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Powers to offer Iran sanctions relief at nuclear talks: U.S. official

Written By Bersemangat on Senin, 25 Februari 2013 | 22.19

ALMATY (Reuters) - Major powers will offer Iran some sanctions relief during talks in Almaty, Kazakhstan, this week if Tehran agrees to curb its nuclear program, a U.S. official said on Monday.

However, the Islamic Republic could face more economic pain if the standoff remains unresolved, the official said ahead of the February 26-27 meeting, speaking on condition of anonymity.

"We think ... there will be some additional sanctions relief (in the powers' updated proposal to Iran)," the official said, without giving details.

Western diplomats have told Reuters that the United States, Russia, China, Britain, Germany and France will offer to ease sanctions on trade in gold and precious metals if Iran closes its Fordow underground uranium enrichment plant.

Iranian officials have indicated, however, that this will not be enough. Iran denies Western it is seeking to develop the capability to make nuclear bombs, saying its program is entirely peaceful.

The U.S. official said the powers hoped that the Almaty meeting would lead to follow-up talks soon. "We are ready to step up the pace of our meetings and our discussions," the official said, adding the United States would also be prepared to hold bilateral talks with Tehran if it was serious about it.

(Reporting by Fredrik Dahl and Justyna Pawlak; Editing by Jon Boyle)


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Cuban leader Raul Castro says he will retire in 2018

HAVANA (Reuters) - Cuban President Raul Castro announced on Sunday he will step down from power after his second term ends in 2018, and the new parliament named a 52-year-old rising star to become his first vice president and most visible successor.

"This will be my last term," Castro, 81, said shortly after the National Assembly elected him to a second five-year tenure.

In a surprise move, the new parliament also named Miguel Diaz-Canel as first vice president, meaning he would take over if Castro cannot serve his full term.

Diaz-Canel is a member of the political bureau who rose through the Communist Party ranks in the provinces to become the most visible possible successor to Castro.

Raul Castro starts his second term immediately, leaving him free to retire in 2018, aged 86.

Former President Fidel Castro joined the National Assembly meeting on Sunday, in a rare public appearance. Since falling ill in 2006 and ceding the presidency to his brother, the elder Castro, 86, has given up official positions except as a deputy in the National Assembly.

The new government will almost certainly be the last headed up by the Castro brothers and their generation of leaders who have ruled Cuba since they swept down from the mountains in the 1959 revolution.

Cubans and foreign governments were keenly watching whether any new, younger faces appeared among the Council of State members, in particular its first vice president and five vice presidents.

Their hopes were partially fulfilled with Diaz-Canel's ascension. He replaces former first vice president, Jose Machado Ventura, 82, who will continue as one of five vice presidents.

Commander of the Revolution Ramiro Valdes, 80, and Gladys Bejerano, 66, the comptroller general, were also re-elected as vice presidents.

Two other newcomers, Mercedes Lopez Acea, 48, first secretary of the Havana communist party, and Salvador Valdes Mesa, 64, head of the official labor federation, also earned vice presidential slots.

Esteban Lazo, a 68-year-old former vice president and member of the political bureau of the Communist Party, left his post upon being named president of the National Assembly on Sunday. He replaced Ricardo Alarcon, who served in the job for 20 years.

Six of the Council's top seven members sit on the party's political bureau which is also lead by Castro.

Castro's announcement came as little surprise to Cuban exiles in Miami.

"It's no big news. It would have been big news if he resigned today and called for democratic elections," said Alfredo Duran, a Cuban-American lawyer and moderate exile leader in Miami who supports lifting the U.S. trade embargo against Cuba. "I wasn't worried about him being around after 2018," he added.

The National Assembly meets for just a few weeks each year and delegates its legislative powers between sessions to the 31-member Council of State, which also functions as the executive through the Council of Ministers it appoints.

Eighty percent of the 612 deputies, who were elected in an uncontested vote February 3, were born after the revolution.

EFFORT TO PROMOTE YOUNGER GENERATION

Raul Castro, who officially replaced his ailing brother as president in 2008, has repeatedly said senior leaders should hold office for no more than two five-year terms.

"Although we kept on trying to promote young people to senior positions, life proved that we did not always make the best choice," Castro said at a Communist Party Congress in 2011.

