Court splits Ayodhya site between Hindus and Muslims (Reuters)

LUCKNOW (Reuters) â€" A court ruled on Thursday that the site of a demolished mosque in Ayodhya would be split between Hindus and Muslims, dousing immediate fears of a violent backlash in one of the country's most religiously divisive cases.

The Uttar Pradesh court also ruled Hindus will be allowed to keep a makeshift temple that was built over the demolished central mosque dome, sparking celebrations by priests who dipped in a nearby river chanting "The temple is now ours".

The 1992 demolition of the 16th century mosque by Hindu mobs triggered some of India's worst riots that killed about 2,000 people. More than 200,000 police fanned out in India on Thursday to guard against any communal violence.

(For slideshow, click http://in.reuters.com/news/pictures/slideshow?articleId=INRTXSJZO)

If the ruling soothes tensions, it would be a boost for the ruling Congress party, a left-of-centre group with secular roots, that does not want to upset either voter bloc. Major political parties had called for calm.

The verdict came only days before Sunday's opening of the Commonwealth Games in New Delhi, with the government wanting to project an image of stability and modernity to the world.

"Nobody has won. Nobody has lost," Yashwant Sinha, a leader of the Hindu nationalist Bharatya Janata Party, told local television. "Let's not look at this as a victory for anyone."

Muslims did appear the biggest losers. But Muslim organisations were measured in their response, careful not to inflame public tensions in a country where they account for only 13 percent of the 1.2 billion plus population.

There were no immediate reports of violence after the ruling.

"It was a very sensible judgment and the court has tried to balance the parties," said Anil Verma, a political analyst. "Apportioning one-third to the Muslims means they have not completely lost."

Commentators said the verdict was unlikely to spark widespread riots that hit the financial capital Mumbai and other cities in 1992. There is little electoral headway to be made in egging on religious riots in post-economic reform India.

The 2-1 majority verdict gave two-thirds of the key parts of the disputed land to Hindus -- one third each to two different Hindu groups -- and one third to Muslims.

Hindu inhabitants of Ayodhya town -- under a security lockdown for a week -- lit candles and lamps outside their homes.

MUSLIM DISAPPOINTMENT

Many Muslim organisations expressed some disappointment but called for reconciliation, resting hopes in an appeal by Muslim lawyers to the Supreme Court in New Delhi.

"The judgment can begin a process of reconciliation," Kamal Farooqi, a member of the All India Muslim Personal Law Board, said.

From the capital New Delhi to Mumbai and towns of the northern Hindu "cow belt" along the holy Ganges river, many Indians waited with apprehension on the verdict, some staying at home and stocking up with food.

"Everybody is very happy with the verdict. People were scared but now everything seems to be normal. People are now opening their shops," said Ghulam Mohammad Sheik, social worker in Mumbai.

The verdict's outcome will be a barometer of whether a rapidly globalising India with a growing middle class and an interest in investor stability has shed some of the religious extremism that often marred its post-independence years.

"I just think there is a moment in which we have to agree with ourselves as modern people to live in the modern world," British-Indian novelist Salman Rushdie told NDTV broadcaster before the verdict was announced.

(Added reporting by Henry Foy, Krittivas Mukherjee and C.J. Kuncheria in New Delhi; Ketan Bondre and Surojit Gupta in Mumbai; Alka Pande in Lucknow; Writing by Alistair Scrutton; Editing by Paul de Bendern and Alex Richardson)

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Instant View: Jobless claims fall to 453K (Reuters)

NEW YORK (Reuters) â€" New U.S. claims for unemployment benefits plunged by 16,000 last week to 453,000, a sign that labor markets may be strengthening modestly.

GDP:

U.S. economic growth was a touch higher in the second quarter than previously estimated due to upward revisions to consumer spending and business inventories, but a surge in imports kept the recovery on a weak path, a government report showed on Thursday.

NEW YORK PMI:

Business activity in New York City rose in September for the first time in four months, suggesting the economy is improving, according to an industry report released on Wednesday.

