Showing posts with label Business. Show all posts
Showing posts with label Business. Show all posts

Kerry to stress need for Egypt consensus for IMF deal

CAIRO (Reuters) - Secretary of State John Kerry will stress the importance Egypt achieves political consensus for painful economic reforms needed to secure an IMF loan, a senior U.S. official said on Saturday.

Kerry arrived in Egypt on his first visit to the Arab world since taking office for talks with the leaders of a country mired in political and economic crisis two years after the overthrow of autocrat Hosni Mubarak.

With Egypt's pound and foreign currency reserves sliding, the official said that if Cairo could agree on a $4.8 billion loan from the IMF, this would bring in other funds from the United States, European Union and Arab countries.

However, the official said the United States believed Egypt needed to increase tax revenues and reduce energy subsidies - measures likely to prove highly unpopular.

"His basic message is it's very important to the new Egypt for there to be a firm economic foundation," the official told reporters as Kerry flew to Cairo.

"In order for there to be agreement on doing the kinds of economic reforms that would be required under an IMF deal there has to be a basic political ... agreement among all of the various players in Egypt," the official said on condition of anonymity.

Egypt said on Thursday it would invite a team from the International Monetary Fund to reopen talks on the loan and the investment minister expressed hope that a deal could be done by the end of April.

The loan was agreed in principle last November but put on hold at Cairo's request during street violence the following month that flared in protest at a planned rise in taxes.

While the tax rise was withdrawn, Islamist President Mohamed Mursi is likely to face violent protests as any cuts in subsidies demanded by the IMF will push up living costs in a country where poverty is rife.

Energy subsidies soak up about 20 percent of the government budget, bloating a deficit set to soar to 12.3 percent of annual economic output this financial year.


Early on Saturday, young protesters fought interior ministry police in the Nile Delta city of Mansoura, where one protester was killed and dozens injured. In the Suez Canal city of Port Said, protesters torched a police station, security sources said.

While the protests were unrelated to Kerry's visit, they were examples of the frequent outbreaks of unrest faced by Egypt's government.

Clashes are commonplace, with young people and Egyptians demanding Mursi reform the interior ministry's police force. The president is accused of not taking police reform, a key demand of the uprising that toppled Mubarak, seriously.

Kerry will stress the need for agreement across the political spectrum on reforms and winning approval in the Shura Council, Egypt's upper house of parliament.

"What they need to do is ... things like increasing tax revenues, reducing energy subsidies, making clear what the approval process will be to the Shura Council for an IMF agreement, that kind of thing," said the official.

Hopes for consensus between the ruling Islamists and opposition parties seem slim. Liberal and leftist opposition parties have announced a boycott of parliamentary elections, scheduled for April to June, over a new constitution produced by an Islamist-dominated assembly and other grievances.

Kerry meets opposition leaders on Saturday but many senior figures were not on the list of expected participants, including Hamdeen Sabahy, who came a close third in presidential elections last year and former U.N. nuclear agency head Mohamed ElBaradei.

Kerry does not wish to be seen as lecturing Egyptians and will not explicitly tell opposition parties to renounce their boycott of the lower house polls, the U.S. official said.

However, he will make the case for them to take part.

"If they want to ensure that their views are taken account, the only way to do that is to participate. That they can't sit aside and just assume that somehow by magic that all of this is going to happen," the official said. "They've got to participate."

(Reporting by Arshad Mohammed; editing by Jason Webb)

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Italy parties seek way out of election stalemate

ROME (Reuters) - Italy's stunned political parties looked for a way forward on Tuesday after an election that gave none of them a parliamentary majority, posing the threat of prolonged instability and European financial crisis.

The results, notably by the dramatic surge of the anti-establishment 5-Star Movement of comic Beppe Grillo, left the center-left bloc with a majority in the lower house but without the numbers to control the powerful upper chamber, the Senate.

Financial markets fell sharply at the prospect of a stalemate that reawakened memories of the crisis that pushed Italy's borrowing costs toward unsustainably high levels and brought the euro zone to the brink of collapse in 2011.

"The winner is: Ingovernability," ran the headline in Rome newspaper Il Messaggero, reflecting the deadlock the country will have to confront in the next few weeks as sworn enemies are forced to work together to form a government.

Pier Luigi Bersani, head of the center-left Democratic Party (PD), has the difficult task of trying to agree a "grand coalition" with former prime minister Silvio Berlusconi, the man he blames for ruining Italy, or striking a deal with Grillo, a completely unknown quantity in conventional politics.

The alternative is new elections either immediately or within a few months, although both Berlusconi and Bersani have indicated that they want to avoid a return to the polls if possible: "Italy cannot be ungoverned and we have to reflect," Berlusconi said in an interview on his own television station.

For his part, Grillo, whose "non-party" movement won the most votes of any single party, has indicated that he believes the next government will last no more than six months.

"They won't be able to govern," he told reporters on Tuesday. "Whether I'm there or not, they won't be able govern."

He said he would work with anyone who supported his policy proposals, which range from anti-corruption measures to green-tinted energy measures but rejected suggestions of entering a formal coalition: "It's not time to talk of alliances... the system has already fallen," he said.

The election, a massive rejection of the austerity policies applied by Prime Minister Mario Monti with the backing of international leaders from U.S. President Barack Obama to German Chancellor Angela Merkel, caused consternation across Europe.

"This is a jump to nowhere that does not bode well either for Italy or Europe," said Spanish Foreign Minister Jose Manuel Garcia-Margallo.

In a sign of worry at the top over what effect the elections could have on the economy, Monti, whose austerity policies were repudiated by voters who shunned his centrist bloc, met the governor of the central bank, the economy minister and the European affairs minister to discuss the situation on Tuesday.

The former EU commissioner and his team of technocrats, who were brought in to govern when Berlusconi was consumed by crisis and scandal, will stay on until a new administration is formed.


Projections for the Senate by the Italian Centre for Electoral Studies indicated that the center-left would have 121 seats, against 117 for the center-right alliance of Berlusconi's PDL and the regionalist Northern League. Grillo would take 54.

That leaves no party with the majority in a chamber which a government must control to pass legislation and opened up the prospect of previously inconceivable partnerships that will test the sometimes fragile internal unity of the main parties.

"The idea of a majority without Grillo is unthinkable. I don't know if anyone in the PD is considering it but I'm against it," said Matteo Orfini, a member of Bersani's PD secretariat.

"The idea of a PD-PDL government, even if it's backed by Monti, doesn't make any sense," he said.

Berlusconi, a media magnate whose campaigning all but wiped out Bersani's once commanding opinion poll lead, hinted in a telephone call to a morning television show that he would be open to a deal with the center-left - but not with Monti, the economics professor who replaced him 15 months ago.

"Italy must be governed," Berlusconi said, adding that he "must reflect" on a possible deal with the center-left. "Everyone must be prepared to make sacrifices," he said of the groups which now have a share of the legislature.

The Milan bourse was down almost 4 percent and the premium Italy pays over Germany to borrow on 10-year widened to a yield spread of 338 basis points, the highest since December 10 and more than 80 points above the level seen earlier on Monday.

At an auction of six-month Treasury bills, Italy's borrowing costs jumped by more than two thirds with the yield reaching 1.237 percent, the highest since October and compared to just 0.730 percent in a similar sale a month ago.

The euro dropped to an almost seven-week low against the dollar in Asia on fears of a revival of the euro zone crisis. It fell as far as $1.3042, its lowest since January 10.

"What is crucial now is that a stable functioning government can be built as swiftly as possible," said German Foreign Minister Guido Westerwelle. "This is not only in the interests of Italy but in the interests of all Europe."

However the view from some voters, weary of the mainstream parties, was unrepentant: "It's good," said Roger Manica, 28, a security guard in Rome, who voted for the center-left PD.

"Next time I'll vote 5-Star. I like that they are changing things, even if it means uncertainty. Uncertainty doesn't matter to me, for me what's important is a good person who gets things done," he said. "Look how well they've done."

A long recession and growing disillusionment with mainstream parties and tax-raising austerity fed the bitter public mood and contributed to the massive rejection of Monti, whose centrist coalition was relegated to the sidelines.

Berlusconi's campaign, mixing sweeping tax cut pledges with relentless attacks on Monti and Merkel, echoed many of the themes pushed by Grillo and underlined the increasingly angry mood of the Italian electorate.

But even if the next government turns away from the tax hikes and spending cuts brought in by Monti, it will struggle to revive an economy that has scarcely grown in two decades.

Monti was widely credited with tightening Italy's public finances and restoring its international credibility after the scandal-plagued Berlusconi, who is currently on trial for having sex with an under-age prostitute.