"Today, we are faced with the consequences of not having a reserve of well-trained replacements ... It's really embarrassing that we have not solved this problem in more than half a century."

Speaking on Sunday, Castro hailed the composition of the new Council of State as an example of what he had said needed to be accomplished.

"Of the 31 members, 41.9 percent are women and 38.6 percent are black or of mixed race. The average age is 57 years and 61.3 percent were born after the triumph of the revolution," he said.

The 2011 party summit adopted a more than 300-point plan aimed at updating Cuba's Soviet-style economic system, designed to transform it from one based on collective production and consumption to one where individual effort and reward play a far more important role.

Across-the-board subsidies are being replaced by a comprehensive tax code and targeted welfare.

Raul Castro has encouraged small businesses and cooperatives in retail services, farming, minor manufacturing and retail, and given more autonomy to state companies which still dominate the economy.

The party plan also includes an opening to more foreign investment.

At the same time, Cuba continues to face a U.S. administration bent on restoring democracy and capitalism to the island and questions about the future largess of oil rich Venezuela with strategic ally Hugo Chavez battling cancer.

(Editing by Kieran Murray and Vicki Allen)


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Britain's top Catholic cleric resigns, won't elect new pope

LONDON (Reuters) - Britain's most senior Roman Catholic cleric resigned on Monday following allegations he behaved in an inappropriate way with priests, and said he would not take part in the election of Pope Benedict's replacement.

Cardinal Keith O'Brien said he had tendered his resignation some months ago, ahead of his 75th birthday in March and because he was suffering from "indifferent health".

The Vatican said the pope, who steps down on Thursday, had accepted O'Brien's resignation as archbishop of St. Andrews and Edinburgh.

O'Brien, an outspoken opponent of gay marriage, has been reported to the Vatican over allegations of inappropriate behavior stretching back 30 years, according to Britain's Observer newspaper.

The cardinal, who last week advocated allowing Catholic priests to marry as many found it difficult to cope with celibacy, rejected the allegations and was seeking legal advice, his spokesman said.1

"Looking back over my years of ministry: For any good I have been able to do, I thank God. For any failures, I apologize to all whom I have offended," O'Brien said in a statement, which made no reference to the recent allegations.

He said he would not attend the election next month of a new pope, saying: "I do not wish media attention in Rome to be focused on me - but rather on Pope Benedict XVI and on his successor."

The Observer, which gave little detail on the claims, said three priests and a former priest, from a Scottish diocese, had complained over incidents dating back to 1980.

One said the cardinal formed an "inappropriate relationship" with him while another complained of unwanted behavior by O'Brien after a late-night drinking session.

Last year, O'Brien's comments labeling gay marriage a "grotesque subversion" landed him with a "Bigot of the Year" award from British gay rights group Stonewall.

(Reporting by Guy Faulconbridge and Michael Holden; editing by Maria Golovnina and Jon Boyle)


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Syria says ready to talk with armed opposition

MOSCOW (Reuters) - Syria is ready for talks with its armed opponents, Foreign Minister Walid al-Moualem said on Monday, in the clearest offer yet of negotiations with rebels fighting to overthrow President Bashar al-Assad.

But Moualem said at the same time Syria would pursue its fight "against terrorism", alluding to the conflict with rebels in which the United Nations says 70,000 people have been killed.

Assad and his foes are locked in a bloody stalemate after nearly two years of combat, destruction and civilian suffering.

"We are ready for dialogue with everyone who wants it...Even with those who have weapons in their hands. Because we believe that reforms will not come through bloodshed but only through dialogue," Russia's Itar-Tass news agency quoted Moualem as saying.

He was speaking in Moscow at a meeting with Foreign Minister Sergei Lavrov. Russia is a staunch ally of Assad.

Moaz Alkhatib, head of the opposition Syrian National Coalition, said in Cairo he had not had held any contacts about talks with Damascus, but had postponed trips to Russia and the United States "until we see how things develop".

Syria's government and the political opposition have both suggested in recent weeks they are prepared for some contacts - softening their previous outright rejection of talks to resolve a conflict which has driven nearly a million Syrians out of the country and left millions more homeless and hungry.

