World powers, Iran bid to break nuclear stalemate

ALMATY, Kazakhstan: World powers meet negotiators from Iran in Kazakhstan on Tuesday in the hope of reaching a breakthrough in the decade-long crisis over its nuclear programme, despite low expectations after years of dashed hopes.

They are hoping to coax concessions out of Iran by advancing a new offer but Tehran has already doused expectations by installing new centrifuges and saying it will not go beyond existing obligations.

The two-day meeting under the shadow of the Tien Shan mountains in the Kazakh city of Almaty comes as sanctions bite against the Islamic republic and Israel still refuses to rule out air strikes to knock out Iran's suspected nuclear weapons drive.

Little apparent progress has been made since the last such session of talks in Moscow in June 2012 ended without any breakthrough and the crux of the dispute remains Iran's insistence on not abandoning uranium enrichment operations.

"We don't expect any breakthrough. The Iranians have made different declarations in the last days. It depends if you take the positive or the negative ones," said one Western official who asked not to be named.

World powers will present Iran with a "good" offer, said Michael Mann, the spokesman for EU foreign policy chief Catherine Ashton.

"We hope that Iran will seize this opportunity and come to the talks with flexibility and commitment to make concrete progress towards a confidence-building step."

A source close to the negotiations said that the world powers in their offer would stick to their insistence that Iran halts enriching uranium to 20 percent, shuts down its controversial Fordo uranium enrichment plant and sends abroad all uranium already enriched to 20 percent.

Previous reports have said that Iran could in return be offered a softening of the sanctions regime against Tehran, possibly starting with a lifting of measures against its gold industry.

The atmosphere has already been clouded by a UN nuclear watchdog report saying Iran started installing next-generation centrifuges at its Natanz nuclear plant, a move Washington said would be "provocative".

Meanwhile, chief Iranian nuclear negotiator Saeed Jalili said Saturday Tehran will not go beyond its obligations or accept anything outside its rights under the non-proliferation treaty (NPT).

Iran's supreme leader Ayatollah Ali Khamenei, who has the last say in all foreign policy matters, has effectively rejected the offer of direct US talks and appeared to order a tough line in Almaty.

Khamenei defiantly claimed earlier this month that even though Iran has no intention of developing nuclear weapons, the United States could not thwart Tehran if it wanted to.

The talks involve the so-called 5+1 world powers on one side -- Britain, China, France, Germany, Russia and the United States -- and Iran's team led by Jalili on the other.

They come with the lingering threat of Israel launching a unilateral strike on Iran just as it had done against the Osirak nuclear reactor in Saddam Hussein's Iraq in 1981.

Such action would almost certainly drag the United States into a conflict it clearly wants to avoid and leave the global economy in peril due to the impact on the price of oil.

Strikes would also risk sparking a broader Middle East conflict -- a danger the region can hardly afford with the violence raging in Syria.

Analysts said Israel's "red line" would be a decision by Iran to enrich uranium above its current upper limit of 20 percent -- within reach of weapons-grade uranium but necessary for Iran's medical research.

Iran already has a nuclear power plant in the southern city of Bushehr -- built with Russian help -- but Khamenei has described atomic weapons as a "sin".

- AFP/fl

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Foursquare checks in to more revenue with credit card specials

Foursquare's latest offer: attach a Visa or MasterCard to your account and get $1 credited back to your card when spend $10 at Burger King.

(Credit:
Foursquare)

Money in the bank. That's the motivation behind a new Foursquare initiative that lets members link their Visa and MasterCard credit or debit cards and redeem money-back specials from participating merchants.

Foursquare, a company banking on check-ins to power its Explore discovery feature, aims to encourage more of its 30 million members to tell the application where they are with the additional freebies. The places-centric social network also hopes to cash in from the program. The company pockets a fee for every credit redemption it processes.

Today's announcement marks the first significant expansion to the startup's credit card specials program, which Foursquare launched exclusively with American Express two years ago. The program gives people automatic, coupon-free credit rewards for shopping at select venues.

