Hong Kong shares may trim strong 2013 start after Fed voices concern

HONG KONG, Jan 4 (Reuters) - Hong Kong shares could end a
two-day rally on Friday, tracking Wall Street weakness after
signs that the U.S. Federal Reserve has growing concerns about
its stimulative monetary policy.
Any losses could be limited if mainland China markets reopen
strongly on Friday, trading for the first day in 2013 after a
three-day New Year holiday.
On Thursday, the Hang Seng Index ended up 0.4 percent
at 23,398.6, its highest since June 1, 2011. The China
Enterprises Index of the top Chinese listings in Hong
Kong added 0.8 percent, reaching another peak since August 2011.
On the week, the indexes are up 3.2 and 5.5 percent,
respectively. The H-share index's relative strength index (RSI)
value suggests that it is now at its most overbought since
October 2010.
Elsewhere in Asia, Japan's Nikkei is up 3 percent in
its first trading session for the year, while South Korea's
KOSPI is down 0.4 percent at 0042 GMT.
FACTORS TO WATCH:
* Consolidation of Austria's cutthroat telecom market moved
ahead on Thursday when Hutchison Whampoa Ltd completed
its 1.3 billion euro ($1.7 billion) takeover of Orange Austria,
making it the country's third-biggest mobile operator.
* Hong Kong's Li & Fung Group agreed to acquire a
majority stake in South Korean children's apparel maker Suhyang
Networks for roughly 200 billion won ($188 million), a South
Korean newspaper reported on Thursday.
* Hong Kong November 2012 retail sales rose 9.5 percent from
a year earlier.
* Bestway International Holdings Ltd has cancelled
part of its mining area in Mongolia due to the implementation of
new regulations.
* Chinese property developer Kaisa Group Holdings Ltd
has issued $500 million in senior notes due 2020
bearing an interest rate of 10.25 percent per annum.
* Chinese property developer Country Garden has
issued $750 million senior notes due 2023 with an interest rate

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Analysis: Alimta patent seen as Lilly's "wild card"

NEW YORK (Reuters) - Eli Lilly & Co may have a $15 billion wild card up its sleeve as it waits for desperately needed new drugs to bear fruit.
Should an obscure patent on Lilly lung cancer drug Alimta survive a court challenge this year, the company would be able to wring more than five additional years of peak sales out of the fast-growing product that it would otherwise lose to cheaper generics.
Annual sales of Alimta are expected by Wall Street to climb to $3.5 billion by 2016, when its basic patent lapses. Once faced with generic competition, branded drugs typically lose more than 80 percent of sales within a year.
While the likelihood of a Lilly victory is not a widely held view, a growing number of patent attorneys and industry analysts believe the particular patent being challenged will pass legal muster.
Alimta may keep its marketing exclusivity until 2022, thanks to protection from a separate so-called method-of-use patent on the way the drug is administered that many investors and Wall Street watchers are not aware of or have failed to appreciate.
Historically, method-of-use patents have had a much tougher time holding up in court than basic chemical patents on medicines. They are often viewed as manipulative, blatant efforts to extend the sales life of products.
But this one could be different because of specific safety language in the Alimta label that could provide a road block to cheaper generics.
The so-called '209 patent covers the administration of two nutrients - folic acid and vitamin B12 - to patients before they receive Alimta, to protect against toxic side effects of the cancer drug. Alimta's approved label instructs doctors to administer the nutrients prior to and during use of the medicine.
"For a generic to win approval, it usually has to copy the branded drug's label," said patent attorney Ben Hsing, a partner in the law firm of Kaye Scholer in New York.
Generics could have a hard time doing so because Lilly has a separate patent on the pre-administration of the nutrients, said Hsing, who last year successfully defended Roche Holding AG's Tarceva lung cancer drug from patent challenges by generic drugmaker Mylan Inc. "So I think generics would have a tough time" prevailing.
If generic versions of Alimta cannot mention use of the nutrients in their own labels, they could be compromising patient safety, which is not likely to sit well with health regulators that must approve any generic, according to patent attorneys.
Lilly, whose attorneys declined to comment for this story, is expected to counter legal arguments that use of folic acid and vitamin B12 is "obvious" and therefore not patentable by arguing that its researchers discovered the protective effects of the nutrients with respect to Alimta specifically.
Gary Frischling, a Los Angeles-based patent attorney for Irell & Manella, agreed that the language in Alimta's label could keep cheap generics at bay until 2022.
"This seems to be a case in which research done on how to safely use this particular drug has turned out to be very economically important," said Frischling, who has represented Elan Corp and other drugmakers.
PATENT WIN WOULD PROVIDE NEEDED BOOST
Lilly badly needs new medicines to replace ones that have already lost patent protection or will in the next two years.
In October 2011, the company began facing one of the worst patent cliffs in industry history when its biggest drug, Zyprexa for schizophrenia, began facing generics. Sales of the former $4.5 billion-a-year drug have plunged by two-thirds.
The pain worsens in December of 2013, when Lilly's current top seller, the $5 billion-a-year anti-depressant Cymbalta, goes generic, and after cheap versions of its $1 billion Evista osteoporosis drug arrive in early 2014.
Blockbuster Alimta sales well into 2022 could go a long way toward easing some of that pain, while other new medicines work their way toward approvals.
Generic drugmakers Teva Pharmaceuticals Industries Ltd and APP Pharmaceuticals LLC have challenged the validity of the '209 patent, and will battle Lilly this summer in federal court in the drugmaker's hometown of Indianapolis.
The U.S. Court of Appeals in Washington last August upheld the validity of the patent on the drug's chemical structure, protecting it from generics through late 2016.
If the method of use patent also holds up in court, Alimta would then be protected from 2017 to 2022, according to Seamus Fernandez, an analyst with Leerink Swann, who received a four-star rating from StarMine for his predictions about Lilly over the previous two years.
His "outperform" rating on Lilly is based partly on that expectation, even though the general consensus on Wall Street is to the contrary.
"We see a real opportunity here," said Fernandez, who estimated Lilly's earnings per share would get more than a 25 percent lift in 2017, 2018 and 2019 if the patent is upheld.
"It would provide a pretty nice runway to launch products and get them to market," said Fernandez. He cited Lilly treatments for Alzheimer's disease, arthritis, psoriasis, diabetes and cancer now in late-stage studies.
Michael Liss, portfolio manager at American Century Investments, said Lilly's profits and share price could expand significantly if only a few good-selling drugs are introduced during the next few years.
Sanford Bernstein's Tim Anderson also has an "outperform" rating on Lilly, based largely on confidence the method of use patent will prevail in court. Anderson also received a four-star out of five StarMine professional rating for his analysis of Lilly.
The company has taken a conservative stance, not stressing the possibility of a patent victory. Lilly Chief Financial Officer Derica Rice has said an extension of Alimta's patent would be an "upside" for Lilly.
Attorneys for Lilly declined to comment on the case. A Teva spokeswoman also declined to comment.
To be sure, keeping Alimta patent protection beyond 2016 is no lock. Based on historical precedence, Morningstar analyst Damien Conover offered little hope the patent will pass muster with the federal court. "Most people expect the patent to fail," Conover said. "Method-of-use patents tend to be particularly weak."
But most people may be underestimating the protective differences of this particular patent, according to legal experts.
Patricia Carson, a patent lawyer with the firm of Kirkland & Ellis in New York, said pre-administration of folic acid and vitamin B12 appears to be "specific to Alimta" and not a procedure common with other drugs.
"In development (of Alimta), they came up with this type of method," she said.
Even so, Carson said Lilly may have to convince the court the method would not have been obvious to the ordinary researcher.
Should the Alimta patent prevail, Conover said it would significantly bolster Lilly's attractiveness and profits beginning in 2017. It also would help Lilly cope with a second patent cliff that would begin that year, as its Cialis impotence treatment and Effient blood clot drug begin facing generics. The drugs now have annual sales of $2 billion and $450 million, respectively.
Lilly's fourth-quarter results, due later this month, are expected to show earnings tumbled about 24 percent in 2012. The company expects to begin rebounding from its patent cliff in 2015.
Cowen and Co analyst Steve Scala, called the patent case a "wildcard opportunity" for Lilly.
Lilly shares rose 19 percent in 2012, compared with a 10 percent gain for the ARCA Pharmaceutical Index of large U.S. and European drugmakers, suggesting confidence in an eventual turnaround for Lilly.

