience caused last night," he added.
Officials at Amazon Web Services were not available for comment. Evers, the Netflix spokesman, declined to comment on the company's contracts with Amazon.

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APNewsBreak: Texas cancer probe draws NCI scrutiny

The National Cancer Institute confirmed Friday that federal officials are taking a closer look at a troubled $3 billion cancer-fighting effort in Texas that is under a criminal investigation over a lucrative taxpayer-funded grant awarded by the state agency.
The Cancer Prevention and Research Institute of Texas touts its status as an NCI-approved funding entity — an exclusive group headlined by the nation's most prominent cancer organizations. The list is fewer than two dozen and includes the American Cancer Society, Susan G. Komen for the Cure and federal entities like the Center for Disease Control and Prevention.
The designation is a federal seal-of-approval that signals high peer review standards and conflict of interest policies. Yearlong turmoil within the Texas institute, or CPRIT, reached a new peak this week when the agency's beleaguered chief executive asked to resign and prosecutors opened cases following an $11 million grant to a private company that was revealed to have bypassed an independent review.
NCI spokeswoman Aleea Farrakh Khan told The Associated Press that officials are "evaluating recent events" at CPRIT. She said officials have not made decisions or contacted the agency directly.
Members of CPRIT's governing board did not immediately return an email seeking comment.
An NCI designation is not required for CPRIT to continue running the nation's second-largest pot of cancer research dollars, Khan said. But jeopardizing that status — and especially losing it — would be a severe blow to CPRIT's reputation, which already has been battered by sweeping resignations, internal accusations of politics trumping science and now a criminal investigation.
A recent internal audit at CPRIT discovered an $11 million funding request from Dallas-based Peloton Therapeutics was approved without the agency ever scrutinizing the proposal's merits. The revelation came only months after two Nobel laureates and other top scientists left the agency in protest over a $20 million grant some accused of being rushed to approval without a proper peer review.
While CPRIT is funded by taxpayers, donors to cancer nonprofits might look to an NCI designation for assurance that their money is in good hands.
"It says, 'If I'm donating money to this agency, if NCI is approving them, that means NCI says it's handling its money well,'" Khan said.
Khan added that CPRIT's inclusion on the list does not mean all of its funding mechanisms are NCI-approved.
There is no funding relationship between the NCI and CPRIT.
An entire page of CPRIT's website is devoted to boasting its NCI designation. The agency says the status is important because it means cancer centers in Texas seeking its own NCI designation — so as to reassure patients or bolster recruitment — can include CPRIT research dollars in their calculations to maintain levels needed to be NCI approved.
"This enhances Texas' ability to leverage additional federal funding for cancer research and raises Texas' profile as a center for cancer research," according to the website.
Executive Director Bill Gimson submitted his resignation letter Tuesday but offered to stay on through January. He has described Peloton's improper funding as an honest mistake and said no one associated with CPRIT stood to personally profit from the company's award.
Prosecutors have not made any specific criminal allegations. Launching separate investigations into CPRIT are the Texas attorney general's office and the Travis County district attorney's public integrity unit, which investigates criminal misconduct within state government.

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Mental health toll emerges among Sandy survivors

The image of his brother trapped in a car with water rising to his neck, his eyes silently pleading for help, is part of a recurring nightmare that wakes Anthony Gatti up, screaming, at night.
Gatti hauled his brother out of the car just in time, saving his life at the height of Superstorm Sandy. The two men rode out the hurricane in their childhood Staten Island home and survived. But weeks afterward, Gatti still hasn't moved on.
Now he's living in a tent in the backyard, burning pieces of furniture as firewood, refusing to leave until the place is demolished. Day and night, he is haunted by memories of the storm.
"My mind don't let me get past the fact that I can't get him out of the car. And I know I did," Gatti said, squeezing his eyes tightly shut at the memory. "But my mind don't let me think that. My mind tells me I couldn't save him, he dies."
As communities battered by Sandy clear away the physical wreckage, a new crisis is emerging: the mental and emotional trauma that storm victims, including children, have endured. The extent of the problem is difficult to measure, as many people are too anxious to even leave their homes, wracked by fears of wind and water and parting from their loved ones. Others are too busy dealing with losses of property and livelihood to deal with their grief.
To tackle the problem, government officials are dispatching more than 1,000 crisis counselors to the worst-hit areas in New York and New Jersey, helping victims begin the long work of repairing Sandy's emotional damage.
Counselors are assuring people that anxiety and insomnia are natural after a disaster. But when the trauma starts to interfere with daily life, it's probably time to seek help. And in a pattern that played out in New Orleans and the Gulf Coast after Hurricane Katrina in 2005, symptoms may only get worse as victims transition from the initial shock to the disillusionment phase of the recovery.
"Folks are starting to realize that they may be in this for the long haul," said Eric Hierholzer, a commander in the U.S. Public Health Service. "And things aren't necessarily going to get better tomorrow or next week."
At St. John's Episcopal Hospital in Far Rockaway, the psychiatry department has recorded a 20 percent increase in walk-in patients since the storm hit, with residents reporting the whole gamut of stress-related symptoms. Anxiety. Insomnia. Panic attacks.
Local schools have referred 25 percent more children than usual to the hospital's outpatient mental health programs.
"The children are very, very traumatized," said Fern Zagor, who runs the Staten Island Mental Health Society. "They have a hard time making sense of this sudden change in their world. It's frightening to them."
A 5-year-old girl who was pulled from floodwaters clinging to her father hasn't been able to attend kindergarten since the storm, Zagor said, because she's too traumatized to be parted from him now. An 11-year-old boy is working with counselors after floating in water up to his neck on the second floor of his home for several hours before being rescued.
"This child has said he worries about rain," Zagor said. "He worries about whether he'll ever want to swim in a swimming pool again."
The society is among many mental health providers who are working with Project Hope, a New York crisis counseling program funded by an $8.2 million Federal Emergency Management Agency grant that has just begun sending counselors to local communities. New York Gov. Andrew Cuomo's office estimates the program will help more than 200,000 people.
Project Hope Counselor Yomira Natera has been seeking out storm victims who don't speak English as their first language.
"We've seen an increase in substance abuse with folks who may have language barriers," she said, "who may be frustrated with the system, who find it difficult to communicate."
At least 20,000 people have so far made contact with counselors from the New Jersey Hope and Healing Program, which has dispatched hundreds of state-trained disaster crisis response counselors into the storm zone. The state also launched a hotline for people to call and talk to a counselor.
In Union Beach, N.J., a working-class enclave on Raritan Bay, Kathy Parsells volunteered at a FEMA recovery center on a recent afternoon, helping to coordinate deliveries. Her daughter and grandchildren had to be rescued during the storm.
"I'm OK," she said, stifling tears. "My grandsons have nightmares. My grandson, the first night, was screaming: 'It's coming up the stairs.'"
Jeannette Van Houten, who lost her home in Union Beach, said in a telephone interview that she feels like she's going through the same stages of grief that she endured when her niece was murdered in 2008.
"I have days that I can't put a thought together. Like you start talking and you forget what you're saying," said Van Houten, who sleeps just two or three hours on a good night nowadays. "And the numbness, like you look at things that are happening around you, but you're not part of it."
The Rev. Matthew Dowling, a pastor at the Monmouth Church of Christ in Tinton Falls, N.J., volunteered as a crisis counselor in the days after the storm and heard a lot of survivor's remorse from people who were more fortunate than their neighbors. But there was also a great deal of frustration.
"When FEMA arrives, they think everything is going to be fixed," Dowling said. "The reality is it's going to take months and months to get back to normal. Just like the steps of grief there's anger at the new normal."
Distress calls to LifeNet, New York City's local crisis hotline, doubled during the first few weeks after the storm hit, averaging more than 2,000 calls per week from people who were angry and worried that basic needs — food, clothing, shelter — had not been met.
Officials are now preparing for a new wave of calls from people struggling with depression and other mental health issues, said Christian Burgess, director of the Disaster Distress Helpline, a national crisis hotline run by the federal government that provides a network of trained counselors in the aftermath of a major disaster.
Coming to grips with the loss of everything she owned has been difficult for Carol Stenquist, who stood outside borough hall in Union Beach, nervously dragging on a cigarette and crying.
"I have anxiety over it. Even when I lay down at night I feel my heart palpitating with the loss of everything," said Stenquist, whose home was destroyed. "I was there for 20 years."
She thinks she needs to talk to a professional counselor, but hasn't sought one out yet.
"I'm kind of afraid that the emotional stuff I feel now is just part of what I'm going to feel when it's over," she said. "I've had my breakdowns, cries, feelings of depression. I've had all of that."
On Staten Island, volunteers have been quietly stopping by Anthony Gatti's tent to check in on him during his long vigil, dropping off boxes of cereal and cans of coffee. A volunteer therapist tried to talk him into leaving, but to no avail. He spends his days patrolling the property for looters and gazing at photos of the storm's destruction on his laptop.
"I keep trying to make him understand. It's a lot of wood and metal and pipes, that's all it is," said his mother, Marge Gatti. "You've got to get numb. You gotta get tough. If I'm not numb, I can't function.