Members can now sync Visa and MasterCard credit or debit cards with Foursquare to get $1 credited back to their accounts when they spend $10 or more at fast-food chain Burger King, the initial partner for the expanded program.

"Foursquare is in the business of connecting people with places, and places with people," Product Manager Noah Weiss told CNET. "We make money when those two parties are happy."

So how does it work, exactly? It's not simple, but it's also not terribly complicated either. People will see the Burger King credit card special when they check-in to the establishment or find it through Foursquare's Explore tab, which highlights nearby specials and places that might of be interest to individuals. After a person sync's his or her card with Foursquare, he or she can click to redeem the offer, and pay with the credit or debit card in question as they normally would -- meaning no coupon or voucher is required.

In the background, a company called First Data, Foursquare's technology partner, recognizes the transaction and offer to credit the special amount, in this case $1 at Burger King, back to the person's Visa or MasterCard account.

Foursquare still maintains a special relationship with AmEx, which has its own custom technology powering the purchase-to-credit process on Foursquare. The prestigious card company, for instance, is expanding its own presence on the location platform with a new spend-$20, get-$5-back special at AMC Theaters. Weiss said that hundreds of thousands of users have saved many millions of dollars as a result of the AmEx credit card specials. While he still considers credit card specials a "pilot" program for Foursquare, the deals, which net Foursquare a fee for each redemption, will eventually grow into a core pillar, alongside promoted updates and other to-be-announced merchant-friendly tools, of the startup's revenue model. Hopefully sooner rather than later. The Wall Street Journal reported that the company expected to bring in a measly $2 million in revenue for all of 2012.

Burger King is the first merchant partner to embrace the Visa and MasterCard credit rewards, but Weiss said that additional campaigns will be rolling out to users in the weeks ahead.

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Former Surgeon General C. Everett Koop dies at 96

C. Everett Koop, who raised the profile of the surgeon general by riveting America's attention on the then-emerging disease known as AIDS and by railing against smoking, has died in New Hampshire at age 96.

The Geisel School of Medicine at Dartmouth said in a release that Koop died peacefully in his home in Hanover on Monday. They did not disclose a cause of death

Koop wielded the previously low-profile post of surgeon general as a bully pulpit for seven years during the Reagan and George H.W. Bush administrations.

An evangelical Christian, he shocked his conservative supporters when he endorsed condoms and sex education to stop the spread of AIDS.

He carried out a crusade to end smoking in the United States -- his goal had been to do so by the year 2000. A former pipe smoker, he said cigarettes were as addictive as heroin and cocaine.

Koop's impact was great, although the surgeon general has no real authority to set government policy. He described himself as "the health conscience of the country."

"My only influence was through moral suasion," Koop said just before leaving office in 1989. By then, his Amish-style silver beard and white, braided uniform were instantly recognizable.

Out of office, he switched to business suits and bow ties, but continued to promote public health causes, from preventing childhood accidents to better training for doctors.

"I will use the written word, the spoken word and whatever I can in the electronic media to deliver health messages to this country as long as people will listen," he promised.

In 1996, he rapped Republican hopeful Bob Dole for suggesting that tobacco is not invariably addictive, saying Dole's comments "either exposed his abysmal lack of knowledge of nicotine addiction or his blind support of the tobacco industry."

Although he eventually won wide respect with his blend of old-fashioned values, pragmatism and empathy, Koop's nomination in 1981 met a wall of opposition from women's groups and liberal politicians.

Critics said President Reagan selected Koop, a pediatric surgeon from Philadelphia, only because of his conservative views -- especially his staunch opposition to abortion.

Foes noted that Koop traveled the country in 1979 and 1980 giving speeches that predicted a progression "from liberalized abortion to infanticide to passive euthanasia to active euthanasia, indeed to the very beginnings of the political climate that led to Auschwitz, Dachau and Belsen."

But Koop, a devout Presbyterian, was confirmed after he told a Senate panel he would not use the surgeon general's post to promote his religious ideology. He kept his word.

In 1986, he issued a frank report on AIDS, urging the use of condoms for "safe sex" and advocating sex education as early as third grade.