KEY POINTS: * Analysts polled by Reuters had forecast that claims would come in at 460,000. The government revised the prior week's figure up to 469,000 claims. * The four-week moving average of claims, considered a better measure of underlying labor market trends, fell 6,250 to 458,000, its lowest level since July 24. * Gross domestic product growth -- which measures total goods and services output within U.S. borders -- was revised up to an annualized rate of 1.7 percent from 1.6 percent, the Commerce Department said in its final estimate.

COMMENTS:

OMER ESINER, CHIEF MARKET ANALYST, COMMONWEALTH FOREIGN

EXCHANGE INC, WASHINGTON:

"Overall, the data looks a little better than expected, but still not really enough to dismiss talk of additional Fed policy easing in November. It's encouraging to see that jobless claims are trending lower now. And also it looks like the U.S. economy entered the third quarter with a little bit more momentum than previously expected. It's particularly encouraging to see consumer spending come in a little bit higher than expected.

"The trend of dollar weakness is likely to continue, unless we see some major upside surprises to U.S. data that will begin to reduce expectations of policy easing from the Fed."

JIM BARRETT, SENIOR MARKET STRATEGIST, LIND-WALDOCK, CHICAGO

"It points a little better for the economy. If stock futures hold, it could embolden the bulls to take the market higher. For bonds, this will take a little less urgency to lock in these yields."

OLIVER PURSCHE, EXECUTIVE VICE PRESIDENT, GARY GOLDBERG

FINANCIAL SERVICES, SUFFERN, NEW YORK

"We have been in the camp of a square root-shaped recovery, where we'll gradually continue to improve. Certainly the jobless claims, its still poor, but gradually improving. GDP is in the neighborhood of the 1.5 percent that we were expecting, so that's not a big deviation.

"What that means for investors is that the more and more of this type of data, the more evident it will become that the risk of a double-dip recession is almost nonexistent, even when you account for some of the euro-debt fears and other forces that are negative that are out there. They are at least balanced out by the positive news that's coming out in terms of our economy and other parts of the world that are growing at a much faster rate. It absolutely proves that we're in at least a slow-growth environment, which is better than no growth."

MARKET REACTION: STOCKS: U.S. stock index futures turned positive BONDS: U.S. Treasury debt prices pared gains DOLLAR: U.S. dollar cut losses

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Pirates grab ship with Indian crew in Tanzania waters (Reuters)

MOGADISHU (Reuters) â€" Somali pirates seized a Panamanian-flagged ship inside Tanzanian territorial waters on Wednesday, the third incident in four days off the east African nation's coast, a maritime official and advocacy group said.

Andrew Mwangura, head of the East African Seafarers' Assistance Programme, said the bitumen carrier MT Asphalt Venture was heading for Durban empty after unloading its bitumen cargo in the Kenyan port of Mombasa.

"The vessel had 15 crew, all Indians. It is now heading northward to Somalia," Mwangura told Reuters.

Calmer sea conditions have resulted in a surge in raids on the high-seas in the last few weeks, Mwangura said.

Maritime advocacy group Ecoterra International said in a statement the MT Asphalt Venture was managed by Mumbai-based Omci Ship Management Pvt and owned by Bitumen Invest AS of United Arab Emirates.

It confirmed the 15-strong crew were Indian and said the 3,884 deadweight tonne vessel was heading to Harardhere, a pirate base on the coast of central Somalia.

Hijackings off the lawless Horn of Africa nation have earned Somali pirates tens of millions of dollars in ransoms, raised shipping insurance premiums and forced ships to sail longer, costlier routes to evade pirates.

The pirates operate despite an international flotilla of warships patrolling in the Gulf of Aden and further out into the Indian Ocean.

The hijack is the latest attack off Tanzania in recent days, with one occurring just 45 miles off its commercial capital of Dar es Salaam.

On Wednesday, the European Union's anti-piracy taskforce said the Italian naval ship ITS Libeccio had freed a hijacked Iranian-flagged dhow.

The dhow was first spotted towing two pirate skiffs, a tell-tale sign of a hijacked vessel, by a French patrol helicopter.

"Warning shots were fired from the helicopter in an attempt to stop the dhow. The dhow initially refused to stop and was shadowed overnight," EU Navfor said in a statement. The pirates surrendered early on Wednesday. It was not immediately clear what action had been taken against them.

