Consumer sentiment at year low; fiscal debate weighs

NEW YORK (Reuters) - Consumer sentiment unexpectedly deteriorated for a second straight month to its lowest in over a year in January, with many consumers citing fallout from the recent "fiscal cliff" debate in Washington, a survey released on Friday showed.

The sharp drop in sentiment over the last two months coincides with rancorous federal budget negotiations that have led to higher taxes for many Americans.

Just weeks after that deal, President Barack Obama and Republican lawmakers are expected to enter another tough round of negotiations over spending cuts, which could dent consumer confidence still further.

"The handling of the fiscal cliff talks and the realization that paychecks are going to be smaller due to the sunset of the payroll tax holiday are probably weighing on consumer attitudes at the moment," said Thomas Simons, a money market economist at Jefferies & Co. in New York.

While most of the scheduled tax hikes and spending cuts forming the fiscal cliff were avoided when Congress struck a deal on January 1, most U.S. workers saw their take-home salary diminished by the expiry of two percentage-point cut in payroll taxes.

"With the debt ceiling yet to be tackled and more political acrimony on the way, we suspect that confidence has room to deteriorate further," Simons said.

The Thomson Reuters/University of Michigan's preliminary reading on the overall index of consumer sentiment came in at 71.3, down from 72.9 the month before. The index was at its lowest since December 2011. It was also below the median forecast of 75 among economists polled by Reuters.

"The most unique aspect of the early January data was that an all-time record number of consumers - 35 percent - negatively referred to the fiscal cliff negotiations," survey director Richard Curtin said in a statement.

"Importantly, the debt ceiling debate is still upcoming and could further weaken confidence," he said.

House Republicans have signaled they might support a short-term extension of U.S. borrowing authority when the government exhausts that capacity sometime between mid-February and early March. A failure by Congress to raise this debt ceiling could result in a market-rattling government default.

On Friday, Republican House Majority Leader Eric Cantor said the House would consider a bill next week to extend the debt limit by three months in order to force the Senate to pass a budget.

U.S. stocks remained little changed after the data. The S&P 500 <.spx> hit a five-year high in the last session. But on Friday, a weak outlook from Intel offset encouraging data out of China and a fourth-quarter profit at Morgan Stanley .

So far there has been a disconnect between what consumers say and do. U.S. retail sales increased a better-than-expected 0.5 percent in December. But given the recent weakening in sentiment investors will be watching for any signs that spending is starting to slip.

"The impact on consumers will be from the hike in the social security tax. That is undoubtedly going to hit discretionary spending. So this may be a signal of things to come," said Michael Woolfolk, a senior currency strategist at BNY Mellon in New York.

The consumer survey's barometer of current economic conditions fell to 84.8 from 87.0 and was below a forecast of 88.0. The gauge hit its lowest since July.

The survey's gauge of consumer expectations also slipped, hitting its lowest since November 2011 at 62.7 from 63.8, and was below an expected 65.2.

The survey's one-year inflation expectations rose to 3.4 percent from 3.2 percent, while the survey's five-to-10-year inflation outlook was unchanged at 2.9 percent.

(Additional reporting by Steven C. Johnson and Ellen Freilich; Editing by Andrea Ricci)

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Algeria ends desert siege, but dozens killed

ALGIERS (Reuters) - Algerian forces stormed a desert gas complex to free hundreds of hostages but 30, including several Westerners, were killed in the assault along with at least 11 of their Islamist captors, an Algerian security source told Reuters.

Western leaders whose compatriots were being held did little to disguise their irritation at being kept in the dark by Algeria before the raid - and over its bloody outcome. French, British and Japanese staff were among the dead, the source said.

An Irish engineer who survived said he saw four jeeps full of hostages blown up by Algerian troops whose commanders said they moved in about 30 hours after the siege began because the gunmen had demanded to be allowed to take their captives abroad.

And while a crisis has ended that posed a serious dilemma for Paris and its allies as French troops attacked the hostage-takers' al Qaeda allies in neighboring Mali, it left question marks over the ability of OPEC-member Algeria to protect vital energy resources and strained its relations with Western powers.

Two Japanese, two Britons and a French national were among at least seven foreigners killed, the source told Reuters. Eight dead hostages were Algerian. The nationalities of the rest, as well as of perhaps dozens more who escaped, were unclear. Some 600 local Algerian workers, less well guarded, survived.

Fourteen Japanese were among those still unaccounted for by the early hours of Friday, their Japanese employer said.

Americans, Norwegians, Romanians and an Austrian have also been mentioned by their governments as having been captured by the militants who called themselves the "Battalion of Blood" and had demanded France end its week-old offensive in Mali.

