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

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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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

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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North Korea warns U.S. forces of "destruction" ahead of war drills

SEOUL (Reuters) - North Korea on Sunday warned the top U.S. military commander stationed in South Korea that his forces would "meet a miserable destruction" if they go ahead with scheduled military drills with South Korean troops, North Korean state media said.

Pak Rim-su, chief delegate of the North Korean military mission to the inter-Korean truce village of Panmunjom, gave the message by phone to Gen. James Thurman, the commander of the U.S. Forces Korea, KCNA news agency said.

It came amid escalating tension on the divided Korean peninsula after the North's third nuclear test earlier this month, in defiance of U.N. resolutions, drew harsh international condemnation.

A direct message from the North's Panmunjom mission to the U.S. commander is rare.

North and South Korea are technically still at war after their 1950-53 conflict ended in a truce, not a peace treaty.

The U.S.-South Korean Combined Forces Command is holding an annual computer-based simulation war drill, Key Resolve, from March 11 to 25, involving 10,000 South Korean and 3,500 U.S. troops.

The command also plans to hold Foal Eagle joint military exercises involving land, sea and air manoeuvres. About 200,000 Korean troops and 10,000 U.S. forces are expected to be mobilized for the two month-long exercise which starts on March 1.

"If your side ignites a war of aggression by staging the reckless joint military exercises...at this dangerous time, from that moment your fate will be hung by a thread with every hour," Pak was quoted as saying.

"You had better bear in mind that those igniting a war are destined to meet a miserable destruction."

Washington and Seoul regularly hold military exercises which they say are purely defensive. North Korea, which has stepped up its bellicose threats towards the United States and South Korea in recent months, sees them as rehearsals for invasion.

North Korea threatened South Korea with "final destruction" during a debate at the U.N. Conference on Disarmament on Tuesday.

(Reporting by Sung-won Shim; Editing by Nick Macfie)

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France's Hollande urges compulsory labeling amid horsemeat scandal

PARIS (Reuters) - French President Francois Hollande called for compulsory labeling and traceability of meat used in processed foods in Europe to prevent a repeat of the horsemeat scandal.

French and German agriculture ministers said on Friday they agreed on the need for origin labeling and would try to find a deal on meat traceability at a meeting of European farm ministers in Brussels on Monday.

"There needs to be traceability, that is what I want from talks on a European level," Hollande said on Saturday.

"We need compulsory labeling on meats that will be used in processed foods," Hollande said at the start of the annual agriculture fair in Paris.

He added that while waiting for European legislation, France would encourage voluntary initiatives to improve labeling.

The EU wants to put regulation in place to avoid a repeat of a scandal that burst after horsemeat was found instead of beef in products around the bloc.

The scandal, which has triggered recalls of ready meals and damaged confidence in Europe's vast food industry, erupted last month when tests carried out in Ireland revealed that some beef products contained horsemeat.

(Reporting by Sybille de la Hamaide, writing by Geert De Clercq; Editing by Nick Macfie)

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Two killed in Yemeni separatist clashes

ADEN (Reuters) - Two people were killed and nine others were wounded in clashes between Yemeni security forces and separatists in the south of the country on Saturday, medical and security sources said.

The clashes followed separatist demonstrations in Mukalla, Ghayl ba Wazir and Aden, capital of the former state of south Yemen which merged with the north in 1990. Six people were shot dead during protests on Thursday.

One of those who died on Saturday was a 50-year-old civilian in Aden who was hit by a bullet, the sources said. The other was killed in Ghayl ba Wazir, a small town near Mukalla. The protests and clashes ended around noon.

The Islah party, one of the most powerful in Yemen, also said on Saturday that separatists had set fire to its headquarters in Mukalla, the capital of a former south Yemeni province.

The resurgent movement for a revived south Yemen state has aggravated political instability in the Arabian Peninsula country, where Washington fears political chaos is giving al Qaeda space to operate.

Yemen also faces an insurgency from Islamist militants linked to al Qaeda in some southern areas and a rebellion by the Shi'ite Muslim Houthi movement in the north.

North and south Yemen were unified in 1990 after the Communist-led southern government collapsed. Northern forces won a brief civil war four years later after the south tried to secede from the union.

The secessionist movement gained strength during mass, nationwide street protests against former president Ali Abdullah Saleh in 2011, which forced the veteran strongman from office a year ago.

