Oracle beats outlook, shrugs off fiscal debate

BOSTON/SAN FRANCISCO (Reuters) - Technology giant Oracle Corp said software sales growth will stay strong into the new year despite fears that there could be big tax hikes and U.S. government spending cuts that could cause a slump in spending by customers.
Shares of the world's No. 3 software maker rose 1.3 percent after it reported fiscal second-quarter revenue and earnings that surpassed Wall Street forecasts.
Oracle President Safra Catz told investors that businesses were still looking to spend money already allocated to 2012 technology budgets.
"Folks want to close deals," she told analysts on a conference call following the earnings release on Tuesday. There has been "no negative impact on pricing. Pricing remains very good for us."
Oracle said software sales would grow 3 to 13 percent this quarter, which runs through February. It expects fiscal third-quarter hardware products sales to be flat to down 10 percent from a year ago.
The company's software and hardware forecasts were roughly in line with Wall Street expectations, according to FBR Markets analyst Daniel Ives.
Oracle reported that software sales and cloud software subscriptions rose 17 percent from a year earlier to $2.4 billion in its fiscal second quarter ended November 30.
It had forecast that new software sales would climb 5 to 15 percent from a year earlier, when it last reported earnings on September 20.
"I would call it an early Christmas present," Ives said. "It's a positive sign for the overall technology sector."
Investors pay close attention to new software sales because they generate high-margin, long-term maintenance contracts and are an important gauge of the company's future profits.
Oracle posted a second-quarter profit, excluding items, of 64 cents per share, beating the average analyst forecast of 61 cents according to Thomson Reuters I/B/E/S.
Jefferies & Co analyst Ross MacMillan said Oracle's results are encouraging for other makers of business software, many of which end their quarter on December 31.
OFF A CLIFF
Some investors have worried that corporations would postpone spending on technology projects because of uncertainty over the year-end deadline for Congress and U.S. President Barack Obama to reach a compromise to thwart an automatic rise in tax rates and government spending cuts.
Failing to reach a deal, economists say, could lead to another U.S. recession. Catz said Oracle's customers are still spending on software.
"What's going on in Washington - I don't know who it's necessarily influencing today. But I can tell you, our customers have been spending money with us even here in December."
On Tuesday, Oracle forecast earnings per share in the current fiscal third quarter of 64 to 68 cents, excluding items. That was about level with an average forecast for 66 cents.
"It tells you that there's still money being spent by enterprises on software. It's not like the world has ground to a halt," MacMillan said.
The picture was not so bright for Oracle's troubled hardware division, which it acquired with its $5.6 billion purchase of Sun Microsystems in January 2010. The division's revenue has fallen every quarter since it closed that deal.
Hardware systems product sales fell 23 percent from a year earlier to $734 million. Oracle had forecast that hardware sales would drop between 8 and 18 percent.
Chief Executive Larry Ellison told analysts he expected hardware systems revenue to start growing in the fiscal fourth quarter which begins March 1.
Oracle shares rose to $33.30 in extended trade after closing at $32.88 on Nasdaq.

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BofA CEO: Fed wants bank to show consistent earnings

CHARLOTTE, North Carolina (Reuters) - Bank of America Corp needs to show the U.S. Federal Reserve it can produce consistent earnings as part of the annual process to gain permission to return more capital to shareholders, CEO Brian Moynihan said in an interview.
The second-largest U.S. bank is turning a profit in most of its main businesses, but it inherited costly legal problems when it acquired companies during the financial crisis, including subprime mortgage lender Countrywide Financial.
In the third quarter, Bank of America reported only a nominal profit after reaching a $2.4 billion settlement with investors to resolve claims it hid crucial information from shareholders when it bought investment bank Merrill Lynch & Co.
Moynihan declined to comment on whether the bank's capital plan, which is due to the Fed by January 7, will include any proposed share buybacks or increases in dividends. Moynihan suffered a major embarrassment in 2011 when the Fed rejected the bank's request to increase its quarterly dividend, which has been stuck at just one penny per share since the financial crisis.
The Fed has been evaluating capital plans as part of its supervision of bank holding companies and under provisions in the Dodd-Frank financial reform law. It is unclear whether the Fed would approve any request for an increased dividend or share buybacks next year. A Fed spokesperson declined to comment.
"The element that is sort of unique to us is the predictability of the earnings stream," Moynihan said in an interview in his Charlotte, North Carolina, office. "We are working to get through that."
Other banks have demonstrated their ability to earn money more consistently. JPMorgan Chase & Co's quarterly profit, for example, hasn't fallen below $3.7 billion in the past year, even as it has taken losses on disastrous credit derivative trades.
Investors and analysts are hopeful that Bank of America's legal problems will die down soon. Its stock price has more than doubled this year, partly on expectations that the bank will increase its dividend and buy back more stock after the Federal Reserve reviews its capital plans this spring.
Analysts at Atlantic Equities on Tuesday said they expect Bank of America to buy back $4 billion of its own shares in 2013 and $10 billion in 2014, which would be its first buybacks since 2007.
The bank has "made a lot of progress" on legal issues, Moynihan said, but he acknowledged that the company is still working through lawsuits and investor demands to buy back soured mortgages the bank sold off during the housing boom.
In recent weeks, the bank's dispute with insurer MBIA Inc over mortgage-related claims has heated up, with Bank of America filing a new lawsuit last week against the insurer. The legal tussle with MBIA has dragged on, even as Bank of America has worked out settlements with other insurers of mortgage-backed securities issued by Countrywide.
Moynihan said the bank will settle the MBIA dispute if it can reach an agreement that is reasonable for shareholders but otherwise it is ready to litigate the matter.
The bank's shares closed Tuesday at $11.35, up 3.2 percent for the day. The shares are the best performer in the Dow Jones industrial average this year, after falling the most in 2011.
HEALING
In an effort to improve earnings, Moynihan is aiming to cut costs by $8 billion annually by mid-2015 through a program called Project New BAC, including 30,000 layoffs that have been under way since September 2011. Bank of America had noninterest expenses of $76.5 billion in 2011.
In addition, Bank of America expects to eventually reduce costs in its unit that serves delinquent mortgage customers to about $500 million per quarter from about $3.4 billion in the third quarter. If delinquent mortgages continue to fall, that saving should be achieved in 2015, if not sooner, Moynihan said.

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Top UBS shareholder pins rebound hopes on private wealth

LONDON (Reuters) - UBS's wealth management business will help it bounce back from a $1.5 billion rap for rigging interest rates, one of its largest investors said, although fears of costly civil lawsuits could cast a pall over its shares for some time.
Paras Anand, European equities head at Fidelity Worldwide Investment, said legal action sparked by the Libor scandal posed an unpredictable threat to the bank's near-term earnings, even if its core private banking franchise escaped permanent harm.
"The big unknown factor is the civil litigation that could follow on as a result of this...That is one thing at the back of our minds that we have to be cognizant of," Anand said in an interview with Reuters.
"The issue for shareholders is the challenge of pricing that risk in. The potential costs are too unquantifiable and indeed, it's unclear as to whether they will actually manifest or not."
Switzerland's largest bank was hit with the fine on Wednesday after admitting to fraud, paying bribes to brokers and "pervasive" manipulation of global benchmark interest rates by dozens of its staff.
UBS shares were trading 1.3 percent higher at 9:01 a.m. ET, as investors looked forward to the end of a scandal-filled chapter in the bank's history and a renewed focus on managing cash on behalf of rich clients, rather than so-called 'casino' investment banking.
"There's clearly been a backlash against big faceless financial entities but a private bank has big personal relationships with its customers ... These kinds of institutions are surprisingly resilient," Anand said.
"We have seen some awful scandals in businesses much weaker than UBS and they manage to survive," he added.
Fidelity owns around 45 million shares in UBS, equivalent to around 1.2 percent of the bank, and is its fifth largest institutional owner excluding sovereign wealth funds, according to Thomson Reuters data.

