Afghanistan readies pre-withdrawal tax breaks

Saturday 15 December 2012

Kabul, Dec 16 : Afghanistan is planning major tax breaks and incentives to lure investors ahead of U.S.-led forces' withdrawal at the end of 2014, part of an effort to stem accelerating capital flight, the country's finance minister said.

A proposal drafted by the finance ministry and endorsed by President Hamid Karzai would grant a 10-year tax break and provide free land to companies that invest in Afghanistan over the next two years, Finance Minister Omar Zakhilwal told The Wall Street Journal.

Concerns about the possibility of civil war once the foreign forces leave, coupled with diminishing Western aid, have undermined confidence in the country's economy. Several billion dollars in cash were smuggled to Dubai from Afghan airports this year alone, according to coalition estimates. Many projects have been put on hold as investors wait to see whether the Afghan government will be able to stave off a Taliban takeover on its own, and whether presidential elections, slated for April 2014, would provide a legitimate successor to Mr. Karzai.

Adding to these jitters is the uncertainty over the outcome of negotiations between the U.S. and Kabul over an enduring U.S. military presence here after 2014.

"We are aware that Afghans are taking money away from Afghanistan because of concerns about 2014," Mr. Zakhilwal said. "When we see half-finished buildings and we ask why, they say, well, we're waiting until 2014."

The incentives plan, which would have to be approved by the full cabinet and the government, is expected to be unveiled. Mr. Zakhilwal didn't specify the size of the tax breaks.

"The reason it will be two years is because if you make it long-term, they will just wait until 2014. And we say, if you wait until 2014, you won't have this," Mr. Zakhilwal said in the interview.

He said the package would spur exporters and agricultural enterprises and also stimulate the construction sector, which has been particularly hard hit by the confidence crisis. The proposal calls for simplifying the process of issuing building permits, which he said currently takes "forever." The new plan would require municipalities to issue them within 21 days.

"The construction sector is not only good for job creation but also good for confidence," he said. "When there is a lot of construction work going on, it gives confidence to people."

Amid the political uncertainty, the country's real-estate market has been particularly hard hit. Rents and property prices in Kabul's toniest neighborhoods have fallen by more than one-third since the year began, real-estate agents say, as foreign contractors and aid groups go home. In some areas, every second building sports a "For Rent" sign.

"People are afraid that a civil war will erupt once the foreigners leave, and everyone who can is taking their money out of the country," said Ghulam Mohammad, co-owner of a property agency in central Kabul. "Business is slow."

Rahimullah Hamid, executive director of the Kabul Chamber of Commerce and Industries, said the government incentives are badly needed. "We try to convince people that things will change in a good way," he said. "But most of the public, after they see the news, have heavy concerns about 2014."

Mr. Zakhilwal said he expected the U.S. military drawdown's economic effect will be limited.

This year, the Afghan economy is growing at about 10%, with the forecast for 2013 at between 10% and 11%, Mr. Zakhilwal said. Once the U.S. military drawdown occurs, however, the growth rate will slip to between 5% and 6%, he estimated, assuming international spending on development won't be significantly affected.

Mr. Zakhilwal added that the drawdown's impact won't be as severe as many fear because a large percentage of the money spent on military contracts—perhaps as much as 80% or 90%—currently doesn't stay in Afghanistan, going instead to large overseas companies.

Still, over the past decade, many Afghan businesses sprang up to provide goods and services to U.S. and coalition forces. Afghan construction firms help build roads and bases, and Afghan logistics companies deliver fuel and supplies for international projects.

As the military-funded contracting boom winds down, the U.S. government is hoping that some of those firms will diversify to focus on local business opportunities. This week, the U.S. Department of Commerce and U.S. Agency for International Development brought four U.S. companies to Kabul to promote franchising opportunities for Afghan businesses.

The companies—electronics retailer RadioShack, RSH +2.08% industrial and construction equipment supplier Hertz Equipment Rental, educational tutoring firm Tutor Doctor and printing services firm AlphaGraphics—held matchmaking sessions with Afghan businesspeople looking to invest in new opportunities.

"I quickly divide [Afghan] companies into three categories," said Walter Koenig, senior commercial officer at the U.S. Embassy in Kabul. "There are the companies that are going to cut and run when it's done. There are the companies that hope things never change And there are those who are looking for the future, and are looking for a new way to respond to the new reality and be successful."

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Beating sparks outcry against militia commanders in Afghan government

Kabul, Dec 16 : When news broke of a suicide bombing at an international military complex in Kabul last month, local police officer Mohammad Ismail was promptly dispatched to the scene.

Ismail's orders were to prevent traffic from entering the area and to redirect locals to safety. But not long after arriving with several other officers, a black SUV with tinted windows approached the checkpoint. Ismail refused the driver's request to be allowed to pass through and repeatedly told him to turn around.

In a matter of seconds, Ismail says, a number of men brandishing AK-47s stepped out of the vehicle.

The armed men -- bodyguards for parliament deputy and former militia commander Haji Zahir Qadir -- cursed and then attacked Ismail as his fellow officers fled the scene.

After picking the injured Ismail up from the side of the road, local residents delivered the 28-year-old officer to a hospital.

"For no reason, they grabbed me by the shirt and attacked me," he said. "One of them told the other bodyguards to attack me. I was surrounded by the bodyguards, who pressed their guns against my side, chest, and back. I looked back and saw that they had released the safeties on their guns. One of them hit me on the shoulder. After that, I can't remember what happened."

The assault on Ismail, which occurred on November 21 in Kabul's Wazir Akbar Khan district, has caused an uproar against Qadir and triggered a backlash against the presence of former militia leaders who are now in government. Anger spread after pictures of the assault went viral on social-media sites.

The outcry prompted the Afghan Interior Ministry to launch an investigation on November 23 and detain Qadir's bodyguards. But just a week later, on December 1, the guards were promptly freed after Qadir and several other lawmakers visited Ismail's precinct and personally apologized to him.

In a statement issued on the day of the visit, the Interior Ministry quoted Qadir as saying he regretted the behavior of his guards and vowed it would never happen again.

For the ministry's part, it simply warned politicians not to intervene in police business. "Political figures should not create problems for Afghan security forces during sensitive situations in the city and should instead assist them," the ministry statement read.

Despite the apology, the head of the Kabul police department's crimes investigation unit, General Mohammad Zaher, said on December 2 that he would refer the case to the Attorney-General's Office. Zaher also said he planned to press charges against Ismail's colleagues who fled the scene.

Ismail, who is still recovering from the injuries he sustained, reluctantly accepted the apology. But he says the incident is symptomatic of the significant power and influence wielded by the country's former militia leaders, including Qadir, who was a senior commander in the Northern Alliance.

The former strongmen, who once waged war against the ruling Taliban as leaders of the mujahedin, still exert significant influence on the country's political affairs.

Many Afghans view former militia commanders who have carved out high-ranking roles within the government as war criminals, and have accused them of using their power to extort money, grab land, and attack their opponents.

Ismail, an officer with the 10th District Force in Kabul, believes the attack should not been seen as one against him, but against the entire country. "When my police cap and badge fell on the ground, I couldn't even pick it up [out of shame]," he says. "More importantly, when my badge was disrespected so was the Interior Ministry, the security commander in Kabul, and the Afghan president himself."

On social-media sites, such as Facebook and Twitter, the response has been equally critical.

Shafiqa Ahmadi, who commented on Facebook, referred to Qadir and other former militia leaders in the government as "criminals," and said the incident showed that many of them think they are above the law.

"Who gives these warlords, who are traitors and thieves, the right to attack and almost kill a member of our security forces?" Ahmadi wrote. "Why does the Interior Ministry protect these fundamentalists instead of protecting the police who have been attacked? If the government does not act we will seek action."

Another Facebook user, Ahmad Seir Nassiri, criticized the Interior Ministry, which oversees the national police force, for taking the side of "criminals" instead of an officer who was merely following orders.

"If we have a system which cannot defend its own police," Nassiri wrote, "then how can it defend people in our country? Shame to all those in the Interior Ministry."

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Afghanistan: For ex-Taliban, it's peace or death

Kabul, Dec 16  : When he was a Taliban member, Mawlawi Pir Mohammed Rohani feared America and its allies. For years, he was scared even to visit his local mosque.

Now estranged from the group, out of hiding and living in the Afghan capital, he fears his former colleagues.

"The big threat is that if they arrest me, they will behead me from the back of the neck," he said, laughing.

Rohani is just one of several former Taliban leaders who left the movement after the US-led invasion only to see it flourish without him. Still fond of their old associates and sympathetic toward the insurgency, they find themselves caught in a dangerous limbo.

Despite reconciling with the Afghan government, they do not fully accept it. Nor do they trust the warlords within its ranks who previously fought them as part of the Northern Alliance.

Yet some in the Taliban — particularly the younger, more radical members —view them as traitors.

Now with security deteriorating and NATO troops withdrawing, it is getting harder for them to walk this tightrope.

And so they are scrambling to broker a peace deal.

Should they fail, a civil war appears destined to begin. Their decision to break from the resistance may cost them their lives.

Rohani comes from the southeastern province of Khost. He joined the Taliban even before the movement took control of the government in 1996. For him and many others it was the best chance to bring law and order to a country then in the grip of anarchy.

A religious scholar, he was later appointed director of Kabul University in what was then known as the Islamic Emirate of Afghanistan.

When the United States invaded in 2001, Rohani initially wanted to fight. But after the sheer ferocity of American airpower became apparent, he changed his mind and fled to Pakistan.

He stayed there until 2005, hardly leaving his house in Miranshah, a town in North Waziristan that is these days regularly pummeled by American drones. He claims most Taliban at that time sought a quiet life away from the battlefield, but were pushed into taking up arms because they were hunted down regardless.

"I could not go and pray in the mosque next door to my house in case the Americans arrested me, so all the time I prayed with my wife inside the house. When the Americans forced us, we tried to organize ourselves to fight against them until the war came to this point," he said.

Rohani is now a member of the High Peace Council, which was established with international backing in 2010 to help encourage talks between the Afghan government and militant groups.