He also maneuvered around uncooperative Reagan administration officials in 1988 to send an educational AIDS pamphlet to more than 100 million U.S. households -- the largest public health mailing ever done.

Koop personally opposed homosexuality and believed sex should be saved for marriage. But he insisted that Americans, especially young people, must not die because they were deprived of explicit information about how the HIV virus was transmitted.

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Americans Targeted for Allegedly Running Underage Prostitution in Philippines

Arthur Benjamin is sitting at the edge of a small stage, wearing a lavender Hawaiian shirt and nursing a bottle of San Miguel Light beer. The 6-foot-6 mustachioed Texan lazily watches the half dozen or so girls dancing rather unenergetically around the stage's pole.

"I forgot your gift again, it's in the car," Benjamin says to one of the girls on stage, shouting above the pop music blaring from the speaker system.

The small, dingy bar, which Benjamin says he owns, is called Crow Bar. It's in a rundown part of the picturesque Subic Bay in the western Philippines, about a three hour drive from the capital, Manila. Home for 50 years to a United States naval base, Subic Bay has become synonymous with foreigners looking for sex in the long string of bars that line the main road along the coast.

Watch the full story on "Nightline" TONIGHT at 12:35 a.m. ET

The bars in this area are often packed with older foreign men ogling the young Filipina women available for the night for a "bar fine" of around 1,500 Filipino pesos, or just over $35. Many of the bars are owned and operated by Americans, often former military servicemen who either served on the base or whose ships docked here until the base was shuttered under political pressure in 1992.

Most of the prostitutes working in the bars are indeed 18 or older. But in the Philippines, just a small scratch to the surface can reveal a layer of young, underage girls who have mostly come from impoverished rural provinces to sell their bodies to help support their families.

Benjamin, 49, is, according to his own statements, one of the countless foreigners who has moved beyond just having sex with underage girls to owning and operating a bar where girls in scantily-clad outfits flaunt their bodies for patrons.

"My wife recently found out that I have this place," he tells an ABC News "Nightline" team, unaware they are journalists and recording the conversation on tiny hidden cameras disguised as shirt buttons.

Benjamin said that a "disgruntled waitress" had written his wife on Facebook, detailing his activities in Subic Bay.

"She sent her this thing saying that I have underage girls who stayed with me, that I [have anal sex with them], I own a bar, I've got other girls that I'm putting through high school, all this other crap," he said.

"All of which is true," he laughed. "However, I have to deny."

He sends a text message summoning his current girlfriend, a petite dark-skinned girl called Jade, who he said is just 16 years old. Benjamin says he bought the bar for her about a year ago and while most still call it Crow Bar, he officially re-named it with her last name.

"She needed a place to stay, I needed a place to do her. I bought a bar for her," he says, explaining that she lives in a house out back by the beach.

"You're not going to find anything like this in the States, not as a guy my age," he said as he looked down at Jade. "Ain't going to happen."

Benjamin is the latest target of Father Shay Cullen, a Catholic priest with a thick Irish brogue and fluency in the local language, Tagalog. Through his non-profit center called Preda, he's been crusading against underage sex trafficking in the Philippines for 40 years.

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Swimming: Magnussen reveals sleeping tabs 'tradition'

SYDNEY: World 100m freestyle champion James Magnussen -- who led the much-vaunted 4x100m Australian relay team which bombed spectacularly at the 2012 Olympics -- has claimed taking sleeping tablets was "a tradition".

The team last week admitted taking the prescription drug Stilnox, banned by the Australian Olympic Committee (AOC), as part of a "bonding exercise" ahead of the Games in London, where they failed even to reach the podium.

Five of the six team members took one of the sleeping tablets at a staging camp in Manchester after seeing a movie and going to dinner in a bid to build unity in the fiercely competitive team.

In an interview with Channel Seven aired late Sunday, Magnussen said during dinner that the discussion had turned to what previous relay teams had done to bond and the group had collectively decided to take the drug.

