Exclusive: North Korea tells China of preparations for fresh nuclear test - source

BEIJING (Reuters) - North Korea has told its key ally, China, that it is prepared to stage one or even two more nuclear tests this year in an effort to force the United States into diplomatic talks, said a source with direct knowledge of the message.

Further tests could also be accompanied this year by another rocket launch, said the source, who has direct access to the top levels of government in both Beijing and Pyongyang.

North Korea conducted its third nuclear test on Tuesday, drawing global condemnation and a stern warning from the United States that it was a threat and a provocation.

"It's all ready. A fourth and fifth nuclear test and a rocket launch could be conducted soon, possibly this year," the source said, adding that the fourth nuclear test would be much larger than the third, at an equivalent of 10 kilotons of TNT.

The tests will be undertaken, the source said, unless Washington holds talks with North Korea and abandons its policy of what Pyongyang sees as attempts at regime change.

North Korea also reiterated its long-standing desire for the United States to sign a final peace agreement with it and establish diplomatic relations, he said. North Korea remains technically at war with both the United States and South Korea after the Korean war ended in 1953 with a truce.

In Washington, U.S. State Department spokeswoman Victoria Nuland urged North Korea to "refrain from additional provocative actions that would violate its international obligations" under three different sets of U.N. Security Council resolutions that prohibit nuclear and missile tests.

North Korea "is not going to achieve anything in terms of the health, welfare, safety, future of its own people by these kinds of continued provocative actions. It's just going to lead to more isolation," Nuland told reporters.

The Pentagon also weighed in, calling North Korea's missile and nuclear programs "a threat to U.S. national security and to international peace and security."

"The United States remains vigilant in the face of North Korean provocations and steadfast in our defense commitments to allies in the region," said Pentagon spokeswoman Major Catherine Wilkinson.

Initial estimates of this week's test from South Korea's military put its yield at the equivalent of 6-7 kilotons, although a final assessment of yield and what material was used in the explosion may be weeks away.

North Korea's latest test, its third since 2006, prompted warnings from Washington and others that more sanctions would be imposed on the isolated state. The U.N. Security Council has only just tightened sanctions on Pyongyang after it launched a long-range rocket in December.

Pyongyang is banned under U.N. sanctions from developing missile or nuclear technology after its 2006 and 2009 nuclear tests.

North Korea worked to ready its nuclear test site, about 100 km (60 miles) from its border with China, throughout last year, according to commercially available satellite imagery. The images show that it may have already prepared for at least one more test, beyond Tuesday's subterranean explosion.

"Based on satellite imagery that showed there were the same activities in two tunnels, they have one tunnel left after the latest test," said Kune Y. Suh, a nuclear engineering professor at Seoul National University in South Korea.

Analysis of satellite imagery released on Friday by specialist North Korea website 38North showed activity at a rocket site that appeared to indicate it was being prepared for a launch (http://38north.org/2013/02/tonghae021413/).

NORTH 'NOT AFRAID' OF SANCTIONS

President Barack Obama pledged after this week's nuclear test "to lead the world in taking firm action in response to these threats" and diplomats at the U.N. Security Council have already started discussing potential new sanctions.

North Korea has said the test was a reaction to "U.S. hostility" following its December rocket launch. Critics say the rocket launch was aimed at developing technology for an intercontinental ballistic missile.

"(North) Korea is not afraid of (further) sanctions," the source said. "It is confident agricultural and economic reforms will boost grain harvests this year, reducing its food reliance on China."

North Korea's isolated and small economy has few links with the outside world apart from China, its major trading partner and sole influential diplomatic ally.

China signed up for international sanctions against North Korea after the 2006 and 2009 nuclear tests and for a U.N. Security Council resolution passed in January to condemn the latest rocket launch. However, Beijing has stopped short of abandoning all support for Pyongyang.

Sanctions have so far not discouraged North Korea from pursuing its nuclear ambitions.

"It is like watching the same movie over and over again," said Lee Woo-young, a professor at Seoul's University of North Korean Studies. "The idea that stronger sanctions make North Korea stop developing nuclear programs isn't effective in my view."

The source with ties to Beijing and Pyongyang said China would again support U.N. sanctions. He declined to comment on what level of sanctions Beijing would be willing to endorse.

"When China supported U.N. sanctions ... (North) Korea angrily called China a puppet of the United States," he said. "There will be new sanctions which will be harsh. China is likely to agree to it," he said, without elaborating.

He said however that Beijing would not cut food and fuel supplies to North Korea, a measure it reportedly took after a previous nuclear test.

He said North Korea's actions were a distraction for China's leadership, which was concerned that the escalations could inflame public opinion in China and hasten military build-ups in the region.