On Thursday, security forces shot at dozens of secessionists in Aden as they staged a rally against Saleh's successor, President Abd-Rabbu Mansour Hadi, a southerner who heads Saleh's party. There were also armed clashes in another southern town, al-Dalea.

Medical sources and witnesses said at least six people had been killed during the two clashes.

Southern Yemenis complain of discrimination by the government in the north. Tackling lawlessness in the country, which lies near oil shipment routes and flanks the world's top oil exporter, Saudi Arabia, is a priority for both Western and Gulf countries.

(Reporting by Mohammed Mukhashaf; Writing by Angus McDowall; Editing by Mark Trevelyan)

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Spain grumbles as king's son-in-law appears in court

PALMA DE MALLORCA, Spain (Reuters) - The Spanish king's son-in-law appeared before a judge on the island of Mallorca on Saturday to respond to charges of tax fraud in a six-million-euro embezzlement case that has eroded public support for the once-popular royal family.

The scandal and other corruption cases in which politicians are accused of taking millions of euros in bribes have enraged Spaniards at a time when unemployment has soared to 26 percent in a deep recession.

Inaki Urdangarin, a former Olympics handball player who is married to the king's daughter, the Infanta Cristina, is accused of using his powerful connections to win public contracts to put on events on the Mediterranean island of Mallorca and elsewhere in Spain.

His Noos Foundation is suspected of overcharging for organizing conferences about the business of sports and hiding the proceeds abroad.

Dozens of police officials guarded the courthouse in Palma as Urdangarin got out of a car and walked down a 30-metre access ramp into the building for the closed-door hearing where he will be questioned by Examining Magistrate Jose Castro.

Near the courthouse, a few hundred protesters chanted and held up signs reading "down with the monarchy" and "they call this a democracy but it isn't".

More than a hundred journalists were also on hand.

In Spain's legal system, lengthy pre-trial investigations are carried out by an examining magistrate, or judge. Urdangarin, 45, is charged with fraud, forgery, embezzlement and corruption. If convicted, he could face a prison sentence and fines.

Urdangarin was first charged and called in for questioning in 2011, but a trial could still be months or years away as the judge continues his probe and adds or dismisses charges.

Judge Castro was expected to question Urdangarin for most of the day on Saturday and perhaps into the early hours of Sunday.

Urdangarin is fighting an order that he and a former business partner in the Noos Foundation post bail of 8.2 million euros. His assets could be seized if he does not meet bail.

The judge will also question on Saturday Carlos Garcia Revenga, former treasurer for the Noos Foundation and also private secretary to Urdangarin's wife, Cristina, 47.

Judge Castro is trying to find out how much the Infanta Cristina knew about the business of the foundation. A criminal indictment of the king's daughter would be an unprecedented accusation against a royal in Spain.

Cristina is the only one of five directors of the Noos Foundation that has not been charged with a crime.

PHOTOGRAPHS REMOVED

The royal family has taken efforts to distance itself from Urdangarin, whose official title is Duke of Palma. Photos of him have been wiped off the royal website. He has also been banned from royal family events for over a year.

In Spain's severe economic downturn, more companies announce lay-offs each week. Tens of thousands of homeowners have defaulted on their mortgages and been evicted from their homes. The government has cut public salaries and spending on health and education.

Public angst over the economy has been aggravated by a number of high-profile corruption cases from the 1990s and early 2000s, when a tax bonanza from a property boom fuelled massive public spending on events and infrastructure that now look like folly.

In another case that has rocked Spain, prosecutors are looking into millions of euros in Swiss bank accounts controlled by a former politician from the ruling People's Party, Luis Barcenas, who is charged with bribery, money laundering and tax evasion.

In Palma, where a number of corruption cases have surfaced, Urdangarin has become a despised figure.

The local government held a news event earlier this month and in front of television crews ceremoniously removed a street sign "Boulevard of the Duke and Duchess of Palma" and renamed the street.

"It's a disgrace for our islands that have been so supportive of the royal family," said Esperanza Ruiz, a resident of Palma, as she shopped in a supermarket near the courthouse.

King Juan Carlos, who took the throne in 1975, was the most popular public figure in Spain in the late 1970s because of his role in supporting the transition to democracy after the long Francisco Franco dictatorship.

But for the first time, politicians have openly called for him to abdicate and hand the throne to his son, Prince Felipe, as his prestige has eroded due to the Urdangarin case, as well as his own missteps. Metroscopia polling firm figures show his approval rating has fallen to 58 percent from much higher levels.