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Poll: Spike in Palestinian support for military operations against Israel

Palestinian support for military operations against Israel has registered its most significant jump in 10 years, spurred by the recent Gaza conflict, ongoing Israeli settlement expansion, and frustration over a peace process that has been essentially deadlocked for more than four years.
The percentage of Palestinians supporting such operations has reached 50.9 percent, up from 29.3 percent in January 2011.
The change in sentiment, together with a resurgent Hamas and an uptick in Israeli-Palestinian clashes in recent weeks, underscores the risks of a continued stalemate both for Israel and the Palestinian Authority (PA).
“I think if the situation continues the way it is … the Palestinian people might rise in rebellion, similar to the rebellion being waged in the rest of the Arab countries,” says Shireen Qawasmi, a mother of three in Hebron with manicured nails and a faux fur wrap. “I will carry arms and be the first one to go and fight…. We are not war lovers, but when you see your children getting killed, and your land confiscated, you are forced to fight.”
Recommended: Five largest Israeli settlements: who lives there, and why
As PA President Mahmoud Abbas’s Fatah party today marks 48 years since the group’s founding – first as a guerrilla organization and later as a Western-backed political movement – Mr. Abbas has reaffirmed his party’s commitment to nonviolent means.
But in the wake of the November conflict between Israel and Hamas, he faces a serious challenge in persuading Palestinians that his model is better than Hamas’s militant approach. While Abbas got a boost from the recent United Nations vote, which recognized Palestine as a non-member state instead of just an observer, he is still seen as fighting an uphill battle.
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“There has been a shift from negotiations to struggle against the [Israeli] occupation,” says Hassan Khresheh, deputy speaker of the Palestinian Legislative Council, who lives in the West Bank city of Tulkarem. “[Palestinians] believe that negotiating for many years has given them nothing except more settlements and more settlers.”
Indeed, after nearly 20 years of negotiation with Israel, during which Israeli settlement in the West Bank and East Jerusalem roughly doubled to more than 550,000, Palestinians are increasingly questioning the value of talking with Israel. By contrast, most Palestinians saw Hamas – which targeted Tel Aviv and Jerusalem with missiles for the first time – as victorious in the recent conflict, since Israel refrained from a ground invasion and made significant concessions in the cease-fire talks.
“The public is comparing the diplomatic, peaceful negotiation approach of [Abbas] that has been actually taking us from bad to worse … with the violent approach of Hamas and Gaza, and they seem to be more attracted to the Gaza model rather than the West Bank model,” says Ghassan Khatib, former PA spokesman and founder of the Jerusalem Media and Communication Centre, which conducted the recent poll showing an uptick in Palestinian support for military operations. (The poll was published Dec. 20 and can be found here.)
“This is a bigger fluctuation than anything we saw in the last 10 years,” Mr. Khatib says, though he adds that it’s too soon to tell whether it’s just a temporary spike or something more enduring.
ARMED, MASKED MEN AT FATAH RALLY
This week, undercover Israeli operations in Jenin and Tamoun sparked demonstrations in both places, injuring dozens of Palestinians. In addition, masked, armed men participated in a Fatah Day rally in Bethlehem’s Dheisheh refugee camp – something that hasn’t been seen in the West Bank for years. Their presence was reported by the Israeli news outlet YnetNews, which posted a video. Nasser al-Laham, editor of the Bethlehem-based Palestinian news agency Maan, confirmed the reports for the Monitor.
Mohammad Laham, a Fatah leader in Bethlehem, says he wasn’t present at the march but points to the tremendous economic pressure the PA is facing, particularly since Israel withheld tax revenues it collects on behalf of the PA, as one of the reasons for local discontent. Israel's move was seen as retaliation for Abbas’s UN bid, but Israel said the money was taken to offset PA debts for Israeli electricity services.
“There are a lot of crises coming together now – economic, political, and social, the financial crisis, the continuation of [Israeli] settlement and the absence of a horizon for the political process and of hope,” says Mr. Laham. “The continuation of this situation in Bethlehem, Nablus, or any other Palestinian city does not augur well.”
When asked whether this might translate into armed struggle, he replies simply: “All the possibilities are open.”
The JMCC poll distinguishes between military operations, such as Hamas’s campaign of firing missiles into Israel, with armed struggle, which would include things like suicide bombings. There was also an uptick in support for armed struggle, albeit to a more modest 32 percent.
GENERATION OF LIBERATION
Last month, the Israeli killing of a Palestinian teenager who reportedly had a fake gun sparked protests in Hebron, a Hamas stronghold and an area of particular friction with Israeli settlers. A previously unknown Palestinian militant group there, the National Unity Brigades, announced the start of a third intifada.
Prof. Mohammed Assad Ewaiwi, who teaches political science at Al Quds Open University in Hebron, dismisses it as an “unorganized, spontaneous group,” but says its existence expresses the level of upheaval and unrest following the Gaza conflict. “This group and others like it should be a message to the world that there is a readiness among Palestinians to engage in military conflict.”
His youngest students, at age 18, weren’t even alive when the historic Oslo peace accords were signed in 1993. The second intifada broke out when they were a mere six years old, and three more Israeli-Arab wars – Lebanon in 2006, Gaza in 2009, and 2012 – punctuated their youth.
Ali Najjar, an 18-year-old from a nearby refugee camp, advocates the two-pronged model espoused by the late Palestinian leader and Fatah founder Yasser Arafat, or Abu Ammar.
“There was an interest in the Palestinian issue during Arafat’s time – Abu Ammar carried a gun in one hand, an olive branch in the other hand,” he says, wearing only a thin jean jacket in the frigid classroom. “Therefore the whole world rose to help him.”
“In my view, what was taken by force will only be returned by force. Twenty years after Oslo, we haven’t gained one inch of Palestine,” he says, declaring his generation to be the one that will liberate Palestine. “Israel only understands the language of military language.”
'JEWS SHOULD GO BACK WHERE THEY CAME FROM'
Many of these students support armed struggle as a way of regaining all of historic Palestine, not just a state alongside Israel.
“When you say ‘two-state solution,’ what state are you talking about?” asks Ayman Jawabreh, who wants to return to his family’s village near Lod. “I do not see it acceptable in any way for a group of people who have come from different parts of the world and based themselves in this country and call it their own…. In my opinion there is no Israeli state.”
Classmate Mohamed Abu Shkhdem shares a similar sentiment. “Jews should go back to where they came from,” he says. “I wonder why the international community has not, since the establishment of the PA, worked hard or in any serious way toward peace.”
The deal former President Bill Clinton clinched at the 2000 Camp David talks doesn't even register – Mr. Abu Shkhdem doesn’t remember it; he was nine years old.
Some of the students leave open the possibility for a peaceful solution to the conflict if Israel will honor the dignity of Palestinians and their right to be here, even though they say they believe that their people deserve more than what they would be given under a two-state solution.
“Israel has acted aggressively and unfairly toward Palestinians …. Therefore I see it fair that we should be the rulers and owners of historical Palestine – the whole thing,” says Abdul Moatti Albab. “I don’t see us living side by side with Israel, because they don’t want it. However, if they accept the two-state solution, I accept them.”
Israel has blamed Abbas for the deadlock in negotiations, since he has refused to come back to the table while Israeli settlements continue to expand. But in recent days Israeli Prime Minister Benjamin Netanyahu has also expressed reservations about engaging in negotiations with the PA, since Palestinian reconciliation could give Hamas – considered a terrorist organization by Israel and the US – more of a role in Palestinian affairs.
Hamas and its secular rival, Fatah, took a big step toward reconciliation today, with as many as 1 million Palestinians turning out at a Fatah rally in Gaza today – the first such event since Hamas violently ousted Fatah from the coastal territory in 2007.
Abbas, for his part, vowed in an interview yesterday to remove what is seen by some as a fig leaf for Israeli occupation by giving Israeli Prime Minister Netanyahu full responsibility for the West Bank.
"I'll tell him, 'My dear friend, Mr. Netanyahu, I am inviting you to the Muqata [the PA presidential headquarters in Ramallah],” he told the Israeli newspaper Haaretz. “Sit in the chair here instead of me, take the keys, and you will be responsible for the Palestinian Authority."