Although the organization has not achieved any major breakthroughs so far, he believes the withdrawal of foreign troops will satisfy one of the Taliban’s key demands and leave them with few reasons to continue their resistance. In the meantime, he cannot visit Miranshah or Khost.

"The people who are fighting right now are very emotional, so if they find us they will kill us," he said.

In May, gunmen in Kabul assassinated Arsalan Rahmani, another High Peace Council member and former deputy minister of the Taliban. Exactly who carried out the attack remains unclear, but it left a lingering atmosphere of suspicion and resentment in some quarters.

Not everyone who broke with the militants is convinced that Afghan and foreign officials are serious about negotiating an end to the conflict. Compounded by an obvious concern for their own safety, they are now speaking with an anger not seen before.

Abdul Hakim Mujahid was the Taliban regime's representative at the United Nations. Also on the peace council, he blamed the government for the death of Rahmani, claiming it had failed to thoroughly investigate the case.

"Any person who is working for peace is under threat from different sides, not only from one side," he said.

Mujahid criticized the United States for not freeing the remaining Taliban prisoners at Guantanamo Bay, and for designating a militant faction known internationally as the Haqqani Network as a terrorist organization. He insisted that senior members of the Taliban were in favor of reconciliation and should not be isolated.

"The other type are inexperienced youths, the zealous ones," he said. "They are not counting [down] the years when the American forces will leave and they will capture the government, they are counting [down] the weeks and months."

Both Mujahid and Rohani were interviewed before Pakistan released a handful of Taliban detainees last month in an apparent effort to kick start talks. Since then, however, the Afghan government is reported to have executed a number of its own Taliban prisoners.

With all conventional foreign combat troops due to depart by the end of 2014, people here believe the Taliban's return to power is a genuine possibility.

Old rivals are re-arming in preparation for the battle ahead. Young educated Afghans who have grown accustomed to the relative freedom of life in urban centers during the last decade are now escaping abroad.

For others, this is a time of mixed emotions. Those who previously served with the Islamists realize they are under threat, but they still have the utmost respect for their former organization.

"The Taliban government was necessary because this is an Islamic nation and we needed everything it was implementing," said one former Taliban member, summing up the lingering reverence felt among of his colleagues.

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Child joins street singer, steals the show

London, Dec 16 : Parents always have extreme confidence in their kids' talents. But here's the surprise: The kid is good and actually outshines the singer in the video.

It's a mystery how this adorable child bundled up in a stroller ended up joining a street performer in a duet. But the toddler can belt out a tune and, thanks to the video filmed by Kamil Litwinowicz, is now catching the attention of the Web.

Someone, probably dad, is seen at the beginning of the clip positioning the stroller next to the singer, who is performing on the main square in Krakow, Poland. He then walks off camera to enjoy the show, which quickly becomes a duet—and a Web hit.

Even though the tyke doesn't know the words to the operatic melody—they come out as basically "goo goo ga ga"—the kid is in tune and even overshadows the professional.

The video of the child's musical stylings, posted on Dec. 2, have hit a high note, with more than 620,000 views on YouTube.

Next time we'd like to see this budding crooner team up with Justin Bieber.

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Loaded pistol found in package of frozen meat

Washington, Dec 16:UFOs aren't the only unexplained oddity happening in Roswell these days. A worker at an Albertsons grocery store in the New Mexico city found a loaded pistol inside a package of frozen meat.

So far, law enforcement officials tell local affiliate KRQE-TV that they have no idea where the gun came from. The Albertsons employee turned over the .38 Super, which was loaded with seven rounds of ammunition.

"I have personally never heard of this," Sgt. Jim Preston of the Roswell Police Department told the station.

Police say the frozen meat came from the Swift meatpacking plant in Greeley, Colo., and is dated June 8, 2011.

"We could speculate on a lot of things," Preston said. "It could have been someone just dropped it there, or it could have been something that someone put in there trying to hide it for 100 different reasons."

Both Colorado and New Mexico police say the gun has not been reported stolen. Unfortunately, the Albertsons employee wiped down the gun before handing it over, meaning there are no fingerprints or other evidence for police to collect in their investigation. Still, they are able to use the gun's serial number to track it to the last location from where it was sold.

"If we would have been notified while it was still in the box and no one would have touched it, there could have possibly been some forensic evidence that we could have actually looked into," Preston said.


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$700,000 in gold dust missing from Pfizer lab

New York, Dec 16: Police in Missouri are trying to determine if hundreds of thousands of dollars in gold dust missing from a Pfizer medical research lab was stolen or simply misplaced.

The St. Louis Post-Dispatch reports that police in Chesterfield began their investigation after the gold dust turned up missing during an annual inventory of the lab. Pfizer Inc. had purchased the gold dust for $700,000 in 2011 to be used for research.

And while small amounts of gold dust may technically be light, it's unlikely that a light breeze blew away the entire supply. The Dispatch notes that $700,000 in gold dust would weigh between 30 and 70 pounds.

"We're not even sure if they just didn't account for it and it was used naturally, or if it was stolen or misplaced," said police Capt. Steven Lewis. "Some of it is gone and some isn't."

Pfizer said it's cooperating with law enforcement on the investigation. "We are taking this matter very seriously and working closely with local law enforcement authorities," reads a statement from the company.

Interestingly, regardless of whether the gold dust was lost or stolen, the value of Pfizer's purchase has increased substantially over the past year.

"You can add at least $100,000 to the value of that from last year," said Gary Sturgill of the Gold Prospectors Association of America.

Pfizer did not specify what kind of research it was conducting on the dust, but gold is commonly used in a number of industries, including electronics and dentistry (the metal is used in creating crowns). A 2004 study looked into the possibility of using gold salts in the treatment of arthritis.

It also has several commercial manufacturing purposes, is sometimes used in automobiles and can even be turned into a clothing thread.

Last month, contractors found $300,000 in gold dust inside a California home where they were installing a new air-conditioning unit.

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Dow, S&P rise on jobs, but Apple bites Nasdaq again

New York, Dec 16 : The Dow and the S&P 500 advanced modestly, though another sell-off in Apple depressed technology shares and kept the Nasdaq negative, overshadowing a sharply better-than-expected jobs report.

Trading was light, continuing the week's trend of slight moves and anemic volume. The S&P 500 ended up a mere 0.1 percent for the week, following several volatile sessions that repeatedly pushed it in and out of positive territory. The benchmark index is just 3.8 percent below the 2012 intraday high of 1,474.51 reached in mid-September.

Equities opened higher after the non-farm payrolls report, which showed 146,000 jobs added in November, far more than had been expected, while the U.S. unemployment rate dropped to 7.7 percent. A sour reading on consumer sentiment caused an erosion of those gains, though markets rebounded going into the close.

The University of Michigan's consumer sentiment index for early December fell to its lowest level since August. Sentiment fell on growing concerns over the "fiscal cliff" debates in Washington, which have been a major factor preventing broader moves as well.

"We're not as concerned as we were a few months ago because of improvement like you can see in the employment number, but there's such a wild card over the cliff," said Bruce McCain, chief investment strategist at Key Private Bank in Cleveland, Ohio. "There are such concerns about what could happen that markets will be overhung until a resolution is more certain."

One of the biggest drags on the Nasdaq was Apple (AAPL) which fell 2.6 percent to $533.25, extending its losses for the week to 8.9 percent. This was the worst week for the stock since May 2010, and with the losses, the stock of the largest U.S. company by market value is now down 24.4 percent from an all-time intraday high reached in late September.

In the session, Apple's 50-day moving average fell to $599.52 - below its 200-day moving average at $601.38. The weakness drove the S&P information technology sector (.GSPT) lower. The index fell 0.6 percent and was the weakest of the S&P 500's 10 major industry sectors.

The Dow Jones industrial average (^DJI) gained 81.09 points, or 0.62 percent, to 13,155.13 at the close. The Standard & Poor's 500 Index (^GSPC) rose 4.13 points, or 0.29 percent, to 1,418.07. The Nasdaq Composite Index (^IXIC) slipped 11.23 points, or 0.38 percent, to close at 2,978.04.

For the week, the Nasdaq is down 1.1 percent, hurt largely by the decline in Apple.

The Dow, which does not count Apple as a component, rose 1 percent for its third straight week of gains. The S&P 500 is also up for three straight weeks, rising 4.3 percent over that period.

The equity market has regained most of the ground it lost following President Barack Obama's re-election as markets turned their focus to the coming "fiscal cliff." Market response to the macroeconomic data remained muted as negotiations continued to command investor attention.

U.S. House Speaker John Boehner said that talks this week with President Barack Obama produced no progress, and he renewed his demand that the president provide a new offer to avert the series of tax increases and spending cuts that are likely to hurt economic demand in 2013.

Material shares (.GSPM) were the strongest performers of the day, with that index up 0.8 percent. Freeport-McMoRan Copper & Gold Co (FCX) gained 2.9 percent to $31.70 while Dow Chemical (DOW) added 2.2 percent to $30.30.

Amarin Corp (AMRN) fell 18.9 percent to $9.69 after the biopharmaceutical company raised $100 million in financing to help it launch its heart drug, Vascepa, but disappointed investors, who had hoped for a sale or partnership.

CombiMatrix Corp (CBMX) shares more than quadrupled, soaring 336.6 percent to $8.60 after the company said two studies published in a medical journal favored technology it uses for prenatal diagnosis of genetic abnormalities over traditional technologies.

About 52 percent of shares listed on the New York Stock Exchange closed higher while slightly more than 50 percent of Nasdaq-listed stocks closed lower.

Volume was light, with about 5.47 billion shares changing hands on the New York Stock Exchange, the Nasdaq and NYSE MKT, below the daily average so far this year of about 6.48 billion shares.

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Former IndyMac officers found liable for $168 million in negligent loans

New York, Dec 16: Three former officers of IndyMac Bank FSB's homebuilder division were found liable by a jury for more than $168 million for negligently lending to developers who were unlikely to repay millions of dollars in loans.

