Stricken cruise ship reported awash in raw sewage nears port

MOBILE, Alabama—

Reeking of rotting food and sewage from overflowing toilets, a crippled cruise ship carrying more than 4,200 people was limping into Mobile, Alabama, on Thursday as passengers awaited the end of a vacation voyage some described as hellish.

The Carnival Triumph was being towed into port by tugboats as the drama played out live on U.S. cable news stations, creating another public relations nightmare for cruise giant Carnival Corp. Last year, its Costa Concordia luxury ship grounded off the coast of Italy, with 32 people killed.

Passengers described an overpowering stench on board the ship four days after an engine room fire knocked out power and plumbing across most of the 893-foot (272-metre) vessel and left it adrift in the Gulf of Mexico.

After the mishap, toilets overflowed, soaking many cabins and interior passages in raw sewage.

"Let's just say that I had a pair of shoes that I will not be bringing home with me," Julie Morgan told CNN.

"It is revolting," Morgan added, referring to the smell aboard the ship. "It's a mixture of sewage and rotting food."

But Terry Thornton, a senior Carnival Cruise Lines vice president, told reporters in Mobile that additional provisions were laid in on Wednesday and the ship was now "in excellent shape."

Passenger Donna Gutzman said those aboard the ship were treated to steak and lobster for lunch on Thursday afternoon.

"Our basic needs are being met. For the most part, they are making us happy," Gutzman told CNN.

The ship was expected to arrive in port around midnight CST (1.00 a.m. ET on Friday), Carnival said. A senior Carnival official said it could take up to five hours to remove all the passengers from the ship, which has only one functioning elevator.

Carnival Corp spokesman Vance Gulliksen said a tow line on one of four tugboats helping the Triumph get into port snapped on Thursday. But the tug was later reattached to the vessel.

Operated by Carnival Cruise Lines, the flagship brand of Carnival Corp, the ship left Galveston, Texas, a week ago carrying 3,143 passengers and 1,086 crew. It was supposed to return there on Monday.

A Coast Guard cutter has been escorting the Triumph on its long voyage into port since Monday, and a Coast Guard helicopter ferried about 3,000 pounds (1,360 kg) of equipment including a generator to the stricken ship late on Wednesday.

Earlier in the week, some passengers reported on the poor conditions on the Triumph when they contacted relatives and media before their cell phone batteries died. They said people were getting sick and passengers had been told to use plastic "biohazard" bags as makeshift toilets.

'VERY CHALLENGING CIRCUMSTANCES'

Carnival Cruise Lines Chief Executive Gerry Cahill said in a statement late on Wednesday that the company had decided to add further payment of $500 a person to help compensate passengers for "very challenging circumstances" aboard the ship.

"We are very sorry for what our guests have had to endure," Cahill said.

Mary Poret, who spoke to her 12-year-old daughter aboard the Triumph on Monday, rejected Cahill's apology in comments to CNN on Thursday, as she waited anxiously in Mobile with a friend for the Triumph's arrival.

"Seeing urine and feces sloshing in the halls, sleeping on the floor, nothing to eat, people fighting over food, $500? What's the emotional cost? You can't put money on that," Poret said.

Carnival Corp Chairman and CEO Micky Arison faced criticism in January 2012 for failing to travel to Italy and take personal charge of the Costa Concordia crisis after the luxury cruise shop operated by Carnival's Costa Cruises brand grounded on rocks off the Tuscan island of Giglio. The tragedy unleashed numerous lawsuits against his company.

The cruise ship mogul has taken a low-key approach to the Triumph situation as well, even as it grabbed a growing share of the U.S. media spotlight. His only known public appearance since Sunday was courtside on Tuesday at a game played by his Miami Heat championship professional basketball team.

"I think they really are trying to do the right thing, but I don't think they have been able to communicate it effectively," said Marcia Horowitz, an executive who handles crisis management at Rubenstein Associates, a New York-based public relations firm.

"Most of all, you really need a face for Carnival," she added. "You can do all the right things. But unless you communicate it effectively, it will not see the light of day."

Carnival Corp shares closed down $0.11 at $37.35 in trading on Thursday on the New York Stock Exchange. The shares closed down 4 percent at $37.46 on Wednesday after the company said voyage disruptions and repair costs related to Carnival Triumph could shave up to 10 cents a share off its second-half earnings.

The Triumph is a Bahamian-flagged vessel and the Bahamas Maritime Authority will be the primary agency investigating the cause of its engine room fire.

For all the passengers' grievances, they will likely find it difficult to sue the cruise operator for any damages, legal sources said. Over the years, the cruise industry has put in place a legal structure that ring-fences operators from big-money lawsuits.

Rules for seeking redress are spelled out in complex, multi-page ticket contracts that have been the subject of decades of court battles. Victims are often required to proceed with any litigation in remote jurisdictions.

(Writing and additional reporting by Tom Brown; Editing by Peter Cooney)

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Key U.S. general backs keeping Afghan forces at peak strength

WASHINGTON (Reuters) - The U.S. general nominated to oversee a vast region that includes Afghanistan on Thursday backed keeping Afghan forces at a peak strength of 352,000, contrary to current plans to shrink them after NATO declares the war over next year.

General Lloyd Austin, nominated to lead the U.S. military's Central Command, said at his Senate confirmation hearing that a more robust Afghan force, while more costly, would "hedge against any Taliban mischief" following America's longest war.

"Keeping the larger-size force would certainly reassure the Afghans, it would also reassure our NATO allies that we remain committed," Austin said.