Last year, when Spain seemed on the brink of bankruptcy and Prime Minister Mariano Rajoy was imposing unpopular budget cuts, the king fell and broke his hip during an elephant hunting safari with wealthy friends in Botswana.

The king, 75, made an unprecedented public apology for the trip, which had been secret until his accident.

(Writing by Fiona Ortiz; Editing by Nick Macfie)

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Iran announces uranium finds, days before nuclear talks

DUBAI (Reuters) - Days before resuming talks over its disputed atomic program, Iran said on Saturday it had found significant new deposits of raw uranium and identified sites for 16 more nuclear power stations.

State news agency IRNA quoted a report by the Atomic Energy Organisation of Iran (AEOI) which said the reserves were discovered in northern and southern coastal areas and had trebled the amount outlined in previous estimates.

There was no independent confirmation. With few uranium mines of its own, Western experts had previously thought that Iran might be close to exhausting its supply of raw uranium.

"We have discovered new sources of uranium in the country and we will put them to use in the near future," Fereydoun Abbasi-Davani, head of the AEOI, was quoted as saying at Iran's annual nuclear industry conference.

The timing of the announcement suggested Iran, by talking up its reserves and nuclear ambitions, may hope to strengthen its negotiating hand at talks in Kazakhstan on Tuesday with the United States, Russia, China, Britain, France and Germany.

Diplomats say the six powers, known as the P5+1, are set to offer Iran some relief from international sanctions if it agrees to curb its production of higher-grade enriched uranium.

The West says Iran's enrichment of uranium to a fissile purity of 20 percent demonstrates its intent to develop a nuclear weapons capability, an allegation the Islamic republic denies.

FROM MINE TO CENTRIFUGE

The enriched uranium required for use in nuclear reactors or weapons is produced in centrifuges that spin uranium hexafluoride gas (UF6) at high speeds. The UF6 is derived from yellow cake, a concentrate from uranium ore discovered in mines.

Iran's reserves of raw uranium now stood at around 4,400 tonnes, taking into account discoveries over the past 18 months, IRNA quoted the report as saying.

In another sign that Iran is intent on pushing forward with its nuclear ambitions, the report also said 16 sites had been identified for the construction of nuclear power stations.

It did not specify the exact locations but said they included coastal areas of the Gulf, Sea of Oman, Khuzestan province and the Caspian Sea.

Iranian authorities have long announced their desire to build more nuclear power plants for electricity production. Only one currently exists, in the southern city of Bushehr, and that has suffered several shutdowns in recent months.

The announcements could further complicate the search for a breakthrough in Kazakhstan, after three unsuccessful rounds of talks between the two sides in 2012.

"We are meeting all of our obligations under the nuclear Non-Proliferation Treaty and we should be able to benefit from our rights. We don't accept more responsibilities and less rights," Saeed Jalili, Iran's chief nuclear negotiator, was quoted as telling Saturday's conference.

In what Washington has called a provocative move, Iran is also installing new-generation centrifuges, capable of producing enriched uranium much faster, at a site in Natanz in the centre of the country.

Western diplomats say the P5+1 will reiterate demands for the suspension of uranium enrichment to a purity of 20 percent, the closure of Iran's Fordow enrichment plant, increased access for International Atomic Energy Agency inspectors and agreement to address concerns on existing uranium stockpiles.

In return, the latest embargoes on gold and metals trading with Iran would be lifted. Iran has criticized the offer and says its rights need to be fully recognized.

"If the P5+1 group wants to start constructive talks with Tehran it needs to present a valid proposal," said Jalili. "It needs to put its past errors to one side ... to win the trust of the Iranian nation."

In a statement issued before the Iranian announcement, German Foreign Minister Guido Westerwelle said the six-power group wanted to enter a 'substantial negotiation process' over Tehran's nuclear program.

"The talks in Almaty are a chance which I hope Iran takes," he said.

(Additional reporting by Alexandra Hudson in Berlin; Editing by Mark Trevelyan)

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Syrian opposition says Assad cannot be part of deal

CAIRO (Reuters) - The opposition Syrian National Coalition is willing to negotiate a peace deal to end the country's civil war but President Bashar al-Assad must step down and cannot be a party to any settlement, members agreed after debating a controversial initiative by their president.

The meeting of the 70-member Western, Arab and Turkish-backed coalition began on Thursday before Syrian Foreign Minister Walid al-Moualem is due for talks in Moscow, one of Assad's last foreign allies, and as U.N. mediator Lakhdar Brahimi renews efforts for a deal.

