Twenty dead in Taliban siege of Afghan hotel

An Afghan policeman walks at the Spozhmai hotel on the outskirts of Kabul

(Reuters) - Elite Afghan police backed by NATO forces ended a 12-hour siege on Friday at a popular lakeside hotel outside Kabul, leaving at least 20 dead after Taliban gunmen stormed the lakeside building, bursting into a party and seizing dozens of hostages.

The night-time assault on the hotel with rocket-propelled grenades, suicide vests and machine guns again proved how potent the Islamist insurgency remains after a decade of war.

The commander of NATO forces in Afghanistan said the attack bore the signature of the Taliban-linked Haqqani group that he said continued to operate from Pakistan, a charge that could further escalate tensions with Islamabad.

General John Allen's comments come days after U.S. Defense Secretary Leon Panetta said Washington was at the limits of its patience with Pakistan over the existence of militant networks including the Haqqanis.

Pakistan says it is doing everything it can to fight militants on its side of the border and accuses Afghanistan of trying to shift the blame for its failure to combat the insurgency.

At the hotel, terrified guests jumped into the lake in the darkness to escape the carnage, Afghan officials and residents said. Up to 300 people had been inside the hotel when the attack began.

Afghan interior ministry spokesman Sediq Sediqqi said 12 to 15 civilians, two hotel guards and a policeman were killed in the gunbattle at the Spozhmai hotel, overlooking Qargha Lake. Five attackers were also killed.

The attack, quickly claimed by the Afghan Taliban, again showed the ability of insurgents to stage high-profile raids even as NATO nations prepare to withdraw most of their combat troops by the end of 2014 and leave Afghans to lead the fight.

"Afghan National Security Forces and coalition military sources acknowledge that this attack bears the signature of the Haqqani network, which continues to target and kill innocent Afghans and blatantly violate Afghan sovereignty from the safety of Pakistan," General Allen said in a statement.

Blood was splattered over the hotel floor and the crumpled body of a man lay in the garden. Women and children were among the wounded.

"We heard a heavy explosion from a rocket-propelled grenade. We tried to escape, but we were surrounded by suicide bombers. We hid ourselves behind a tree until morning. God protected us," said Abdullah Samadi, 24.

The gunmen, Samadi said, had been closely watching their prisoners and searching for illegal stocks of wine.

"Around dawn they came closer to us and we had to jump in the water. We were there until 9 a.m. and then the situation got better and we slowly, slowly swam toward security forces," he said.

Sediqqi said the Taliban were using civilians as human shields to defend themselves and held about 50 people hostage late into Friday morning.

Elite Afghan quick-response police backed by NATO troops freed at least 35 hostages in an operation that only began in earnest after sunrise to help security forces avoid civilian deaths in night-time confusion.

The Taliban complained wealthy Afghans and foreigners used the hotel, about 10 km (6 miles) from the center of Kabul, for "prostitution" and "wild parties" ahead of the Friday religious day holiday.

Launching their annual offensive this spring, the Taliban threatened to attack more government officials and rich Afghans, but the hotel assault was one of few in which multiple hostages were taken since the start of the war, now in its 11th year.

President Hamid Karzai said attacking a place where people went for picnics was a sign of defeat for the enemies of Afghanistan.

"This is a crime against humanity because they targeted children, women and civilians picnicking at the lake. There wasn't even a single soldier around there," said General Mohammad Zahir, head of the Kabul police investigation unit.

Television pictures showed several people wading out of the lake onto a balcony and clambering over a wall to safety.

NATO attack helicopters could be seen over the single-storey hotel building and a balcony popular with guests for its sunset views, while a pall of smoke rose into the air.

NEW FACE OF INSURGENCY?

Soldiers and police fanned out around the hotel at dawn, arriving in cars and armored Humvee vehicles and taking cover behind trees flanking the lake and a nearby golf course.

Qargha Lake is one of Kabul's few options for weekend getaways. Restaurants and hotels that dot the shore are popular with Afghan government officials and businessmen, particularly on Thursday nights.

Guests at the Spozhmai must pass through security checks before entering the hotel, where tables with umbrellas overlook the water, but security is relatively light for a city vulnerable to militant attacks.

Violence across Afghanistan has surged in recent days, with three U.S. soldiers and more than a dozen civilians killed in successive attacks, mostly in the country's east, where NATO-led forces have focused their efforts during the summer fighting months.

NATO commanders, halfway into the process of transferring security responsibility to Afghan forces, are racing through training for the Afghan army and police, including holding basic literacy classes for recruits.

Well-planned assaults in Kabul in the past year have raised questions about whether the Taliban and their al Qaeda-linked Haqqani network allies have shifted tactics to embrace attacks on landmarks, foreigners and Afghanistan's elite, extending a guerrilla war once primarily waged in the countryside.

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China's ZTE planned U.S. computer sale to Iran

ZTE Corporation

(Reuters) - China's ZTE Corp, which recently sold Iran's largest telecommunications firm a powerful surveillance system, later agreed to ship to Iran millions of dollars worth of embargoed U.S. computer equipment, documents show.

The American components were part of an 8 million euro ($10.5 million) equipment-supply contract, dated June 30, 2011, between ZTE, a Chinese trading firm and a unit of the consortium that controls the Iranian telecom, Telecommunication Co. of Iran, according to documents reviewed by Reuters. ZTE is China's second-largest telecommunications equipment maker.

The documents shed further light on how Iran obtains sophisticated American tech products despite U.S. sanctions on Iran. China is a major conduit. Reuters in March revealed an earlier deal between ZTE and TCI, which centered on non-American surveillance equipment but also included some U.S. tech goods. The latest deal, though smaller in scale, was much more reliant on U.S. products.

Beijing and Moscow have vetoed Western attempts to strengthen sanctions against Iran over its nuclear-development program. ZTE, based in the city of Shenzhen, is publicly traded but its largest shareholder is a Chinese state-owned enterprise.

According to the contract's parts list, the equipment to be delivered from China included IBM servers; switches made by Cisco Systems Inc and Brocade Communications Systems Inc; database software from Oracle Corp and a unit of EMC Corp; Symantec back-up and ant-virus software; and a Juniper Networks firewall. The parts were intended for business-support services, including a ZTE billing system.

A spokesman for ZTE said last week in an email that "as far as we know" the company had not yet shipped any of the products. Asked if ZTE intended to do so, he emailed a new statement Monday that said: "We have no intention to implement this contract or ship the products."

He also said ZTE decided "to abandon" the agreement after "we realized that the contract involved some U.S. embargoed products."

The contract had made clear the American provenance of the goods: Its accompanying parts list, signed by ZTE, lists more than 20 different computer products from U.S. companies. Washington has banned the sale of such goods to Iran for years.

U.S. companies that responded to requests for comment said they were not aware of the Iranian contract; several said they were investigating the matter.

A spokesman for IBM said: "Our agreements with ZTE specifically prohibit ZTE from the transfer of IBM products to Iran. If any of IBM's business partners are breaching our export compliance agreements, then IBM will take appropriate actions."

A Brocade spokesman said the company doesn't sell any products to Iran "and we certainly have not shipped these products to" ZTE. A spokesman for Greenplum, the EMC unit, said: "We have no knowledge of the contract described, but are actively researching this matter." A Cisco spokesman said: "We continue to investigate this matter, as any violation of U.S. export controls is a very serious matter."

According to the U.S. Treasury Dept., a U.S. company would violate sanctions if it shipped products requiring an export license to a third party knowing the goods would end up in Iran.

The United States, Europe and the United Nations have been imposing increasingly tough economic sanctions on Iran to pressure it to refrain from developing nuclear weapons, which Iran denies it is doing. The five permanent members of the U.N. Security Council - the U.S., China, Russia, Britain and France - plus Germany are scheduled to hold talks with Iran Saturday in Istanbul over its nuclear program, which it maintains is peaceful.

Reuters reported on March 22 that ZTE had sold Iran's TCI a surveillance system capable of monitoring landline, mobile and internet communications. The system was part of a 98.6 million euro ($128.9 million) contract for networking equipment signed in December 2010.

The article reported that despite a longtime U.S. sales ban on tech products to Iran, ZTE's "Packing List" for the contract, dated July 24, 2011, also included numerous American hardware and software products, although they were not part of the surveillance system.