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Stocks fade after Fed discloses split on stimulus

NEW YORK (AP) — A two-day rally in the stock market came to an end Thursday afternoon when an account of the Federal Reserve's last meeting revealed a split between bank officials over how long the Fed should keep buying bonds to support the economy.
The Dow Jones industrial average and the Standard & Poor's 500 index treaded water for much of the day, then slid into the red around 2 p.m. Eastern, after the Fed released the minutes from its December meeting.
The Dow ended with a loss of 21.19 points at 13,391.36.
The S&P 500 lost 3.05 points to 1,459.37 and the Nasdaq composite fell 11.70 to 3,100.57.
At last month's meeting of the Federal Reserve's policy-making committee, the central bank pledged to buy $85 billion of Treasurys and mortgage-backed bonds and also keep a benchmark interest rate near zero until the unemployment rates drops below 6.5 percent.
On Thursday, the minutes from that meeting showed Fed officials were divided over the bond purchases. Some of its 12 voting members thought they should continue through this year, while another group thought they should be slowed or stopped much earlier. Just "a few" members saw no need for a time frame, according to the minutes.
"It's pretty surprising," said Thomas Simons, market economist at the investment bank Jefferies. "I think everybody thought there was broad agreement on policy, but now it seems like few of them really wanted to vote for it."
The stock market opened on a weak note after retailers reported mixed holiday sales and as the prospect of a new budget battle in Congress loomed. UnitedHealth Group led the Dow lower. The insurance giant's stock fell $2.55 to $51.99 after analysts at Deutsche Bank and other firms cut their ratings on the stock.
"It's natural to relax a bit after such a huge day as yesterday," said Lawrence Creatura, who manages a small-company fund at Federated Investors.
The Dow soared 308 points Wednesday, its largest point gain since December 2011. The rally was ignited after lawmakers passed a bill to avoid a combination of government spending cuts and tax increases called the "fiscal cliff."
That deal gave the market a jump start into the new year. The Dow and the S&P 500 are already up more than 2 percent.
"We're off to a very strong start," Creatura said. "The dominant reason is the resolution of the fiscal cliff. But January is usually a strong month, as investors all shift money into the market at the same time. When the calendar flips, it's as if you're allowed to begin the race anew."
Economists had warned that the full force of the fiscal cliff could drag the country into a recession. The law passed late Tuesday night averted that outcome for now, but other fiscal squabbles are likely in the months ahead. Congress must raise the government's borrowing limit soon or be forced to choose between slashing spending and paying its debts.
In other Thursday trading, prices of U.S. government bonds fell, sending their yields higher. The yield on the benchmark 10-year Treasury note rose to 1.90 percent from 1.84 percent late Wednesday, a sign that some bond traders believe the Fed minutes hinted at an early end to its bond buying.
Family Dollar Stores sank 13 percent after reporting earnings that fell short of analysts' projections. The company also forecast a weaker outlook for the current period and full year. Family Dollar's stock lost $8.30 to $55.74.
Nordstom Inc. surged 3 percent after the department-store chain reported strong holiday sales, especially in the South and Midwest. Nordstrom's stock was up $1.64 to $55.27.
Among other stocks making big moves:
— Transocean jumped $2.96 to $49.20. The owner of the oil rig that sank in the Gulf of Mexico in 2010 after an explosion killed 11 workers reached a $1.4 billion settlement with the Justice Department.

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Egypt says it seizes US-made missiles near Gaza

 Egyptian authorities seized six U.S.-made missiles in the Sinai Peninsula Friday that security officials said were likely smuggled from Libya and bound for the Gaza Strip.
Libya's 2011 uprising and subsequent civil war left the country awash in weapons, including rocket-propelled grenades, automatic rifles and other munitions. Since the end of the country's eight-month conflict, smugglers have transferred some of the weapons to Islamic militants in Egypt's Sinai Peninsula, which has faced a security vacuum since the country's own uprising, and from there onward in underground tunnels to neighboring Gaza.
Security officials said that police working on a tip from local Bedouin discovered the six U.S.-made missiles hidden in a hole in the desert outside the northern Sinai city of el-Arish before dawn on Friday. They said the anti-tank and anti-aircraft missiles have a range of up to two kilometers (one mile).
The officials, who spoke anonymously because they were not authorized to speak to media, did not specify the make of weapon.
Over the past year, Egypt's Interior Ministry has confiscated hundreds of weapons smuggled from Libya, often near the Egyptian city of Marsa Matrouh, which is located along the Mediterranean coastal highway some 430 kilometers (270 miles) northwest of Cairo. Last month, security officials seized 17 French-made missiles near el-Arish, some 750 kilometers east of Marsa Matrouh along the coast, before they could be smuggled through tunnels to the Gaza Strip.
Gaza has been under an Israeli-Egyptian blockade since the militant Hamas group took over in 2007 following an election win two years earlier. Egyptian security often turn a blind eye to the smuggling of goods to Gaza, which ranges from cars to diapers to food, but have come down harder on weapons smuggling.
Meanwhile, the U.S. State Department has provided funding to U.S. Customs and Border Protection to conduct training for officials from the Libyan Ministry of Defense and the Customs Authority with the aim of reducing the illicit transfers of weapons across borders.

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Saudi's top cleric warns against mixing of genders

 Saudi Arabia's top cleric on Friday warned against the mixing of the genders, saying it poses a threat to female chastity and society, as the kingdom prepares for the first time to grant women seats on the country's top advisory body.
Delivering his traditional Friday sermon, Grand Mufti Sheik Abdul-Aziz Al-Sheik said authorities must adhere to Shariah, or Islamic law, by ensuring men and women are separated as much as possible at all times. The cleric's comments come just weeks ahead of allowing women to be members of the 150-member Shura Council, the country's top advisory body.
Since 2006, women have been appointed as advisors to the council — an appointed, consultative body that has the authority to review laws and question ministers but cannot propose or veto legislation. There are currently 12 female advisors, but they do not have a right to vote in the assembly.
The move by King Abdullah to allow women a voice on the Shura Council is part of a larger reform effort by the monarchy to give women greater space in the public sphere. Last year, the kingdom began enforcing a law that allows women to work in female apparel and lingerie stores.
Religious leaders, including the grand mufti, have spoken out against such reforms.
The country is guided by an ultraconservative interpretation of Islam called Wahhabism. In the kingdom, women cannot travel, work, study abroad, marry, get divorced or gain admittance to a public hospital without permission from a male guardian — typically a husband, brother, father or uncle.
While Al-Sheik has spoken out in support of granting women the right to vote in 2015 alongside men in the nation's only open elections, he has criticized the decision to allow women to work in apparel stores, saying that it puts them in contact with men unrelated to them.
"It is necessary for women to be separated from men as much as possible, because this great religion protects the chastity of women against evil and corruption," Al-Sheik told worshippers at the Imam Turki mosque in Riyadh.
While his Friday sermon focused mainly on corruption in the kingdom, the grand mufti stressed that it is forbidden in Islam for a woman to stand before a man unveiled, warning that to do so will destroy the morals and values of society. The veil in Saudi Arabia refers to the full face covering worn by most women in the ultraconservative kingdom.
The Saudi government has not said how many women will be given seats on the Shura Council. Some local papers have suggested that women would be separated from the men in the assembly hall by a barrier, while others have suggested that women communicate via an internal video system.
However, those pushing for reform point to a recent council session where the country's top female official, deputy Education Minister Nura al-Fayez, sat in a full face veil and took part in the dialogue alongside the men.
"It sends a message to the conservatives that this is the example for women's participation in the Shura Council," Hatoon Al-Fassi, a columnist and professor of women's history in King Saud University said, adding that it also suggests this is what the king supports.
She said she is among many in Saudi Arabia who are rejecting a symbolic presence of women in the assembly.
"At the end we are not behind the scenes," Al-Fassi said. "We are asking for equality and for half of the council, or what is 75 seats."
Al-Fassi and other Saudi women have been pushing the government for social reforms and greater rights for women, including allowing women the right to drive and for the dissolution of male guardianship laws. Saudi women have staged protests defying the driving ban.
She said that there is pressure from the religious establishment to keep to a minimum the number of seats for women in the advisory body.
"I believe that the religious establishment will insist on forcing its opinion to resist the kingdom's progressive reforms, but as women we are insisting on building society hand in hand.