After an angry late night session in which coalition president Moaz Alkhatib came under strong criticism from Islamist and liberal members alike for proposing talks with Assad's government without setting what they described as clear goals, the coalition adopted a political document that demands Assad's removal and trial for the bloodshed, members said.

A draft document seen by Reuters that was circulated for debate said Assad cannot be party to any political solution and has to be tried, but did not directly call for his removal.

"We have adopted the political document that sets the parameters for any talks. The main addition to the draft is a clause about the necessity of Assad stepping step down," said Abdelbasset Sida, a member of the coalition's 12 member politburo who has criticized Alkhatib for acting alone.

"We removed a clause about a need for Russian and U.S. involvement in any talks and added that the coalition's leadership has to be consulted before launching any future initiatives," he added.

Still, the agreement marked a softening of tone by the coalition because previously it had insisted that Assad must step down before any talks with his government could begin.

In an indication that Syria's strongman remains defiant, Brahimi said Assad had told him he will remain president until his term ends in 2014 and then run for re-election.

Brahimi told al-Arabiya television he wants to see a transitional government formed in Syria that would not answer to any higher authority and lasts until U.N.-supervised elections take place in the country.

"I am of the view that U.N. peacekeepers should come to Syria as happened in other countries," Brahimi said.

BOMB, AIR STRIKES

The opposition front convened in Cairo on a day when a car bomb jolted central Damascus, killing 53 people, wounding 200 and incinerating cars on a busy highway close to the Russian Embassy and offices of the ruling Baath Party.

Syrian state television blamed the suicide blast on "terrorists". Central Damascus has been relatively insulated from the 23-month conflict that has killed around 70,000 people, but the bloodshed has shattered suburbs around the capital.

In the southern city of Deraa near the border with Jordan, activists said warplanes bombed the old quarter for the first time since March 2011, when the town set in a wheat-growing plain rose up against Assad, starting a national revolt.

A rebel officer in the Tawheed al-Janoub brigade which led an offensive this week in Deraa said there were at least five air strikes on Thursday. The Syrian Observatory for Human Rights said 18 people were killed, including eight rebel fighters.

Coalition member Munther Makhos, who was forced into exile in the 1970s for his opposition to Assad's father, the late President Hafez al-Assad, said supplies from Iran and Russia were giving government forces an awesome firepower advantage.

"It would be surreal to imagine that a political solution is possible. Bashar al-Assad will not send his deputy to negotiate his removal. But we are keeping the door open," Makhos said.

Makhos is the only Alawite in the Islamist-dominated coalition. The Alawite sect, an offshoot of Shi'ite Islam which accounts for about 10 percent of Syria's population but makes up most of the intelligence apparatus and dominates the army and the political system, has generally remained behind Assad.

With Alawites feeling increasingly threatened by a violent Sunni backlash, Alkhatib, a cleric from Damascus who played a role in the peaceful protest movement against Assad at the beginning of the uprising in 2011, has been calling on Alawites to join the revolution, saying their participation will help preserve the social fabric of the country.

Alkhatib's supporters say the initiative has popular support inside Syria from people who want to see a peaceful departure of Assad and a halt to the war that has increasingly pitted his fellow Alawites against Syria's Sunni Muslim majority.

But rebel fighters on the ground, over whom Alkhatib has little control, are generally against the proposal.

The Syrian Islamic Liberation Front, which represents armed brigades, said in a statement it was opposed to Alkhatib's initiative because it ignored the revolt's goal of "the downfall of the regime and all its symbols".

"We are demanding his accountability for the bloodshed and destruction he has wreaked. I think the message is clear enough," said veteran opposition campaigner Walid al-Bunni, who supports Alkhatib.

Alkhatib formulated the initiative in broad terms last month after talks with the Russian and Iranian foreign ministers in Munich but without consulting the coalition, catching the umbrella organization by surprise.

Among Alkhatib's critics is the Muslim Brotherhood, the only organized group in the political opposition.

A Brotherhood source said the group will not scuttle the proposal because it was confident Assad is not interested in a negotiated exit, which could help convince the international community to support the armed struggle for his removal.

"Russia is key," the source said, speaking on condition of anonymity. "We are showing the international community that we are willing to take criticism from the street but the problem is Assad and his inner circle. They do not want to leave."