The U.S. product makers - which included Microsoft Corp, Hewlett-Packard Co and Dell Inc, among others - all said they were not aware of the Iranian contract, and several said they were investigating the matter.

The day after the article was published, a ZTE spokesman said the company would "curtail" its business in Iran. The company later issued a statement saying, "ZTE no longer seeks new customers in Iran and limits business activities with existing customers."

Three other telecommunications equipment makers - Ericsson, Nokia Siemens Networks and China-based Huawei Technologies - previously have said they would reduce their business in Iran. Huawei and ZTE have emerged as the largest equipment suppliers to Iran, according to people involved with the country's telecom industry.

The parts list for the June 2011 contract was much more dominated by U.S. products than the earlier equipment contract. The earlier pact was between TCI, ZTE and a Chinese trading company called Beijing 8-Star International Co. The latest contract was between ZTE, Beijing 8-Star and an Iranian company called Aryacell.

Aryacell is a unit of Iran Mobin Electronic Development Co., part of a consortium that controls TCI along with the Iranian government. According to the contract, Beijing 8-Star was required to provide "third-party equipments," while ZTE was responsible for supplying equipment and collecting payment. The contract was to last until December 31, 2015.

Officials at Aryacell and TCI did not respond to requests for comment. A representative of Beijing 8-Star, reached in China, declined to answer questions, saying: "Concerning my business matters, it's not necessary for me to tell you anything."

The contract's parts list included products made by manufacturers from several countries. But most were from the U.S., with IBM items accounting for the bulk of them. The IBM parts included 30 servers and other computer equipment with a total cost of more than 6.8 million euros ($8.9 million), minus about a 30 percent discount.

Several of the IBM server models, though new, were discontinued shortly before the contract was signed. It called for a 12-month warranty on all equipment.

It is not clear how ZTE will get out of the contract. According to the terms, the contract only can be terminated if Aryacell breaches it, becomes bankrupt or can't pay its debts.

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SEC probes exchanges' disclosure in broad inquiry

New York stock exchange

(Reuters) - Regulators are closely scrutinizing stock exchanges for failure to disclose material changes to their businesses, part of some 20 different areas of inquiry by the U.S. Securities and Exchange Commission into how the electronic marketplace works. The SEC is interested in everything from the type of orders that the exchanges have devised to allow their clients to execute trades, to whether they are properly self-policing their markets, according to people familiar with the matter.

The stepped-up inquiries, which center on a marketplace where trades are now executed at speeds far faster than a blink of the eye, were sparked by the "flash crash" in May 2010, which one official called a "game changer."

The agency is concerned the electronic exchanges may be conducting their business in a way that could provide certain clients preferential treatment.

The inquiries also coincide with an embarrassing technical glitch in March that derailed the much-anticipated initial public offering of one of the fastest-growing electronic exchanges, BATS Global Markets Inc. Failure to disclose could lead to enforcement actions by the SEC, although fraud or illicit conduct have not been a major focus, these people told Reuters. Exchanges need to disclose rule changes and get the SEC's approval. Disclosure issues tripped up exchange operator Direct Edge, which the SEC sanctioned in October after an affiliated routing broker engaged in proprietary trading, even though the exchange's rules forbade such transactions. It is also one element of the SEC's probe into BATS, which said in February that regulators sought information about certain order types and its communications with market participants. One person familiar with the matter said that the SEC is looking at whether BATS should have filed certain rules disclosing how its order types work, and also whether those order types may give some market participants an advantage over others.

BATS declined to comment. Exchanges act as self-regulatory organizations, which means they must police their own markets for abuse. The exchanges are called SROs because of that distinction. Exchanges must file SRO rules with the SEC any time a material change is made. Those rules are vetted through a public comment process, and the SEC can also intervene if it feels the proposed rule violates certain legal provisions, such as an anti-discrimination clause that prevents exchanges from favoring one group of clients over another. But over the years, as more exchanges have gone from member-owned organizations to profit-driven public companies, regulators say that the quest for profit has at times trumped self-regulatory responsibilities. Moreover, in today's world of multiple trading venues and trades measured in microseconds, the way things actually work on an exchange is not always properly communicated in an SRO's own rules. Historically, there have always been problems with exchanges at times failing to make the proper rule filings. However, after the flash crash the SEC stepped up its scrutiny of exchange oversight and started to discover repeated failures in this area. Now, the SEC has also become much more willing to recommend enforcement action for technical violations that in the past might have flown under the radar.

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Facebook launches patent counterattack against Yahoo

Facebook Vs Yahoo

(Reuters) - Facebook fired back on Tuesday in its legal battle with Yahoo by accusing the Web pioneer of infringing 10 of Facebook's patents, according to a court filing.

The counterclaim from Facebook, filed in a San Francisco federal court, comes after Yahoo a sued Facebook for patent infringement last month.

The dueling claims mark an expanding web of patent litigation that has already caught up the smartphone and tablet sectors and high-tech stalwarts such as Apple Inc, Microsoft Corp and Motorola Mobility Holdings Inc.

Yahoo's lawsuit against Facebook came at a delicate time, as the world's largest Internet social networking service is preparing for an initial public offering that could value the company at up to $100 billion.

Observers have said that companies are usually more vulnerable to patent suits when they are in the IPO process, as investors scrutinize the risks involved in the business.

But Facebook's counterclaim comes as Yahoo addresses its own challenges: the Web pioneer has seen declining revenue, and newly installed Chief Executive Scott Thompson is facing a contentious proxy fight with activist hedge fund Third Point.

Yahoo spokesman Eric Berman said Facebook's counterclaim is "nothing more than a cynical attempt to distract from the weakness of its defense."

Five of the patents asserted by Facebook target features related to Yahoo's online advertising business, which Facebook pegged at 80 percent of Yahoo's 2011 revenue, according to the counterclaim.

Yahoo's Flickr photo sharing service infringed various Facebook patents involving the ability to connect with other users on the online service, to identify people in a photo and to generate personalized news feeds, according to the filing.

At least one of the patents asserted by Facebook -- a method for tagging digital media -- lists its chief executive, Mark Zuckerberg, as one of the inventors, according to a U.S. government database.

Facebook General Counsel Ted Ullyot said the company had indicated that it would defend itself vigorously in the face of Yahoo's lawsuit.

"While we are asserting patent claims of our own, we do so in response to Yahoo's short-sighted decision to attack one of its partners and prioritize litigation over innovation," Ullyot said in a statement.

Yahoo has claimed Facebook infringed 10 of Yahoo's patents, including several that cover online advertising technology. In its lawsuit, Yahoo said Facebook was considered "one of the worst performing sites for advertising" prior to adapting Yahoo's ideas.

The case in U.S. District Court, Northern District of California is Yahoo Inc. v. Facebook Inc., 12-cv-1212.

Yahoo shares fell 2.4 percent to $15.09 in afternoon trading on Tuesday.

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U.S. soldier flown out of Afghanistan

U.S. Army soldiers from 2nd Batallion, 35th Infantry Division leave Afganistan

(Reuters) - A U.S. soldier accused of shooting dead 16 Afghan civilians has been flown out of Afghanistan, officials said, as Washington attempted to calm seething anger over a massacre that raised serious questions about the West's war strategy.

Underscoring the instability in Afghanistan, an Afghan man in a stolen pickup truck sped onto the tarmac as a plane carrying U.S. Defense Secretary Leon Panetta was about to land on Wednesday, an extraordinary security breach in a southern province next to where Sunday's massacre took place.

No one on board the military plane carrying Panetta was hurt when it landed at a British base in Helmand province. Defence officials played down the incident, saying the Pentagon chief was never in danger.

The pickup truck crashed into a ditch after it sped across the runway ramp and the driver, whose motives were unclear, emerged from the vehicle in flames.

He was being treated for burns, a Pentagon spokesman said, and a member of the NATO-led coalition was also hurt when the vehicle was stolen.

Panetta arrived for his unannounced visit three days after the massacre in neighboring Kandahar province. Although Panetta's trip was planned before the shooting, it comes as Afghan civilians and lawmakers alike demand answers.

Foremost among those demands is that the soldier responsible be tried in Afghanistan over the shooting, one of the worst of its kind since U.S.-backed Afghan forces toppled the Taliban in 2001 for harboring the al Qaeda masterminds of the September 11 attacks on the United States.

Despite those calls, the U.S. staff sergeant who gave himself up after the villagers, including nine children and three women, were killed has been flown out of Afghanistan, the Pentagon said on Wednesday.