However he struggled to pass the kind of structural reforms needed to improve competitiveness and lay the foundations for a return to economic growth. A weak center-left government may not find it any easier.

For Italian business, with an illustrious history of export success, the election result brought dismay that there would be no quick change to what they see as a regulatory sclerosis that has kept the economy virtually stagnant for a decade.

"This is probably the worst possible scenario," said Francesco Divella, whose family began selling pasta under its eponymous brand in 1890 in the southern region of Puglia.

"We are very concerned about the uncertainty and apparent ungovernability," said Silvio Pietro Angori, chief executive of Pininfarina, which has designed Ferrari sportscars since 1950. "A company competing on the global markets like Pininfarina needs the support of a stable government that inspires trust."

One of the country's leading bankers summed up his personal reaction: "I'm in shock," he told Reuters. "What a mess!"

(Additional reporting by Barry Moody, Gavin Jones, Lisa Jucca, Steven Jewkes, Steve Scherer Writing by Philip Pullella and James Mackenzie; Editing by Alastair Macdonald)

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Powers to offer Iran sanctions relief at nuclear talks

ALMATY (Reuters) - Major powers will offer Iran some sanctions relief during talks in Almaty, Kazakhstan, this week if Tehran agrees to curb its nuclear program, a U.S. official said on Monday.

But the Islamic Republic could face more economic pain if it fails to address international concerns about its atomic activities, the official said ahead of the February 26-27 meeting in the central Asian state, speaking on condition of anonymity.

"There will be continued sanctions enforcement ... there are other areas where pressure can be put," the official said, on the eve of the first round of negotiations between Iran and six world powers in eight months.

A spokesman for European Union foreign policy chief Catherine Ashton, who leads the talks with Iran on behalf of the powers, said Tehran should understand that there was an "urgent need to make concrete and tangible progress" in Kazakhstan.

Both Russia and the United States stressed there was not an unlimited amount of time to resolve a dispute that has raised fears of a new war in the Middle East.

"The window for a diplomatic solution simply cannot by definition remain open forever. But it is open today. It is open now," U.S. Secretary of State John Kerry told a news conference in London. "There is still time but there is only time if Iran makes the decision to come to the table and negotiate in good faith."

Russian Deputy Foreign Minister Sergei Ryabkov said there was "no more time to waste", Interfax news agency quoted him as saying in Almaty.

The immediate priority for the powers - the United States, Russia, China, Germany, Britain and France - is to convince Iran to halt its higher-grade enrichment, which is a relatively short technical step away from potential atom bomb material.

Iran, which has taken steps over the last year to expand its uranium enrichment activities in defiance of international demands to scale it back, wants a relaxation of increasingly harsh sanctions hurting its lifeline oil exports.

Western officials say the Almaty meeting is unlikely to produce any major breakthrough, in part because Iran's presidential election in June may make it difficult for it to make significant concessions before then for domestic reasons.

But they say they hope that Iran will take their proposals seriously and engage in negotiations to try to find a diplomatic settlement.

"No one is expecting to walk out of here with a deal but ... confidence building measures are important," one senior Western official said.

The stakes are high: Israel, assumed to be the Middle East's only nuclear-armed arsenal, has strongly hinted at possible military action to prevent its old foe from obtaining such arms. Iran has threatened to retaliate if attacked.


The U.S. official said the powers' updated offer to Iran - a modified version of one rejected by Iran in the unsuccessful talks last year - would take into account its recent nuclear advances but also take "some steps in the sanctions arena".

This would be aimed at addressing some of Iran's concerns, the official said, while making clear it would not meet Tehran's demand of an easing of all punitive steps against it.

"We think ... there will be some additional sanctions relief" in the powers' revised proposal," the official said, without giving details.

Western diplomats have told Reuters the six countries will offer to ease sanctions on trade in gold and precious metals if Iran closes its Fordow underground uranium enrichment plant.

Iran has indicated, however, that this will not be enough.

Tehran denies Western allegations it is seeking to develop the capability to make nuclear bombs, saying its program is entirely peaceful. It wants the powers to recognize what it sees as its right to refine uranium for peaceful purposes.

The U.S. official said the powers hoped that the Almaty meeting would lead to follow-up talks soon.

"We are ready to step up the pace of our meetings and our discussions," the official said, adding the United States would also be prepared to hold bilateral talks with Tehran if it was serious about it.

Ashton's spokesman, Michael Mann, said the updated offer to Iran was "balanced and a fair basis" for constructive talks.

(Additional reporting by Yeganeh Torbati and Dimitry Solovyov; Editing by Jon Hemming)

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Frustrated Italians vote in crucial election for euro zone

ROME (Reuters) - Italians voted on Sunday in one of the most closely watched and unpredictable elections in years, with pent-up fury over a discredited elite adding to concern it may not produce a government strong enough to lead Italy out of an economic slump.

The election, which concludes on Monday afternoon, is being followed closely by investors; their memories are still fresh of the potentially catastrophic debt crisis that saw Mario Monti, an economics professor and former bureaucrat, summoned to serve as prime minister in place of Silvio Berlusconi 15 months ago.

A weak Italian government could, many fear, prompt a new dip in confidence in the European Union's single currency.

Opinion polls give the center-left a narrow lead but the result has been thrown completely open by the prospect of a huge protest vote against the painful austerity measures imposed by Monti's government and deep anger over a never-ending series of corruption scandals. Berlusconi's centre-right has also revived.

"I'm not confident that the government that emerges from the election will be able to solve any of our problems," said Attilio Bianchetti, a 55-year-old builder in Milan, who voted for the anti-establishment 5-Star Movement of comic and blogger Beppe Grillo.

The 64-year-old Grillo, heavily backed by a frustrated generation of young Italians hit by record unemployment, has been one of the biggest features of the last stage of the campaign, packing rallies in town squares up and down Italy.

"He's the only real new element in a political landscape where we've been seeing the same faces for too long," said Vincenzo Cannizzaro, 48, in the Sicialian capital Palermo.

Italians started voting at 8 a.m. (0700 GMT). Polling booths will remain open until 10 p.m. on Sunday and open again between 7 a.m. and 3 p.m. on Monday. Exit polls will come out soon after voting ends and official results are expected by early Tuesday.

Snow in northern regions is expected to last into Monday and could discourage some of the 47 million people eligible to vote in Italy to head out to polling stations, though the Interior Ministry has said it is fully prepared for bad weather.

Monti and his wife cast their votes at a polling booth in a Milan school on Sunday morning and centre-left leader Pier Luigi Bersani, the leader opinion polls suggest will have to form a new government, voted in his home town of Piacenza.

A small group of women's rights demonstrators greeted former prime minister Berlusconi when he voted in Milan. They bared their breasts in protest at the conservative leader, who is on trial at present for having sex with an underage prostitute.

Whichever government emerges from the election will have to tackle reforms needed to address problems that have given Italy one of the most sluggish economies in the developed world for the past two decades.

But the widespread despair over the state of the country, where a series of corruption scandals has highlighted the stark divide between a privileged political elite and millions of ordinary Italians, has left deep scars.

"It's our fault, Italian citizens. It's our closed mentality. We're just not Europeans," said Luciana Li Mandri, a 37-year-old public servant in Palermo.

"We're all about getting favors when we study, getting a protected job when we work. That's the way we are and we can only be represented by people like that as well," she said.


Final polls published two weeks ago showed center-left leader Bersani with a 5-point lead, but analysts disagree about whether he will be able to form a stable majority that can make the economic reforms they believe Italy needs.

While the center left is still expected to gain control of the lower house, thanks to rules that guarantee a strong majority to whichever party wins the most votes nationally, a much closer battle will be fought for the Senate, which any government also needs to control to be able to pass laws.

The euro zone's third-largest economy is stuck in deep recession, struggling under a public debt burden second only to Greece in the 17-member currency bloc and with a public weary of more than a year of austerity policies.

Bersani is now thought to be just a few points ahead of media magnate Berlusconi, the four-times prime minister who has promised tax refunds and staged a media blitz in an attempt to win back voters.

Think-tank consultant Mario, 60, who was on his way to vote in Bologna, said Bersani's Democratic Party was the only serious grouping that could help solve the country's economic woes.

"They're not perfect," he said. "But they've got the organization and the union backing that will help them push through the structural reforms."

A strong fightback by Berlusconi, who has promised to repay a widely hated housing tax, the IMU, imposed by Monti last year, saw his support climb during a campaign that relentlessly attacked the "German-centric" austerity policies of the former European Union commissioner.

"I won't vote for Monti, and I don't think a lot of people will. He made a huge blunder with IMU," said 35-year-old hairdresser Marco Morando, preparing to vote in Milan.