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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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Colombia firm makes armored clothes for kids

BOGOTA, Colombia (AP) — A Colombian firm that makes bulletproof vests is now creating armored clothing for children.
Factory owner Miguel Caballero said he never thought about making protective clothes for kids until requests came in following the deadly attack on Sandy Hook Elementary in Connecticut last month.
"After the tragedy in Connecticut, we started getting emails from customers asking for protected (clothing) because they were afraid to take their kids to school," Caballero said.
"We have received messages from all over the United States," seeking the protective gear, added Giovanni Cordero, the company's marketing director.
Products include child-sized armored vests, protective undershirts and backpacks with ballistic protection that can be used as shields.
The products are designed for children ages 8-16 years old and cost $150-$600 depending on the complexity of their construction. Each piece weighs 2-4 pounds.
"The products were created with the American market in mind, not for the Latino market," said Caballero. "All the designs and colors, everything is thought out with them in mind."
Caballero performed a test on a pink-and-yellow striped bulletproof backpack attached to a pale blue protective vest, firing a 9mm pistol and a machine gun to show it could withstand a barrage of bullets.
He said the backpack-vest combo and other protective gear have already been ordered by a U.S. distributor, although he would not identify it.
About 250 people work at Caballero's factory, which has been making armored vests for adults for more than 20 years. Colombia suffers from an internal conflict that has killed thousands of people over the last half-century.
Outside Colombia, the vests for adults are sold in some 20 countries, including Ecuador, Costa Rica and Mexico. They are also marketed in parts of Europe, Asia and the Middle East.
Twenty first-graders and six educators were killed in the Dec. 14 attack at Sandy Hook Elementary in Newtown, Conn. The 20-year-old gunman, Adam Lanza, also shot and killed his mother inside their home before driving to the school and shooting his way inside. He committed suicide as police were closing in.
After the Newtown shooting, at least three American companies that were already making backpacks designed to shield children reported a spike in sales.
Massachusetts-based Bullet Blocker reported it was selling 50 to 100 bulletproof backpacks a day after the shooting, up from about 10 to 15 in an average week. The children's backpacks, which are designed to be used as shields, cost more than $200 each.
Most of the children killed in the Sandy Hook Elementary massacre were shot at close range and likely would not have been saved by armored backpacks. At any rate, children don't usually wear their backpacks at their desks or while walking around school.

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"Nobody helped us for an hour:" Indian rape witness

Passers-by left a gang-raped Indian student lying unclothed and bleeding in the street for almost an hour, a male friend who was assaulted with her said on Friday in his first public comments on the case that provoked a global outcry.
The 23-year-old student died in hospital two weeks after she was attacked on December 16 in a private bus in New Delhi, prompting street protests over the Indian authorities' failure to stem rampant violence against women.
The graphic account from the man in a television interview is likely to add fuel to public anger over the death in a country where official statistics show one rape is reported every 20 minutes.
The woman's friend told the Zee News television network he was beaten unconscious with a metal bar by her attackers before the pair were thrown off the bus.
They lay in the street for 45 minutes before a police van arrived and officers then spent a long time arguing about where to take them, the man said.
"We kept shouting at the police, 'please give us some clothes' but they were busy deciding which police station our case should be registered at," the man said in Hindi.
Delhi police spokesman Rajan Bhagat told Reuters GPS records show the first police van reached the scene four minutes after it was were called and took the man and the woman to hospital within 24 minutes.
Neither the woman nor her friend have been named. Five men were charged with her gang rape and murder on Thursday. A court is due to consider the charges on Saturday.
TWITTER ANGER
The man's comments caused an renewed outpouring of anger on Twitter. "After reading and watching the Zee News interview i'm absolutely shocked and ashamed of being an Indian," said @BarunKiBilli.
The man called on the protests to continue, but said he wished people had come to his friend's help when she needed it.
"You have to help people on the road when they need help."
The male friend said he and the woman were attacked after an evening out watching a film.
"From where we boarded the bus, they (the attackers) moved around for nearly two and a half hours. We were shouting, trying to make people hear us. But they switched off the lights of the bus," he said, according to a transcript of the interview.
When they were thrown out, they pleaded with passers-by for help, he added in the studio interview, a blue metal crutch leaning on his chair.
"There were a few people who had gathered round but nobody helped. Before the police came I screamed for help but the auto rickshaws, cars and others passing by did not stop," the man added.

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Pakistani girl shot by Taliban leaves British hospital

LONDON (Reuters) - A Pakistani girl shot in the head by the Taliban for advocating girls' education has been discharged from a British hospital after doctors said she was well enough to spend time recovering with her family.
Fifteen-year-old Malala Yousufzai, who was shot by the Taliban in October and brought to Britain for treatment, was discharged on Thursday but is due to be re-admitted in late January or early February for reconstructive surgery to her skull, doctors said.
The shooting of Yousufzai, in the head at point blank range as she left school in the Swat valley, drew widespread international condemnation.
She has become a an internationally recognized symbol of resistance to the Taliban's efforts to deny women education and other rights, and more than 250,000 people have signed online petitions calling for her to be nominated for a Nobel Peace Prize for her activism.
Doctors at the Queen Elizabeth Hospital in Birmingham where Yousufzai was treated said that although the bullet hit her left brow, it did not penetrate her skull but instead travelled underneath the skin along the side of her head and into her neck.
She was treated by doctors specializing in neurosurgery, trauma and other disciplines in a department of the hospital which has treated hundreds of soldiers wounded in conflicts in Afghanistan and Iraq.
"Malala is a strong young woman and has worked hard with the people caring for her to make excellent progress in her recovery," said Dave Rosser, the hospital's medical director.
"Following discussions with Malala and her medical team, we decided that she would benefit from being at home."
Yousufzai has already been leaving the hospital on a regular basis on "home leave" in recent weeks to spend time with her parents and younger brothers, who have a temporary home in central England, Rosser said.
"During those visits assessments have been carried out by her medical team to ensure she can continue to make good progress outside the hospital," Rosser said.
Yousufzai's father said in October he was sure she would "rise again" to pursue her dreams after medical treatment.

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World shares hit highest since July 2011

 World shares hit their highest level since July 2011 on Wednesday after U.S. markets jumped sharply in response to the deal to prevent a fiscal crunch from sending the giant economy back into recession.
MSCI's global share index rose to 346.57 points shortly after Wall Street opened, a peak not seen since July 8, 2011 after which a resurgence in the euro zone debt crisis sparked a sharp sell-off in global equity markets.
Wednesday's gains come after the MSCI global index added 13.5 percent in 2012 - its best year since 2009.

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'Cliff' deal sends stocks up, but problems lurk