The New York Times, citing an unidentified senior U.S. official, said the soldier had been flown to Kuwait. CNN also reported the sergeant had been taken there.

The commander of U.S. and Afghan forces in Afghanistan, General John Allen, made the decision based on a legal recommendation, a U.S. official said.

Afghan President Hamid Karzai's office was understood to have accepted that the soldier be tried in a U.S. court, provided the process was transparent and open to media.

Panetta, the most senior U.S. official to visit Afghanistan since the massacre, told U.S. troops it must not deter them from their mission to secure the country ahead of the 2014 NATO deadline for the withdrawal of foreign combat troops.

"We'll be challenged by our enemy. We'll be challenged by ourselves. We'll be challenged by the hell of war itself. But none of that, none of that, must ever deter us from the mission that we must achieve," Panetta told soldiers at Camp Leatherneck, the main U.S. Marine base in Helmand.

U.S. and other foreign soldiers listening to Panetta had been asked to leave their weapons outside, a highly unusual move that was downplayed as a gesture to Afghan troops who were unarmed during the address.

Tensions have risen sharply across Afghanistan since the attack and the inadvertent burning of copies of the Koran at the main NATO base last month, adding urgency to Panetta's visit. Panetta was to hold talks with Karzai and other Afghan leaders.

The Afghan Taliban threatened to retaliate for Sunday's shooting by beheading U.S. personnel, while insurgents also attacked investigating Afghan officials on Tuesday.

BOMB ATTACKS, PROTEST

U.S. soldiers are likely to be among those targeted, although other Westerners have also been attacked after similar incidents and Afghan civilians invariably bear the brunt of any upsurge in violence.

Earlier on Wednesday, a motorcycle bomb blast in Kandahar city -- the capital of Kandahar province, where the Panjwai village shootings happened -- killed an Afghan intelligence soldier.

A roadside bomb also killed eight civilians in Helmand.

On Tuesday, some 2,000 demonstrators chanting "Death to America" demanded Karzai reject a planned strategic pact that would allow U.S. advisers and possibly special forces to remain beyond 2014.

In Washington, President Barack Obama said after meeting British Prime Minister David Cameron he did not anticipate any sudden change in plans for the pace of withdrawing troops.

Obama described the Kandahar massacre as tragic but emphasized at a briefing with Cameron that both nations remained committed to completing the Afghan mission "responsibly".

"In terms of pace, I don't anticipate at this stage that we're going to be making any sudden additional changes to the plan that we currently have," Obama said.

NATO leaders gathering in Obama's home city of Chicago on May 20-21 will decide the next phase of the planned transition to Afghan forces, which is already under way.

The United States and Britain have the largest contingents of foreign troops in Afghanistan, but domestic support for the war has flagged, posing a challenge to Obama as he campaigns for re-election on November 6.

Obama acknowledged that people wanted the war over, but argued they still back the reason for troops being there.

In a Reuters/Ipsos poll, 40 percent of Americans said the shooting had weakened their support for the war.

Sixty-one percent of Americans surveyed in the March 12-13 poll said remaining U.S. troops should be brought home immediately, down slightly from the 66 percent with that opinion in an earlier March poll. Seventeen percent disagreed.

The U.S. military hopes to withdraw about 23,000 soldiers from Afghanistan by the end of the coming summer fighting season, leaving about 68,000.

In the two Panjwai district villages where the massacre took place, U.S. troops remain confined to the compound where the accused soldier was based.

With its mission facing growing protests, NATO said on Wednesday it planned to boost security measures for its troops, measures reached in part after the January killing of four French soldiers by a rogue Afghan soldier.

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Stunning images of Japan, a year later

Same place after one year of tsunami in Japan (Top and Bottom)

The tsunami-devastated Yamada town in Iwate prefecture is seen in two images taken on March 14, 2011 (top) and March 1, 2012, in this combination photo released by Kyodo on March 7, 2012, ahead of the one-year anniversary of the March 11 earthquake and tsunami. Mandatory Credit REUTERS/Kyodo

News and Photos by Yahoo, Credit to Reuters


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Hong Kong dentist to help check pharaoh's cavity

A Hong Kong Dentist relaxing at his chamber

(Reuters) - A Hong Kong dentist is wielding forceps to help reach for answers inside the last surviving example of the Seven Wonders of the Ancient World, the Great Pyramid of Giza.

Pulling teeth by day and devising inventions by night, Ng Tze-chuen, 59, said he organized a team working with Egypt's former antiquities minister Zahi Hawass to unlock the mystery surrounding the doors blocking two narrow shafts in the pyramid, which is the tomb of the Pharaoh Cheops, also known as Khufu.

"The Chinese have more experience with chopsticks. And a dentist has more experience in gripping with forceps," said Ng.

"Why Egypt is so interesting, it's because of the hieroglyphics. It's like a detective story. It's all waiting for me to use my grippers."

Inspired by dental forceps -- he has designed 70 of his own to properly grip the tricky crevices of patients' teeth -- Ng said his team will mount tiny grippers on an insect-sized robot expected to gently trek the winding shafts of the pyramid without causing damage to the walls.

The Great Pyramid, the largest and oldest of the three pyramids at Giza, stands 146.5 meters (482 ft) and was completed around 2,500 BC.

The two shafts, which rise from a chamber in the pyramid, and their doors have puzzled archaeologists since they were first discovered in 1872. There is some speculation that Khufu's burial chamber might lie beyond the doors.

The robot will travel up the shafts, which are so narrow only a small robot could fit, to eventually drill through the two doors. It carries a camera to record what it finds.

The international team, which will take the name Djedi -- after the magician with whom Khufu is thought to have consulted for the pyramid layout -- plans to use the robot this spring, depending on when the license to do so will be issued, Ng said.

The expansive Giza plateau is a far cry from Ng's office in a high rise amidst the concrete jungle of Hong Kong, where he said dentists prefer to talk about money and expensive cars rather than ancient Egypt or Mars, another of his passions.

"I want to test my grippers in the most secretive places," said Ng. "I want to see my tools used on sea, land and space."

He already has an impressive record and says he was behind the concept to use a rock sampling tool on board the Beagle 2 mission to Mars in 2003.

A self-described maverick as a child, with an adamant allergy to schoolwork, Ng said he was an avid daydreamer who imagined playing marbles on Mars and feels he lived on Mars in a previous incarnation.

"I always think that I was a Martian crab in my past life," added Ng, whose home is stacked with cat drawings, volumes on ancient Egypt, and books by Carl Sagan. On the walls are plaques and newspaper clippings recognising his contribution to a number of projects.

The Great Pyramid is only one of 10 missions Ng plans to finish before the age of 65. Future plans include a German rover to sample soil on the moon, a submarine rescue cutter, and a search for Cleopatra's tomb - all scrawled in marker pen on the inside of his mobile phone cover so he is constantly reminded of his dreams.

"Egypt is one of the testing grounds for my toys," he said.

Even talk of the apocryphal "Curse of the Pharaohs" said to cause the illness or death of anybody who disturbs the mummy of an ancient Egyptian doesn't faze him -- much.

"No matter, curse or no curse, I just want to take a peek. That's it," he said. "And then I will run."

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U.S. fears reprisals after Afghan shooting rampage

An Afghan man sits next to the dead bodies killed by US Army

(Reuters) - U.S. officials warned on Monday of possible reprisal attacks after 16 Afghan villagers, mostly children and women, were killed in a likely "rogue" shooting by a U.S. soldier that weakens the West's tenuous grip on a decade-old war.

Washington has rushed to distance the shootings, blamed on a lone U.S. soldier, from the efforts of the 90,000-strong U.S. force in Afghanistan, but the rampage in southern Kandahar province is certain to inflame anti-Western anger once again.

It comes less than three weeks after U.S. troops inadvertently burned copies of the Koran, the Muslim holy book, at the main NATO base in Afghanistan, sparking widespread protests in which 30 people were killed.

"The U.S. Embassy in Kabul alerts U.S. citizens in Afghanistan that as a result of a tragic shooting incident in Kandahar province involving a U.S. service member, there is a risk of anti-American feelings and protests in coming days, especially in the eastern and southern provinces," the embassy said in an emergency statement on its website.