Underlining the view of African and Western leaders that they face a multinational Islamist insurgency across the Sahara - a conflict that prompted France to send hundreds of troops to Mali last week - the official source said only two of the 11 dead militants were Algerian, including the squad's leader.

The bodies of three Egyptians, two Tunisians, two Libyans, a Malian and a Frenchman were found, the security source said.

The group had claimed to have dozens of guerrillas on site and it was unclear whether any militants had managed to escape.

The overall commander, Algerian officials said, was Mokhtar Belmokhtar, a veteran of Afghanistan in the 1980s and Algeria's bloody civil war of the 1990s. He appears not to have been present and has now risen in stature among a host of Saharan Islamists, flush with arms and fighters from chaotic Libya, whom Western powers fear could spread violence far beyond the desert.

"NO TO BLACKMAIL"

Algeria's government spokesman made clear the leadership in Algiers remains implacably at odds with Islamist guerrillas who remain at large in the south years after the civil war in which some 200,000 people died. Communication Minister Mohamed Said repeated their refusal ever to negotiate with hostage-takers.

"We say that in the face of terrorism, yesterday as today as tomorrow, there will be no negotiation, no blackmail, no respite in the struggle against terrorism," he told APS news agency.

British Prime Minister David Cameron, who warned people to prepare for bad news and who canceled a major policy speech on Friday to deal with the situation, said through a spokesman that he would have liked Algeria to have consulted before the raid.

A Briton and an Algerian had also been killed on Wednesday.

The prime minister of Norway, whose state energy company Statoil runs the Tigantourine gas field with Britain's BP and Algeria's national oil company, said he too was not informed.

U.S. officials had no clear information on the fate of Americans, though a U.S. military drone had flown over the area. Washington, like its European allies, has endorsed France's move to protect the Malian capital by mounting air strikes last week and now sending 1,400 ground troops to attack Islamist rebels.

A U.S. official said on Thursday it would provide transport aircraft to help France with a mission whose vital importance, President Francois Hollande said, was demonstrated by the attack in Algeria. Some fear, however, that going on the offensive in the remote region could provoke more bloodshed closer to home.

The apparent ease with which the fighters swooped in from the dunes to take control of an important energy facility, which produces some 10 percent of the natural gas on which Algeria depends for its export income, has raised questions, over the value of security measures that are outwardly draconian.

Foreign firms were pulling non-essential staff out of the country, which has recovered stability only in recent years and whose ruling establishment, heirs to fighters who ended French rule 50 years ago, has resisted demands for reform and political freedoms of the kind that swept North Africa in the Arab Spring.

"The embarrassment for the government is great," said Azzedine Layachi, an Algerian political scientist at New York's St John's University. "The heart of Algeria's economy is in the south. where the oil and gas fields are. For this group to have attacked there, in spite of tremendous security, is remarkable."

"KILL INFIDELS"

A local man who had escaped from the facility told Reuters the militants appeared to have inside knowledge of the layout of the complex, supporting the view of security experts that their raid was long-planned, even if the Mali war provided a motive.

"The terrorists told us at the very start that they would not hurt Muslims but were only interested in the Christians and infidels," Abdelkader, 53, said by telephone from his home in the nearby town of In Amenas. "'We will kill them,' they said."

Algiers, whose leaders have long had frosty relations with the former colonial power France and other Western countries, may have some explaining to do over its tactics in putting an end to a hostage crisis whose scale was comparable to few in recent decades bar those involving Chechen militants in Russia.

Government spokesman Said sounded unapologetic, however: "When the terrorist group insisted on leaving the facility, taking the foreign hostages with them to neighboring states, the order was issued to special units to attack the position where the terrorists were entrenched," he told state news agency APS, which said some 600 local workers were freed.

The militants said earlier they had 41 foreign hostages.

"ARMY BLASTED HOSTAGES"

Stephen McFaul, an electrical engineer, told his family in Northern Ireland after the operation that he narrowly escaped death, first when bound and gagged by the gunmen who fastened explosives around the hostages' necks and then on Thursday when he was in a convoy of five vehicles driving across the complex.

"(The gunmen) were moving five jeeploads of hostages from one part of the compound," his brother Brian McFaul said. "At that stage, they were intercepted by the Algerian army.

"The army bombed four out of five of the trucks and four of them were destroyed ... He presumed everyone else in the other trucks was killed ... The truck my brother was in crashed and at that stage Stephen was able to make a break for his freedom."

