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Japanese shares open higher after Wall Street rally

Japanese shares opened higher Monday, tracking gains on Wall Street last week after the US Congress resolved a fresh political deadlock and voted to extend a payroll tax holiday.

The Nikkei index at the Tokyo Stock Exchange rose 1.37 percent or 114.96 points to 8,510.12 in early trade. The Topix index of all first section shares gained 0.78 percent or 5.62 points to 728.74.

The gains came after US markets cheered a decision by US lawmakers to extend temporary tax breaks and unemployment benefits, despite earlier Republican threats to block the move.

The Dow Jones Industrial Average on Friday closed up 124.35 points (1.02 percent) at 12,294.00.

The broader S&P 500 gained 11.33 (0.90 percent) to 1,265.33, while the Nasdaq Composite rose 19.19 (0.74 percent) to 2,618.64.

Still, the Nikkei faced risks of slowing momentum as participants were expected to take a wait-and see approach until fund mangers return from the holiday in the US market, said Kenichi Hirano, operating officer at Tachibana Securities.

The New York market is closed Monday for the Christmas holiday.

"They must have trimmed long positions before the break," he told Dow Jones Newswires

"Given firm US economic indicators, they may start buying back once they return," he said.

The forex market was quiet with the dollar standing at 78.07 yen, basically unchanged from 78.06 yen in New York Friday.

The euro was also flat at $1.3039 and 101.79 yen, compared with $1.3040 and 101.86 yen in New York Friday.

Child survives being dropped from second-story window by mother

SAN JOSE, Calif. —

 A 1-year-old child dropped from a second story window by his mother on Christmas morning suffered only minor injuries, San Jose police said Sunday afternoon.

Police were called to the 3500 block of Alden Way around 11:30 a.m. on a report that a mother had locked herself into a bathroom with her child, Sgt. Jason Dwyer said.

When officers arrived on the scene and forced their way into the bathroom, she dropped the child out of a second-story window.

Fortunately, he received only minor injuries, "bumps and bruises," Dwyer said.

The mother threw herself out the window after her child but also survived, suffering minor injuries to her feet.

She remains in custody this afternoon. Dwyer said it is unclear what charges might be filed but she is being evaluated for possible psychiatric issues.

4 killed in Maine crash, state's worst in 2011

PALERMO, Maine  — Maine State Police say a Christmas Day traffic accident was the state's deadliest this year, taking the lives of four people.

Police said the four, all men, died instantly in the two-vehicle crash about 1:30 p.m. Sunday. The accident occurred on Route 3 in Palermo.

Troopers believe the weather was a factor. Light snow was falling at the time and the road was slippery. Troopers say a sport-utility vehicle slipped sideways in the road and was hit broadside by an oncoming car.

Two men were in each vehicle. Their names were not released, pending notification of their families. All four were from Maine and members of two different families.

The road was closed for nearly four hours.

Suspect in Va. slayings, boy's abduction at large

RICHMOND, Va.  — Richmond, Va., police have identified the two people slain on Christmas Eve that led to a search for a 2-year-old boy abducted from the scene who was later found safe in the backseat of an SUV.

Police on Sunday said 60-year-old Edward Lee Bowmer Jr. and 56-year-old Sheryl Clapp were shot to death.

Bowmer was from the street where the bodies were found and Clapp was from Mechanicsville.

Neither was related to 2-year-old Kaiden Burnside. Police say the shooting suspect stole the vehicle in which Kaiden was seated.

Police are looking for suspect 27-year-old Jamal Louis Clemons. They say Clemons faces abduction, robbery and other charges.

On Saturday night, police said Kaiden was to be reunited with his mother. But his whereabouts were not mentioned in a Sunday news release.

Christmas attacks in Nigeria by sect kill 39

LAGOS, Nigeria  — Terror attacks across Nigeria by a radical Muslim sect killed at least 39 people, with the majority dying on the steps of a Catholic church after celebrating Christmas Mass as blood pooled in dust from a massive explosion.

Authorities on Sunday acknowledged they could not bring enough emergency medical personnel to care for the wounded outside St. Theresa Catholic Church in Madalla near Nigeria's capital. Elsewhere, a bomb exploded amid gunfire in the central Nigeria city of Jos and a suicide car bomber attacked the military in the nation's northeast as part of an apparently coordinated assault by the sect known as Boko Haram.

The Christmas Day violence, denounced by world leaders and the Vatican, shows the threat of the widening insurrection posed by Boko Haram against Nigeria's weak central government. Despite a recent paramilitary crackdown against the sect in the oil-rich nation, it appears that Africa's most populous nation remains unable to stop the threat.

The White House condemned what it called a "senseless" attack, offered its condolences to the Nigerian people and pledged to assist authorities in bringing those responsible to justice.

In a statement, Britain's Foreign Secretary William Hague said, "These are cowardly attacks on families gathered in peace and prayer to celebrate a day which symbolises harmony and goodwill towards others."

U.N. Secretary General Ban Ki-Moon called in a statement for an end to sectarian violence in the country.

The first explosion on Sunday struck St. Theresa Catholic Church just after 8 a.m. The attack killed 35 people and wounded another 52, said Slaku Luguard, a coordinator with Nigeria's National Emergency Management Agency.

Though billions of dollars of oil money flow into the nation's budget yearly, Luguard's agency could only send text messages to journalists asking for their help in getting more ambulances.

Those wounded filled the cement floors of a nearby government hospital, with television images showing them crying in pools of their own blood. Corpses lined an open-air morgue.

The bombing and the delayed response drew anger from those gathering around the church after the blast. The crowd initially blocked emergency workers from the blast site, only allowing them in after soldiers arrived.

"We're trying to calm the situation," Luguard said. "There are some angry people around trying to cause problems."

In Jos, a second explosion struck near the Mountain of Fire and Miracles Church, state government spokesman Pam Ayuba said. Gunmen later opened fire on police guarding the area, killing one officer, he said. Two other locally made explosives were found in a nearby building and disarmed.

By noon Sunday, explosions echoed through the streets of Damaturu, the capital of Yobe state where fighting between security forces and the sect already had killed at least 61 people in recent days. The most serious attack on Sunday came when a suicide bomber detonated a car loaded with explosives at the state headquarters of Nigeria's secret police, the State Security Service.

The bomber killed three people in the blast, though the senior military commander apparently targeted survived the attack, the State Security Service said in a statement.

After the bombings, a Boko Haram spokesman using the nom de guerre Abul-Qaqa claimed responsibility for the attacks in an interview with The Daily Trust, the newspaper of record across Nigeria's Muslim north. The sect has used the newspaper in the past to communicate with public.

Boko Haram has carried out increasingly sophisticated and bloody attacks in its campaign to implement strict Shariah law across Nigeria, a multiethnic nation of more than 160 million people. The group, whose name means "Western education is sacrilege" in the local Hausa language, is responsible for at least 504 killings this year alone, according to an Associated Press count.

This Christmas attack comes a year after a series of Christmas Eve bombings in Jos claimed by the militants left at least 32 dead and 74 wounded. The group also claimed responsibility for the Aug. 26 bombing of the United Nations headquarters in Nigeria's capital Abuja that killed 24 people and wounded 116 others.

The sect came to national prominence in 2009, when its members rioted and burned police stations near its base of Maiduguri, a dusty northeastern city on the cusp of the Sahara Desert. Nigeria's military violently put down the attack, crushing the sect's mosque into shards as its leader was arrested and died in police custody. About 700 people died during the violence.

While initially targeting enemies via hit-and-run assassinations from the back of motorbikes after the 2009 riot, violence by Boko Haram now has a new sophistication and apparent planning that includes high-profile attacks with greater casualties. That has fueled speculation about the group's ties as it has splintered into at least three different factions, diplomats and security sources say. They say the more extreme wing of the sect maintains contact with terror groups in North Africa and Somalia.

Targeting the group has remained difficult, as sect members are scattered throughout northern Nigeria and nearby Cameroon, Chad and Niger. Analysts say political considerations also likely play a part in the country's thus-far muted response: President Goodluck Jonathan, a Christian from the south, may be hesitant to use force in the nation's predominantly Muslim north.

In a statement, Jonathan condemned the blasts as a "unwarranted affront on our collective safety and freedom."

"I want to reassure all Nigerians that government will not relent in its determination to bring to justice all the perpetrators of today's acts of violence and all others before now," Jonathan said.

However, Jonathan has made the same promises after a series of spiraling attacks by the group. His spokesman, Reuben Abati, defended the president by saying the country planned to spend more on security and had made arrests targeting the group.

"The administration is very determined to address this new threat of terrorism that seems to have slipped into our environment," Abati told the AP.

But anger continues to grow over the sect's apparent ability to strike at will — anger that could be seen at St. Theresa Catholic Church. After the blast, someone picked up a burnt piece of wood to scrawl: "Revolution now in the country" on its cement walls.

Holiday recalls hit snack makers, alfalfa producer

Two U.S. food makers have voluntarily recalled snacks contaminated by peanuts, while another firm increased its recall of alfalfa products due to salmonella contamination, the Food and Drug Administration said on Sunday.

Green Bay, Wisconsin-based Eillien's Candies, Inc. recalled its Yogurt Raisins, Granola Mix and Cinnamon Granola Mix products while Maribel's Sweets Inc of New York recalled its New York Handbag Collection chocolates because the products may contain undeclared peanuts, the FDA said.

Both companies said there have been no reports of illness, but warned that people with peanut allergies could face serious or life-threatening reactions if they consumed the products.

"The recall was initiated when it was discovered that Yogurt Covered Peanuts may have been mixed with Yogurt Covered Raisins," Eillien's said.