The comments came two days after President Barack Obama announced in his State of the Union address that 34,000 U.S. troops - roughly half of the current U.S. force in Afghanistan - would be withdrawn by early 2014.

Obama reassured Americans that the costly, unpopular war was coming to an end, but he left unanswered bigger questions about America's exit strategy, including how many U.S. troops would stay in the country beyond 2014 to help train and advise the Afghans and to battle remnants of al Qaeda.

Obama also did not discuss the future size of the Afghan forces, although a White House fact sheet sent out after his address noted they would remain at 352,000 until "at least" early 2015.

Austin warned the Taliban would be waiting to test them.

"You could reasonably expect that an enemy that's been that determined, that agile, will very soon after we transition begin to try to test the Afghan security forces," Austin said.

Under current plans, the United States and its NATO allies will help build up the Afghan armed forces to 352,000 personnel, a number they are approaching, but the size of the force - which the allies will continue to fund - will be trimmed to 230,000 after 2015.

ECHOES OF IRAQ

The hearing frequently moved away from questions about the Afghan war and other current events to questions about Austin's past role as commander in Iraq, when a failure to strike an immunity deal for U.S. troops led to their total withdrawal in 2011.

Obama administration officials have warned that failure to strike an immunity deal with Afghanistan would also result in a pullout, but Afghan President Hamid Karzai and U.S. officials have expressed confidence a deal can be reached.

Republicans, who have criticized Obama's drawdown strategy in Afghanistan, noted that the president would have left a much smaller force in Iraq than Austin recommended, even if a deal had been struck.

Senator John McCain of Arizona lamented the lack of a U.S. presence in Iraq.

Pressed by Republicans, Austin acknowledged that the situation in Iraq was trending in a "problematic" direction, and agreed that a continued U.S. role would have helped bolster Iraqi forces.

When it came to Afghanistan, Senator Lindsay Graham of South Carolina warned Austin that if Obama sought an insufficient force for the post-2014 mission, he would refuse to vote for funding the war effort.

"It can be as low as 9 or 10,000, that I will stand with them," Graham said.

"If they overrule the commanders and create a force that cannot in my view be successful, I cannot in good conscience vote to continue this operation."

Graham said he would vote for Austin's confirmation once Austin spoke with the former commander of the Afghan mission, General John Allen, about his recommendations to Obama and reported back to the committee about his opinion.

(Reporting by Phil Stewart; Editing by David Brunnstrom)

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Obama speech 'relied on amnesia'

STORY HIGHLIGHTS

• Matt Welch: State of the Union featured content-free calls to action for action's sake


• He says governed might want to know what they've gotten in return for ballooning debt


• Didn't we try repairing infrastructure with the stimulus package? he asks


• Welch: Rand Paul spoke to those who think government should get out of way

Editor's note: Matt Welch is editor in chief of Reason and co-author of "The Declaration of Independents: How Libertarian Politics Can Fix What's Wrong With America" (Public Affairs).

(CNN) -- The two most memorable lines of President Barack Obama's fourth State of the Union address were the ad-libbed: "Get it done" (which doesn't appear in the remarks as prepared), and the emotional "They deserve a vote," concerning victims of gun violence.

As exasperated appeals for an obstructionist Congress to get off its duff, the exhortations provided emotional catnip for Democrats. For the rest of us, however, they were sobering reminders of what governing liberalism has deteriorated into: content-free calls to take action for action's sake.

Consumers of national governance are within their rights to ask just what we've gotten in return for ballooning the cost of the stuff since 2000. The answer may lie in not just what the president said, but what he has assumed we've already forgotten.

Matt Welch

"Let's cut in half the energy wasted by our homes and businesses over the next 20 years," said the president, who promised a "Recovery Through Retrofit" three years ago. "The American people deserve a tax code that ... lowers tax rates for businesses and manufacturers that create jobs right here in America," said the man who before he took office vowed to, uh, give "tax breaks to companies that are investing here in the United States."

That "aging infrastructure badly in need of repair"? Well, what happened to the $50 billion from the stimulus package dedicated to precisely that task, or the $50 billion plan 18 months later? Making college "more affordable"? That has been the motivation for continuous ratcheting of government involvement in higher education, which has -- surprise! -- coincided with a several-decade increase in tuition costs and student loan debt.

Greene: In 2013, democracy talks back

Do-something politics works when Americans have amnesia, or are reacting to headline-making tragedies, or when they just want free stuff. But this irresistible force is butting up against the immovable object of a have-nothing U.S. Treasury. Debt service costs will soon overtake defense spending, and baby boomer entitlements are about to transform the federal government into a check-writing program for senior citizens.

Americans know by now that Obama can't possibly believe his own promises that his policies won't "increase our deficit by a single dime," not only because of his poor track record with that particular vow, but because he spends the rest of his time talking about all the various things the government needs to "invest" to create "broad-based growth." It's a conflict at the basic level of vision with those of us who think prosperity is mostly a private-sector affair that is on balance imperiled, not improved, by the exertions of a deficit-spending government.

Opinion: Obama dares Congress to get the job done

Thankfully, and quite unlike during the 2012 presidential campaign, the competing vision was voiced Tuesday night. Not necessarily by a dehydrated but game Sen. Marco Rubio, R-Florida, who delivered the Republican response to the State of the Union address, but by Sen. Rand Paul, R-Kentucky, who did the honors online for the tea party.

"The path we are on is not sustainable," Paul said, directly. "All that we are, all that we wish to be, is now threatened by the notion that you can have something for nothing, that you can have your cake and eat it, too, that you can spend a trillion dollars every year that you don't have."