McFaul said it was unclear whether the vehicles had been struck by missiles fired from helicopters or by ground forces.

The attack in Algeria did not stop France from pressing on with its campaign in Mali. It said on Thursday it now had 1,400 troops on the ground there, and combat was under way against the rebels that it first began targeting from the air last week.

"What is happening in Algeria justifies all the more the decision I made in the name of France to intervene in Mali in line with the U.N. charter," Hollande said on Thursday.

The French action last week came as a surprise but received widespread public international support. Neighboring African countries planning to provide ground troops for a U.N. force by September have said they will move faster to deploy them.

(Additional reporting by Ali Abdelatti in Cairo, Eamonn Mallie in Belfast, Gwladys Fouche in Oslo, Mohammed Abbas in London and Padraic Halpin and Conor Humprhies in Dublin; Writing by Alastair Macdonald; Editing by Peter Millership)

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Video game puts players in shoes of Syrian rebels

BEIRUT (AP) — A new video game based on Syria‘s civil war challenges players to make the hard choices facing the country’s rebels. Is it better to negotiate peace with the regime of President Bashar Assad, for example, or dispatch jihadist fighters to kill pro-government thugs?

The British designer of “Endgame: Syria” says he hopes the game will inform people who might otherwise remain ignorant about the conflict.

Views differ, however, on the appropriateness of using a video game to discuss a complex crisis that has killed more than 60,000 people since March 2011. Computer giant Apple has refused to distribute the game and some consider the mere idea insulting. Others love it, and one fan from inside Syria has suggested changes to make the game better mirror the actual war.

The dispute comes amid wider arguments about violent video games since last month’s shooting in Newtown, Connecticut, that left 20 children and six adults dead. This week, the National Rifle Association revised the recommended age for a new shooting game after criticisms by liberal groups.

Tomas Rawlings, who designed the Syria game, said he got the idea while watching TV pundits debate the possible consequences of directly arming Syria’s rebels, which Western nations have declined to do. He said he thought a game could explore such questions by allowing players to make choices and see their consequences.

“For those who don’t want to read a newspaper but still care about the world, this is a way for them to find out about things,” said Rawlings, the design and production director of U.K.-based Auroch Digital.

In the simple game, which took about two weeks to build, the player assumes the role of the rebels seeking to topple Assad’s regime. The play alternates between political and military stages. In each stage, the player sees cards representing regime actions and must choose the rebel response.

The choices seek to mirror the real conflict. The regime may get declarations of support from Russia, China or Iran to boost its popularity while the rebels receive support from the United States, Turkey or Saudi Arabia – reflecting the foreign powers backing the two sides.

In battle, the regime may deploy conventional military forces like infantry, tanks and artillery as well as pro-government thugs known as shabiha. The rebels’ choices include sympathetic Palestinian or Kurdish militias, assassins or jihadist fighters known as muhajideen.

Some of the rebels’ strongest attacks also kill civilians, reducing rebel popularity and seeking to reflect the war’s complexity.

All along, the player is given basic information about the conflict, learning that Islamists once persecuted by the regime now consider the fight a holy war and that the shabiha are accused of massacring civilians.

The game ends when one side loses its support or the sides agree to a peace deal. The player is then told what follows. The longer the fighting lasts, the worse the aftermath, as chaos, sectarian conflict and Islamic militancy spread.

The lasting impression is that no matter which side wins, Syria loses.

Rawlings said that’s the game’s point.

“You can win the battle militarily but still lose the peace because the cost of winning militarily has fractured the country so much that the war keeps going,” he said. “You can also end the war so that there is less of that.”

The game was released on the company’s website and as a free download from Google for Android devices on December 12. Rawlings submitted the game to Apple to distribute via its App Store but the company rejected it.

Apple declined to comment, but Rawlings’s rejection referred to a company guideline for mobile apps: ” ‘Enemies’ within the context of a game cannot solely target a specific race, culture, a real government or corporation, or any other real entity.”

Rawlings is modifying the game, though he worries it will weaken it.

“It will still be the same overall experience, but it will reduce the value of the game to inform people,” he said.

News of the game was greeted with a mix of interest and outrage online. Some complained that players can’t take the regime side, while others found it wrong to make a game about a brutal war.

“Rawlings has mistakenly understood the Syrian war as a nonchalant ‘experience’ that people can play while waiting for the train to work,” said Samar Aburahma, a university student of Palestinian descent in San Francisco who refused to try the game. “It is beyond insulting to Syrians, especially given the fact that war is ongoing.”

Others find it a valuable, if limited, approach to the conflict.