Eillien's recall affects products with a "sell by" date prior to December 22, 2012 and that were distributed throughout Wisconsin, Illinois, Iowa, Minnesota, Michigan, North Dakota, South Dakota, Nebraska and Colorado.

The contaminated Maribel's Sweets chocolates, which may contain tree nuts or peanuts, are packaged in either blue or red boxes with varying quantities -- 9, 16, 25, or 100 -- and distributed between November 1 and December 23 of this year, the company said.

Maribel's Sweets said the contamination problem was caused by a temporary breakdown in the company's production and packaging processes.

The recalled chocolates were distributed nationwide in retail stores and through mail orders, the company said.

Meanwhile, Texas-based Green Valley Food Corp has increased to 6,723 the number of cases it recalled of its "Let's Grow Healthy Together!" alfalfa sprouts, up from an initial recall of 650 cases on Friday.

The product, packaged in small plastic containers, was distributed to retail chains and food distribution centers in Texas, the company said.

On December 12, "a random sample was taken from a customer we currently supply. The product tested positive for Salmonella," an organism that can cause serious and sometimes fatal infections, the company said.

There have been no confirmed illnesses related to the recalled product, the company said.

Seven dead in US Christmas shooting

Police found seven bodies in a US apartment on Sunday after an apparent Christmas Day shooting in which the gunman killed six people before committing suicide, a newspaper reported.

The Dallas Morning News cited police as saying they had found the bodies of four women and three men after responding to an emergency call in the town of Grapevine, near Dallas, Texas.

It cited Grapevine Police Sergeant Robert Eberling as saying that the victims had not yet been identified.

"It's a very tragic situation. It could have been a family gathering, given the time of year," the newspaper quoted him as saying.

"We believe that we have just one shooter that is responsible, and we believe he is among the deceased," Eberling told the paper, without providing further details.

The Grapevine police did not immediately respond to a request for comment.

UN, Iraq agree on Camp Ashraf resettlement plan

BAGHDAD  — The United Nations and the Iraqi government have signed an agreement to relocate several thousand Iranian exiles living in a camp in northeastern Iraq, the U.N.'s office in Baghdad announced Sunday.

But it's not clear yet whether the camp's residents have signed off on the deal.

In a statement late Sunday, the United Nations Assistance Mission for Iraq said the agreement establishes a process to move the residents of Camp Ashraf to a temporary location. It did not give a timeline for the move or specify the new location.

But U.S. and Iraqi officials have previously identified a former American military base in Baghdad as the location being considered to house the exiles.

From there, the U.N.'s refugee agency will process their asylum claims with the idea that they would eventually be resettled in other countries.

The People's Mujahedeen Organization of Iran first moved to Camp Ashraf during the regime of Saddam Hussein, who saw the group as a convenient ally against Tehran. The group is committed to the overthrow of the Iranian regime, and sided with Iraq in the war against Iran in the 1980s.

The group carried out a series of bombings and assassinations against Iran's clerical regime in the 1980s and fought alongside Saddam's forces in the Iran-Iraq war. But the group says it renounced violence in 2001. U.S. soldiers disarmed them during the invasion of Iraq in 2003.

Prime Minister Nouri al-Maliki has been determined to close down the camp, located in barren terrain northeast of Baghdad about 50 miles (80 kilometers) from the Iranian border, by the end of December. His government considers the camp as an affront to Iraq's sovereignty.

Last week, an Iraqi government spokesman said the government was working out a solution to the situation at Camp Ashraf with the U.N. and would allow the camp to stay open into January as residents are being relocated. At the time, representatives of the residents suggested they would be willing to move, as long as their security was provided for.

Under the agreement outlined by the U.N., the international organization will monitor the relocation process and then a team from the U.N.'s refugee agency will be deployed at the new location to process the refugee claims.

The Iraqi government will be responsible for the exiles' safety during that time, and will have a liaison officer from the Ministry of Human Rights involved in the relocation, the U.N. said.

"I would like to highlight that the government is exclusively responsible for the safety and security of the residents both during their transfer and in the new location until they leave the country," said Martin Kobler, Special Representative of the United Nations Secretary General for Iraq.

The Iraqi government's vow to close Camp Ashraf had raised concerns that forcibly removing its 3,400 residents would result in violence. The U.N. has said that at least 34 people were killed in a raid on the camp by Iraqi security forces last April.

Representatives of the camp could not be reached Sunday evening. They sent out a press release Sunday evening saying that rockets had been fired on their camp. No casualties were reported. There was no way to immediately verify the claims.

The People's Mujahedeen has been branded a foreign terrorist organization by the United States, a designation now under review by the State Department. It has been removed from similar blacklists in Europe.

Web gambling gets boost from Obama administration

WASHINGTON  - The Obama administration cleared the way for states to legalize Internet poker and certain other online betting in a switch that may help them reap billions in tax revenue and spur web-based gambling.

A Justice Department opinion dated September and made public on Friday reversed decades of previous policy that included civil and criminal charges against operators of some of the most popular online poker sites.

Until now, the department held that online gambling in all forms was illegal under the Wire Act of 1961, which bars wagers via telecommunications that cross state lines or international borders.

The new interpretation, by the department's Office of Legal Counsel, said the Wire Act applies only to bets on a "sporting event or contest," not to a state's use of the Internet to sell lottery tickets to adults within its borders or abroad.

"The United States Department of Justice has given the online gaming community a big, big present," said I. Nelson Rose, a gaming law expert at Whittier Law School who consults for governments and the industry.

The question at issue was whether proposals by Illinois and New York to use the Internet and out-of-state transaction processors to sell lottery tickets to in-state adults violated the Wire Act.

But the department's conclusion would eliminate "almost every federal anti-gambling law that could apply to gaming that is legal under state laws," Rose wrote on his blog at www.gamblingandthelaw.com.

If a state legalized intra-state games such as poker, as Nevada and the District of Columbia have done, "there is simply no federal law that could apply" against their operators, he said.

The department's opinion, written by Assistant Attorney General Virginia Seitz, said the law's legislative history showed that Congress's overriding goal had been to halt wire communications for sports gambling, notably off-track betting on horse races.

Congress also had been concerned about rapid transmission of betting information on baseball, basketball, football and boxing among other sports-related events or contests, she summarized the legislative history as showing.

"The ordinary meaning of the phrase 'sporting event or contest' does not encompass lotteries," Seitz wrote. "Accordingly, we conclude that the proposed lotteries are not within the prohibitions of the Wire Act."

The department expressed no opinion about a provision in the law that lets prosecutors shut down phone lines where interstate or foreign gambling is taking place.

Many of the 50 U.S. states may be interested in creating online lotteries to boost tax revenues and help offset the ripple effect of a federal deficit-reduction push.

The global online gambling industry grew 12 percent last year to as much as $30 billion, according to a survey in March by Global Betting and Gaming Consultancy, based on the Isle of Man, where online gambling is legal.

Federal prosecutors in April charged three of the biggest Internet poker companies with fraud and money-laundering along with violations of another federal law, the Unlawful Internet Gambling Act of 1986.

The government outlined an alleged scheme by owners of the three largest online poker companies - Full Tilt Poker, Absolute Poker and PokerStars - to funnel gambling profits to online shell companies that would appear legitimate to banks processing payments.

Japan, China look to trade talks, debt buys

BEIJING  - Japan and China agreed to start formal talks early next year on a free trade pact that would also include South Korea, Japanese Prime Minister Yoshihiko Noda said on Sunday after talks that showed the deepening bonds between Asia's two biggest economies.

Japan also said it was looking to buy Chinese treasury debt, and the two governments agreed to enhance financial cooperation.

"On a free trade agreement among Japan, China and South Korea, we've made a substantial progress for an early start of negotiations," Noda told reporters after his meeting with Premier Wen Jiabao.

China's central bank, the People's Bank of China, said on its website (www.pbc.gov.cn) that the two leaders agreed to strengthen bilateral financial market cooperation and "encourage the use of the renminbi and Japanese yen in international trade transactions between the two countries."

The renminbi is another name for China's yuan currency.

The trade talks announcement builds on an agreement between the three countries last month also to seek a trilateral investment treaty and finish studies on the proposed free trade agreement by the end of December so that they could start formal negotiations on the trade pact.

"China is willing to closely coordinate with Japan to promote our two countries' monetary and financial development, and to accelerate progress of the China-Japan-Republic of Korea free-trade zone and East Asian financial cooperation," Wen told Noda at the meeting, according to Chinese Foreign Ministry's official website (www.mfa.gov.cn).

But the regional trade negotiations could also compete for attention with Washington's push for a Trans-Pacific Partnership (TPP), after Japan said last month it wants to join in the talks over the U.S. proposal.

CLOSER ECONOMIC TIES

Despite sometimes rancorous political ties between the two neighbors, Japan's economic fortunes are increasingly tied to China's economic growth and consumer demand.

China and Japan are also the world's first and second-biggest holders of foreign reserves. Wen told Noda that closer economic ties were in both countries' interests.

"The deep-seated consequences of the current international financial crisis continue to spread, and the complexity and severity of global and world developments have exceeded our expectations," Wen said.

"China and Japan both have the need and conditions to join hands more closely to respond to challenges and deepen mutually beneficial strategic relations."

China has been Japan's biggest trading partner since 2009.

In 2010, trade between the two nations grew by 22.3 percent compared to levels in 2009, reaching 26.5 trillion yen ($339.3 billion), according to the Japan External Trade Organization.

In a statement issued after the two leaders' meeting, the Japanese government said it would seek to buy Chinese government bonds -- a tentative step toward diversification of Tokyo's large foreign exchange reserves that are believed to be mostly held in dollars.

China central bank said the two governments agreed to support Japanese businesses issuing yuan bonds in Tokyo and other markets outside of China, and Japan Bank for International Cooperation would begin a pilot scheme for issuing yuan-denominated bonds in mainland China.