But the populist frustration Berlusconi's campaign tapped into has also benefitted Grillo and many pollsters said his 5-Star Movement, made up of political novices, was challenging the center-right for the position as second political force.

"I'm very worried. There seems to be no way out from a political point of view, or from being able to govern," said Calogero Giallanza, a 45-year-old musician in Rome, who voted for Bersani's Democrats.

"There's bound to be a mess in the Senate because, as far as I can see, the 5-Star Movement is unstoppable."

(Additional reporting by Cristiano Corvino, Lisa Jucca, Jennifer Clark, Matthias Baehr and Sara Rossi in Milan, Stephen Jewkes in Bologna, Wladimir Pantaleone in Palermo, Stefano Bernabei and Massimiliano Di Giorgio in Rome; Editing by Robin Pomeroy and Alastair Macdonald)

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Iran announces uranium finds, days before nuclear talks

DUBAI (Reuters) - Days before resuming talks over its disputed atomic program, Iran said on Saturday it had found significant new deposits of raw uranium and identified sites for 16 more nuclear power stations.

State news agency IRNA quoted a report by the Atomic Energy Organisation of Iran (AEOI) which said the reserves were discovered in northern and southern coastal areas and had trebled the amount outlined in previous estimates.

There was no independent confirmation. With few uranium mines of its own, Western experts had previously thought that Iran might be close to exhausting its supply of raw uranium.

"We have discovered new sources of uranium in the country and we will put them to use in the near future," Fereydoun Abbasi-Davani, head of the AEOI, was quoted as saying at Iran's annual nuclear industry conference.

The timing of the announcement suggested Iran, by talking up its reserves and nuclear ambitions, may hope to strengthen its negotiating hand at talks in Kazakhstan on Tuesday with the United States, Russia, China, Britain, France and Germany.

Diplomats say the six powers, known as the P5+1, are set to offer Iran some relief from international sanctions if it agrees to curb its production of higher-grade enriched uranium.

The West says Iran's enrichment of uranium to a fissile purity of 20 percent demonstrates its intent to develop a nuclear weapons capability, an allegation the Islamic republic denies.


The enriched uranium required for use in nuclear reactors or weapons is produced in centrifuges that spin uranium hexafluoride gas (UF6) at high speeds. The UF6 is derived from yellow cake, a concentrate from uranium ore discovered in mines.

Iran's reserves of raw uranium now stood at around 4,400 tonnes, taking into account discoveries over the past 18 months, IRNA quoted the report as saying.

In another sign that Iran is intent on pushing forward with its nuclear ambitions, the report also said 16 sites had been identified for the construction of nuclear power stations.

It did not specify the exact locations but said they included coastal areas of the Gulf, Sea of Oman, Khuzestan province and the Caspian Sea.

Iranian authorities have long announced their desire to build more nuclear power plants for electricity production. Only one currently exists, in the southern city of Bushehr, and that has suffered several shutdowns in recent months.

The announcements could further complicate the search for a breakthrough in Kazakhstan, after three unsuccessful rounds of talks between the two sides in 2012.

"We are meeting all of our obligations under the nuclear Non-Proliferation Treaty and we should be able to benefit from our rights. We don't accept more responsibilities and less rights," Saeed Jalili, Iran's chief nuclear negotiator, was quoted as telling Saturday's conference.

In what Washington has called a provocative move, Iran is also installing new-generation centrifuges, capable of producing enriched uranium much faster, at a site in Natanz in the centre of the country.

Western diplomats say the P5+1 will reiterate demands for the suspension of uranium enrichment to a purity of 20 percent, the closure of Iran's Fordow enrichment plant, increased access for International Atomic Energy Agency inspectors and agreement to address concerns on existing uranium stockpiles.

In return, the latest embargoes on gold and metals trading with Iran would be lifted. Iran has criticized the offer and says its rights need to be fully recognized.

"If the P5+1 group wants to start constructive talks with Tehran it needs to present a valid proposal," said Jalili. "It needs to put its past errors to one side ... to win the trust of the Iranian nation."

In a statement issued before the Iranian announcement, German Foreign Minister Guido Westerwelle said the six-power group wanted to enter a 'substantial negotiation process' over Tehran's nuclear program.

"The talks in Almaty are a chance which I hope Iran takes," he said.

(Additional reporting by Alexandra Hudson in Berlin; Editing by Mark Trevelyan)

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South African court grants Pistorius bail in murder case

PRETORIA (Reuters) - A South African court granted bail on Friday to Oscar Pistorius, charged with the murder of his girlfriend, after his lawyers argued the "Blade Runner" was too famous to pose a flight risk.

The decision by Magistrate Desmond Nair drew cheers from the athlete's family and supporters, although he appeared unmoved. Pistorius had broken down in tears earlier in the week-long hearing.

The court set bail at 1 million rand ($113,000) and postponed the case until June 4. Pistorius was ordered to hand over firearms and passports, avoid his home and all witnesses in the case, report to a police station twice a week and not to drink alcohol.

The decision followed a week of dramatic testimony about how the athlete shot dead Reeva Steenkamp at his luxury home near Pretoria in the early hours of February 14, Valentine's Day.

Prosecutors said Pistorius, 26, committed premeditated murder when he fired four shots into a locked bathroom door, hitting his girlfriend cowering on the other side. Steenkamp, 29, suffered gunshot wounds to her head, hip and arm.

Pistorius' defense team argued the killing was a tragic mistake, saying the athlete had mistaken Steenkamp for an intruder. They said he was too famous to pose a flight risk and deserved bail to prepare for a case that has drawn worldwide attention.

"He can never go anywhere unnoticed," his lawyer Barry Roux told the court on Friday.

The 26-year-old Olympic and Paralympic star's lower legs were amputated in infancy and he has raced on carbon fiber blades.

The Olympic and Paralympic star faces life in prison if convicted of premeditated murder.

Prosecutors had portrayed him as a cold-blooded killer.

"You cannot put yourself in the deceased's position. It must have been terrifying. It was not one shot. It was four shots," prosecutor Gerrie Nel said on Friday.


In an affidavit read out in court, Pistorius said he had been "deeply in love" with Steenkamp, and Roux said his client had no motive for the killing.

Pistorius contends he was acting in self-defense after mistaking Steenkamp for an intruder, and feeling vulnerable because he was unable to attach his prosthetic limbs in time to confront the perceived threat.

He said he grabbed a 9-mm pistol from under his bed and went into the bathroom. He said he fired into the locked door of the toilet, which adjoined the bathroom, in a blind panic in the mistaken belief the intruder was lurking inside.

Witnesses said they heard a gunshots and screams from the athlete's home on an upscale gated community near Pretoria. The community is surrounded by 3-metre-high stone walls and topped with an electric fence.

In a magazine interview a week before her death, published on Friday, Steenkamp, a law graduate and model, spoke about her three-month-old relationship with Pistorius.

"I absolutely adore Oscar. I respect and admire him so much," she told celebrity gossip magazine Heat. "I don't want anything to come in the way of his career."

Police pulled their lead detective off the case on Thursday after it was revealed he himself faces attempted murder charges for shooting at a minibus. He has been replaced by South Africa's top detective.

The arrest of Pistorius last week shocked those who had watched in awe last year as he reached the semi-final of the 400 meters race in the London Olympics.

The impact has been greatest in sports-mad South Africa, where Pistorius was seen as a rare hero who commanded respect from both black and white people, transcending the racial divides that persist 19 years after the end of apartheid.

(Editing by Andrew Roche)

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Nigerian troops surround French family's kidnappers: source

YAOUNDE/MAIDUGURI, Nigeria (Reuters) - Nigerian security forces surrounded the kidnappers of a French family in northeast Borno state on Thursday in an operation to rescue the hostages, a Nigerian military source said.

French, Nigerian and Cameroonian officials earlier denied French media reports that the family, who were seized in Cameroon and taken over the border, had been freed.

The Nigerian military located the hostages and kidnappers between Dikwa and Ngala in the far northeast, the military source in Borno said, asking not to be identified.

Dikwa is less than 80 km (50 miles) from the border with Cameroon where the three adults and four children were taken hostage on Tuesday.

A senior Cameroonian military official declined to comment saying the matter was too sensitive.

Citing a Cameroon army officer, French media reported earlier on Thursday that the hostages had been found alive in a house in northern Nigeria.

"This is a crazy rumor that we cannot confirm. We do not know where is it coming from," Cameroon Communications Minister Issa Tchiroma Bakary told Reuters by telephone from the capital Yaounde.

"What is certain is that the French tourists who were abducted are no longer on our territory. However, we are in touch with the Government of Nigeria to intensify measures to continue the search for them along our common border," he said.

French gendarmes backed by special forces arrived in northern Cameroon on Wednesday to help locate the family, a local governor and French defense ministry official said.

