CAMP ROUND MEADOW, Maryland |
Sun May 20, 2012 9:44am IST

CAMP ROUND MEADOW, Maryland (Reuters) – Britain may keep a small number of soldiers in Afghanistan to fight terrorism after 2014, when NATO forces are due to end combat operations, a senior British government official said on Saturday.

It is the first time Britain has given any indication it may keep forces in Afghanistan after 2014 apart from a small training contingent.

Britain plans to withdraw 500 soldiers from its 9,500-strong force in Afghanistan this year before ending combat operations in 2014 when Afghan security forces are due to have taken over responsibility for security.

“As we’ve said previously, British forces will not remain in a combat role in Afghanistan beyond 2014,” the official said before the start of a NATO summit in Chicago on Sunday that will be dominated by Afghanistan.

“The majority of forces that remain in Afghanistan will be in a training and mentoring role,” he said, speaking on condition of anonymity.

“But I wouldn’t rule out a small number of forces playing a counterterrorism role if needed. This would be in keeping with how we are working to protect ourselves from the terrorism threat emanating from other parts of the world, such as the Arabian Peninsula,” the official said.

Britain has said previously that about 120 British troops will help train Afghan officers at a military academy modelled on Britain’s prestigious Sandhurst.

Britain, which currently has the second largest foreign force fighting the Taliban in Afghanistan after the United States, has not yet set out plans for how many troops it will withdraw in 2013 and 2014.

British military planners are expected to put proposals to ministers on the timing of future withdrawals in the next few months.

(Reporting by Adrian Croft; Editing by Jim Loney)

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By Shihar Aneez and Ranga Sirilal

COLOMBO |
Sun May 20, 2012 11:33am IST

COLOMBO (Reuters) – Sri Lanka’s President Mahinda Rajapaksa has ordered the early release from jail of his highest-profile political rival Sarath Fonseka, the president’s spokesman said on Sunday, in an apparent bid to quell international criticism of the government’s human rights record.

The authorisation for Fonseka’s release will be sent to the justice ministry on Monday, spokesman Bandula Jayasekara said. The former general is expected to be free soon afterwards, but will not be able to leave the country.

“(The) president signed the papers on Friday evening enabling the release of Sarath Fonseka,” Jayasekara said.

The United States calls former army general Fonseka, who was detained in February 2010 after challenging Rajapaksa for the presidency, a political prisoner, and has repeatedly said he should be freed.

Many Sri Lankans regard Fonseka as a hero for helping to end the 25-year civil war against the Tamil Tiger rebels, and his case has gained prominence as international scrutiny of the Rajapaksa administration’s human rights record has intensified.

At a meeting in Washington on Friday, Secretary of State Hillary Clinton called on Sri Lanka’s foreign minister to address human rights issues.

In March, the U.S. sponsored a United Nations resolution calling on the Colombo to investigate abuses alleged to have taken place in the final months of the war, a move which strained ties between the countries.

Rajapaksa has until now defied the U.N. and U.S. criticism of his handling of the war’s aftermath. Local analysts says Fonseka’s release is partly aimed at distracting from local complaints about poor economic management.

Last week, news of his impending liberation was welcomed by investors who hoped it would improve Sri Lanka’s international image, and prompt more foreign inflows.

His health has deteriorated in prison, and for the last few weeks he has been under guard in a hospital where he is being treated for respiratory problems stemming from war wounds.

POPULAR LEADER

Economic woes pushing up the cost of living have dented the government’s popularity ahead of local elections this year, and Rajapaksa’s decision could increase his party’s chances by dividing the bickering opposition.

Fonseka leads the Democratic National Alliance, which has seven seats in a 225-member legislature, and some lawmakers from other opposition parties have said they are ready to back him, citing his popularity and strident criticism of Rajapaksa.

He trailed Rajapaksa by 17 points in the last presidential election. With the next one not due until 2016, he is not seen as an immediate political threat, although he remains a popular leader. His poor health has increased pressure on Rajapaksa to set him free.

In Washington on Friday, Clinton told foreign minister G.L. Peiris that Sri Lanka should demilitarise the former Tiger strongholds in the north of the country. Rajapaksa responded by saying he would not be dictated to on matters of national security.