Andrea Stanton, a religious studies professor at the University of Denver who studies Syria, said she responded emotionally to the game.

“It isn’t really a fun game to play,” she said, noting that she was angry when she lost and felt dread when the frequency of deadly regime airstrikes went up as the game progressed – as it has in the real conflict.

“This a very sobering game in that you sense how quickly the military stakes escalate and how little the political phase has to do with actual Syrians,” she said.

She is organizing a campus activity for students to play and discuss the game.

“I think it is very valuable for teaching and getting people to experience a sense of the limited options the rebels face,” she said.

It is unclear how many people have played the game. Google says it has been downloaded as many as 5,000 times from its site, and Rawlings says more have played online. He guesses more than 10,000 people have tried it.

Few in Syria are likely to have played it, since fighting has made the Internet and even electricity rare in some parts of the country.

One 18-year-old Syrian gamer liked the game so much, however, that he sent Rawlings a list of suggestions for improvement.

Reached via Skype, he said the jihadist fighters should be called Jabhat al-Nusra, after an extremist rebel group that the U.S. has designated as a terrorist organization.

He also pointed out that few rebel groups have tanks, as they do in the game, and suggested new rebel tactics.

“Car bombs are used lots in Syria, so that would make the game more realistic,” he said.

He said he hoped the game would help people understand the situation.

“I wish there were a 3D strategy game about Syria so you could feel the destruction on the ground,” he said.

The player, who spoke on condition of anonymity for fear of reprisals, said his feelings playing the game often mirror his feelings about the war. He wants peace but can’t imagine the rebels accepting a negotiated solution given how many people have died.

“Right this second, I want the war in Syria to stop, but when you see what is happening on the ground there is no way to make peace,” he said. “When I play the game like a rebel, I have to reject the peace.”

___

Associated Press writer Michael Liedtke contributed reporting.

Online: http://gamethenews.net/index.php/endgame-syria/

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See Personal Pics of Rosie O'Donnell's Daughter Dakota

After welcoming her fifth child, the comedian gives fans an intimate glimpse into her mommy joy in a series of personal photos

Credit: Courtesy of Rosie O'Donnell

Updated: Thursday Jan 17, 2013 | 12:00 PM EST
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Will Obama's order lead to surge in gun research?

MILWAUKEE (AP) — Nearly as many Americans die from guns as from car crashes each year. We know plenty about the second problem and far less about the first. A scarcity of research on how to prevent gun violence has left policymakers shooting in the dark as they craft gun control measures without much evidence of what works.

That could change with President Barack Obama's order Wednesday to ease research restrictions pushed through long ago by the gun lobby. The White House declared that a 1996 law banning use of money to "advocate or promote gun control" should not keep the Centers for Disease Control and Prevention and other federal agencies from doing any work on the topic.

Obama can only do so much, though. Several experts say Congress will have to be on board before anything much changes, especially when it comes to spending money.

How severely have the restrictions affected the CDC?

Its website's A-to-Z list of health topics, which includes such obscure ones as Rift Valley fever, does not include guns or firearms. Searching the site for "guns" brings up dozens of reports on nail gun and BB gun injuries.

The restrictions have done damage "without a doubt" and the CDC has been "overly cautious" about interpreting them, said Daniel Webster, director of the Center for Gun Policy and Research at the Johns Hopkins Bloomberg School of Public Health.

"The law is so vague it puts a virtual freeze on gun violence research," said a statement from Michael Halpern of the Union of Concerned Scientists. "It's like censorship: When people don't know what's prohibited, they assume everything is prohibited."

Many have called for a public health approach to gun violence like the highway safety measures, product changes and driving laws that slashed deaths from car crashes decades ago even as the number of vehicles on the road rose.

"The answer wasn't taking away cars," said Dr. Georges Benjamin, executive director of the American Public Health Association.

However, while much is known about vehicles and victims in crashes, similar details are lacking about gun violence.

Some unknowns:

—How many people own firearms in various cities and what types.

—What states have the highest proportion of gun ownership.

—Whether gun ownership correlates with homicide rates in a city.

—How many guns used in homicides were bought legally.

—Where juveniles involved in gun fatalities got their weapons.

—What factors contribute to mass shootings like the Newtown, Conn., one that killed 26 people at a school.

"If an airplane crashed today with 20 children and 6 adults there would be a full-scale investigation of the causes and it would be linked to previous research," said Dr. Stephen Hargarten, director of the Injury Research Center at the Medical College of Wisconsin.

"There's no such system that's comparable to that" for gun violence, he said.