Nigerian military spokesman Sagir Musa earlier also said the report on France's BFM television of the hostages being released was "not true," while Didier Le Bret, the head of the French foreign ministry's crisis center, said the information was "baseless."

The abduction was the first case of foreigners being seized in the mostly Muslim north of Cameroon, a former French colony.

But the region - like others in West and North Africa with porous borders - is considered within the operational sphere of Boko Haram and fellow Nigerian Islamist militants Ansaru.

On Sunday, seven foreigners were snatched from the compound of Lebanese construction company Setraco in northern Nigeria's Bauchi state, and Ansaru took responsibility.

Northern Nigeria is increasingly afflicted by attacks and kidnappings by Islamist militants. Ansaru, which rose to prominence only in recent months, has claimed the abduction in December of a French national who is still missing.

Three foreigners were killed in two failed rescue attempts last year after being kidnapped in northern Nigeria and Ansaru, blamed for those kidnaps, warned this could happen again.

The threat to French nationals in the region has grown since France deployed thousands of troops to Mali to oust al Qaeda-linked Islamists who controlled the country's north.

The kidnapping in Cameroon brought to 15 the number of French citizens being held in West Africa.

(Reporting By Emile Picy and Nicholas Vinocur in Paris; Additional reporting by Joe Brock in Abuja and Bate Felix and John Irish in Dakar; Writing by Bate Felix and John Irish; Editing by Angus MacSwan)

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Bulgarian government resigns amid growing protests

SOFIA (Reuters) - Bulgaria's government resigned on Wednesday after mass protests against high power prices and falling living standards, joining a long list of European administrations felled by austerity during four years of debt crisis.

Prime Minister Boiko Borisov, an ex-bodyguard who took power in 2009 on pledges to root out graft and raise incomes in the European Union's poorest member, faces a tough task of propping up eroding support ahead of an expected early election.

Wage and pension freezes and tax hikes have bitten deep in a country where earnings are less than half the EU average and tens of thousands of Bulgarians have rallied in protests that have turned violent, chanting "Mafia" and "Resign".

Moves by Borisov on Tuesday to blame foreign utility companies for the rise in the cost of heating homes was to no avail and an eleventh day of marches saw 15 people hospitalized and 25 arrested in clashes with police.

"My decision to resign will not be changed under any circumstances. I do not build roads so that blood is shed on them," said Borisov, who began his career guarding the Black Sea state's communist dictator Todor Zhivkov.

A karate black belt, Borisov has cultivated a Putin-like "can-do" image since he entered politics as Sofia mayor in 2005 and would connect with voters by showing up on the capital's rutted streets to oversee the repair of pot-holes.

But critics say he has often skirted due process, sometimes to the benefit of those close to him, and his swift policy U-turns have wounded the public's trust.

The spark for the protests was high electricity bills, after the government raised prices by 13 percent last July. But it quickly spilled over into wider frustration with Borisov and political elites with perceived links to shadowy businesses.

"He made my day," said student Borislav Hadzhiev in central Sofia, commenting on Borisov's resignation. "The truth is that we're living in an extremely poor country."


The prime minister's final desperate moves on Tuesday included cutting power prices and risking a diplomatic row with the Czech Republic by punishing companies including CEZ, moves which conflicted with EU norms on protection of investors and due process.

CEZ officials were hopeful on Wednesday that it would be able to avoid losing its distribution license after all and officials from the Bulgarian regulator said the company would not be punished if it dealt with breaches of procedure.

But shares in what is central Europe's largest publicly-listed company fell another 1 percent on Wednesday.

If pushed through, the fines for CEZ and two other foreign-owned firms will not encourage other investors in Bulgaria, who already have to navigate complicated bureaucracy and widespread corruption and organized crime to take advantage of Bulgaria's 10-percent flat tax rate.

Financial markets reacted negatively to the turbulence on Wednesday. The cost of insuring Bulgaria's debt rose to a three-month high and debt yields rose some 15 basis points, though the country's low deficit of 0.5 percent of gross domestic product means there is little risk to the lev currency's peg against the euro.

Borisov's interior minister indicated that elections originally planned for July would probably be pulled forward by saying that his rightist GERB party would not take part in talks to form a new government.


GERB's woes have echoes in another ex-communist EU member, Slovenia, where demonstrators have taken to the streets and added pressure to a crumbling conservative government.

A small crowd gathered in support of Borisov outside Sofia's parliament, which is expected to approve his resignation on Thursday, while bigger demonstrations against the premier were expected in the evening.

Unemployment in the country of 7.3 million is far from the highs hit in the decade after the end of communism but remains at 11.9 percent. Average salaries are stuck at around 800 levs ($550) a month and millions have emigrated, leaving swathes of the country depopulated and little hope for those who remain.

GERB's popularity has held up well and it still led in the latest polls before protests grew in size last weekend, but analysts say the opposition Socialists should draw strength from the demonstrations.

The leftists, successors to Bulgaria's communist party, have proposed tax cuts and wage hikes and are likely to raise questions about public finances if elected.

(Additional reporting by Angel Krasimirov; editing by Patrick Graham)

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Venezuela's Maduro would win vote if Chavez goes: poll

CARACAS (Reuters) - Venezuelan Vice President Nicolas Maduro would win a presidential vote should his boss Hugo Chavez's cancer force him out, according to the first survey this year on such a scenario in the South American OPEC nation.

Local pollster Hinterlaces gave Maduro 50 percent of potential votes, compared to 36 percent for opposition leader Henrique Capriles.

Chavez made a surprise return to Venezuela on Monday, more than two months after cancer surgery in Cuba, to continue treatment at home for the disease that is jeopardizing his 14-year socialist rule.

He has named Maduro, 50, a former bus driver and union activist, as his preferred successor.

Capriles, 40, a center-left state governor who lost to Chavez in a presidential vote last year, likely would run again.

Chavez still has not spoken in public since his December 11 operation in Cuba. Venezuelans were debating on Tuesday the various possible scenarios after his homecoming - from full recovery to resignation or even death from the cancer.

There was widespread expectation Chavez would soon be formally sworn in for his new six-year term at the Caracas military hospital where officials said he was staying. The January 10 ceremony was postponed while he was in Cuba.

"The president's timeline is strictly linked to his medical evolution and recovery," said Rodrigo Cabezas, a senior member of Chavez's ruling Socialist Party who, like other officials, would not comment on when he might be sworn in.


Should Chavez be forced out, Venezuela's constitution stipulates an election must be held within 30 days, giving Capriles and the opposition Democratic Unity coalition another chance to end the socialists' lengthy grip on power.

Capriles, who crossed swords with Hinterlaces at various points during the presidential election, again accused its director, Oscar Schemel, of bias in the latest survey.

"That man is not a pollster, he's on the government's payroll," Capriles told local TV.

"He said in December I would lose the Miranda governorship," he added, referring to his defeat of government heavyweight Elias Jaua, now foreign minister, in that local race.

Opinion surveys are notoriously controversial and divergent in Venezuela, with both sides routinely accusing pollsters of being in the pocket of the other. But Hinterlaces successfully forecast Chavez's win with 55 percent of the vote in October.

Its latest poll was of 1,230 people between January 30-February 9.

Polls last year showed Capriles - an energetic basketball-playing lawyer who admires Brazil's centrist mix of free-market economics with strong social welfare policies - as more popular than any of Chavez's senior allies.

But Chavez's personal blessing of Maduro, on the eve of his last cancer surgery, has transformed his status and made him the heir apparent for many of the president's supporters.

As de facto leader since mid-December, Maduro also has built up a stronger public profile, copying the president's techniques of endless live TV appearances, especially to inaugurate new public works or promote popular policies like subsidized food.

He lacks Chavez's charisma, however, and opponents have slammed him as a "poor imitation" and incompetent.


Local analyst Luis Vicente Leon said that should Chavez die, Maduro would benefit from the emotion unleashed among his millions of passionate supporters in Venezuela.

"The funeral wake for Chavez would merge into the election campaign," he told a local newspaper, noting how Argentine President Cristina Fernandez's popularity surged when her husband and predecessor Nestor Kirchner died in 2010.

Maduro already has implemented an unpopular devaluation of the local currency and said more economic measures are coming this week in what local economists view as austerity measures after blowout spending prior to last year's election.

In Caracas, the streets were quieter after tumultuous celebrations of Chavez's homecoming by supporters on Monday. A few journalists stood outside the military hospital.

Prayer vigils were planned in various parts of Venezuela.

"We hope Chavez will stay governing because he is a strong man," supporter Cristina Salcedo, 50, said in Caracas.

Student demonstrators who had chained themselves near the Cuban Embassy last week, demanding more information on Chavez's condition, called off their protest after his return.