But the opposition has said any political solution must be based on the removal of Assad, whose family has ruled Syria since 1970. Rebel fighters, who do not answer to Alkhatib, are even more insistent that Assad must go before any talks start.

Brigadier Selim Idris, head of a rebel military command, demanded a complete ceasefire, the president's departure and the trial of his security and military chiefs as preconditions for negotiations. "We will not go (into talks) unless these demands are realized," he told Al Arabiya Television.

Damascus has rejected any preconditions for talks aimed at ending the violence, which started as a peaceful pro-democracy uprising in March 2011 inspired by Arab revolts elsewhere.

"SYRIAN COLLAPSE"

The two sides also differ on the location for any talks, with the opposition saying they should be abroad or in rebel-held parts of Syria. Assad's government says any serious dialogue must be held on Syrian territory under its control.

Adding to the difficulty of any negotiated settlement is the lack of influence that Syria's political opposition - mostly operating outside the country - has over rebels inside.

"We are following the development of events ... with alarm," Lavrov said. "In our evaluation the situation is at a kind of crossroads. There are those who have set a course for further bloodshed and an escalation of conflict. This is fraught with the risk of the collapse of the Syrian state and society.

"But there are also reasonable forces that increasingly acutely understand the need for the swiftest possible start of talks ... In these conditions the need for the Syrian leadership to continue to consistently advocate the start of dialogue, and not allow provocations to prevail, is strongly increasing."

Lavrov's warning that the Syrian state could founder appeared aimed to show that Russia is pressing Assad's government to seek a negotiated solution while continuing to lay much of the blame for the persistent violence on his opponents.

Russia has distanced itself from Assad and has stepped up its calls for dialogue as his prospects of retaining power have decreased, but insists that his exit must not be a precondition.

Itar-Tass did not report any other comments by Syria's Moualem on the chances for talks or on any conditions attached.

"What's happening in Syria is a war against terrorism," the agency quoted him as saying. "We will strongly adhere to a peaceful course and continue to fight against terrorism."

The Syrian National Coalition said on Friday it was willing to negotiate a peace deal, but insisted Assad could not be party to it - a demand that the president looks sure to reject.

U.N. envoy Lakhdar Brahimi said Assad had told him he intended to remain president until his term ends in 2014 and would then run for re-election.

The political chasm between the government and rebels and a lack of opposition influence over rebel fighters has allowed fighting to rage on for 23 months in Syria, while international diplomatic deadlock has prevented effective intervention.

Moualem's comments echoed remarks last week by Minister for National Reconciliation Ali Haidar, who said he was ready to meet the armed opposition. But Haidar drew a distinction between what said might be "preparatory talks" and formal negotiations.

Assad, announcing plans last month for a national dialogue to address the crisis, said that there would be no dialogue with people he called traitors or "puppets made by the West".

Moualem made his remarks a day after U.S. Secretary of State John Kerry began a nine-nation tour of European and Arab nations in which the Syria conflict will be a main focus.

Kerry plans to meet Lavrov in Berlin on Tuesday and Syrian opposition leaders at a conference in Rome on Thursday, although it is unclear whether all will attend amid internal rows over the value of such international meetings while violence goes on.

(Additional reporting by Yasmine Saleh in Cairo; Writing by Dominic Evans; Editing by Alistair Lyon)


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Centre left takes strong lead in Italy election: polls

ROME (Reuters) - The centre left is strongly leading in Italy's election, raising the chances of a stable pro-reform government in the euro zone's third largest economy, according to two telephone polls published after voting ended.

The polls on Sky and Rai television after voting ended at 3 p.m. (1400 GMT/9 a.m. ET) showed the centre left of Pier Luigi Bersani 5-6 points ahead of the centre right of former premier Silvio Berlusconi, with the anti-establishment movement of Genoese comedian Beppe Grillo taking third place.

The early polls cheered markets worried that the election could produce a weak, unstable government. Italian shares extended an earlier rally and bonds gained.

The poll for Sky television showed the centre left ahead by 5.5 points in the lower house and by six points in the Senate although the result there will depend on key battleground regions. In the most important, Lombardy, Sky said the centre left was tied with Berlusconi.