The Federal Deposit Insurance Corp brought a civil lawsuit against the officers in 2010 in its capacity as receiver for the now-defunct IndyMac. The agency alleged that the officers of "significant departures from safe and sound banking practices" in an attempt to rev up IndyMac's loan production despite warnings about an imminent market decline.

Following a 16-day trial in California federal court, jurors found three former officers - Scott Van Dellen, Richard Koon and Kenneth Shellem - liable for negligence and breach of fiduciary duty in connection with 23 loans, according to the verdict sheet. Jurors found that all three men should pay $168.1 million in damages.

A fourth defendant, William Rothman, settled the claims against him in October for $4.75 million.

FDIC general counsel Richard Osterman said in a statement that the agency was pleased with the verdict. "While most of our cases have settled short of trial, we remain committed to pursuing actions where necessary to maximize recoveries and hold those responsible for losses to failed financial institutions accountable," he said.

Attorney Kirby Behre, who represented Shellem and Koon, called the verdict the "result of a deliberate effort by the government to scapegoat a few men for the impact that the unforeseen and unprecedented housing collapse in 2007 had at IndyMac and many, many other financial institutions."

California-based IndyMac, which specialized in a type of mortgage that often required minimal documentation from borrowers, was seized by banking regulators in July 2008 as the financial crisis gathered steam.

Its failure cost the FDIC, which stands behind bank deposits, an estimated $12.8 billion.

Lawyers for Van Dellen could not be immediately reached for comment. The case is FDIC v. Van Dellen et al, in the U.S. District Court for the Central District of California, no. 10-4915.

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Goldman Sachs fined $1.5 million for trading glitch

Washington, Dec 16 : Goldman Sachs Group Inc was fined $1.5 million to settle charges it failed to supervise its traders and allowing one futures dealer to hide billions in dollars from sight and causing a $118 million loss.

Ex-Goldman trader Matthew Marshall Taylor in 2007 camouflaged an $8.3 billion position, manually entering fake trades, the Commodity Futures Trading Commission (CFTC) said.

"Goldman failed to have policies or procedures reasonably designed to detect and prevent the manual entry of fabricated futures trades into its front office systems," the top U.S. derivatives regulator said.

"As a result, on seven trading days in November and December 2007, Taylor circumvented Goldman's risk management, compliance, and supervision systems," the CFTC said.

In a lawsuit in New York in November, the CFTC sought a $130,000 civil penalty against Taylor, who at the time was a vice president at the bank's Capital Structure Franchise Trading desk, and later went to work for Morgan Stanley.

Goldman Sachs took a $118 million loss in unwinding the position in e-mini S&P 500 futures contracts.

"Taylor's activity was flagged by our controls on December 14, with no impact to customer funds," Goldman Sachs said in an emailed statement. "Since these events, we have enhanced our controls. We're pleased to have settled this matter."

Taylor had established the position on December 13, 2007.

Bart Chilton, a Democrat and one the CFTC's commissioners, thought the penalty was too low.

"I believe that the monetary penalty should be significantly higher in order to represent a sufficient punishment, as well as to denote a meaningful deterrent to future illegal activity," Chilton said in a statement.

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US Air makes merger offer, AMR pilots approve labor deal

New York, Dec 16  : US Airways Group Inc has made a formal merger proposal to American Airlines parent AMR Corp and its creditors that could value the combined airline at around $8.5 billion, two people familiar with the matter said.

Details of the proposal emerged as American Airlines pilots voted to ratify a new union contract, ending a years-long labor dispute and stabilizing the carrier as it tries to emerge from bankruptcy.

Under an all-stock merger that US Airways proposed in mid-November at a meeting with AMR's unsecured creditors committee, AMR creditors would own 70 percent of the merged company and US Airways shareholders 30 percent, the people said.

US Airways and AMR are negotiating toward a potential merger agreement that the smaller rival hopes could come as soon as January, one of the people added, asking not to be named because the matter is not public.

The combined AMR and US Airways could have a value similar to Delta Air Lines Inc, which has a market capitalization of around $8.5 billion, the person said.

At the same time, AMR is still pursuing a plan to emerge from bankruptcy proceedings as an independent airline, which will be compared against the merits of a merger with US Airways, the people said.

The companies have yet to narrow differences on a number of significant issues before any deal could be agreed, including how much of the combined carrier each side should own, the people said.

AMR creditors think they should get an equity stake of closer to 80 percent in a merged entity, rather than the 70 percent proposed by US Airways, the people said. AMR and US Airways also disagree on potential cost and revenue benefits from a merger as well as labor integration challenges, they added.

In a note to American Airlines workers, AMR CEO Tom Horton said the company is weighing whether a merger could "create value for our owners and a positive outcome for our people and our customers. We expect to have a conclusion on this soon."

Representatives of US Airways and the creditors committee declined to comment. The Wall Street Journal reported details of US Airways' proposal.

The new labor contract, approved by nearly three-quarters of the AMR pilots who voted, gives the Allied Pilots' Association a 13.5 percent equity stake in AMR and offers what the union sees as a path to "industry-standard" pay, union spokesman Dennis Tajer said.

AMR filed for bankruptcy in November 2011, primarily due to high labor costs, and said it needed to cut those costs by $1 billion a year. It achieved concessions from its ground workers and flight attendants but remained at odds with pilots in bitter labor talks that date to 2006.

AMR creditors had deemed labor peace a major priority, saying uncertainty over contracts could make it difficult for creditors and potential investors to assess the company's post-bankruptcy viability.

The vote could be seen as addressing that concern and providing AMR a clearer path toward exiting Chapter 11.

The pilots had been working under strict labor terms imposed unilaterally by AMR as part of its bankruptcy process while negotiations dragged on. The pilots struck down a previous contract offer in August, which at the time AMR had framed as its "last, best" offer.

How the company will look when it exits bankruptcy is still unclear. The pilots' union says it has lost faith in AMR management, led by Horton, and strongly supports a US Airways takeover.

"This ratified agreement should not in any way be viewed as support for the American standalone plan or for this current management team," Tajer said. "This contract represents a bridge to a merger with US Airways."

At least one large group of bondholders, including JPMorgan Chase & Co, Pentwater Capital Management and York Capital Management, has expressed interest in providing an equity infusion to fund AMR as a standalone entity.

The group was strengthened recently when other significant stakeholders, including Marathon Asset Management, joined forces with it, according to court papers filed by the group said.

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Employment ducks Superstorm Sandy's punch

Washington, Dec 16 : Companies kept up their slow but steady hiring pace in November, defying predictions that Superstorm Sandy would deal a big blow to the labor market.

While the unemployment rate fell to a near four-year low of 7.7 percent, that was only because many Americans gave up the hunt for work, tempering the signal from the stronger-than-expected payrolls growth.

A big drop in consumer confidence in December, the largest fall in more than 1-1/2 years, also offered a cautionary note on the economy's health.

Non-farm employment expanded by 146,000 jobs last month after gaining 138,000 in October, the Labor Department said. The increase was well above the 93,000 expected on Wall Street.

"We are moving in a trend-like modest job-growth environment," said Michael Hanson, a senior economist at Bank of Bank of America Merrill Lynch in New York. "We really need to see payroll numbers break above 200,000 for a while to think we have a more sustained recovery under way."

The government said Sandy, which slammed the densely populated East Coast in late October, did not have a substantive impact on the data. Economists had thought it would, with some predicting it would cut up to 75,000 jobs off payrolls growth.

Nevertheless, the storm did hit the economy hard.

Sandy knocked retail sales and industrial output in October and led to a big spike in claims for jobless benefits, one of the reasons economists expected job growth to slow.

A Labor Department survey of households found 369,000 workers were unable to make it to work in the aftermath of the storm and a further 1.1 million ended up working only part time. However, the department still considered them employed.

The stronger-than-expected payrolls number helped to push down prices for U.S. Treasuries, but lifted the dollar against a basket of currencies. The Dow Jones industrial average and the Standard & Poor's 500 Index ended the session moderately higher, but a steep drop in Apple's stock once again forced the Nasdaq Composite Index to end the day in negative territory.

November's job gains left them just below the monthly average of 151,000 that has prevailed since January.

Economists consider that pace just enough to push the jobless rate lower over time. But they say roughly 200,000 to 250,000 jobs per month would be needed to make noticeable headway in absorbing the 22.7 million Americans who are either jobless or underemployed.

The 0.2 percentage point drop in the unemployment rate, which took it to its lowest level since December 2008, was due to a decrease in the size of the labor force, a suggestion that frustrated Americans were giving up the hunt for work.

The labor force participation rate, or the proportion of working-age Americans who have a job or are looking for one, fell back to near a 31-year low.

Heidi Shierholz, an economist at the Economic Policy Institute in Washington, said it could take more than 10 years for the unemployment rate to drop back to its pre-recession level of around 5 percent at the current pace of job growth.

Last month, the retail sector accounted for more than a third of jobs gains, which economists tied to a brisk start to the holiday shopping season. Still, private hiring slowed to 147,000 from 189,000 in October, pulled down by a sharp decline in construction employment and weak manufacturing payrolls.

Employment continues to be held back by fears the government may fail to prevent the $600 billion in automatic tax hikes and government spending cuts set to take hold at the start of next year. The debt crisis in Europe has also weighed.

Worries about this so-called fiscal cliff hit consumer sentiment in early December. The University of Michigan's preliminary confidence index plummeted 8.2 points to 74.5. It was the largest drop since March 2011.

"That confirms my belief that the only thing the economy has to fear is Washington itself," said Joel Naroff, chief economist at Naroff Economic Advisors in Holland, Pennsylvania.

"There is some real underlying strength in the economy as the November jobs numbers indicate, but it could be wiped out by the games being played by our political representatives."

With the labor market far from full health, Federal Reserve policymakers, who meet, look certain to keep U.S. monetary policy on its current ultra-easy course.

Economists said an anticipated tightening of fiscal policy next year, even if a deal is reached to avoid completely going over the fiscal cliff, provides ample reason for the U.S. central bank to maintain its stance.