Paul dinged Republicans as well as Democrats, targeted military spending as well as entitlements, and spent a good 30 seconds giving a more full-throated defense of wartime civil liberties than the allegedly anti-war candidate Obama ever did.

Most importantly, he laid out a truly alternative vision that speaks directly to the growing number of Americans who feel like the federal government has failed as the engine of economic growth, and needs urgently to take a back seat before it does more harm.

Rothkopf: This time, a president in full

"What America needs," Paul said, "is not Robin Hood, but Adam Smith." As Obamanomics continues underperforming through a second term, it will be fascinating to see whether Ron Paul's kid can get more people to agree.

Follow us on Twitter: @CNNOpinion.

Join us at Facebook/CNNOpinion.

The opinions expressed in this commentary are solely those of Matt Welch.

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Wall Street ends slightly higher, Dow near a record

NEW YORK (Reuters) - Stocks closed modestly higher on Tuesday, putting the Dow within striking distance of an all-time high, as investors looked ahead to President Barack Obama's State of the Union address.

Investors will be listening to Obama's speech for any clues on a deal with Republicans to avert automatic spending cuts due to take effect March 1. The tone of the speech will also be scrutinized, with any sign of compromise likely to be warmly received.

The S&P 500 has risen for the past six weeks, putting it up 6.5 percent so far this year, while the Dow is about 1 percent away from its all-time closing record of 14,164.53, reached in October 2007.

But gains have been harder to come by since the S&P hit a five-year high on February 1. Daily moves have been small and trading volume light as investors search for new reasons to drive stocks higher.

About 5.73 billion shares changed hands on the New York Stock Exchange, the Nasdaq and NYSE MKT on Tuesday, below the daily average so far this year of about 6.48 billion shares.

"We're likely to settle in for a period and digest the gains we've had, though there's still a bias towards positive momentum," said Eric Teal, chief investment officer at First Citizens Bancshares in Raleigh, North Carolina.

"Questions over government spending are the big overhang, and we're looking for Obama to inspire some confidence over that tonight."

The White House has signaled Obama will urge investment in infrastructure and clean energy, suggesting companies in those sectors may be volatile in Wednesday's session.

"Gun makers could also see a reaction if Obama talks about anything with respect to gun control," said Teal, who helps oversee $5 billion. Shares of Smith & Wesson fell 2 cents to $9.11 while Sturm Ruger was up 0.4 percent at $53.91.

The Dow Jones industrial average <.dji> was up 47.46 points, or 0.34 percent, at 14,018.70. The Standard & Poor's 500 Index <.spx> was up 2.42 points, or 0.16 percent, at 1,519.43. The Nasdaq Composite Index <.ixic> was down 5.51 points, or 0.17 percent, at 3,186.49.

Housing shares were among the strongest of the day, led by a 12.5 percent jump in Masco Corp to $20.02 after the home improvement product maker said it expects new home construction to show strong growth in 2013. The PHLX housing sector index <.hgx> rose 3.7 percent.

Avon Products Inc surged 20 percent to $20.79 as the S&P 500's top percentage gainer after the cosmetics company reversed sales declines and cut costs.

On the downside, Coca-Cola Co fell 2.7 percent to $37.56 and was the biggest drag on the Dow after reporting revenue below estimates, hurt by a weaker-than-expected performance in Europe.

Michael Kors Holdings shares jumped 8.8 percent to $62.04 after the fashion company handily beat Wall Street's estimates and raised its full-year outlook.

With earnings season starting to wind down, Thomson Reuters data through Tuesday morning shows of the 353 companies in the S&P 500 that have reported results, 70.3 percent have exceeded analysts' expectations, above a 62 percent average since 1994 and 65 percent over the past four quarters.

Fourth-quarter earnings for S&P 500 companies are estimated to have risen 5.3 percent, according to the data, above a 1.9 percent forecast at the start of the earnings season.

About 62 percent of stocks traded on the New York Stock Exchange closed higher while 59 percent of Nasdaq-listed shares closed in positive territory.

(Editing by Nick Zieminski)

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Body slam for wrestling: Sport cut from Olympics

LAUSANNE, Switzerland (AP) — For wrestling, this may have been the ultimate body slam: getting tossed out of the Olympic rings.

The vote Tuesday by the IOC's executive board stunned the world's wrestlers, who see their sport as popular in many countries and steeped in history as old as the Olympics themselves.

While wrestling will be included at the 2016 Olympics in Rio de Janeiro, it was cut from the games in 2020, which have yet to be awarded to a host city.

2004 Olympic Greco-Roman champion Khasan Baroev of Russia called the decision "mind-boggling."

"I just can't believe it. And what sport will then be added to the Olympic program? What sport is worthy of replacing ours?" Baroev told the ITAR-Tass news agency. "Wrestling is popular in many countries — just see how the medals were distributed at the last Olympics."

American Rulan Gardner, who upset three-time Russian Olympic champion Alexander Karelin at the Sydney Games in an epic gold-medal bout known as the "Miracle on the Mat," was saddened by the decision to drop what he called "a beloved sport."

"It's the IOC trying to change the Olympics to make it more mainstream and more viewer-friendly instead of sticking to what they founded the Olympics on," Gardner told The Associated Press in a telephone interview from Logan, Utah.

The executive board of the International Olympic Committee reviewed the 26 sports on its summer program in order to remove one of them so it could add one later this year. It decided to cut wrestling and keep modern pentathlon — a sport that combines fencing, horse riding, swimming, running and shooting — and was considered to be the most likely to be dropped.