Fonseka and the president’s brother, Defence Secretary Gotabaya Rajapaksa, led the army to victory in the final stages of the war, but they fell out in peacetime. The general complained he was sidelined by the president, who grew concerned Fonseka was plotting a coup.

Fonseka is serving two separate jail terms, one for misappropriation of funds and another for giving an interview in 2009 in which he said he was informed that Gotabaya Rajapaksa ordered troops to kill surrendering rebel leaders.

Rights groups say both Fonseka and the president are implicated in shooting Tamil fighters as they sought to surrender. In recent months, rights workers and journalists have been targeted by a government media campaign against “traitors” it says helped the defeated guerrillas.

(Writing by Frank Jack Daniel; Editing by Daniel Magnowski)

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By Missy Ryan and David Brunnstrom

CHICAGO |
Sun May 20, 2012 9:15am IST

CHICAGO (Reuters) – Pakistani President Asif Ali Zardari arrived in Chicago on Saturday for a NATO summit to what could be a chilly reception if a hoped-for deal allowing trucks to again supply alliance troops in Afghanistan fails to materialize.

While Western officials sought to portray Zardari’s presence as a sign of improving NATO-Pakistan ties, possible friction at the meeting underscores the challenges NATO countries face as they struggle to ensure a stable future for Afghanistan after Western toops withdraw.

Western leaders, who sometimes differ in their visions for the best way to end the war, speak with one voice when they describe Pakistan as the lynchpin to Afghanistan’s future security – or continued conflict.

“We can’t solve the problems in Afghanistan without a positive engagement of Pakistan,” NATO Secretary-General Anders Fogh Rasmussen said hours before Zardari’s arrival, repeating a refrain from NATO leaders that Pakistan must do more to act against militants who launch attacks from the country’s tribal areas.

Zardari’s decision to accept a last-minute invitation to attend the summit in President Barack Obama’s home town was an abrupt reversal after months of diplomatic estrangement. Islamabad had made clear that Obama’s top aides were not welcome in Pakistan.

It was also initially seen as a sign that Islamabad was on the verge of reopening supply routes through Pakistan that are crucial for NATO troops in Afghanistan.

But now it is far from clear that a deal on those supply lines is imminent.

“It is time for them to make a decision,” said a U.S. official. “Patience is not exhausted but it’s wearing thinner on the U.S. side.”

In a sign of U.S. frustration, the White House said this week that Obama had no plans to meet with Zardari individually, although he is scheduled to meet with Afghan President Hamid Karzai.

A RIFT NOT YET HEALED

Pakistan closed the supply routes in November after U.S. aircraft killed 24 of its soldiers along the border with Afghanistan. The incident caused a rift with the United States that has not yet healed as the White House, gearing up for November elections, has rebuffed Pakistan’s demands for an apology.

The U.S. official, speaking on condition of anonymity, said there have been no breakthroughs in talks on the supply routes that many in the Obama administration had hoped would yield an agreement at the summit, which begins on Sunday.

Yet U.S. and NATO officials said the mere fact that Zardari would attend is a step forward.

“Obviously it’s important that they are taking part in the summit as it’s a big show of support for Afghanistan,” said NATO spokeswoman Oana Lungescu.

The Obama administration is eager to resume more productive ties with Pakistan, whose role will be even more crucial as NATO combat troops begin to withdraw ahead of a 2014 deadline.

“The goal is to re-establish a sense of normalcy in the relationship and we’re getting there. It will take time,” the U.S. official said.

The Obama administration accuses Pakistan of sheltering militants who attack Karzai’s government and NATO troops. Pakistan sees Afghanistan as vital to its security concerns, and wants a say in the country’s future.

Islamabad defends its role in combating militants and notes that many of its own soldiers have died in that fight.

“The point here is that Pakistan has cooperated in every effort to hunt down, degrade, destroy and disable al Qaeda. And your military acknowledges that,” Sherry Rehman, Pakistani ambassador to the United States, told CNN on Friday.

Zardari’s government has voiced its willingness to reopen the supply routes – if an agreement can be reached on fees that will be paid on each shipment going into Afghanistan.