The retail sector added 52,600 jobs last month after rising 50,900 in October. The pace of retail hiring over the last three months was the fastest since 1995.

There were also increases in information and temporary help hiring. But transport, financial, education and health services employment slowed. Manufacturing employment fell 7,000, marking the third month it has dropped this year.

Construction payrolls surprisingly tumbled 20,000, despite a surge in homebuilding, which is benefiting from the Fed's effort to hold borrowing costs down. Economists said they expect construction jobs to rise in the coming months as the housing recovery returns full swing.

Average hourly earnings increased 4 cents. In the 12 months through November, average hourly earnings are up just 1.7 percent, underscoring the trouble that workers are having keeping up with inflation.

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US authorities probe SAC for Weight Watchers

New York, Dec 16 : US authorities are investigating Steven A. Cohen's SAC Capital Advisors hedge fund for possible insider trading in the shares of the popular diet company Weight Watchers International Inc, according to people familiar with the matter.

The investigation focuses on trading in Weight Watchers shares in the first half of 2011, when SAC Capital had taken a sizeable position in the stock, and potentially could implicate the billionaire hedge fund manager, the sources said.

Regulatory filings show that Cohen's $14 billion fund briefly held 2.1 million shares in Weight Watchers during the period under scrutiny by authorities - at which time the diet company's stock price roughly doubled.

The inquiry is in its early stages and it is not clear whether anything improper was done either by SAC Capital or Cohen himself, said the people familiar with the matter, who requested anonymity. The trading in Weight Watchers would be permissible as long as it was based on fundamental research or derived from individuals who did not have access to non-public corporate information.

An SAC Capital spokesman said the firm was not aware of any investigation involving Weight Watchers. A spokeswoman for Manhattan U.S. Attorney Preet Bharara declined to comment. A spokesperson for Weight Watchers did not immediately respond to a request for comment.

The new line of pursuit ratchets up pressure on Cohen, 56, one of the hedge fund industry's most successful and best-known managers. The spotlight the probe casts on SAC Capital and Cohen could further rattle the hedge fund's investors, who account for roughly 40 percent of the firm's capital.

Two weeks ago, U.S. prosecutors charged a former SAC Capital employee, Mathew Martoma, with using inside information to generate profits and avoid losses totaling $276 million in shares of two drug stocks. The U.S. Securities and Exchange Commission also has formally warned SAC Capital that the firm could face civil charges.

A number of SAC's investors have said they have not made a decision on whether to redeem money from the firm. Investors have until mid-February to put in a redemption notice.

Martoma has not entered a plea but his lawyer has said he expects to be exonerated. SAC has declined to comment beyond saying, "Mr. Cohen and SAC are confident that they have acted appropriately."

Martoma is the seventh former SAC Capital employee to be charged or implicated by federal authorities for insider trading. The criminal complaint against Martoma, who last worked for CR Intrinsic, an affiliated fund of SAC Capital in 2010, for the first time alleges that Cohen personally approved the decision to sell-out of a big stake the hedge fund had in shares of Elan Corp and Wyeth, now part of Pfizer Inc.

Separately, U.S. authorities are also investigating SAC for suspicious trading in shares of biotech company InterMune Inc. in 2010, according to one of the people familiar with the probes. Officials at InterMune weren't immediately available for comment. The SAC spokesman declined to comment on the InterMune investigation.

Federal authorities have not charged Cohen, whose net worth is estimated by Forbes at about $8.8 billion as of September this year. The hedge fund manager has told his investors and 900 employees that neither he nor the firm has done anything improper in response to Martoma's arrest.

It's not clear what has prompted federal authorities to look into Stamford, Conn.-based SAC Capital's trading in shares of Weight Watchers. One of the people familiar with the investigation said authorities are looking at trading that both booked hefty profits and avoided losses for SAC Capital.

Over his 20 years in the business, Cohen has emerged as one of the pioneers of sophisticated trading. His funds, which charge some of the highest fees in the $2 trillion industry, has boasted an average annual return of 30 percent since launch in 1992.

This year, SAC Capital's main fund is up about 12 percent, compared to the industry average of just over 5 percent. SAC Capital's only down year was in 2008, when it lost 19 percent of its value.

Cohen has endured federal authorities looking into trading at his firm for about five years now. The investigation into SAC Capital ran parallel with the federal government's undercover investigation that led to the October 2009 arrest of Galleon founder Raj Rajaratnam, who was convicted by a federal jury on May 2011 on 14 counts of insider trading.

SAC Capital's big move into Weight Watcher's stock in early 2011 gained attention in part because it came at a time that the once-heavyset Cohen had lost about 20 pounds. (It's not clear if he used Weight Watchers.) The trader has said he lost the weight to help with a chronic bad back.

A first quarter 2011 regulatory filing for SAC Capital showed the firm had acquired 2.1 million shares of the stock. But by the end of the next quarter, a subsequent filing revealed the hedge fund had unloaded nearly all of those shares.

It is not uncommon for a rapid-fire trading firm like SAC Capital to move in and out stocks - even big positions. SAC Capital, in particular, is not known for holding stocks for a long time.

SAC Capital's trading strategy relies on analysts and portfolio managers gathering information about a company's prospects before making a trading decision. Cohen has told people privately he believes his firm has drawn unwanted scrutiny from the government because of its long history of success.

Cohen has become an avid art collector in recent years, with a number of Jeff Koons sculptures gracing the grounds of his 30-room mansion in Greenwich, Conn.

Cohen, who grew up on Long Island in Great Neck, New York, is also pursuing the kind of charitable legacy building done by other famous Wall Street money managers. In 2010, the North Shore-LIJ's pediatric hospital was renamed the Steven and Alexandra Cohen Children's Medical Center of New York, after Cohen and his second wife in recognition of their donations.

More recently, he took a minority ownership stake in the New York Mets baseball team after failing to win the rights to buy another team, the Los Angeles Dodgers.

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Pollution, encroachments mar Jhelum’s beauty at Bijbehara

Islamabad, Dec 16 : Failure of the authorities to take measures for conservation of river Jhelum here has pushed it on the verge of extinction.

 Considered to be lifeline of held Kashmir, the river is marred by extensive pollution and encroachments particularly in Islamabad and Pulwama.

 By virtue of the Water Resources Regulation Act, the Irrigation and Flood Control department entrusted with conservation of Jhelum has been vested with executive powers to act against encroachers. Ironically, the department has been acting as a mute spectator to the vandalization of the river.

 Many illegal constructions have come up on Jhelum banks near Khanabal bridge, Bijbehara, Sangam, Halmula, Awantipora, Kakpora, Samboora and Padhgampura.

 The locals accused the concerned officials of facilitating the encroachments. “Despite our reminders, the concerned authorities failed to act against the encroachers. Lackadaisical approach of the authorities has pushed the river on the verge of extinction,” said a group of locals of Bijbehara.

 Pointing towards some houses on river banks, the locals said till few decades ago the spot was an open expanse of land.

 “This was a beautiful spot… we used to watch crystal clear waters of Jhelum from here. People of the locality and adjoining areas used to organize picnics and functions there. In absence of any conservation measures, the river has been encroached and turned into a garbage dump,” said Ghulam Qadir of Bijbehara.

 The locals said the river banks have been turned into a junkyard with tons of polythene, cardboard, steel and other scavenged items dumped on it.

 Pungent smell has engulfed many localities along the Jhelum in Khanabal, Sangam, Awantipora and Kakpora as sewage of the illegal hutments directly flows into the river affecting its flora and fauna.

 “If government is serious to save Jhelum, it must take action against the encroachers and concerned officials who facilitated its vandalisation,” said Abdul Rehman, a resident of Kakpora.

 Environmentalists have expressed concern over Jhelum’s deteriorating condition. “Jhelum was the main source of drinking water for the Valley. The present rate of pollution from inflowing drains of its catchments and dumping of garbage, including non-bio-degradable items has rendered its waters unfit for human consumption,” they said

 They said dumping of large heaps of cow dung, waste of slaughter and tanning units on the slanting banks of Jhelum are washed into the river enriching its waters with harmful nutrients like nitrates, phosphates, sulphates and chlorides.

 “This has caused eutrophication of the river. Recently, Azolla, an obnoxious weed has been found in Jhelum, which is gradually chocking its tributaries. Beatification of Jhelum banks in Srinagar city is not enough. Government needs to work out a comprehensive action plan to restore Jhelum,” he added.

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Porcupines trigger panic in Lolab villages

Lolab, Dec 16 : The sudden presence of porcupines locally called ‘trunz’ in villages has triggered panic with residents forcing children to remain indoors since they fear they may attack them with quills.

 The inhabitants said that at least six to seven porcupines were found roaming in Maidanpora and Cheepora villages of Lolab.
 “They make sounds in the villages while dogs chase them and in retaliation they shoot quills at dogs,” said an eyewitness.
 These animals remain on prowl and children of the villages are hesitant to step out of their homes in the late and early hours due to fear of this rare species.

 A wildlife official said that the crested porcupine is one of the largest rodents and a new species in held Kashmir.

 The head is roundish and rather domed, with a blunt muzzle and small eyes and ears.

 The legs are short and sturdy, and each foot has five toes, all equipped with powerful claws.

 The porcupine is, of course, easily recognized by its most notable feature—its quills. Quill length on different parts of the body varies, from 1 inch up to 12 inches on the back.

 Usually the quills lie flat against the body, but if danger threatens, the porcupine raises and spreads them. Scales on quill tips lodge in the skin like fishhooks and are difficult to pull out. New quills grow in to replace lost ones.

 “The porcupine warns potential enemies of its defense system when alarmed. It will stamp its feet, click its teeth and growl or hiss while vibrating specialized quills that produce a characteristic rattle. If an enemy persists, the porcupine runs backward until it rams its attacker. The reverse charge is most effective because the hindquarters are the most heavily armed and the quills are directed to the rear.

When contacted wildlife warden occupied Kashmir Muhammad Maqbool Baba told Greater Kashmir  that the porcupine is not dangerous for humans. “There is no need to be panic. It shoots its quills in self defense when it is disturbed. People should not disturb these species unnecessarily”.