NEW YORK (AP) — The "fiscal cliff" compromise, even with all its chaos, controversy and unresolved questions, was enough to send the stock market shooting higher Wednesday, the first trading day of the new year.
All the major U.S. stock indexes swelled more than 2 percent in early trading and were still up significantly in the afternoon. The Dow Jones industrial average briefly surged to its biggest gain in six months.
The reverie multiplied across the globe, with stocks throughout Europe and Asia leaping higher.
In the U.S., the rally was extraordinarily broad. For every stock that fell on the New York Stock Exchange, roughly 9 rose. Technology and bank stocks rose the most. U.S. government bond prices fell as investors pulled money out of safe-harbor investments. Zipcar soared nearly 50 percent after agreeing to be bought by Avis.
But for all the euphoria, many investors cautioned that it can't last long. The deal that politicians hammered out merely postpones the country's budget reckoning, they said, rather than averting it.
"Washington negotiations remind me of the Beach Boys song, 'We'll have fun, fun, fun 'til her daddy takes the T-Bird away," Jack Ablin, chief investment officer of BMO Private Bank in Chicago, wrote in a note to clients.
"Nothing got solved," added T. Doug Dale, chief investment officer for Security Ballew Wealth Management in Jackson, Miss.
According to them and others, the markets were celebrating Wednesday not because investors love the budget deal that was cobbled together, but because they were grateful there was any deal at all.
"Most people think that no deal would have been worse than a bad deal," said Mark Lehmann, president of JMP Securities in San Francisco. He called the current package "not too Draconian."
The House passed the budget bill late Tuesday night, a contentious exercise because many Republicans had wanted a deal that did more to cut government spending. The Senate had already approved the bill.
The late-night haggling was a product of lawmakers wanting to avert a sweeping set of government spending cuts and tax increases that kicked in Jan. 1 in the absence of a budget deal, a scenario that came to be known on Wall Street and Washington as the fiscal cliff, because of the threat it would pose to the fragile U.S. economic recovery.
The bill passed Tuesday night ended the stalemate for now, but it leaves many questions unanswered.
The deal doesn't include any significant deficit-cutting agreement, meaning the country still doesn't have a long-term plan or even a philosophical agreement for how to rein in spending. Big cuts to defense and domestic programs, which were slated to kick in with the new year, weren't worked out but instead were just delayed for two months. And the U.S. is still bumping up against its borrowing limit, or "debt ceiling."
"There's definitely another drama coming down the road," said Lehmann. "That's the March cliff."
The political bickering that's almost certain to persist could have another unwelcome effect: It could influence the ratings agencies to downgrade their ratings of the U.S. When that happened before, when Standard & Poor's cut its rating on the U.S. government in August 2011, the stock market plunged.
Even so, Wednesday's performance gave no hint of the dark clouds on the horizon.
The Dow briefly surged as much as 273 points in early trading. At mid-afternoon, it was up 219 points, or 1.7 percent, to 13,323.
The Standard & Poor's 500 was up 24, or 1.7 percent, to 1,450. The Nasdaq composite was up 68, or 2.3 percent, to 3,088.
The yield on the 10-year Treasury note rose sharply, to 1.83 percent from 1.75 percent. Prices for oil and metals including gold, copper and platinum, were up.
The gains persisted despite small reminders that there are still serious problems punctuating the world economy, like middling growth for the U.S. economy and the still-unsolved European debt crisis. The government reported that U.S. builders spent less on construction projects in November, the first decline in eight months. And the president of debt-wracked Cyprus said he'd refuse to sell government-owned companies, a provision that the country's bailout deal says it must at least consider.
Among stocks making big moves, Zipcar shot up 48 percent, or $4, to $12.24 after the company said it would sell itself to Avis. Avis rose $1.02 to $20.84, about 5 percent.
Marriott rose more than 4 percent, up $1.69 to $38.96, after SunTrust analysts upgraded the stock to "buy." Headphone maker Skullcandy dropped 13 percent, losing $1.02 to $6.77, after Jefferies analysts downgraded it to "underperform" from "buy."

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Stocks surge after Congress passes budget deal

Stocks roared higher on Wall Street and around the world after Congress passed a last-minute budget deal to avert sweeping tax hikes and government spending cuts.
The Dow Jones industrial jumped 308 points to close at 13,412 Wednesday, the first trading day of the year. That's the biggest gain the Dow has had since December 2011.
The Standard & Poor's 500 index rose 36 points to 1,462. The Nasdaq composite rose almost 93 points to 3,112.
The gains were broad. Ten stocks rose for every one that fell on the New York Stock Exchange.
Technology and bank stocks had the biggest gains.
Car-sharing company Zipcar surged 48 percent after agreeing to be bought by Avis for nearly $500 million.
Volume was heavier than the recent average at 4.1 billion shares.

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S&P says U.S. fiscal deal will not affect credit outlook

The U.S. budget deal won't change Standard & Poor's perspective on the country's credit outlook, the rating agency said Wednesday, but the risk of another recession in the world's biggest economy has eased.
The budget compromise "doesn't affect our view of the country's credit outlook, given that we believe yesterday's agreement does little to place the U.S.'s medium-term public finances on a more sustainable footing," S&P said in a statement.
The hard-fought fiscal measures helped avert the so-called fiscal cliff of potentially devastating tax hikes and spending cuts. But more work remains for policymakers, S&P added.
Given the deal, however, "we've reduced our assessment of the risk of another recession in the next 12 months to 10 percent to 15 percent from 15 percent to 20 percent (with more weight placed on the lower end of the range)," the statement read.

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Wall Street starts new year with a bang after "cliff" deal

Stocks kicked off the new year with their best day in over a year on Wednesday, sparked by relief over a last-minute deal in Washington to avert the "fiscal cliff" of tax hikes and spending cuts that threatened to derail the economy's growth.
In 2013's first trading session, the S&P 500 achieved its biggest one-day gain since December 20, 2011, pushing the benchmark index to its highest close since September 14.
Concerns over Washington's ability to sidestep the cliff had driven the S&P 500 down for five straight sessions, before signs that a resolution was near sent the benchmark index higher on the final trading session of 2012.
The CBOE Volatility Index or the VIX <.vix>, Wall Street's favorite gauge of investor anxiety, dropped 18.5 percent to 14.68 at the close. The VIX has fallen 35.4 percent over the past two sessions, the biggest 2-day percentage drop in the history of the index.
The Dow Jones industrial average <.dji> jumped 308.41 points, or 2.35 percent, to 13,412.55 at the close. The Standard & Poor's 500 Index <.spx> gained 36.23 points, or 2.54 percent, to finish at 1,462.42. The Nasdaq Composite Index <.ixic> climbed 92.75 points, or 3.07 percent, to end at 3,112.26.
U.S. markets were closed on Tuesday for New Year's Day.
Market breadth reflected the strong rally, with 10 stocks rising for every one that fell on the New York Stock Exchange. All 10 of the S&P 500 industry sector indexes gained at least 1 percent. The S&P financial index <.gspf> shot up 2.9 percent.
The S&P Information Technology index <.gspt> gained 3.2 percent, including Hewlett-Packard , which climbed 5.4 percent to $15.02. HP's gain followed a miserable 2012 when the stock fell nearly 45 percent as one of the S&P 500's worst performers for 2012.
On Tuesday, Congress passed a bill to prevent huge tax hikes and delay spending cuts that would have pushed the world's largest economy off a "fiscal cliff" and possibly into recession.
The vote avoided steep income-tax increases for a majority of Americans, but failed to resolve a major showdown over cutting the budget deficit, leaving investors and businesses with only limited clarity about the outlook for the economy. Spending cuts of $109 billion in military and domestic programs were temporarily delayed, and another fight over raising the U.S. debt limit also looms.
"We got through the fiscal cliff. The next big thing, and probably more contentious thing, is negotiating the debt ceiling and possibly entitlement reform in early 2013," said Jim Russell, senior equity strategist for U.S. Bank Wealth Management in Cincinnati.
Hard choices about budget cuts and the critical need to raise the debt ceiling will confront Congress about the same time in two months "so the fur will be flying," Russell said.
U.S. stocks ended 2012 with the S&P 500 up 13.4 percent for the year, as investors largely shrugged off worries about the fiscal cliff. For the year, the Dow gained 7.3 percent and the Nasdaq jumped 15.9 percent.
Bank shares rose following news that U.S. regulators are close to securing another multibillion-dollar settlement with the largest banks to resolve allegations that they unlawfully cut corners when foreclosing on delinquent borrowers.
Bank of America Corp rose 3.7 percent to $12.03 and Citigroup Inc gained 4.3 percent to $41.25. The KBW bank index <.bkx> rose 3.2 percent.
Shares of Zipcar Inc surged 47.8 percent to $12.18 after Avis Budget Group Inc said it would buy Zipcar for about $500 million in cash to compete with larger rivals Hertz and Enterprise Holdings Inc. Avis advanced 4.8 percent to $20.77.
Shares of Apple rose 3.2 percent to $549.03, helping to lift the S&P information technology index <.gspt> up 3.2 percent following a report that the most valuable tech company has started testing a new iPhone and a new version of its iOS software.
Economic data from the Institute for Supply Management showed U.S. manufacturing ended 2012 on an upswing despite fears about the fiscal cliff, but the Commerce Department reported that construction spending fell in November for the first time in eight months.
Volume was heavy, with about 7.8 billion shares traded on the New York Stock Exchange, the NYSE MKT and the Nasdaq, well above the 2012 daily average of 6.42 billion.