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GlaxoSmithKline wins U.S. approval for new flu vaccine

U.S. health regulators have approved a new four-strain seasonal influenza vaccine made by GlaxoSmithKline Plc, the company said on Monday.
The U.S. Food and Drug Administration has approved Fluarix Quadrivalent to immunize children age 3 and older and adults against flu virus subtypes A and B contained in the vaccine.
It is the first intramuscular vaccine to protect against four influenza strains. Three-strain flu vaccines currently administered help protect against the two most common A virus strains and the B strain expected to be predominant in a given year, the company said.
Since 2000, however, two B virus strains have circulated to varying degrees each season, meaning patients infected with the B virus not contained in the vaccine were not immunized.
Fluarix Quadrivalent helps protect against the two A strains and adds coverage against a second B strain, the company said.
Three-strain vaccines "have helped protect millions of people against flu, but in six of the last 11 flu seasons, the predominant circulating influenza B strain was not the strain that public health authorities selected," said Dr. Leonard Friedland, head of clinical development and medical affairs for Glaxo's North American vaccines program.
"Fluarix Quadrivalent will help protect individuals against both B strains and from a public-health standpoint, can help decrease the burden of disease."
Glaxo said it will make the vaccine available in time for the 2013-14 flu season and plans to fulfill orders for its trivalent, or three-strain, vaccines. Healthcare providers traditionally order flu vaccines about a year in advance of each flu season.
Fluarix Quadrivalent is not currently approved or licensed in any country outside of the United States.

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Inherited colon cancer risk tied to certain foods

Among people who have a genetic susceptibility to colon cancer, those whose diets are heavy in junk food have an even higher risk, according to a new study.
"These patients have this very high risk because of this (genetic) mutation they have, but it might be that they could reduce the number of (tumors) by having a more healthy lifestyle," said Akke Botma, the lead author of the study.
Botma's study is just the first to find a link between certain foods and a higher colon cancer risk in this group, and it can't prove that the diet is to blame.
All of the people in the study had Lynch syndrome, a genetic disorder that predisposes people to cancer at younger ages and that affects up to one in 660 people.
In Western countries, colorectal and endometrial cancers are the dominant cancers to turn up in people with the syndrome, while in Asia it's mostly stomach cancer, Botma said.
Up to 70 percent of people with Lynch syndrome will develop colon cancer. Among people without Lynch syndrome, such cancers are thought to be influenced by diet, particularly alcohol and red and processed meat, the authors note in their study, published in the journal Cancer.
Botma and her colleagues at Wageningen University in the Netherlands contacted 486 people with Lynch syndrome from a national database of families with inherited risks for cancer.
At the beginning of the study they surveyed the participants about what they ate, and they ranked each person on whether he ate low, medium or high amounts of foods within four dietary categories.
The food groups included one that was dominated by fruits, vegetables and whole grains; another that was high in meat and coffee; a third dietary group that resembled a Mediterranean diet - fish, leafy greens, pasta, sauces and wine; and a fourth group that was heavy on fried snacks, fast food and diet soda.
Botma and her colleagues found that, over 20 months of follow up, 56 of the participants -- or 12 percent -- screened positive for tumors in the colon, a precursor to cancer.
Of the four dietary groupings, only the junk food category showed any link with a different risk for developing colon tumors.
Of the 160 people who scored low on the junk food diet, 17 developed tumors, while 18 out of the 160 people who ate the most junk food developed tumors.
The numbers initially seemed similar, but after taking into account smoking and other risk factors, the researchers determined that those in the high junk food group were twice as likely to develop colon tumors.
HOW TO MANAGE RISKS?
"It's hard to say why" junk food is linked with a greater risk for these tumors, said Dr. Mala Pande, an instructor at the University of Texas MD Anderson Cancer Center in Houston who was not involved in the research.
She said some researchers have suggested that high fat might have something to do with it, but it's impossible to conclude that from this study.
Although the findings are too preliminary to be used in making dietary recommendations to people with Lynch Syndrome, the study was valuable in launching research into the possible role of certain foods on cancer risk, said Christopher Amos, a professor at the Geisel School of Medicine at Dartmouth College.
"People with Lynch Syndrome are at higher risk, and we'd really like to know how to manage their risks better," Amos, who was not part of the study, told Reuters Health.
Certain foods have been shown to be linked with different types of cancer, but many of those studies contradict each other and sow confusion (see Reuters Health report of December 5, 2012 here: http://reut.rs/YPuDcs).

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Global malaria battle stalls as financing gets tight

Global funding for the fight against malaria has stalled in the past two years, threatening to reverse what the World Health Organisation (WHO) says are "remarkable recent gains" in the battle to control one of the world's leading infectious killers.
After rapid expansion between 2004 and 2009, funding for malaria prevention and control leveled off between 2010 and 2012 - meaning there were fewer life-saving steps taken in hard- hit malarial regions such as sub-Saharan Africa.
"If we don't scale up vector control activities in 2013 we can expect major resurgences of malaria," said Richard Cibulskis, lead author of the WHO's World Malaria Report, which was published on Monday.
"Vector control" means stopping transmission of the disease with tools such as treated mosquito nets. The report found that deliveries of such nets to endemic countries in sub-Saharan Africa dropped from 145 million in 2010 to an estimated 66 million in 2012.
"This means that many households will be unable to replace existing bed nets when required, exposing more people to the potentially deadly disease," the report said.
Malaria is caused by a parasite carried in the saliva of mosquitoes and kills hundreds of thousands of people a year, mainly babies and children under the age of five in Africa.
According to WHO data, the disease infected around 219 million people in 2010, killing around 660,000 of them. Robust figures are, however, hard to establish and other health experts say the annual malaria death toll could be double that.
GLOBAL TARGETS
An estimated $5.1 billion a year is needed between 2011 and 2020 to get malaria medicines, prevention measures and tests to all those who need them in the 99 countries which have on-going transmission of the disease.
"Essentially, with the tools that we've got, we need to make sure that we continue the investments in the control measures that we have," Cibulskis told a news conference in Geneva.
"If we don't do that, malaria will bounce back. As soon as you take bed nets away, malaria will come back. If you stop indoor residual spraying, it will come back, and with a vengeance. So yes, we need to keep on investing in malaria ultimately until new tools are developed."
The WHO says while many countries have increased financing for malaria, the total available global funding remained at $2.3 billion in 2011 - less than half of what is needed.
"Global targets for reducing the malaria burden will not be reached unless progress is accelerated in the highest burden countries," Robert Newman, director of the WHO Global Malaria Programme, said in statement with the report.
"These countries are in a precarious situation and most of them need urgent financial assistance to procure and distribute life-saving commodities."
The WHO report found that by far the greatest impact of malaria is concentrated in 14 endemic countries which account for an estimated 80 percent of malaria deaths.
Nigeria and the Democratic Republic of the Congo are the most affected countries in sub-Saharan Africa, while India is the hardest hit in South East Asia.
WHO director general Margaret Chan wrote in a forward to the report that there is now an urgent need to identify new sources of funding to boost and sustain malaria control.
"We also need to examine new ways to make existing funds stretch further by increasing the value for money of malaria commodities and the efficiency of service delivery," she said.
The Roll Back Malaria Partnership, which includes the WHO, UNICEF and the World Bank, said it was already exploring several options, including financial transaction taxes, airline ticket taxes and a potential "malaria bond" to encourage more involvement from private sector investors.
Fatoumata Nafo-Traore, executive director of the Roll Back Malaria Partnership, said Mozambique and one other African country were preparing to pilot such a bond in 2013, with the hope that other countries would follow their example.

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Analysis: Democrats' discord undercuts Obama estate tax push