"The tradition had been, and what we did, was take Stilnox on its own with water," he said.

"We then sat around telling jokes, you know laughing, carrying on. It was really, I think, for a lot of us a chance to take a step back from the pressure."

Australian swimmers had previously used Stilnox to ensure a good night's rest before competition until the AOC banned it in the lead-up to London.

But use of the drug had been discouraged as far back as 2005, according to The Australian newspaper, which said former relay swimmers Michael Klim, Ashley Callus and Andrew Lauterstein had all denied taking it as a bonding tradition.

Recreational users of Stilnox often deliberately try to stay awake, which can induce a "high" and even cause hallucinations.

Magnussen, 21, denied he was out of control on the night when the team engaged in misbehaviour including door-knocking and prank-calling teammates but said he would not be repeating the incident.

The swimmer said he had learned "a lot about the repercussions of my behaviour" and admitted to being too arrogant before the Games.

"It has taken me a lot of reflection and a lot of time to admit that," he said. "But again I was inexperienced and I didn't know how big of a deal and how big of an event the Olympics was and how much of a part it was going to play mentally, and I didn't cope with it."

London was Australian swimming's first Games without an individual gold medal since the 1976 Montreal Olympics and marked Australia's lowest medal haul in the sport since Barcelona in 1992 with just one gold, six silver and three bronze.

Two reports into what went wrong in London found the squad lacked leadership and that "toxic" incidents such as drunkenness and bullying had gone unchecked.

-AFP/sb

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How MasterCard plans to transform mobile purchases

Pay for goods using MasterPass loaded on a smartphone.

(Credit:
MasterCard)

BARCELONA, Spain--The hype around mobile payments is just the tip of the iceberg when it comes to the coming transformation for how people purchase goods and services.

That's according to Ed McLaughlin, chief emerging payments officer for MasterCard, who spoke with CNET about his company's vision.
While at the Mobile World Congress conference, MasterCard unveiled its MasterPass system, which addresses not only mobile payments, but also all forms of digital transactions. MasterPass is designed for purchases made in stores, online, or on the phone.
"It's a foundation for moving to a world beyond plastic," McLaughlin said. "We're in a generational shift from the physical to the connected digital."

While other players are focusing on the traditional concept of mobile payment, or the idea of flashing your smartphone in front of a cash register to pay for clothes, food, and other items, MasterPass will attempt to unify all transactions under one system.
As a result, both the merchant and consumer have a consistent experience whether the purchase is made at the cash register with a phone or credit card, online, or through a browser on the smartphone.
"There's no e-commerce or m-commerce, there's just commerce," McLaughlin said.

That's not to say that mobile payments isn't a huge driver of what's going on in the industry, including at MasterCard. There are a few initiatives out there, on which MasterCard is also playing a part. Google, for instance, has had its Google Wallet out in the market for roughly a year and a half, but has seen limited adoption. ISIS, a joint venture between Verizon Wireless, AT&T, and T-Mobile, has started testing the service in Salt Lake City and Austin, Texas.

MasterPass is intended to tie it all together. For the consumer, MasterPass is a place to securely store credit card data, address books, and other important information in the cloud. It acts as a digital wallet that can use other branded credit cards as well. Bank, merchants, and other companies can offer their own wallets to consumers that are tied into MasterPass too. For online purchases, consumers can opt for a simpler checkout process with retailers who are participating in the program.

For merchants, MasterPass also includes a consistent method of accepting electronic payments regardless of location or device. More retailers are opting to use near-field communication, or NFC, technology to enable tap-and-pay functions at the register, as well as experimenting with different methods like the use of QR codes, and MasterPass is designed to address all of the different options.


Consumers in Australia and Canada will be able to sign up for the service through financial institutions in March. The U.S. will get access to it in the spring, the U.K. will get it in the summer, and it will gradually expand to other parts of the world, including China, Brazil and Spain.
MasterCard has lined up scores of financial institutions, including Citi and Commonwealth Bank in the U.S., merchants, and technology partners to help roll out the service.
So what's taking so long?