In an interview with the Chicago Tribune, Defense Secretary Leon Panetta said it was unlikely the United States would accept Pakistani requests to pay as much as $5,000 per military shipment going into Afghanistan.

(Additional reporting by Phil Stewart. Editing by Christopher Wilson)

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By Missy Ryan and David Brunnstrom

CHICAGO |
Sun May 20, 2012 11:11am IST

CHICAGO (Reuters) – NATO leaders gather in Chicago on Sunday for a summit that will chart a path out of Afghanistan, as Western nations seek to fend off fissures in their alliance and ensure Afghanistan can hold a still-potent Taliban at bay when foreign troops withdraw.

President Barack Obama hosts the summit in his home town, Chicago, a day after leaders of major industrialized nations tackled Europe’s debt crisis, backing keeping Greece in the euro zone and vowing to take steps necessary to revitalize the world economy.

The shadow cast by fiscal pressures in Europe and elsewhere will follow leaders from Obama’s presidential retreat in Maryland to the talks on Afghanistan, an unwelcome weight on countries mindful of dwindling support for a costly campaign that has not defeated the Taliban in more than 10 years.

The Obama administration, looking ahead to November presidential elections, is expected to emphasize a common alliance vision for gradually pulling most of the NATO force of around 130,000 by the end of 2014. It will also highlight Afghanistan’s strides toward taking charge of its own security.

In addition to the shared fiscal stress, the talks may be characterized by undercurrents of dissent between leaders in Washington, Brussels and other nations, like France, who are more eager to go home.

France’s new leader, Francois Hollande, repeated a pledge during his inaugural visit to Washington last week to pull “combat troops” from Afghanistan this year. He has said an extremely limited number of soldiers would remain to train Afghan forces and bring back equipment beyond 2012.

“This decision is an act of sovereignty and must be done in good coordination with our allies and partners,” said Hollande, who will discuss his exit plans with Afghan President Hamid Karzai on Sunday.

Yet Hollande has declined to define the details of his withdrawal, saying that was France’s “business.”

The careful French comments, leaving room for various interpretations, illustrate the balance NATO leaders strike as they seek to avoid the appearance of splits with NATO partners without alienating voters who want to see a swift exit.

Alliance leaders may use the same approach in discussions this weekend of long-term funding for Afghan police and army, whose ability to battle the Taliban is at the core of NATO strategy for exiting Afghanistan smoothly.

The Obama administration has been seeking promises from its allies in Afghanistan to give $1.3 billion a year for Afghan forces. While there are few doubts allies will eventually provide support, it appeared unlikely heading into the summit that it would meet that goal by the end of the meeting.

SHADOW OF FISCAL WOES

A last-minute addition to the list of leaders at the carefully choreographed meeting is President Asif Ali Zardari of Pakistan, whose western tribal areas provide shelter to militants attacking Karzai’s government and NATO forces.

Zardari may encounter friction in interactions with NATO leaders who have been pressing Islamabad to reopen routes used to supply NATO soldiers in Afghanistan. Pakistan shut those routes in protest when U.S. aircraft killed 24 Pakistani soldiers along the Afghan border in November.

It’s unclear whether a deal reopening those roads will occur this weekend as U.S. officials had hoped earlier in the week.

Severe fiscal pressures, including plans for major cuts to defense spending Europe and the United States, are sure to color the talks in Chicago, as they did those between G8 leaders.

The overarching message from that G8 summit reflected Obama’s own concerns that euro-zone contagion, which threatens the future of Europe’s 17-country single currency bloc, could hurt a fragile U.S. recovery and his re-election chances.

The G8 leaders, hoping to put years of financial turmoil behind them, also said the global economic recovery showed promising signs but that “significant headwinds persist.”

Austerity has played a role in NATO leaders’ efforts to make progress on “smart defense” – making resources go further by encouraging NATO allies to share key capabilities.

NATO is expected to announce a milestone in the effort to provide a pan-European missile defense system, which has now has reached “interim capability.” It will also formally endorse an agreement for 14 countries to jointly purchase five U.S.-made unmanned drone aircraft.