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Iraq's al-Sadr visits church, site of 2010 attack

BAGHDAD (AP) — Shiite cleric Muqtada al-Sadr reached out to Iraq's religious minorities Friday, visiting a Baghdad church desecrated in a deadly 2010 attack and a prominent Sunni mosque as public opposition spread against his rival, Prime Minister Nouri al-Maliki.
The anti-U.S. cleric's stops at the holy sites — a rare public appearance outside predominantly Shiite parts of Iraq — came as tens of thousands of primarily Sunni protesters angry over perceived second-class treatment rallied to maintain pressure against al-Maliki's Shiite-led government.
Friday's demonstrations reached well beyond the desert province of Anbar that has been the hub of two weeks of unrest, touching a string of Sunni-dominated communities in Iraq's north and west. Cries of "Down, down with al-Maliki" echoed in the streets of the northern city of Mosul, while protesters in the capital Baghdad accused the prime minister of being a liar.
The government has tried to appease the demonstrators by agreeing this week to release some detainees, bowing at least in part to one of their more emotionally charged demands. But that gesture has done little to stem their rage.
In a statement Friday, the prime minister urged government security forces to show restraint toward protesters. He also called on demonstrators to avoid acts of civil disobedience and warned them that "foreign agendas" seek to push Iraq toward sectarian conflict again.
Al-Sadr to be trying to capitalize on the political turmoil by attempting to portray himself as a unifying figure ahead of provincial elections in the spring. He spoke up for the Sunni protesters' right to demonstrate earlier this week, and echoed that sentiment again Friday.
"We support the demands of the people, but I urge them to safeguard Iraq's unity," he said.
Wearing his signature black cloak and turban, the cleric said he visited the Our Lady of Salvation church to express sorrow at the attack and send a message of peace to Iraq's dwindling Christian community, which is estimated to number about 400,000 to 600,000.
He sat quietly in the front pew, listening and nodding as Father Ayssar al-Yas described recent renovations to the church. The priest then led al-Sadr on a tour, pointing out places where attackers killed more than 50 people, including priests and worshippers, in an ambush during a 2010 Mass.
Al-Maliki himself attended a ceremony to officially reopen the church last month.
Al-Sadr's visit took place at a time of rising sectarian tensions a year after the U.S. withdrawal from Iraq. Al-Sadr grudgingly backed fellow Shiite al-Maliki following elections in 2010. But last year he joined Iraq's minority Sunni Arabs and Kurds in calling for al-Maliki to resign.
Al-Sadr rose to prominence as the leader of a militia movement that battled American forces following the 2003 U.S.-led invasion, and he has made overtures to Sunnis and others in the past. But fighters loyal to him were among the worst perpetrators of sectarian violence last decade, and he is still viewed with suspicion, if not hostility, by many Iraqis.
After visiting the church, al-Sadr's heavily protected convoy made its way to the Abdul-Qadir al-Gailani mosque, one of Baghdad's most prominent Sunni places of worship, shortly before midday Friday prayers.
As he entered the mosque, one worshipper called out that he is "the unifier of Sunnis and Shiites." Another hailed him as "the patriot, the patriot." Women in the courtyard ululated and showered him with candy on the way out.
Protesters, meanwhile, massed in several Sunni areas around the country.
The demonstrations appeared to be some of the largest in a wave of rallies over the past two weeks that erupted following the arrest of bodyguards assigned to Finance Minister Rafia al-Issawi, one of the central government's most senior Sunni officials.
The detention of female prisoners has been a focus of the demonstrations, though the protests tap into deeper Sunni feelings of perceived discrimination and unfair application of laws against their sect by al-Maliki's government.
Iraqi authorities this week ordered the release of 11 women facing criminal charges and pledged to transfer other women prisoners to jails in their home provinces.
But demonstrators Friday continued to press for more detainees to be released.
Several thousand people rallied amid tight security in the courtyard of Baghdad's Abu Hanifa mosque after midday prayers. They demanded the release of detainees, and held banners with slogans against the perceived politicization of the judiciary.
Their chants included: "Iran out!" — a reference to what many Iraqis see as their neighbor's influence over the government — and "Nouri al-Maliki is a liar."
Local TV broadcast what appeared to be tens of thousands of protesters massed along a highway near the western city of Ramadi, which has been the focus of demonstrations and sit-ins in recent weeks. Large crowds also converged on a stretch of the same highway near Fallujah.
About 3,000 people gathered in the northern city of Mosul, where they called for the release of female prisoners and to end to what they say are random arrests of Sunnis, while in the ethnically mixed city of Kirkuk, about 1,000 protested to demand the release of Sunni detainees.
Protests were also reported in other areas, including the Sunni stronghold of Tikrit, the hometown of former dictator Saddam Hussein.
The highest ranking member of Saddam's regime still at large, Izzat Ibrahim al-Douri, threw his support behind the protests in a video broadcast Friday evening by pan-Arab satellite channel Al-Arabiya.
Dressed in an olive, Saddam-era military uniform, the man purporting to be al-Douri told demonstrators they would have the support of "all the national and Islamic forces ... until (their) legitimate demands are achieved."
Al-Douri was the "king of clubs" in the deck of playing cards issued by the U.S. to help troops identify the most-wanted members of Saddam's regime.

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Fatah rally in Gaza looks toward unity with Hamas