 Divisions among Democrats are undermining President Barack Obama's push to raise the U.S. estate tax on inherited wealth, just weeks before the arrival of the "fiscal cliff" could drive the present estate tax rate even higher than Obama proposes.
Action on the estate tax could be postponed. But in his successful re-election campaign, Obama called for wealthy Americans to pay more in taxes - and it is overwhelmingly the wealthy who pay the estate tax.
The outcome may hinge on whether Obama insists on his estate tax proposal - or something close to it - as forcefully as he has insisted on raising individual income tax rates for high income-earners, or whether he lets the issue be put off.
If a single facet of the complicated partisan stand-off over taxing the wealthy best captures Capitol Hill's fiscal gridlock, it may be the estate tax - a long-standing and volatile issue - that may finally be coming to a head.
"If you look at where the public is on tax issues compared to the last time this was debated - it is night and day," said Frank Clemente, campaign manager for left-leaning Americans for Tax Fairness. "They are deep into this tax fairness position."
The "fiscal cliff" is a collection of federal tax increases and automatic government spending cuts that, if allowed to take effect as scheduled early in 2013, could push the U.S. economy into recession, according to economists' forecasts.
Part of the picture is the estate tax.
Under laws signed a decade ago by former Republican President George W. Bush, the estate tax is applied to inherited assets at 35 percent after a $5 million exemption. That means a deceased person can pass on an inheritance of up to $5 million before any tax applies.
Inherited wealth passed to a spouse or a federally recognized charity is generally not taxed.
Obama wants to raise the rate to 45 percent after a $3.5 million exemption. If the Bush rates are allowed to expire and Congress does nothing, the rate will shoot up next year to the pre-Bush levels of 55 percent after a $1 million exemption.
SCHUMER ON ESTATE TAX
New York Senator Charles Schumer on Thursday said the Democrats' proposal to avert the "fiscal cliff" involves $1 trillion in immediate deficit reduction that includes new revenue from raising the estate tax to the level proposed by Obama.
No less a power broker than Democratic Senate Finance Committee Chairman Max Baucus said this week, however, that he wants to hold the estate tax steady at current rates.
Baucus is up for re-election in 2014 from Montana. He says ranch and farm owners in his state would stand to lose if federal taxes rose on passing property to heirs.
"Rural Montana is much different than urban America," Baucus told Reuters in a brief interview in the U.S. Capitol.
He told a Montana newspaper on Sunday that he would even support scrapping the estate tax altogether, as most Republicans favor. A spokesman for Baucus - the Senate's top tax law writer - said he will seek as much estate tax "relief" as he can get.
At least three other rural-state Democratic senators have proposed extending current estate tax rates: Claire McCaskill of Missouri, Jon Tester of Montana and Mark Pryor of Arkansas.
Spokesmen for Pryor and McCaskill said everything is on the table as Congress struggles to deal with the "fiscal cliff."
But one thing is clear: the voice of farming lobbyists is registering with Democrats on the volatile estate tax issue, although it is only marginally about farms and ranches.
BEYOND FARMS AND RANCHES
The estate tax's impact extends beyond farmers and ranchers. It applies mostly to very wealthy Americans, whose taxes have been specifically targeted for increase by a president whom voters returned to the White House just three weeks ago following a tough campaign in which taxes were a key topic.
Of the 3,600 estates subject to the estate tax this year, only 100 are classified as farming estates, according to the congressional Joint Committee on Taxation.
The wealthiest 10 percent of Americans pay nearly all of the estate tax under current rates, according to the Tax Policy Center, a non-partisan fiscal policy think tank.
The number of estates subject to the tax would double under the plan proposed by Obama. About 300 farming estates would be subject to the tax under Obama's terms, which would raise about $100 billion in new revenue for the government over 10 years.
Republicans have benefited previously from Democratic division over the tax. In July, Senate Democrats shelved a plan to raise the estate tax with a symbolic extension of the Bush tax rates for the middle-class.
A senior Senate Democratic aide said the tax was pulled from the bill because Obama felt strongly about boosting the tax. It is unclear how hard he will fight for his position this time.
BY ANY OTHER NAME
The divide between the political parties over the tax is so wide that they cannot even agree on a name for it. Democrats call it the estate tax, as it is described in law.
Republicans, who generally want to repeal it, have another, more provocative name. They call it the "death tax" and characterize it as a penalty on being wealthy and successful.
First enacted nearly a century ago to combat the rise of dynastic wealth and check income disparity, the estate tax is the most progressive tax there is. That means it hits the wealthy much more than lower income groups.
It was a Republican president, Teddy Roosevelt, that proposed the first permanent inheritance tax, arguing that inheritance of "enormous fortunes" does a society no good.
"No advantage comes either to the country as a whole or to the individuals inheriting the money by permitting the transmission in their entirety of the enormous fortunes which would be affected by such a tax," Roosevelt said.
Another decade passed before it was adopted in 1916, partly to fund World War I. The rate has waxed and waned, hitting a high of 77 percent prior to World War II.

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Canadian year-to-date budget deficit narrows in September

 Canada's federal budget deficit dropped in the first six months of the fiscal year, falling to C$8.9 billion ($9.0 billion) in April to September from a C$11.8 billion shortfall in the same period of last year, the Department of Finance said on Friday.
The monthly deficit in September fell slightly to C$2.69 billion from C$2.75 billion in September 2011.
Revenues in the first six months of the fiscal year were up by 2.8 percent, compared with the same period in 2011, reflecting higher income tax revenues, excise taxes and duties, the finance department said.
Program expenses rose by 1.4 percent, mainly due to higher transfer payments.
September revenues fell by 0.1 percent from September 2011 while program expenses increased by 0.6 percent. Public debt charges fell by 7.6 percent.

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Number of ND 'income millionaires' jumps by 102

A record number of North Dakotans reported seven-figure incomes last year, many of whom are benefiting from the state's oil bonanza, the state Tax Department says.
Figures released to The Associated Press show a record 634 people reported incomes of more than $1 million on their 2011 individual tax returns, up from 532 in 2010 and 384 in 2009. In 2006, while North Dakota's oil boom was in its infancy, there were 339 so-called "income millionaires."
About 90 percent of the drilling in western North Dakota occurs on private land.
Tax Department analyst Kathy Strombeck said the increase in the number of North Dakotans with million-dollar incomes comes largely from royalties paid to mineral owners by oil companies.
"Oil has a lot to do with it," she said. "I imagine we'll see growth for a while as we ratchet up projection."
Through September, North Dakota already has set an oil production record for the fifth consecutive year and the state is on pace to best the previous mark by more than 50 million barrels. The state Department of Mineral Resources said crude production through September totaled more than 173.9 million barrels, up from the record 152.9 million barrels set last year.
Tax Department records show the average adjusted gross income in the state increased from $53,036 in 2010 to $60,947 last year. The average adjusted gross income on 2006 returns was about $43,300.
The number of returns has jumped from 339,000 in 2006 to 403,625 last year. The total reported income has increased from $14.6 billion to $21.9 billion during those years, data show.
Tax Commissioner Cory Fong said the higher incomes and the increase in the number of people filing tax returns in the state "adds to the narrative of what we've got going on here in North Dakota."
The oil industry has helped grow wages throughout the state and created hundreds of high-paying jobs. It also has an effect on other industries, including wholesale trade and manufacturing, he said.
"In a way, it's lifting all boats," Fong said.

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Obama says Republican "fiscal cliff" plan out of balance

 President Barack Obama rejected a Republican proposal to resolve a looming fiscal crisis on Tuesday as "still out of balance" and insisted any deal must include a rise in income tax rates on the wealthiest Americans.
Obama told Bloomberg Television that the Republicans' reliance on eliminating tax deductions instead of letting taxes rise on Americans making more than $250,000 a year would not raise enough money to fund the government.
House of Representatives Speaker John Boehner of Ohio, the top Republican in Congress, laid out a proposal on Monday that called for spending cuts but did not give any ground on Obama's call for an increase in tax rates for the top 2 percent of U.S. earners.
"Unfortunately, the Speaker's proposal right now is still out of balance. You know, he talks, for example, about $800 billion worth of revenues, but he says he's going to do that by lowering rates. And when you look at the math, it doesn't work," Obama said.
Obama, who won re-election last month, said it was important for Republicans to acknowledge that tax rates had to rise for top earners to raise revenue sufficient to balance spending cuts.
"We're going to have to see the rates on the top 2 percent go up. And we're not going to be able to get a deal without it," he said.
Obama said on Tuesday that while tax rates must go up for a "fiscal cliff" deal, it may be possible to lower rates at the top end of the scale late next year as part of tax reforms that would close loopholes and limit deductions.
"Let's let those go up," Obama told Bloomberg in an interview, referring to tax rates for the wealthiest Americans.
"And then let's set up a process with a time certain, at the end of 2013 or the fall of 2013, where we work on tax reform, we look at what loopholes and deductions both Democrats and Republicans are willing to close, and it's possible that we may be able to lower rates by broadening the base at that point."
Obama acknowledged there were more spending cuts that could be made and he pledged to work with Boehner to trim what he called excessive healthcare costs in the budget but that a deal was not possible without raising tax rates on the wealthy.
"There's probably more cuts that we can squeeze out, although we've already made over $1 trillion worth of spending cuts," he said.
Obama said there was not enough time this year to come up with an overhaul of the U.S. tax system and entitlement programs that Republicans want as a condition for an agreement to avoid the so-called fiscal cliff, a combination of tax hikes and spending cuts set to start in 2013 that economists predict will throw the economy into depression.
He said that despite weaknesses in Europe and Asia, he believed the U.S. economy is "poised to take off."
Obama added he is considering bringing a top business executive onto his economic team, but that the Senate confirmation process can be so difficult that some business executives shy away from government service.