(Additional reporting by John Irish and Phil Stewart. Editing by Christopher Wilson)

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By Mike Collett

MUNICH |
Sun May 20, 2012 12:14pm IST

MUNICH (Reuters) – Chelsea cleared the final hurdle in a season of never-ending challenges when they beat Bayern Munich 4-3 on penalties in the German team’s Allianz Arena stadium to be crowned European Champions for the first time on Saturday.

In what may be the final act of his Chelsea career, Didier Drogba sealed victory in a tension-packed Champions League final with the last kick of the shootout to clinch victory after he had headed Chelsea’s equaliser two minutes from time to force a 1-1 draw and send the game to extra time.

Bayern, just as in 1999 when they lost 2-1 to Manchester United who scored two goals in stoppage time, were within touching distance of the cup thanks to an 83rd-minute header from Thomas Mueller.

But history came back to haunt them as Drogba snatched victory from their grasp with a late equaliser to set up his team to victory against all the odds.

Even in extra time Bayern had a golden opportunity to seal the win but Arjen Robben’s penalty was saved by Petr Cech after Drogba fouled Franck Ribery to concede the spot kick.

Bayern skipper Philipp Lahm even won the toss to decide which end the shootout would take place and it was held in front of the Bayern fans.

Chelsea’s success, built on the millions invested in the club over the last nine years by Russian billionaire Roman Abramovich, came on another night of unlikely glory in a season that seemed to be going nowhere under coach Andre Villas-Boas who was sacked in March.

Chelsea were rejuvenated by interim coach Roberto Di Matteo who not only steered them to this success but also won the FA Cup two weeks ago.

Whether he gets the job permanently remains to be seen, but there is little more he could have done to prove he is the man for the job.

He ended the campaign not only with the two cups, but also making Chelsea the first London club to win the trophy since the competition began 57 years ago and guaranteed to play Champions League football again next season.

The match itself was similar to Chelsea’s astonishing semi-final victory over Barcelona with both successes built on solid steel rearguard actions against sides that dominated them territorially and with possession of the ball.

The Barcelona victory followed Chelsea’s win over Napoli in the Round of 16 when they lost the first leg 3-1 in Italy and came back to win 4-1 in the second leg, a result that ultimately set them on the road to their success in Germany.

At the end the German players were utterly stunned, none more so that Bastian Schweinsteiger after his poorly struck penalty hit the post.

“I believe a lot in destiny,” Drogba said. “It was written a long time ago. This team is amazing and I dedicate this cup to all the managers and players we had before.

“(My equaliser) changed the game. Life is fantastic.”

Bayern were left to rue a third near-miss this season after finishing runners-up in the Bundesliga and the German Cup but this was the harshest of blows.

For much of a compelling final, the match resembled a defence versus attack exercise as Bayern poured forward, only to be denied by a wall of blue or their own wastefulness in front of goal.

Both Thomas Muller and Mario Gomez snatched at clear chances as Chelsea rode their luck and manned the barricades as they did in the Nou Camp during their semi-final against Barcelona.

Muller lashed one volley wide from Franck Ribery’s cross while the disappointing Gomez showed a surprising lack of composure on several occasions.

Substitute Ivica Olic had his head in his hands in the second period of extra time as he prodded a volley agonisingly wide of the post with Cech helpless.

The night still seemed to be heading Bayern’s way when they moved 3-1 ahead in the penalty shootout after Juan Mata missed Chelsea’s first spot kick but Olic missed for Bayern and when Schweinsteiger struck the post the stage was left for Ivorian Drogba to write his name into Chelsea folkore.

(Writing by Martyn Herman, editing by Ed Osmond)

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By Kim Palmer

CLEVELAND |
Sun May 20, 2012 12:07pm IST

CLEVELAND (Reuters) – A gorilla known for being the patriarch of a renowned gorilla surrogacy program at the Columbus Zoo and Aquarium in Ohio died on Friday at an estimated age of 47, the zoo said.

The popular gorilla, Mumbah, was eating breakfast with his family when he collapsed, the zoo said in a statement. The animal care team was unable to resuscitate him.

Mumbah was born in equatorial Africa around 1965 and brought to the Columbus zoo from England in 1984. He was well past a male gorilla’s average life expectancy of 31 years.