One reason is changes pushed by the National Rifle Association and its allies in 1996, a few years after a major study showed that people who lived in homes with firearms were more likely to be homicide or suicide victims. A rule tacked onto appropriations for the Department of Health and Human Services barred use of funds for "the advocacy or promotion of gun control."

Also, at the gun group's urging, U.S. Rep. Jay Dickey, a Republican from Arkansas, led an effort to remove $2.6 million from the CDC's injury prevention center, which had led most of the research on guns. The money was later restored but earmarked for brain injury research.

"What the NRA did was basically terrorize the research community and terrorize the CDC," said Dr. Mark Rosenberg, who headed the CDC's injury center at the time. "They went after the researchers, they went after institutions, they went after CDC in a very big way, and they went after me," he said. "They didn't want the data to be collected because they were threatened by what the data were showing."

Dickey, who is now retired, said Wednesday that his real concern was the researcher who led that gun ownership study, who Dickey described as being "in his own kingdom or fiefdom" and believing guns are bad.

He and Rosenberg said they have modified their views over time and now both agree that research is needed. They put out a joint statement Wednesday urging research that prevents firearm injuries while also protecting the rights "of legitimate gun owners."

"We ought to research the whole environment, both sides — what the benefits of having guns are and what are the benefits of not having guns," Dickey said. "We should study any part of this problem," including whether armed guards at schools would help, as the National Rifle Association has suggested.

Association officials did not respond to requests for comment. A statement Wednesday said the group "has led efforts to promote safety and responsible gun ownership" and that "attacking firearms" is not the answer. It said nothing about research.

The 1996 law "had a chilling effect. It basically brought the field of firearm-related research to a screeching halt," said Benjamin of the Public Health Association.

Webster said researchers like him had to "partition" themselves so whatever small money they received from the CDC was not used for anything that could be construed as gun policy. One example was a grant he received to evaluate a community-based program to reduce street gun violence in Baltimore, modeled after a successful program in Chicago called CeaseFire. He had to make sure the work included nothing that could be interpreted as gun control research, even though other privately funded research might.

Private funds from foundations have come nowhere near to filling the gap from lack of federal funding, Hargarten said. He and more than 100 other doctors and scientists recently sent Vice President Joe Biden a letter urging more research, saying the lack of it was compounding "the tragedy of gun violence."

Since 1973, the government has awarded 89 grants to study rabies, of which there were 65 cases; 212 grants for cholera, with 400 cases, yet only three grants for firearm injuries that topped 3 million, they wrote. The CDC spends just about $100,000 a year out of its multibillion-dollar budget on firearm-related research, New York Mayor Michael Bloomberg has said.

"It's so out of proportion to the burden, however you measure it," said Dr. Matthew Miller, associate professor of health policy at the Harvard School of Public Health. As a result, "we don't know really simple things," such as whether tighter gun rules in New York will curb gun trafficking "or is some other pipeline going to open up" in another state, he said.

What now?

CDC officials refused to discuss the topic on the record — a possible sign of how gun shy of the issue the agency has been even after the president's order.

Health and Human Services Secretary Kathleen Sebelius said in a statement that her agency is "committed to re-engaging gun violence research."

Others are more cautious. The Union of Concerned Scientists said the White House's view that the law does not ban gun research is helpful, but not enough to clarify the situation for scientists, and that congressional action is needed.

Dickey, the former congressman, agreed.

"Congress is supposed to do that. He's not supposed to do that," Dickey said of Obama's order. "The restrictions were placed there by Congress.

"What I was hoping for ... is 'let's do this together,'" Dickey said.

___

Follow Marilynn Marchione's coverage at http://twitter.com/MMarchioneAP

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Housing, job data push S&P to five-year high; Intel down late

NEW YORK (Reuters) - Stronger-than-expected data on housing starts and jobless claims lit a fire under stocks on Thursday, pushing the S&P 500 to a five-year high and its third day of gains.

A pair of economic reports lifted investors' sentiment. The number of Americans filing new claims for unemployment benefits fell to a five-year low last week and housing starts jumped last month to the highest since June 2008.

Strength in the housing and labor markets is key to sustained growth and higher corporate profits, helping to bring out buyers even on a day when earnings reports were mixed.

Gains were tempered by weakness in the financial sector, with Bank of America down 4.2 percent to $11.28 and Citigroup off 2.9 percent to $41.24 after their results.

In other negative earnings news, shares of chipmaker Intel fell 5.2 percent to $21.49 in extended-hours trading after the company forecast quarterly revenue that fell short of analysts' expectations. Intel had ended the regular session up 2.6 percent at $22.68.