The People's Bank of China also said it will support Japan in using the yuan for direct investment in China.

But Japanese officials have stressed that Japan's trust in dollar assets remains unshaken, and the scale of the planned purchase of Chinese government bonds will be small.

Wen and Noda also agreed to set up a framework to discuss maritime issues after diplomatic ties deteriorated sharply last year following Japan's arrest of a Chinese fishing boat captain near disputed isles in the East China Sea.

Bilateral meetings attended by vice ministers and senior officials from relevant ministries will be held periodically to exchange views, in an effort to prevent a similar row from happening.

"On maritime matters, we have successfully set up a channel to solve problems through multi-layered dialogue," Noda told reporters.

Bolivia extradites Argentine 'Dirty War' suspect

Bolivia on Sunday extradited an Argentine ex-military officer wanted for human rights violations in his native country, officials said one day after announcing his arrest.

Luis Enrique Baraldini, linked to crimes committed during his country's "Dirty War" in the 1970s and 1980s, "was delivered to the Argentine authorities in Bermejo," a border city, Bolivia's Interior Minister Wilfredo Chavez told AFP by telephone.

He declined to provide further details, citing security concerns.

Baraldini was arrested in Bolivia's economic capital of Santa Cruz, where he allegedly lived under the false name Marco Antonio Aponte for half a dozen years.

Argentina had offered a reward of some $23,000 for information leading to his arrest.

Argentina's justice ministry linked him to human rights abuses committed by former general Guillermo Suarez Mason, accused of ordering the killing of thousands of alleged dissidents during the 1976-1983 military dictatorship.

Bolivian officials said they located Baraldini by tracking his wife, who traveled from Argentina to spend Christmas with him.

Argentine prosecutor Marta Odasso said officials learned about the wife's visit from Interpol.

Police found Baraldini and his children in a sport utility vehicle, and when authorities questioned him he showed a false identity document.

Chavez said the expulsion was permitted by Bolivian law because Baraldini had been using a false name.

An estimated 30,000 people died in Argentina's "Dirty War," the dictatorship's brutal campaign against mostly leftist dissidents, according to rights groups.

Those targeted in the campaign are popularly known as the "disappeared" because many were taken to detention centers where they were tortured and executed without their families knowing their exact whereabouts.

In recent years, Argentina and other Latin American countries have put several former military officers and senior officials on trial for crimes committed during similar crackdowns in the 1970s and 1980s.

Reversal of fortune

SINGAPORE  - While the threat of credit rating downgrades hangs over Europe, a few big emerging market economies are on the upswing.

Indonesia provides arguably the starkest contrast. Fitch's upgrade of Indonesia's sovereign rating on December 15 restored it to investment grade status for the first time in 14 years. Back in 1997, when the Asian financial crisis exploded, the International Monetary Fund had to step in with a three-year loan worth $10.1 billion at the time.

"Indonesia's banking sector was not prepared to withstand the financial turmoil that swept Southeast Asia," the IMF said then.

Fast-forward to 2011, and it is European banks that are the focus of concern as the euro zone struggles to come up with a politically palatable way to solve its own debt crisis.

All three of the world's major ratings agencies have warned that European countries face downgrades if they cannot stem the crisis. Fitch said on December 16 that a comprehensive solution was "technically and politically beyond reach."

Sentiment toward Europe has turned so dark that the most positive thing Northern Trust economists could say about the outlook there was, "Our base case is that the euro zone does not completely collapse within the next two years."

Why the role reversal?

Indonesia's 2012 growth is expected to reach 6.4 percent, according to a Reuters poll of economists, down only slightly from 2011's estimated 6.5 percent. The euro zone is widely expected to be stuck in recession next year, while U.S. growth will probably trudge along at one-third of Indonesia's pace.

The lesson that Asia learned from its financial crisis in the late 1990s was, "make sure you've got good insurance."

Asia now holds most of the world's foreign exchange reserves, with about $4.5 trillion concentrated in China and Japan combined. But there are also large stockpiles in India, Indonesia and South Korea.

That cushion can provide protection from financial market turbulence. Indonesia, South Korea, India and others have tapped reserves this year to defend their currencies from extreme volatility.

^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

IMF on "schizophrenic" investors:

imfdirect.imf.org/2011/12/21/2011-in-review-four-hard-truths/

For IFR's forecasts for the week ahead in U.S. economic data, click on: http://graphics.thomsonreuters.com/11/12/IFRPV122611.pdf

^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

"SCHIZOPHRENIC" INVESTORS

The IMF itself seems to have learned a few lessons from its experience in Asia, especially on how deep budget cuts can hurt a country's economic growth and its citizens.

Its November 1997 statement announcing Indonesia's bailout arrangement spelled out the IMF's policy prescription: tight fiscal and monetary policies and "substantial" fiscal measures to keep the budget in surplus.

The IMF at the time expected Indonesia's growth, which had been around 8 percent before the crisis, to slow to 5 percent in the first year of the program and 3 percent in the second. In fact, Indonesia's economy contracted by 13.1 percent in 1998 and grew by only 0.8 percent in 1999.

Former IMF Managing Director Dominique Strauss-Kahn acknowledged in February 2011 that the IMF's reform program had been "harmful and painful" for the Indonesian people.

Many economists worry that Europe's austerity measures, much like those in Indonesia in the late 1990s, will end up doing even more damage to the economy, worsening the debt picture.

IMF Chief Economist Olivier Blanchard said investors were "schizophrenic" about austerity and growth.

"They react positively to news of fiscal consolidation, but then react negatively later, when consolidation leads to lower growth -- which it often does," Blanchard said.

WHO IS NEXT?

European countries are the obvious candidates for imminent downgrade. S&P's move could come any day. Moody's said on December 12 it will revisit its European ratings in the first quarter of 2012.

While downgrades and the threat of more have received the most media attention this year, Fitch said its sovereign rating actions year-to-date were almost evenly split between upgrades and downgrades.

Since August 5, when Standard & Poor's stripped the United States of its AAA-rating, countries including Indonesia, Brazil, Estonia, the Czech Republic, Paraguay, Peru, Kazakhstan and Israel have received upgrades from at least one of the world's big three ratings agencies.

Next on the upgrade list may be the Philippines. Its leaders

expressed some disappointment that Indonesia got the nod from Fitch first, although S&P revised its outlook to "positive" on December 16.

But it is the negative actions that pose the global economic threat. The advanced economies in the Organisation for Economic Co-operation and Development have 2012 borrowing needs estimated at $10.5 trillion. A number this large means even a small increase in borrowing costs is meaningful.

"OECD debt managers are facing unprecedented funding challenges in meeting higher-than-anticipated, strong borrowing needs," the OECD said in a report on sovereign debt.

Mortars hit Iranian dissident camp in Iraq: Iraqi army

BAGHDAD  - Two mortars hit an Iranian dissident camp in Iraq just days after Baghdad extended a year-end deadline for the camp to be closed as the U.N. negotiated resettlement of 3,000 residents there, the Iraqi military said Sunday.

The mortars landed on Camp Ashraf, home to the People's Mujahideen Organization of Iran, or PMOI, an Iranian opposition group the United States and Iran officially consider a terrorist group. The camp is 65 km (40 miles) from Baghdad.

"Two mortars landed on Ashraf Camp and we cannot identify the number of casualties because we are not allowed to enter the camp," said an official with the Iraqi army, asking not to be identified.

A statement from Camp Ashraf representatives said the camp was hit by rockets, but did not refer to any casualties.

Iraq's Prime Minister Nuri al-Maliki said last week he had agreed to extend the deadline for closing the camp on condition the U.N. transfer about 400-800 residents to other countries before the end of this year.

Camp Ashraf's future became unclear after Washington turned it over to the Iraq in 2009. Baghdad has repeatedly said it does not want the guerrilla group on Iraqi soil.

The United Nations, along with the European Union, has been trying to resolve the issue. The mortars came just a week after the last U.S. troops withdrew from Iraq, almost nine years after the 2003 invasion.

In the 1970s the group, which is also known as the Mujahadin-e Khalq (MEK), led a guerrilla campaign against the U.S.-backed Shah of Iran, including attacks on U.S. targets. It says it has since renounced violence.

UN, Iraq agree on Camp Ashraf resettlement plan

BAGHDAD  — The United Nations says it has signed an agreement with the Iraqi government to move a group of Iranian exiles living in a camp in northeastern Iraq.

In a statement late Sunday, the United Nations Assistance Mission in Iraq said the agreement establishes a process to move the residents to a temporary location.

From there, the UN's refugee agency will process them with the idea of eventually resettling them in another country.

The exiles live in a camp northeast of Baghdad and are dedicated to overthrowing the Iranian government.

But the Iraqi government, which would like to shore up relations with Iran, sees them as an irritant and has been pushing to close the camp.

Global Economy Weekahead: Reversal of fortune

SINGAPORE  - While the threat of credit rating downgrades hangs over Europe, a few big emerging market economies are on the upswing.

Indonesia provides arguably the starkest contrast. Fitch's upgrade of Indonesia's sovereign rating on December 15 restored it to investment grade status for the first time in 14 years. Back in 1997, when the Asian financial crisis exploded, the International Monetary Fund had to step in with a three-year loan worth $10.1 billion at the time.

"Indonesia's banking sector was not prepared to withstand the financial turmoil that swept Southeast Asia," the IMF said then.

Fast-forward to 2011, and it is European banks that are the focus of concern as the euro zone struggles to come up with a politically palatable way to solve its own debt crisis.

All three of the world's major ratings agencies have warned that European countries face downgrades if they cannot stem the crisis. Fitch said on December 16 that a comprehensive solution was "technically and politically beyond reach."