The source said he saw little room for compromise under North Korea's youthful new leader, Kim Jong-un. The third Kim to rule North Korea is just 30 years old and took over from his father in December 2011.

He appears to have followed his father, Kim Jong-il, in the "military first" strategy that has pushed North Korea ever closer to a workable nuclear missile at the expense of economic development.

"He is much tougher than his father," the source said.

(Additional reporting by Arshad Mohammed and Phillip Stewart in WASHINGTON; Writing by David Chance; Editing by Raju Gopalakrishnan, David Brunnstrom and Jackie Frank)

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Wall Street ends slightly higher, helped by acquisitions

NEW YORK (Reuters) - The S&P 500 eked out a small gain for a third straight session on Thursday, helped by a flurry of merger activity, though investors see no catalysts to lift the market further with major averages near multi-year highs.

The market's slowed advance took the S&P 500 to its highest intraday level since November 2007 on Wednesday. While the index notched its third straight day of gains, none was more than 0.2 percent.

Shares of H.J. Heinz Co jumped 20 percent to $72.50 after it said Warren Buffett's Berkshire Hathaway and 3G Capital will buy the food company for $72.50 a share, or $28 billion including debt. Berkshire's class B shares rose 1.3 percent to $99.21.

Also supporting the market was data showing the number of Americans filing new claims for unemployment benefits fell more than expected in the latest week. The CBOE Volatility index <.vix> fell 2.4 percent, dropping to 12.67.

"While I'm not bearish, I don't see many upside motivations at these levels," said Donald Selkin, chief market strategist at National Securities in New York, who cited the low level of the VIX as a sign the market was overbought.

Equities have struggled to break above current levels where they have been hovering for almost two weeks. The S&P 500 is up more than 6 percent so far this year.

"We need to digest some of our gains to go higher, but people are so eager to buy on the dips that we're not even seeing dips anymore. People are just chasing the market higher," said Selkin, who helps oversee about $3 billion in assets.

Stocks fell earlier after a report the euro zone's gross domestic product contracted by the steepest amount since the first quarter of 2009. In addition, Japan's GDP shrank 0.1 percent in the fourth quarter, crushing expectations of a modest return to growth.

The Dow Jones industrial average <.dji> was down 9.52 points, or 0.07 percent, at 13,973.39. The Standard & Poor's 500 Index <.spx> was up 1.05 points, or 0.07 percent, at 1,521.38. The Nasdaq Composite Index <.ixic> was up 1.78 points, or 0.06 percent, at 3,198.66.

Constellation Brands soared 37 percent to $43.75 after AB InBev's deal to take over Mexican brewer Grupo Modelo was revised to grant Constellation perpetual rights to distribute Corona and other Modelo brands in the United States. U.S. shares of AB InBev gained 5.1 percent to $92.77.

American Airlines and US Airways Group said they plan to merge in a deal that will form the world's biggest air carrier, with an equity valuation of about $11 billion. US Airways shares fell 4.6 percent to $13.99.

Weakness in Europe contributed to a 5 percent drop in revenue from the region for Cisco Systems , which nonetheless beat estimates as it reported its results late Wednesday. The company's shares dipped 0.7 percent to $20.99.

General Motors Co reported a weaker-than-expected fourth-quarter profit, also citing bigger losses in Europe alongside lower prices in its core North American market. The stock was off 3.3 percent to $27.73.

Only five more stocks rose than fell on the New York Stock Exchange, while 51 percent of Nasdaq-listed shares closed higher.

Volume was light, with about 6.36 billion shares changing hands on the New York Stock Exchange, the Nasdaq and NYSE MKT, below the daily average so far this year of about 6.48 billion shares.

(Editing by Nick Zieminski and Kenneth Barry)

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Olympian Oscar Pistorius charged with murder

PRETORIA, South Africa (AP) — Paralympic superstar Oscar Pistorius was charged Thursday with the murder of his girlfriend who was shot inside his home in South Africa, a stunning development in the life of a national hero known as the Blade Runner for his high-tech artificial legs.

Reeva Steenkamp, a model who spoke out on Twitter against rape and abuse of women, was shot four times in the predawn hours in the house, in a gated community in the capital, Pretoria, police said.

Hours later after undergoing police questioning, Pistorius left a police station accompanied by officers. He looked down as photographers snapped pictures, the hood on his gray workout jacket pulled up, covering most of his face. His court hearing was originally scheduled for Thursday afternoon but has been postponed until Friday to give forensic investigators time to carry out their work, said Medupe Simasiku, a spokesman for the prosecution.