PLAY FOR RUSSIA

Russia hopes Alkhatib will visit soon in search of a breakthrough. Bunni said Alkhatib would not go to Moscow without the coalition's approval and that he would not be there at the same time as Moualem.

"In my opinion Alkhatib should not go to Moscow until Russia stops sending arms shipments to the Assad regime," Bunni said.

Formal backing by the coalition for Alkhatib's initiative gives it more weight internationally and undermines Assad supporters' argument that the opposition is too divided to be considered a serious player, opposition sources said.

Coalition members and diplomats based in the region said Brahimi asked Alkhatib in Cairo last week to seek full coalition backing for his plan, which resembles the U.N. envoy's own ideas for a negotiated settlement.

One diplomat in contact with the opposition and the United Nations had said a coalition approval of Alkhatib's initiative could help change the position of Russia, which has blocked several United Nations Security Council resolutions on Syria.

The diplomat said only a U.N. resolution could force Assad to the negotiating table, and a U.N. "stabilization force" may still be needed to prevent an all-out slide into a civil war.

"Brahimi has little hope that Assad will agree to any serious talks," the diplomat said. "Differences are narrowing between the United States and Russia about Syria but Moscow remains the main obstacle for Security Council action."

(Editing by Paul Taylor and Mohammad Zargham)

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Iran appears to advance in construction of Arak nuclear plant

VIENNA (Reuters) - Iran appears to be advancing in its construction of a research reactor Western experts say could offer the Islamic state a second way of producing material for a nuclear bomb, if it decided to embark on such a course, a U.N. report showed.

Iran has almost completed installation of cooling and moderator circuit piping in the heavy water plant near the town of Arak, the International Atomic Energy Agency (IAEA) said in a confidential report issued to member states late on Thursday.

Nuclear analysts say this type of reactor could yield plutonium for nuclear arms if the spent fuel is reprocessed, something Iran has said it has no intention of doing. Iran has said it "does not have reprocessing activities", the IAEA said.

In its previous report on Iran, in November, the Vienna-based U.N. agency said installation work at Arak was continuing, without giving any indication of how far advanced it was.

Iran rejects Western allegations it seeks to develop a capability to assemble nuclear weapons, saying its atomic program is entirely peaceful and that the Arak reactor will produce isotopes for medical and agricultural use.

Iran says it plans to begin operating the facility in the first quarter of 2014, the IAEA said. Tehran last year postponed the planned start-up from the third quarter of 2013, a target that Western experts said always had seemed unrealistic.

The Arms Control Association, a Washington-based research and advocacy group, said late last year that it was questionable whether Iran would be able to meet the new target date as well, in view of "significant delays and impeded access to necessary materials" because of international sanctions imposed on Iran.

Western worries about Iran are focused largely on uranium enrichment plants at Natanz and Fordow, as such material refined to a high level can provide the fissile core of an atomic bomb. But experts say Arak may also be a proliferation issue.

The Arak facility is a "growing source of concern", said Mark Fitzpatrick, director of the non-proliferation and disarmament program of the International Institute for Strategic Studies (IISS), a London-based think-tank.

Israel, believed to be the Middle East's only nuclear-armed state, sees Iran's nuclear program as a serious danger and has threatened to attack its atomic sites if diplomacy and sanctions fail to resolve the decade-old dispute.

If it does, the nuclear sites at Natanz, Fordow and Arak in central Iran are likely to be targets. Fitzpatrick said it could be Arak that triggers a conflict because attacking it after it is launched could cause an environmental disaster.

TESTING FUEL FOR ARAK REACTOR

Thursday's quarterly IAEA report showed Iran expanding its uranium enrichment program in defiance of tightening Western sanctions, installing advanced centrifuge machines at its main enrichment plant near the town of Natanz.

The report, issued just a few days before six world powers and Iran are due to resume negotiations after an eight-month hiatus, underlined the tough task facing the West in seeking to pressure Tehran to curb its nuclear activities.

Cliff Kupchan, Middle East director at the Eurasia consultancy, said Iran had adopted a defiant policy of pressing ahead with its nuclear program, despite harsh sanctions.

"As a result, Israel and the U.S. Congress will press a receptive U.S. administration to move forward with new and even harsher sanctions," he said in a research note.

Enriched uranium can fuel nuclear power plants, Iran's stated aim, but also provide the explosive core of a nuclear weapon if refined much further. Making plutonium from spent fuel is a second way of obtaining potential bomb material.

The Institute for Science and International Security (ISIS), a U.S. think-tank, noted that Iran planned to use a medical research reactor in Tehran, known as TRR, to test fuel for Arak.