McLaughlin has an interesting way of describing the transition to a digital payments world: "It's happening, and it will happen when it gets better."

The seemingly contradictory statement underscores perfectly the complexity and snail's pace of progress that has weighed on the progress of mobile payments. The services and features are here, as evidenced by the initiatives of Google and the carriers, but for many people, it hasn't yet happened and things still need to get a lot better.
Just as it took a long time for consumers to warm up to the idea of paying bills through a Web site, there will be a slow progression toward getting people to take their wallet into the cloud.
It's been a journey just to get to where things are today. Previously, the carriers, banks, payment networks, and merchants all disagreed over which parties would take what cut. Ultimately, does the bank serve the customer? A merchant? Or Google? These are issues the payments industry is still settling.

MasterCard, for its part, is staying out of the fray. The company intends to stay in the background, aside from the MasterPass logo, and preserve the relationship between the merchant or bank and the consumer.

There remains, however, reluctance over the safety of these services, as well as a general lack of awareness. But ultimately, the move to digital is a good thing for consumers, McLaughlin said. For the first time, the act of paying could potentially become both easier and more secure. With traditional plastic credit cards, any effort to make things convenient often resulted in higher risks for the consumer.

Services such as MasterPass, or the ones provided by companies such as Square and Starbucks, also enable new ways to purchase items. Even now, restaurants and stores are experimenting with allowing consumers to order food or goods through mobile point-of-sale devices, allowing them to avoid checkout lines.
"It's an extension of what we've been talking about," McLaughlin said. "It's a huge leap forward."

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Oscars 2013: Stars dazzle on the red carpet

Stars dazzled on the Oscars red carpet Sunday night in Los Angeles, wearing shades of red and blue, along with neutral tones -- and practically everything in between.

67 Photos

Oscars 2013: Red carpet

"Silver Linings Playbook" actress Jennifer Lawrence opted to wear her hair pulled back as she walked the red carpet in a strapless Dior Haute Couture gown, reminiscent of a bride's dress. While speaking with host Kristin Chenoweth on ABC's red carpet pre-show, Lawrence mentioned how she was excited to see Sally Field and her new buddy Laura Dern at the Oscars.

Nine-year-old actress Quvenzhane Wallis donned a blue Armani Junior gown, and of course, carried her pooch purse, which has become her staple on the red carpet.

Jessica Chastain, in a stunning Armani Prive gown and vintage Harry Winston jewelry, told the story behind her dress choice. "It came down to old Hollywood for me," she said, adding, "What I love so much about this dress is the pink beads and underneath it's copper."

Chastain wasn't the only actress wearing Armani; Naomi Watts also chose the designer for her beaded gown.

Kerry Washington walked the red carpet in a Miu Miu dress, Christian Louboutin shoes, a Prada bag, earrings by Chopard and a Fred Leighton ring. When asked about her dress' interesting hue, Washington described it as "Coral-ly, red, hot pink and copper...I can't really put a name on the color."

Amanda Seyfried, wearing a fitted Alexander McQueen dress, said on the red carpet, "I can't sit down and I feel like my organs are being pulled out of my body slowly."

"Lincoln" star Field stood out in a red gown, while Jennifer Aniston, also in red, said her Valentino gown felt "very princess." Reese Witherspoon opted for a strapless bright royal blue number with black across to the top, designed by Louis Vuitton. "I saw this dress and I just loved the color, " said Witherspoon, who also donned Louis Vuitton jewelry.

Amy Adams, meanwhile, sported a flowing Oscar de la Renta powder blue dress with tiered layers throughout the large ballskirt.

Prada was a last-minute decision for Anne Hathaway, who said she decided on her blush-colored dress only three hours before her red-carpet arrival. She paired her gown with a sparkly Tiffany necklace.

Jennifer Garner, in a strapless plum Gucci gown, did a bit more planning, telling, Chenoweth, "They made it for me...I loved this from the minute I saw the first sketch."

Halle Berry, in a black and silver-striped Versace dress, said she wanted to go "as a Bond girl to the Oscars."