Sentiment toward Europe has turned so dark that the most positive thing Northern Trust economists could say about the outlook there was, "Our base case is that the euro zone does not completely collapse within the next two years."

Why the role reversal?

Indonesia's 2012 growth is expected to reach 6.4 percent, according to a Reuters poll of economists, down only slightly from 2011's estimated 6.5 percent. The euro zone is widely expected to be stuck in recession next year, while U.S. growth will probably trudge along at one-third of Indonesia's pace.

The lesson that Asia learned from its financial crisis in the late 1990s was, "make sure you've got good insurance."

Asia now holds most of the world's foreign exchange reserves, with about $4.5 trillion concentrated in China and Japan combined. But there are also large stockpiles in India, Indonesia and South Korea.

That cushion can provide protection from financial market turbulence. Indonesia, South Korea, India and others have tapped reserves this year to defend their currencies from extreme volatility.

^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

IMF on "schizophrenic" investors:

imfdirect.imf.org/2011/12/21/2011-in-review-four-hard-truths/

For IFR's forecasts for the week ahead in U.S. economic data, click on: http://graphics.thomsonreuters.com/11/12/IFRPV122611.pdf

^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

"SCHIZOPHRENIC" INVESTORS

The IMF itself seems to have learned a few lessons from its experience in Asia, especially on how deep budget cuts can hurt a country's economic growth and its citizens.

Its November 1997 statement announcing Indonesia's bailout arrangement spelled out the IMF's policy prescription: tight fiscal and monetary policies and "substantial" fiscal measures to keep the budget in surplus.

The IMF at the time expected Indonesia's growth, which had been around 8 percent before the crisis, to slow to 5 percent in the first year of the program and 3 percent in the second. In fact, Indonesia's economy contracted by 13.1 percent in 1998 and grew by only 0.8 percent in 1999.

Former IMF Managing Director Dominique Strauss-Kahn acknowledged in February 2011 that the IMF's reform program had been "harmful and painful" for the Indonesian people.

Many economists worry that Europe's austerity measures, much like those in Indonesia in the late 1990s, will end up doing even more damage to the economy, worsening the debt picture.

IMF Chief Economist Olivier Blanchard said investors were "schizophrenic" about austerity and growth.

"They react positively to news of fiscal consolidation, but then react negatively later, when consolidation leads to lower growth -- which it often does," Blanchard said.

WHO IS NEXT?

European countries are the obvious candidates for imminent downgrade. S&P's move could come any day. Moody's said on December 12 it will revisit its European ratings in the first quarter of 2012.

While downgrades and the threat of more have received the most media attention this year, Fitch said its sovereign rating actions year-to-date were almost evenly split between upgrades and downgrades.

Since August 5, when Standard & Poor's stripped the United States of its AAA-rating, countries including Indonesia, Brazil, Estonia, the Czech Republic, Paraguay, Peru, Kazakhstan and Israel have received upgrades from at least one of the world's big three ratings agencies.

Next on the upgrade list may be the Philippines. Its leaders

expressed some disappointment that Indonesia got the nod from Fitch first, although S&P revised its outlook to "positive" on December 16.

But it is the negative actions that pose the global economic threat. The advanced economies in the Organisation for Economic Co-operation and Development have 2012 borrowing needs estimated at $10.5 trillion. A number this large means even a small increase in borrowing costs is meaningful.

"OECD debt managers are facing unprecedented funding challenges in meeting higher-than-anticipated, strong borrowing needs," the OECD said in a report on sovereign debt.

No. 14 Xavier tops So. Illinois 87-77 in Hawaii

HONOLULU  — Tu Holloway scored 21 points and No. 14 Xavier ended a three-game losing streak with an 87-77 victory over Southern Illinois on Sunday in the seventh-place game of the Diamond Head Classic.

Before a sparse, morning crowd on Christmas Day, the Musketeers won for the first time since Dec. 10, when they beat Cincinnati in a game cut short in the closing seconds by brawling and mayhem on the court.

This was the first three-game losing streak for Xavier under coach Chris Mack and first since the 2007-08 season.

Mark Lyons scored 17 points and grabbed 10 rebounds for Musketeers (9-3). Andre Walker and Travis Taylor added 13 apiece for Xavier, which made 35 of 44 free throws. The Salukis (3-8) were led by Dantiel Daniels' 22 points.

Southern Illinois cut it to 68-64 at 8:45 after a 3-point play by Daniels, but an 8-1 run gave the Musketers a 9-point cushion.

Mancini issues City with festive warning

Manchester City manager Roberto Mancini has warned his Premier League leaders that they cannot afford to offer up unexpected gifts on their travels over the festive season.

City start their final game of 2011 at West Bromwich Albion on Monday two points clear of nearest rivals Manchester United and on course for their first top-flight title for 44 years.

But Sir Alex Ferguson's reigning champions will end the calendar year at the summit if they follow up victory over struggling Wigan on Monday with another three points against bottom club Blackburn on Sunday.

That is because City do not play again after Monday until January 1, when they travel to Sunderland.

Mancini's expensively-assembled side have led the table for most of the season and remain favourites to finish the impressive job they have started.

They appear to have an easier second half to the campaign on paper.

While United still have to travel to Arsenal, Chelsea, Tottenham and City, Mancini's men, invincible at home this year, host Tottenham, Chelsea and United.

But Mancini is taking nothing for granted and wants maximum points at West Brom and Sunderland after drawing 1-1 at Liverpool and then losing 2-1 at Chelsea in their past two away league games.

"We still have Chelsea, United, Tottenham and Liverpool to come to the Etihad Stadium, but we need to win away games as well, and we have only one point from our last two," said the Italian.

"I have a lot of respect for West Bromwich, and for (manager) Roy Hodgson - he is one of the best managers in Europe. It will be very hard because they play good football. They have had some problems but won their last two away games and seem to be in good form."

Free-scoring City have doubts concerning defender Micah Richards (leg) and striker Edin Dzeko (knock) while Serbian defender Aleksander Kolarov is troubled by a groin injury.

West Brom start the game in mid-table after back-to-back away wins at Blackburn and Newcastle.

But their home form has been less impressive although defender Gareth McAuley insists confidence is high after recent results.

"City are top of the league and scoring goals for fun," said McAuley. "But it's a challenge for us to stop that.

"The changing room is confident at the moment but we know it's going to be a tough game and we've got to do the basics right and all the hard work.

"Then, when we get the ball, we have to play like we can do."

Albion moved seven points clear of the relegation zone and up to 10th courtesy of last Wednesday's 3-2 win over Newcastle, however McAuley admits he and his team mates face the unenviable task in attempting to shackle Sergio Aguero.

City's Argentina international scored twice in Wednesday's 3-0 victory over Stoke to take his Premier League tally for the campaign to 13 goals.

"I watched a bit of City's game against Arsenal on TV and his movement was second to none," added Northern Ireland international McAuley.

"His movement in and around the box is different class and it's going to be a big task and a big job in terms of concentration for whoever plays against him."

West Brom hope James Morrison will recover from the hamstring injury which ruled him out in midweek.

Steven Reid (ankle), Youssouf Mulumbu (groin) and Jerome Thomas (ankle) are all major doubts.

Ferguson wary of capital threat in title race

Sir Alex Ferguson has refused to write off a challenge from London at the top of the Premier League in 2012 despite the dominance of Manchester's rival pace-setters.

A strong first half to the season from Manchester United and current league leaders City has left many pundits predicting that the eventual champions will come from Manchester.

However, although third-placed Tottenham are currently seven points behind Ferguson's second-placed team, Harry Redknapp's club has the luxury of a game in hand and history has taught the veteran United manager that challenges to their title could come from a variety of sources in the new year.

"At this moment in time, everyone thinks it will be one and two for the city," said Ferguson. "But come March, things change and you need to go back over the years to see how dramatic it can be.

"We surrendered an 11 point lead to Arsenal and we managed to claw back a 12 point deficit to Newcastle and last year Chelsea were 10 points clear in November and they lost it.

"You lose a game in this league and all the rest get a pick up and start chasing harder. That's the way the league is and come March, you never know."

United bounced back superbly in midweek, winning 5-0 at Fulham, to respond to the critics who had a field day after the defending Premier League champions were unceremoniously dumped out of the Champions League by Swiss club Basel.

"The criticism has been understandable because you lose a derby game 6-1, you get knocked out of the League Cup by Crystal Palace, a Championship team, and you lose to Basel, which is not a power in Europe," said Ferguson.

"You can understand the criticism but in terms of the nature of the kind of player we have, the kind of club we are, we've got the resilience and determination to do something about it each time it's happened.

"I think that shows the character of the team. In a normal season we lose games but the games we've lost this season have been a bit more dramatic and more emphatic in the sense of the impact it has had on our chances of winning trophies.

"We're out of the Champions League, out of the League Cup and lost to City in a derby game. These are bad results for us, bad results, and the character of the team has rescued us each time.

"We've come back. Last season the focus was on our bad away form but the home form rescued us. We haven't had any away defeats and you wonder what's happened here because it's a tough league."

United face a home fixture against Wigan on Monday that would appear, on paper at least, to offer little obstacle to them continuing a run of seven wins and a draw in the eight games since their humiliating 6-1 home defeat to City.

However, they will have to contend without winger Ashley Young who has been ruled out for a "few weeks" with a knee injury.

Versatile Phil Jones has handed Ferguson a bonus with the news that he could be fit to play against the Latics despite fears he had suffered a bad facial injury at Fulham.

After an away victory at West Brom and home draws with Chelsea and Liverpool, the Wigan manager Roberto Martinez wants his team to continue to show their steady improvement against United, in the more intimidating atmosphere of Old Trafford.