The S&P 500 ended at its highest since December 2007 and now sits just 5.6 percent from its all-time closing high of 1,565.15.

"Having consolidated really for the last two weeks, the fact that we broke out, I think that that is sucking in quite a bit of money," said James Dailey, portfolio manager of TEAM Asset Strategy Fund in Harrisburg, Pennsylvania.

The Dow Jones industrial average <.dji> was up 84.79 points, or 0.63 percent, at 13,596.02. The Standard & Poor's 500 Index <.spx> was up 8.31 points, or 0.56 percent, at 1,480.94. The Nasdaq Composite Index <.ixic> was up 18.46 points, or 0.59 percent, at 3,136.00.

Better-than-expected earnings and revenue reported by online marketplace eBay late Wednesday helped the stock gain 2.7 percent to $54.33.

In the housing sector, PulteGroup Inc shares gained 4.9 percent to $20.29 and Toll Brothers Inc advanced 3.1 percent to $35.99. The PHLX housing sector index <.hgx> climbed 2.4 percent, reaching its highest close since August 2007.

Semiconductor shares <.sox> rose 2 percent to the highest close in eight months.

Financials were the only S&P 500 sector to register a slight decline for the day.

Bank of America's fourth-quarter profit fell as it took more charges to clean up mortgage-related problems. Citigroup posted $2.32 billion of charges for layoffs and lawsuits.

Energy shares led gains on the Dow as U.S. crude oil prices jumped more than 1 percent. Shares of Exxon Mobil were up 0.8 percent at $90.20 while shares of Chevron were up 0.7 percent at $114.75.

S&P 500 earnings are expected to have risen 2.3 percent in the fourth quarter, Thomson Reuters data showed. Expectations for the quarter have fallen considerably since October when a 9.9 percent gain was estimated.

Volume was roughly 6.5 billion shares traded on the New York Stock Exchange, the Nasdaq and the NYSE MKT, compared with the 2012 average daily closing volume of about 6.45 billion.

Advancers outpaced decliners on the NYSE by about 22 to 7 and on the Nasdaq by about 2 to 1.

(Additional reporting by Chuck Mikolajczak; Editing by Kenneth Barry and Nick Zieminski)

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Sahara hostage siege turns Mali war global

ALGIERS/BAMAKO (Reuters) - Islamist fighters have opened an international front in Mali's civil war by taking dozens of Western hostages at a gas plant in the Algerian desert just as French troops launched an offensive against rebels in neighboring Mali.

Nearly 24 hours after gunmen stormed the natural gas pumping site and workers' housing before dawn on Wednesday, little was certain beyond a claim by a group calling itself the "Battalion of Blood" that it was holding 41 foreign nationals, including Americans, Japanese and Europeans, at Tigantourine, deep in the Sahara.

Algerian media said a Briton and an Algerian were killed in the assault. Another local report said a Frenchman had died.

One thing is clear: as a headline-grabbing counterpunch to this week's French buildup in Mali, it presents French President Francois Hollande with a daunting dilemma and spreads fallout from Mali's war against loosely allied bands of al Qaeda-inspired rebels far beyond Africa, challenging Washington and Europe.

A French businessman with employees at the site said the foreigners were bound and under tight guard, while local staff, numbering 150 or more, was held apart and had more freedom.

Led by an Algerian veteran of guerrilla wars in Afghanistan, the group demanded France halt its week-old intervention in Mali, an operation endorsed by Western and African allies who fear that al Qaeda, flush with men and arms from the defeated forces of Libya's Muammar Gaddafi, is building a haven in the desert.

Hollande, who won wide praise for ordering air strikes and sending troops to the former French colony, said little in response. In office for only eight months, he has warned of a long, hard struggle in Mali and now faces a risk of attacks on more French and other Western targets in Africa and beyond.

The Algerian government ruled out negotiating and the United States and other Western governments condemned what they called a terrorist attack on a facility, now shut down, that produces 10 percent of Algeria's gas, much of which is pumped to Europe.

The militants, communicating through established contacts with media in neighboring Mauritania, said they had dozens of men at the base, near the town of In Amenas close to the Libyan border, and that they were armed with mortars and anti-aircraft missiles.

They said they had repelled a raid by Algerian forces after dark on Wednesday. There was no government comment on that. Algerian officials said earlier about 20 gunmen were involved.

LIVES AT RISK

The militants issued no explicit threat but made clear the hostages' lives were at risk: "We hold the Algerian government and the French government and the countries of the hostages fully responsible if our demands are not met and it is up to them to stop the brutal aggression against our people in Mali," read one statement carried by Mauritanian media.