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Republicans see some leverage in "fiscal cliff" talks

U.S. Republicans may have some leverage in their fiscal cliffhanger with President Barack Obama: the threat of forcing a disproportionate number of Democrats to pay the so-called alternative minimum tax.
Under U.S. law, taxpayers each year must pay the greater of regular federal income tax, or the AMT. The latter requires taxpayers to give up certain tax breaks, typically exemptions and deductions for state and local taxes and medical costs.
Only about 4 million taxpayers pay the AMT because Congress routinely passes a law to adjust for inflation, to spare middle-income and upper-middle income taxpayers. Without this legislative fix, called a "patch" by lawmakers, up to 33 million taxpayers will have to pay an AMT liability for 2012, according to the Internal Revenue Service.
That is one in five taxpayers.
The number of taxpayers affected by the AMT would jump because the AMT exemption amounts and income brackets do not automatically rise with inflation and also because across-the-board individual tax cuts a decade ago did not cut AMT rates.
States with the wealthiest taxpayers and the steepest state taxes, which typically cannot be deducted under the AMT, include New York, California and Illinois - Democratic strongholds.
That may make the threat of a lapse one of the Republicans' strongest cards after Obama's re-election last month on a theme of tax fairness.
"The AMT is one of the more significant pieces of leverage that the Republicans have," said Evan Liddiard, a former tax adviser to Orrin Hatch, the top Republican on the Senate Finance Committee. "It will pinch harder in the blue states."
That may make Republicans less likely to agree to a bill that addresses only the AMT.
Obama's Democrats and Republicans, led by House of Representatives Speaker John Boehner, have been battling while trying to keep from falling over a $600 billion "fiscal cliff" - a combination of tax increases and spending cuts due to be implemented early next year.
Now at a standstill, talks on how to avert the fiscal cliff have been largely focused on whether to renew low tax rates for the wealthiest taxpayers along with everyone else.
In a brief interview in the Capitol, Hatch said voters in the Democratic-leaning states will not be amused if their taxes go up unexpectedly.
"When they find out they are going to get hammered because of the AMT and the lack of plan by this administration to resolve that problem, yes, I think that will cost them (the Democrats) a few votes," Hatch said.
Because the latest AMT patch expired in 2011, it is in some ways more urgent to address the AMT than the Bush-era tax cuts expiring at the end of December.
Congress last patched the AMT in the lame-duck session in 2010. A bipartisan bill passed by the Senate finance committee to patch AMT for 2012 and 2013 was estimated to cost $132.2 billion.
The cost is one reason the AMT never gets patched permanently. Republicans generally want to scrap the AMT altogether; Obama's latest budget calls for adjusting it for inflation.
IRS WARNINGS
Further complicating the AMT picture is the chaos predicted for the tax-filing season due to begin on January 22, the first working day after Obama's inauguration ceremony in Washington.
A letter from the tax-collecting IRS Commissioner Steve Miller on potential agency problems related to the fiscal cliff focuses almost exclusively on the AMT.
Failure to "patch" the AMT could lead to 60 million taxpayers not being able to file tax returns or get a refund, in addition to a software nightmare for the IRS computer systems.
Miller wrote lawmakers on November 13 warning them of serious repercussions for taxpayers, including 28 million with a "very large unexpected tax liability," and delays in refunds for millions.
"Consistent with past practice, I have instructed IRS staff again this year to leave our core systems "as-is" with respect to the AMT, and hold off on the substantial design and engineering work" required otherwise, he wrote.
Miller last briefed the Senate Finance Committee about the need for action late last month, according to a Senate source.
Representative Richard Neal, a senior Democrat on the Ways and Means Committee who represents parts of Massachusetts, said fixing the AMT was an absolute must.
"It has to be done. It reaches too many people if it's not," Neal said. "I think it is again being used as (a) bargaining (chip)."
Republicans say they are holding out for a bigger deal.
"That is not going to solve the fiscal cliff," said Republican Representative Pat Tiberi, who leads the revenue sub-panel of the tax-writing House Ways and Means Committee.
"It is a very important part of the tax code but once you start picking winners and losers in the tax code, how do you get ... the big deal done?

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Buying your own botnet costs as little as $250

Botnets used to be the exclusive domain of high-powered hackers looking to rake in cash from spam operations or to conduct highly effective DDoS attacks. But now Symantec has found that botnets are increasingly becoming available to less sophisticated hacker wannabes and are being sold for as little as $250. [More from BGR: BlackBerry 10 browser smokes iOS 6 and Windows Phone 8 in comparison test [video]] After trolling around on some of the darker corners of the Internet, Symantec researchers stumbled upon a seller marketing a “Zeus Fully Setup Botnet + Bulletproof Hosting” for $250 that includes source code, binaries, user guides and a control panel. Symantec also found other purported botnets on sale for as much as $1,000, although the firm believes that at least some of these advertised botnets are scams. [More from BGR: Google Maps causes huge spike in iOS 6 adoption] Even so, the company says the rise of for-sale botnets is significant because “previously, it was necessary to be a member of an exclusive community to purchase these files, but it appears that it is now getting easier.”

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Samsung will patch malware exploit affecting Galaxy S III and Galaxy Note II

Samsung (005930) Galaxy S III and Galaxy Note II owners had a big scare last week when it was discovered the smartphones are vulnerable to app-based attacks stemming from a security hole with their Exynos-4 processors. Samsung confirmed to Android Central that it has investigated the “potential security issue” and re-states that the “issue may arise only when a malicious application is operated on the affected devices; however, this does not affect most devices operating credible and authenticated applications.” Nonetheless, Samsung will be releasing a software update “to address it as quickly as possible.” Samsung’s swift action is reassurance that it values the more than 30 million Galaxy S III and more than 5 million Galaxy Note II customers it has racked up this year.

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Kodak in $525 million patent deal, eyes bankruptcy end

Eastman Kodak Co agreed to sell its digital imaging patents for about $525 million, a key step to bringing the photography pioneer out of bankruptcy in the first half of 2013.
The deal for the 1,100 patents allows Kodak to fulfill a condition for securing $830 million in financing.
The patent deal was reached with a consortium led by Intellectual Ventures and RPX Corp, and which includes some of the world's biggest technology companies, which will license or acquire the patents.
Those companies are Adobe Systems Inc, Amazon.com Inc, Apple Inc, Facebook Inc, Fujifilm, Google Inc, Huawei Technologies Co Ltd, HTC Corp, Microsoft Corp, Research In Motion Ltd, Samsung Electronics Co Ltd and Shutterfly Inc, according to court documents.
Kodak still must sell its personalized and document-imaging businesses as part of the financing package, and also has to resolve its UK pension obligation.
Kodak said the patent deal puts it on a path to emerge from Chapter 11 in the first half of 2013.
"Our progress has accelerated over the past several weeks as we prepare to emerge as a strong, sustainable company," said Antonio Perez, chairman and chief executive of the Rochester, New York-based company.
The patent portfolio was expected to be a major asset for Kodak when it filed for bankruptcy in January. An outside firm had estimated the patents could be worth as much as $2.6 billion.
Kodak's patents hit the market as intellectual property values have soared and technology companies have plowed money into patent-related litigation.
For example, last year Nortel Networks sold 6,000 wireless patents in a bankruptcy auction for $4.5 billion and earlier this year Google spent $12.5 billion for patent-rich Motorola Mobility.
But Kodak's patent auction dragged on beyond the initial expectation that it would be wrapped up in August. One patent specialist blamed those early, overly optimistic valuations, which he said encouraged Kodak's team to set their sights too high.
"Unfortunately (Kodak management) was misled into thinking it was worth billions of dollars and it wasn't," said Alex Poltorak, chairman of General Patent Corp, a patent licensing firm. "I think they sold them at a very good price."
He said after Google acquired Motorola, the search engine company no longer needed patents at any price, deflating the intellectual property market.
Kodak traces its roots to the 19th century and invented the handheld camera. But it has been unable to successfully shift to digital imaging.
It will likely be a different company when it exits bankruptcy, out of the consumer business and focused instead on providing products and services to the commercial imaging market.
The patent sale is subject to approval by the U.S. Bankruptcy Court in Manhattan.
The Kodak bankruptcy case is in Re: Eastman Kodak Co. et al, U.S. Bankruptcy Court, Southern District of New York, No. 12-10202.

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Kodak acuerda venta patentes por 525 mln dlr, busca fin bancarrota

 La firma Eastman Kodak Company acordó vender sus patentes de imágenes digitales en una operación valuada en 525 millones de dólares, un paso clave para que la empresa pionera de la fotografía pueda salir de la bancarrota en el primer semestre del 2013.
El acuerdo por 1.100 patentes permite a Kodak cumplir una condición para conseguir 830 millones de dólares de financiamiento.
El acuerdo sobre patentes se logró con un consorcio liderado por Intellectual Ventures y RPX Corp, que incluye a algunas de la compañías de tecnología más grandes del mundo, que comprarán o licenciarán las patentes.
Esas compañías son Adobe Systems Inc, Amazon.com Inc, Apple Inc, Facebook Inc, Fujifilm, Google Inc, Huawei Technologies Co Ltd, HTC Corp, Microsoft Corp, Research In Motion Ltd, Samsung Electronics Co Ltd y Shutterfly Inc, según documentos de la corte.
Kodak aún debe vender su negocio de imágenes personalizadas y de documentos como parte del paquete de financiamiento, y además debe resolver sus obligaciones de pensiones en el Reino Unido.
La compañía dijo que el acuerdo de patentes la pone en camino a salir de la bancarrota en la primera mitad del 2013.
"Nuestros avances se han acelerado durante las últimas semanas a medida que nos preparamos para surgir como una compañía sólida y sostenible", dijo Antonio Pérez, presidente ejecutivo de la firma con sede en Rochester, Nueva York.
Cuando Kodak solicitó la bancarrota en enero, se esperaba que la cartera de patentes fuera un enorme activo para la empresa. Una compañía externa había estimado que las patentes pudiesen valer hasta 2.600 millones de dólares.
Las patentes de Kodak salieron al mercado en momentos en que los valores de la propiedad intelectual se han disparado y las compañías de tecnología han destinado mucho dinero a litigios legales relativos a patentes.
Por ejemplo, Nortel Networks vendió el año pasado 6.000 patentes inalámbricas en una subasta por bancarrota por 4.500 millones de dólares y anteriormente este año Google gastó 12.500 millones de dólares por Motorola Mobility, que tiene una amplia cartera de patentes.
Pero la subasta de patentes de Kodak se prolongó más allá de las expectativas iniciales, que apuntaban a una conclusión en agosto. Un especialista en patentes culpó a las estimaciones iniciales extremadamente optimistas, que dijo alentaron al equipo de Kodak a poner sus metas demasiado altas.
"Lamentablemente (la gerencia de Kodak) fue engañada y creyó que valía miles de millones de dólares, pero no era así", dijo Alex Poltorak, presidente de General Patent Corp, una firma de licencias de patentes. "Creo que las vendieron a un muy buen precio", agregó.
El dijo que después de que Google compró a Motorola, la compañía de búsquedas en internet ya no necesitaba patentes a ningún precio, lo que hizo caer los precios del mercado de propiedad intelectual.
Las raíces de Kodak se remontan al Siglo XIX e inventó la cámara portátil. Pero no ha podido girar con éxito a la fotografía digital.
Posiblemente será una compañía diferente cuando salga de la bancarrota, fuera del negocio para los consumidores y concentrada, en cambio, en brindar productos y servicios al mercado de imágenes comerciales.
Los acuerdos están sujetos a la aprobación de la Corte de Bancarrota de Estados Unidos en Manhattan.