"The performances against Chelsea and Liverpool were very good. They weren't just accidents," he said. "They showed what we can do but the next game is going to be as big a test we've faced all season.

"You can't afford to go to Old Trafford and be affected. You have got to try and play your own game. We need to repeat the levels we have produced in the last two home games in one of the most intimidating arenas in European football."

All eyes on Suarez, Kean at Anfield

Kenny Dalglish has leapt to the defence of Blackburn manager Steve Kean as Liverpool's Luis Suarez prepares for his first Anfield game since receiving an eight-match ban from the Football Association.

Suarez, who is set to appeal the suspension for racially abusing Manchester United defender Patrice Evra, is still eligible to play as his ban has yet to come into force.

The Uruguay striker featured in the goalless stalemate with Wigan on Wednesday -- the day after the suspension was announced -- and is again set to play against Blackburn, the Premier League's bottom club, on Monday.

But there will be just as much attention on beleaguered Kean as there will be on Suarez after a dreadful run of form which has left Blackburn fans calling ever louder for the manager to be sacked.

Earlier in the season Kean said he was willing to meet disgruntled fans to outline his plans for the future.

But the Scot now believes his safety could be at risk if such a meeting took place.

Liverpool manager Dalglish, who masterminded Blackburn's Premier League title success in 1995, admits the situation at his former club is 'sad' but believes Kean needs support -- not abuse.

"They are under a lot of pressure and the frustration is understandable in many ways," said Dalglish. "But I don't think it is helpful and I think it is sad really that it has come to that, but that is the way it is.

"I think it is unfortunate that as a manager you know that results are going to count and if you don't get them then you are running the risk of getting your P45 (sacked).

"Results aren't purely down to what the manager does, he needs support from the players, owners and certainly the crowd."

Having dropped points at lowly Wigan in midweek, Dalglish is demanding his side return to winning ways as Liverpool seek to keep their hopes of qualifying for next season's Champions League alive.

Captain Steven Gerrard could return from his two-month injury absence from an infected ankle.

Midfielder Gerrard, 31, has appeared in just five matches this campaign as a result of injuries, but he is back in training and stands a chance of featuring against Blackburn.

"He's been training, but whether that means he's ready or not, we'll have to wait and see," added Dalglish, who has midfielder Jay Spearing available after suspension.

Meanwhile, Kean's future could be decided over the course of the next few days with Blackburn facing a daunting match against Manchester United on December 31 after Liverpool.

"It's not a nice place we find ourselves in at the moment," said Kean, who was appointed a year ago after Blackburn's Indian owners Venky's sacked Sam Allardyce.

"I'll take the responsibility for that, I'll never shirk away from that or duck that. The players are giving me everything they can.

"It's been tough. It's never easy when you're getting a bit of stick but it's part of the job.

"There's plenty of people who have got stick over the years from fans and months later the fans are singing your name. That's football."

Blackburn could be without first-choice keeper Paul Robinson who has a small tear in his calf muscle while Sweden international Martin Olsson (hamstring) has not recovered as quickly as anticipated.

Chelsea wary of wounded Fulham

Chelsea goalkeeper Petr Cech has warned his team-mates against complacency as they prepare to face a shellshocked Fulham side in a Boxing Day derby on Monday.

The Blues could not have picked a better time to face the Cottagers, who are reeling after suffering their heaviest ever home defeat last week, a 5-0 thrashing by Manchester United.

Yet Cech has urged his team-mates to disregard Fulham's recent problems as Andre Villas-Boas's men look to pick up three points in order to stay in touch with the league leaders.

"We can't look too much at the table, we need to keep going step by step, try to win our games and try to catch up as many points as we can," Cech said.

"We depend on everybody else, so it's up to them how they are going to do but we just need to keep winning our games. Fulham will be a difficult game because they lost 5-0 at home in their last game.

"It's a big London derby and they will want to bounce back, so Chelsea is a great motivation to say sorry to their supporters after Man United but we are in a situation where we need to keep winning."

Villas-Boas heads into the game trying to juggle a growing central defensive crisis that has seen him open talks with Bolton about a move for Gary Cahill.

The injury to Branislav Ivanovic during the 1-1 draw with Tottenham Hotpsur last week means John Terry is the Blues' only fully fit centre back ahead of the meeting with Fulham at Stamford Bridge.

That will only strengthen Villas-Boas's resolve to complete a deal for England defender Cahill - out of contract at the end of the season - as quickly as possible next month.

Until the window opens, however, Villas-Boas will be forced to improvise unless David Luiz recovers from a knee injury in time to face Fulham in a game Chelsea must win to maintain their title hopes.

The point gained at White Hart Lane left Villas-Boas's side 11 points adrift of Premier League leaders Manchester City.

And while Chelsea will expect to beat a Fulham side in the doldrums following the United drubbing, a makeshift backline will do little to enhance their chances of victory.

Villas-Boas insists there is no way back for the transfer-listed Alex and is likely to use Paulo Ferreira or Oriol Romeu alongside Terry.

Frank Lampard could return to the starting line-up in place of Ramires after the Brazil midfielder collected his fifth booking of the season.

Fulham sit just four points above the bottom three and, having also exited the Europa League, are in desperate need of a lift.

The performance against United drew widespread criticism but manager Martin Jol insists his side can turn things around quickly.

"I don't think we are lacking confidence, it's about teamwork. If you work as a team, we are good and our goal difference has shown that -- that's probably been a big plus for us this season.

"But that is something we destroyed on Wednesday with the five goals. If you play as a team, you don't concede goals and you always get your chances."

Jol has no new injury worries and he may well opt to restore Bobby Zamora to the starting line-up after starting the England forward on the bench against United.

Left back John Arne Riise said: "We have Chelsea on Sunday then Norwich and Arsenal, so we just have to look at what we did wrong, pick ourselves up fast and improve."

"We will lift our heads up, focus on the things we've done right in the last few weeks, work hard and stick together."

Texas police find 7 dead in Dallas-area apartment

GRAPEVINE, Texas — Texas police have found seven people dead in a Dallas-area apartment after gaining entry to the unit on Christmas Day.

Grapevine police told the Dallas Morning News (http://dallasne.ws/vL486p) the four women and three men have all apparently been shot. The ages of the victims are unknown. Police say they were responding to a 911 call when they discovered the bodies.

Authorities didn't immediately return a call for details.

Princes visit queen's husband in hospital

Britain's Princes William and Harry visited their grandfather Prince Philip in hospital Sunday after the queen's husband missed the royal Christmas celebrations for the first time.

The outspoken Philip -- who at the age of 90 is the longest serving royal consort in British history -- was set to spend a third night in hospital recovering from heart surgery to clear a blocked coronary artery.

Six of his eight grandchildren with Queen Elizabeth II came to the Papworth hospital near Cambridge, after the royal family's Christmas church service and lunch at their Sandringham estate in eastern England.

New wife Catherine did not come with William, 29, who arrived in a Range Rover along with Zara Tindall and Peter Phillips, the children of the queen's daughter Princess Anne.

Harry, 27, drove an Audi which also carried Beatrice and Eugenie, the daughters of the queen's second youngest son Prince Andrew. William and Harry are the sons of heir to the throne Prince Charles and the late Princess Diana.

The queen -- who visited Philip on Saturday with her children -- stressed the importance of family and friendship in her annual pre-recorded Christmas address to the nation which was televised Sunday.

Wearing a red dress, she said the marriage of William and Catherine in April was her personal reminder of the value of loved ones, and that in times of hardship we often "find strength from our families"

The royals earlier told wellwishers who had gathered to see them attend the Christmas morning service in the St Mary Magdalene church at Sandringham that Prince Philip's condition was improving.

William said his grandfather, known for his outspoken and occasionally gruff comments, was "very well, thank you. Getting much better", while Charles added that Philip was "very well".

The Prince of Wales told supporters his father was "resilient" and "very determined".

During the service, the rector of Sandringham, Jonathan Riviere said: "We pray for the queen and the royal family, especially today we pray for Prince Philip and his continued recovery."

Police said 3,000 people gathered at Sandringham.

The service was the first to be attended by Catherine, 29, who wowed the crowds in an aubergine coat and hat and chatted to children who presented her with flowers.

But it was overshadowed by Prince Philip's first absence from church at Christmas. He is also set to miss the Boxing Day shoot he traditionally leads on December 26.

During the service, the rector of Sandringham, Jonathan Riviere said: "We pray for the queen and the royal family, especially today we pray for Prince Philip and his continued recovery."

He was airlifted to hospital from Sandringham on Friday suffering from chest pains.

Tests showed a blocked coronary artery and doctors at Papworth, which boasts Britain's biggest cardiac unit, inserted a tube-like device called a stent to restore healthy blood flow.

The Greek-born Philip married then Princess Elizabeth in 1947 and has become a national institution -- almost as much for his often brusque comments as for his support for the queen.

An active outdoorsman and former Royal Navy captain, he has been in largely good health and joined his wife on an 11-day tour of Australia three months ago.

But he pulled out of a trip to Italy in October nursing a cold.

The next year is a big one for the queen as she celebrates her diamond jubilee marking 60 years on the British throne.

In an interview to mark his 90th birthday in June, Prince Philip said he would scale back his workload.

"I reckon I've done my bit. I want to enjoy myself a bit now, with less responsibility, less frantic rushing about, less preparation, less trying to think of something to say," he told the BBC.

Thinking of things to say has sometimes landed him in hot water.

On a visit to China in 1986, he warned a group of British students: "If you stay here much longer, you'll all be slitty-eyed."

Libya to include rebels in military from January

TRIPOLI - Libya will include thousands of former rebels who helped topple Muammar Gaddafi in its armed forces from January, the defense minister said on Sunday, testing the government's ability to get rebel leaders to cede command of their fighters.