Gold also made its way onto the red carpet. Rennee Zellweger chose a gold Carolina Herrera gown, one of her favorite designers and one she describes as "easy" to wear.

"Skyfall" songstress Adele, sporting a black gown, joked, "My dress weighs 50 kilos."

Tell us: Who was your favorite on the red carpet?

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Oscars 2013: 'Argo' Wins Best Picture

"Argo" took home the top prize as best picture at the Oscars Sunday night, with first lady Michelle Obama announcing the winner from the White House.

"You directed a hell of a film," co-producer Grant Heslov told director and fellow producer Ben Affleck. "I couldn't be more proud of the film and more proud of our director."

Affleck was snubbed in the directing category but humbly accepted the best picture Oscar as one of the three producers on the film. George Clooney was the third.

Affleck thanked Stephen Spielberg and the other best picture nominees and his wife Jennifer Garner for "working on our marriage."

"It's good, it's work," he said, adding, "but there's no one I'd rather work with."

For Full List of Winners

Acknowledging his last Oscar win, as a screenwriter for "Good Will Hunting," Affleck said, "I was really just a kid. I never thought I would be back here."

In the acting categories, Daniel Day-Lewis won the Oscar for best actor, being the first actor to three-peat in that category. As he accepted the award from Hollywood's greatest actress, Meryl Streep, he joked, "I had actually been committed to play Margaret Thatcher. ... Meryl was Stephen's first choice for Lincoln."

He also thanked his wife, Rebecca Miller, for "living with some very strange men," with each new role that he takes on.

"She's the versatile one in the family and she's been the perfect companion to all of them," he said.

Kevin Winter/Getty Images

Jennifer Lewis won the award for best actress. She tripped on the stairs on her way to accepting her award but picked herself up and made her way to the stage, earning a standing ovation.

"You're just standing up because you feel bad that I fell and that's embarrassing," she said, before rattling off a list of thank-yous and leaving the stage looking slightly stunned.

Related: Oscars 2013 Live Blog

"Life of Pi," which had a total of 11 nominations, was another big winner of the night. Director Ang Lee took home the Oscar for best director over Stephen Spielberg and David O. Russell.

"Thank you, movie god," Lee said, accepting his award.

As expected, the film took home the first technical awards of the night for cinematography and visual effects. "Life of Pi" also won for best original score.

The first big acting awards of the night went to Christoph Waltz and Anne Hathaway in the supporting actor categories.

In one of the biggest tossups, Waltz claimed the award for supporting actor for his role in "Django Unchained." It was his second Oscar for a Quentin Tarantino film; his first was for Tarantino's "Inglourious Basterds."

PHOTOS: Stars on the Red Carpet

As expected, Hathaway took home the award for best supporting actress for her role as Fantine in "Les Miserables."

"It came true," she said, launching into a breathy speech, in which she thanked the cast and crew, her team and her husband. "The greatest moment of my life was when you walked into it," she said.

Quentin Tarantino won the Oscar for best original screenplay for his slave revenge western "Django Unchained." He thanked his cast.

"I have to cast the right people," he said. "And boy this time did I do it."

Chris Terrio won the award for best adapted screenplay for "Argo," which also won for film editing.

For only the sixth time in Academy history, there was a tie at the Oscars. "Zero Dark Thirty" and "Skyfall" tied for sound editing.

See Other Ties in Academy History

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Italians head to polls in crucial vote for euro zone

ROME (Reuters) - Italians vote on Sunday in one of the most closely watched elections in years with markets nervous about whether it will produce a strong government to pull Italy out of recession and help resolve the euro zone debt crisis.

A huge final rally by anti-establishment-comedian-turned-politician Beppe Grillo on Friday before a campaigning ban kicked in has highlighted public anger at traditional parties and added to uncertainty about the election outcome.

Polling booths will open between 02:00 am-04:00 pm EST on Sunday and 01:00 am-09:00 am EST on Monday. Exit polls will come out soon after voting ends and official results are expected by early Tuesday.