Sky had Bersani on 34.5 percent in the lower house, Berlusconi on 29 percent, Grillo on 19 percent and the centrist group of outgoing Prime Minister Mario Monti slumping to 9.5 percent after a lackluster campaign that deeply disappointed his backers among foreign governments and investors.

The RAI poll showed a similar line-up, with the centre left six points ahead of Berlusconi in the lower house.

The spread between Italy's benchmark 10-year bonds and the German equivalent narrowed to less than 260 basis points after the poll results, in a sign of investor optimism that the centre left will be able to form a stable, pro-reform government.

The picture could change after computer projections of the result in both houses, expected shortly.

Italy's electoral laws guarantee a strong majority in the lower house to the party or coalition that wins the biggest share of the national vote.

However the Senate, elected on a region-by-region basis, is more complicated and the result could turn on a handful of regions, including Lombardy in the rich industrial north - which the polls showed was tied - and the southern island of Sicily.

Italy, the euro zone's third largest economy, is pivotal to stability in the region as a whole. The period of maximum peril for the currency was when Rome's borrowing costs were spiraling out of control at the end of 2011.

BITTER CAMPAIGN

A bitter campaign, fought largely over economic issues, has been closely watched by financial markets, anxious about the risk of a return of the kind of debt crisis that took the whole euro zone close to disaster and brought the technocrat Monti to office, replacing the scandal-plagued Berlusconi, in 2011.

Monti helped save Italy from a debt crisis, but the polls suggested few Italians see him as the savior of the country, in its longest recession for 20 years.

A surge in protest votes supporting Grillo's 5-Star Movement had raised uncertainty about the chances of a strong, stable government that could fend off the danger of a renewed euro zone crisis.

Grillo's movement rode a huge wave of voter anger about both the pain of Monti's tough austerity program and a string of political and corporate scandals. It had particular appeal for a frustrated younger generation shut out of full-time jobs.

"I'm sick of the scandals and the stealing," said Paolo Gentile, a 49-year-old Rome lawyer who voted for 5-Star.

"We need some young, new people in parliament, not the old parties that are totally discredited."

Bad weather, including heavy snow in some areas, was thought to have hampered the turnout in Italy's first post-war election to be held in winter. This could have favored the centre left, whose voters tend to be more committed than those on the right, which has strong support among older people.

The 76-year-old Berlusconi, a billionaire media tycoon, pledged sweeping tax cuts and accused Monti of being a puppet of German Chancellor Angela Merkel in a media blitz that halved the lead of the centre left since the start of the year.

But many voters said they were sick of his broken promises and his campaign faltered at the end, with Grillo stealing some of his votes. The election could mark the end of a flamboyant two-decade career at the centre of the political stage.

Whatever government emerges will inherit an economy that has been stagnant for much of the past two decades and problems ranging from record youth unemployment to a dysfunctional justice system and a bloated public sector.

(Additional reporting by Stefano Bernabei, Steve Scherer, James Mackenzie and Giuseppe Fonte in Rome, Lisa Jucca in Milan and; Writing by Barry Moody; Editing by Robin Pomeroy)


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Kerry makes first foreign trip as top U.S. diplomat

Written By Bersemangat on Minggu, 24 Februari 2013 | 22.19

WASHINGTON (Reuters) - John Kerry views his first trip as U.S. secretary of state as a listening tour, but the leaders he meets will want to hear whether he has any new ideas on Syria, Iran and the Israeli-Palestinian conflict.

Kerry left Washington on Sunday for London, the first stop on a nine-nation, 11-day trip that will also take him to Berlin, Paris, Rome, Ankara, Cairo, Riyadh, Abu Dhabi and Doha before he returns home on March 6.

It is an introductory trip for a man who needs little introduction abroad after spending 28 years in the U.S. Senate, all of them as a member of the Senate Foreign Relations Committee and the last four as its chairman.

After talks with allies in London, Berlin and Paris, Kerry travels to Rome to meet members of the Syrian opposition as well as a wider group of nations seeking to support them in their nearly two-year quest to oust Syrian President Bashar al-Assad.

While the opposition Syrian National Coalition is willing to negotiate a peace deal to end the country's civil war, members this week agreed that Assad must step down and cannot be a party to any settlement.