The board voted after reviewing a report by the IOC program commission report that analyzed 39 criteria, including TV ratings, ticket sales, anti-doping policy and global participation and popularity. With no official rankings or recommendations contained in the report, the final decision by the 15-member board was also subject to political, emotional and sentimental factors.

"This is a process of renewing and renovating the program for the Olympics," IOC spokesman Mark Adams said. "In the view of the executive board, this was the best program for the Olympic Games in 2020. It's not a case of what's wrong with wrestling; it is what's right with the 25 core sports."

According to IOC documents obtained by the AP, wrestling ranked "low" in several of the technical criteria, including popularity with the public at the London Games — just below 5 on a scale of 10. Wrestling sold 113,851 tickets in London out of 116,854 available.

Wrestling also ranked "low" in global TV audience with a maximum of 58.5 million viewers and an average of 23 million, the documents show. Internet hits and press coverage were also ranked as low.

The IOC also noted that FILA — the international wrestling federation — has no athletes on its decision-making bodies, no women's commission, no ethics rules for technical officials and no medical official on its executive board.

Modern pentathlon also ranked low in general popularity in London, with 5.2 out of 10. The sport also ranked low in all TV categories, with maximum viewership of 33.5 million and an average of 12.5 million.

FILA has 177 member nations, compared to 108 for modern pentathlon.

Modern pentathlon, which has been on the Olympic program since the 1912 Stockholm Games, was created by French baron Pierre de Coubertin, the founder of the modern Olympic movement.

It also benefited from the work of Juan Antonio Samaranch Jr., the son of the former IOC president who is a UIPM vice president and member of the IOC board.

"We were considered weak in some of the scores in the program commission report but strong in others," Samaranch told the AP. "We played our cards to the best of our ability and stressed the positives."

Klaus Schormann, president of governing body UIPM, lobbied hard to protect his sport's Olympic status and it paid off in the end.

"We have promised things and we have delivered," he said after Tuesday's decision. "That gives me a great feeling. It also gives me new energy to develop our sport further and never give up."

The IOC executive board will meet in May in St. Petersburg, Russia, to decide which sport or sports to propose for 2020 inclusion. The final vote will be made at the IOC session, or general assembly, in September in Buenos Aires, Argentina.

Wrestling will now join seven other sports in applying for 2020, but it is extremely unlikely that it would be voted back in so soon after being removed by the executive board.

The other sports vying for a single opening in 2020 are a combined bid from baseball and softball, karate, squash, roller sports, sport climbing, wakeboarding and wushu, a martial art.

"Today's decision is not final," Adams said. "The session is sovereign and the session will make the final decision."

Wrestling featured 344 athletes competing in 11 medal events in freestyle and seven in Greco-Roman at last year's London Olympics, with Russia dominating the podium but Iran and Azerbaijan making strong showings. Women's wrestling was added to the Olympics at the 2004 Athens Games.

Tuesday's decision came via secret ballot over four rounds, with 14 members voting each time on which sport should not be included in the core group. IOC President Jacques Rogge did not vote.

Three sports were left in the final round: wrestling, field hockey and modern pentathlon. Eight members voted against wrestling and three each against the other two sports. Taekwondo and canoe kayaking survived the previous rounds.

"I was shocked," said IOC board member Rene Fasel of Switzerland.

"It was an extremely difficult decision to take," added IOC Vice President Thomas Bach of Germany. "The motivation of every member is never based on a single reason. There are always several reasons. It was a secret vote. There will always be criticism, but I think the great majority will understand that we took a decision based on facts and for the modernization of the Olympic Games."

Wrestling was featured in the first modern Olympics in Athens in 1896. Along with Russia's Karelin, it has produced such American stars as Gardner, Bruce Baumgartner, Jeff Blatnick and Jordan Burroughs.

U.S. Olympic Committee CEO Scott Blackmun also expressed surprise at the IOC decision, citing "the history and tradition of wrestling, and its popularity and universality."

"It is important to remember that today's action is a recommendation, and we hope that there will be a meaningful opportunity to discuss the important role that wrestling plays in the sports landscape both in the United States and around the world," Blackmun said in a statement. "In the meantime, we will fully support USA Wrestling and its athletes."

FILA said in a statement that it was "greatly astonished" by the decision, adding that the federation "will take all necessary measures to convince the IOC executive board and IOC members of the aberration of such decision against one of the founding sports of the ancient and modern Olympic Games."

It said it has always complied with IOC regulations and is represented in 180 countries, with wrestling the national sport in some of them.

The federation, which is headed by Raphael Martinetti and based in Corsier-sur-Vevey, Switzerland, said it would meet next week in Thailand to discuss the matter.

Gardner cited wrestling's worldwide popularity and urged a campaign to keep it in the Olympics.

"It just seems like wrestling — if we don't fight, we're going to die," he said. "At this point, it's time for everybody to man up and support the program."

The decision hit hard in Russia, which has long been a power in the sport.

Mikhail Mamiashvili, president of the Russian Wrestling Federation, suggested FILA had not done enough to keep the sport in the games.

"We want to hear what was done to prevent this issue from even being discussed at the board," he said on the Rossiya TV channel.

In comments carried by ITAR-Tass, Mamiashvili added: "I can say for sure that the roots of this problem is at the FILA. I believe that Martinetti's task was to work hard, socialize and defend wrestling's place before the IOC."

Alexander Leipold, a 2000 Olympic champion from Germany and former freestyle German team coach, said he was shocked.

"We are a technical, tactical martial sport where the aim is not to harm the opponent," he said. "Competing at the Olympics is the greatest for an athlete."