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Kodak sells digital imaging patents for $525M

ROCHESTER, N.Y. (AP) — Eastman Kodak is selling its digital imaging patents for about $525 million, money the struggling photo pioneer says will help it emerge from bankruptcy protection in the first half of next year.
Apple Inc., Google Inc., Samsung Electronics Co., Research In Motion Ltd., Microsoft Corp., China's Huawei Technologies, Facebook Inc. and Amazon.com Inc. are among the 12 companies paying to license the 1,100 patents, according to court filings. Patents have become very valuable to digital device makers, who want to protect themselves from intellectual property lawsuits. But Kodak, which has been trying to make the sale happen for more than a year, wound up receiving substantially less money than had been expected.
Rochester, N.Y.-based Eastman Kodak Co. said Wednesday that the patent sale will help it repay a substantial amount of a loan it received under the bankruptcy process. It also satisfies a key condition of a new, cheaper $830 million loan package, which required that the patents be sold for at least $500 million.
Founded in 1880, Kodak filed for Chapter 11 bankruptcy protection in January after a long struggle to stay relevant. First came competition from Japanese companies, then the shift from film to digital photography over the past decade. Kodak failed to keep up. The once-mighty company, whose workforce peaked at 145,300 in 1988, said at the end of September that it expected to wind up with 13,100 employees after another round of job cuts.
Since filing for bankruptcy protection, Kodak has sold off several businesses, such as its online photo service, and said it would shut down other divisions, including the manufacturing of digital cameras. The company intends to focus on commercial and packaging printing. It sees home photo printers, high-speed commercial inkjet presses, software and packaging as the core of its business as it emerges from bankruptcy.
Kodak began mining its patent portfolio for license revenue in 2008. In January 2010, it sued Apple and RIM, saying that smartphone makers infringed its patent for technology that lets a camera preview low-resolution versions of a moving image while recording still images at higher resolutions.
But by July 2011, it was trying to sell its 1,100 digital imaging patents. Analysts initially thought the portfolio could fetch between $2 billion and $3 billion. But Kodak struggled to find a buyer.
The 12 licensees for Kodak's imaging patents were organized by Intellectual Ventures and RPX Corp. Kodak spokesman Christopher Veronda said each licensee will pay a portion of the total cost and then have access to all the patents. The deal also includes an agreement to settle patent-related litigation.
The sale represents "another major milestone toward successful emergence" from bankruptcy, said Antonio M. Perez, Kodak's chairman and CEO, in a statement. "Our progress has accelerated over the past several weeks as we prepare to emerge as a strong, sustainable company."
Kodak will keep ownership of about 9,600 patents, focused mostly on commercial imaging and printing technologies.

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Coalition soldier missing in Afghanistan

KABUL, Afghanistan (AP) — A search is under way in southern Afghanistan for a soldier from the NATO-led coalition, believed to be the first to have gone missing since a U.S. Army sergeant was captured by the Taliban more than three years ago, a military spokesman said Friday.
U.S. Army Maj. Martyn Crighton said the soldier was among the 1,560 troops from the former Soviet republic of Georgia serving in the country.
A statement from Georgia's Defense Ministry on Thursday said an intense "search and rescue" operation was being mounted in Helmand and Nimroz provinces, describing the soldier as a military officer who went missing on Wednesday.
The last known coalition soldier to go missing was U.S. Army Sgt. Bowe Bergdahl, 26, who was taken prisoner on June 30, 2009 in Paktika province in southeastern Afghanistan.
Bergdahl, who turned 26 in captivity on March 28, was the subject of a proposed prisoner swap in which the Obama administration was considering the transfer of five Taliban prisoners long held at the U.S. military prison at Guantanamo Bay, Cuba, to Qatar.
That plan collapsed, but a new proposal would transfer some Taliban fighters or their affiliates out of full U.S. control. The prisoners would go to a detention facility adjacent to Bagram air field, the largest U.S. military base in Afghanistan, officials of both governments have said.
Eighteen Georgian soldiers have been killed since the country joined the international military operations in Afghanistan in August 2009. Georgia is not a member of NATO but has significant presence in Afghanistan relative to its population of 4.5 million.
There are currently more than 102,000 coalition troops in the country, including 66,000 from the United States. Only a residual force is slated to remain past 2013.

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US budget negotiations setback drives stocks down

PARIS (AP) — A failed attempt find a compromise in U.S. budget negotiations sent global stock markets plummeting Friday, as investors feared the world's largest economy could teeter into recession if no deal is found.
Without an agreement, the U.S. economy will fall off the so-called "fiscal cliff" on Jan. 1 when Bush-era tax cuts expire and spending cuts kick in automatically. The measures were designed to have a negative effect on the U.S. economy, in the hopes that the feared outcome would push lawmakers and President Barack Obama to find a deal.
"We've seen Europe's politicians repeatedly flirt lemming-like with cliff-diving in 2012, and now it's the turn of U.S. 'leaders,'" said Kit Juckes, an analyst with Societe Generale. "The nagging fear is always there that someone, on one side of the Atlantic or the other, will forget to let rational thought take over at the last second."
Amid the uncertainty, European shares fell. France's CAC dropped 0.15 percent to close at 3,661, while the DAX in Germany dropped 0.5 percent to end the day 7,636. The FTSE index of leading British shares retreated 0.3 percent to 5,939.
The euro also fell sharply, dropping 0.5 percent to $1.3159.
In Asia, Japan's Nikkei 225 index closed 1 percent lower at 9,940.06. Hong Kong's Hang Seng lost 0.7 percent to 22,506.29. South Korea's Kospi shed 1 percent at 1,980.42. Australia's S&P/ASX 200 fell 0.2 percent to 4,623.60. Mainland Chinese stocks were mixed.
U.S. stock futures tumbled after rank-and-file Republican lawmakers failed to support an alternative tax plan by House Speaker John Boehner late Thursday in Washington. That plan would have allowed tax rates to rise on households earning $1 million and up. Obama wants the level to be $400,000.
In midday trading trading in New York, the Dow Jones industrial average dropped 1.25 percent to 13,147, while the broader Standard & Poor's index fell 1.3 percent at 1,424.
"The fiscal cliff is a real threat not just for U.S. growth next year but for the outlook for global growth," said Jane Foley, currency analyst with Rabobank.
When growth slows, energy demand does, too, and oil prices fell in anticipation.
Benchmark crude for February delivery fell $1.78 to $88.35 per barrel in electronic trading on the New York Mercantile Exchange.

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NKorea says it has detained a US citizen