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Ire brewing against pesky power cuts

Srinagar, Dec 16 : With power situation worsening in held Kashmir, people took to roads in several parts of the summer capital here to protest against the erratic power supply amid biting cold conditions.

Anger is brewing across the Valley against the Power Development Department (PDD) for enforcing long and unscheduled power cuts.

PDD authorities said situation would not improve unless consumers cooperate to save energy.

Massive protests were held in different localities of downtown against the erratic power supply. Angry people disrupted traffic for long hours, shouting anti-government slogans.
 Residents of Nowpora, Eidgah, Sakidafar and Safakadal and its adjoining areas assembled outside mosques after prayers and staged demonstrations.

 “PDD is resorting 12 to 18 hours unscheduled power cuts,” said a local Muhammad Faheem Reshi of Nowapora.

 Traders from these localities said even though the marketplaces were metered, they were being subjected to erratic power cuts.
 Over more than a month the power situation in held Kashmir has remained grim forcing people in different districts to stage anti-government and anti-PDD demonstrations.

 Situation was alike in metered and unmetered areas, both in rural and urban held Kashmir.

 People in Baramulla, Pulwama, Budgam and other districts complained of severe and pesky power cuts.

 “We are witnessing cuts after every hour. The power plays hide and seek during evening and night,” said Mushtaq Ahmad of Baramulla.

 In Wahibugh village of Pulwama district in occupied Kashmir people accused PDD of violating its own power schedule.
 “The entire village is without electricity for past more than a month. Nobody is listening to our pleas,” residents told Greater Kashmir.

 Elsewhere in the district the power scenario is worsening. Last month there were several protests on power shortage in the district forcing the authorities to enforce severe restrictions to bring situation under control.

 “The situation is leading in the same direction again,” residents told Greater Kashmir.

Reports reaching from other districts said the consumers are all fire against PDD for not sticking to the announced power curtailment schedule.

According to them, there are frequent cuts in power supply after almost every two to three hours and mostly there is complete black-out in the mornings and evenings.

 “For two consecutive nights, there was no electricity in our locality,” said Muzamil Ahmad of Budgam.

 He said apart from newly announced curtailment schedule they were witnessing distress power cuts quite often.

 Chief Engineer PDD (MNRE) Muzaffar Ahmad Mattoo said the department was supplying 11 percent more power supply compared to last year.

 “If consumers don’t comply they can’t expect situation to improve,” Mattoo said.

Instead of load agreement of 800 MW, the PDD is supplying 1000 MW to 1100

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Neuroscientists find greater complexity in how we perceive motion

Islamabad, Dec 16 : How we perceive motion is a significantly more complex process than previously thought, researchers at New York University's Center for Neural Science, Stanford University and the University of Washington have found.

Their results, which appear in the journal Current Biology, show that the relationship between the brain and visual perception varies, depending on the type of motion we are viewing.

Neuroscientists have posited that our perception of motion is derived from a relatively simple process -- that is, it relies on a single cortical area in the brain. This region, MT, has a well-established role in processing information about moving visual objects. However, less clear is the scope of its influence -- does it dictate our ability to detect all types of motion or is its function more limited or, perhaps, more nuanced?

With this in mind, the NYU-led team examined how the visual system processes two types of motion: local motion, which involves tracking signals that fall within a small retinal area, and global motion, in which several movements are integrated over larger areas. Specifically, they monitored activity in MT to determine if its neurons were active in response to both types of motion.

In normal scenes, local and global motion are normally in agreement. Here, the researchers conducted experiments in which macaque monkey and human subjects watched specially crafted patterns in which the local and global motion information were in competition. The researchers made physiological and perceptual measurements of brain activity.

Their results showed notable differences in how the visual system functions in processing local and global motion. They found that neuronal activity in MT was controlled by the local motion in the stimulus and unaffected by global motion. Under the same conditions, though, humans' perceptual responses were dominated by global motion, which means that their responses were determined by a second brain mechanism that encodes global motion, whose nature is currently unknown.

J. Anthony Movshon, director of the Center for Neural Science and the paper's senior author, says that the work opens a window for further study: "While comprehending the specifics of this process requires more work, it's clear that motion perception does not depend on a single cortical brain area, but, rather, reflects the action and interaction of multiple mechanisms. We now have new tools to help us identify and study brain systems that are currently unknown."

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Novel way to improve outcomes from umbilical cord blood transplants

Islamabad, Dec 16 : A new method to boost the number of immune cells in umbilical cord blood prior to cord blood transplants for cancer patients appears to lead to a quicker rebuilding of a new immune system in the patient's body than with a conventional cord blood transplant procedure, according to new research from the Perelman School of Medicine at the University of Pennsylvania that is being presented at the 53rd American Society of Hematology Annual Meeting.

The technique also paves the way for the development of a way to provide these transplant patients with a salvage therapy from the same donor if their cancer returns.
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"Umbilical cord blood is a potential cancer therapy that is thrown away every day," said lead author Elizabeth Hexner, MD, an assistant professor in the division of Hematology-Oncology in Penn's Abramson Cancer Center. "Our findings point to a promising method to make better use of scarce cord blood resources available through public banks, which offer the only transplant option for patients who have no suitably matched blood or bone marrow donor prospects."

Though cord blood has a larger number of stem cells by volume than blood or marrow from living donors, the actual amount of blood available per cord is smaller -- containing about one tenth the number of cells collected from living donors. That deficit typically leads to a slower rebuilding of a sick patient's new immune system following transplant, leaving patients vulnerable to severe, even life-threatening infections. On the other hand, because immune cells in cord blood are less developed and have not been fully "educated" to attack perceived invaders in the body, patients who undergo cord blood transplants are less likely to suffer graft-versus-host disease (GVHD) -- a common, dangerous complication in which the new cells assault healthy organs like the liver and skin -- doctors say that improvements to the transplant procedure hold great potential.

The procedure used in the Penn trial, involving four patients, began with cord blood donations that had been separated into two parts -- typically an 80 percent fraction and a 20 percent fraction -- prior to freezing.

Then, the team thawed the smaller fraction two weeks prior to transplant, activated and grew the number of donated T cells -- which are a key driver for the process that recovers transplant patients' immune system and play a role in fighting infections -- using the co-stimulatory compounds CD3 and CD28 in Penn's Clinical Cell and Vaccine Production Facility. Following a chemotherapy and radiation regimen to destroy patients' remaining cancer cells and the administration of immunosuppression drugs to prevent rejection of the donor cells, patients then received the thawed, larger fraction of the cord blood first (a standard, single cord blood transplant). An infusion of the newly activated and expanded T cells followed, with a portion of those cells being reserved and frozen for potential future use as immunotherapy in the event of a cancer relapse or transplant failure.

"Donor lymphocyte infusions (DLI) are frequently given to patients who need them following stem cell transplants from living donors, but until now, we have been unable to offer this therapy to cord blood transplant patients because the source of their cells is used up at the time of transplant," Hexner says. "Our results show that we are able to grow sufficient numbers of T cells to be available both for that use as well as to buoy the number of cells that patients receive during the transplant itself, which seems to have helped their immune systems come back online more quickly than is typically seen in umbilical cord blood transplants."

Three of the patients enrolled on the study experienced relatively early neutrophil engraftment -- the point at which these critical infection fighting cells in our body reach 500 per microliter. This milestone is important because above this threshold, the risk of life-threatening infections is drastically lower. For these three patients, engraftment was achieved on days 12, 20, and 17 post-transplant. This was approximately half the time this process has historically taken with this type of transplant, substantially narrowing the window in which patients have the greatest risk of death from transplant complications.

Research has shown that using two cords per transplant can also speed this process, but that tactic also doubles the cost of the procedure, to more than $60,000. The fourth trial patient's umbilical cord blood graft failed, and they were subsequently treated with another stem cell transplant. There were no infusion-related adverse events observed during the trial, and three of the four expansion samples yielded enough cells for future immunotherapeutic DLI use. Next, the team hopes to test the optimal expanded T cell dose necessary for speeding the process of immune recovery and develop a method to perform DLI after transplant.

Though the new research paves the way for improvements in the use of existing cord blood resources to improve transplant outcomes, the Penn team says their work also sheds light on the need to buoy the number of public cord blood banks through which new parents can opt to donate their newborns' cord blood for use treating sick patients. Commercial, private cord blood banks have proliferated in the United States in recent years, despite a lack of evidence proving the utility of this so-called "biological insurance" and statements from the American Academy of Pediatrics and other groups discouraging new parents from paying for the service.

Since cord blood stored in public banks is already frozen and awaiting use, it offers a less labor intensive, quicker way to match patients for transplant than the two to three month timeframe for locating and obtaining cells from a matching unrelated donor through the National Marrow Donor Program. Blood stored in private banks, however, is not available for treatment of unrelated donors for whom a living blood or marrow donor cannot be located.

"In many parts of the country, even families who want to donate their infant's cord blood for care of unrelated sick patients are not able to do so because no public bank exists in their area," Hexner says. "Greater investment in public banks and more opportunities for parents to donate to these banks are a necessary component of improving care for patients with blood cancers."

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Massive DNA search uncovers new mutations driving blood cancer

Islamabad, Dec 16: The most comprehensive search to date of DNA abnormalities in chronic lymphocytic leukemia (CLL) has unearthed several new altered genes that drive this common blood cancer, a finding that could potentially help doctors predict whether an individual patient's disease will progress rapidly or remain indolent for years, say scientists from Dana-Farber Cancer Institute and the Broad Institute.

Using powerful "next-generation" DNA sequencing, the teams identified nine frequently mutated genes across 91 patients. Catherine J. Wu, MD, of Dana-Farber, a co-senior author of the report, says five of the mutated genes are implicated in CLL for the first time.

Wu says that mutations in one of the new genes, SF3B1, interfere with gene splicing, or "editing" of RNA messages that form a genetic template the cell uses to build a specified protein. "We have identified a new cancer pathway -- aberrant RNA splicing -- that has been underappreciated," says Wu, a researcher in Dana-Farber's Cancer Vaccine Center.