Although rebels met a deadline imposed by the National Transitional Council (NTC) to withdraw this week from the capital Tripoli, militias led by rival commanders still guard key installations and checkpoints across the city.

The lack of a fully functioning army and police force, has given militias free rein to fight turf wars after the uprising that ended Gaddafi's 42-year dictatorship in August.

"The program aims at including the revolutionaries in many fields including defense," Osama al-Juwali, interim defense minister told a news conference also attended by interim interior minister Fawzi Abd al-All.

"The idea is to inject new blood in the army which was marginalized by the tyrant (Gaddafi)," said Juwali who was commander of the Zintan militia that captured Gaddafi's son Saif al-Islam in November.

Abd al-All said the rebels were also invited to take up positions in the interior ministry which, he said, was understaffed. He said they could also apply for civilian jobs in government offices through the ministry of labor.

Lifting of the U.N. Security Council sanctions this month on Libya's central bank and a subsidiary means that the interim leaders have access to cash that could be used to offer the fighters well-paying government jobs.

Juwali said that part of the plan was to train the rebels to take up high-ranking positions in the military.

He said it would take a month to register and allocate them to the military, police and other civilian posts, and months before they were trained to guard borders and installations, including oilfields and refineries, now held by rival militias.

"Everyone is allowed to join the special forces, the navy and others," he said. Talks were being held with a number of countries to train rebels inside and outside Libya for the military, he said.

Gaddafi ignored the military, giving control to security militias led by either his sons or confidants.

Juwali said he was not concerned about occasional skirmishes among rebel factions and that he was continuously in contact with most of the rebel leaders.

"I am not worried about the revolutionaries," he told Reuters after the conference. "The revolutionaries ask me every day when can they hand in their weapons and ammunition, but I tell them to wait until we have the facilities to store them."

The latest major turf war broke out this month when armed men in the vehicles of Libya's new national army tried to take control of Tripoli's international airport from a powerful Zintan militia unit.

Three Indian police die in Kashmir barracks shooting

Three Indian federal police are dead and another was injured following a shooting at a barracks in insurgency-hit Kashmir, an official said Sunday.

The fatal incident happened late Saturday evening inside the Central Reserve Police Force (CRPF) camp in the Himalayan town of Kulgam, about 90-minutes drive from Srinagar, the capital of Indian-controlled Kashmir.

"We have three CRPF personnel dead and one injured," a police officer told AFP, speaking on condition of anonymity because he was not authorised to speak with the media.

Other personnel inside the barracks at the time of the shooting were detained for questioning, he added.

It was not immediately clear if there was one or more shooters responsible for the deaths.

Around 100 Indian security force personnel commit suicide every year in Kashmir and the insurgency-racked northeastern states, according to official figures.

There have also been a raft of incidents involving soldiers shooting their comrades and officers, known as fragging, which have been blamed on stress.

Indian soldiers battling a 20-year-old insurgency in Kashmir are now being provided a 24-hour helpline and meditation classes to overcome stress, although fragging incidents in the region have dropped as the insurgency slowed.

More than two decades of violence in Kashmir has left more than 47,000 people dead by official count.

India and Pakistan, which each hold the region in part but claim it in full, started a peace process in 2004.

Anonymous hacks US security firm Stratfor

Online "hacktivist" group Anonymous claimed Sunday it had stolen a trove of emails and credit card information from US-based security firm Stratfor's clients, and vowed additional attacks.

Hackers provided a link on Twitter to what they said was Stratfor's private client list, which included the US Defense Department, Army, Air Force, law enforcement agencies, top security contractors and technology firms like Apple and Microsoft.

They also posted images online claiming to show receipts from donations made by the hackers on behalf of some of Stratfor's clients by using their credit card data.

The hackers said they were able to obtain the information in part because Stratfor did not encrypt it, which could prove a major blow to company which calls itself a global intelligence firm.

"Anonymous hacks and discredits @STRATFOR intelligence company," Twitter user YourAnonNews wrote on the micro-blogging website. "Maybe they should learn what encryption is."

An alleged Anonymous hacker who uses the Twitter handle anonymouSabu claimed that over 90,000 credit cards from law enforcement, journalists and the intelligence community had been leaked and used for "over a million dollars" in donations.

A widely distributed hacking message posted online, however, mentioned around 4,000 credit cards, passwords and home addresses.

Among the donations shown was a $494 payment on behalf of the Department of Defense for textbooks, a school uniform and food crisis education provided by charity CARE for impoverished girls and women.

A $180 payment was also made to the American Red Cross on behalf of a Department of Homeland Security official, and was signed "Thank you! Department of Homeland Security." Another $200 payment was made to the American Red Cross on behalf of a Texas Department of Banking official.

In an email to its members, Stratfor said it had suspended its email and servers after learning the website was hacked.

"We have reason to believe that the names of our corporate subscribers have been posted on other web sites," said the email signed by Stratfor chief executive George Friedman. "Stratfor and I take this incident very seriously."

He said Stratfor was "working closely with law enforcement" to identify those responsible for the hack.

By midday, the company's website was down, saying the "site is currently undergoing maintenance."

Wishing a "Merry LulzXmas" to all -- in an apparent reference to Anonymous-affiliated group Lulz Security -- Anonymous said it would focus its next attacks on celebrities Justin Bieber, Lady Gaga, Kim Kardashian and Taylor Swift.

Anonymous has been involved in scores of hacking exploits, including the recent defacing of a website of Syria's Ministry of Defense to protest a bloody crackdown on anti-government protesters.

Last year, the shadowy group launched retaliatory attacks on companies perceived to be enemies of the anti-secrecy website WikiLeaks.

Japan foreign minister arrives in Myanmar

Japanese Foreign Minister Koichiro Gemba arrived in Myanmar Sunday, in the latest high-profile diplomatic trip looking to encourage reforms in the isolated nation, Tokyo's public broadcaster reported.

Gemba's visit, the first by a Japanese foreign minister since 2002, comes as Tokyo considers resuming official development aid as part of international efforts to engage Myanmar's new military-backed civilian government.

Gemba plans to meet with President Thein Sein and other top officials, and also democracy leader Aung San Suu Kyi, Kyodo News reported citing an unnamed government source.

Unlike major Western nations, Japan has maintained trade ties and dialogue with Myanmar and warned that a hardline approach could push Myanmar closer to neighbouring China, its main political supporter and commercial partner.

Gemba is expected to propose negotiations on a bilateral investment accord in his meetings with officials, Kyodo said.

Japan has continued to provide humanitarian and emergency aid to the country, but halted regular economic assistance in 2003 following the arrest and subsequent detention of Suu Kyi.

Myanmar's new nominally civilian government has rolled out a series of reformist measures since it took office as the former generals who dominate it have sought to reach out to political opponents and the West.

Suu Kyi was freed in November 2010 from seven years of house arrest, and has re-registered her previously banned opposition National League for Democracy (NLD) as a political party, clearing the way for her to take part in elections.

Hillary Clinton visited Myanmar earlier this month in the first trip there by a US Secretary of State in more than 50 years.

Iran says woman's stoning case might change to hanging

TEHRAN  - An Iranian woman sentenced to be stoned to death for adultery could be hanged instead, the students news agency ISNA reported.

A court sentenced Sakineh Mohammadi Ashtiani to be stoned in 2006 but the sentence was suspended last year after an international outcry. However, under a judicial review being carried out she still could be hanged.

"There is no rush ... our Islamic experts are reviewing Ashtiani's sentence to see whether we can carry out the execution of a person sentenced to stoning by hanging," said Malek Ajdar Sharifi, head of judiciary in the East Azerbaijan province.

Ashtiani's husband was murdered in 2005, after which an Iranian court convicted the mother of two of having an "illicit relationship" with two men. For this, she was given a stoning sentence in 2006.

Amnesty International says she received 99 lashes as her sentence but she was subsequently convicted of "adultery while being married," which the human rights group says she denied.

Ashtiani, arrested in 2006, is already serving 10 years for being an accessory to her husband's murder in a prison in the East Azerbaijan.

A local judiciary official said last year that the stoning of Ashtiani had been suspended due to "humanitarian reservations," but did not rule out possibility of her execution.

"The sentence of Ashtiani will be carried out as soon as our experts announce their view," the official said.

Under Islamic law in force in Iran since the 1979 revolution, adultery may be punished by death by stoning and crimes such as murder, rape, armed robbery, apostasy and drug trafficking are all punishable by hanging.

The European Union called Ashtiani's stoning sentence "barbaric." The Vatican pleaded for clemency and Brazil offered her asylum. The case further strained Tehran's relations with the West, already at odds over Iran's disputed nuclear program.

Two reporters for German newspaper Bild am Sonntag were detained in Iran in October last year when they were interviewing Ashtiani's son without official permission, highlighting the sensitivity of the case. The two were released in February.

Iranian authorities dismiss allegations of rights abuses, saying they are following Islamic law.

Mohammad Javad Larijani, secretary-general of the Iranian High Council for Human Rights, argued in December that stoning should not be classified as a method of execution but rather a method of punishment which is actually more "lenient" because half of the people survive, the U.N. quoted him as saying.

Libya set to register former rebel fighters

Libya's transitional government said on Sunday that it will next month begin registering fighters who helped to topple Moamer Kadhafi, hoping to integrate them within the security services.

Planning Minister Issa al-Tuijer said the plan calls for all former rebels, many of whom are still organised in disparate militias, to register and make clear if they want to join the national security forces.

Thousands of civilians left their jobs or their studies to fight against Kadhafi when the popular uprising against his dictatorship morphed into a civil war.

Since the Kadhafi regime collapsed and the long-serving leader was killed in October, many of those armed civilian fighters are exercising informal control in parts of Libya.