The Columbus zoo is one of the leading facilities in gorilla breeding, with 30 gorillas born there since 1956.

The zoo currently houses 15 gorillas, including 55-year-old Colo, the first captive-born gorilla and the oldest gorilla in captivity.

Mumbah was a fundamental component of the zoo’s gorilla surrogacy program, the zoo said. He acted as a father figure to young gorillas unable to be cared for by their birth mothers.

“He was a gentle giant who readily accepted youngsters into his family,” the zoo president, Dale Schmidt, said in a statement. “He was patient but effective at teaching them how to be vital members of a gorilla social group. His legacy will live on through all of the gorillas he helped to raise.”

The zoo’s Facebook page has received more than 300 comments mourning Mumbah’s death.

(Editing by Mary Slosson and Peter Cooney)

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By Mary Slosson

Sun May 20, 2012 10:58am IST

REUTERS – Facebook co-founder and CEO Mark Zuckerberg wed longtime girlfriend Priscilla Chan on Saturday, announcing the nuptials through a status update on the social networking site.

The 28-year-old billionaire’s wedding took place a day after Facebook’s initial public offering on the Nasdaq stock exchange on Friday.

More than 280,000 people “liked” Zuckerberg’s status change, which was accompanied by a photo of the smiling couple in wedding attire in a small, verdant outdoor setting with a string of lights behind them.

In the photo, the famously casual Zuckerberg is wearing a dark blue suit and tie, a departure from his trademark “hoodie,” while Chan has on a sleeveless white dress with lace overlay.

The pair wed in an intimate backyard ceremony in Palo Alto, California, according to People magazine. The couple had planned the exchange of vows for four months, but surprised their guests, who thought they were to celebrate Chan’s recent graduation from medical school, the magazine reported.

Zuckerberg’s sister, Arielle Zuckerberg, posted, “Balls. Now I’m the only unmarried Zuckerberg…” on her Facebook page. She is listed by Chan as a family member on the site.

Zuckerberg designed a simple ruby wedding ring for Chan himself, People reported. Guests dined on food from the couple’s favorite restaurants, and nibbled on mouse-shaped chocolates that the pair ate on their first date nine years ago.

Tim Carvell, lead writer for “The Daily Show” with Jon Stewart, reacted to the news on Twitter, writing: “Congratulations, Mark Zuckerberg! As a gift, I got you the names of all my friends, a list of my favorite movies, and some photos of me!”

OPENING BELL TO WEDDING BELLS

Zuckerberg, whose shares are worth nearly $20 billion and who retains voting control of Facebook, marked the debut of his company’s stock at Facebook’s Silicon Valley campus on Friday, symbolically ringing the opening bell for stock trading.

The IPO did not go as well as the social networking company had hoped, with shares closing just above the offering price of $38 a share after trading glitches and a last-minute, 25 percent increase in the number of shares being sold.

More than 576 million shares changed hands, setting a trading volume record for U.S. market debuts. Facebook posted $3.7 billion in revenue in 2011 and $1 billion in profit. The site boasts 900 million global users.

Facebook’s emergence as a cultural phenomenon was depicted in the fictionalized 2010 film “The Social Network.”

Zuckerberg, Time magazine’s Person of the Year in 2010, started Facebook in his Harvard University dorm room eight years ago, before dropping out of the Ivy League school. Chan just graduated from medical school at the University of California, San Francisco. The couple met while at Harvard.

Neither Zuckerberg nor Chan commented further about their marriage on their Facebook pages, and Facebook representatives did not immediately respond to e-mailed requests for comment on the wedding.

The couple adopted a Hungarian sheepdog named Beast a year ago, and live together in Palo Alto.

(Reporting by Mary Slosson; Editing by Cynthia Johnston and Doina Chiacu)

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Sun May 20, 2012 8:03am IST

REUTERS – Google (GOOG.O) said on Saturday that Chinese authorities have approved its $12.5 billion purchase of Motorola Mobility Holdings (MMI.N), th e last regulatory hurdle to a deal that would allow the world’s No. 1 Internet search engine to develop its own line of smart phones.