Until photos were published of him on Friday, the president had not been seen by the public since his six-hour December 11 operation, the fourth since cancer was detected in mid-2011.

The government has said Chavez is breathing through a tracheal tube and struggling to speak.

Bolivian President Evo Morales arrived in Caracas on Tuesday in the hope of visiting his friend and fellow leftist.

(Additional reporting by Deisy Buitrago, Mario Naranjo, Girish Gupta in Caracas, Carlos Quiroga in La Paz; Editing by Bill Trott)

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Time to refer Syrian war crimes to ICC, U.N. inquiry says

GENEVA (Reuters) - United Nations investigators said on Monday that Syrian leaders they had identified as suspected war criminals should face the International Criminal Court (ICC).

The investigators urged the U.N. Security Council to "act urgently to ensure accountability" for violations, including murder and torture, committed by both sides in a conflict that has killed an estimated 70,000 people since a revolt against President Bashar al-Assad began in March, 2011.

"Now really it's time...We have a permanent court, the International Criminal Court, who would be ready to take this case," Carla del Ponte, a former ICC chief prosecutor who joined the U.N. team in September, told a news briefing in Geneva.

The inquiry, led by Brazilian Paulo Pinheiro, is tracing the chain of command to establish criminal responsibility.

"Of course we were able to identify high-level perpetrators," del Ponte said, adding that these were people "in command responsibility...deciding, organising, planning and aiding and abetting the commission of crimes".

She said it was urgent for the Hague-based war crimes tribunal to take up cases of very high officials, but did not identify them, in line with the inquiry's practice.

Del Ponte, who brought former Yugoslav President Slobodan Milosevic to the ICC on war crimes charges, said the ICC prosecutor would need to deepen the investigation on Syria before an indictment could be prepared.

Pinheiro, noting that the Security Council would have to refer Syria's case to the ICC, said: "We are in very close dialogue with all the five permanent members and with all the members of the Security Council, but we don't have the key that will open the path to cooperation inside the Security Council."

Karen Koning AbuZayd, an American member of the U.N. team, told Reuters it had information pointing to "people who have given instructions and are responsible for government policy, people who are in the leadership of the military, for example".

The inquiry's third list of suspects, building on lists drawn up in the past year, remains secret. It will be entrusted to U.N. High Commissioner for Human Rights, Navi Pillay, upon expiry of its mandate at the end of March, the report said.

Pinheiro said the investigators would not speak publicly about "numbers, names or levels" of suspects, adding that it was vital to pursue accountability for international crimes "to counter the pervasive sense of impunity" in Syria.


The investigators' latest report, covering the six months to mid-January, was based on 445 interviews conducted abroad with victims and witnesses, as they have not been allowed into Syria.

"The ICC is the appropriate institution for the fight against impunity in Syria. As an established, broadly supported structure, it could immediately initiate investigations against authors of serious crimes in Syria," the 131-page report said.

Pillay, a former ICC judge, said on Saturday Assad should be probed for war crimes, and called for outside action on Syria, including possible military intervention.

Government forces have carried out shelling and air strikes across Syria including Aleppo, Damascus, Deraa, Homs and Idlib, the U.N. report said, citing corroborating satellite images.

"In some incidents, such as in the assault on Harak, indiscriminate shelling was followed by ground operations during which government forces perpetrated mass killing," it said, referring to a town in the southern province of Deraa where residents told them that 500 civilians were killed in August.

"Government forces and affiliated militias have committed extra-judicial executions, breaching international human rights law. This conduct also constitutes the war crime of murder. Where murder was committed as part of a widespread or systematic attack against a civilian population, with knowledge of that attack, it is a crime against humanity," the U.N. report said.

Those forces have targeted bakery queues and funeral processions to spread "terror among the civilian population".

"Syrian armed forces have implemented a strategy that uses shelling and sniper fire to kill, maim, wound and terrorize the civilian inhabitants of areas that have fallen under anti-government armed group control," the report said.

Government forces had used cluster bombs, it said, but it found no credible evidence of either side using chemical arms.

Rebels fighting to topple Assad have also committed war crimes including murder, torture, hostage-taking and using children under age 15 in hostilities, the U.N. report said.

"They continue to endanger the civilian population by positioning military objectives inside civilian areas" and rebel snipers had caused "considerable civilian casualties", it said.

"The violations and abuses committed by anti-government armed groups did not, however, reach the intensity and scale of those committed by government forces and affiliated militia."

Foreign fighters, many of them from Libya, Tunisia, Saudi Arabia, Lebanon, Iraq and Egypt, have radicalised the rebels and helped detonate deadly improvised explosive devices, it said.

(This story corrects the name of the U.N. expert in the ninth paragraph to Koning)

(Reporting by Stephanie Nebehay; Editing by Alistair Lyon)

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Pope, nearing retirement, says pray "for me and next pope"

VATICAN CITY (Reuters) - Pope Benedict asked the faithful to pray for him and for the next pope, addressing a crowded St. Peter's Square in his penultimate Sunday address before becoming the first pontiff in centuries to resign.

The crowd chanted "Long live the pope!," waved banners and broke into sustained applause as he spoke from his window. The 85-year-old Benedict, who will resign on February 28, thanked them in several languages.

Speaking in Spanish, he told the crowd which the Vatican said numbered more than 50,000: "I beg you to continue praying for me and for the next pope".

It was not clear why the pope chose Spanish to make the only specific reference to his upcoming resignation in his Sunday address.

A number of cardinals have said they would be open to the possibility of a pope from the developing world, be it Latin America, Africa or Asia, as opposed to another from Europe, where the Church is crisis and polarized.

After his address, the pope retired into the Vatican's Apostolic Palace for a scheduled, week-long spiritual retreat and will not make any more public appearances until next Sunday.

Speaking in Italian in part of his address about Lent, the period when Christians reflect on their failings and seek guidance in prayer, the pope spoke of the difficulty of making important decisions.

"In decisive moments of life, or, on closer inspection, at every moment in life, we are at a crossroads: do we want to follow the ‘I' or God? The individual interest or the real good, that which is really good?" he said.


Since his shock announcement last Monday, the pope has said several times that he made the difficult decision to become the first pope in more than six centuries to resign for the good of the Church.

"In a funny way he is even more peaceful now with this decision, unlike the rest of us, he is not somebody who gets choked up really easily," said Greg Burke, a senior media advisor to the Vatican.

"I think that has a lot to do with his spiritual life and who he is and the fact he is such a prayerful man," Burke told Reuters Television.

The pope has said his physical and spiritual forces are no longer strong enough to sustain him in the job of leading the world's 1.2 billion Roman Catholics at a time of difficulties for the Church in a fast-changing world.

Benedict's papacy was rocked by crises over the sex abuse of children by priests in Europe and the United States, most of which preceded his time in office but came to light during it.

His reign also saw Muslim anger after he compared Islam to violence. Jews were upset over his rehabilitation of a Holocaust denier. During a scandal over the Church's business dealings, his butler was convicted of leaking his private papers.

People in the crowd said the pope was a shadow of the man he was when elected on April 19, 2005.

"Like always, recently, he seemed tired, moved, perplexed, uncertain and insecure," said Stefan Malabar, an Italian in St. Peter's Square.

"It's something that really has an effect on you because the pope should be a strong and authoritative figure but instead he seems very weak, and that really struck me," he said.

The Vatican has said the conclave to choose his successor could start earlier than originally expected, giving the Roman Catholic Church a new leader by mid-March.

Some 117 cardinals under the age of 80 will be eligible to enter the secretive conclave to elect Benedict's successor. Church rules say the conclave has to start between 15 and 20 days after the papacy becomes vacant, which it will on February 28.

But since the Church is now dealing with an announced resignation and not a sudden death, Vatican spokesman Federico Lombardi said the Vatican would be "interpreting" the law to see if it could start earlier.


Cardinals around the world have already begun informal consultations by phone and email to construct a profile of the man they think would be best suited to lead the Church in a period of continuing crisis.

The Vatican appears to be aiming to have a new pope elected and then formally installed before Palm Sunday on March 24 so he can preside at Holy Week services leading to Easter.

New details emerged at the weekend about the state of Benedict's health in the months before his shock decision.

Peter Seewald, a German journalist who wrote a book with the pope in 2010 in which Benedict first floated the possibility of resigning, visited him again about 10 weeks ago and asked what else could be expected from his papacy.

According to excepts published in the German magazine Focus, the pope answered: "From me? Not much from me. I'm an old man and the strength is ebbing. I think what I've done is enough."

Asked if he was considering resigning, the pope said: "That depends on how much my physical strength will force me to that".

Seewald said he was alarmed about the pope's health.