On Sunday, Tanzania's navy captured a suspected Somali pirate after a gun battle off Tanzania's southern Mtwara coast in an area where the London-based oil and gas firm Ophir Energy has an exploration vessel.

Two days later, the Malta-flagged chemical product tanker MV Mississippi Star with 18 crew also evaded a pirate raid off Tanzania.

(Additional reporting by George Obulutsa in Nairobi Writing by Wangui Kanina; Editing by David Stamp)

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Reuters Summit - World Bank may invest in $11bln India fund (Reuters)

(For other news from the Reuters India Infrastructure Summit, click http://www.reuters.com/summit/IndiaInvestment10)

By Matthias Williams

NEW DELHI (Reuters) - The World Bank is exploring whether to invest in an $11 billion debt fund the Indian government will roll out by next year as part of a massive push to its infrastructure sector, the bank's India head said.

Roberto Zagha said India was making progress in tackling procedural hassles that have held back faster infrastructure growth but a major roadblock to more private investment was a shortage of bankable projects.

The World Bank was likely to lend around $15 billion to $20 billion to India's infrastructure sector in the next five years. Typically the bank's lending to the sector ranges between 40-60 percent of the total annual lending.

The government has announced the $11 billion debt fund as a part of a series of recent measures to overhaul India's creaking infrastructure, which has long been seen as hobbling faster growth in Asia's third-largest economy. A similar fund is also under consideration for the power sector.

"It is being explored," Zagha said in an interview as part of the Reuters India Investment Summit, when asked whether the World Bank would contribute to the fund.

"Our role is not entirely clear, whether there is a need for finance from the bank, or whether there is a need for expertise from the bank," he added.

Pending legislation to give farmers a better deal in land acquisition would be a big step towards balancing development with social justice and help ease the implementation of infrastructure projects, he said.

The Indian government plans to double spending on infrastructure to $1 trillion in its next five-year plan, which runs from 2012-17.

"That's a statement of intent," said Zagha, referring to the spending target. "There's a sense of urgency in the government which I didn't see before. That's very encouraging."

There was at least $50 billion to $60 billion untapped investor potential in water and sewage treatment projects alone, he said.

"I don't think financing is an issue." he said. "The greatest challenge is bankable projects. Investors will come, financing will be found if you find ways of making projects which are commercially attractive and bankable."

The fiasco of New Delhi's preparations to host the Commonwealth Games has proved an embarrassment to the government and raised worries in some quarters, including the rating agency Moody's Analytics, that it could deter foreign investment.

"I don't think it matters," Zagha said, when asked whether the Games could hit investor sentiment. "But it does show the organisational issues that India has to deal with."

(Editing by Ranjit Gangadharan)

(For more news, visit Reuters India)

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Economy improving despite setbacks: Summers (Reuters)

WASHINGTON (Reuters) â€" The U.S. economy is "moving upwards" despite setbacks, including the European crisis that slowed global growth and a buildup of inventories at home, White House economic adviser Larry Summers said on Tuesday.

Summers, speaking at a conference on the U.S. workforce, said the economy was "not fulfilling the promise" that it had shown in the spring because of the headwinds.

(Editing by Mohammad Zargham)

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Foreigners to fund up to 30 pct of Indian roads (Reuters)

(For other news from the Reuters India Infrastructure Summit, click on http://in.reuters.com/summit/IndiaInvestment10)

By Rajesh Kumar Singh

NEW DELHI (Reuters) - Foreign investors are likely to fund up to 30 percent of India's $18 billion road projects in the current fiscal year, a top official at the National Highways Authority of India (NHAI) said on Monday.

J.N. Singh, member finance at the authority, said Asian and European companies were participating as minority stakeholders in road projects and the appetite was good.

NHAI, which builds, maintains and manages highways, has awarded contracts to build 3,000 kms of road between April and August and looks to award another 6,000 kms before the fiscal year ends next March, he told in an interview for the Reuters India Investment Summit.

"Companies from Spain, the UK, Italy, Saudi Arabia, China, Russia and Malaysia are actively participating in the BOT mode of the national highway development programme," Singh said, referring to Build-Operate-Transfer partnership models.