An advanced online publication has been scheduled for Dec. 12 by the New England Journal of Medicine, to coincide with a presentation of the results (abstract 463) at the American Society of Hematology's 2011 annual meeting on  Dec. 12 at 10:30 a.m. PST.

The study's other two co-senior authors are Jennifer Brown, MD, PhD, of Dana-Farber and Brigham and Women's Hospital, and Gad Getz, PhD, of the Broad Institute, where the sequencing search was carried out.

CLL is the most common form of leukemia. The American Cancer Society expects it will be diagnosed in 14,570 patients in 2011, and projects 4,380 deaths. The behavior of the disease differs widely among patients. About half the time, CLL is aggressive, worsening steadily and rapidly, often with fatal outcomes. In many other patients, the leukemia is said to be "indolent," causing few symptoms for years or even decades. Doctors often choose not to treat the indolent form until symptoms become life-threatening.

Physicians have only a limited set of markers to predict the course of CLL in an individual, such as the presence of certain types of chromosome damage in the cancer cells, which are associated with more aggressive disease. Previous searches for predictive genetic clues spotted only a small number of "driver" mutations, but those hunts were limited in their power by the small number of tumor samples in the study.

The latest search harnessed Illumina sequencing technology at the Broad Institute to sequence leukemia and matched normal DNA samples from 91 patients with CLL, looking for frequently mutated genes in the tumors. They sequenced the entire genome in three patient samples, and only the protein-coding genes, collectively termed the "exome," in the other 88 patients.

The search turned up nine genes frequently mutated in the CLL samples, and these fell into five pathways regulating DNA damage repair, cell-cycle control, Notch signaling, inflammation, and RNA splicing/processing. Two had previously been associated with CLL and cancer in general. Another two mutations -- MYD88 and NOTCH1 -- were implicated in leukemia this year (2011). The remaining five, now identified for the first time as culprits in CLL, are SF3B1, FBXW7,

The SF3B1 gene was the second most commonly mutated gene, being found abnormal in 14 of the 91 leukemia DNA samples. The gene's full name is Splicing Factor 3b, subunit 1, and the protein it makes is part of the "spliceosome" -- a collection of proteins that govern the splicing out of extraneous RNA molecules ("introns") to create the RNA message ("exons"), or molecular recipe, from which the cell manufactures proteins for the body.

"Defects in splicing have not previously been implicated in the biology of CLL," the researchers wrote.

The researchers checked to see whether CLL samples that contained the mutated genes also had specific deletions in chromosomes (the DNA structures that carry genes) previously known to signal a poor outlook in patients. They found that, indeed, the SF3B1 gene was often found in tandem with a particular chromosomal abnormality, consistent with a more aggressive form of CLL.

However, independent of the presence of the chromosomal deletion, the study revealed that a mutated SF3B1 gene by itself was a red flag for an aggressive case of CLL; patients harboring the mutant SF3B1 gene were more likely to need treatment sooner than individuals lacking the gene. Wu said that that the gene alteration might serve as a biomarker. Since these patients have more aggressive disease, knowledge of the presence of the gene alteration might prompt physicians early on to consider alternatives to conventional chemotherapy, such as earlier use of stem cell transplants to quell the disease.

The researchers said the study findings show the value of large-scale genome searches in elucidating cancers. The numerous genetic flaws uncovered by the search could not only aid in the prediction of disease course, they said, but also offer clues to the biological underpinnings of CLL, paving the way for novel targeted treatments.

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Cricket to become part of the curriculum in Afghanistan

Kabul, Dec 15 : Cricket was one of the few sports in Afghanistan to survive the rule of the Taliban. Now, the wildly popular sporting import is poised to leave the playground and enter the classroom.

Afghanistan's Education Ministry is teaming up with the country's Cricket Board (ACB) to make cricket a compulsory class in Afghan schools as early as January.

According to the board's chief executive officer, Bashir Stanikzai, the idea is to help develop the sport in Afghanistan, spot talent, and turn the country into a force in the international cricketing arena.

"We want to develop cricket in a proper way, and schools will be a big project," he says. "If we succeed in developing cricket in schools, we are quite sure that we will get good players in the country. And it will have a social value as well, especially for those who love this game but don't get a chance to play."

Cricket came into its own only recently after it found acceptance under the hard-line Islamist regime. After the Taliban's fall in 2001 the sport flourished when the children of Afghan refugees returned to the country after learning to play cricket in neighboring Pakistan.

Since the national cricket squad was first formed in 2001, Afghanistan has shown that it has the potential to become a major player. In 2010, it secured qualification to the prestigious 2010 World Twenty20 competition, and is ranked among the world's top teams in that category.

Now, there is even talk that Afghanistan's cricketers could soon achieve test-playing status.

Although Afghanistan has not yet established a national cricket league, it regularly organizes domestic tournaments among the country's numerous clubs. The matches usually attract a full house of spectators, many of whom regard cricket players as national heroes and children's idols.

A recent nationwide survey indicated that nearly 75 percent of respondents consider cricket their favorite sport. Many of those questioned supported the idea of cricket being taught in schools.

In October, the board organized its first month-long training classes for potential cricket instructors and similar trainings for coaches and umpires are due to start on December 15.

"We are sending cricket kits for students that consist of plastic bats and balls, and other cricket equipment especially made for children," Stanikzai says.

Some of the country's top professionals are willing to lend a helping hand. Noorulhaq Malekzai, the captain of the Kabul-based Al-Masafi team, says he "would be more than happy" to assist the coaches.

Malekzai, a batsman who has represented his country in numerous international tournaments, believes officials "should not wait until all conditions are perfect to launch their plan."

"If there is a will to play, you can play cricket with the most basic equipment," he says. "As they say, 'just do it.'"

"There are so many children eager to play cricket," Malekzai adds. "You can see them playing in the streets, Many schools have small sports grounds. In the beginning, a pair of bats, a pair of balls, a pair of leg pads, and uniforms should be enough for an entire team of players. Of course, it's a far cry from international standards, but it is just enough to start professional careers in cricket."

Officials have yet to work out the details, such as what age group they should target, and how many hours a week the children should be taught cricket during physical education classes.

The ACB and the Education Ministry are expected to finalize arrangements "within days" before starting the first cricket lessons at several schools across five provinces in January 2013.

Kabul, Kandahar, Khost, Konduz, and Nangarhar provinces have been chosen due to their relatively developed cricket infrastructure. By the end of 2013, the project is expected to expand into six more provinces.

"We hope these schools will be a success story and serve as a role model to the rest of the country," Stanikzai says.

Fitratullah, a young boy who like many Afghans goes by one name, looks forward to that day. But for now he and his friends are honing their skills with a homemade bat on a dusty road in the eastern town of Jalalabad.

"We have only two special cricket academies in the province and they don't have space for everyone and besides they charge money," Fitratullah says. "If cricket becomes a school subject for free, it would be like a dream come true for many kids."

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Kabul's roads, paved with good intentions

Kabul, Dec 15: Sometimes, you don't have to go far to find a story. For the past few months, just stepping outside NPR's Kabul office has been a drama.

The neighborhood is in the midst of a major road and sewer renovation project. It's just one of many such projects that is badly needed in Kabul and elsewhere in the country.

But as is often the case, the pace and quality of the work has been uneven. And residents aren't so sure whether the final product will be worth the months of gridlock, power outages and business interruption.

The street outside of our office is complete dirt. It's rough and uneven, with huge craters and giant piles of boulders and rubble. It's hard to imagine how this could be a planned construction project — and this is one of dozens of streets in the neighborhood where this work has been going on, causing massive disruptions to people, to businesses and to daily life in this area.

The Sufi Restaurant is one of the businesses being affected. The renowned establishment serves traditional Afghan food to everyone from diplomats to development workers.

Bismillah, the restaurant's manager, says business is down about 50 percent compared with last year.

"Foreigners come here and see there is no parking area, so they give up and leave," he says.

Bismillah says he's had to lay off staff.

"We've appealed to many government departments, but no one listens to us," he says.

Sayed Nezamuddin Wahdat is the head of Kabul's 10th District, where this work is taking place. He says it's part of a citywide project to pave more than 60 miles of roads and renovate the fetid sewage trenches. Wahdat believes the project is going much better than past projects. He estimates 80 percent of the work is "going well."

"Most of the problems are caused by the contractors," he adds.

Wahdat says the city will fine the contractors if they do not complete the work properly and on time — by the end of December.

Yet one of the main contractors, UBCC, says that deadline will not be met. The company says the delays were unavoidable. Control and coordination among the four different contractors has been a problem. Often multiple streets are simultaneously shut down, hence the paralyzing traffic, even by Kabul standards.

To make matters worse, people in the neighborhood say no one from the government or the project has spoken to them about what streets would be torn up and when.

Yama Torabi is director of Integrity Watch Afghanistan, a nongovernmental transparency and accountability group.

"They have been able to do this main road, which is in front of the attorney general's office, in about a month or even less," Torabi says. "But then why is it that this road is taking four months?"

He says he does think it will be a huge improvement when it's done, and by all accounts, the quality of the work is far better than past paving projects that often crumble after one winter. But Torabi also says this area is only getting renovated because it's a wealthy neighborhood.

"We have a long way ahead of us, because 90 percent of the roads in Kabul are just not paved," he says.

At the rate things are going, many of the streets in our neighborhood aren't going to be paved anytime soon, either.

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Afghanistan's competitive pilgrims

Kabul, Dec 15 : In Afghanistan, as in other Muslim countries, pilgrims returning from the annual Hajj are greeted with open arms – but here they are expected to reciprocate with lavish entertainment that some view as inappropriate.

In recent weeks, Afghans have been arriving home after joining the Hajj, the pilgrimage to Mecca in Saudi Arabia, which this year took place in October.

Performing the Hajj is one of five central duties for Muslims who are able and can afford to go. About 30,000 Afghans make the trip in the course of a year, and for many the expense makes it a once-in-a-lifetime experience.