The political chasm between the sides, along with a lack of opposition influence over rebels on the ground and an international diplomatic deadlock preventing effective intervention, has allowed fighting to rage on. Almost 70,000 people have been killed in 22 months of conflict, according to a U.N. estimate.

U.S. President Barack Obama has limited U.S. support to non-lethal aid for the rebels who, despite receiving weapons from countries such as Qatar and Saudi Arabia, are poorly armed compared to Assad's army and loyalist militias.

Although the Obama administration appears to be rethinking the question of arming the rebels, there are few signs it is on the verge of a new approach toward Syria, said Jon Alterman of the Center for Strategic and International Studies think-tank.

"I have a hard time imagining that this is the time to float a new American strategy because he (Kerry) still doesn't have a counterpart in the Department of Defense (and) the new administration is still getting set up," Alterman said.

"I don't see any sign that there is a new strategy but I do see signs that he wants to be engaged and understand what the options are for moving something in a different direction," he said.

IRAN TALKS

Kerry makes his first foreign trip as senior U.S. diplomats, along with counterparts from Britain, China, France, Germany and Russia, will meet Iranian officials on Tuesday in Kazakhstan in an effort to persuade Iran to curtail its nuclear program.

The United States and many of its allies suspect Iran may be using its civil nuclear program as a cover to develop atomic weapons, a possibility that Israel, which is regarded as the Middle East's only nuclear power, sees as an existential threat.

Iran says its program is solely for peaceful purposes, such as generating electricity and making medical isotopes.

Bruce Riedel of the Brookings Institution think-tank said Saudi King Abdullah would regard himself, rather than Kerry, as the listening party and want to hear of any new U.S. approaches on the Israeli-Palestinian conflict, Iran and other issues.

"The secretary has the tough job of selling as something new an administration (whose) foreign policies are pretty well established," Riedel said.

"There is not a high level of expectation that it is going to be able to break the logjam on the Israeli-Palestinian conflict, get Iran to give up its nuclear weapons program and topple Bashar al-Assad," he added. "The Saudis will understand that Kerry will try to put a new face on policies which are now pretty well known but they will be looking for what's new."

(Reporting By Arshad Mohammed; Editing by Paul Simao)


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U.S. condemns Scud attack in Syria, invites opposition for talks

WASHINGTON (Reuters) - The United States condemned a Syrian army Scud missile attack that killed dozens of people on Friday in the city of Aleppo, and invited the Syrian opposition for talks on finding a negotiated settlement to the conflict.

A State Department statement said the attack on a district of Aleppo and other assaults such as strikes on city blocks and a field hospital were "the latest demonstrations of the Syrian regime's ruthlessness and its lack of compassion for the Syrian people it claims to represent."

The statement, released on Saturday, could help placate the main Syrian opposition grouping, which turned down invitations to visit Washington and Moscow to protest what it described as international silence over the destruction of the historic city of Aleppo by government missile strikes.

Almost two years since the start of the revolt against President Bashar al-Assad, rebels have wrested large swathes of Syria from the control of Assad's forces but the areas remain the target of army artillery, air strikes and, increasingly, missiles.

The decision by the Syrian National Coalition to spurn the invitations and to suspend participation in the Friends of Syria conference of international powers has put peace initiatives on ice.

In the State Department statement, spokeswoman Victoria Nuland said Washington hoped to meet soon with the leadership of the opposition umbrella group "to discuss how the United States and other friends of the Syrian people can do more to help the Syrian people achieve the political transition that they demand and that they deserve."

Invitations from Washington and Moscow had been extended to opposition coalition leader Mouz Alkhatib after he met the Russian and U.S. foreign ministers in Munich earlier this month.

Alkhatib has tried to open channels to Russia and Iran, Assad's only remaining foreign backers, to put pressure on the Syrian strongman to leave power.

Alkhatib, a cleric from Damascus who has said he is morally obliged to try to seek an exit for Assad without more bloodshed, has been criticized by others in the SNC for acting alone.

The rocket attacks on an eastern districts of Aleppo, Syria's industrial and commercial hub, killed at least 29 people on Friday and trapped a family of 10 in the ruins of their home, opposition activists in the city said.

On Tuesday, activists said at least 20 people were killed when a large missile hit the rebel-held district of Jabal Badro, also in the east of the contested city.