South Africans were shocked at the killing. But while Pistorius captured the nation's attention with his Olympic quest, police said there was a recent history of problems involving him. Police spokeswoman Brigadier Denise Beukes said the incidents included "allegations of a domestic nature."

"I'm not going to elaborate on it but there have been incidents (at Pistorius' home)," Beukes said. Police in South Africa do not name suspects in crimes until they have appeared in court but Beukes said that the 26-year-old Pistorius was at his home at the time of the death of Steenkamp and "there is no other suspect involved."

Pistorius' father, Henke, declined to comment when contacted by The Associated Press, only saying "we all pray for guidance and strength for Oscar and the lady's parents."

Neither Pistorius' agent Peet van Zyl nor coach Ampie Louw could be reached while Pistorius' own cellphone went straight to voicemail.

Pistorius' former coach, Andrea Giannini, said he hopes it was "just a tragic accident." Giannini said he believed that Pistorius had been dating Steenkamp for "a few months."

"No matter how bad the situation was, Oscar always stayed calm and positive," Giannini told the AP in Italy. "Whenever he was tired or nervous he was still extremely nice to people. I never saw him violent."

Yet Pistorius had troubles in his personal life. In February 2009, he crashed a speed boat he was piloting on South Africa's Vaal River. Witnesses said he had been drinking before the crash and officers found alcoholic beverages in the wreckage, though they acknowledged at the time they hadn't conducted a blood test on the athlete. Pistorius broke his nose, jaw and several ribs in the crash, as well as damaged his eye socket and required some 180 stitches to his face.

In November, Pistorius also found himself in an altercation with a local coal mining millionaire over a woman, South African media reported. Eventually, the two men involved the South African Police Service's elite Hawks investigative unit before settling the matter.

Pistorius owned firearms and posted a photograph of himself at a shooting range in November 2011 to the social media website Twitter, bragging about his score.

"Had a 96% headshot over 300m from 50shots! Bam!" he tweeted.

Police said that earlier reports that Steenkamp may have been mistaken for a burglar by Pistorius did not come from the police. Several local media outlets initially reported that the shooting may have been accidental.

Capacity Relations, a talent management firm, earlier named model Steenkamp as the victim of the shooting. Police spokeswoman Lt. Col. Katlego Mogale told the AP that officers received a call around 3 a.m. after the shooting.

A 9 mm pistol was recovered and a murder case opened against Pistorius.

Pistorius enjoyed target shooting with his pistol and an online advertisement featuring him for Nike read: "I am a bullet in the chamber." An article in January 2012 in The New York Times Magazine described him talking about how he pulled a pistol to search his home when his alarm went off the night before an interview. At Pistorius' suggestion, he and the journalist went to a nearby target range where they fired at targets with a 9 mm pistol. At one point, Pistorius told the writer: "If you practiced, I think you could be pretty deadly."

Asked how often he went target shooting, Pistorius replied: "Just sometimes when I can't sleep."

Police have still not released the name of the woman, but the publicist for Steenkamp confirmed in a statement that the model was dead.

"We can confirm that Reeva Steenkamp has passed away," Steenkamp's publicist Sarit Tomlinson said. "Our thoughts and prayers go to the Steenkamp family, who have asked to have their privacy respected during this difficult time, everyone is simply devastated. She was the kindest, sweetest human being; an angel on earth and will be sorely missed."

Tomlinson said Steenkamp, known simply as Reeva, was one of FHM's (formerly For Him Magazine) 100 Sexiest Women in the World for two years running, appeared in countless international and national advertisements and was one of the celebrity contestants on the reality show "Tropika Island of Treasure," filmed in Jamaica.

She and Pistorius were first seen publicly together in November at an awards ceremony in Johannesburg. Later, she began mentioning the athlete in public messages on Twitter.

She also tweeted messages urging women to stand up against rape as well as her excitement about Valentine's Day. "What do you have up your sleeve for your love tomorrow?" she tweeted. "It should be a day of love for everyone."

Pistorius made history in London last year when he became the first double-amputee track athlete to compete in the Olympic Games, propelling him to the status of an athletics superstar.

Having had both his legs amputated below the knee before his first birthday because of a congenital condition, he campaigned for years to be allowed to compete against able-bodied athletes. Having initially been banned because of his carbon fiber blades — which critics said gave him an unfair advantage — he was cleared by sport's highest court in 2008 and allowed to run at the top events.

He competed in the 400 meters and on South Africa's 4x400 relay team at the London Games, making history when his selection for South Africa's team was confirmed at the very last minute. He also retained his Paralympic title in the 400 meters in London.