Google, which will be the newest entrant to the handset market, announced plans for the acquisition last year in a bid to secure Motorola’s valuable patents and pave the way for a pai ring of Goo gle’s Android mobile software and Motorola’s handset business.

U.S. and European regulators approved the deal in February, leaving only the Chinese regulators as potential spoilers.

“Our stance since we agreed to acquire Motorola has not changed, and we look forward to closing the deal,” Google spokeswoman Niki Fenwick said, co nfirming that the Chinese had approved the deal.

Google, whose Android software is the top operating system for Internet-enabled smart phones, wants phone-maker Motorola for its 17,000 patents and 7,500 patent applications, as it looks to compete with rivals such as Apple Inc. (AAPL.O) and defend itself and Android phone manufacturers in patent litigation.

A main condition of the deal is that the Android system remain free and open for five years, said a source who is familiar with the Chinese approval but not authorized to discuss it.

“We are pleased that the deal has received approval in all jurisdictions and we expect to close early next week,” Motorola spokeswoman Jennifer Weyrauch-Erickson said.

(Reporting By Kyle Peterson; Editing by Paul Simao)

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By Jeff Mason and Laura MacInnis

CAMP DAVID, Maryland |
Sun May 20, 2012 8:56am IST

CAMP DAVID, Maryland (Reuters) – World leaders backed keeping Greece in the euro zone on Saturday and vowed to take all steps necessary to combat financial turmoil while revitalizing a global economy increasingly threatened by Europe’s debt crisis.

A summit of the G8 leading industrialized nations came down solidly in favor of a push to balance European austerity – an approach long driven by German Chancellor Angela Merkel – with a new dose of U.S.-style stimulus seen as vital to healing ailing euro-zone economies. But it was clear that divisions remained.

“We commit to take all necessary steps to strengthen and reinvigorate our economies and combat financial stresses, recognizing that the right measures are not the same for each of us,” the leaders said in a joint statement issued at their meeting at the Camp David presidential retreat in Maryland.

The overarching message from the summit hosted by President Barack Obama reflected his own concerns that the euro-zone contagion, which threatens the future of Europe’s 17-country single currency bloc, could hurt the fragile U.S. recovery and his re-election chances in November.

With Greece’s political and economic upheaval high on the summit’s agenda and stoking concerns over instability in Spain and Italy, Group of Eight leaders sought to calm the situation.

In the first line of their final economic communique, they essentially endorsed calls to broaden Europe’s focus beyond German-backed fiscal belt-tightening, calling it “our imperative” to promote growth and job creation.

Anxious to quell investor fears, the G8 said: “We reaffirm our interest in Greece remaining in the euro zone while respecting its commitments.” But leaders offered no specific prescription for extracting Athens from its worsening crisis.

It was unusual for the often-bland G8 communique to single out a relatively small nation. But fears that a political stalemate in Greece would lead to its departure from Europe’s monetary union at unknown costs to the financial system and global economic stability have spooked markets.

Greek voters this month toppled a government that had agreed to painfully austere terms of an international bailout plan, and uncertainty hangs over the next election set for June 17.

Spain too has roiled markets by revealing huge bad loans in its banking system as it struggles to rein in its budget while facing recession.

Merkel, increasingly isolated by a French-led push for a more growth-oriented approach, sought to play down the differences, saying: “Solid finances and growth belong inseparably together and should not be put into contrast.”

Obama, who has pressed Europe for more growth-boosting measures like those he pursued at home, used his closing statement to remind euro-zone leaders that the stakes were high and there could be “enormous” costs if they failed.

“Growth and jobs must be our top priority,” he said, reaffirming that Europe has the capacity to meet the challenge.

Marc Chandler, currency strategist at Brown Brothers Harriman, said: “It is significant that a group as weighty as the G8 backs Greece and reinforces the idea that Europe needs a strong union. It strengthens its hand.”

In another move to shore up shaky global growth, the G8 leaders said they would monitor oil markets closely and stand ready to seek an increase in supplies if needed. While crude oil prices have declined by 10 percent over the past month, the threat of tighter sanctions on Iran loom next month.

The G8 said the global economic recovery shows promising signs but “significant headwinds persist.”