"The TRR is now more than a medical isotope production reactor, Iran's stated use for the reactor, and is necessary for the operation" of Arak, it said in a report.

If operated optimally, the heavy-water plant could produce about nine kilograms (20 pounds) of plutonium a year, or enough for about two nuclear bombs annually, ISIS has said previously.

"Before it could use any of the plutonium in a nuclear weapon, however, it would first have to separate the plutonium from the irradiated fuel," it added on its website.

Iran has repeatedly declared it has no plans to reprocess the spent fuel. But, "similarly sized reactors ostensibly built for research" have been used by India, Israel, North Korea and Pakistan to make plutonium for weapons, Fitzpatrick said.

(Editing by Mark Heinrich)

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Bulgaria begins talks for new cabinet, election

SOFIA (Reuters) - Bulgaria's president launched talks to create a new government on Friday after violent protests toppled the austerity-minded cabinet and put the Balkan country on course for an early election and a potential political deadlock.

The resignation of Prime Minister Boiko Borisov's cabinet has failed to quell public anger over high utility bills, and more protests are planned on Friday evening, as well as over the weekend.

President Rosen Plevneliev began talks with the main political parties, including Borisov's centre-right GERB party and their rivals the Socialists, on the prospect of creating a government ahead of an election scheduled for July.

Both parties have signaled they have no intention to join a new cabinet, however, so Plevneliev will most likely appoint a caretaker administration next week and bring the vote forward to a new date as early as the end of April.

Plevneliev criticized Borisov, a former bodyguard of late Soviet-era dictator Todor Zhivkov, for quitting. "The politically responsible option was for the cabinet to finish its term," he said on Thursday.

Plevneliev said an interim cabinet would focus on ensuring fair elections.

Growing public frustration over the government's failure to boost living standards in the EU's poorest member state boiled over into bloody protests this month.

Many in the Black Sea state of 7.3 million are also angered by Borisov's failure to make good on his 2009 election pledge to stamp out endemic corruption and reform inefficient healthcare and education systems.

On Wednesday, he gave into the pressure and stepped down -- the latest administration to fall in Europe's four-year-old debt crisis.

CARETAKER CABINET

Recession-weary voters, analysts say, could produce a hung parliament and the type of political stalemate that has stalled reforms in neighboring Romania and Greece.

GERB is running neck-and-neck with the Socialists. But with polls showing them both at around 22 to 23 percent support, neither is expected to win a majority in the upcoming vote.

Bulgaria has narrowly avoided the recession that has hit other former communist countries in the European Union's eastern wing.

But since a sharp contraction in 2009, Bulgaria has failed to resume the type of rapid growth it needs to catch up with its richer EU partners and standards are stuck at about 45 percent of the bloc's average.

On Friday, dozens of people protested in a car rally against Czech power distributor CEZ in the northeastern city of Vratsa, after the energy regulator opened a process to revoke its license but suggested there was a room for compromise.

Borisov promised an 8 percent cut in electricity bills as of March, but the energy regulator said a possible decrease can be introduced as of April at the earliest.

(Additional reporting by Angel Krasimirov; Writing by Mike Winfrey; Editing by Jeremy Laurence)

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Israeli forces, Palestinians clash throughout West Bank

RAMALLAH, West Bank (Reuters) - Israeli forces clashed with Palestinian protesters throughout the occupied West Bank on Friday, capping a week of violence amid a hunger strike by four Palestinians in Israeli jails.

Tension and anticipation is rising in the West Bank a month before U.S. President Barack Obama is due to visit Jerusalem and Ramallah, though he has announced no concrete plans to revive Israeli-Palestinian peace talks stalled for three years.

From the precincts of Jerusalem's al-Aqsa mosque, both one of Islam's holiest sites and revered by Jews as the site of their Biblical temple, youths threw stones at Israeli police after Friday prayers.

Dozens of Israeli officers briefly entered the politically sensitive compound. Witnesses said officers fired tear gas and threw percussion grenades at the demonstrators as bystanders and elderly worshippers ran for cover.

A police spokesman said no tear gas was fired, but that protesters were throwing firecrackers.

The old city of Hebron, a bitterly contested city in the southern West Bank sown heavily with Israeli settlers, echoed with percussion grenades hurled by Israeli forces at some 1,500 Palestinian protesters.