(Reporting by Khaled Yacoub Oweis; Editing by Rosalind Russell)


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Bulgarian protests for cheaper energy intensify

SOFIA (Reuters) - Tens of thousands of people marched in cities across Bulgaria on Sunday, demanding an end to high utility bills and new voting rules after the government was toppled last week.

Public anger with power monopolies in the European Union's poorest member forced right-of-center Prime Minister Boiko Borisov's cabinet to resign and has put the country on track for an early election by May.

Although Borisov's government managed to maintain fiscal stability since taking power in 2009, belt-tightening has held back growth and driven up unemployment.

His departure has failed to calm voters fed up with low living standards and rampant graft, and his GERB party is now running neck-and-neck with the opposition Socialists ahead of the new election.

The last straw for many was a jump in winter electricity bills that at times exceeded incomes in a country where average salaries are just 400 euros ($530) a month and pensions are less than half that amount.

Much of the anger has been directed at power companies including Czech CEZ and Energo-Pro and Austria's EVN, which bought exclusive rights to distribute energy in specific regions from Bulgaria in 2004.

Waving Bulgarian flags and slogans reading "Fighting for decent life" and "Down with monopolies" over 10,000 Bulgarians marched through downtown Sofia.

"For years and years the politicians failed to impose strict controls over monopolies. This should stop," said 54-year-old Irena Mitova, a shop owner in Sofia.

POWER BILLS

Demonstrations also took place in around 40 other cities, with some 15,000 people marching in Bulgaria's second and third largest cities Plovdiv and Varna.

Separate, smaller protests were held against an inefficient education system that critics say does not prepare students for the labor market and against high interest charges from retail banks criticized for hurting small businesses.

President Rosen Plevneliev, who will probably appoint a caretaker government and dissolve parliament next week to pave the way for the early election, met protesters and ensured them their voices would be heard.

Protesters' demands ranged from imposing a moratorium on paying electricity bills for December and January until audits are carried out to sweeping changes in the constitution to allow the direct vote for deputies, rather than using party lists.

Some of the protesters demanded parliament continue with its work to adopt laws to ensure strict controls over the energy monopolies. Many want them to be renationalized and say politicians sold firms since the fall of communism in 1989 in a way that hurt public interest and kept living standards low.

Borisov had promised an 8 percent cut in electricity bills as of March - reversing much of a 13 percent rise his government approved last year - and has said the energy regulator would begin the process to revoke CEZ's license.

The regulator said a possible price decrease could be introduced as of April at the earliest and suggested there was room for compromise with CEZ.

(Editing by Michael Winfrey and Alison Williams)


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Frustrated Italians vote in crucial election for euro zone

ROME (Reuters) - Italians voted on Sunday in one of the most closely watched and unpredictable elections in years, with pent-up fury over a discredited elite adding to concern it may not produce a government strong enough to lead Italy out of an economic slump.

The election, which concludes on Monday afternoon, is being followed closely by investors; their memories are still fresh of the potentially catastrophic debt crisis that saw Mario Monti, an economics professor and former bureaucrat, summoned to serve as prime minister in place of Silvio Berlusconi 15 months ago.

A weak Italian government could, many fear, prompt a new dip in confidence in the European Union's single currency.

Opinion polls give the center-left a narrow lead but the result has been thrown completely open by the prospect of a huge protest vote against the painful austerity measures imposed by Monti's government and deep anger over a never-ending series of corruption scandals. Berlusconi's centre-right has also revived.

"I'm not confident that the government that emerges from the election will be able to solve any of our problems," said Attilio Bianchetti, a 55-year-old builder in Milan, who voted for the anti-establishment 5-Star Movement of comic and blogger Beppe Grillo.

The 64-year-old Grillo, heavily backed by a frustrated generation of young Italians hit by record unemployment, has been one of the biggest features of the last stage of the campaign, packing rallies in town squares up and down Italy.

"He's the only real new element in a political landscape where we've been seeing the same faces for too long," said Vincenzo Cannizzaro, 48, in the Sicialian capital Palermo.

Italians started voting at 8 a.m. (0700 GMT). Polling booths will remain open until 10 p.m. on Sunday and open again between 7 a.m. and 3 p.m. on Monday. Exit polls will come out soon after voting ends and official results are expected by early Tuesday.