"His hearing had deteriorated. He couldn't see with his left eye. His body had become so thin that the tailors had difficulty in keeping up with newly fitted clothes ... I'd never seen him so exhausted-looking, so worn down."

The pope will say one more Sunday noon prayer on February 24, hold a final general audience on February 27. The next day he will take a helicopter to the papal summer retreat at Castle Gandalf, south of Rome, flying into the history books.

Vatican officials said he would stay there for the two months or so needed to restore the convent inside the Vatican where he will live out his remaining years.

(Additional reporting by Hanna Rantala; Editing by Robin Pomeroy)

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Pistorius, girlfriend were planning future: uncle

JOHANNESBURG (Reuters) - South African athlete Oscar Pistorius was planning a future with girlfriend Reeva Steenkamp, who he is accused of shooting in cold blood this week, his uncle said on Saturday.

"We are in a state of total shock - firstly about the tragic death of Reeva who we had all got to know well and care for deeply over the last few months," Anthony Pistorius said in a statement released by his nephew's agent.

"They had plans together and Oscar was happier in his private life than he had been for a long time," he said.

Pistorius, 26, was charged on Friday with murdering Steenkamp in the early hours of the previous day. He broke down during a 40-minute bail hearing at a Pretoria court but was not asked to enter a plea.

Prosecutors alleged the shooting was premeditated - a charge that could put Pistorius behind bars for life if he is convicted.

Anthony Pistorius reiterated the family's belief that the track star - a double amputee who became one of the biggest names in world athletics - had not deliberately shot Steenkamp, a 30-year-old model. Initial reports suggested he may have mistaken Steenkamp for an intruder.

(Reporting by Ed Cropley; Editing by Angus MacSwan)

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Meteorite hits central Russia, more than 500 people hurt

CHELYABINSK, Russia (Reuters) - A meteor streaked across the sky and exploded over central Russia on Friday, sending fireballs crashing to earth which shattered windows and damaged buildings, injuring more than 500 people.

People heading to work in Chelyabinsk heard what sounded like an explosion, saw a bright light and then felt a shockwave, according to a Reuters correspondent in the industrial city 950 miles east of Moscow.

The fireball, travelling at a speed of 19 miles per second according to Russia's space agency Roscosmos, had blazed across the horizon, leaving a long white trail in its wake which could be seen as far as 125 miles away.

Car alarms went off, windows broke and mobile phone networks were interrupted. The Interior Ministry said the meteor explosion had caused a sonic boom.

"I was driving to work, it was quite dark, but it suddenly became as bright as if it was day," said Viktor Prokofiev, 36, a resident of Yekaterinburg in the Urals Mountains.

"I felt like I was blinded by headlights," he said.

No fatalities were reported, but President Vladimir Putin, who was due to host Finance Ministry officials from the Group of 20 nations in Moscow, told Emergencies Minister Vladimir Puchkov to help those affected.

"Unfortunately, the normal work of some industrial enterprises was disrupted, people have suffered as has social infrastructure - kindergartens, schools," Putin told his Emergencies Minister Sergei Puchkov in televised comments.

"First of all, it is necessary to think about how to help the people, and not only to think about it, but to do it immediately," Putin said.

A local ministry official said such incidents were extremely rare and Friday's events might have been linked to an asteroid the size of an Olympic swimming pool due to pass earth. However, the European Space Agency on its Twitter website said its experts had confirmed there was no connection.

"There have never been any cases of meteorites breaking up at such a low level over Russia before," said Yuri Burenko, head of the Chelyabinsk branch of the Emergencies Ministry.

Russia's Emergencies Ministry said 514 people had sought medical help, mainly for light injuries caused by flying glass, and that 112 of them were kept in hospital.

Despite warnings not to approach any unidentified objects, some enterprising locals were hoping to cash in.

"Selling meteorite that fell on Chelyabinsk!," one prospective seller, Vladimir, said on a popular Russian auction website. He attached a picture of a black piece of stone that on Friday afternoon was priced at $49.46.


The blast at around 9.20 a.m. (12:20 a.m. ET) shattered windows on Chelyabinsk's central Lenin Street and some of the frames of shop fronts buckled. The shockwave could be felt in apartment buildings in the city's center.

"I was standing at a bus stop, seeing off my girlfriend," said Andrei, a local resident who did not give his second name. "Then there was a flash and I saw a trail of smoke across the sky and felt a shockwave that smashed windows."

Chelyabinsk city authorities urged people to stay indoors unless they needed to pick up their children from schools and kindergartens. They said what sounded like a blast had been heard at an altitude of 32,800 feet.

A wall was damaged at the Chelyabinsk Zinc Plant but a spokeswoman said there was no environmental threat.

Although a rare occurrence, a meteorite is thought to have devastated an area of more than 1,250 miles in Siberia in 1908, smashing windows as far as 125 miles from the point of impact.

The Emergencies Ministry described Friday's events as a "meteor shower in the form of fireballs" and said background radiation levels were normal. It urged residents not to panic.

Simon Goodwin, an astrophysics expert from Britain's University of Sheffield, said it was estimated between 1,000 and 10,000 tonnes of material rained down from space onto the earth every day, but most burned up in the atmosphere.

"While events this big are rare, an impact that could cause damage and death could happen every century or so," he said. "Unfortunately there is absolutely nothing we can do to stop impacts."

The meteor struck just as an asteroid known as 2012 DA14, about 46 meters in diameter was due to pass closer to earth than any other known object of its size since scientists began routinely monitoring them about 15 years ago.

The small asteroid was expected to pass at a distance of 17,100 miles from earth on Friday.

(Additional reporting by Gabriela Baczynska in Moscow, Writing by Alexei Anishchuk and Timothy Heritage, Editing by Michael Holden)

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"Blade Runner" Pistorius charged with murdering girlfriend

JOHANNESBURG (Reuters) - South African "Blade Runner" Oscar Pistorius, a double amputee who became one of the biggest names in world athletics, was charged on Thursday with shooting dead his girlfriend at his upscale home in Pretoria.

Police said they opened a murder case after a 30-year-old woman was found dead at the Paralympic and Olympic star's house in the Silverlakes gated complex on the capital's outskirts.

Pistorius, 26, and his girlfriend, model Reeva Steenkamp, had been the only people in the house at the time of the shooting, police brigadier Denise Beukes, told reporters, adding witnesses had been interviewed about the early morning incident.

"We are talking about neighbors and people that heard things earlier in the evening and when the shooting took place," Beukes said outside the heavily guarded residential complex. Earlier, police said a 9mm pistol had been found at the scene.

Beukes said police were aware of previous incidents at the Pistorius house. "I can confirm that there has previously been incidents at the home of Mr Oscar Pistorious, of allegations of domestic nature," she said.

Pistorius, who uses carbon fiber prosthetic blades to run, is due to appear in a Pretoria court on Friday.

"He is doing well but very emotional," his lawyer Kenny Oldwage told SABC TV, but gave no further comment.

A sports icon for triumphing over disabilities to compete with able-bodied athletes at the Olympics, his sponsorship deals, including one with sports apparel group Nike, are thought to be worth $2 million a year.

South Africa's M-Net cable TV channel said it was pulling adverts featuring Pistorius off air immediately.


Steenkamp's colleagues in the modeling world were distraught. "We are all devastated. Her family is in shock," her agent, Sarita Tomlinson, tearfully told Reuters. "They did have a good relationship. Nobody actually knows what happened."

Pistorius, who was born without a fibula in both legs, was the first double amputee to run in the Olympics and reached the 400-metre semi-finals in London 2012.

In last year's Paralympics he suffered his first loss over 200 meters in nine years. After the race he questioned the legitimacy of Brazilian winner Alan Oliveira's prosthetic blades, though he was quick to express regret for the comments.

South Africa has some of the world's highest rates of violent crime, and many home owners have weapons to defend themselves against intruders, although Pistorius' complex is surrounded by a three-meter high wall and electric fence.

In 2004, Springbok rugby player Rudi Visagie shot dead his 19-year-old daughter after he mistakenly thought she was a robber trying to steal his car in the middle of the night.

Before the murder charge was announced, Johannesburg's Talk Radio 702 said the athlete may have mistaken Steenkamp for a burglar.

Recent media interviews with Pistorius revealed he kept an assortment of weapons in his home.

"Cricket and baseball bats lay behind the door, a pistol by his bed and a machine gun by a window," Britain's Daily Mail wrote in a profile published last year.

Pistorius was arrested in 2009 for assault after slamming a door on a woman and spent a night in police custody. Family and friends said it was just an accident and charges were dropped.

"He's very quiet and very modest but he's a big party animal," one of South Africa's top runners, who knows Pistorius, told Reuters. "I've been with him when we've been smashed and he never seemed violent," said the runner, who declined to be named.