At a military checkpoint near the northern city of Nablus and outside a military prison in the central West Bank, Israeli forces worked to clear away makeshift roadblocks and fired rubber bullets towards stone-throwing Palestinians.

There were dozens of light injuries from gas inhalation and rubber and aluminum bullets, witnesses said.

Palestinians seek statehood in territories Israel captured in a 1967 war. Peace talks broke down in 2010 over Palestinian objections to Israel expanding settlements on occupied land. Israel has called for resuming the talks without preconditions.

HUNGER STRIKERS IN LIMBO

The status of four hunger-striking Palestinian detainees was in limbo as Israeli civilian courts failed to rule definitively in hearings held for two of them this week, referring their multi-decade sentences back to military courts.

Israel convicted the men of taking part in militant attacks and freed them along with hundreds of other prisoners in a 2011 swap for Gilad Shalit, an Israeli soldier held in Hamas-ruled Gaza for five years, only to re-arrest them soon afterward.

Lawyers and officials representing the men, who were accused by Israel of violating the terms of their release, say their cases are locked in a legal maze and Palestinian officials hope Egyptian mediation could convince Israel to free them.

"Our prisoners ...(on) hunger strike are engaging in a true battle, a battle of glory against the tyrant," said Ismail Haniyeh, Gaza's Hamas prime minister. "No one of us will forget the prisoners. No one would enjoy being with his children at home as long as those heroes continued to suffer in jails."

The hunger strikers have told representatives of an independent Israeli medical group, Physicians for Human Rights, that they are taking water but refusing medicines and nutrients.

There is little exact information on the health of the strikers, whose on-off hunger strikes have ranged from around 80 to over 200 days, as they have repeatedly refused treatment and been denied regular access to independent doctors.

Israel holds around 4,700 Palestinians in its prison on charges ranging from throwing stones to killing Israelis.

Palestinians widely regard them as heroes of their national struggle against Israel and want them all freed.

(Reporting By Noah Browning; Editing by Mark Heinrich)

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South African court grants Pistorius bail in murder case

PRETORIA (Reuters) - A South African court granted bail on Friday to Oscar Pistorius, charged with the murder of his girlfriend, after his lawyers argued the "Blade Runner" was too famous to pose a flight risk.

The decision by Magistrate Desmond Nair drew cheers from the athlete's family and supporters, although he appeared unmoved. Pistorius had broken down in tears earlier in the week-long hearing.

The court set bail at 1 million rand ($113,000) and postponed the case until June 4. Pistorius was ordered to hand over firearms and passports, avoid his home and all witnesses in the case, report to a police station twice a week and not to drink alcohol.

The decision followed a week of dramatic testimony about how the athlete shot dead Reeva Steenkamp at his luxury home near Pretoria in the early hours of February 14, Valentine's Day.

Prosecutors said Pistorius, 26, committed premeditated murder when he fired four shots into a locked bathroom door, hitting his girlfriend cowering on the other side. Steenkamp, 29, suffered gunshot wounds to her head, hip and arm.

Pistorius' defense team argued the killing was a tragic mistake, saying the athlete had mistaken Steenkamp for an intruder. They said he was too famous to pose a flight risk and deserved bail to prepare for a case that has drawn worldwide attention.

"He can never go anywhere unnoticed," his lawyer Barry Roux told the court on Friday.

The 26-year-old Olympic and Paralympic star's lower legs were amputated in infancy and he has raced on carbon fiber blades.

The Olympic and Paralympic star faces life in prison if convicted of premeditated murder.

Prosecutors had portrayed him as a cold-blooded killer.

"You cannot put yourself in the deceased's position. It must have been terrifying. It was not one shot. It was four shots," prosecutor Gerrie Nel said on Friday.

SHOTS AND SCREAMS

In an affidavit read out in court, Pistorius said he had been "deeply in love" with Steenkamp, and Roux said his client had no motive for the killing.

Pistorius contends he was acting in self-defense after mistaking Steenkamp for an intruder, and feeling vulnerable because he was unable to attach his prosthetic limbs in time to confront the perceived threat.

He said he grabbed a 9-mm pistol from under his bed and went into the bathroom. He said he fired into the locked door of the toilet, which adjoined the bathroom, in a blind panic in the mistaken belief the intruder was lurking inside.

Witnesses said they heard a gunshots and screams from the athlete's home on an upscale gated community near Pretoria. The community is surrounded by 3-metre-high stone walls and topped with an electric fence.