CASUAL SETTING, TENSE ISSUES

The mountain cabins at Camp David where a shirt-sleeved Obama hosted the G8 leaders contrasted with recent tense meetings in European capitals about a sovereign debt crisis that just keeps getting worse.

The economic communique endorsed a recent political shift away from the budget-cutting austerity that has been championed by Merkel and British Prime Minister David Cameron as the route to prosperity.

Instead it recognized a need to combine budgetary discipline with a growth strategy. This strengthens the hand of newly elected socialist French President Francois Hollande before a crucial European Union dinner on Wednesday to discuss growth.

The G8 said it had “an interest” in specific measures from Europe, signaling it wants concrete steps from a dinner meeting of European Union leaders later this week and an EU summit in June.

Cameron, after an early morning gym workout with Obama, said he detected a “growing sense of urgency that action needs to be taken” on the euro zone crisis. London relies heavily on international finance and banking instability would strike a fresh blow to an economy already in recession.

“Contingency plans need to be put in place and the strengthening of banks, governance, firewalls – all of those things need to take place very fast,” he told reporters.

European leaders seemed keen to stress that they would stand firm in protecting their banks, after news of escalating bad loans raised the specter that rescuing Spain’s banks would crash the euro zone’s fourth largest economy.

Hollande suggested using European funds to inject capital into Spain’s banks, which would mark a significant acceleration of EU rescue efforts. But there was no direct mention of Spain in the communique or any indication of action leaders would take to combat the financial stresses.

GERMANY SOFTENING ON AUSTERITY

Obama and Merkel, on opposite sides of the growth-versus-austerity debate almost since the U.S. president took office in 2009, discussed what one White House aide called an “emerging consensus” in one-on-one talks after the Camp David summit.

There already had been signs of a softening in Germany’s austerity stance as the G8 meetings began.

Germany’s largest industrial union, IG Metall, struck its biggest pay deal in 20 years early on Saturday. The 4.3 percent pay increase, more than double Germany’s inflation rate, will boost worker buying power in the euro zone’s richest nation and lift consumption. That is something the United States has urged as a means to bolster overall growth throughout the world’s second largest economic region.

G8 leaders also raised pressure on Iran over its nuclear program, which they suspect has military objectives, by committing to a common approach. They pledged to implement sanctions fully against Tehran and indicated they would act together to lower oil prices if needed.

“Our hope is that we can resolve this issue in a peaceful fashion that respects Iran’s sovereignty and its rights in the international community, but also recognizes its responsibilities,” Obama told reporters.

The Camp David summit kicked off four days of intensive diplomacy that will test world leaders’ ability to quell unease over the threat of another financial meltdown as well as plans to wind down the unpopular war in Afghanistan.

After the Camp David talks, Obama and several of the G8 leaders headed to his home town of Chicago where he will host a two-day NATO meeting at which the Afghanistan war will be the central topic.

(Additional reporting by Alister Bull, Jeff Mason, Caren Bohan, Stella Dawson, Elizabeth Pineau, Gleb Bryanski, and John Irish; Writing by Matt Spetalnick and Stella Dawson; Editing by Mary Milliken and Christopher Wilson)

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KABUL |
Sat May 19, 2012 9:14pm IST

KABUL (Reuters) – A suicide bomber on a motorcycle detonated explosives in an Afghan district close to the border with Pakistan, killing at least 10 people including children, officials said on Saturday.

The attack comes one day ahead of a NATO summit in Chicago, where the coalition intends to spell out its role in Afghanistan after foreign combat troops leave by the end of 2014.

“The bomber blew himself up in a crowded market and it was powerful,” said Sardar Mohammad Zazai, police chief of eastern Khost province.

He said the assailant was heading for a police checkpoint in the Ali Sher district along the border with Pakistan’s “lawless tribal areas”.

No one claimed responsibility for the attack, which killed six children, one civilian adult and three policemen.

Eleven years into the NATO-led war against the Taliban, the Islamist group holds large sway in Afghanistan’s restive south and east, where they enjoy enormous popular support.

Afghan security officials have said they expect this year’s summer fighting season to be bloody as the third phase of a security handover from NATO to Afghan forces gets underway.

(Reporting by Hamid Shalizi, writing by Amie Ferris-Rotman)

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