GAZA CITY, Gaza Strip (AP) — Tens of thousands of Fatah supporters rallied in the Hamas stronghold of Gaza on Friday for the first time since they were routed from power in the territory by the Islamist militants in 2007.
The rally, approved by Gaza's Hamas rulers, marks a renewed attempt by the rival Palestinian factions to show unity following a fierce Hamas battle with Israel in November and Fatah's subsequent recognition bid at the United Nations.
But many obstacles still remain before the sides can settle their differences, chief among them how to deal with Israel. Several rounds of reconciliation talks over recent years centered on finding ways to share power have failed to yield results.
Still, both sides expressed optimism following Friday's unprecedented Fatah show of strength that included hours of waving their yellow flags, dancing in the streets and chanting party slogans. For years, Fatah loyalists in Gaza faced retribution from the Hamas regime, which banned them from gathering.
"We feel like birds freed from our cage today," said Fadwa Taleb, 46, who worked as a police officer for Fatah before the Hamas takeover and attended Friday's rally with her family. "We are happy and feel powerful again."
Top Fatah officials arrived in Gaza for the first time since they were violently ousted. Palestinian President Mahmoud Abbas, who rules the West Bank, did not attend the event, but he addressed the crowd on a large screen telling them "there is no substitute for national unity."
Hamas Prime Minister Ismail Haniyeh also expressed hope that the two factions could reconcile their differences, sending Fatah a message that he hoped they could work together as joint representatives of the Palestinian people, according to Fatah official Nabil Shaath. Hamas was not directly involved in the event.
Ihab al-Ghussian, the chief spokesman for the Hamas government in Gaza, said the sides would "work toward the consolidation of national unity." Egyptian officials say a first such meeting in months between the factions is scheduled for next week in Cairo.
After the rally, Haniyeh called Abbas to congratulate him and Abbas in turn thanked Haniyeh for letting it happen, said Haniyeh spokesman Taher al-Nunu. He added that both leaders expressed hope that the cooperation would lead to renewed reconciliation efforts.
The warmer tone is a result of recent gains by both factions.
Abbas has enjoyed a boost in his status since he led the Palestinians' successful bid to upgrade their status at the United Nations to a non-member observer state. On Friday, he signed a presidential decree officially changing the name of the Palestinian Authority to the "State of Palestine." All Palestinian stamps, signs and official letterhead will henceforth be changed to bear the new name, according to the official Palestinian news agency Wafa.
The move marked the first concrete, albeit symbolic, step the Palestinians have taken following the November decision by the United Nations. Abbas has hesitated to take more dramatic steps, like filing war crimes indictments against Israel at the International Criminal Court, a tactic that only a recognized state can carry out.
Hamas, meanwhile, has gained new support among Palestinians following eight days of fighting with Israel in November, during which Israel pounded the seaside strip from the air and sea, while Palestinians militants for the first time lobbed rockets toward Jerusalem and Tel Aviv.
Following the fighting, Fatah allowed Hamas to hold its first rally in the West Bank since the 2007 split. Hamas returned the favor Friday by allowing the Fatah rally to take place.
Still, the two sides have wide differences — over Israel and over the possibility of sharing power.
Fatah has held several rounds of peace talks with the Jewish state and says it is committed to a two-state solution. Hamas does not recognize Israel and is officially committed to its destruction. Hamas has carried out hundreds of deadly attacks against Israeli citizens and is regarded by the U.S. and Israel as a terrorist organization.
Hamas political chief Khaled Mashaal, considered more pragmatic than the movement's Gaza-based hardline leaders, forged a reconciliation agreement with Abbas in 2011. But the Gaza-based leadership has held up implementing it and has blamed Fatah of doing the same.
Fatah enjoys Western support and has been pressured not to forge a unity agreement with the militant Hamas, facing a potential cutback in foreign aid if it does.
Friday's rally also served as a reminder of the conflicts within Fatah itself that continue to dog the movement: Officials cancelled the event halfway through after 20 people were injured due to overcrowding, and shoving matches erupted between separate Fatah factions.
Yahiya Rabah, a top Fatah official in Gaza, said the rally was cancelled "due to the huge number of participants and logistical failures."
But witnesses said one pushing match was between supporters of Abbas and partisans of Fatah's former Gaza security commander Mohammed Dahlan, who was expelled from the party because of conflicts with Abbas.
Another Fatah official, who spoke anonymously because he did not want to embarrass the party, said the rally was cancelled because hundreds of Dahlan supporters jumped up on the stage and clashed with Abbas supporters.
Fatah spokesman Fayez Abu Etta attributed the injuries to overcrowding and the excitement of the rally. Later, more Palestinians were injured when part of a stage collapsed. Youths also clashed and stabbings were reported. Gaza health official Ashraf al-Kidra said overall 55 people were injured, including three critically.
There was one death during the rally: A 23-year-old Fatah activist was electrocuted while trying to hang a flag on an electric pole.
Overnight, throngs had camped out in a downtown Gaza square to ensure themselves a spot for the anniversary commemoration of Fatah's 1965 founding, and tens of thousands marched early Friday carrying Fatah banners. When the rally began, people stampeded to the stage to try to shake leaders' hands.

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Syrian forces bombard rebel areas near capital

 Syrian government warplanes and artillery pounded restive suburbs of Damascus on Friday and anti-regime activists said a car bomb targeted an intelligence building north of the capital.
Fighting in Syria's civil war has flared in areas around Damascus as rebels seeking to topple President Bashar Assad try to push into the city itself. The rebel advances in the suburbs threaten the government's grip on its seat of power, prompting a punishing response from the military on rebel areas skirting the capital.
Anti-regime activists circulated a video they said showed an explosion near a military intelligence office in the town of Nabk, north of the capital. They had no information on casualties and the government did not comment on the bombing.
The blast came one day after a car bomb hit a gas station in the capital itself, killing eleven people, activists said. While no one has claimed responsibility for the attacks, they could be guerrilla strikes by rebels groups who lack the force to battle Assad's troops in the capital.
Syria's 21-month conflict has turned into a bloody stalemate that the United Nations says has killed more than 60,000 people, and it warns the civil war could claim the lives of many more this year. International efforts to stop the fighting have failed so far, and although rebels have made gains in recent months, they still can't challenge Assad's hold on much of the country.
On Friday, the Britain-based Syrian Observatory for Human Rights said government warplanes bombed suburbs of the capital, including Douma, where twin airstrikes killed more than a dozen people a day earlier.
The Observatory also reported the explosion near the military intelligence building in Nabk, some 50 miles (80 kilometers) north of Damascus.
A amateur video posted online showed a large explosion and a large gray cloud of smoke billowing from the area. An off-camera narrator said the blast struck the intelligence building.
The video appeared genuine and corresponded to other AP reporting.
Fighting also raged south of the capital, where rebels have been trying to push into the city for weeks.
Damascus activist Maath al-Shami said the government fired rockets and mortars from Qasioun mountain overlooking the capital at orchards near the southern suburbs of Daraya and Kfar Sousseh.
The Observatory reported clashes between rebels and the army in other areas south of the capital and on the road to the city's airport, to the southeast.
For its part, the Syrian army said in a statement late Thursday that troops had killed "terrorists" in areas around the capital, including Daraya.
The government says the uprising is fueled by foreign-backed terrorists who seek to destroy the country.
"Regime forces are facing very strong resistance in Daraya," said al-Shami via Skype, but added that government forces had been able to advance down the suburb's main thoroughfare.
The government's capture of Daraya, southwest of the city, would provide a boost to the regime's defense of Damascus. It is close to a military air base as well as government headquarters and one of President Bashar Assad's palaces.
In the north, rebels continued to clash with government forces inside the Taftanaz air base in Idlib province and near the Mannagh military airport and the international airport in Aleppo. The attacks are part of the rebel's effort to erode the military's air power.
Fadi al-Yassin, an activist based in Idlib, said the rebels killed on Thursday the commander of Taftanaz air base, a brigadier general.
"The battles now are at the gates of the airport," al-Yassin said via Skype. He added that it has become very difficult for the regime helicopters to take off and land at the facility.
He said warplanes taking off from airfields in the central province of Hama and the coastal region of Latakia are targeting rebels fighting around Taftanaz.
The Syrian Army General Command said troops directed "painful strikes" against the "armed terrorist groups" of Jabhat al-Nusra, a group the U.S. claims has designated a terrorist organization that is at the forefront of the airport attacks. The Syrian military said it killed many of the group's fighters.
The Aleppo airport has been closed since Monday. A government official in Damascus said the situation is relatively quiet around the facility, adding that it is up to civil aviation authorities to resume flights.
A man who answered the telephone at the information office at the Damascus International Airport said, "God willing, flights will resume to Aleppo very soon.