Wrestling's long history in the Olympics has featured some legendary names and moments:

— Karelin won the super-heavyweight gold in Greco-Roman over three straight Olympics — 1988, 1992 and 1996 — until his streak was ended by Gardner, who beat him for the gold in 2000.

— Baumgartner won four Olympic medals, including golds in 1984 and 1992.

— Blatnick overcame cancer to win gold in Greco-Roman at the 1984 Los Angeles Games, bursting into tears after the match. Blatnick died last year at age 55.

— Burroughs emerged as the star of the sport in London, where he won the 74-kilogram gold.

The last sports removed from the Olympics were baseball and softball, voted out by the IOC in 2005 and off the program since the 2008 Beijing Games. Golf and rugby will be joining the program at the 2016 Games in Rio.

Among those in Lausanne were the leaders of the recently created World Baseball Softball Confederation. The two sports agreed last year to merge in a joint bid to return to the games.

Don Porter, the American who heads international softball, and Riccardo Fraccari, the Italian who leads baseball, are working out the final details of their unified body ahead of their presentation to the IOC in May.

A major hurdle remains the lack of a commitment from Major League Baseball to release top players for the Olympics.

Porter and Fraccari said they hope to have another meeting with MLB officials in April in Tokyo.

"The next thing is to sit down with them and see how they can help us," Porter said. "It all depends on the timing, the timing of the season. It's not an easy decision to allow players a week off."

___

Associated Press writers Lynn Berry in Moscow and Luke Meredith in Des Moines, Iowa, contributed to this story.

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Was euro ever 'about to collapse'?

By Ramy Inocencio, for CNN

February 12, 2013 -- Updated 0948 GMT (1748 HKT)

STORY HIGHLIGHTS

• Former European Central Bank chief says euro was never going to collapse


• In 2012, critics predicted at least partial breakup of 17-member eurozone


• Euro plunged to 25-month low against U.S. dollar in July 2012


• Currency war fears prevail in run-up to G20 finance ministers meeting this week

Hong Kong (CNN) -- Less than six months ago, eurozone watchers had been predicting the breakup of the 17-member bloc of nations as the euro plunged to a 25-month low against the U.S. dollar last July.

Even as recently as November, Warren Buffett, the famed CEO of Berkshire Hathaway, said of the eurozone's future that "it's hard to tell exactly how it comes out."

But since then, the euro has appreciated nearly 11% as its member countries battled to contain sovereign debt crises, rising unemployment and social unrest. The euro now stands at a 13-month high against the greenback.

And flying in the face of last year's critics, former European Central Bank chief Jean-Claude Trichet told CNN's Nina dos Santos that the euro "was never about to collapse" and that its viability as a currency is solid.

"The euro as a currency has never been put in question," asserted Trichet, while at the same time admitting the euro area's financial stability and credit worthiness had been tested.

As for the euro, he said it "is certainly reliable and credible."

Yet, the euro's gains over the past seven months is a mixed blessing. Arguments have long-existed for and against a stronger currency. Appreciation means investors are more confident in the euro but eurozone exports become more expensive when sold overseas; devaluation makes the bloc's exports more competitive globally, which many eurozone officials would prefer.

But if the world's major economies devalued their currencies to make exports more competitive and to spur their economies to growth again, it would be chaos, says Trichet.

"If the reasoning is the same in all constituencies you have nothing but...a 'beggar-thy-neighbor' policy which is a recipe for catastrophe."

That catastrophe could take the form of an all-out currency war. And this week, the world's leading banks called on the G20 group of richest nations to avoid such an outcome.

"We believe major central banks should focus on enhancing their cooperation...to guide market expectations and thus help avoid a disorderly interest rate adjustment process and undue exchange rate volatility," the Institute of International Finance wrote in a letter to Russian Finance Minister Anton Siluanov, who is chairing the G20 finance minister's meeting later this week.

But with the eurozone in recession for the second time in four years, the desire to devalue the euro may be strong. The European Central Bank in December cut its 2013 growth forecast, with a best-case growth rate scenario of only 0.3%.

"It is no time for complacency," warned Trichet who added that the central banks of the United States, Japan and Europe as well as their private sectors should get their "house(s) in order."

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Dorner surrounded by police in cabin after gun battle

Christopher Dorner was engaged in a shootout with federal authorities in the Big Bear area Tuesday, a law enforcement source told The Times.

"Hundreds of rounds" were exchanged in about half an hour during the gun battle between fugitive former police officer Christopher Dorner and law enforcement officers Tuesday afternoon, sources said.

At least two San Bernardino County sheriff's deputies were wounded, sources said. Their conditions were not immediately known.

Days ago, Dorner broke into a cabin off Route 38, a source said. He allegedly tied up the couple inside and held them hostage until Tuesday morning when he left. It is unclear whether Dorner stole their vehicle or another, but Fish and Wildlife officers knew to be on the lookout for a white pickup truck when they spotted Dorner driving one and attempted to stop him, the source said.

Dorner crashed the truck during the ensuing chase and allegedly exchanged gunfire with the officers as he fled into another cabin, where he was quickly surrounded by San Bernardino sheriff’s deputies. The source said one deputy was hit as Dorner fired out of the cabin and a second was injured when Dorner exited the back of the cabin, deployed a smoke bomb and opened fire again in an apparent attempt to flee. Dorner was driven back inside the cabin, the source said.

There was initial confusion as to where a helicopter should land to evacuate the injured officers,  so deputies used their own smoke bombs to provide enough cover to carry the wounded to a pickup truck that took them to the waiting helicopter.