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For Egypt's satirists, Morsi's power is no joke

There are few things dictators hate more than satirists, with their uncomfortable habit of piercing hypocrisy and self-importance with just a few well-placed verbal or written barbs.
Under Hosni Mubarak, the Egyptian public's rich horde of satirical memes was an underground phenomenon, the province of cafe talk and SMS messages. That former President Mubarak was commonly called La Vache qui rit ("The Laughing Cow") after the processed cheese brand's mascot, which Egyptian wags insisted Mubarak bore a resemblance to, was something you would never learn from turning on local television and rarely, if ever, from newspapers. You picked it up from friends or acquaintances.
All that changed overnight with the Egyptian uprising against Mubarak in early 2011. The posters of protesters at Tahrir Square relentlessly mocked the president, the themes were quickly taken up on television and newspapers, and it was at this point that Bassem Youssef, a relentlessly genial cardiologist and ardent fan of Jon Stewart's Daily Show, smelled his opportunity.
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Working on a shoestring budget, he began posting a satirical news program on YouTube that quickly caught fire with its irreverent willingness to skewer all comers, members of the old authoritarian regime and emerging political factions like the Muslim Brotherhood alike.
A TV contract soon followed, and his success was in many ways a symbol of the best promises of the Egyptian revolution: A country where freedom of expression was tolerated, energizing local politics and culture after decades of being shut in by a military-backed dictatorship. Mr. Youssef, who I knew years ago when he was focused on his medical career, quickly established a major following. It was clear on the ride in from the airport the other day: Over one of Cairo's busiest highways is a billboard plastered with Youssef's face in a spot where just a few years ago advertisements for the low-quality slapstick comedies of the Mubarak era would have been placed. Recently Youssef even got to meet his hero Jon Stewart (video of Youssef and Stewart above).
But while Egypt remains far more open than it was before the revolution, President Mohamed Morsi and the Muslim Brotherhood that propelled him to power have shown a worrying willingness to try to silence citizens like Youssef with means similar to those used in the past. Yesterday local media reported that Egypt Prosecutor General Talaat Abdallah recommended that Youssef be investigated for the crime of insulting President Morsi and other government figures.
He's just the latest public figure to be targeted, with Islamist lawyers bringing a string of lawsuits against government critics for the crime of "defamation" or threatening national "stability." Ramadan Abdel Hamid al-Oksory, the Islamist lawyer who filed the initial complaint against Youssef, also started proceedings against Coptic Christian tycoon Naquib Sawiris last year for "insulting Islam."
In Egypt, almost anyone can make a legal complaint against private and public figures for insulting religion or individuals, whether or not they have personal standing in the matter. The new Egyptian constitution outlaws, specifically, both defaming religion and "insulting" individuals. But it's up to the general prosecutor to decide whether investigations will go forward. Mr. Abdallah, a Morsi appointee, has been inclined to accept such cases. With the broad, vaguely defined articles in the constitution, convictions that stick are a real threat for the targets.
Over the weekend, Morsi filed a complaint against leading newspaper al-Masry al-Youm for "circulating false news likely to disturb public peace and public security" after the paper reported, apparently incorrectly, that Morsi was planning to visit a military hospital in a Cairo suburb where Mubarak is currently undergoing treatment. Journalist Yousry al-Badry was summoned for interrogation over the incident by the prosecutor's office.
In November, an Egyptian court sentenced seven Egyptian Copts and Florida preacher Terry Jones to death in absentia for their involvement with a YouTube clip that was deemed insulting to Islam and the prophet Mohammed. Such death sentences were unheard of in Mubarak's day. In October, controversial and conspiratorial talk show host Tawfiq Okasha, often described as the Glenn Beck of Egypt, was sentenced to four months in prison for defaming Morsi after a member of the Muslim Brotherhood's Freedom and Justice Party filed a lawsuit against him. Mr. Okasha is appealing.
The growing use of the courts to silence critics, comedians, and dissenters is a clear trend in Egypt, and Egypt's new constitution will make such prosecutions easier than they were under the old one. President Morsi has shown little willingness to stop the suits.
One of the clear gains of Egypt's revolution is under threat. And many of those in power now seem quite comfortable with that.

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Central African Republic rebels halt advance, agree to peace talks

DAMARA, Central African Republic (Reuters) - Rebels in Central African Republic said they had halted their advance on the capital on Wednesday and agreed to start peace talks, averting a clash with regionally backed troops.
The Seleka rebels had pushed to within striking distance of Bangui after a three-week onslaught and threatened to oust President Francois Bozize, accusing him of reneging on a previous peace deal and cracking down on dissidents.
Their announcement on Wednesday gave the leader only a limited reprieve as the fighters told Reuters they might insist on his removal in the negotiations.
"I have asked our forces not to move their positions starting today because we want to enter talks in (Gabon's capital) Libreville for a political solution," said Seleka spokesman Eric Massi, speaking by telephone from Paris.
"I am in discussion with our partners to come up with proposals to end the crisis, but one solution could be a political transition that excludes Bozize," he said.
Bozize on Wednesday sacked his Army Chief of Staff and took over the defense minister's role from his son, Jean Francis Bozize, according to a decree read on national radio, a day after publicly criticizing the military for failing to repel the rebels.
The advance by Seleka, an alliance of mostly northeastern rebel groups, was the latest in a series of revolts in a country at the heart of one of Africa's most turbulent regions - and the most serious since the Chad-backed insurgency that swept Bozize to power in 2003.
Diplomatic sources have said talks organized by central African regional bloc ECCAS could start on January 10. The United States, the European Union and France have called on both sides to negotiate and spare civilians.
Central African Republic is one of the least developed countries in the world despite its deposits of gold, diamonds and other minerals. French nuclear energy group Areva mines the country's Bakouma uranium deposit - France's biggest commercial interest in its former colony.
RELIEF IN BANGUI
News of the rebel halt eased tension in Bangui, where residents had been stockpiling food and water and staying indoors after dark.
"They say they are no longer going to attack Bangui, and that's great news for us," said Jaqueline Loza in the crumbling riverside city.
ECCAS members Chad, Congo Republic, Gabon and Cameroon have sent hundreds of soldiers to reinforce CAR's army after a string of rebel victories since early December.
Gabonese General Jean Felix Akaga, commander of the regional force, said his troops were defending the town of Damara, 75 km (45 miles) north of Bangui and close to the rebel front.
"Damara is a red line not to be crossed ... Damara is in our control and Bangui is secure," he told Reuters. "If the rebellion decides to approach Damara, they know they will encounter a force that will react."
Soldiers armed with Kalashnikovs, rocket propelled grenade launchers and truck-mounted machineguns had taken up positions across the town, which was otherwise nearly-abandoned.
Some of the fighters wore turbans that covered their faces and had charms strung around their necks and arms meant to protect them against enemy bullets.
Chad's President Idriss Deby, one of Bozize's closest allies, had warned the rebels the regional force would confront them if they approached the town.
Chad provided training and equipment to the rebellion that brought Bozize to power by ousting then-president Ange Felix Patasse, who Chad accused of supporting Chadian dissidents.
Chad is also keen to keep a lid on instability in the territory close to its main oil export pipeline and has stepped in to defend Bozize against insurgents in the past.
A CAR government minister told Reuters the foreign troop presence strengthened Bozize's bargaining position ahead of the Libreville peace talks.
"The rebels are now in a position of weakness," the minister said, asking not to be named. "They should therefore stop imposing conditions like the departure of the president."
Central African Republic is one of a number of countries in the region where U.S. Special Forces are helping local soldiers track down the Lord's Resistance Army, a rebel group which has killed thousands of civilians across four nations.
France has a 600-strong force in CAR to defend about 1,200 of its citizens who live there.
Paris used air strikes to defend Bozize against a rebellion in 2006. But French President Francois Hollande turned down a request for more help, saying the days of intervening in other countries' affairs were over.
(Additional reporting by Paul-Marin Ngoupana in Bangui and Jon Herskovitz in Johannesburg; Writing by Richard Valdmanis; Editing by Andrew Heavens and Janet Lawrence)

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Malala's father given diplomatic role in UK

The father of a teenage Pakistani activist shot in the head by Taliban for advocating girls' education has been given a diplomatic post in the U.K.
Malala Yousufzai has been recovering at a hospital in Birmingham, England, after she was shot in October in Pakistan. The Taliban have vowed to target her again.
Pakistan's High Commissioner to Britain, Wajid Shamsul Hasan, confirmed a BBC report Wednesday saying that Malala's father, Ziauddin, has been appointed Pakistan's education attache in Birmingham.
The position — with an initial 3-year commitment — virtually guarantees Malala will remain in the U.K.
Malala's case won worldwide recognition for the struggle for women's rights in Pakistan. In a sign of her reach, the 15-year-old made the shortlist for Time magazine's "Person of the Year" for 2012.