Snow in northern regions is expected to last into Monday and could discourage some of the 47 million people eligible to vote in Italy to head out to polling stations, though the Interior Ministry has said it is fully prepared for bad weather.

Monti and his wife cast their votes at a polling booth in a Milan school on Sunday morning and centre-left leader Pier Luigi Bersani, the leader opinion polls suggest will have to form a new government, voted in his home town of Piacenza.

A small group of women's rights demonstrators greeted former prime minister Berlusconi when he voted in Milan. They bared their breasts in protest at the conservative leader, who is on trial at present for having sex with an underage prostitute.

Whichever government emerges from the election will have to tackle reforms needed to address problems that have given Italy one of the most sluggish economies in the developed world for the past two decades.

But the widespread despair over the state of the country, where a series of corruption scandals has highlighted the stark divide between a privileged political elite and millions of ordinary Italians, has left deep scars.

"It's our fault, Italian citizens. It's our closed mentality. We're just not Europeans," said Luciana Li Mandri, a 37-year-old public servant in Palermo.

"We're all about getting favors when we study, getting a protected job when we work. That's the way we are and we can only be represented by people like that as well," she said.

FRUSTRATION

Final polls published two weeks ago showed center-left leader Bersani with a 5-point lead, but analysts disagree about whether he will be able to form a stable majority that can make the economic reforms they believe Italy needs.

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 for the Senate, which any government also needs to control to be able to pass laws.

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

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

Think-tank consultant Mario, 60, who was on his way to vote in Bologna, said Bersani's Democratic Party was the only serious grouping that could help solve the country's economic woes.

"They're not perfect," he said. "But they've got the organization and the union backing that will help them push through the structural reforms."

A strong fightback by Berlusconi, who has promised to repay a widely hated housing tax, the IMU, imposed by Monti last year, saw his support climb during a campaign that relentlessly attacked the "German-centric" austerity policies of the former European Union commissioner.

"I won't vote for Monti, and I don't think a lot of people will. He made a huge blunder with IMU," said 35-year-old hairdresser Marco Morando, preparing to vote in Milan.

But the populist frustration Berlusconi's campaign tapped into has also benefitted Grillo and many pollsters said his 5-Star Movement, made up of political novices, was challenging the center-right for the position as second political force.

"I'm very worried. There seems to be no way out from a political point of view, or from being able to govern," said Calogero Giallanza, a 45-year-old musician in Rome, who voted for Bersani's Democrats.

"There's bound to be a mess in the Senate because, as far as I can see, the 5-Star Movement is unstoppable."

(Additional reporting by Cristiano Corvino, Lisa Jucca, Jennifer Clark, Matthias Baehr and Sara Rossi in Milan, Stephen Jewkes in Bologna, Wladimir Pantaleone in Palermo, Stefano Bernabei and Massimiliano Di Giorgio in Rome; Editing by Robin Pomeroy and Alastair Macdonald)


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45 arrested in Madrid after mass demonstration

MADRID (Reuters) - Forty-five people have been arrested in Spain during disturbances following a demonstration on Saturday by tens of thousands of people against spending cuts and allegations of government corruption.

The mostly peaceful march convened in central Madrid on Saturday evening in front of parliament under the watch of riot police, who closed access to the legislature, Ritz Hotel and stock exchange.

However, while most protesters dispersed after the rally, police reported disturbances later on Saturday and early on Sunday around the city's Atocha train station. Nine of those arrested were under 18, police said.

Some 40 people were hurt, including 12 police, though none seriously, officials said on Sunday.

The march was just one of a number of demonstrations across the country to protest against deep austerity, the privatization of public services and allegations of political corruption.

Protests in Spain have become commonplace as the conservative government passes measures aimed at shrinking one of the euro zone's highest budget deficits and reinventing an economy hobbled by a burst housing bubble.

A corruption scandal involving the ruling People's Party and a separate investigation into the king's son-in-law, Inaki Urdangarin, has further undermind Spaniards' trust in the leaders.

One poll, before the latest accusations of high level slush funds came to light, showed some 96 percent of Spanish adults thought corruption amongst politicians was pervasive.

The People's Party and the Urdangarin deny wrongdoing.


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