Kandahar is the birthplace of the Taliban, toppled by U.S.-backed forces in late 2001. Southern and eastern provinces have seen some of the fiercest fighting of the war, increasingly unpopular among Americans and their European allies.

Early on Monday, the embassy said on its Twitter feed restrictions had been placed on the movements of all embassy personnel in the south.

A sharp increase in attacks on U.S. troops by Afghan forces followed the Koran burning. Sunday's incident in Kandahar was one of the worst of its kind, witnesses describing it as a "night-time massacre" that killed nine children and three women.

Villagers in three houses were attacked and many civilians were wounded, a spokesman for the NATO-led International Security Assistance Force (ISAF) said.

Deeply saddened, U.S. President Barack Obama called Afghan counterpart Hamid Karzai, promising to establish the facts quickly and "to hold fully accountable anyone responsible.

"This incident is tragic and shocking and does not represent the exceptional character of our military and the respect that the United States has for the people of Afghanistan," Obama said in a statement.

However, such incidents fuel anti-Western sentiment among Afghans and are quickly exploited by the insurgents. The Afghan Taliban said it would take revenge.


WIDESPREAD ANGER

The burning of copies of Koran at Bagram air base touched off widespread anger among Afghan officials, security forces and civilians alike. It also shows the challenges that remain as foreign forces prepare to withdraw combat troops and hand security responsibility to Afghans by the end of 2014.

Sunday's attack may also harden a growing consensus in Washington about what can be accomplished in Afghanistan even after a troop surge meant to turn the war around.

The bill for the war has already exceeded $500 billion and more than 1,900 U.S. troops have been killed, with the total number of foreign troops killed approaching 3,000.

"These killings only serve to reinforce the mindset that the whole war is broken and that there's little we can do about it beyond trying to cut our losses and leave," said Joshua Foust, a security expert with the American Security Project.

Karzai, whose relationship with his Western backers is fraught at the best of times, seethed. Civilian casualties caused by U.S. and other Western forces have long been a major cause of friction between Washington and Kabul.

He condemned the rampage as "intentional murders" and demanded an explanation. Karzai's office released a statement quoting a villager as saying "American soldiers woke my family up and shot them in the face".

There were conflicting accounts of how many U.S. soldiers were involved, with witness accounts saying there were several.

Officials from the U.S. Embassy, ISAF and from Washington said it appeared there was only one. An ISAF spokesman said the lone U.S. soldier "walked back to the base and turned himself in to U.S. forces this morning", adding there had been no military operations in the area.

The soldier in custody was described by one U.S. official in Washington as a staff sergeant who was married with three children. The sergeant had served three tours in Iraq but was on his first deployment in Afghanistan, the official said.

Neighbors and relatives of the dead said they saw a group of U.S. soldiers arrive at their village in Panjwai district, about 35 km from the provincial capital Kandahar City, at about 2 a.m. They said the soldiers entered homes and opened fire.

However, Afghan Minister of Border and Tribal Affairs Asadullah Khalid said a U.S. soldier burst into three homes near his base in the middle of the night, killing a total of 16 people, including 11 people in the first house.

Villager Haji Samad said his children and grandchildren were among 11 relatives killed.

"They (Americans) poured chemicals over their dead bodies and burned them," a weeping Samad told Reuters at the scene, with blood splattered on the walls of his home.

Neighbours said they had awoken to crackling gunfire from American soldiers, who they described as laughing and drunk.

"Their bodies were riddled with bullets," said Agha Lala, who visited one of the homes where the killings took place.

A senior U.S. defence official in Washington rejected such accounts. "Based on the preliminary information we have this account is flatly wrong," the official said. "We believe one U.S. service member acted alone, not a group of U.S. soldiers."

Defense Secretary Leon Panetta also called Karzai to offer his condolences. "I condemn such violence and am shocked and saddened that a U.S. service member is alleged to be involved, clearly acting outside his chain of command," Panetta said.

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Strong solar storm heading for Earth

Largest solar flares of this solar cycle in this NASA photo taken on March 6, 2012

(Reuters) - A strong geomagnetic storm is racing from the Sun toward Earth, and its expected arrival on Thursday could affect power grids, airplane routes and space-based satellite navigation systems, U.S. space weather experts said.

The storm, a big cloud of charged particles flung from the Sun at about 4.5 million miles per hour (7.2 million km per hour), was spawned by a pair of solar flares, scientists said.

This is probably the strongest such event in nearly six years, and is likely more intense than a similar storm in late January, said Joseph Kunches, a space weather specialist at the U.S. National Oceanic and Atmospheric Administration (NOAA).

This solar disturbance is a three-stage affair, or as Kunches said in a telephone interview from Boulder, Colorado: "We hit the trifecta."

These are the stages he described, with the first two already affecting Earth:

* First, two solar flares moving at nearly the speed of light reached Earth late on Tuesday. Such flares can cause radio blackouts.

* Then, solar radiation hit Earth's magnetic field on Wednesday, with possible impact on air traffic, especially near the poles, satellites and any astronauts taking space walks. This phase could last for days.

* Finally, the plasma cloud sent by the coronal mass ejection, which is basically a big chunk of the Sun's atmosphere, is expected to arrive at Earth early on Thursday.

This phase can disrupt power grids, satellites, oil pipelines and high-accuracy GPS systems used by oil drillers, surveyors and some agricultural operations, scientists said.

GPS systems used for less-refined functions, such as the turn-by-turn navigation found in many cars, should not be affected, according to NOAA's Doug Biesiecker.

Kunches said the geomagnetic component of the storm may arrive a bit ahead of schedule because it follows a previous storm that left the Sun on Sunday and is currently buffeting the Earth's magnetosphere.

"When you've already had one coronal mass ejection storm, sometimes the next coronal mass ejection storm is faster to get here," Kunches said.

These storms could produce some vivid auroras, according to experts. In the Northern Hemisphere, the aurora borealis could be visible at mid-latitudes, which in the United States could include New York, Illinois and Iowa.

Such stormy space weather is unusual in recent history, according to Harlan Spence, an astrophysicist at the University of New Hampshire who is principal investigator on the Cosmic Ray Telescope for the Effects of Radiation (CRaTER) aboard NASA's Lunar Reconnaissance Orbiter.

"These relatively large (solar) events, which we've had maybe a couple of handfuls total in the course of a decade, we've now had two or three of them, more or less right on top of each other," Spence said by telephone.

The Sun is on the ascendant phase of its 11-year cycle of solar activity, with the peak expected next year, scientists said.

"It's a clear harbinger that the Sun is waking up," Spence said. "We're trying to put this in context not only ... of what has the Sun done in the past, but what is the biggest thing the Sun is capable of and what should we be planning for in terms of extreme sorts of events in the future."

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Public schools sell empty classroom seats abroad

Amy Wang, a foreign exchange student from Shenyang, China,

(Reuters) - There are just seven pairs of boots lined up outside the kindergarten classroom in this fading farm town. Just eight crayon drawings are taped to the wall outside second grade.

Enrollment is dropping at the Grant-Deuel School, as at so many rural schools. Fewer students means less state funding and a slow extinction.

But Superintendent Grant Vander Vorst has an improbable plan to save his little school on the prairie - by turning it into a magnet for wealthy foreign students. This year, 11 students from China, Thailand, Germany and elsewhere account for nearly 20% of high school enrollment, bringing cash and a welcome splash of diversity to an isolated patch of the Great Plains.

Grant-Deuel is not alone. Across the United States, public high schools in struggling small towns are putting their empty classroom seats up for sale.

In Sharpsville, Pennsylvania, and Lake Placid, New York, in Lavaca, Arkansas, and Millinocket, Maine, administrators are aggressively recruiting international students.

They're wooing well-off families in China, Saudi Arabia, Pakistan, Russia and dozens of other countries, seeking teenagers who speak decent English, have a sense of adventure - and are willing to pay as much as $30,000 for a year in an American public school.

The end goal for foreign students: Admission to a U.S. college.

In an age of tenuous public funding, school districts "can't expect to sit back and survive, because the money is not going to be there. The taxpayers are not going to provide it," said Kenneth Smith, the superintendent in Millinocket, a remote town of 5,000 in central Maine.

IMAGINATIVE

Smith has three foreigners in his high school now, each paying $15,000 in tuition plus $11,000 to bunk with a local family. He hopes to bring in many more. "You've got to be imaginative," he said.