In a magazine interview a week before her death, published on Friday, Steenkamp, a law graduate and model, spoke about her three-month-old relationship with Pistorius.

"I absolutely adore Oscar. I respect and admire him so much," she told celebrity gossip magazine Heat. "I don't want anything to come in the way of his career."

Police pulled their lead detective off the case on Thursday after it was revealed he himself faces attempted murder charges for shooting at a minibus. He has been replaced by South Africa's top detective.

The arrest of Pistorius last week shocked those who had watched in awe last year as he reached the semi-final of the 400 meters race in the London Olympics.

The impact has been greatest in sports-mad South Africa, where Pistorius was seen as a rare hero who commanded respect from both black and white people, transcending the racial divides that persist 19 years after the end of apartheid.

(Editing by Andrew Roche)

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China's Bo Xilai not cooperating on probe, been on hunger strike: sources

BEIJING (Reuters) - Disgraced former senior Chinese leader Bo Xilai is refusing to cooperate with a government investigation into him and has staged hunger strikes in protest and at one point was treated in hospital, sources with knowledge of the matter said.

Almost a year after Bo's fall from grace under a cloud of lurid accusations about corruption, abuse of power and murder, the government has given no definitive time frame for when he will face court, and has not even announced formal charges.

Bo was ousted from his post as Communist Party chief in the southwestern city of Chongqing last year following his wife's murder of a British businessman, Neil Heywood.

Before that, Bo, 63, had been widely tipped to be promoted to the party's elite inner core. His downfall came after his estranged police chief, Wang Lijun, fled briefly to a U.S. consulate last February and accused Bo's wife, Gu Kailai, of poisoning Heywood.

Gu and Wang have both since been convicted and jailed.

No criminal charges against Bo have been revealed but the ruling Communist party has accused him in statements carried by the official Xinhua news agency of corruption and of bending the law to hush up Heywood's killing.

Two independent sources with ties to the family said Bo's trial was likely to be delayed until after an annual full session of parliament and its top advisory body in March because he was not physically fit.

"He was on hunger strike twice and force fed," one source told Reuters, requesting anonymity due to the sensitivity of the case. It was unclear how long the hunger strike lasted.

"He was not tortured, but fell ill and was taken to a hospital in Beijing for treatment," the source said, declining to provide details of Bo's condition and whereabouts which have been kept under wraps since his downfall.

The stability-obsessed ruling party is determined to prevent anything, including Bo's trial, from disrupting the final steps of Vice President Xi Jinping's ascent to becoming top leader.

Xi, who assumed leadership of the party and military in November, will take over from Hu Jintao as state president during the annual session of parliament, beginning on March 5.

Aware of public anger about a succession of officials caught up in graft cases, Xi has made fighting graft one of his main themes, saying that nobody, no matter how senior, is above the law. He has said that the party's survival is at stake if the issue is not tackled.

"TOO MUCH TIME"

A second source confirmed that Bo had been on a hunger strike and also said he had refused to shave to protest against what he saw as his unfair treatment.

"His beard is long, chest-length," the source said.

"He refused to cooperate," the source said. "He wouldn't answer questions and slammed his fist on a table and told them they were not qualified to question him and to go away."

His family could not be reached. The government declined to comment, as did one of his lawyers, Li Guifang. Reuters was unable to reach his second lawyer, Wang Zhaofeng.

Bo's is the most sensational case of elite political turmoil in China since the fall of the "Gang of Four" after Mao Zedong's death in 1976, and has transfixed the public, unused as they are to having party scandals aired in public.

The recent lack of information about the case - Bo has not been seen in public since last March - harms the government's credibility in the eyes of the people, said Bao Tong, the most senior official jailed over the 1989 Tiananmen protests.

"It's not normal, too much time has past," Bao told Reuters, referring to the lack of information from the government about the case.

"This is not good for the party's image. They have not thought about this clearly. If they are able to properly deal with a big shot like Bo Xilai then they will increase people's trust in the party," he added.

Bao, one-time trusted aide to former Communist Party chief Zhao Ziyang, a man purged and put under house arrest for sympathizing with the student protests, has experience of government investigations into suspected wrongdoing by senior officials.

Bao was jailed for seven years for his opposition to the government decision to send in troops to crush the pro-democracy demonstrations.

"They won't torture or beat him," Bao said of Bo's treatment at the hands of investigators.

"I was not tortured, and he was a former Politburo member, so I don't think they will mistreat him."

(Editing by Bill Powell and Robert Birsel)

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