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Private hiring jumps in December despite fiscal worries

Private-sector employers added more new jobs than expected last month even as a potential budget crisis loomed, helping the job market end 2012 on a high note, a report by a payrolls processor showed on Thursday.
The ADP National Employment Report showed the private sector added 215,000 jobs in December, comfortably above economists' expectation of a 133,000 gain.
The increase came even as companies worried the economy might fall off a "fiscal cliff" at year end, which would have meant higher taxes and, some predicted, suppressed hiring.
"All the labor market data...has held up very, very well so (there is) no sign of the fiscal cliff impact on the job market," Mark Zandi, chief economist at Moody's Analytics, told CNBC television. The ADP report is jointly developed with Moody's Analytics.
On a conference call about the results, he said the report showed "the resilience of the economy in the face of some pretty significant uncertainty with regard to what's been going on in Washington," adding "I expected more of an impact on the job market than we have observed."
A last-minute deal to avoid going over the fiscal cliff was struck on New Year's Day, though decisions on some important spending issues were delayed rather than decided.
"The underlying economy has momentum, and the employment data confirms that," said John Brady, managing director at R.J. O'Brien & Associates in Chicago. "The hope and prayer of the market is that our political leaders don't screw it up."
A revival in new construction jobs was also a hopeful sign, Zandi said, though the gains were likely boosted by rebuilding efforts after Superstorm Sandy hit the U.S. East Coast in October.
November's private payrolls tally was also revised upward to show a gain of 148,000 from the previously reported 118,000.
The ADP data has had a mixed track record when it comes to predicting changes in the Bureau of Labor Statistics' more comprehensive payrolls data. The December report, due on Friday, is expected to show the economy added 150,000 jobs last month after adding 146,000 in November.
"In terms of implications for the payrolls report tomorrow, we tend to discount this a little bit, especially around the turn of the year, because ADP tends to be very volatile in December in particular," said Yelena Shulyatyeva, U.S. economist at BNP Paribas in New York.

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Fiscal cliff market relief fades in Europe

Enthusiasm waned Thursday in Europe over U.S. legislators' deal to stave off the so-called fiscal cliff, a series of automatic tax increases and spending cuts that could have hurt the world's largest economy.
While the deal passed by Congress this week avoids the near-term risk of a major blow to businesses and households, it left unsolved several budget measures, mainly government spending cuts. Major indexes fell modestly as investors considered that U.S. politicians now have only two months to negotiate those cuts.
In afternoon trading in Europe, Germany's DAX shed 0.3 percent to 7,758.71 and France's CAC-40 lost 0.5 percent to 3,714.87. Britain's FTSE 100 rose a bare 0.1 percent to 6,035.18. Some broader indexes of European shares rose slightly, boosted by sharp gains in Switzerland. The 18-country STOXX 600 rose 0.3 percent to 286.14.
Wall Street also appeared headed for a lower open Thursday after gains Wednesday. Dow Jones futures were down 0.1 percent to 13,311 while S&P 500 futures lost 0.2 percent to 1,454.10.
A last-minute deal agreed to by U.S. lawmakers late Tuesday triggered a global market rally on Wednesday. But while it settled tax rates, the deal only postponed automatic spending cuts to defense and domestic programs for two months. And it doesn't include any significant deficit-cutting agreement, meaning the country still doesn't have a long-term plan on how to curb spending.
Rabobank analyst Jane Foley said that a "more realistic sense" of the situation with U.S. budget affairs "has started to trickle into market sentiment this morning."
"Over the next couple of months, U.S. budget talks are set to remain a threat to risk appetite," Foley wrote in a note to investors.
Some traders may have decided to sell and lock in this week's gains. "After the euphoric mood of markets yesterday...a degree of profit taking was perhaps inevitable," GFT Markets strategist Fawad Razaqzada said.
Looking ahead, investors will keep an eye on the U.S. monthly jobs report due Friday. The figures often move markets as they are a key indicator for the health of the U.S. economy, which has struggled to gain steam in recent months.
Figures from human resources firm ADP showed U.S jobless claims rose by more than expected to 372,000. But that was offset by more positive figures showing the economy created 215,000 new jobs during the month.
The ADP numbers are a prelude to Friday's official U.S. government numbers, but sometimes differ.
Earlier in Asia, benchmarks in Hong Kong and Sydney rose modestly and crested above the 19-month highs hit Wednesday. Hong Kong's Hang Seng Index rose 0.1 percent to 23,398.98, while Australia's S&P/ASX 200 rose 0.7 percent to 4,740.70. Benchmarks in Singapore, Taiwan, Indonesia, Thailand, the Philippines and New Zealand also rose.
Still, South Korea's Kospi fell 0.6 percent to 2,019.41 amid fears the weakening Japanese yen could hurt South Korean exporters.
Markets in Japan and mainland China were closed for extended holidays until Friday.
Benchmark oil for February delivery fell 42 cents to $92.59 in electronic trading on the New York Mercantile Exchange. The euro fell 0.6 percent to $1.3108, while the dollar slipped 0.5 percent to 86.90 yen.

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Monti says political rivals should sideline extremists

 Mario Monti, bidding for a second term as Italy's prime minister, said on Thursday a left-wing party on track to lead the next government should sideline "extreme" elements who hinder vital economic reforms.
The 69-year-old former European Commissioner was appointed in November 2011 to lead an unelected right-left government of experts to save Italy from financial crisis after then-Prime Minister Silvio Berlusconi quit.
On Friday, he turned against his former allies and entered a three-way race against the Democratic Party (PD) on the left and Berlusconi's People of Freedom (PDL) on the right. The election is scheduled for February 24-25.
Opinion polls suggest PD leader Pier Luigi Bersani's center-left, two-party coalition is most likely to form a government, either alone or in alliance with other groups.
Bersani's pro-European stance makes him the most likely ally for Monti's centrist bloc after the vote should the PD not win a solid majority in both houses of parliament.
"If (Bersani) wants a PD and a left that truly watches out for the needs of workers and acts dynamically to create job possibilities, then he should, with an act of courage, silence a little this wing that I consider conservative," Monti told the Uno Mattina program on state television.
Monti said PD economic adviser Stefano Fassina and Nichi Vendola - head of the PD coalition ally Left, Ecology, and Freedom party - espoused the over-protective labor policies of the left-wing labor union CGIL.
COURAGE
Monti has blamed the CGIL and a minority of PD supporters for blocking more radical labor market changes that he had wanted to introduce with his reform last year.
"I'll never shut anyone up," Bersani shot back after meeting with his party rival, Florence mayor Matteo Renzi, who Bersani defeated in a primary vote last year.
"The courage that is being asked of me I've already demonstrated, and it wasn't used to shut people up, but to make them participate," Bersani said, referring to the primary that crowned him the center-left leader.
Susanna Camusso, head of the CGIL, replied that Monti did not understand the country nor the desperate conditions of workers.
A poll published on Wednesday said Monti's grouping would win 12 percent of the vote. One published last week said it could gain up to 16 percent, depriving rivals of a clear win, but not enough to govern.
Under a complex electoral law, Bersani's coalition could win a comfortable majority in the lower house without taking secure command of the Senate, possibly making an alliance with Monti's bloc crucial to creating a stable parliamentary majority.
Monti also said Berlusconi's PDL had caved to pressure from lobbyists, especially the pharmacy sector, and had watered down an effort by his government to deregulate services.
Kicking off his political campaign on Wednesday, Monti pledged to cut labor taxes and redistribute wealth from the richest to the poorest if he wins.
That was a shift from his role doling out painful austerity to Italians to shore up public finances.