PYONGYANG, North Korea (AP) — North Korea said Friday that an American citizen has been detained after confessing to unspecified crimes, confirming news reports about his arrest at a time when Pyongyang is facing criticism from Washington for launching a long-range rocket last week.
The American was identified as Pae Jun Ho in a brief dispatch issued by the state-run Korean Central News Agency in Pyongyang. News reports in the U.S. and South Korea said Pae is known in his home state of Washington as Kenneth Bae, a 44-year-old tour operator of Korean descent.
An expert said he is likely to become a bargaining chip for the North, an attempt to draw the U.S. into talks. Five other Americans known to have been detained in North Korea since 2009 were all eventually released.
North Korean state media said Pae arrived in the far northeastern city of Rajin on Nov. 3 as part of a tour.
Rajin is part of a special economic zone not far from Yanji, China, that has sought to draw foreign investors and tourists over the past year. Yanji, home to many ethnic Korean Chinese, also serves as a base for Christian groups that shelter North Korean defectors.
"In the process of investigation, evidence proving that he committed a crime against (North Korea) was revealed. He admitted his crime," the KCNA dispatch said.
The North said the crimes were "proven through evidence" but did not elaborate.
KCNA said consular officials from the Swedish Embassy in Pyongyang visited Pae on Friday. Sweden represents the United States in diplomatic affairs in North Korea since Washington and Pyongyang do not have diplomatic relations.
Karl-Olof Andersson, Sweden's ambassador to North Korea, told The Associated Press he could not comment on the case and referred the matter to the U.S. State Department.
The State Department was not immediately able to provide any additional information about the report.
The operator of a Korean language website for the Korean community in the Northwest, Chong Tae Kim of JoySeattle.com, said the detainee's father lives in Korea and his mother lives in Lynnwood, Washington.
"She hopes the State Department and Swedish Embassy help with his release," he said Friday. "She's trying not to speak to reporters, fearing that could affect her son's release."
The office of U.S. Rep. Suzan DelBene says it has reached out to the mother and is pressing the State Department for information.
"We are very concerned about it and seeing what can be done on our end to help with this," said spokesman Viet Shelton.
State Department spokesman Patrick Ventrell on Friday would only say that they were aware of the detention and that Swedish Embassy in Pyongyang is providing consular services.
"We can, indeed, confirm that a U.S. citizen has been detained in North Korea," Ventrell said, adding that he could not say more because of privacy restrictions.
In Seoul, the Segye Ilbo newspaper reported last week that Bae had been taking tourists on a five-day trip to the North when he was arrested. The newspaper cited unidentified sources.
News of the arrest comes as North Korea is celebrating the launch of a satellite into space on Dec. 12, in defiance of calls by the U.S. and others to cancel a liftoff widely seen as an illicit test of ballistic missile technology.
The announcement of the American's detainment could be a signal from the North that it wants dialogue with the United States, said Cheong Seong-chang, an analyst at the private Sejong Institute in South Korea. He said trips by former U.S. Presidents Bill Clinton and Jimmy Carter to North Korea to secure the release of other detained Americans created a mood for U.S.-North Korea talks.
"North Korea knows sanctions will follow its rocket launch. But in the long run, it needs an excuse to reopen talks after the political atmosphere moves past sanctions," Cheong said.
Cheong said he expects that the American will be tried and convicted in coming months. North Korean leader Kim Jong Un has the power to grant amnesty and will exercise it as a bargaining chip, Cheong said.
State Department spokeswoman Victoria Nuland said earlier this week that Washington had been trying to reach out to Kim.
"Instead, that was met not only with an abrogation of agreements that had been made by the previous North Korean regime, but by missile activity both in April and in December," she told reporters.
She said Washington had no choice but to put pressure on Pyongyang, and was discussing with its allies how to "further isolate" the regime.
In April 2009, a North Korean rocket launch took place while two American journalists, Laura Ling and Euna Lee, were in North Korean custody after allegedly trying to sneak into the country across the Tumen River dividing the North from China.
They were sentenced to 12 years of hard labor before being released on humanitarian grounds after Clinton flew to Pyongyang to negotiate their release.
Subsequently, three other Americans were arrested and eventually released by North Korea. All three are believed to have been accused of illegally spreading Christianity.
North Korea has several sanctioned churches in Pyongyang but frowns on the distribution of Bibles and other religious materials by foreigners. Interaction between North Koreans and foreigners is strictly regulated.

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Gunmen kill 11 Pakistanis, Afghans in SW Pakistan

QUETTA, Pakistan (AP) — An official says gunmen have killed eleven Pakistanis and Afghans in a border town of southwestern Pakistan as they were trying to cross to Iran to travel on to Europe as illegal migrants.
Local government official Zubair Ahmed said Saturday the shooting took place late Friday in the Sunsar town of southwestern Baluchistan province.
He said the dead and wounded were Afghans and Pakistanis.
It was not immediately clear who was behind the attack, but hundreds of such Pakistanis and Afghans are captured by Iranian border guards every year for illegally trying to travel to Europe to find better jobs.
Iran deports such detainees after questioning.
Quetta is the capital of impoverished Baluchistan province, where nationalist groups have also waged a low-level insurgency.

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People flee Japan nuke disaster to faraway Okinawa

NAHA, Japan (AP) — Okinawa is about as far away as one can get from Fukushima without leaving Japan, and that is why Minaho Kubota is here.
Petrified of the radiation spewing from the Fukushima Dai-ichi nuclear plant that went into multiple meltdowns last year, Kubota grabbed her children, left her skeptical husband and moved to the small southwestern island. More than 1,000 people from the disaster zone have done the same thing.
"I thought I would lose my mind," Kubota told The Associated Press in a recent interview. "I felt I would have no answer for my children if, after they grew up, they ever asked me, 'Mama, why didn't you leave?'"
Experts and the government say there have been no visible health effects from the radioactive contamination from Fukushima Dai-ichi so far. But they also warn that even low-dose radiation carries some risk of cancer and other diseases, and exposure should be avoided as much as possible, especially the intake of contaminated food and water. Such risks are several times higher for children and even higher for fetuses, and may not appear for years.
Okinawa has welcomed the people from Fukushima and other northeastern prefectures (states) affected by the March 11, 2011, earthquake and tsunami that set off the nuclear disaster. Okinawa is offering 60,000 yen ($750) a month to help relocating families of three or four pay the rent, and lower amounts for smaller families.
"We hope they feel better, maybe refreshed," said Okinawan official Masakazu Gunji.
Other prefectures have offered similar aid, but Okinawa's help is relatively generous and is being extended an extra year to three years for anyone applying by the end of this year.
Most people displaced by the disaster have relocated within or near Fukushima, but Okinawa, the only tropical island in Japan, is the most popular area for those who have chosen prefectures far from the nuclear disaster. An escape to Okinawa underlines a determination to get away from radiation and, for some, distrust toward Tokyo Electric Power Co., the utility that operates Fukushima Dai-ichi.
Kazue Sato lived in fear of radiation because the roof of her home in Iwaki, a major city in Fukushima, was destroyed by the earthquake.
And so she moved with her husband, a chef, back to Okinawa, where she had grown up. She now lives in her grandparents' home and hopes to turn it into a coffee shop with her husband.
But Sato is still struggling with depression, especially because her old friends criticized her for what they thought were her exaggerated fears about radiation. She struggles with a sense of guilt about having abandoned Fukushima.
"Little children have to wear masks. People can't hang their laundry outdoors," she said. "Some people can't get away even if they want to. I feel so sorry for them."
Sato and Kubota are joining a class-action lawsuit being prepared against the government and Tokyo Electric on behalf of Fukushima-area residents affected by the meltdowns. It demands an apology payment of 50,000 yen ($625) a month for each victim until all the radiation from the accident is wiped out, a process that could take decades, if ever, for some areas.
Independent investigations into the nuclear disaster have concluded that the Fukushima Dai-ichi plant was unprepared for the massive tsunami, in part because of the nuclear industry's cozy relationship with government regulators.
"We think people have the right to live in an environment not polluted by radiation that may harm their health, and that right has been violated by this accident," Izutaro Managi, one of the case's lawyers, said in a meeting earlier this month for plaintiffs in Naha, a major Okinawan city.
Japan's statute of limitations requires that the lawsuit be filed no later than March 11, 2014. About 20 of the evacuees in Okinawa have signed on to the lawsuit, which has gathered 100 other people in the three weeks since it began.
Kubota, who now works part time for an Okinawa magazine publisher, said the problem is that no one is taking responsibility for the accident.
"Seeking accountability through a lawsuit may feel like such a roundabout effort. But in the end, it's going to be the best shortcut," she said.
She is getting health checkups for her children, fretting over any discovered problems, including anemia, fevers and nosebleeds.
Her fears are heightened by the fact that she and her children had lived in their car right after the disaster, which had liquefied the land and destroyed their home. They had unknowingly played outdoors while the nuclear plants had been exploding, she recalled.
The disaster ended up separating her family. Her husband refused to leave his dentist practice in Ibaraki Prefecture. They argued over whether to relocate, but she knew she had to leave on her own when he said: "There is nothing we can do."
These days, he visits her and their two boys, ages 8 and 12, in her new apartment in Okinawa on weekends. He sends her money, something he didn't do at first.
"I wake up every day and feel thankful my children are alive. I have been through so much. I have been heartbroken. I have been so afraid," she said.

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Why scandal-tinged Berlusconi still beloved of many Italians