Steenkamp, a regular on the South African social scene, was reported to have been dating Pistorius for several months.

In the social pages of last weekend's Sunday Independent she described him as having "impeccable" taste. "His gifts are always thoughtful," she was quoted as saying.

Some of her last Twitter postings indicated she was looking forward to Valentine's Day on Thursday. "What do you have up your sleeve for your love tomorrow???" she posted.

Pistorius was on Thursday being processed through the police system. "At this stage he is on his way to a district surgeon for medical examination," the police brigadier said.

"When a person has been accused of a crime like murder they look at things like testing under the finger nails, taking a blood alcohol sample and all kinds of other test that are done. They are standard medical tests," Beukes said.

Pistorius is also sponsored by British telecoms firm BT, sunglasses maker Oakley and French designer Thierry Mugler.

"We are shocked by this terrible, tragic news. We await the outcome of the South African police investigation," a BT spokeswoman said before Pistorius was charged.

A Nike spokesman in London said before hearing of the murder charge that the company was "saddened by the news, but we have no further comment to make at this stage".

Pistorius also has a sponsorship deal with Icelandic prosthetics manufacturer Ossur.

"I can only say that our thoughts and prayers are with Oscar and the families involved in the tragedy," Ossur CEO Jon Sigurdsson told Reuters. "It is completely premature to discuss or speculate on our business relationship with him."

Neighbors expressed shock at the arrest of a "good guy".

"It is difficult to imagine an intruder entering this community, but we live in a country where intruders can get in wherever they want to," said one Silverlakes resident, who did not want to be named.

"Oscar is a good guy, an upstanding neighbor, and if he is innocent I feel for this guy deeply," he said.

(Additional reporting by Sherilee Lakmidas, David Dolan, Ed Cropley, Jon Herskovitz, Keith Weir and Kate Holton; Writing by Ed Cropley; Editing by Will Waterman and Peter Millership)

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Insight: Divided Damascus confronted by all-out war

DAMASCUS (Reuters) - MiG warplanes roar low overhead to strike rebels fighting to oust President Bashar al-Assad on the fringes of Damascus, while artillery batteries pound the insurgents from hills overlooking a city divided between all-out war and a deceptive calm.

Whole families can be obliterated by air raids that miss their targets. Wealthy Syrians or their children are kidnapped. Some are returned but people tell grim tales of how others are tortured and dumped even when the ransom is paid.

People also tell of prisoners dying under torture or from infected wounds; of looting by the government's feared shabbiha militias or by rebels fighting to throw out the Assad family.

That is one Damascus. In the other, comprising the central districts of a capital said to be the oldest continually inhabited city in the world, the restaurant menus are full, the wine is cheap and the souks are packed with shoppers.

Employees report for work, children go to school and shops are open, seemingly undeterred by the din and thud of war.

The two cities exist a few miles apart - for now.

For Damascus and its outskirts are rapidly descending into civil war and everything that comes with it - lawlessness, looting, kidnapping and revenge killings. Like the rest of the country, the capital and its suburbs are crawling with armed gangs.

"Anybody can come to you pretending he is security and grab you in broad daylight, put you in a car and speed off and nobody dares interfere or rescue you," says Lama Zayyat, 42. "A girl in the 7th grade was kidnapped and her father was asked to pay a big ransom. The same happened to other children," she said.

Nobody really knows who is behind the kidnappings. In one gang, one brother is in charge of abductions while another brother negotiates with the victims. The fear is palpable.


The war has not yet reached the heart of the capital, but it is shredding the suburbs. In the past week, government troops backed by air power unleashed fierce barrages on the east of the city in an attempt to flush out rebel groups.

Most of central Damascus is controlled by Assad's forces, who have erected checkpoints to stop bomb attacks. The insurgents have so far failed to take territory in the center.

Just as loyalist forces seem unable to regain control of the country, there looks to be little chance the rebels can storm the center of Damascus and attack the seat of Assad's power.

For most of last week the army rained shells on the eastern and southern neighborhoods of Douma, Jobar, Zamalka and Hajar al-Aswad, using units of the elite Republican Guard based on the imposing Qasioun mountain that looms over the city.

The rebels, trying to break through the government's defense perimeter, were periodically able to overrun roadblocks and some army positions, but at heavy cost.

Jobar and Zamalka are situated near military compounds housing Assad's forces, while Hajar al-Aswad in the south is one of the gateways into the city, close to Assad's home and the headquarters of his republican guard and army.

Since the uprising began two years ago, 70,000 people have been killed, 700,000 have been driven from Syria and millions more are displaced, homeless and hungry. No section of society has been spared, whether Christians, Alawites or Sunnis, but in every community it is the poor who are suffering most.

Electricity is sporadic. Hospitals are understaffed as so many doctors - often targeted on suspicion of treating rebel wounded - have fled. Hotels and businesses barely function.

Outside petrol stations and bakeries, queues are long and supplies often run out, meaning people have to come back the next day. Those who can afford it pay double on a thriving black market.

The scale of the suffering can be seen in the ubiquitous obituary notices on the walls of Damascus streets - some announcing the deaths of whole families killed by shelling.

As if oblivious of these private daily tragedies, the government insists the situation is under control, while the rebels say the Assads' days are numbered.


Ordinary Syrians are convinced their ordeal is nowhere near over. While they believe Assad will not be able to reverse the gains of the rebels, they cannot see his enemies prevailing over his superior firepower, and Russian and Iranian support.

"The regime won't be able to crush the revolution and the rebels won't be able to bring down the regime," said leading opposition figure Hassan Abdel-Azim. "The continuation of violence won't lead to the downfall of the regime, it will lead to the seizure of the country by armed gangs, which will pose a grave danger not only to Syria but to our neighbors".

"Right now no one is capable of winning," said a Damascus-based senior Arab envoy. "The crisis will continue if there is no political process. It is deadlock."

Other diplomats in Damascus say the United States and its allies are getting cold feet about arming the rebels, fearing the growing influence of Islamist radicals such the al-Nusra Front linked to al-Qaeda, banned last year by Washington.

Some remarks recur again and again in Damascus conversations: "Maybe he will stay in power, after all", and, above all, "Who is the alternative to Assad?"

"At first I thought it was a matter of months. That's why I came here and stayed to bear witness to the final moments," said Rana Mardam Beik, a Syrian-American writer. "But it looks like it will be a while so I am thinking of going back to the U.S."

Loyalty to Assad is partly fed by fear of the alternative. Facing a Sunni-dominated revolt, Syria's minorities, including Christians and Assad's own Alawites - an offshoot of Shi'ite Islam - fear they will slaughtered or sidelined if the revolution succeeds and Sunni fundamentalists come to power.


Many Christians are already trying to emigrate to countries such as Sweden, diplomats say.

"The minorities have every right to be frightened because no one knows what is the alternative. Is it a liberal, civic, pluralistic and democratic state, or is the alternative an Islamist extremist rule that considers the minorities infidels and heretics?" said Abdel Azim.

The government tells the minorities the only alternative to Assad is Islamism. Loyalist brutality against the Sunni majority is in danger of making this a self-fulfilling prophecy, by sucking in jihadi extremists from Libya to Saudi Arabia.

"I am not with the regime but we are sure that if Bashar goes the first people they will come for are the Alawites, then the Shi'ites and then us Christians. They are fanatics," said George Husheir, 50, an IT engineer.

At the Saint Joseph Church in Bab Touma, the old Christian quarter of Damascus, Christians in their dozens, mostly middle-aged and older couples, gathered for mass on a Friday morning.

"We don't know what the future holds for us and for this country," said the priest in his sermon. "The Christians of Syria need to pray more."

Nabiha, a dentist in her 40s, said: "Bashar is a Muslim president but he is not a fanatic. He gave us everything. Why shouldn't we love him. Look at us here in our church, we pray, we mark our religious rituals freely, we do what we like and nobody interferes with us."

The fear of the Christians extends to the Alawite and minority Shi'ites. "If Bashar goes we definitely have to leave too because the Sufianis (Sunni Salafis) are coming and they are filled with a sectarian revenge against us," said one wealthy middle class Shi'ite.


Alongside sectarian hatreds, class and tribal acrimony is also surfacing. Wealthy Sunnis in the capital are already in a panic about poor Sunni Islamists from rural areas descending on their neighborhoods.

"When they come they will eat us alive", one rich Sunni resident of Damascus said, repeating what a cab driver dropping him in the posh Abou Roummaneh district told him: "Looting these houses will be allowed."

Yet many activists feel protective of the revolution, despite the brutal behavior of some Islamist rebels.