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December retail sales mixed, nimble chains do better

Several major U.S. retailers beat expectations of modest sales increases in December as shoppers wrapped up holiday buying, but overall results were mixed and only stores that were nimble enough thrived in an uncertain economy.
Costco Wholesale Corp , Nordstrom Inc , TJX Cos Inc and Ross Stores Inc were among the winners of the month, while such chains as Target Corp and Family Dollar Stores Inc felt the pinch as cautious consumers focused purchases on food and other basics.
Across 17 retailers including discounters, department stores and apparel chains, December sales at stores open at least a year rose 4.5 percent, topping analysts' estimates for 3.3 percent growth. The result reported Thursday also topped 1.6 percent growth in November 2012 and a 4.2 percent increase in December 2011, according to Thomson Reuters I/B/E/S.
Companies like Costco, TJX and Ross "are able to thrive in whatever economic environment they happen to be operating in" by adjusting their business models, inventory levels and sales strategies better than many peers, said Craig Johnson, president of Customer Growth Partners.
The stronger-than-expected December is likely to help retailers overcome a softer start to the key holiday season. The 2012 season was never expected to be stellar, but even the single-digit growth anticipated by chains and analysts came under pressure as Superstorm Sandy, the ever-present headlines about the "fiscal cliff" and the Connecticut school shootings affected consumers' moods in November and December.
With the number of chains that report monthly sales dwindling in recent years, Thursday's tally offered a limited snapshot of consumer behavior. Industry heavyweights like Wal-Mart Stores Inc and sector leaders like consumer electronics chain Best Buy Co Inc have yet to report sales for the holiday season.
Retail stocks, which largely missed out on Wednesday's market rally, rose on Thursday. The S&P 500 retail index <.spxrt> added nearly 1 percent near midday, while the S&P 500 index <.spx> inched up 0.1 percent.
CONSUMER CONFIDENCE
With the country moving past the fiscal cliff debate, retailers will be watching whether the expiration of the payroll tax cut takes a toll on consumer spending.
The expiration of the payroll tax holiday, which this week raises Social Security taxes for workers to 6.2 percent from 4.2 percent, may be more important to the economy than the income tax hike for wealthy people, said Michael Wilson, head of research at Morgan Stanley's wealth management division.
"A two percent hit off the top for the average person is meaningful," he said. "It will change their spending behavior."
While it was hard to say American consumers were tapped out, they are "fragile," said Chris Donnelly, global head of Accenture's retail practice. "It doesn't take much to rattle the consumer."
As cautious U.S. consumers try to stick to their budgets, it remains a very competitive marketplace for retailers, Donnelly said.
Madison Riley, managing director of retail consulting firm Kurt Salmon, predicted that if the upcoming debt ceiling debate goes better than the Washington wrangling to avoid the cliff, there could be a bigger uptick in consumer spending in 2013.
HO-HUM SPRING
As retailers finish up their quarter this month, they are bringing out fresh merchandise while offering deep discounts to move winter goods.
Michael Niemira, chief economist of the International Council of Shopping Centers, sees a ho-hum spring selling season. He expects sales growth in the 2013 spring season to be weaker than in 2012.
Higher food prices this year mean "a little less discretionary spending power" for U.S. shoppers, he said.
One bright spot this spring could be home goods. Home improvement chains such as Home Depot Inc and Lowe's Cos Inc and retailers selling home goods and furnishings could benefit as people start to update their homes with the turn in the housing market, said Customer Growth's Johnson.
HITS AND MISSES
TJX and Ross, which appeal to bargain hunters with marked-down name-brand merchandise, posted stronger-than-expected sales and raised their fourth-quarter earnings forecasts.
But at Barnes & Noble Inc , holiday sales fell sharply, with a decline in the number of Nook devices sold and shoppers at its stores.
Kohl's Corp slashed its fourth-quarter profit outlook, as holiday sales came late in the season at deeper discounts than planned. Still, its 3.4 percent rise in December same-store sales topped forecasts.
Gap Inc's December same-store sales topped expectations. The retailer also said it would buy women's luxury retailer Intermix.
Target's same-store sales were essentially flat, while analysts anticipated a 0.8 percent increase. Target said fourth-quarter earnings should meet or somewhat exceed the low end of its forecast, but the warning was not as dire as some may have anticipated, and its shares were up 2.3 percent.
Limited Brands Inc sales rose less than anticipated, marking a rare miss for the owner of the Victoria's Secret chain. Limited said its merchandise profit margin came in below its own forecast. Its shares fell 5.4 percent.
Wet Seal Inc expects a fourth-quarter loss at or near the bottom of its prior forecast after December same-store sales fell 9.7 percent, the steepest decline among the 17 chains. Its shares were flat.
Family Dollar's same-store sales rose about 2.5 percent in December after increasing 6.6 percent in the preceding quarter. Its shares slid 11 percent.
"The holiday selling season proved to be more challenging than we expected as customers faced increasing financial uncertainty," said Family Dollar Chairman and CEO Howard Levine.

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World stocks put relief rally on pause

 Enthusiasm faded on Wall Street and in European markets Thursday over U.S. legislators' deal to stave off the so-called fiscal cliff, a series of automatic tax increases and spending cuts that could have hurt the world's largest economy.
While the deal passed by Congress this week avoids the near-term risk of a major blow to businesses and households, it left unsolved several budget measures, mainly government spending cuts.
Major indexes fell modestly or saw only small gains as investors considered that U.S. politicians now have only two months to negotiate those cuts.
Wall Street lacked momentum after strong gains the previous day. The Dow industrials average was flat at 13,415.12 and the broader Standard & Poor's 500 index was up barely 0.1 percent at 1,464.31.
In Europe, Germany's DAX shed 0.3 percent to close at 7,756.44 and France's CAC-40 lost 0.3 percent to 3,721.17. Britain's FTSE 100 rose 0.3 percent to 6,047.34. Shares rose sharply in Switzerland, however, as markets there were closed on Wednesday.
A last-minute deal agreed to by U.S. lawmakers late Tuesday triggered a global market rally on Wednesday. But while it settled tax rates, the deal only postponed automatic spending cuts to defense and domestic programs for two months. And it doesn't include any significant deficit-cutting agreement, meaning the country still doesn't have a long-term plan on how to curb spending.
Rabobank analyst Jane Foley said that a "more realistic sense" of the situation with U.S. budget affairs "has started to trickle into market sentiment this morning."
"Over the next couple of months, U.S. budget talks are set to remain a threat to risk appetite," Foley wrote in a note to investors.
Looking ahead, investors will keep an eye on the U.S. monthly jobs report due Friday. The figures often move markets as they are a key indicator for the health of the U.S. economy, which has struggled to gain steam in recent months.
Figures from human resources firm ADP showed U.S jobless claims rose by more than expected to 372,000. But that was offset by more positive figures showing the economy created 215,000 new jobs during the month.
The ADP numbers are a prelude to Friday's official U.S. government numbers.
Earlier in Asia, benchmarks in Hong Kong and Sydney rose modestly and crested above the 19-month highs hit Wednesday. Hong Kong's Hang Seng Index rose 0.1 percent to 23,398.98, while Australia's S&P/ASX 200 rose 0.7 percent to 4,740.70. Benchmarks in Singapore, Taiwan, Indonesia, Thailand, the Philippines and New Zealand also rose.
Still, South Korea's Kospi fell 0.6 percent to 2,019.41 amid fears the weakening Japanese yen could hurt South Korean exporters.
Markets in Japan and mainland China were closed for extended holidays until Friday.
In currencies, the euro was down 0.6 percent at $1.311 while in commodity markets the benchmark crude oil contract was trading 5 cents higher at $93.17 in New York.

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Unreleased ‘BlackBerry X10′ QWERTY phone appears again in new photos

As Research In Motion’s (RIMM) January 30th BlackBerry 10 unveiling draws closer, nearly every last detail surrounding RIM’s first two BlackBerry 10-powered smartphones will likely soon emerge. The vendor has a long history of leaks leading up to its new device announcements, and this time around RIM reps toured the world showing the phones to every carrier that would meet with them. Pictured once again over the weekend by N4BB is RIM’s first new QWERTY phone, which is code-named “N-Seriers” and expected to bear the name “BlackBerry X10” at launch. No fresh details accompany the newly leaked photos, but rumored specs from earlier reports include  a 720 x 720-pixel display with a pixel density of 330 ppi and integrated NFC. Additional images of the BlackBerry X10 follow below.