Officers have crisscrossed California for days pursuing the more than 1,000 tips that poured in about Dorner's possible whereabouts — including efforts in Tijuana, Mexico, San Diego County and Big Bear — and serving warrants at homes in Las Vegas and Point Loma.

Statewide alerts were issued in California and Nevada, and border authorities were alerted. The Transportation Security Administration also issued an alert urging pilots and other aircraft operators to keep an eye out for Dorner.

At the search's height, more than 200 officers scoured the mountain, conducting cabin-by-cabin checks. It was scaled back Sunday — about 30 officers were out in the field Tuesday, the San Bernardino County Sheriff's Department said.

Dorner allegedly threatened "unconventional and asymmetrical warfare" against police in a lengthy manifesto that authorities say he posted on Facebook. The posting named dozens of potential targets, including police officers, whom Dorner allegedly threatened to attack, according to authorities.

His alleged slayings began Feb. 3 with the deaths of Monica Quan, a Cal State Fullerton assistant basketball coach, and her fiance, Keith Lawrence, a USC public safety officer. Quan was the daughter of a retired LAPD captain whom Dorner allegedly blamed in part for his firing from the force in 2009.

While on the run Thursday, Dorner allegedly shot three police officers in Riverside County, killing one and wounding the others. Riverside Officer Michael Crain, 34, a married father of two who served two tours in Kuwait as a rifleman in the Marines, was killed in the attack.

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North Korean nuclear test draws anger, including from China

SEOUL (Reuters) - North Korea conducted its third nuclear test on Tuesday in defiance of U.N. resolutions, drawing condemnation from around the world, including from its only major ally, China, which summoned the North Korean ambassador to protest.

Pyongyang said the test was an act of self-defense against "U.S. hostility" and threatened stronger steps if necessary.

The test puts pressure on U.S. President Barack Obama on the day of his State of the Union speech and also puts China in a tight spot, since it comes in defiance of Beijing's admonishments to North Korea to avoid escalating tensions.

The U.N. Security Council held an emergency meeting at which its members, including China, "strongly condemned" the test and vowed to start work on appropriate measures in response, the president of the council said.

North Korean leader Kim Jong-un, the third of his line to rule the country, has presided over two long-range rocket launches and a nuclear test during his first year in power, pursuing policies that have propelled his impoverished and malnourished country closer to becoming a nuclear weapons power.

North Korea said the test had "greater explosive force" than those it conducted in 2006 and 2009. Its KCNA news agency said it had used a "miniaturized" and lighter nuclear device, indicating it had again used plutonium, which is suitable for use as a missile warhead.

China, which has shown signs of increasing exasperation with the recent bellicose tone of its reclusive neighbor, summoned the North Korean ambassador in Beijing and protested sternly, the Foreign Ministry said.

Foreign Minister Yang Jiechi said China was "strongly dissatisfied and resolutely opposed" to the test and urged North Korea to "stop any rhetoric or acts that could worsen situations and return to the right course of dialogue and consultation as soon as possible".

Analysts said the test was a major embarrassment to China, which is a permanent member of the Security Council and North Korea's sole major economic and diplomatic ally.

Obama called the test a "highly provocative act" that hurt regional stability.

"The danger posed by North Korea's threatening activities warrants further swift and credible action by the international community. The United States will also continue to take steps necessary to defend ourselves and our allies," Obama said.

U.S. Ambassador to the United Nations Susan Rice said Washington and its allies intended to "augment the sanctions regime" already in place due to Pyongyang's previous atomic tests. North Korea is already one of the most heavily sanctioned states in the world and has few external economic links that can be targeted.

Japanese Prime Minister Shinzo Abe said the test was a "grave threat" that could not be tolerated.

Russian Foreign Minister Sergei Lavrov urged North Korea to abandon its nuclear arms program and return to talks. NATO condemned the test as an "irresponsible act."

South Korea, still technically at war with North Korea after a 1950-53 civil war ended in a mere truce, also denounced the test. Obama spoke to South Korean President Lee Myung-bak on Tuesday and told him the United States "remains steadfast in its defense commitments" to Korea, the White House said.

MAXIMUM RESTRAINT

North Korea's Foreign Ministry said the test was "only the first response we took with maximum restraint".

"If the United States continues to come out with hostility and complicates the situation, we will be forced to take stronger, second and third responses in consecutive steps," it said in a statement carried by the official KCNA news agency.

North Korea - which gave the U.S. State Department advance warning of the test - often threatens the United States and its "puppet", South Korea, with destruction in colorful terms.

North Korea told the U.N. disarmament forum in Geneva that it would never bow to resolutions on its nuclear program and that prospects were "gloomy" for the denuclearization of the divided Korean peninsula because of a "hostile" U.S. policy.

Suzanne DiMaggio, an analyst at the Asia Society in New York, said North Korea had embarrassed China with the test. "China's inability to dissuade North Korea from carrying through with this third nuclear test reveals Beijing's limited influence over Pyongyang's actions in unusually stark terms," she said.

Mark Fitzpatrick of the International Institute for Strategic Studies think tank, said: "The test is hugely insulting to China, which now can be expected to follow through with threats to impose sanctions."

The magnitude of the explosion was roughly twice that of the 2009 test, according to the Vienna-based Comprehensive Nuclear-Test Ban Treaty Organization. The U.S. Geological Survey said that a seismic event measuring 5.1 magnitude had occurred.

U.S. intelligence agencies were analyzing the event and found that North Korea probably conducted an underground nuclear explosion with a yield of "approximately several kilotons", the Office of the Director of National Intelligence said.