Tuijer said "thwars" (revolutionaries) must begin registering in the first week of January and state whether they want to join the security forces, return to their studies, or take advantage of a state benefits programme.

The registration exercise is to last one month and the former rebels will be divided based on their skill sets and levels of education, Defence Minister Osama al-Juili said.

Some who register could be sent for overseas training, he added.

The exercise will allow the transitional government "to renew the army... marginalised under the former regime," installing a professional army in its place, the defence minister said.

Interior Minister Fawzi Abdelali made clear that "the programme is not a reward" for those who helped to topple Kadhafi.

"We have large gaps at the interior ministry and the needs cannot be filled without integrating the thwars" he added.

The ministers gave no estimate as how many fighters they expect to register, but Abedlali recently told AFP he expects some 25,000 former rebels to join the defence ministry and another 25,000 to join the interior ministry.

Leafs coach Ron Wilson gets contract extension

TORONTO — Maples Leafs coach Ron Wilson has gotten his Christmas wish.

Two days after hinting on Twitter of his desire for a new contract, Wilson says the team has given him an extension.

Wilson tweeted Sunday morning: "'He came! He came!' Remember saying that as a little kid? Well he did: I got a new Red Ryder BB gun and a contract extension!"

The team did not immediately respond to an email seeking confirmation of the deal.

The 56-year-old coach was in the final season of a four-year contract. The Leafs are sixth in the Eastern Conference.

4-year-old boy, 2 adults die in house fire in Ohio

COLUMBUS, Ohio  — A 4-year-old boy, his mother and another person are dead following a house fire in central Ohio late Christmas Eve.

The Columbus fire department says the blaze was reported shortly before midnight Saturday in a vacant house on the city's west side. When firefighters reached the scene, neighbors reported that people might be inside.

Battalion Chief Michael Fowler says firefighters entered the home and found three victims in a room full of flames.

They were identified Sunday as 22-year-old Jerrica Francisco, her son Deshawn Francisco and 33-year-old Demetrius Chappell. Authorities were trying to determine if they lived in the home.

The cause of the blaze was unclear. Investigators remained on the scene Sunday afternoon.

The damage was estimated at $40,000.

Israel to send medical aid after Nigeria attacks

Israel is to send medical aid to people wounded in Nigeria's deadly blasts on Sunday that killed at least 40 people, a foreign ministry statement said, condemning the attacks.

"Israel condemns in the strongest terms these attacks carried out on Christmas Day, and expresses its deepest condolences over the deaths of innocent people," the statement said.

"Israel will supply with Nigerian authorities with medical aid to help the wounded."

The series of bomb attacks on churches during Christmas services and a suicide blast killed at least 40 people amid spiralling violence claimed by Islamists.
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Dirk, Kidd help Mavs raise championship banner

DALLAS — With a tug from Dirk Nowitzki, Jason Kidd, Jason Terry and others, the Dallas Mavericks unveiled their championship banner minutes before opening this season against the team they knocked off in the NBA finals, LeBron James and the Miami Heat.

The ceremony was supposed to have been held Nov. 1, but the lockout pushed it back. So after waiting until their 31st season to become champions for the first time, the Mavericks and their fans waited another 54 days.

The Heat were in their locker room while clips of last year's postseason were shown, followed by brief comments from NBA Commissioner David Stern, owner Mark Cuban, coach Rick Carlisle, Terry and Nowitzki.

Nowitzki and Kidd seemed awed watching the banner rise to the rafters.

White House: appears Nigeria attacks were terrorism

HONOLULU - The White House condemned the violent attacks in Nigeria on Sunday, which it said appeared to be acts of terrorism.

"We condemn this senseless violence and tragic loss of life on Christmas Day," the White House said in a statement released from Hawaii, where President Barack Obama is vacationing.

"We have been in contact with Nigerian officials about what initially appear to be terrorist acts and pledge to assist them in bringing those responsible to justice," it said.

National Museum Of American Jewish History Open For Christmas

Philadelphia  – The National Museum of American Jewish History is open this Christmas Day.

The National Museum of American Jewish History hosts its annual ‘Being Jewish at Christmas’ celebration.

“We have board games, dreidel making.”

Michael Rosenzweig is the museum president and CEO. He says Christmas is a day that captures the essence of what this museum is about.

“What this museum is about is being Jewish in America and however you slice it; we are less than 2% of the population.”

And Rosenzweig says there’s a lot that can be learned by being Jewish at Christmas in America.

“Christmas is not our celebration; it doesn’t mean that we can’t genuinely enjoy the celebrations of others who do celebrate Christmas. I think it’s also a time when we’re reminded that we are Americans and we have a different heritage in some respects. In other respects, we have a great deal in common.”

NY sheriff hawks naming rights for helicopter

SYRACUSE, N.Y. — A high-tech helicopter has helped Sheriff Kevin Walsh chase down fugitives, airlift accident victims and spearhead search-and-rescue missions in the Syracuse region of central New York since 1999. In 2012, Air-1 could be grounded by budget cuts.

Walsh's proposed solution? Slap a corporate logo on the Bell 407 chopper to raise ad revenue and keep her flying.

"We (police) have put up with donut jokes for our entire existence. I think we can tolerate jokes about the Price Chopper chopper or the Wegmans whirlybird showing up," Walsh said, referring to two supermarket chains. "I don't like the idea of our having to fund public services with private donations, but the option is not to have that public service."

While hawking naming rights for municipal stadiums, parks, mass-transit stations and other public entities is nothing new for the nation's cash-strapped cities, sponsorship deals with police agencies are much less common, and typically less lucrative.

On top of that, watchdog groups — and many in uniform — are wary about potential conflicts when law enforcement cozies up with advertisers, such as officers possibly looking the other way on matters involving corporate sponsors.

"I feel very confident my officers wouldn't be compromised," said John Kelly, police chief of Littleton, Mass. A town-approved $12,000-a-year contract with a grocery chain pays for one of Kelly's five patrol cars. In return, the cruiser has been adorned for nine years with a modest Donelan's Supermarkets bumper sticker.

Kelly said he's endured plenty of flack, but "my position is I have to give my officers tools to provide the necessary services our citizens paid for. At 2:30 in the morning, someone laying out on a local highway because of an accident really doesn't care who's paying for the cruiser or what it says on its side."

In 2002, dozens of cities jumped at an offer by a Charlotte, N.C., company to provide new police cars for $1 each in exchange for festooning them with race car-style logos. The venture fizzled, in part because the line between tactful and tacky advertising can be a narrow one, and the company has gone out of business.

"We can't let cutesy things" subtract from "making us look serious," said police Chief Philip Thorne in Springfield, Fla., which turned down a chance to save $500,000 over three years.

"It sounded like a good idea," recalled Bruce Owens, police chief in Summerville, S.C. "But the main concern is the potential ethical issues you might encounter, because no one gives something for nothing."

Russ Haven of the New York Public Interest Research Group fears the drive to find sponsorship arrangements in budget-strapped times "may in some instances seem unseemly or feel like it's going too far.

"When it comes to law enforcement, you have this additional layer of concerns," Haven said. "If the sponsor becomes a target of an investigation, does the public have confidence they'll be treated equally under the law?"

In addition, "what's the appropriate valuation for naming rights?" Haven said. "Does it put government in the position of deciding what is an inappropriate sponsor, which could raise First Amendment issues?"

In Syracuse, the sheriff's budget woes in recent years deepened this fall when the county Legislature eliminated $591,000 in taxpayer aid in 2012 for the helicopter known by its radio call sign. Bought for $2.3 million, Air-1 costs around $500,000 on average to operate and maintain each year.

Walsh has appealed for private donations and hopes to secure federal grants to help pay for Air-1's four-pilot roster. Getting a commercial operator's license from the Federal Aviation Administration to allow him to charge fees for medical flights might come through soon, potentially raising $125,000 to $200,000 a year.

Selling naming rights could prove vital in filling the gap. Talks are under way with two potential sponsors who remain unidentified, and Walsh's administrative chief, John Balloni, hopes to add at least $100,000 a year in advertising revenue.

While conceding that Air-1 might have to stop operations in 2012, Balloni said: "There will be some revenue streams coming in and we have full expectation we'll keep it in the air. The extent of our success in 2012 will determine how much we fly in 2013."

Landing private funding wouldn't be a first for a police airborne unit. In Missouri, St. Louis County police got cash donations and electronic equipment worth upward of $200,000 from three helicopter manufacturers in 2004 in exchange for putting the companies' decals on three of its six choppers, said Capt. Kurt Frisz, a pilot.

"It kept us flying at a critical time and got us equipment we wouldn't have been able to afford otherwise," said Frisz, who says the decals are hardly visible from the ground. "The value for the vendor is if a picture of our helicopter shows up in a law enforcement trade magazine such as Air Beat."

Onondaga County sheriffs have deployed helicopters of their own since snapping up a Korean War-era bubble model in 1975.

Supporters praise the new chopper's versatility and credit it as a vital public safety tool not only in the county but in emergencies across a five-county metro area of 640,000 people along Lake Ontario's southeast corner.

Air-1 and its crew logged hundreds of hours of missions in 2011. It airlifted a badly injured toddler who was run over by a lawnmower, alerted sheriff's deputies to a rifle-toting fugitive hiding up a tree and rescued a man whose snowmobile plunged through the ice on a lake.

Opponents view it as a financial burden that duplicates services already provided at no cost to taxpayers by private medevac helicopters and a state police chopper stationed in Syracuse that runs missions farther afield in upstate New York.

A county Legislature resolution to auction off Air-1 was voted down 18-1 on Dec. 6. Walsh will likely renew his funding request when the Legislature returns Jan. 1 with seven new members.