American colleges have long seen international students as a rich source of revenue. Nearly 725,000 foreign students enrolled at U.S. universities last year, a record high. Private boarding schools have also targeted wealthy foreigners for some time.

But few public school principals ever dreamed of charging tuition for Algebra I, U.S. History and the like - until states began making deep cuts to education budgets and plunging property values eroded local funding for schools.

Success in the international market is far from assured. Just 1,135 foreign students are currently paying tuition to attend a public high school. Still, that's a huge jump from the 309 enrolled five years ago, according to the Department of Homeland Security.

More than 1,000 public high schools have completed the federal certification process, including a site visit, that allows them to bring in tuition-paying foreigners.

In small schools with just 10 or 15 students per class, the marginal cost of adding a few more bodies is slim, notes Randy Richards, the superintendent in Lake Placid, New York.

"We're paying for the teachers already. We're paying for the electricity already," he said. So he considers the foreigners' tuition checks pure profit. Even just a handful of overseas students, paying $18,000 each, could bring in enough money to pay a few salaries or upgrade technology. "That's a lot of money for us," Richards said.

SCHOOL CULTURE

The rush to recruit abroad has raised some alarms.

"We've heard a lot of questions - how will it change our school culture?" said Shane Murray, superintendent of Jamestown Area School District in western Pennsylvania. He says some local parents fear their children will lose spots on sports teams or seats in honors classes to foreign students.

Murray is undaunted. He hopes to bring 40 foreign students, each paying $10,000 tuition, into the high school, which has a local enrollment of 270. That would make up for the $400,000 cut in state funding the district absorbed last year. It would save teacher jobs.

And, Murray says, it will build character in local kids, as they learn to work with, and compete against, students from other cultures. "Competition is good," he said.

Susan Flaccus, who sits on a school board for an impoverished swath of rural Massachusetts, has heard those arguments. But she opposes her district's effort to recruit international students to Mohawk Trail Regional High School.

"I don't like the feeling that our schools are for sale," Flaccus said. "It just doesn't feel right to me."

She fears districts that become dependent on foreign tuition will lose sight of their obligation as public schools to serve local kids first and foremost.

FOOLING FOREIGNERS?

Flaccus frets, too, that small, rural public schools - many with only mediocre academic records - have no business charging such hefty tuition. "We may be fooling foreigners into thinking they are getting something that they are not," she said. "That doesn't seem honorable to me."

Some overseas recruiters acknowledge that foreign families know little about public high schools. "Asians have no clue where they're sending all their kids," said David Ho, who recruits students from across Asia for rural public schools in Pennsylvania.

Nonetheless, student visas are fairly easy to get; the United States does not impose any caps or quotas. And recruiters say public schools appeal to foreign families because they're often far cheaper than private boarding schools.

A year abroad, recruiters say, is not so much about the academics. It's seen as a chance to master English and build ties with American teachers who can serve as personal references on college applications.

Many American universities have had problems with foreign students who arrive ill-prepared and with only rudimentary English. But on the high school level, superintendents say they're largely getting qualified students.

"I've had 43 international students here in five years, and I've never once had a disciplinary or academic issue," said Skip Hults, the superintendent in the Adirondacks village of Newcomb, New York, and one of the first public school administrators to recruit abroad.

Foreign recruiters say they typically charge students $1,000 to $3,000 to place them in an American public school.

Some, like Educatius International, which is based in Sweden but employs recruiters worldwide, offer a fat catalog of schools to choose from. Founder Tom Ericsson says most kids focus on the more glamorous coastal destinations; schools in Florida and California are top picks.

Other recruiters tout rural districts -- some so remote they lack cell phone service -- as the best bet for students who want to immerse themselves in local culture. "I tell them it's a real American experience," said Suzanne Fox, who recruits Chinese students for public schools, mostly in rural New England.

Here in Revillo, where a sign generously pegs the population at 152, Superintendent Vander Vorst started small three years ago, welcoming two foreign students to his school on the far northeast hem of South Dakota. The next year, he brought in seven. He now has 11.

Grant-Deuel doesn't charge tuition but since the school gets about $5,000 in state funding for every child enrolled - whether they're from a local farm or Seoul, South Korea - the foreign students have boosted the school's revenue considerably. With the extra money, the district hired its first art teacher in years. There are plans to hire a business teacher next year.

The arrangement disturbs some taxpayer advocates outside the Grant-Deuel district. "We're already strapped for education funding, and now the state is paying to educate foreign students who come here just for that benefit?" said Dawn Pence, vice president of the South Dakota Tea Party Alliance in Rapid City, part of the loosely organized conservative Tea Party movement. "I have a real problem with that. It shortchanges our citizen students."

Like other superintendents who welcome foreign students, Vander Vorst says it's not all about the money.

As in many small Midwest communities, the population here is nearly all white; few people have traveled overseas. The foreign students have broadened horizons. Flags from their home nations line the high-school hall. One memorable night, they each cooked a favorite dish for the community. "Most of the foods you can't pronounce, but they sure do taste good," said Vander Vorst.

DIET STRUGGLES

For the students, landing in such an isolated place was a shock. "I was kind of sad," said Pedro Moreno Martinez, a 16-year-old from Madrid.

Diet has been a challenge; the Asian students have struggled to get used to all the fried meats and local favorites like sour-cream-and-raisin pie. "I miss rice," moaned Davy Lin, 18, from Taiwan.

Still, the students have found their way. They jump right into the discussion of "The Red Badge of Courage" in English class. On a recent night, Oh Sawatpoon, from Thailand, and Joy Cheng, from Taiwan, both played forward for the junior varsity girls basketball team. Then they rushed to change into flouncy skirts and joined the cheerleading squad for the boys' game.

"They just fit in after a while," said Barrett Loehrer, 17, a local student.

Superintendent Vander Vorst is so pleased, he's raising the stakes. His guidance counselor heads to China this month to begin recruiting students who will pay tuition, perhaps $18,000 a year.

Some locals worry that bringing in too many foreigners will strain the community. The students need local mentors who can help them with homework and drive them to football games and take them shopping at Wal-Mart.

"Sometimes, you just want to sit on the couch," said Garry Harstad, who is hosting an international student and finds it both rewarding and wearying.

Yet others see no alternative to keep the school afloat.

Plus, they say, they take a quiet pride in recognizing that their frozen patch of South Dakota has something to offer all these bright, ambitious, worldly kids from far-off places.

"Our culture, our openness, our family time -- whatever it is, we have something they like," said Barb Hoyles, who connects the foreign students with host families. "We've got something to sell, and that's huge for us."

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Tornadoes kill at least 28 in Midwest and South of U.S.

A home in Midwest destroyed by Tornado

(Reuters) - Powerful tornadoes raked across a wide swath of the Midwest and South on Friday, killing at least 28 people in four states and bringing the death toll to at least 41 from a week of deadly late-winter storms.

The twisters splintered homes, damaged a prison and tossed around vehicles across the region, leaving at least 13 people dead in southern Indiana, another 12 in neighboring Kentucky, two more in Ohio, and one in Alabama, officials said. In all, the latest line of storms battered a band of states from Ohio and Indiana on southward to Alabama and Georgia.

"We are no match for Mother Nature at her worst," Indiana Governor Mitch Daniels said in a statement, adding that he would visit the stricken southeast corner of the state on Saturday.

Another possible storm-related death occurred in Henryville, Indiana, where television images showed homes and a school blown apart.

Televised video taken from the air showed rescue workers in Indiana picking through one splintered house, residents sifting through the ruins of a home, and a school bus thrown into a building. Several warehouse-like structures had their roofs ripped off.

Major Chuck Adams of the sheriff's office in Indiana's Clark County said there was extensive damage to a school in Henryville but said: "All the children are out. No injuries to any of them, just minor scrapes and abrasions."

An Indiana official confirmed 13 deaths from the tornadoes on Friday, in four southeastern counties. A spokesman for Kentucky's Department of Public Health reported a statewide death toll of 12, while Ohio officials said there were two deaths in a single county.

"There's a possibility we could have additional fatalities," in southwestern Ohio said Kathy Lehr, the director of public information in Clermont County.

The Ohio victims were a 54-year-old man and a 64-year-old woman who was a city council member in the town of Moscow, Lehr said. Many homes in the county had suffered damage, including some in which buildings were swept off their foundations.