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American journalist missing in Syria

 An American journalist has been missing in Syria since he was kidnapped more than one month ago, his family said Wednesday, less than two years after he was held by government forces in Libya while covering that country's civil war.
The family of James Foley, of Rochester, N.H., said he was kidnapped in northwest Syria by unknown gunmen on Thanksgiving day.
Foley, 39, has worked in a number of conflict zones around the Middle East, including Syria, Libya and Iraq. He was contributing videos to Agence France-Press while in Syria.
Foley's disappearance highlights the risks to reporters seeking to cover the civil war from inside Syria.
The Syrian government rarely gives visas to journalists and often limits the movements of those it allows in. This has prompted a number of reporters to sneak into the country with the rebels fighting to topple President Bashar Assad. Some have been killed or wounded while others have disappeared.
Foley and another journalist were working in the northern province of Idlib when they were kidnapped near the village of Taftanaz on November 22. He had entered Syria a short time earlier.
Media outlets refrained from reporting on Foley's kidnapping until his family released its statement. The other reporter's family has requested that that reporter's name not be made public.
Foley's family said they have not heard from him since.
"We want Jim to come safely home, or at least we need to speak with him to know he's OK," said his father, John Foley, in the online statement. "Jim is an objective journalist and we appeal for the release of Jim unharmed. To the people who have Jim, please contact us so we can work together toward his release."
The Chairman of Agence France-Press, Emmanuel Hoog, said in a statement that the news agency was doing all it could to get Foley released.
"James is a professional journalist who has remained totally neutral in this conflict," Hoog said. "His captors, whoever they may be, must release him immediately."
In April 2011, Foley and two other reporters were detained by government forces in Libya while covering that country's civil war. They were released six weeks later. South African photographer Anton Hammerl was shot during their capture and left to die in the desert.
"I'll regret that day for the rest of my life. I'll regret what happened to Anton," Foley told The Associated Press at the time. "I will constantly analyze that."
The U.N. said Wednesday that more than 60,000 people have been killed since the start of Syria's conflict in March 2011. This number represents a large jump from death tolls previously given by anti-regime activists.
The Committee to Protect Journalists said that Syria was the most dangerous country in the world for journalists in 2012, when 28 reporters were killed.
Those who lost their lives include award-winning French TV reporter Gilles Jacquier, photographer Remi Ochlik and Britain's Sunday Times correspondent Marie Colvin. Also, Anthony Shadid, a correspondent for The New York Times, died after an apparent asthma attack while on assignment in Syria.
Last month, NBC correspondent Richard Engel and his crew were detained by pro-regime gunmen near where Foley was kidnapped. After his release, Engels said they escaped unharmed during a firefight between their captors and anti-regime rebels.

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U.N. worried about reports of air strikes in Myanmar

UNITED NATIONS (Reuters) - U.N. Secretary-General Ban Ki-moon voiced concern on Wednesday at reports of air strikes in Myanmar's Kachin State, where a 20-month conflict between government troops and rebels has been escalating.
"(Ban) has taken serious note of the most recent reports indicating air strikes against targets in Kachin State," U.N. spokesman Martin Nesirky said in a statement.
"While details of these reports are still emerging and being closely followed, the Secretary-General calls upon the Myanmar authorities to desist from any action that could endanger the lives of civilians living in the area or further intensify the conflict in the region," he said.
Myanmar, also known as Burma, has introduced social and economic reforms since a quasi-civilian government took power in 2011 after nearly half a century of military rule.
The changes have attracted large numbers of foreign investors and prompted the United States and European Union to ease longstanding sanctions to encourage further reform.
But ethnic conflicts continue across the Southeast Asian nation, including in Kachin State.
"The ongoing hostilities have already caused large-scale displacement of civilians who continue to be in need of humanitarian assistance," Nesirky said. "It is vital that timely access be provided for the delivery of aid to vulnerable communities.

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Wall Street ends sour week with fifth straight decline

 Stocks fell for a fifth straight day on Friday, dropping 1 percent and marking the S&P 500's longest losing streak in three months as the federal government edged closer to the "fiscal cliff" with no solution in sight.
President Barack Obama and top congressional leaders met at the White House to work on a solution for the draconian debt-reduction measures set to take effect beginning next week. Stocks, which have been influenced by little else than the flood of fiscal cliff headlines from Washington in recent days, extended losses going into the close with the Dow Jones industrial average and the S&P 500 each losing 1 percent, after reports that Obama would not offer a new plan to Republicans. The Dow closed below 13,000 for the first time since December 4.
"I was stunned Obama didn't have another plan, and that's absolutely why we sold off," said Mike Shea, managing partner at Direct Access Partners LLC in New York. "He's going to force the House to come to him with something different. I think that's a surprise. The entire market is disappointed in a lack of leadership in Washington."
In a sign of investor anxiety, the CBOE Volatility Index <.vix>, known as the VIX, jumped 16.69 percent to 22.72, closing at its highest level since June. Wall Street's favorite fear barometer has risen for five straight weeks, surging more than 40 percent over that time.
The Dow Jones industrial average <.dji> dropped 158.20 points, or 1.21 percent, to 12,938.11 at the close. The Standard & Poor's 500 Index <.spx> lost 15.67 points, or 1.11 percent, to 1,402.43. The Nasdaq Composite Index <.ixic> fell 25.59 points, or 0.86 percent, to end at 2,960.31.
For the week, the Dow fell 1.9 percent. The S&P 500 also lost 1.9 percent for the week, marking its worst weekly performance since mid-November. The Nasdaq finished the week down 2 percent. In contrast, the VIX jumped 22 percent for the week.
Pessimism continued after the market closed, with stock futures indicating even steeper losses. S&P 500 futures dropped 26.7 points, or 1.9 percent, eclipsing the decline seen in the regular session.
All 10 S&P 500 sectors fell during Friday's regular trading, with most posting declines of 1 percent, but energy and material shares were among the weakest of the day, with both groups closely tied to the pace of growth.
An S&P energy sector index <.gspe> slid 1.8 percent, with Exxon Mobil down 2 percent at $85.10, and Chevron Corp off 1.9 percent at $106.45. The S&P material sector index <.gspm> fell 1.3 percent, with U.S. Steel Corp down 2.6 percent at $23.03.
Decliners outnumbered advancers by a ratio of slightly more than 2 to 1 on the New York Stock Exchange, while on the Nasdaq, two stocks fell for every one that rose.
"We've been whipsawing around on low volume and rumors that come out on the cliff," said Eric Green, senior portfolio manager at Penn Capital Management in Philadelphia, who helps oversee $7 billion in assets.
With time running short, lawmakers may opt to allow the higher taxes and across-the-board federal spending cuts to go into effect and attempt to pass a retroactive fix soon after the new year. Standard & Poor's said an impasse on the cliff wouldn't affect the sovereign credit rating of the United States.
"We're not as concerned with January 1 as the market seems to be," said Richard Weiss, senior money manager at American Century Investments, in Mountain View, California. "Things will be resolved, just maybe not on a good timetable, and any deal can easily be retroactive."
Trading volume was light throughout the holiday-shortened week, with just 4.46 billion shares changing hands on the New York Stock Exchange, the Nasdaq and NYSE MKT on Friday, below the daily average so far this year of about 6.48 billion shares. On Monday, the U.S. stock market closed early for Christmas Eve, and the market was shut on Tuesday for Christmas. Many senior traders were absent this week for the holidays.
Highlighting Wall Street's sensitivity to developments in Washington, stocks tumbled more than 1 percent on Thursday after Senate Majority Leader Harry Reid warned that a deal was unlikely before the deadline. But late in the day, stocks nearly bounced back when the House said it would hold an unusual Sunday session to work on a fiscal solution.
Positive economic data failed to alter the market's mood.
The National Association of Realtors said contracts to buy previously owned U.S. homes rose in November to their highest level in 2-1/2 years, while a report from the Institute for Supply Management-Chicago showed business activity in the U.S. Midwest expanded in December.
"Economic reports have been very favorable, and once Congress comes to a resolution, the market should resume an upward trend, based on the data," said Weiss, who helps oversee about $125 billion in assets. "All else being equal, we see any further decline as a buying opportunity."
Barnes & Noble Inc rose 4.3 percent to $14.97 after the top U.S. bookstore chain said British publisher Pearson Plc had agreed to make a strategic investment in its Nook Media subsidiary. But Barnes & Noble also said its Nook business will not meet its previous projection for fiscal year 2013.
Shares of magicJack VocalTec Ltd jumped 10.3 percent to $17.95 after the company gave a strong fourth-quarter outlook and named Gerald Vento president and chief executive, effective January 1.
The U.S.-listed shares of Canadian drugmaker Aeterna Zentaris Inc surged 13.8 percent to $2.47 after the company said it had reached an agreement with the U.S. Food and Drug Administration on a special protocol assessment by the FDA for a Phase 3 registration trial in endometrial cancer with AEZS-108 treatment.