"Short of robbing banks," said Balloni, his deputy, "any way we can keep this ship flying is the way we're going to do it. I took an oath to protect and serve and, to me, the lives it saves are what's sacred."

Military wives claim coveted Christmas number one

A charity single recorded by wives of British soldiers on Sunday claimed the country's prestigious Christmas number one spot, outselling its nearest rival by almost five to one.

The Military Wives choir, which was formed for BBC entertainment programme The Choir, marched to the peak of the chart after their song "Wherever You Are" sold 556,000 copies, the Official Charts Company revealed.

Profits from the single are being given to military charities the Royal British Legion and the Soldiers, Sailors, Airmen and Families Association (SSAFA).

Gareth Malone, the BBC presenter who formed the group, said the honour was well deserved.

"This is so surreal," he said. "Who would have guessed in those first rehearsals that we could take Christmas Number 1?

"It's testament to the Military Wives' hard work and the nation's support of them, as well as the power of choral singing.

"The support of the British military for the choir has been fantastic. I'm delighted that they have found their voice. We did it!"

The Military Wives outsold second-placed X Factor winners Little Mix by nearly five to one, while Lou Monte's "Dominick the Donkey," which was originally released in 1960, placed third after a campaign by BBC radio DJ Chris Moyles.

'Anonymous' hackers target US security think tank

LONDON — Hackers with the loose-knit movement "Anonymous" claimed on Sunday to have stolen a raft of e-mails and credit card data from U.S.-based security think tank Stratfor, promising it was just the start of a weeklong, Christmas-inspired assault on a long list of targets.

One alleged hacker said the goal was to use the credit data to steal a million dollars — including, apparently, from individuals' accounts — and give the money away as Christmas donations. Images posted online claimed to show the receipts.

A Twitter account tied to Anonymous posted a link to what they said was Stratfor's tightly-guarded, confidential client list. Among those on the list: The U.S. Army, the U.S. Air Force and the Miami Police Department.

The rest of the list, which the hacking movement said was a small slice of its 200 gigabytes worth of plunder, included banks, law enforcement agencies, defense contractors and technology firms such as Apple and Microsoft.

"Not so private and secret anymore?" the group taunted in a message on the microblogging site.

Austin, Texas-based Stratfor provides political, economic and military analysis to help clients reduce risk, according to a description on its YouTube page. It charges subscribers for its reports and analysis, delivered through the web, emails and videos.

Lt. Col. John Dorrian, public affairs officer for the Air Force, said that "for obvious reasons" the Air Force doesn't discuss specific vulnerabilities, threats or responses to them.

"The Air Force will continue to monitor the situation and, as always, take apporpriate action as necessary to protect Air Force networks and information," he said in an email.

Miami Police Department spokesman Sgt. Freddie Cruz Jr. said that he could not confirm that the agency was a client of Stratfor, and he said he had not received any information about any security breach involving the police department.

Anonymous said it was able to get the credit details in part because Stratfor didn't bother encrypting them — an easy-to-avoid blunder which, if true, would be a major embarrassment for any security-related company.

Hours after publishing what it claimed was Stratfor's client list, Anonymous tweeted a link to encrypted files online. It said the files contained 4,000 credit cards, passwords and home addresses belonging to individuals on the think tank's private client list.

It also linked to images online that it suggested were receipts for charitable donations made by the group manipulating the credit card data it stole.

"Thank you! Defense Intelligence Agency," read the text above one image that appeared to show a transaction summary indicating that an agency employee's information was used to donate $250 to a non-profit.

One receipt — to the American Red Cross — had Allen Barr's name on it.

Barr, of Austin, Texas, recently retired from the Texas Department of Banking and said he discovered last Friday that a total of $700 had been spent from his account. Barr, who has spent more than a decade dealing with cybercrime at banks, said five transactions were made in total.

"It was all charities, the Red Cross, CARE, Save the Children. So when the credit card company called my wife she wasn't sure whether I was just donating," said Barr, who wasn't aware until a reporter with the AP called that his information had been compromised when Stratfor's computers were hacked.

"It made me feel terrible. It made my wife feel terrible. We had to close the account."

Stratfor said in an email to members that it had suspended its servers and email after learning that its website had been hacked.

"We have reason to believe that the names of our corporate subscribers have been posted on other web sites," said the email, passed on to The Associated Press by subscribers. "We are diligently investigating the extent to which subscriber information may have been obtained."

The email, signed by Stratfor Chief Executive George Friedman, said the company is "working closely with law enforcement to identify who is behind the breach."

"Stratfor's relationship with its members and, in particular, the confidentiality of their subscriber information, are very important to Stratfor and me," Friedman wrote.

Repeated calls to Stratfor went unanswered Sunday and an answering machine thanked callers for contacting the "No. 1 source for global intelligence." Stratfor's website was down, with a banner saying "site is currently undergoing maintenance."

Wishing everyone a "Merry LulzXMas" — a nod to its spinoff hacking group Lulz Security — Anonymous also posted a link on Twitter to a site containing the email, phone number and credit number of a U.S. Homeland Security employee.

The employee, Cody Sultenfuss, said he had no warning before his details were posted.

"They took money I did not have," he told The Associated Press in a series of emails, which did not specify the amount taken. "I think why me? I am not rich."

One member of the hacking group, who uses the handle AnonymousAbu on Twitter, claimed that more than 90,000 credit cards from law enforcement, the intelligence community and journalists — "corporate/exec accounts of people like Fox" news — had been hacked and used to "steal a million dollars" and make donations.

It was impossible to verify where credit card details were used. Fox News was not on the excerpted list of Stratfor members posted online, but other media organizations including MSNBC and Al Jazeera English appeared in the file.

Anonymous warned it has "enough targets lined up to extend the fun fun fun of LulzXmas through the entire next week."

The group has previously claimed responsibility for attacks on companies such as Visa, MasterCard and PayPal, as well as others in the music industry and the Church of Scientology.

Sri Lanka hope for Durban change of luck

South Africa will remain favourites but Sri Lanka can expect less treacherous batting conditions in the second Test starting at Kingsmead Monday.

Sri Lanka were swept aside by an innings and 81 runs before tea on the third day in the first Test at Centurion, where their batsmen were unable to combat the home side's fast bowlers on a pitch with uneven bounce and extravagant sideways movement.

Shaun Pollock, a former South African captain and a resident of this Indian Ocean city, was among critics who felt the pitch at Centurion was loaded unfairly in favour of the bowlers and it seems likely that the surface at Kingsmead will offer a more even contest.

Pollock said he could understand South Africa's eagerness to win a home series, but with tours to New Zealand, England and Australia coming up in 2012, he added: "I'm more concerned with us honing the skills we will surely need over the next year."

Pollock said pitches like that at Centurion did not benefit the South African team in the long term.

"I don't believe these conditions help with the development of our cricketers ... as a South African supporter I feel we can compete with the best teams in the world on quality surfaces."

The Kingsmead pitch is still likely to help the fast bowlers, because it offers pace and bounce, but the bowlers will probably have to work harder for their wickets.

Sri Lanka were outclassed in the first Test but will be hoping to end what has been a winless year in Test cricket on a positive note.

With batsmen of the calibre of Kumar Sangakkara, Mahela Jayawardene and captain Tillekeratne Dilshan, they have the potential to post a competitive total.

Sri Lanka's bowling, though, lacks penetration following the retirement of off-spinner Muttiah Muralitharan and it is doubtful whether the call-up of fast bowling reserves in the form of Dhammika Prasad and Kanishka Alvitigala will make a significant difference.

The tourists can take heart from recent history, however, because South Africa have lost their three most recent Tests at Kingsmead -- against Australia, England and India.

Sri Lanka drew the only Test they have played at the ground, in 2000/01, when Sangakkara and Jayawardene shone with the bat, making 74 and 98 respectively, and Dilhara Fernando, another survivor from that tour, took five first-innings wickets.

It remains the only Test in South Africa in which Sri Lanka have avoided defeat -- although they were helped by a full day's play being lost to rain.

South Africa will be seeking to wrap up the three-Test series ahead of the final match in Cape Town, starting on January 3.

Rookie fast bowler Vernon Philander, who hurt his knee in the nets on Saturday, has been in irresistible form, taking 24 wickets in his first three Tests, including 10 for 102 at Centurion.

He has been helped by bowler-friendly pitches but offers tight control and the ability to move the ball both ways, proving an ideal new ball partner for tearaway Dale Steyn.

South Africa will look to improved form from tall fast bowler Morne Morkel, who went to Durban early to work with fast bowling coach Allan Donald in an effort to regain the form that made him one of the world's most potent strike bowlers last year.

Another early arrival in Durban was batsman Jacques Rudolph, who is hoping to cement his position as captain Graeme's Smith opening partner.

Teams

South Africa (likely): Graeme Smith (capt), AB de Villiers (vice-capt), Jacques Rudolph, Hashim Amla, Jacques Kallis, Ashwell Prince, Mark Boucher (wkt), Vernon Philander, Dale Steyn, Morne Morkel, Imran Tahir

Sri Lanka (from): Tillakaratne Dilshan (capt), Angelo Mathews (vice- capt), Tharanga Paranavitana, Kumar Sangakkara, Mahela Jayawardene, Thilan Samaraweera, Kaushal Silva (wkt), Thisara Perera, Rangana Herath, Chanaka Welegedara, Dilhara Fernando, Ajantha Mendis, Lahiru Thirimanne, Dimuth Karunaratne, Dinesh Chandimal, Dhammika Prasad, Kanishka Alvitigala

Umpires: Steve Davis (AUS), Richard Kettleborough (ENG)

TV umpire: Rod Tucker (AUS)

Match referee: Chris Broad (ENG)
 
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