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BlackBerry Z10 with AT&T-compatible LTE uncovered ahead of January unveiling

Hang in there, American BlackBerry fans — your wait for a new device is nearly over. Engadget reports that the Federal Communications Commission has granted approval to what looks like RIM’s (RIMM) BlackBerry Z10 smartphone for use on AT&T’s (T) LTE and HSPA networks. The Z10, which will be the first device released with the new BlackBerry 10 operating system, is rumored to include a Qualcomm Snapdragon MSM8960 1.5GHz dual core processor, a 4.2-inch display with a resolution of 1,280 x 768 pixels, 2GB of RAM, up to 32GB expandable of storage and an 8-megapixel camera. RIM plans to unveil the BlackBerry Z10 along with the finished version of the BlackBerry 10 OS on January 30th.

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No surprise: YouTube, Angry Birds, Instagram and Facebook among 2012′s top apps

Although every app developer dreams of creating the next big mobile app, it seems that established applications are becoming more firmly entrenched at the top of the food chain. Per Reuters, year-end totals from the Apple (AAPL) App Store and Google (GOOG) Play show that stalwarts such as YouTube, Angry Birds, Instagram and Facebook (FB) “continued to be among the most downloaded apps of the year,” which shouldn’t be too surprising considering that all four are now staples of the mobile computing experience. There were a few newcomers that soared up the charts for iOS and Android, however, including the make-your-own-art game Draw Something, the Paper sketch pad app for the iPad and the Songza music discovery app. Apps have become a more popular way to spend time, as analytics firm Flurry recently found that American consumers now spend 127 minutes per day using mobile apps, up from just 94 minutes per day one year ago.

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Thieves stole more than $1 million worth of Apple products during a New Years Eve heist

As the world celebrated the New Year, masked men forced their way into an Apple (AAPL) retail store in Paris and made off with an estimated $1.32 million worth of iPads, iPhones and Macs, according to The Wall Street Journal. The suspects are said to have broken in through an employee entrance, slightly injuring a cleaner and a security guard. Apple products have been a hot commodity for thieves this year. In November, more than $1.5 million worth of iPad minis were stolen from a cargo building at John F. Kennedy airport, however the perpetrators were later arrested. The Apple Store heist is currently being investigated by French authorities

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Poll: Would you buy a blue, pink or yellow iPhone 5S?

A report issued by Topeka Capital Markets on Wednesday morning suggested that Apple (AAPL) has some big changes in store for the next-generation iPhone. According to analyst Brian White, the “iPhone 5S” will be available with two different screen sizes to help Apple better address emerging markets, marking the first time Apple offers a single smartphone model with multiple screen size options. In another first for Apple, White reports that the next iPhone will be available in three new colors — blue, pink and yellow — on top of black and white, which are both currently available. Apple’s most recent iPod touch is available with multiple color options and the new case on the iPhone 5 is aluminum, so it could certainly be anodized — but are consumers interested in different color options for the iPhone? Vote in the poll below and let us know if different iPhone colors would appeal to you.

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Egypt budget deficit expected to widen to 200 billion pounds: agency

 Egypt's budget deficit in the year to end-June 2013 could widen by 50 percent from the original forecast made in July, according to a figure released by the planning minister on Monday.
"The budget deficit is expected to rise to 200 billion Egyptian pounds ($31.5 billion) in the current fiscal year unless strict economic policies are put in place to confront it," the state news agency quoted Ashraf al-Araby as saying on Monday.
The 2012/13 budget released in July had forecast a deficit of 135 billion pounds compared to an actual deficit of 166.7 billion pounds for the previous year. Economists at the time said that forecast was optimistic.
President Mohamed Mursi earlier this month suspended a series of planned tax increases as the country prepared for a referendum on a contentious new constitution, which was passed on December 22.
The unpopular measures were deemed necessary to secure $4.8 billion Egypt is seeking from the International Monetary Fund, which wants Egypt to rein in its deficit.
The government said last week it would not implement the measures for at least two more weeks to give it time to explain them to different parts of society.
Prime Minister Hisham Kandil said on Sunday he expected talks with the IMF to resume in January.
Al-Araby predicted in November that this year's deficit would be 10.4 percent of gross domestic product, without stating the figure in pounds, up from the original forecast of 8 percent.

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Egypt's leader sees currency stabilising "within days"

 Egypt's pound fell to a record low on Monday as the president signalled his government would allow it to depreciate slowly for several more days to stop a drain on foreign reserves that has driven the economy into crisis since the fall of Hosni Mubarak.
Hit by a new bout of political turmoil in the last month, the pound had weakened to a record low on Sunday at a new dollar auction brought in by the central bank. It fell further at a second auction on Monday, last trading at 6.37 to the dollar on the interbank market.
The drop means the central bank has allowed the pound to slide by almost 3 percent over the last two days after limiting its decline to only 6 percent since the uprising that removed Mubarak from power almost two years ago.
The pound's fall, which is certain to increase the price of imported staples such as tea and sugar, underlines the economic crisis facing President Mohamed Mursi as his administration tries to contain the political fall-out of his move to fast-track a contentious new constitution passed into law last week.
Egyptians panicked by street clashes between Mursi's Islamist backers and his more secular-minded opponents on the streets of Cairo and other cities have rushed to change their pounds into dollars in recent weeks, fearing it would be devalued further.
"The market will return to stability," Mursi told Arab journalists on Sunday evening, the state news agency MENA reported.
The pound's fall "does not worry or scare us, and within days matters will balance out," he said.
Having just sold their last dollar bills, dealers at one Cairo foreign exchange bureau did not bother changing their price board when the new low appeared on their trading screens.
"He took our last dollars," said one of the traders, pointing to a man walking out of the door.
Outside, another man told a friend his dollar hunt had failed. "They have no dollars. What can I do?" he said by mobile phone. "I went to many dealers and could not find dollars."
The fall has been driven mainly by ordinary citizens who have been trying to turn their savings into foreign currency, worried that the pound will weaken further because of the latest political turmoil.
The crisis wiped 10 percent off the value of Egyptian stocks when it erupted in late November. But the main index has mostly recovered since then, climbing in the two sessions since the introduction of the new foreign currency system.
Market participants attribute the rise to buying by Arab and international investors using the cheaper pound to bargain hunt.
FREE FLOATING POUND
The auctions are part of a shift announced on Saturday and designed to conserve foreign reserves, which the bank says are now at "critical" levels that cover just three months of the food, fuel and other goods Egypt imports.
Bankers have described the new system as a move towards establishing a free market value for the pound, which has been tightly controlled since a managed devaluation which ended in 2004.
The head of the Egyptian banking federation said the new system was an "important first step" towards a free float.
In remarks to MENA, Tarek Amer, who is also chairman of Egypt's largest bank, state-owned National Bank of Egypt, said the new system was a success on its first day and had "significantly reduced" demand for dollars.
The central bank has sold about $75 million at each of Sunday's and Monday's auctions.
The run on the pound prompted officials last week to impose controls on how much cash could be physically carried out of the country. Security men at one Cairo bank branch had to remove one customer angered by a $10,000 limit on how much currency he could withdraw, witnesses said.
The changes announced on Saturday include regular foreign currency auctions and also limit how much foreign currency companies can withdraw at a time.
The central bank had spent more than $20 billion - or more than half of its reserves - over the past two years to defend the currency. The reserves fell by a further $448 million in November to about $15 billion.
Prices of imports have already started to rise. Pyramid Oil Field, a firm that imports chemicals for use in water treatment and oil fields, had put up its prices by 10 to 15 percent last week, fearing a further weakening of the pound.
"This instability obliges you to increase the price, to have a safety factor," said Ashraf el-Gamal, president and managing director of the company, told Reuters. "From now on, the contracts will be of a very short validity."
To be on the safe side, he was projecting that the pound would weaken to stand at 9 against the euro, compared to a previous level of 8.
ECONOMY FRAGILE
Prime Minister Hisham Kandil said on Sunday that the economy was in "a very difficult and fragile" situation, adding that he expected talks with the International Monetary Fund on a $4.8 billion loan to resume in January.
Egypt won preliminary approval in November from the IMF for the loan, but delayed seeking final approval until January after it suspended a series of tax increases to allow more time to explain a heavily criticized package of economic austerity measures to the public.
Kandil's efforts to revive the economy have been hit by the latest turmoil, which scared off tourists who had begun to return. On the eve of the anti-Mubarak revolt, Egypt's tourism industry accounted for one in eight jobs.
Mursi hoped that the passage of a new constitution would stabilise Egypt's politics, giving him space to implement economic reforms and attract investment. The constitution, written by Mursi's Islamist allies, was approved in a popular referendum in December.
But it remains the focus of controversy, and the opposition is likely to seize upon austerity measures demanded under an IMF deal as a stick to beat the Muslim Brotherhood ahead of a parliamentary vote expected in early 2013.
Two-fifths of Egypt's 84 million population live around the poverty line and depend on subsidies that are straining the treasury.
Gamal of Pyramid Oil Field said he knew of at least three foreign companies that were hesitant to make large investments in the country because of the instability.
"They are feeling insecure because of everything that is happening," he said. "One is looking to invest billions."