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Wall Street Week Ahead: Cliff may be a fear, but debt ceiling much scarier

 Investors fearing a stock market plunge - if the United States tumbles off the "fiscal cliff" next week - may want to relax.
But they should be scared if a few weeks later, Washington fails to reach a deal to increase the nation's debt ceiling because that raises the threat of a default, another credit downgrade and a panic in the financial markets.
Market strategists say that while falling off the cliff for any lengthy period - which would lead to automatic tax hikes and stiff cuts in government spending - would badly hurt both consumer and business confidence, it would take some time for the U.S. economy to slide into recession. In the meantime, there would be plenty of chances for lawmakers to make amends by reversing some of the effects.
That has been reflected in a U.S. stock market that has still not shown signs of melting down. Instead, it has drifted lower and become more volatile.
In some ways, that has let Washington off the hook. In the past, a plunge in stock prices forced the hand of Congress, such as in the middle of the financial crisis in 2008.
"If this thing continues for a bit longer and the result is you get a U.S. debt downgrade ... the risk is not that you lose two-and-a-half percent, the risk is that you lose ten and a half," said Jonathan Golub, chief U.S. equity strategist at UBS Equity Research, in New York.
U.S. Treasury Secretary Tim Geithner said this week that the United States will technically reach its debt limit at the end of the year.
INVESTORS WARY OF JANUARY
The White House has said it will not negotiate the debt ceiling as in 2011, when the fight over what was once a procedural matter preceded the first-ever downgrade of the U.S. credit rating. But it may be forced into such a battle again. A repeat of that war is most worrisome for markets.
Markets posted several days of sharp losses in the period surrounding the debt ceiling fight in 2011. Even after a bill to increase the ceiling passed, stocks plunged in what was seen as a vote of "no confidence" in Washington's ability to function, considering how close lawmakers came to a default.
Credit ratings agency Standard & Poor's lowered the U.S. sovereign rating to double-A-plus, citing Washington's legislative problems as one reason for the downgrade from triple-A status. The benchmark S&P 500 dropped 16 percent in a four-week period ending August 21, 2011.
"I think there will be a tremendous fight between Democrats and Republicans about the debt ceiling," said Jon Najarian, a co-founder of online brokerage TradeMonster.com, in Chicago.
"I think that is the biggest risk to the downside in January for the market and the U.S. economy."
There are some signs in the options market that investors are starting to eye the January period with more wariness. The CBOE Volatility Index, or the VIX, the market's preferred indicator of anxiety, has remained at relatively low levels throughout this process, though on Thursday it edged above 20 for the first time since July.
More notable is the action in VIX futures markets, which shows a sharper increase in expected volatility in January than in later-dated contracts. January VIX futures are up nearly 23 percent in the last seven trading days, compared with a 13 percent increase in March futures and an 8 percent increase in May futures. That's a sign of increasing near-term worry among market participants.
The CBOE Volatility Index closed on Friday at 22.72, gaining nearly 17 percent to end at its highest level since June as details emerged of a meeting on Friday afternoon of President Barack Obama with Senate and House leaders from both parties where the president offered proposals similar to those already rejected by Republicans. Stocks slid in late trading and equity futures continued that slide after cash markets closed.
"I was stunned Obama didn't have another plan, and that's absolutely why we sold off," said Mike Shea, a managing partner and trader at Direct Access Partners LLC, in New York.
Obama offered hope for a last-minute agreement to avoid the fiscal cliff after a meeting with congressional leaders, although he scolded Congress for leaving the problem unresolved until the 11th hour.
"The hour for immediate action is here," he told reporters at a White House briefing. "I'm modestly optimistic that an agreement can be achieved."
The U.S. House of Representatives is set to convene on Sunday and continue working through the New Year's Day holiday. Obama has proposed maintaining current tax rates for all but the highest earners.
Consumers don't appear at all traumatized by the fiscal cliff talks, as yet. Helping to bolster consumer confidence has been a continued recovery in the housing market and growth in the labor market, albeit slow.
The latest take on employment will be out next Friday, when the U.S. Labor Department's non-farm payrolls report is expected to show jobs growth of 145,000 for December, in line with recent growth.
Consumers will see their paychecks affected if lawmakers cannot broker a deal and tax rates rise, but the effect on spending is likely to be gradual.
PLAYING DEFENSE
Options strategists have noted an increase in positions to guard against weakness in defense stocks such as General Dynamics because those stocks would be affected by spending cuts set for that sector. Notably, though, the PHLX Defense Index is less than 1 percent away from an all-time high reached on December 20.
This underscores the view taken by most investors and strategists: One way or another, Washington will come to an agreement to offset some effects of the cliff. The result will not be entirely satisfying, but it will be enough to satisfy investors.
"Expectations are pretty low at this point, and yet the equity market hasn't reacted," said Carmine Grigoli, chief U.S. investment strategist at Mizuho Securities USA, in New York. "You're not going to see the markets react to anything with more than a 5 (percent) to 7 percent correction."
Save for a brief 3.6 percent drop in equity futures late on Thursday evening last week after House Speaker John Boehner had to cancel a scheduled vote on a tax-hike bill due to lack of Republican support, markets have not shown the same kind of volatility as in 2008 or 2011.
A gradual decline remains possible, Golub said, if business and consumer confidence continues to take a hit on the back of fiscal cliff worries. The Conference Board's measure of consumer confidence fell sharply in December, a drop blamed in part on the fiscal issues.
"If Congress came out and said that everything is off the table, yeah, that would be a short-term shock to the market, but that's not likely," said Richard Weiss, a Mountain View, California-based senior money manager at American Century Investments.
"Things will be resolved, just maybe not on a good time table. All else being equal, we see any further decline as a buying opportunity.