Storm warnings were issued throughout the day from the Midwest to the Southeast, and schools and businesses were closed

ahead of the storms after a series of tornadoes earlier in the week killed 13 people in Kansas, Missouri, Illinois and Tennessee.

"We may not be done yet," said John Hart, a meteorologist at the Weather Service's Storm Prediction Center in Norman, Oklahoma.

As night fell and temperatures cooled, the line of storms appeared to weaken somewhat as they traveled eastward, but the National Weather Service warned of another possible outbreak of tornadic weather in Saturday's early hours.

Severe thunderstorms and tornadoes were likely over an area stretching from Indiana and Ohio into Kentucky, Tennessee, Mississippi and Alabama.

This week's violent storms raised fears that 2012 will be another bad year for tornadoes after 550 deaths in the United States were blamed on twisters last year, the deadliest year in nearly a century, according to the Weather Service.

The highest death tolls were from an April outbreak in Alabama and Mississippi that claimed 364 lives, and from a May tornado in Joplin, Missouri, that killed 161 people. There were two tornado-related deaths earlier this year in Alabama.

STRUCK FOR SECOND YEAR

Alabama's Madison County, which was struck by a tornado during last April's deadly outbreak, was hit again on Friday by a tornado that took a similar path. An emergency management official said seven people had been transported to hospitals.

"There were two storms that moved across the area, very close together, almost attached to each other," National Weather Service meteorologist Chris Darden said. The Weather service said the damage was from an EF-2 tornado with winds of 120 miles per hour that took a similar path to a devastating tornado on April 27, 2011.

Authorities said 40 homes were destroyed and 150 damaged in two northern Alabama counties on Friday. One person died in a home in Tallapoosa County, according to Joe Paul Boone, the director of the local Emergency Management Agency.

A prison, Limestone Correctional Facility, was in the path of the storm, Alabama officials said. High winds caused roof damage to two dormitories, forcing 300 inmates to be moved to elsewhere in the facility.

No one was seriously injured at the prison and there were no risks of prisoners escaping, though there was damage to some perimeter fencing and a canteen, said Brian Corbett, a spokesman for the Alabama Department of Corrections.

Multiple tornadoes also struck Tennessee and along the Ohio River valley in Illinois, Indiana and Kentucky.

In Kentucky, a small trailer park, a fire station and a few homes in Trimble County were destroyed by suspected tornadoes about 40 miles northwest of Louisville, the Kentucky State Police said. The fire house and trailer park in Milton "were down to the ground," said the state police's Kevin Woosley.

Nashville was pounded by rain and hail, and suspected tornadoes struck twice, hours apart, in eastern Tennessee near Chattanooga. Among the places hit was the valley below historic Lookout Mountain.

"We've had 29 injuries in the state, but no fatalities," said Dean Flener of the Tennessee emergency management agency.

Storm damage to transmission lines in Tennessee forced operators to reduce the output of the Tennessee Valley Authority's 1,126-megawatt Unit 2 at the Sequoyah nuclear plant to 70 percent from full power, a spokeswoman said.

More than 57,000 customers served by providers in the TVA service area were without power in north Alabama, western Kentucky and southeast Tennessee, the power supplier said.

High winds downed power lines in the Atlanta area, pitching more than a thousand homes into darkness, and officials warned residents about torn lines becoming entangled in trees.

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"The Artist" wins Oscar for best picture

Best actor winner Jean Dujardin of France carries Uggie the dog

(Reuters) - Hollywood showed some love for its history at the Oscars on Sunday, giving its best film award and four others to silent movie "The Artist" in a ceremony that recalled why cinema is special to so many people.

The Academy of Motion Picture Arts and Sciences also gave Oscars to Meryl Streep playing former British Prime Minister Margaret Thatcher in "The Iron Lady," marking Streep's third Academy Award in 17 nominations, and veteran Christopher Plummer made history by becoming the oldest winner ever at age 82 with his role as an elderly gay man in "Beginners."

But it was the "The Artist," a French movie that has been called a love letter to old Hollywood by its makers, that charmed Oscar voters. Made in the style of old silents, it tells a romantic story of a fading star in the era when silent movies were overtaken by talkies.

"The Artist" collected Oscars for its star Jean Dujardin and director Michel Hazanavicius, as well as for musical score and costume design.

"I am the happiest director in the world right now. Thank you for that," Hazanavicius told the audience of stars including George Clooney, Michelle Williams, Angelina Jolie, Brad Pitt and members of the Academy.

Dujardin was equally excited, exclaiming "I love this country" before thanking the Academy, the film's makers and his wife, and calling silent actor Douglas Fairbanks an inspiration.

Streep's victory surprised Oscar pundits who thought Viola Davis would win the Academy Award with her portrayal of a black maid in a southern white home in civil rights drama "The Help."

But Streep's turn as an elderly Thatcher who is slipping into dementia was too good to be ignored. It was Streep's third Academy Award out of 17 nominations, and even she reckoned that Oscar voters would think she's been there, done that. Backstage she termed it "Streep fatigue" to reporters.

"When they called my name, I could feel America saying, 'Oh why her again?' But whatever," she joked. Yet even the steely veteran could not hold back the emotion of an Oscar victory. When she thanked her husband and talked about her career she came close to breaking into tears, and backstage she said it made her feel like a kid again.

MAKING HOLLYWOOD HISTORY

Veteran Plummer, a star of classic film "The Sound of Music," won his first ever Oscar for his portrayal of an elderly gay man who comes out to his family in "Beginners."

"You're only two years older than me, darling. Where have you been all of my life," he said, looking at his golden Oscar, which was celebrating its 84th awards ceremony.

Spencer, a relative newcomer in contrast to Plummer, had to hold back tears as she accepted her trophy for her portrayal of a black, southern maid in civil rights drama "The Help."

"Thank you Academy for putting me with the hottest guy in the room," she said holding her Oscar in her hand. She then went on to talk about her family in Alabama and could not hold back her tears as she joyously accepted her trophy.

Director Martin Scorsese's "Hugo," which like "The Artist" pays tribute to early filmmaking, came into the night with a leading 11 nominations - one more than "Artist" - and also picked up five wins. But its Oscars came in technical categories cinematography, art direction, sound editing and mixing and visual effects.

Another highly touted movie, family drama "The Descendants," walked off with only one Oscar, adapted screenplay for its writer and director Alexander Payne and co-writers Nat Faxon and Jim Rash. Woody Allen won for original screenplay with "Midnight in Paris," but he was not on hand to accept his trophy.

In other major wins, the foreign language film award went to Iranian divorce drama "A Separation." "I proudly offer this award to the people of my country, the people who respect all cultures and civilizations and despise hostility and resentment," said its director, Ashgar Farhadi.

Asked backstage how he thought the Iranian government might respond, he said he really did not know. "I can't predict what's going to happen," he said.

"Rango" claimed best animated film, while "The Iron Lady," won a second award for makeup.

BILLY'S RETURN

The documentary category saw another major surprise for "Undefeated," a film about football players in a poor struggling community to make their lives better. "Paradise Lost 3: Purgatory" had been widely picked to win by pundits.

One of the film's makers, T.J. Martin, used an expletive onstage in a sign of his joy, but it was edited out for television audiences. He apologized backstage in the press room.

Comedian Billy Crystal, who returned to emcee the show for the ninth time, had the crowd laughing loudly with an opening video in which he was edited into the year's top movies.

He was kissed by George Clooney on the lips in a scene out of "The Descendants" and even ate a tainted pie from "The Help." He opened with a monologue in which he joked: "there's nothing like watching a bunch of millionaires present each other with golden statues" and sang a comic song about the movies.

Other highlights included stars like Morgan Freeman, Tom Hanks, Adam Sandler and others in brief video vignettes telling audiences why they loved movies. The clips highlighted this year's themes of reminding people what makes movies magical.

Finally, Hollywood's biggest fashion parade on the Oscar red carpet heated up with Michelle Williams in a stunning red dress from Louis Vuitton, "The Help" star Jessica Chastain in a dazzling Alexander McQueen black and gold embroidered gown, while Gwyneth Paltrow chose Tom Ford and white, a popular color.

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Europe's banks bleed from Greek debt crisis

(Reuters) - Greece's debt problems drove a slew of heavy losses across the European banking sector on Thursday, and bosses warned the euro zone crisis would continue to threaten earnings.