Nuclear experts have described Pyongyang's previous two tests as puny by international standards. The yield of the 2006 test has been estimated at less than 1 kiloton (1,000 tons of TNT equivalent) and the second at some 2-7 kilotons, compared with 20 kilotons for a Nagasaki-type bomb.

Initial indications are that the test involved the latest version of a plutonium-based prototype weapon, according to one current and one former U.S. national security official. Both previous tests involved plutonium. If it turns out the test was of a new uranium-based weapon, it would show that North Korea has made more progress on uranium enrichment than previously thought.

The United States uses WC-135 Constant Phoenix "sniffer" aircraft to collect samples to identify nuclear explosions. These would need to be deployed quickly to detect whether highly enriched uranium rather than plutonium was used because uranium decays to undetectable levels within a matter of days. Plutonium takes much longer to decay.

North Korea trumpeted news of the test on its state television channel to patriotic music against a backdrop of its national flag.

"It was confirmed that the nuclear test that was carried out at a high level in a safe and perfect manner using a miniaturized and lighter nuclear device with greater explosive force than previously did not pose any negative impact on the surrounding ecological environment," KCNA said.

North Korea linked the test to its technical prowess in launching a long-range rocket in December, a move that triggered the U.N. sanctions, backed by China, that Pyongyang said prompted it to take Tuesday's action.

The North's ultimate aim, Washington believes, is to design an intercontinental ballistic missile capable of carrying a nuclear warhead that could hit the United States. North Korea says the program is aimed at putting satellites in space.

Despite its three nuclear tests and long-range rocket tests, North Korea is not believed to be close to manufacturing a nuclear missile capable of hitting the United States.

It used plutonium in previous nuclear tests and before Tuesday there had been speculation that it would use highly enriched uranium so as to conserve its plutonium stocks, as testing eats into its limited supply of materials to construct a nuclear bomb.

"VICIOUS CYCLE"

When Kim Jong-un, who is 30, took power after his father's death in December 2011, there were hopes that he would bring reforms and end Kim Jong-il's "military first" policies.

Instead, North Korea, whose economy is smaller than it was 20 years ago and where a third of children are believed to be malnourished, appears to be trapped in a cycle of sanctions followed by further provocations.

"The more North Korea shoots missiles, launches satellites or conducts nuclear tests, the more the U.N. Security Council will impose new and more severe sanctions," said Shen Dingli, a professor at Shanghai's Fudan University. "It is an endless, vicious cycle."

Options for the international community appear to be in short supply. Diplomats at the United Nations said negotiations on new sanctions could take weeks since China is likely to resist tough new measures for fear they could lead to further retaliation by the North Korean leadership.

Beijing has also been concerned that tougher sanctions could further weaken North Korea's economy and prompt a flood of refugees into China.

Tuesday's action appeared to have been timed for the run-up to February 16 anniversary celebrations of Kim Jong-il's birthday, as well as to achieve maximum international attention.

Significantly, the test comes at a time of political transition in China, Japan and South Korea, and as Obama begins his second term. The U.S. president will likely have to tweak his State of the Union address due to be given on Tuesday.

Japanese Prime Minister Shinzo Abe is bedding down a new government and South Korea's new president, Park Geun-hye, is preparing to take office on February 25.

China too is in the midst of a once-in-a-decade leadership transition to Xi Jinping, who takes office in March. Both Abe and Xi are staunch nationalists.

The longer-term game plan from Pyongyang may be to restart international talks aimed at winning food and financial aid. China urged it to return to the stalled "six-party" talks on its nuclear program, hosted by China and including the two Koreas, the United States, Japan and Russia.

Its puny economy and small diplomatic reach mean that North Korea struggles to win attention on the global stage - other than through nuclear tests and attacks on South Korea, the last of which was made in 2010.

"Now the next step for North Korea will be to offer talks... - any form to start up discussion again to bring things to their advantage," predicted Jeung Young-tae, senior research fellow at the Korea Institute for National Unification in Seoul.

(Additional reporting by Jack Kim, Christine Kim and Jumin Park in SEOUL; Linda Sieg in TOKYO; Louis Charbonneau and Michelle Nichols at the UNITED NATIONS; Fredrik Dahl in VIENNA; Michael Martina and Chen Aizhu in BEIJING; Mette Fraende in COPENHAGEN; Adrian Croft, Charlie Dunmore and Justyna Pawlak in BRUSSELS; Mark Hosenball, Paul Eckert, Roberta Rampton, Tabassum Zakaria and Jeff Mason in WASHINGTON; Editing by Nick Macfie, Claudia Parsons and David Brunnstrom)

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Wall Street ends flat as investors seek new catalysts

NEW YORK (Reuters) - Stocks ended a quiet session with slight moves on Monday as investors found few reasons to keep pushing shares higher following a six-week advance, though the longer-term trend was still viewed as positive.

The benchmark index is up more 6.4 percent in 2013, putting both the S&P 500 and Dow industrials near multi-year highs. The S&P is less than 4 percent from its all-time intraday high of 1,576.09, hit in October 2007.

"This is still a market that looks terrific, but when you're up for six weeks in a row, everyone is going to want to take a pause going into the seventh week even if there is no bad news out there," said Eric Kuby, chief investment officer at North Star Investment Management in Chicago.

Volume was light, with about 4.812 billion shares changing hands on the New York Stock Exchange, the Nasdaq and NYSE MKT, well below the daily average so far this year of about 6.48 billion shares.