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Stung Bankia investors look to courts for justice

 Spanish savers and pensioners who have seen their money wiped out by investing in state-rescued lender Bankia are likely to seek redress in court rather than wait for any official inquiry, which looks increasingly unlikely.
About 350,000 stockholders will share the pain of the bank's European bailout, many of them bank clients who were sold the shares through an aggressive marketing campaign for its stock market flotation in 2011.
Shares in the lender, rescued by the state in May in Spain's biggest ever bank bailout, fell to record lows on Friday, tumbling over 40 percent from the start of the week after it emerged losses on bad loans were worse than expected.
"Going to the courts and seeing if a judge can bring us justice is the only path left to us," said Maricarmen Olivares, whose parents lost 600,000 euros ($793,300) they made from selling her father's car workshop by investing in Bankia preference shares.
Neither of the two main political parties want to push for a full investigation into Bankia's demise, which could draw attention to their own role in a debacle that has driven Spain to the brink of an international rescue, commentators say.
"Investigations work when a political party has something to gain over another. In this case, no-one has anything to gain," said Juan Carlos Rodriguez, of consultancy Analistas Socio Politicos.
"I don't see the big parties investigating this because if there have been errors committed, they have been committed by both sides."
The Socialist Party was in power when Bankia was formed in 2010 from an ill-matched combination of seven regional savings banks, a union that concentrated an unsustainable exposure to Spain's collapsed property sector.
Immense political pressure from the then government forced Bankia executives to push ahead with an initial public offering in July 2011 as Spain sought to bring private capital into its banking system and avoid a European bailout.
Then chairman, Rodrigo Rato, a former chief of the International Monetary Fund, had strong links to the centre-right Popular Party (PP) and was finance minister in a previous PP administration.
A small political party, UPyD, forced the High Court in July to open an investigation into whether Rato, ousted when the bank was nationalized in May, and 32 other former board members are guilty of fraud, price-fixing or falsifying accounts.
Investigating magistrate Fernando Andreu has so far not brought charges against anyone and could still drop the case.
"WE WON'T SEE OUR MONEY AGAIN"
Rato appeared in a private session before the judge on December 20 where he denied any blame for what happened.
Rato, who cannot legally speak to the press because he is the subject of a court investigation, has kept a low profile since the bank rescue in May. Protesters gathered outside the court on the day of his declaration wearing masks of his face.
The probe centres around Bankia's stock market listing, the formation of the lender from the seven savings banks and the gaping capital shortfall revealed at the bank after the state takeover in May.
Rato and 23 others including bank executives and cabinet ministers were called to testify before a parliamentary committee in July this year where Rato said he had a clear conscience and had done things properly.
"That was just window-dressing by the PP following the outcry over the Bankia disaster," said a Socialist Party source.
The opposition Socialists called for a full parliamentary investigation in May, but the ruling PP blocked it, the Socialist Party source said. A PP spokeswoman said any investigation of Bankia should be carried out through the courts, not the government.
A government source said any investigative process would not fall to the government, but to the courts.
Bankia, alongside other Spanish banks, sold billions of euros of preference shares and subordinated debt to high street clients, many of whom say they were tricked into parting with their savings and are seeking compensation.
The investigating magistrate is not including the mis-selling of preference shares - hybrid instruments that fall between a share and a bond - in the probe.
Holders of preference shares at Bankia will incur losses of up to 46 percent as part of the European bailout, receiving shares rather than cash in exchange.
"We won't see our money again, that's for sure. They'll give us shares, but shares with no value or credibility in a nationalized bank," said Olivares, who said she had heard nothing from the bank as to how much their losses would be.
The losses each investor will have to take has yet to be decided, a Bankia spokesman said, adding that hybrid debtholders at all rescued banks had to take losses, not just at Bankia.
A source close to the court investigation said there would certainly be scope for a separate wider probe into the mis-selling of preference shares, not just at Bankia, but throughout Spain's savings banks.
Olivares, like many other small savers at Spain's state-rescued banks, claims her parents were sold the preference shares as a kind of high-interest savings account and that the bank staff did not explain the risks attached.
The government is in the process of setting up an arbitration process to compensate Bankia clients who can prove that they were duped into buying preference shares, Economy Minister Luis de Guindos said last week.
But many ordinary Spaniards who lost their life savings through the Bankia rescue say this is not enough and they want answers as to what happened to their money.
"We want justice, at least some kind of recognition that we were swindled," said Raimundo Guillen, a 50-year-old electricity station worker who put 30,000 euros in preference shares with Bankia under the impression they were a form of savings account.
"It's as if they've stolen your wallet - blatantly, with their face uncovered.

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Indian stocks third best performers globally

Mumbai, Dec 31 (IANS) After a dismal show a year ago, the Indian stock market emerged as the third best performer globally in 2012, with a return of over 25 percent for a key index on the back of $24 billion foreign fund inflows and robust buying by domestic investors.
The 30-share sensitive index (Sensex) of the Bombay Stock Exchange (BSE) ranked third in terms of returns after the yields of the 50-scrip Thailand Set Index and Germany's 30-share Deutscher Aktien IndeX.
The benchmark Indian index ended the year Monday at 19,426.71 points, 25.70 percent or 3,971.79 points higher than the previous year's close at 15,454.92 points. This is the best performance of the benchmark index since 2009.
The Sensex recorded a high of 19,612.18 points and a low of 15,358.02 points in 2012, data available with the bourse showed.
"Markets gained globally. But Indian market outperformed others because of the reform push that came after September," said Vaibhav Agrawal, vice president, research, Angel Broking.
Agrawal said the government decision to cut subsidies on petroleum products and liberalise overseas investment norms for the sectors like retail, aviation, insurance and banking sent a positive signal to the market.
"Government took some politically difficult decisions. It sent a positive signal to the markets," Agrawal told IANS.
Data with the regulator, the Securities and Exchange Board of India (SEBI), showed that foreign funds pumped in $24 billion into the Indian markets.
In contrast, foreign funds had divested $357.8 billion from Indian equities and invested $8.65 billion in the debt markets in 2011, while in 2010, their investment in these two segments amounted to $29.36 billion and $10.11 billion, respectively.
Among the individual scrips that comprise the 30-share Sensex basket, the best performer in 2012 was Tata Motors, which surged almost 75 percent on the back of strong performance of its luxury car division Jaguar Land Rover.
The country's largest lender ICICI Bank jumped 66 percent, Maruti Suzuki soared 63 percent and engineering and construction firm Larsen & Toubro gained 61 percent in 2012.
The worst performer in this segment was the country's second largest software exporter Infosys, which slumped 16.5 percent. Gail India fell 8 percent, Bharti Airtel declined 7 percent and BHEL lost 4.5 percent in 2012.
"In 2013, we expect good performance of banking, IT, pharma and auto sectors," said Agrawal.
Anis Chakravarty, director, Deloitte Haskins and Sells, said the overall for the stock markets remained positive for 2013.
"RBI has indicated interest rate cuts. Inflation is showing some moderation. Economic growth is likely to improve. So this should have positive impact on the market," said Chakravarty.
The show at the other major bourse, the National Stock Exchange (NSE), was no different, with the broader 50-share S&P CNX Nifty registering a gain of almost 27 percent. The Nifty ended the year at 5,905.10 points.
However, on last day of the year, key indices closed in the red.
The benchmark Sensex closed 0.09 percent down at 19,426.71 points, while the Nifty declined 0.06 percent to close at 5,905.10 points, in a lacklustre session the last day of 2012 on concern over the US "fiscal cliff".

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Stocks open mixed as budget deadline nears

 Stocks are little changed in early trading on Wall Street as a budget deadline approaches with no deal in sight.
The Dow Jones industrial average was down six points at 12,931 shortly after the opening bell Monday.
The Standard & Poor's 500 index was up two points at 1,405 and the Nasdaq composite edged up 10 points to 2,970.
There are just hours to go before a midnight deadline, when sweeping tax increases and government spending cuts will go into effect unless lawmakers agree on a plan to cut the nation's budget deficit.
More than $500 billion in 2013 tax increases would take effect and $109 billion would be slashed from defense and domestic programs.
Senate Majority Leader Harry Reid says negotiations are ongoing.

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