From France to Germany, Britain to Belgium, some of the region's biggest banks lined up to reveal billions of euros lost through writedowns on Greek loans.

"We are in the worst economic crisis since 1929," Credit Agricole (CAGR.PA) chief executive Jean-Paul Chifflet said.

Credit Agricole reported a record quarterly net loss of 3.07 billion euros ($4.06 billion), performing worse than expected from the cost of shrinking its balance sheet and after a 220 million euro charge on its Greek debt.

"We think 2012 is going to still be a tense period," Chifflet said, adding: "We're hoping that our results will be largely better than in 2011.

Europe's banks have already written down billions of euros from losses on Greek government bonds and loans, and a deal agreed this week with its creditors will inflict losses of 74 percent on bondholders.

"We can't say that the writedowns are over," said Franklin Pichard, director at Barclays France. "Even if some can say that the worst is over, we are only at a new stage in terms of provisioning and not necessarily at the end."

That is because, despite the bond swap deal, bondholders could suffer further hits if Greece's economy fails to recover.

Britain's Royal Bank of Scotland (RBS.L) has marked its Greek bonds at a 79 percent loss -- or 1.1 billion pounds -- for 2011. The state-owned bank posted a fourth quarter loss of nearly 2 billion pounds on Thursday.

FAR WIDER THAN GREECE

Problems in Europe's banking sector are far wider than Greece, however.

"We have reduced the balance sheet of RBS by over 700 billion pounds of assets. That is roughly twice the size of the entire national debt of Greece," said RBS boss Stephen Hester.

The region's banks are still repairing the damage of the financial crisis and shrinking their assets. They must also find 115 billion euros by the middle of this year to shore up their balance sheets against future shocks. But any weakening in the economy will hit earnings and make that harder to achieve.

Germany's Commerzbank (CBKG.DE), whose fourth-quarter earnings were spoiled by a 700 million euro hit on Greek sovereign debt, needs to find 5.3 billion euros to meet the stringent new capital requirements set by Europe's banking regulator. It has now lost more than 2 billion euros on its Greek bonds.

Commerzbank said it could reduce some of its shortfall by shedding risky assets, though the debt crisis still had the potential to disrupt earnings.

"The high degree of uncertainty associated with the European sovereign debt crisis will ... continue to pose challenges for us," Chief Executive Martin Blessing said.

STILL ROOM FOR A BONUS

European governments are hoping to avoid more state bailouts to prop up the banking sector, and to limit the fallout should any bank collapse.

Bailed out Franco-Belgian bank Dexia (DEXI.BR) warned on Thursday it risked going out of business. It suffered a 2011 net loss of 11.6 billion euros, hit by its break-up and exposure to Greek debt and other toxic assets such as U.S. mortgage-backed securities.

Dexia, which accepted a state-led break-up and the nationalization of its Belgian banking arm in October and is now little more than a holding of bonds in run off, booked a 3.4 billion euro loss on its holding of Greek sovereign bonds.

French investment bank Natixis (CNAT.PA), rescued from near-collapse during the 2008 financial crisis by a government-backed merger of its retail cooperative parents, reported a milder-than-expected 32 percent decline in quarterly profits.

Despite the weak results, banks still found room for bonuses.

RBS, 82 percent owned by the British government, paid out almost 1 billion pounds in bonuses to staff in 2011. Credit Agricole said it would cut trader bonuses by 20 percent.

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Iranian bomber maimed in blasts in Thai capital

Policeman showing the spot

(Reuters) - An Iranian man was seriously wounded in Bangkok on Tuesday when a bomb he was carrying exploded and blew one of his legs off in an incident Israel said was an attempted terrorist attack by Iran.

Shortly beforehand, there had been an explosion in a house the man was renting in the Ekamai area of central Bangkok. Soon after that, there was a third blast on a nearby road, Thai police and officials said.

"The police have control of the situation. It is thought that the suspect might be storing more explosives inside his house," government spokeswoman Thitima Chaisaeng told reporters.

Police said they had detained another suspect at Bangkok's main Suvarnabhumi airport, one of two men they were looking for who had been living at the house where the initial blast took place.

"We discovered the injured man's passport. It's an Iranian passport and he entered the country through Phuket and arrived at Suvarnabhumi Airport on the 8th of this month," Police General Bansiri Prapapat told Reuters.

The three explosions in Bangkok came a day after bomb attacks targeted Israeli embassy staff in India and Georgia. Israel accused Iran and its Lebanese ally Hezbollah of being behind those attacks. Iran denied involvement.

Hezbollah is a Shi'ite group backed by Syria and Iran that is on the U.S. blacklist of foreign terrorist organizations.

Thai officials declined to say whether the two men they had detained were involved with any militant group, but Israeli Defense Minister Ehud Barak blamed Iran.

"The attempted terrorist attack in Bangkok proves once again that Iran and its proxies continue to perpetrate terror," Barak said on a visit to Singapore.

"Iran and Hezbollah are unrelenting terror elements endangering the stability of the region, and endangering the stability of the world," said Barak, who spent a few hours in Bangkok on Sunday.

Iran strongly denied any involvement in the Thai incident.

"The Foreign Ministry spokesman rejected Israeli claims that Iran was involved in the Bangkok bombing and added that efforts by the Zionist regime to harm friendly and historic relations between Iran and Thailand will bear no fruit," the semi-official Fars news agency reported.

TAXI A TARGET

Thai police said they were working to make safe an unspecified amount of explosives found in the house where the initial blast took place.

Police declined to make any link between Tuesday's incident and the arrest last month of a Lebanese man in Bangkok who, according to the Thai authorities, had links to Hezbollah.

The police discovered a large amount of explosive material in an area southwest of Bangkok at around the time of that arrest. The United States, Israel and other countries issued warnings, subsequently lifted, of possible terrorist attacks in areas frequented by foreigners.

The Lebanese man has been charged with possession of explosive material and prosecutors said further charges could follow next week. Tuesday's blasts were not near Israel's embassy nor the main area for embassies.

A taxi driver told Thai television the wounded suspect had thrown a bomb in front of his car when he refused to pick him up near the site of the first blast. The driver was wounded slightly.

Government spokeswoman Thitima said police had then tried to move in and arrest the man but he attempted to throw another bomb at them. It went off before he was able to do so, blowing one of his legs off. A doctor at Chulalongkorn Hospital told reporters the other leg had to be amputated.

Another doctor was quoted on TV as saying three Thai people had suffered minor injuries, in addition to the taxi driver.

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Hijab ban driving women away from soccer

Women Soccer

(Reuters) - Muslim women are being driven away from soccer by FIFA's ban of the hijab, with more likely to follow if rulemakers fail to reverse the decision at a meeting next month, Prince Ali Bin Al-Hussein of Jordan told Reuters.

While physical Olympic sports such as rugby and taekwondo allow Muslim women to wear the headscarf in competition, soccer, the world's most popular sport, remains against its use, citing safety concerns.

Last year the Iranian women's soccer team were prevented from playing their 2012 Olympic second round qualifying match against Jordan because they refused to remove their hijabs before kick-off.

Iran had topped their group in the first round of Olympic qualifiers after going undefeated, however the Asian nation were given 3-0 defeats in their four second round matches because of their failure to comply with the rules, their dreams of competing in London abruptly ended.

"It is very important that everybody has the chance to play the sport that they love and obviously the laws of the games have to be amended to allow that," Prince Ali, a FIFA vice-president, told Reuters in an interview in Singapore.

"I think that football, being the most popular sport in the world, accessible to all, we should take the lead on this issue and therefore that is what we are trying to pursue and hopefully we will get a pass from IFAB."

Founded in 1886, IFAB, or the International Football Association Board, is soccer's ultimate law-making body comprising four members from the sport's world governing body, FIFA, and four from the British associations.

They will hold a meeting in England on March 3 where Prince Ali will present the case for allowing players to use a Dutch-designed Velcro hijab which comes apart if pulled and, he hopes, will remove safety concerns.

"As far as I'm concerned, I want to make sure and guarantee what it is - that football is for everyone," said the Prince, who at 36 is the youngest member of FIFA's all-powerful executive committee.

"If you look at other sports such as rugby, they are allowed to play so therefore we hope it will be the same case with football."

A three-quarters majority is required for the proposal to be passed by IFAB, who first banned the hijab in 2007 when 11-year-old Asmahan Mansour was prevented from playing a match by the Quebec Soccer Federation after she refused to remove her headscarf.