"People talk about chaos and anarchy after Assad, but so what if we have two years of a messy transition? That is better than to endure another 30 years of this rule," said Rana Darwaza, 40, a Sunni academic in Damascus.

Prominent human rights lawyer Anwar al-Bunni said the suffering is a price that had to be paid. "Those on the ground will continue to fight even with their bare hands", he said.

He said there are thousands of prisoners in horrific conditions in Assad's jails. Some suffocate in overcrowded cells while others die under torture or from untreated wounds. "They don't give them medical treatment or pain killers or antibiotics. They leave them to die," he said.

Close watchers of Syria predict that if there is no settlement in a few months the conflict could go on for years. Yet the economy is collapsing, leaving the government to rely on dwindling foreign reserves, private assets and Iranian funds.

There is no tourism, no oil revenue, and 70 percent of businesses have left Syria, said analyst Nabil Samman. "We are heading for destruction, the future is dark", he added.

Added to the religious animosity between the Sunni majority and the Alawite minority who took control when Hafez al-Assad seized power in 1970 are social and economic grievances fuelled by the predatory practices of the elite.

This resentment extends to young middle class Syrians who feel they have lost a way of life and that their country is being used by regional powers for proxy war.

"All the regional point-scoring is taking place in Syria. We have Libyan fighters and Saudis fighting for freedom in Syria, why are they here? Let them go and demand freedom in their own countries?," said banker Hani Hamaui, 29.

Two years into the uprising, Assad is hanging on. Some will always back him and others want him dead. But many just want an end to the fighting. They may have to wait for some time.

Signs daubed on the gates to the city by Assad's troops are a reminder that the battle for Damascus will be costly. "Either Assad, or we will set the country ablaze", they say.

(Editing by Giles Elgood)

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China joins U.S., Japan in condemning North Korea nuclear test

SEOUL (Reuters) - North Korea conducted its third nuclear test on Tuesday in defiance of existing U.N. resolutions, drawing condemnation from around the world, including from its only major ally, China, which summoned the North Korean ambassador to protest.

The reclusive North said the test was an act of self-defense against "U.S. hostility" and threatened further, stronger steps if necessary.

It said the test had "greater explosive force" than the 2006 and 2009 tests. Its KCNA news agency said it had used a "miniaturized" and lighter nuclear device, indicating that it had again used plutonium which is more suitable for use as a missile warhead.

North Korean leader Kim Jong-un, the third of his line to rule the country, has presided over two long-range rocket launches and a nuclear test during his first year in power, pursuing policies that have propelled his impoverished and malnourished country closer to becoming a nuclear weapons power.

China, which has shown signs of increasing exasperation with the recent bellicose tone of its neighbor, summoned the North Korean ambassador in Beijing and protested sternly, the Foreign Ministry said.

Foreign Minister Yang Jiechi said China was "strongly dissatisfied and resolutely opposed" to the test and urged North Korea to "stop any rhetoric or acts that could worsen situations and return to the right course of dialogue and consultation as soon as possible".

China is a permanent member of the Security Council.

U.S. President Barack Obama labeled the test a "highly provocative act" that hurt regional stability and pressed for new sanctions.

"The danger posed by North Korea's threatening activities warrants further swift and credible action by the international community. The United States will also continue to take steps necessary to defend ourselves and our allies," Obama said in a statement.

The Security Council will meet on Tuesday to discuss its reaction to the test, although North Korea is already one of the most heavily sanctioned states in the world and has few external economic links that can be targeted.

Japanese Prime Minister Shinzo Abe said the test was a "grave threat" that could not be tolerated. U.N. Secretary-General Ban Ki-moon said the test was a "clear and grave violation" of U.N. Security Council resolutions.

Russian Foreign Minister Sergei Lavrov urged North Korea to abandon its nuclear arms program and return to talks. NATO condemned the test as an "irresponsible act" that posed a grave threat to world peace.

The test "was only the first response we took with maximum restraint", an unnamed spokesman for the North Korean Foreign Ministry, which acts as Pyongyang's official voice to the outside world, said in a statement carried by the official KCNA news agency.

"If the United States continues to come out with hostility and complicates the situation, we will be forced to take stronger, second and third responses in consecutive steps."

North Korea often threatens the United States and its "puppet", South Korea, with destruction in colorful terms.

North Korea told the U.N. disarmament forum in Geneva that it would never bow to resolutions on its nuclear program and that prospects were "gloomy" for the denuclearization of the divided Korean peninsula because of a "hostile" U.S. policy.

South Korea, still technically at war with the North after the 1950-53 civil war ended in a mere truce, also denounced the test.

The magnitude was roughly twice as large as that of 2009, Lassina Zerbo, director of the international data centre division of the Vienna-based Comprehensive Nuclear-Test Ban Treaty Organization, said. The U.S. Geological Survey said that a seismic event measuring 5.1 magnitude had occurred.

"It was confirmed that the nuclear test that was carried out at a high level in a safe and perfect manner using a miniaturized and lighter nuclear device with greater explosive force than previously did not pose any negative impact on the surrounding ecological environment," KCNA said.

Despite China's strong response, the test is likely to be a major embarrassment for Beijing, the North's sole major economic and diplomatic ally.

"The test is hugely insulting to China, which now can be expected to follow through with threats to impose sanctions," said Mark Fitzpatrick of the International Institute for Strategic Studies think tank.

North Korea trumpeted the announcement on its state television channel to patriotic music against the backdrop of an image of its national flag.

It linked the test to its technical prowess in launching a long-range rocket in December, a move that triggered the U.N. sanctions, backed by China, that Pyongyang said prompted it to take Tuesday's action.

The North's ultimate aim, Washington believes, is to design an intercontinental ballistic missile capable of carrying a nuclear warhead that could hit the United States. North Korea says the program is aimed merely at putting satellites in space.

North Korea used plutonium in previous nuclear tests and prior to Tuesday there had been speculation it would use highly enriched uranium so as to conserve its plutonium stocks as testing eats into its limited supply of the material that could be used to construct a nuclear bomb.


Despite its three nuclear tests and long-range rocket tests, North Korea is not believed to be close to manufacturing a nuclear missile capable of hitting the United States.

South Korea's Yonhap news agency said Pyongyang had informed China and the United States of its plans to test on Monday, although this could not be confirmed.

When North Korean leader Kim, 30, took power after his father's death in December 2011, there were hopes the he would bring reforms and end Kim Jong-il's "military first" policies.

Instead, the North, whose economy is smaller than it was 20 years ago and where a third of children are believed to be malnourished, appears to be trapped in a cycle of sanctions followed by further provocations.

"The more North Korea shoots missiles, launches satellites or conducts nuclear tests, the more the U.N. Security Council will impose new and more severe sanctions," said Shen Dingli, a professor at Shanghai's Fudan University. "It is an endless, vicious cycle."

But options for the international community appear to be in short supply.

Tuesday's action appeared to have been timed for the run-up to February 16 anniversary celebrations of Kim Jong-il's birthday, as well as to achieved maximum international attention.

Significantly, the test comes at a time of political transition in China, Japan and South Korea, and as Obama begins his second term. He will likely have to tweak his State of the Union address due to be given on Tuesday.

Japanese Prime Minister Shinzo Abe is bedding down a new government and South Korea's new president, Park Geun-hye, prepares to take office on February 25.

China too is in the midst of a once-in-a-decade leadership transition to Xi Jinping, who takes office in March. Both Abe and Xi are staunch nationalists.

The longer-term game plan from Pyongyang may be to restart talks aimed at winning food and financial aid. China urged it to return to the stalled "six-party" talks on its nuclear program, hosted by China and including the two Koreas, the United States, Japan and Russia.

Its puny economy and small diplomatic reach mean the North struggles to win attention on the global stage - other than through nuclear tests and attacks on South Korea, last made in 2010.

"Now the next step for North Korea will be to offer talks... - any form to start up discussion again to bring things to their advantage," said Jeung Young-tae, senior research fellow at the Korea Institute for National Unification in Seoul.

The European Union's foreign policy chief, Catherine Ashton, urged North Korea to refrain from further provocation.

EU member Denmark called on China to step up to the plate and use its influence to rein in its ally.

"This deserves only one thing and that is a one-sided condemnation," said Foreign Minister Villy Sovndal. "North Korea is likely the most horrible country on this planet."

(Additional reporting by Jack Kim, Christine Kim and Jumin Park in SEOUL; Linda Sieg in TOKYO; Louis Charbonneau at the UNITED NATIONS; Fredrik Dahl in VIENNA; Michael Martina and Chen Aizhu in BEIJING; Mette Fraende in COPENHAGEN; Adrian Croft, Charlie Dunmore and Justyna Pawlak in BRUSSELS; Editing by Nick Macfie)

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