The group also said its fighters had rigged explosives around the site and any attempt to free the hostages would lead to a "tragic end." The large numbers of gunmen and hostages involved pose serious problems for any rescue operation.

Smaller hostage-taking incidents have been common in the Sahara and financial gain plays a part in the actions of groups whose members mingle extremist religious aims with traditional smuggling and other pursuits in the lawless, borderless region.

Algerian Interior Minister Daho Ould Kablia said the raid was led by Mokhtar Belmokhtar, who fought Soviet forces in Afghanistan in the 1980s and recently set up his own group in the Sahara after falling out with other local al Qaeda leaders.

A holy warrior-cum-smuggler dubbed "The Uncatchable" by French intelligence and "Mister Marlboro" by some locals for his illicit cigarette-running business, Belmokhtar's links to those who seized towns across northern Mali last year are unclear.

French media said the militants were also demanding that Algeria, whose government fought a bloody war against Islamists in the 1990s, release dozens of prisoners from its jails.

AMERICANS

The militants said seven Americans were among the 41 foreign hostages - a figure U.S. officials said they could not confirm.

Norwegian energy company Statoil, which operates the gas field in a joint venture with Britain's BP and the Algerian state company Sonatrach, said nine of its Norwegian employees and three of its Algerian staff were being held.

Also reported kidnapped, according to various sources, were five Japanese working for the engineering firm JGC Corp, a French national, an Austrian, an Irishman and a number of Britons.

U.S. Defense Secretary Leon Panetta said, "I want to assure the American people that the United States will take all necessary and proper steps that are required to deal with this situation."

He said he lacked firm information on whether there were links to the situation in Mali. Analysts pointed to shifting alliances and rivalries among Islamists in the region to suggest the hostage-takers may have a range of motives.

In their own statements, they condemned Algeria's secularist government for "betraying" its predecessors in the bloody anti-colonial war against French rule half a century ago by letting French warplanes fly over its territory to Mali. They also accused Algeria of shutting its border to Malian refugees.

Panetta said Washington was still studying legal and other issues before providing more help to France in the war in Mali.

Hollande has called for international support against rebels who France says pose a threat to Africa and the West, and admits it faces a long struggle against well-equipped fighters who seized Timbuktu and other oasis towns in northern Mali and have imposed Islamic law, including public amputations and beheading.

Islamists have warned Hollande that he has "opened the gates of hell" for all French citizens.

Some of those held at the facility, about 1,300 km (800 miles) inland, had sporadic contact with the outside world.

The head of a French catering company said he had information from a manager who supervises some 150 Algerian employees at the site. Regis Arnoux of CIS Catering told BFM television the local staff was being prevented from leaving but was otherwise free to move around inside and keep on working.

"The Westerners are kept in a separate wing of the base," Arnoux said. "They are tied up and are being filmed. Electricity is cut off, and mobile phones have no charge.

"Direct action seems very difficult. ... Algerian officials have told the French authorities as well as BP that they have the situation under control and do not need their assistance."

MALI OFFENSIVE

French army chief Edouard Guillaud said ground forces were stepping up their operation to engage directly "within hours" the alliance of Islamist fighters, grouping al Qaeda's North African wing AQIM and Mali's home-grown Ansar Dine and MUJWA.

West African military chiefs said the French would soon be supported by about 2,000 troops from Nigeria, Chad, Niger and other states - part of a U.N.-mandated deployment that had been expected to start in September before Hollande intervened.

Chad's foreign minister, Moussa Faki Mahamat, told Radio France International his country alone would send 2,000 troops, suggesting plans for the regional force were already growing.

In Mali, residents said a column of some 30 French Sagaie armored vehicles had set off toward rebel positions from the town of Niono, 300 km (190 miles) from the capital, Bamako.

A Malian military source said French special forces units were taking part in the operation. Guillaud said France's strikes, involving Rafale and Mirage jet fighters, were being hampered because militants were sheltering among civilians.

Many inhabitants of northern Mali have welcomed the French attacks, although some also fear being caught in the cross-fire.

Hollande said on Tuesday that French forces would remain in Mali until stability returned to the West African nation.

The conflict, in a landlocked state of 15 million twice the size of France, has displaced an estimated 30,000 people and raised concerns across mostly Muslim West Africa of a radicalization of Islam in the region.

But many who have lived for many months under harsh and violent Islamist rule said they welcomed the French.

"There is a great hope," one man said from Timbuktu, where he said Islamist fighters were trying to blend into civilian neighborhoods. "We hope that the city will be freed soon."