"I do hope and do believe that if common sense does prevail all will be supportive of this, why not?

"I don't like the politics, we are going straight to the point which is to allow all of our players to participate on all levels," Prince Ali said.

VERY UNFORTUNATE

In 2010, FIFA adjusted their rules to allow a cap that covers the players heads to the headline but did not extend below the ears to cover the neck.

Asked if he was concerned that Muslim women would turn away from the sport if IFAB fail to permit a full headscarf, Prince Ali said it may already be too late for some.

"Well I think already we have seen that, and I think that is very unfortunate. I think we need to give the right to (play) to everyone across the world and we have to respect each others cultures."

FIFA's reluctance to allow the full headscarf on concerns over safety appear overly strict. Prince Ali, who suggested long hair was more likely to cause injury on the field, said that his findings had not uncovered any hijab-related injuries in women's soccer matches.

"If you want to have a fancy hairdo, or whatever (it doesn't matter) just let them play and I think there are so many women out there who have the right to do this and participate in this sport.

"If you look at FIFA as well, they spend about 15 percent of their budget on developing women's football but when it comes to playing at this level they are suddenly banned and we have to change that."

While the campaign has royal approval, members of the Jordanian women's team have used the modern day method of social networking to highlight the campaign.

A Facebook page called 'let us play' has been launched and attracted more than 30,000 'likes', while the players have used national radio to also boost their message.

Prince Ali said he was confident that, with approximately 650 million headscarf wearers globally, the number of Muslim women playing soccer would rise on the back of the campaign if IFAB reversed their decision.

"I think definitely, definitely. Just give them the opportunity and let them make their choices. It is a game for the world -- that's what makes football what it is, it is a very, very special game and therefore we should allow full participation."

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Syria Forces Attack Homs, UN Condemns 'Appalling Brutality'

A grieving relative kissing a dead man on the back of a truck at Homs

By Khaled Yacoub Oweis and Angus MacSwan
AMMAN/BEIRUT, Feb 9 (Reuters) - Syrian forces bombarded opposition-held neighbourhoods of the city of Homs with rocket and mortar fire on Thursday, activists said, as divided world powers struggled to find a way to end the violence.

The United Nations chief condemned the ferocity of the government assault on Homs, heart of a revolt against President Bashar al-Assad that broke out nearly a year ago and is getting bloodier by the day.

"I fear that the appalling brutality we are witnessing in Homs, with heavy weapons firing into civilian neighbourhoods, is a grim harbinger of things to come," U.N. Secretary General Ban Ki-moon told reporters after briefing the Security Council.

Activists and residents report hundreds of people killed over the last week as Assad's forces try stamp out opposition in Homs, and as dawn broke on Thursday, rocket and mortar fire rained down again on Baba Amro, Khalidiya and other districts. Armoured reinforcements also poured into the eastern city.

Concern was growing over the plight of civilians and the United States said it was considering ways to get food and medicine to them - a move that would deepen international involvement in a conflict which has wide geopolitical dimensions and has caused division between foreign powers.

Turkish Foreign Minister Ahmet Davutoglu said before flying to Washington for talks on Syria that Turkey, which once saw Assad as an ally but now wants him out, could no longer stand by and watch. Turkey wanted to host an international meeting to agree ways to end the killing and provide aid, he said.

"It is not enough being an observer," he told Reuters, though Russia and China have warned against "interference".

Foreign ministers of the Arab League, which the U.N.'s Ban said was planning to revive an observer mission it suspended last month because of the violence, are due to meet in Cairo on Sunday. They may want to hear other governments' ideas by then.

U.S. officials said they expected to meet soon with allies to discuss ways of helping Syrian civilians. And China, cool to Western lobbying for international involvement, nonetheless reported its first formal contact with the Syrian opposition.


HOMS UNDER FIRE

The Syrian Revolution Coordinating Commission said at least 30 civilians in Homs were killed in bombardment on Thursday morning on mainly Sunni Muslim neighbourhoods that have been the focus of attacks by the government forces led largely by members of Assad's Alawite religious minority.
Such sectarian divisions have been coming to the surface as killings have increased on either side of the conflict.

The main street in Baba Amro was strewn with rubble and at least one house was destroyed, according to YouTube footage broadcast by activists from the district who said troops had used anti-aircraft cannon to demolish the building.

The video showed a youth putting two bodies wrapped in blankets in a truck. What appeared to be body parts were shown inside the house.

The Syrian Human Rights Organisation (Sawasiah)said in a statement that this week's assault on Homs had killed at least 300 civilians and wounded 1,000, not counting Thursday's toll.

International officials have estimated the overall death toll in Syria since last March at over 5,000.
Activists said neighbourhoods of Homs remained without electricity and water and basic supplies were running low.

There was no comment from the Syrian authorities, who have placed tight restrictions on access to the country and it was not possible to verify the reports of local activists.

Mazen Adi, a prominent Syrian opposition figure in Paris, said rebels loosely organised under the Free Syrian Army were fighting back and staging hit-and-run guerrilla attacks against government forces in Homs.

"The regime cannot keep tanks for long inside opposition neighbourhoods because they will be ambushed," he said.

"It is retaliating by hysterical bombing that is killing mostly civilians and with mass executions."
The role of the Free Syrian Army, largely made up of soldiers who have defected from the government forces, highlighted the slide in the uprising against the Assad family's 42-year dynastic rule from civilian demonstrations to armed insurgency over the past few months.

KURDISH PRECEDENT

Exile activist Massoud Akko said Turkey and Western countries should organise an airlift to Homs and other stricken cities and towns that have borne the brunt of the crackdown.

"This could be done by air drops into Homs similar to what the United States did in Iraqi Kurdistan in the 1990s," Akko said, of help for Iraq's ethnic minority during its fight against Saddam Hussein.

Syria's position at the heart of the Middle East, allied to Iran and home to a volatile religious and ethnic mix, means Assad's international opponents have ruled out the kind of military action they took against Libya's Muammar Gaddafi.

Russia and China, which let the United Nations support the air campaign in Libya, provoked strong condemnation from the United States, European powers and Arab governments when they vetoed a resolution in the Security Council last week that called on Assad to step down.

Moscow, for whom Syria is a buyer of arms and host to a Soviet-era naval base, wants to counter U.S. influence and maintain its traditional role in the Middle East.

For both Russia and China, Syria is also a test case for efforts to resist international encroachment on sovereign governments' freedom to deal with rebels as they see fit.

PUTIN SAYS NO INTERFERENCE

Campaigning for next month's presidential election that he is certain to win, Prime Minister Vladimir Putin, said: "A cult of violence has been coming to the fore in international affairs ... This cannot fail to cause concern.

"Help them, advise them, limit, for instance, their ability to use weapons but not interfere under any circumstances."

Turkish Prime Minister Tayyip Erdogan, who had described the Russian and Chinese veto at the U.N. as a "fiasco", telephoned outgoing Russian President Dmitry Medvedev on Wednesday.

The Kremlin said Medvedev told Erdogan the search for a solution should continue but that foreign interference was not an option.

The U.N.'s Ban said it was more urgent than ever to find common ground. In an implicit criticism of the Assad government, he said: "Such violence is unacceptable before humanity ... We have heard too many broken promises, even within the past 24 hours."

In Washington, officials said the United States planned to meet soon with its allies to discuss ways to halt the violence and provide humanitarian aid to civilians under attack.

White House spokesman Jay Carney said the talks, which would include the opposition Syrian National Council, were aimed at helping the process "move toward a peaceful, political transition, democratic transition in Syria".

Any international move to bring in humanitarian aid could open a dangerous and complicated new chapter in the crisis, with air drops seen as expensive and ineffective and any land routes open to attack from Syrian forces. But the White House stressed it was not actively considering military intervention.

"We never rule anything out in a situation like this," Carney said. "But we are pursuing a path that includes isolating and pressuring the Assad regime so that it stops its heinous slaughtering of its own people." (Additional reporting by Simon Cameron-Moore and Tulay Karadeniz in Ankara, Steve Gutterman in Moscow, Erika Solomon in Beirut, John Irish in Paris, Yasmine Saleh and Ayman Samir in Cairo and Alister Bull, Matt Spetalnick and Andrew Quinn in Washington; Writing by Angus MacSwan in Beirut; Editing by Alastair Macdonald)