On their return, the pilgrims or “hajjis” are met by friends and relatives, but custom dictates that they spend the next few weeks receiving guests, hosting feasts and handing out gifts.

Some people regret that instead of marking an act of piety, the celebrations have become a form of ostentation.

Hajji Mohammad Yaqub, 60, says that since returning to his home in Nangarhar province in eastern Afghanistan, he has spent 6,000 US dollars on entertaining.

"I had to do it,” he said. “I would have spent the money whether I liked it or not, because it’s a matter of your cousins and the village. People would laugh at you if you didn’t bring them presents, arrange free lunches, and play host to people for a month. It’s tradition.

Yaqub acknowledged that the costs of putting on a good show mounted up.

“The cost of the Hajj plus the gifts, lunches, and hospitality can add up to 12,000 or 13,000 dollars, and it’s very hard for poor people like us to earn that amount of money,” he said. “But what else can we do? We have to find it."

Zainaba, a pupil at Bibi Hawa High School in the provincial centre Jalalabad, recalled what happened when a hajji returned to her neighbourhood.

“Dishes of food were cooked in the alley for several days, and people would come for lunch. It created problems for all the neighbours – women and children weren’t able to get through,” she said. “Going on the Hajj is an obligation, but people have turned tradition into an obligation that they place on themselves."

Families try to outdo one another when they go to meet the returning pilgrims, with as large a convoy of highly-decorated cars as they can get hold of.

Lal Mir, a resident of Nangarhar’s Batikot district, has lined up eight cars to welcome his father back, twice as many as were there for his cousin last year.

As he decked out his Toyota Corolla with plastic flowers, he said the convoy was a matter of pride.

"It’s a great source of happiness,” he explained. “This is what people earn money for. This is what people work for, so that they can walk tall among cousins and friends."

On their way back with the hajji, the cars often race each other, and accidents are not uncommon.

Shawali, a student of law and political science at Jalalabad’s Ariana University, recalled a trip he took in one of these convoys.

“There were seven or eight cars, and they kept overtaking each other along the way. Suddenly there was a car in front of us – our driver tried to swerve but he had an accident and the car crashed. My head and leg were injured. There were five passengers in our car and all of us were as good as dead," he said.

There are other risks too, given Afghanistan’s dangerous security environment. On November 29, a roadside bomb killed ten civilians, including a woman and five children, in Uruzgan province. The party was travelling to visit recently-returned Hajjis.

The head of the Shariah law faculty at Nangarhar University, Sayed Ahmad Fatemi said the competitive show of wealth was contrary to the spirit of Islam.

"In the next world, people will be asked about how they earned their money and how they spent it. Man is not free to make and spend money [at will] – people should spend neither so little nor so much that it harms themselves and society,” he said.

Nabi Basirat, who lectures in law and political science at Nangarhar university, said it was certainly permissible to bring back gifts for friends, but other customs like the feasts and convoys of decorated cars were not in keeping with Islam, as well as being bad for Afghan society given the state of the economy.

Abdul Qayum Mashwani, a member of Afghanistan’s Academy of Sciences, interviewed while attending a lunch laid on by a hajji, said, “These negative traditions place an economic burden on people, and prevent them from performing the central obligation [Hajj]. I know many people who have failed to perform the Hajj because of these customs."

Mashwani said that if he went on the Hajj himself, he would not say anything, and would just tell friends he was going on a trip.

Nangarhar resident Fatema agreed that the post-Hajj festivities were not grounded in religion.

“A friend of mine returned from Hajj a few days ago, but I haven’t been to see her yet – it would take up her time and be a bother for me,” she said.

People who are in a position to get the money together for the Hajj journey are often put off by the thought of the costs they would have to bear afterwards.

Moalem Mohammad Ghani, a shopkeeper in Mehtarlam, a town in Laghman province just north of Nangarhar, is among them.

"I can afford to carry out the Hajj obligation, but I can’t afford the other things that people have made into obligations, like bringing back gifts, prayer cloths and clothing, and hosting lunches,” he said. “More money is spent on these things than on the Hajj itself. And if you don’t do them, people will speak ill of you."


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Senators to screen 'Lincoln', seek a waiver for popcorn

Washington, Dec 15: As lawmakers struggle to solve the fiscal cliff, they're also struggling for the right to snack on movie night.

Senate Majority Leader Harry Reid, D-Nev., will make a formal appeal to the Senate Rules Committee in order to allow popcorn into the Senate's special screening of the new movie "Lincoln" in the Capitol Complex.

The screening, for all Senators and their spouses, will take place in the Capitol Visitors Center.

Since food is not allowed in the room, the Majority Leader's office must get a special waiver to allow for it.

A Senate aide says Reid's office is currently going through the process of getting approval -because even Senators need their movie snacks.

President Obama held a private screening of the movie at the White House last month.

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New Fantasyland officially opens in Orlando

Lake Buena Vista, Dec 15 : Derrick Weitlich and his friend Leslie Martinez arrived at the Magic Kingdom, wanting to be among the first to visit the park's New Fantasyland.

Getting up early was worth it, said these Melbourne, Fla., Disney fans, who estimated that they have visited the park some 180 times.

"I love Beauty and the Beast," said Martinez, while standing in front of the new Gaston's Tavern restaurant. "And I'm very picky when it comes to details about Beauty and the Beast."

Martinez and Weitlich weren't disappointed. From the antlers lining the walls in the tavern to the animatronic Ariel in the Under the Sea-Journey of the Little Mermaid ride, they were impressed with the New Fantasyland.

It's the largest expansion project in the park's 41-year history. The new spaces are built on what was once the site of the 20,000 Leagues Under the Sea experience, and the expansion doubles the size of the original Fantasyland. The central Florida theme park near Orlando is blending classic Disney characters (like Dumbo, the flying elephant) and newer, popular hits (like "The Little Mermaid") with the multimillion dollar expansion.

"It's really about immersing people in a number of stories, characters and music that they love," said Walt Disney Parks and Resorts Chairman Tom Staggs.

New Fantasyland sits just past Cinderella Castle, with two sections: Enchanted Forest, where visitors will find Belle from "Beauty and the Beast" and Ariel from "The Little Mermaid," and Storybook Circus, which is inspired by the Disney film "Dumbo."

Among the highlights: a ride called Under the Sea-Journey of the Little Mermaid, which tells Ariel's story, and Enchanted Tales With Belle, a walk-through experience that features a magical mirror and costumed characters.

Staggs said that the expansion allows families to "be a little more relaxed" while in the park, calling the spaces "more enjoyable."

The grand opening happened twice: once for media and bloggers in front of Gaston's Tavern and then again on the steps of Cinderella Castle, with cheering park visitors. Staggs was joined by actress Ginnifer Goodwin, singer Jordin Sparks and, of course, Mickey Mouse. Sparks sang a medley of songs from Disney movies.

Two of New Fantasyland's highlights have yet to open. A ride called Seven Dwarfs Mine Train is still under construction, as is Princess Fairytale Hall — where guests can go to meet all of their favorite Disney princesses at once. Disney officials said the princess experience will open next year and the ride is expected to open in 2014.

For Disney traditionalists, never fear: Many of the park's longstanding beloved attractions like Cinderella Castle, and rides based on "It's a Small World" and "The Many Adventures of Winnie the Pooh" remain open.

Be Our Guest Restaurant is new, and offers a different Disney concept. Folks who eat lunch will be served at the counter, while dinner guests will be served tableside. It will also serve wine and beer with dinner, which is the first time alcohol is being sold at the Magic Kingdom. The meals at Be Our Guest are French-themed.

Some old favorites have been improved. An additional Dumbo ride was added — one Dumbo carousel goes clockwise, the other counter-clockwise — two castles were built and the Barnstormer rollercoaster was remodeled. Other areas were spruced up and redecorated.

"I think they did the themes so well, the transitions from one area to another," said Weitlich, who is 31. He and Martinez, who is 29, come to the park at least twice a month.

They bought T-shirts that said "A Brand New Happily Ever After," posed for photos and drank LeFou's Brew, a sweet drink based on apple juice and toasted marshmallows. The pair said they were going to get to know New Fantasyland just like the rest of the park.

"For not being cast members, we're pretty good," said Martinez.

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Marijuana goes legal in Washington state amid mixed messages

Seattle, Dec 15 : Hundreds of marijuana enthusiasts huddled near Seattle's famed Space Needle tower with pipes, bongs and hand-rolled joints to celebrate Washington's new status as the first state in the nation to legalize pot for adult recreational use.

The public gathering at the downtown Seattle Center, like a smaller turnout at a nearby spot hours earlier, defied a key provision of the state's landmark marijuana law, which allows possession of small amounts of cannabis but forbids users from lighting up outside the privacy of their homes.

Police kept their distance from both gatherings, underscoring mixed law enforcement messages about the new statute, known by its ballot designation as Initiative 502. The measure took effect.

Seattle's city attorney issued a stern warning that public pot puffing would not be tolerated and that violators faced citations with $100 fines.

But the Seattle Police Department said its officers had been directed to limit any enforcement actions related to Initiative 502 to verbal warnings only, at least for now.

The new law, passed by voters last month in a move that could set the state up for a showdown with the federal government, removes criminal sanctions for anyone 21 or older possessing 1 ounce (28.5 grams) or less of pot for personal use.

Colorado voters likewise chose to legalize pot for personal recreational use, but that measure is not due to take effect until next month. Both states are among 18 that have already removed criminal sanctions for medical use of marijuana.

The Washington law also legalizes possession of up to 16 ounces (0.45 kg) of solid cannabis-infused goods - such as brownies - and up to 72 ounces (2.4 kg) of weed in liquid form.

But driving under the influence of cannabis or imbibing in public places where the consumption of alcohol is already banned remain illegal.

The new law ultimately will permit cannabis to be legally sold and taxed at state-licensed stores in a system to be modeled after those in many states for alcohol sales. The state Liquor Control Board, along with agriculture and public health officials, have until next December to set up such a system.

For now, it remains a crime to sell, cultivate or even share one's own stash, even though the law allows individuals to purchase a limited amount for personal possession.