(Additional reporting by Pascal Fletcher and Andrew Callus in London, Balazs Koranyi in Oslo, Laurent Prieur in Nouakchott, Daniel Flynn in Dakar, John Irish, Catherine Bremer and Nick Vinocur in Paris, David Alexander in Rome and Andrew Quinn in Washington; Writing by Alastair Macdonald; Editing by Peter Cooney)

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BlackBerry maker plans local skate, publicity in Waterloo to celebrate new phone

WATERLOO, Ont. – Call it BlackBerry Town, even if the name isn’t official.

In the lead up to the BlackBerry smartphone unveiling later this month, creator Research In Motion is turning its Waterloo, Ont., home base into a celebration of the device.

The company plans to decorate light poles in areas of Waterloo and neighbouring Kitchener with banners that promote its latest smartphone and thank the community for its support.

City councillors in Kitchener voted earlier this week to make an exception to rules that prevent corporations from using public property to advertise.

RIM says it is making plans for other events as well.

The company will hold skating rink parties at Kitchener City Hall and in Waterloo Town Square on Jan. 30 to coincide with the unveiling of its new BlackBerry devices.

Gadgets News Headlines – Yahoo! News

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Baby Boy on the Way for Kara DioGuardi

Mom & Babies
Celebrity Baby Blog

01/16/2013 at 08:15 PM ET

Cindy Ord/Getty

Kara DioGuardi is going to be a mom!

The Grammy-nominated songwriter, who also served as a judge on American Idol‘s eighth and ninth seasons, confirms to PEOPLE exclusively that she and husband Mike McCuddy will welcome their first child via gestational surrogate in the coming weeks.

“We are eagerly awaiting the healthy and happy birth of our son Greyson James Carroll McCuddy,” DioGuardi, 42, tells PEOPLE.

After years of struggling with fertility issues and multiple failed IVF attempts, the couple, who wed in 2009, decided to explore other paths to parenthood — including adoption and surrogacy.

In the end, says DioGuardi, “We made a personal decision to try with a surrogate. I asked someone we knew, a friend. And on the first try, it worked.”

“We’re praying for our surrogate, that she gets through this and that it’s as easy on her as it can possibly be, because she’s been a gem throughout the whole process,” says the songwriter and music publisher.

“I’ve got two people on my mind: her and the baby. She’s given us this incredible gift.”

– Marisa Laudadio

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Large study confirms flu vaccine safe in pregnancy

NEW YORK (AP) — A large study offers reassuring news for pregnant women: It's safe to get a flu shot.

The research found no evidence that the vaccine increases the risk of losing a fetus, and may prevent some deaths. Getting the flu while pregnant makes fetal death more likely, the Norwegian research showed.

The flu vaccine has long been considered safe for pregnant women and their fetus. U.S. health officials began recommending flu shots for them more than five decades ago, following a higher death rate in pregnant women during a flu pandemic in the late 1950s.

But the study is perhaps the largest look at the safety and value of flu vaccination during pregnancy, experts say.

"This is the kind of information we need to provide our patients when discussing that flu vaccine is important for everyone, particularly for pregnant women," said Dr. Geeta Swamy, a researcher who studies vaccines and pregnant women at Duke University Medical Center.

The study was released by the New England Journal of Medicine on Wednesday as the United States and Europe suffer through an early and intense flu season. A U.S. obstetricians group this week reminded members that it's not too late for their pregnant patients to get vaccinated.

The new study was led by the Norwegian Institute of Public Health. It tracked pregnancies in Norway in 2009 and 2010 during an international epidemic of a new swine flu strain.

Before 2009, pregnant women in Norway were not routinely advised to get flu shots. But during the pandemic, vaccinations against the new strain were recommended for those in their second or third trimester.

The study focused on more than 113,000 pregnancies. Of those, 492 ended in the death of the fetus. The researchers calculated that the risk of fetal death was nearly twice as high for women who weren't vaccinated as it was in vaccinated mothers.

U.S. flu vaccination rates for pregnant women grew in the wake of the 2009 swine flu pandemic, from less than 15 percent to about 50 percent. But health officials say those rates need to be higher to protect newborns as well. Infants can't be vaccinated until 6 months, but studies have shown they pick up some protection if their mothers got the annual shot, experts say.

Because some drugs and vaccines can be harmful to a fetus, there is a long-standing concern about giving any medicine to a pregnant woman, experts acknowledged. But this study should ease any worries about the flu shot, said Dr. Denise Jamieson of the Centers for Disease Control and Prevention.

"The vaccine is safe," she said.

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Online:

Medical journal: http://www.nejm.org

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