ROME (Reuters) - They call themselves "the club". A doctor, a business-owner, pensioners and engineers - united by their support for one of Europe's most controversial politicians, Silvio Berlusconi.
"We are all Berlusconiani. We do not want Monti. We don't want someone who takes orders from Brussels," said teacher Annalisa Lillo, 49, in the Rome antiques shop where the club meets to discuss politics in the evenings.
Outsiders might struggle to understand the continued appeal of the four-time, scandal-ridden prime minister, driven from office a year ago at the height of Italy's economic crisis.
But while support for his People of Freedom party is half what it once was, it still commands 16.5 percent and remains a formidable player as Italy prepares for elections in February.
Fuelled by cake and glasses of sparkling wine, members lobby politicians, attend pro-Berlusconi rallies and scrub off anti-Berlusconi graffiti in the neighborhood where they meet.
On one evening, about 20 men and women between 25 and 75 sat in a circle on assorted antique furniture discussing Berlusconi's return to the leadership of the PDL.
"He knows the pulse of Italians," said 39-year old engineer Alessio Brugnoli. "Berlusconi is the obligatory choice."
THAT OLD MAGIC
One poll showed PDL support rose three points in the week after he announced his candidacy, proving there is life in the old man yet and it would be rash to underestimate him.
"Berlusconi is an unusual politician. He's a businessman. He's not in politics to claim expenses and get an official car. He lives, works to help businesses," pensioner Augusto Senesi said. "You cannot say he damaged the country."
The media mogul's campaign began in earnest this week when he rallied his ample resources to fill the airwaves with the time-worn tenets of his sales pitch: anti-tax, pro-business, and anti-communist.
He is making the most of the fact that on Monday, Italians had to pay a hated property tax re-introduced by Monti's government. Berlusconi has promised to cancel it.
He illustrated what he sees as a communist threat in an interview on Sunday with a story about a Soviet Union family massacred to force them to reveal the whereabouts of a bishop.
This might seem odd to those outside Italy but it emphasized the Marxist origins of much of the country's political left and deftly played on old fears among his conservative voters.
His enormous media control ensures that his point of view - for example, that the many court cases against him stem from a left-wing judicial conspiracy - get substantial airing.
But, as it did in the Arab Spring protests, new media are becoming an unfettered forum for alternative views in Italy.
After a microphone picked up Berlusconi instructing his interviewer what question to ask next, thousands of mocking Tweets kept the journalist's name trending on Twitter.
CONSPIRACIES
On one issue the club is unanimous: that the replacement of Berlusconi with the Monti government was a coup d'etat by nebulous forces in Brussels and possibly orchestrated with the deliberate collusion of financial markets.
"Berlusconi was democratically elected. This has been a dark phase of democracy. Twelve months of horror. Europe set us up," said 34-year-old engineer Marco Ajello.
Berlusconi insists he supports a strong pan-European foreign policy, but he intersperses those claims with tirades against "German-imposed austerity" and the "rigging" of the European Union to favor northern member countries.
"Look, if you add it up, over the last 10 years Italy has lost out from the euro," engineer Ajello said.
Berlusconi had said he would withdraw to support Monti if he ran at the head of coalition of the centre-right and moderates.
Yet this thought horrifies the club, who believe the PDL lost support because it cooperated with Monti - the darling of the international financial community - for too long.
As Italy awaits Monti's decision on whether he will run, expected this weekend, polls show he commands much more support among leftist voters than on the right.
He could split the main centre-left Democratic Party's (PD) dominant voting bloc of more than 30 percent, says James Walston, politics professor at the American University of Rome.
Berlusconi is now on trial on charges of paying for sex with an minor during one of the so-called "Bunga Bunga" parties at his plush residences.
He has denied any wrongdoing in that case and in others where he has been accused of corruption and tax fraud, decrying what he says is a politically motivated war against him by leftist magistrates.
Many Italians do not believe him. But as far as the zealots of "the club" are concerned, he is preaching to the converted.

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South Africa's soothing Ramaphosa leads ANC charm offensive

BLOEMFONTEIN, South Africa (Reuters) - South Africa's ruling ANC put its new No. 2 Cyril Ramaphosa at the head of a charm offensive on Friday as it sought to reassure both investors and a restless public it would tackle economic inequality without recourse to wholescale nationalization.
Days after his appointment as party deputy to President Jacob Zuma, who was re-elected ANC chief this week, the anti-apartheid hero and businessman laid out the party's strategic priorities.
Appearing at a business breakfast with Zuma and other ANC leaders elected at a conference in Bloemfontein, Ramaphosa stressed the ruling party backed a mixed economy model.
But he added the state would intervene to ensure the country's wealth was better shared.
"Within a mixed economy, the state has a role to play. It intervenes and the private sector also has a role," Ramaphosa said, wearing like Zuma a red tie with his dark business suit.
The return of Ramaphosa to the ANC leadership will allow the party to capitalize on his experience and reputation for integrity. His popularity rests on both his history as an anti-apartheid mineworkers' champion in the 1980s and his current pro-business credentials as South Africa's second wealthiest black entrepreneur.
The ANC had its 100th anniversary this year. But Nelson Mandela's liberation movement has been split by feuding and has faced a groundswell of popular anger against graft, cronyism and widespread poverty and unemployment in Africa's biggest economy.
Deadly strikes swept the mines this year in the worst labor violence since the end of apartheid in 1994. It led to damaging credit downgrades for South Africa and questions whether 70-year-old Zuma, who has faced a slew of corruption and personal scandals, can effectively lead the party and country.
Ramaphosa warmed to his new role on Friday as he finessed the ANC's main economic policy takeaway from Bloemfontein. This was a decision to shun "classic, wholesale nationalization" but for the state to intervene selectively in the economy where necessary in key areas such as mining and infrastructure.
Rejecting charges the ANC was "confused" on nationalization, whose defenders at the conference were soundly defeated, Ramaphosa invoked the party's 1955 Freedom Charter that declares "the people shall share in the wealth of the country".
"Now the ANC's duty is to make sure that is fulfilled, and fulfilling that would mean that in certain areas the state intervenes," he said, giving the examples of a state mining company set up by the government and intervention to ensure that prices of drugs for HIV/AIDS sufferers remain affordably low.
Ramaphosa's elevation was welcomed in business circles.
Moody's, which with another credit rating agency has punished South Africa for its mining and leadership woes, said the ANC platform looked "more investor- and business-friendly than had generally been anticipated prior to the conference".
South Africa's Business Day newspaper said in an editorial: "Mr. Ramaphosa's re-entry into party politics represents a victory for those dealing and negotiating in the real world, rather than in the world of ideological illusion."
WANTED: A PROSPEROUS SOUTH AFRICA
But the Chamber of Mines and Moody's said questions remained about how the government would intervene in the mining sector, and what additional taxes it might levy there. The ANC has also raised the idea of export curbs on minerals.
It also remained to be seen whether Ramaphosa, who has maintained a wealthy lifestyle in recent years far from his origins in the anti-apartheid workers' struggle, can connect with the mass of voters who are poor and unemployed.
His comeback puts him in line for a possible future bid for the South African presidency currently held by Zuma who, if he remains the party candidate, is virtually assured of re-election as head of state in the next national vote in 2014.
At this week's ANC conference, Zuma crushed a half-hearted leadership bid from Deputy President Kgalema Motlanthe, whose challenge grouped a loose alliance of opponents of the Zuma presidency. This included advocates of more radical policies such as nationalization and seizure of white-owned farm land.
Asked about the ANC's future ideological direction, Zuma replied: "Ideologically, we want a prosperous South Africa."
He also made clear he would not immediately replace Deputy President Motlanthe with Ramaphosa in the cabinet.
Zuma, who took the party leadership from former President Thabo Mbeki at a 2007 ANC conference, acknowledged one of the party's biggest tasks was to address the popular clamor for better services, improved livelihoods and more jobs.
"There's a huge backlog there we have to deal with," he said.
Although Zuma denied any internal purge of top figures who had opposed him, some of these, such as Human Settlements Minister Tokyo Sexwale and Sports Minister Fikile Mbalula, were dropped from the new ANC National Executive Committee (NEC).
Re-elected ANC Secretary-General Gwede Mantashe made clear the party took a dim view of attempts to divide it, for example from expelled former Youth League leader Julius Malema. "If you mess up the ANC, the ANC messes you up," he said.

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S.Africa's soothing Ramaphosa leads ANC charm offensive

BLOEMFONTEIN, South Africa (Reuters) - South Africa's ruling ANC put its new No. 2 Cyril Ramaphosa at the head of a charm offensive on Friday as it sought to reassure both investors and a restless public it would tackle economic inequality without recourse to wholescale nationalisation.
Days after his appointment as party deputy to President Jacob Zuma, who was re-elected ANC chief this week, the anti-apartheid hero and businessman laid out the party's strategic priorities.
Appearing at a business breakfast with Zuma and other ANC leaders elected at a conference in Bloemfontein, Ramaphosa stressed the ruling party backed a mixed economy model.
But he added the state would intervene to ensure the country's wealth was better shared.
"Within a mixed economy, the state has a role to play. It intervenes and the private sector also has a role," Ramaphosa said, wearing like Zuma a red tie with his dark business suit.
The return of Ramaphosa to the ANC leadership will allow the party to capitalise on his experience and reputation for integrity. His popularity rests on both his history as an anti-apartheid mineworkers' champion in the 1980s and his current pro-business credentials as South Africa's second wealthiest black entrepreneur.
The ANC had its 100th anniversary this year. But Nelson Mandela's liberation movement has been split by feuding and has faced a groundswell of popular anger against graft, cronyism and widespread poverty and unemployment in Africa's biggest economy.
Deadly strikes swept the mines this year in the worst labour violence since the end of apartheid in 1994. It led to damaging credit downgrades for South Africa and questions whether 70-year-old Zuma, who has faced a slew of corruption and personal scandals, can effectively lead the party and country.
Ramaphosa warmed to his new role on Friday as he finessed the ANC's main economic policy takeaway from Bloemfontein. This was a decision to shun "classic, wholesale nationalisation" but for the state to intervene selectively in the economy where necessary in key areas such as mining and infrastructure.
Rejecting charges the ANC was "confused" on nationalisation, whose defenders at the conference were soundly defeated, Ramaphosa invoked the party's 1955 Freedom Charter that declares "the people shall share in the wealth of the country".
"Now the ANC's duty is to make sure that is fulfilled, and fulfilling that would mean that in certain areas the state intervenes," he said, giving the examples of a state mining company set up by the government and intervention to ensure that prices of drugs for HIV/AIDS sufferers remain affordably low.
Ramaphosa's elevation was welcomed in business circles.
Moody's, which with another credit rating agency has punished South Africa for its mining and leadership woes, said the ANC platform looked "more investor- and business-friendly than had generally been anticipated prior to the conference".
South Africa's Business Day newspaper said in an editorial: "Mr. Ramaphosa's re-entry into party politics represents a victory for those dealing and negotiating in the real world, rather than in the world of ideological illusion."
WANTED: A PROSPEROUS SOUTH AFRICA
But the Chamber of Mines and Moody's said questions remained about how the government would intervene in the mining sector, and what additional taxes it might levy there. The ANC has also raised the idea of export curbs on minerals.
It also remained to be seen whether Ramaphosa, who has maintained a wealthy lifestyle in recent years far from his origins in the anti-apartheid workers' struggle, can connect with the mass of voters who are poor and unemployed.
His comeback puts him in line for a possible future bid for the South African presidency currently held by Zuma who, if he remains the party candidate, is virtually assured of re-election as head of state in the next national vote in 2014.
At this week's ANC conference, Zuma crushed a half-hearted leadership bid from Deputy President Kgalema Motlanthe, whose challenge grouped a loose alliance of opponents of the Zuma presidency. This included advocates of more radical policies such as nationalisation and seizure of white-owned farm land.
Asked about the ANC's future ideological direction, Zuma replied: "Ideologically, we want a prosperous South Africa."
He also made clear he would not immediately replace Deputy President Motlanthe with Ramaphosa in the cabinet.
Zuma, who took the party leadership from former President Thabo Mbeki at a 2007 ANC conference, acknowledged one of the party's biggest tasks was to address the popular clamour for better services, improved livelihoods and more jobs.
"There's a huge backlog there we have to deal with," he said.
Although Zuma denied any internal purge of top figures who had opposed him, some of these, such as Human Settlements Minister Tokyo Sexwale and Sports Minister Fikile Mbalula, were dropped from the new ANC National Executive Committee (NEC).
Re-elected ANC Secretary-General Gwede Mantashe made clear the party took a dim view of attempts to divide it, for example from expelled former Youth League leader Julius Malema. "If you mess up the ANC, the ANC messes you up," he said.