Wall Street was modestly lower throughout the session but regained some ground in the final hour of trading as Google Inc rebounded off earlier losses. Shares of the Internet search giant dipped 0.4 percent to $782.42, recovering from earlier declines of 1 percent after the company said in a filing former chief executive Eric Schmidt is selling roughly 42 percent of his stake in the company.

Also in the tech space, Apple Inc rose up 1 percent to $479.93 after the New York Times reported the iPhone maker was experimenting with the design of a device similar to a wristwatch.

The Federal Reserve's Vice Chair Janet Yellen, seen as a potential successor to Fed Chairman Ben Bernanke next year, said the Fed is still aggressively stimulating an anemic U.S. economic recovery that has failed to bring rapid progress on employment.

The Dow Jones industrial average <.dji> was down 21.81 points, or 0.16 percent, at 13,971.16. The Standard & Poor's 500 Index <.spx> was down 0.92 points, or 0.06 percent, at 1,517.01. The Nasdaq Composite Index <.ixic> was down 1.87 points, or 0.06 percent, at 3,192.00.

Upbeat U.S. and Chinese data last week helped the S&P 500 extend its weekly winning streak to six. The index gained about 8 percent over that period.

Equities have been strong performers lately and many investors have used any declines in the market as opportunities to buy.

"Everyone wants to buy on a dip in this market, but if you're on the sidelines right now, the decline we're seeing today just isn't the kind you would jump in on," Kuby said.

President Barack Obama will describe his plan for spurring the economy in his State of the Union address on Tuesday. He is expected to offer proposals for investment in infrastructure, manufacturing, clean energy and education.

Opposition has grown to the $24.4 billion buyout of Dell Inc , the No. 3 personal computer maker, as three of the largest investors joined Southeastern Asset Management on Friday in raising objections. Dell said in a regulatory filing it had considered many strategic options before opting to go private in a buyout led by Chief Executive Michael Dell.

Dell shares hovered near $13.65, the buyout offer price.

Regeneron Pharmaceuticals Inc shares rose 2.7 percent at $170.35 after it said longtime drug development partner Sanofi plans to boost its stake.

Moody's Corp was one of the strongest percentage gainers on the S&P 500, rising 4.9 percent to $45.49. Last week the stock plunged 22 percent after the U.S. government launched a civil lawsuit against the company. The sell-off marked the stock's worst week since October 2008.

About 53 percent of stocks traded on the New York Stock Exchange closed lower while slightly more Nasdaq-listed stocks closed in negative territory.

(Editing by Nick Zieminski)

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Indiana stays at No. 1 in AP Top 25 despite loss

Indiana coach Tom Crean used an analogy to the state's second favorite sport after the Hoosiers remained No. 1 in The Associated Press' Top 25 for a second straight week.

It had been over a month since a team managed to stay on top, and Indiana broke that trend despite losing a game last week, leading Crean to bring up auto racing.

"I had a good friend tell me that in-season rankings are the barometer of representing what lane you're in and the direction and how far you are moving towards your goals," Crean said Monday. "We want to stay in the left lane and keep working on our team and pace because we know there are quite a few others in the left lane as well."

The Hoosiers (21-3) lost to Illinois on a last-second basket Thursday but rebounded with a win at then-No.10 Ohio State on Sunday. In a week when four of the top five teams and six of the top 10 lost, it was enough to keep the No. 1 ranking.

"They were really disappointed on Thursday night. And instead of carrying that disappointment into a 'woe is me' mentality, they really did trigger how to get better. And I think it was in the sense of closing games," Crean said.

"I think there was a different level, a sense of urgency because of the way we didn't finish it off, combined with the fact that we knew we were playing a team that it is outstanding."

This ends a stretch of five consecutive weeks with a new No. 1, two weeks short of the longest such stretch in 1993-94. Duke started the run followed by Louisville, Duke again, Michigan and Indiana.

The Hoosiers received 26 first-place votes from the 65-member national media panel Monday, while Duke, the only member of the top five not to lose last week, moved up two spots to second after getting 20 first-place votes.

The last time a No. 1 team lost and kept the ranking the next week was the final poll of last season. Kentucky fell to Vanderbilt in the Southeastern Conference tournament championship game, but Nos. 2-4 also went down that week, so the Wildcats were No. 1 heading into the NCAA tournament.

Miami, which received 17 No. 1 votes, jumped from eighth to No. 3, the Hurricanes' highest ranking ever.

"I've never really thought that Miami could be a top 10 program," center Reggie Johnson said. "I didn't think we'd be here in February. It's surreal. The votes are cool, but we've still got work to do."

The Hurricanes are the last team from a major conference to still be unbeaten in league play.

"It's what every program strives for," coach Jim Larranaga said. "Carolina and Duke have this every year. It's a little different for us. These guys are hungry. They remain very, very humble."

Michigan dropped one spot to fourth, while Gonzaga, which got the other two first-place votes, moved up one spot to fifth.

Syracuse was sixth, followed by Florida, Michigan State, Arizona and Kansas State.

Along with Indiana and Ohio State, the other top 10 teams to lose last week were No. 2 Florida, No. 3 Michigan, No. 5 Kansas and No. 7 Arizona.

There were four newcomers to the rankings: No. 20 Wisconsin, No. 22 Memphis, No. 24 Colorado State and No. 25 Kentucky.

Wisconsin, Memphis and Kentucky, the defending national champion, were all ranked early in the season, while Colorado State makes it first appearance in the poll since March 9, 1954.

They replace Creighton, Cincinnati, Minnesota and Missouri, the only one of the four not to lose two games last week.

In all, 14 ranked teams lost at least once, with five losing twice.

___

AP Sports Writer Steve Wine in Miami contributed to this report.

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