Ironically, the first known court challenge of the law came from a medical marijuana patient in Olympia, who filed suit last week seeking to block enforcement of a new standard for marijuana impairment while driving, similar to the blood-alcohol standard for drunken driving.

The plaintiff, Arthur West, says the new legal limit - 5 nanograms per milliliter of blood of THC, pot's active ingredient - would unfairly subject him to prosecution for a THC level at which he routinely drives without impairment. A hearing on his request for an injunction.

Little if any of the law's fine points seemed to matter to the mellow group of about 300 people - from college-age tokers to middle-aged Baby Boomers - who assembled at the Seattle Center fountain, a short distance from the Space Needle.

Convivial laughter, laid-back conversation and occasional coughing filled the air as the pungent smell of marijuana wafted through the crowd, many wearing sweatshirt hoodies to ward off the chill, on a cold, crisp evening.

Carrying a sign, "marijuana is safer than alcohol," Jared Allaway, 30, described the night as "iconic."

"Seattle's always been friendly to cannabis," Allaway said. "Hopefully this will spread to eastern Washington. You get outside of Seattle, it's a different world."

Seated in a wheelchair that sported a "Goddess" sticker, medical marijuana patient Penny Simons, 52, said she traveled with friends from Renton, Washington, south of Seattle, to attend the smoke-in.

"It's history," she said. "I've been thinking about the people across the country who are jailed for this. It's nice to see things change."

A smaller crowd of about 100 pot-smoking celebrants had assembled about 19 hours earlier nearby for a count-down to the law taking effect at the stroke of midnight, blaring the music of reggae legend Bob Marley from loudspeakers.

Both gatherings were peaceful, with no reports of arrests.


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Traders are absolutely prepared to crush stocks if fiscal cliff is unresolved: Colas

New York, Dec 15: We call it the fiscal cliff, but really it's a $5 trillion game of chicken, and neither side appears to be budging.

The White House is ''absolutely prepared" to allow economically ruinous tax increases and budget cuts to take place on January 1, while Republican anti-tax stalwart Grover Norquist now thinks the cliff dive is inevitable.

While newsrooms across the country are consumed with the minute-to-minute developments, Wall Street has remained oddly calm and is sticking with its consensus that a deal will ultimately get done.

"Wall Street understands what negotiations look like," says Nick Colas, chief market strategist at ConvergEx Group, who predicts the wrangling has to go down to the final hours, even though the stakes are enormous. "There's nothing else that matters nearly as much. This is, in fact, a critical issue. It is the difference between the potential for expansion, economically, next year and a sure recession."

While the tone and tenor of the talks appears to be worsening and the likelihood of a deal seems to be contracting with each passing day, Colas is not all that worried yet and says it's just part of the process. "You've got to make your opponent think you're crazy enough to do the unexpected," he says.

That's not to say investors don't care. In fact, Colas thinks the markets will show lawmakers just how much they really do care in a matter of days. "Unfortunately, what happens is Wall Street usually has to put a warning shot across the bow of Congress and the President in order to get things done. So that will probably happen next week," Colas predicts.If that happens, the dynamics of December could make for an outsized sell-off, Colas explains, since there's not a lot of volume and people are either in vacation mode or heading out of town. "Decembers are really a bad time to have a large, exogenous event like this kind of failure," he says, adding that any type of shock is going to have a "disproportionate effect." Which, if you think about it, might just be what's needed to break the impasse.

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T-Mobile USA plans to ditch phone subsidies, sell iPhone in 2013

New York, Dec 15: T-Mobile USA said it planned to stop subsidizing smartphones, the first major U.S. carrier to do so, in a move it hopes will cut costs and woo customers frustrated with restrictions on upgrades in longer-term contracts.

T-Mobile USA also announced an agreement to sell the iPhone, becoming the last big carrier to sign on with Apple Inc, which will also help it win new customers and keep existing subscribers.

U.S. operators typically pay phone subsidies, giving subscribers discounts in exchange for tying them into a two-year contract. While this helps retain customers, it also ramps up costs, particularly for the higher-priced iPhone.

The No. 4 mobile service provider, which has been struggling with customer losses, already gives customers the option to pay less for their phone service if they forego a smartphone subsidy.

Next year, T-Mobile USA plans do away with subsidies entirely, Chief Executive John Legere said in parent company Deutsche Telekom's investor meeting, which was webcast.

The move will cut T-Mobile USA's upfront costs but Legere also expects it to appeal to customers, who dislike restrictions on how often they can upgrade their phones under the subsidy model favored by bigger rivals Verizon Wireless Inc, AT&T Inc and Sprint Nextel Corp.

"We think there is huge room for a challenger to change some of that, in a way that the larger players will not be able to or will choose not to respond to," the executive said.

Under the unsubsidized model, Legere said customers will be able to upgrade their phones when they want to by trading in the device. T-Mobile USA's bigger rivals have been restricting upgrades to keep their subsidy costs under control.

He did not say when exactly in 2013 the company plans to switch entirely away from subsidizing phones. Around 80 percent of the company's new phone activations are currently from subscribers who have decided not to pay a subsidy for their device.

While T-Mobile USA has long wanted to sell the iPhone, which first went on sale at AT&T in 2007, the phone's high price appeared to stop it from reaching a deal with Apple.

Legere said that T-Mobile USA worked hard to come to a deal with Apple and promised that the Apple experience would be "dramatically different" compared to other operators.

He said T-Mobile USA did not have to make the same kind of commitment Sprint made to order a certain number of iPhones, but did not give further details about his company's deal with Apple.

Sprint agreed to pay Apple a minimum of $15.5 billion over four years for selling the iPhone.

Legere did not say when T-Mobile USA would start selling Apple products but said it would be months before he could give more details.

T-Mobile USA has agreed to merge with smaller rival MetroPCS Communications Inc next year.

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China insurer PICC debut shines through Hong Kong IPO gloom

Hong Kong, Dec 15: Shares in Chinese state-owned insurer PICC Group (1339.HK) surged in its Hong Kong trading debut, a lone bright spot in an otherwise dismal year for initial public offerings in the city and most other big regional markets.

The stock jumped as much as 7.8 percent as retail investors who missed out on shares in its $3.1 billion IPO, the largest in Hong Kong in two years, scrambled on board.

Despite the late boost to deal volumes from the PICC debut, new listings in Hong Kong are down more than 60 percent in 2012, making it the worst year since the onset of the global financial crisis in 2008.

People's Insurance Company (Group) of China, as the company is formally called, priced the biggest initial public offering in Hong Kong in two years at HK$3.48 per share, after marketing the deal in a range of HK$3.42-HK$4.03.

PICC Group was traded as high as HK$3.75, up 7.8 percent. The benchmark Hang Seng index (.HSI) gained 0.5 percent.

"The prices we saw today reflect people's confidence and expectations in us," PICC Group's Chairman Wu Yan said during a ceremony at the Hong Kong stock exchange. "Everyone has the same confidence in us as we have in ourselves."

The gains were a rare success in a difficult capital markets environment in Hong Kong, where some companies looking to go public have delayed or sharply scaled back fund raising plans.

Demand from retail investors for the PICC Group IPO was 17.5 times larger than the number of shares offered, the insurance company said in a securities filing, leaving plenty of individual investors looking to scoop up shares.

Institutional demand, excluding orders from cornerstone investors, was equivalent to three times the amount of stock on offer.

The IPO was the biggest in Hong Kong since the $20.5 billion listing of AIA Group Ltd (1299.HK) in October 2010. The deal was also the largest in Asia excluding Japan since plantation company Felda Global Ventures Holdings Bhd's (FGVH.KL) $3.3 billion offering in June 2012.

Hong Kong led the world in IPO issuance in 2009 and 2010, but new stock offerings have dwindled and volumes are down by about 63 percent so far this year, including the PICC Group IPO.

Most deals in 2012 have been so-called block offerings, which target a select number of institutional investors and seek to bypass volatile demand from retail investors.

Across the region, only the Southeast Asian markets of Malaysia, Philippines and Thailand have seen a surge in IPO issuance, with volumes down more than 60 percent in China and South Korea and 40 percent in Singapore.

Founded in 1949, PICC is China's first nationwide insurer, with 2.42 million institutional clients and about 130 million individual customers, exceeding the entire population of Japan.

China has the world's sixth largest insurance market, where life and non-life premiums have recorded 22.1 percent and 24.8 percent growth respectively between 2006 and 2011, according to figures from the country's insurance regulator.

Swiss Re forecasts life insurance premiums to grow 8 percent and non-life insurance premiums to expand 13 percent in 2013, compared with a low single digit forecast for developed markets.

The country's life insurance market alone had $134.5 billion in total written premiums in 2011, PICC said in its preliminary IPO prospectus, citing figures from the Sigma Report compiled by Swiss Re.

Life insurance penetration in China reached 1.8 percent at the end of 2011, compared with 8.8 percent in Japan and 3.6 percent in the United States, it added.

"The life part of the business is growing fast and will become bigger part of the group going forward," Sally Yim, a senior credit officer at Moody's Investors Service in Hong Kong. "And the company will require more capital to meet the rapid growth in life insurance."

PICC Group hired a record number of underwriters and secured $1.82 billion in commitments from cornerstone investors, easing concerns it wouldn't find enough demand for the deal amid volatile global markets.

Cornerstone investors included U.S. insurer American International Group (AIG) (AIG.N), utility State Grid Corp, China's leading gold miner Zijin Mining Group and China Life Insurance.

Cornerstones back many Asian listings, committing to buy large, guaranteed stakes and agreeing to a lock-up period during which they will not sell their shares.

China International Capital Corp (CICC), Credit Suisse Group AG (CSGN.VX), Goldman Sachs Group Inc (GS) and HSBC Holdings Plc (HSBA.L) acted as sponsors of the IPO.

The record list of 17 banks helping to underwrite the deal also included Bank of America Merrill Lynch (BAC), Morgan Stanley (MS) and UBS AG (UBSN.VX), as well Chinese firms such as ABC International and BOC International.

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