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Fiscal cliff setback rattles shares, euro

LONDON (Reuters) - Global stock markets weakened on Friday and both the euro and gold slipped, as a new setback in talks to avert a U.S. fiscal crisis and evidence of Europe's ongoing economic difficulties stoked investor nerves.

A proposal from Republican leader John Boehner to avoid the so-called fiscal cliff failed to get support from his party on Thursday, casting fresh uncertainty over talks to avoid across-the-board tax hikes and spending cuts that could push the U.S. economy into recession in 2013.

Anxiety was exacerbated by weaker-than-expected data from key corners of Europe, as German consumer morale dropped to its lowest level in more than a year, Britain revised down growth figures and Sweden slashed its economic forecasts.

The combined worries prompted widespread selling in most major stock markets and saw investors head for traditional safe-haven assets.

The dollar and yen and U.S. and German Government bonds all rose as falls on London <.ftse>, Paris <.fchi> and Frankfurt <.gdaxi> equity markets compounded tumbles in Asia to leave MSCI's global index <.miwd00000pus> down 0.4 percent.

Futures prices also pointed to sharp falls when trading resumes on Wall Street later, with the S&P 500 Dow Jones and Nasdaq 100 all seen losing around 1.4 percent.

Nevertheless, European and global share indices remain on course for their fifth straight week of gains. In the U.S., the S&P 500 is up about 1.8 percent so far this week and 14.8 percent on the year.

"Risk assets look vulnerable over the holiday trading period. The recent performance of key benchmarks has priced in a satisfactory outcome to the U.S. fiscal discussions, which is far from a done deal," said Peel Hunt strategist Ian Williams.

Boehner will hold a news conference at 10 a.m. ET (1500 GMT), likely to focus on the budget wrangling.

Bickering U.S. politicians have only 10 days left to resolve their differences and prevent automatic tax hikes and spending cuts worth around $600 billion kicking in in the new year.

Most observers are still assuming the two sides will avert disaster but tensions are likely to intensify over the normally quiet Christmas period as the deadline draws near.

"The markets are likely to interpret this as signaling even tougher negotiations in coming days," Mohamed El-Erian, chief executive of bond giant PIMCO, told Reuters.

CLIFF HANGER

Oil and gold were also caught up in the U.S. disappointment. Brent crude oil fell more than $1 per barrel before clawing back some ground. Bullion pared earlier losses but remained on track for its steepest weekly drop since June.

"The market volume is thin amidst all these uncertainties, and the year is coming to an end. Many of the investors prefer to take profits and just leave the market," said Brian Lan, managing director of GoldSilver Central Pte Ltd in Singapore.

In currency markets, strengthening appetite for safe-haven assets saw the yen firm and the highly liquid U.S. dollar <.dxy> climb 0.2 percent against a basket of key currencies.

At the same time, concerns over the U.S. impasse dented demand for so-called high-beta currencies that tend to rise or fall with the global growth outlook, such as the Australian dollar and euro.

Weaker German data, which saw consumer confidence unexpectedly drop for a fourth month running, kept downward pressure on the euro which retreated further from a 8-1/2 month high hit earlier in the week, to stand at $1.3200.

"This is a classic risk-off trading environment where the yen did best, followed by the dollar, and higher-beta currencies underperformed," said Audrey Childe-Freeman, head of FX strategy at BMO Capital Markets.

"We have had a very good run in the euro and what we are seeing at the moment is a little bit of profit-taking triggered by disappointment in the fiscal cliff discussions."

CAUTION

Caution also prevailed in Europe's bond markets, where German government bonds climbed at the expense of recently resurgent euro zone periphery debt.

Other safe-haven bonds followed the trend, with U.S. 10-year Treasury yields dipping from an 8-week high hit this week to 1.74 percent and 10-year Japanese yields inching down 0.765 percent.

Jim Barnes, senior fixed income manager at National Penn Investors Trust Co. in Wyomissing, Pennsylvania, saw Treasuries continuing to gain once U.S. markets open later, but expected a correction by the end of the day.

"Treasury yields will likely fall Friday morning and will begin to reverse course in the afternoon as investors become more optimistic a deal will be reached," Barnes said.

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UK data point to meager growth, public finances worsen

LONDON (Reuters) - Britain's dominant services sector posted meager growth in October, which may be just enough for the economy as a whole to avoid contraction in the last three months of 2012.
However, public borrowing figures also released on Friday showed that finance minister George Osborne has a lot of catching up to do to meet updated forecasts published earlier this month given the poor economic outlook.
The Office for National Statistics said services output grew 0.1 percent on the month in October, recovering from a 0.6 percent drop in September.
However, this is far behind the 1.2 percent growth that the sector enjoyed in the third quarter, which helped drive an overall 0.9 percent expansion in the economy as a whole in the three months to the end of September.
"It's not a great number but it is positive and it is better than the decline that had been expected," Ross Walker, an economist at Royal Bank of Scotland, said about October's services number.
"On the basis of all the published data it looks like the fourth quarter will be broadly flat, rather than negative."
Revised ONS figures published on Friday confirmed that third-quarter gross domestic product growth was the strongest since the third quarter of 2007. But much of that reflected a one-off boost from the London Olympics and a rebound from the second quarter when an extra public holiday dented output.
GDP in the third quarter was unchanged on the year, a small revision from the fall that the ONS had previously estimated.
The Bank of England and the government's forecasting body, the Office for Budget Responsibility, have both said a small quarterly contraction in the fourth quarter is likely.
Britain suffered its second recession since the financial crisis between late 2011 and mid-2012, and overall has recovered much more slowly since 2009 than most other big economies.
The BoE and other forecasters expect little in the way of a pick-up in the immediate future, given the weak global economy, government spending cuts and relatively high inflation.
"The economy faces a difficult-looking 2013 and we suspect it will only manage to eke out growth of 1.1 percent," said Howard Archer, economist at IHS Global Insight.
Recent ONS data has shown contraction in the retail and industrial sectors in the first part of the fourth quarter, though construction - which has been a major drag on GDP - appears to be stabilizing.
A GfK consumer confidence survey released earlier on Friday showed an unexpectedly sharp fall in morale.
Friday's GDP figures showed that the household savings ratio rose to 7.7 percent, its highest since the third quarter of 2009, suggesting an unwillingness to spend and a desire to pay down debts.
TRADE GAP NARROWS
One bright spot was third-quarter current account data, which showed Britain's deficit with the rest of the world narrowed more than expected to 12.8 billion pounds, equivalent to 3.3 percent of GDP, from 17.4 billion in the second quarter.
But Britain's government borrowed more than expected in November as government spending rose while a weak economy meant tax receipts fell compared to a year earlier.
Public sector net borrowing excluding financial sector interventions - the government's preferred measure - rose last month to 17.5 billion pounds from 16.3 billion in November 2011.
This was above economists' average forecast for 16.0 billion pounds and took borrowing in the fiscal year to date to 92.7 billion pounds, excluding the transfer of Royal Mail pension assets, up from 84.4 billion at the same point in 2011.
The OBR forecast earlier this month that the borrowing measure would reach 108.5 billion pounds this financial year, equivalent to 6.9 percent of GDP.
To meet this forecast, the deficit would have to fall 10.8 percent on the year, but so far in 2012, it is 9.9 percent higher than last year.
When the government came to power in 2010, it planned to largely eliminate the budget deficit by 2015 with spending cuts and tax rises. But a weak economy has since forced it to extend austerity until 2018.

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