South Africa's Sports Confederation and Olympic committee released a statement on Thursday saying they had been "inundated" with requests for comment but were not in a position to give out any details of the shooting. The International Paralympic Committee also said it wouldn't comment in detail apart from offering its condolences to the victim's family.

South Africa has some of the world's highest murder rates, with nearly 50 people killed each day in the nation of 50 million. It also has high rates of rape, other assaults, robbery and carjackings.

U.N. statistics show South Africa has the second highest rate of shooting deaths in the world, second only to Colombia.

"The question is: Why does this story make the news? Yes, because they are both celebrities, but this is happening on every single day in South Africa," said Adele Kirsten, a member of Gun Free South Africa. "We have thousands of people killed annually by gun violence in our country. So the anger is about that it is preventable."

___

Imray reported from Cape Town, South Africa. Associated Press writer Michelle Faul contributed to this report from Johannesburg.

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How safe are nanoparticles in food?

STORY HIGHLIGHTS

• Andy Behar: Some foods contain tiny, engineered particles called nanomaterials


• Behar: Nanoparticles might pose health risks, since they have adversely affected mice


• He says not enough studies have adequately demonstrated the safety of nanoparticles


• Behar: With an emerging technology such as this, companies have to be careful

Editor's note: Andy Behar is the chief executive of As You Sow, a nonprofit organization that promotes corporate accountability.

(CNN) -- Some foods sold in supermarkets across America contain tiny, engineered particles called nanomaterials. Our organization decided to test doughnuts after learning that the titanium dioxide used as a coloring in the powdered sugar coating likely contained nano-sized particles.

The tests, conducted by an independent laboratory, found that both Dunkin' Donuts Powdered Cake Donuts and Hostess Donettes did indeed contain titanium dioxide nanoparticles. In response, a spokeswoman for Dunkin Donuts said the company was looking into the matter.

You must be wondering: What are nanomaterials? They are microscopic in size. "If a nanoparticle were the size of a football, a red blood cell would be the size of the field." Nanoparticles have been heralded as having the potential to revolutionize the food industry -- from enabling the production of creamy liquids that contain no fat, to enhancing flavors, improving supplement delivery, providing brighter colors, keeping food fresh longer, or indicating when it spoils.

Andy Behar

But there are a few problems.

One is that no one knows how many and which food products have them. Companies are not being forthcoming about whether they are using nanoparticles. To further complicate the issue, some companies may not even be aware that they are selling products containing them.

Many companies are reluctant or uninterested in discussing the issue, and concrete information has been difficult to obtain. The majority of food companies are not responsive in providing information about their specific uses, plans and policies toward nanoparticles. There is also no law in the United States that requires disclosure. In contrast, companies in the European Union are required to label foods containing nanoparticles.

The bigger issue with nanoparticles is that they might pose health risks, as they have been found to in tests on mice.

There are not nearly enough studies that can adequately demonstrate the safety of nanoparticles in food additives or packaging. Scientists are still investigating how the broad range of nanoparticles, with their myriad potential uses, would react in the body.

When ingested, nano-sized particles can pass into the blood and lymph, where they circulate through the body and reach in potentially sensitive sites such as bone marrow, lymph nodes, the spleen, the brain, the liver and the heart.

Our knowledge about how nanomaterial food additives react in the body and their health impact is still in its infancy. While efforts are under way to understand them better, much deeper scientific inquiry should occur before nanoparticles are sold in food and food-related products.

More companies and consumers need to be aware of the use of engineered nanomaterials in foods and the potential unknown risks of this technology. More food products like M&M's and Pop-Tarts should be tested as recent studies have identified them as likely to contain nanomaterials as well.

Fortunately, a few companies have become willing to take a public position on nanoparticles.

McDonald stated that it "does not currently support the use by suppliers of nano-engineered materials in the production of any of our food, packaging, and toys." Similarly, Kraft Foods said that it was not using nanotechnology.

Some of the largest food companies in the world, including YUM! Brands, PepsiCo, and Whole Foods, need to know more about nanomaterials and check with their supplies to see if they are using them.

Americans are becoming increasingly interested in what is in the food they're eating. No longer content with label information on daily allowances of vitamins and minerals, U.S. consumers are following the lead of their counterparts in many other countries by demanding more disclosure about where and how their food is grown and whether it is safe.

Even though communicating risks to consumers can be challenging, the public's perception of safety will be paramount in determining the acceptance of nanomaterials. This is especially true for an emerging food-products technology the safety of which even the FDA has acknowledged a lack of understanding.

Follow us on Twitter @CNNOpinion.

Join us on Facebook/CNNOpinion.

The opinions expressed in this commentary are solely those of Andy Behar.

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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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