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Egypt budget deficit expected to widen to 200 bln pounds: agency

Egypt's budget deficit in the year to end-June 2013 could widen by 50 percent from the original forecast made in July, according to a figure released by the planning minister on Monday.
"The budget deficit is expected to rise to 200 billion Egyptian pounds in the current fiscal year unless strict economic policies are put in place to confront it," the state news agency quoted Ashraf al-Araby as saying on Monday.
The 2012/13 budget released in July had forecast a deficit of 135 billion pounds compared to an actual deficit of 166.7 billion pounds for the previous year. Economists at the time said that forecast was optimistic.
President Mohamed Mursi earlier this month suspended a series of planned tax increases as the country prepared for a referendum on a contentious new constitution, which was passed on December 22.
The unpopular measures were deemed necessary to secure $4.8 billion Egypt is seeking from the International Monetary Fund, which wants Egypt to rein in its deficit.
The government said last week it would not implement the measures for at least two more weeks to give it time to explain them to different parts of society.
Prime Minister Hisham Kandil said on Sunday he expected talks with the IMF to resume in January.
Al-Araby predicted in November that this year's deficit would be 10.4 percent of gross domestic product, without stating the figure in pounds, up from the original forecast of 8 percent.

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Nigerian forex reserves up 34.4 pct yr-on-yr by December 24

Nigeria's foreign exchange reserves rose 34.45 percent year-on-year to $44.25 billion by December 24, latest figures from the central bank showed on Monday.
The forex reserves of Africa's second biggest economy were down from their year peak of $44.64 billion on December 7. Reserves stood at $44.03 billion a month ago and $32.91 billion the same the same time last year.
Nigeria's central bank has been on a drive to increase foreign exchange reserves this year in a bid to protect Africa's biggest crude exporter from oil price shocks and to defend the naira currency.

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Markets calm despite looming fiscal cliff

Markets appeared Monday to take in stride the ongoing failure of U.S. politicians to agree to a budget deal in time to avoid automatic tax increases and spending cuts that many economists think could tilt the world's largest economy back into recession.
With just hours to go before the U.S. falls off the so-called "fiscal cliff," Republicans and Democrats remained divided over taxes and spending, raising the prospect that markets will start 2013 without a clear idea of America's budget policy.
Unless an agreement is reached and approved by Congress by the start of New Year's Day, more than $500 billion in 2013 tax increases will begin to take effect and $109 billion will be carved from defense and domestic programs.
Discussions in the Senate broke off Sunday night without agreement. Senators are due to reconvene at 11 a.m. EST (1600 GMT) to try to hammer out a deal before the deadline.
"With precisely zero headway made on the fiscal front resulting from the early weekend return by Congressional lawmakers, hopes are fast-fading of any sort of compromise before the end of 2012," said Andrew Wilkinson, chief economic strategist at Miller Tabak & Co.
However, it's not the first time that budget discussions in the U.S. have gone down to the wire only for a deal to be eventually reached.
Many investors remain confident that some sort of deal will be struck in time following positive noises coming out from late Sunday discussions between Senate Minority Leader Mitch McConnell, a Republican, and Vice President Joe Biden, a Democrat.
Even if a deal is not reached in time, many investors think that the possible damage can be contained for a while at least.
A backup proposal that would address only a few issues is expected to be presented by Senate Majority Leader Harry Reid, a Democrat, if a bipartisan deal is not reached.
"It is likely that many of the fiscal cliff measures allow a certain amount of room within which the government can introduce measures to refrain from any tax increases," said Joshua Mahony, an analyst at Alpari.
The prospect of counter-measures to offset the "fiscal cliff" impact helps explain why markets were fairly calm in Europe and Asia, and Wall Street was poised to open higher on the last day of a year that's seen many indexes post strong gains, partly through rising hopes over Europe's 3-year debt crisis.
In Europe, the FTSE 100 index of leading British shares closed down 0.5 percent at 5,897.81. For the year as a whole, the FTSE ended 5.8 percent higher.
The CAC-40 in France closed 0.6 percent higher on the day at 3,641.07. In 2012, it rose 15.2 percent.
Those European indexes that were open only traded for half the day. Others, including Germany's DAX, were closed. The DAX was one of the world's best-performers in 2012 with its annual rise of 29.1 percent.
U.S. stocks opened solidly despite the "fiscal cliff" uncertainty, with the Dow Jones industrial average up 0.1 percent at 12,149 and the broader S&P 500 index up 0.4 percent at 1,407.
Despite the recent worries, U.S. stocks have had a strong 2012, with the Dow up around 6 percent so far and the S&P 11.5 percent higher.
Developments over the U.S. budget will likely be one of the big issues in financial markets in 2013, especially in the early part, alongside Europe's ongoing efforts to contain its debt crisis and the state of the Chinese economy, now the world's second biggest.
Clearly, the full imposition of the "fiscal cliff" measures would hobble the U.S. economy that has shown some signs of late of a more sustainable economic recovery. Waning U.S. economic growth would have an impact worldwide.
Some economists predict the effects of the "fiscal cliff" could eventually throw the U.S. economy back into recession — although if the deadline passes, politicians still have a few weeks to keep the tax hikes and spending cuts at bay by repealing them retroactively once a deal is reached.
Still, the failure to adhere to the deadline following weeks of squabbling and procrastination could be view negatively by the major credit rating agencies and weigh on investor confidence going into 2013.
"I think the market reaction to that will be very negative. This means the U.S. will never be able to bring its house in order. And the deficit will continue to accumulate," said Francis Lun, managing director of Lyncean Holdings in Hong Kong. "No meaningful reform and no solution in sight. You can throw confidence out of the window."
Earlier in Asia, the picture was fairly subdued in those markets that were open — among others, markets in Japan, were closed for the New Year's holidays. After a stellar performance in December, Japan's Nikkei ended the year almost 23 percent higher.
Hong Kong's Hang Seng, trading for a half-day, closed marginally lower at 22,656.92, to also end the year nearly 23 percent higher.
Mainland Chinese stocks rose Monday after a private survey showed the country's manufacturing growth at its strongest level in 18 months in December. Australia's S&P/ASX 200 fell 0.5 percent to close at 4,648.90.
There was also a fairly calm atmosphere in other financial markets, with the euro down just 0.2 percent at $1.3190. Despite the endless debate over its future, the euro has actually ended the year modestly higher against the dollar.

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