The election will be followed closely by financial markets with memories still fresh of the potentially catastrophic debt crisis that brought technocrat Prime Minister Mario Monti to power more than a year ago.

Italy, the euro zone's third-largest economy, is stuck in deep recession, struggling under a public debt burden second only to Greece's in the 17-member currency bloc and with a public weary of more than a year of harsh austerity policies.

Italy's Interior Ministry has urged some 47 million eligible voters to not let bad weather forecasts put them off, and said it was prepared to handle even snowy conditions in some northern regions to ensure everyone had a chance to vote.

Final polls published two weeks ago showed center-left leader Pier Luigi Bersani with a five-point lead, but analysts disagree about whether he will be able to form a stable majority that can push though the economic reforms Italy needs.

Bersani is now thought to be just a few points ahead of center-right rival Silvio Berlusconi, the four-times prime minister who has promised tax refunds and staged a media blitz in an attempt to win back voters in recent weeks.

While the center left is still expected to gain control of the lower house thanks to rules that guarantee a strong majority to whichever party wins the most votes nationally, a much closer battle will be fought in the Senate, which any government also needs to control in order to be able to pass laws.

Seats in the upper house are awarded on a region-by-region basis, meaning that support in key regions can decisively influence the overall result.

Pollsters still believe the most likely outcome is a center-left government headed by Bersani and possibly backed by Monti, who is leading a centrist coalition.

But strong campaigning by Berlusconi and the fiery Grillo, who has drawn tens of thousands to his election rallies, have thrown the election wide open, causing concern that there may be no clear winner.

Whatever government emerges from the vote will have the task of pulling Italy out of its longest recession for 20 years and reviving an economy largely stagnant for two decades.

The main danger for Italy and the euro zone is a weak government incapable of taking firm action, which would rattle investors and could ignite a new debt crisis.

Monti replaced Berlusconi in November 2011 after the euro zone's third-largest economy came close to Greek-style financial meltdown while the center-right government was embroiled in scandals.

The former European Commissioner launched a tough program of spending cuts, tax hikes and pension reforms which won widespread international backing and helped restore Italy's credibility abroad after the scandals of the Berlusconi era.

Italy's borrowing costs have since fallen sharply after the European Central Bank pledged it was prepared to support countries undertaking reforms by buying unlimited quantities of their bonds on the markets.

But economic austerity has fuelled anger among Italians grappling with rising unemployment and shrinking disposable incomes, encouraging many to turn to Grillo, who has tapped into a national mood of disenchantment.

(Reporting by Catherine Hornby; Editing by Jason Webb)

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China gold output up nearly 12% in 2012: report

SHANGHAI: Gold production in China, the world's second largest market for the precious metal, surged nearly 12 percent year-on-year last year despite a slowdown in the domestic economy, state media reported.

Output rose to 403.1 tonnes in 2012, up 11.66 percent from 2011, the official Xinhua news agency said late Saturday, quoting figures from the Ministry of Industry and Information Technology.

China is the world's second largest consumer of gold after India. A global industry group, the World Gold Council, has put China's consumer demand for gold at 776.1 tonnes last year, flat from 2011.

The council attributed the stable Chinese demand to a slowdown in the domestic economy and consolidation in gold prices which discouraged investors, according to its latest report released this month.

China's economy -- the world's second largest -- grew at its slowest pace in 13 years in 2012, expanding 7.8 percent from the year before.

But the economy has been showing renewed vigour since late last year, with growth accelerating in the final three months of 2012 to 7.9 percent, snapping seven straight quarters of weakening expansion.

"The signs of economic improvement bode well for gold demand in China, although the indications are for a steady firming of demand rather than for strong growth," the World Gold Council said.

China's Ministry of Industry said domestic gold prices dropped in December last year as worries over the US "fiscal cliff" caused uncertainty.

US lawmakers clinched a last-gasp deal to avoid the fiscal cliff of tax hikes and spending cuts.

China's gold producers recorded a combined 35 billion yuan (US$5.6 billion) in profits last year, up just 4.0 percent from 2011, the ministry said.

- AFP/ir

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