India needs to invest $80 billion in the next two years to revamp highways and is expecting the private sector to fund half of the project costs, Transport Minister Kamal Nath had told Reuters last week.

But underdeveloped domestic bond markets and restrictions on investments of pension and insurance funds ensure the country's infrastructure developers rely mainly upon overstretched banks, which provide only short-term funds.

The government has announced a series of measures to boost funding for infrastructure. Last week, New Delhi lifted the cap on foreign investment in the debt market to address the long-term capital requirements for the sector.

The move comes on the heels of a plan to set up an $11 billion debt fund by next year. There is also a proposal to allow India's top state-run infrastructure finance company, IIFCL, to guarantee all infrastructure bonds, helping generate long-term funds for the sector.

"The policy changes made by the government have been quite good and are likely to have a positive impact," Singh said.

He also said NHAI plans to raise up to 55 billion rupees ($1.2 billion) this year via tax-free and taxable bonds, adding the firm also has plans to tap overseas debt market in the next fiscal year.

Officials have said bureaucratic and regulatory hassles keep foreigners from jumping into the fray on their own, and tend to look for joint venture partners.

India is currently building 13 kms of roads a day against a stated target of 20 kms. Singh attributed the delay to a slow bidding process in the past and said the target could be achieved by 2012.

"It takes at least two years to complete road projects after the actual construction work begins. If you had awarded fewer projects earlier, how could you achieve the desired results today?"

India's infrastructure deficit acts as a brake on the economy and is seen a drag on achieving a growth pace similar to China's double-digit economic expansion. Poor infrastructure is also partly responsible for high inflation.

A Planning Commission report showed the country missed its target for power sector and road additions in the last fiscal year.

(Editing by Ranjit Gangadharan)

(For more news, visit Reuters India)

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Yuan rise could worsen China's imbalance: central banker (Reuters)

BEIJING (Reuters) â€" A rise in the value of the yuan may intensify expectations for further increases and could lead to a worsening of China's international payments imbalance, a regional central bank official said in comments published on Monday.

The comments by Xu Nuojin, deputy head of the People's Bank of China (PBOC) Guangzhou, were published in the Financial News, a paper run by the central bank, and come amid growing pressure from Washington for faster yuan appreciation.

"Any efforts to address the international payments balance by adjusting the yuan exchange rate will achieve no results," Xu wrote in an opinion piece.

He did not elaborate on the currency issue, but he added that China has to boost consumption and investment to address the problem of high savings levels in the Chinese economy.

Many Chinese economists and officials, like Xu, have reiterated their view that the yuan, also known as the renminbi, is not undervalued and should not be blamed for China's trade and economic imbalances.

(Reporting by Zhou Xin and Kevin Yao; Editing by Ken Wills)

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India removes snakes, filth to ready Games village (Reuters)

NEW DELHI (Reuters) â€" Workers painted walls, drained out rain water and removed a snake at the Commonwealth Games Village as India raced on Sunday to address complaints of filth and hygiene a week before the start of the showpiece event.

The Games were supposed to enhance India's image of a rising power, but shoddy construction, filthy accommodation and security fears have underlined governance and accountability issues, hurting the runaway pride of Asia's third largest economy.

Several top athletes, including world champion sprinter Usain Bolt, have pulled out, taking away some of the shine from the event held every four years for former British colonies.

Two more Australian athletes, cyclist Travis Meyer and table tennis player Stephanie Sang, pulled out on Sunday. This comes a day after Britain's number one tennis player Elena Baltacha withdrew because of concerns about disease and hygiene.

On Sunday, Indian organising committee officials met to review the work at the Games Village where masons plastered walls while workers struggled to dry out the basement of the Village which sits on the flooded plains of the Yamuna river.

"All finishing work is going on in full swing," said Dalbir Singh, mayor of the Games Village where the athletes will stay.

"It's a world class facility with some minor issues and work is going on to fix those problems."

(For a slideshow: Countdown to Commonwealth Games, click http://in.reuters.com/news/pictures/slideshow?articleId=INRTR2HWG7)

Indeed, most of the 34 apartment blocs are gleaming and spacious and fitted with Italian marble. But much of what is good about the facility has been overshadowed by athletes' complaints of filth and unfinished work in some of the living quarters.

SNAKE, TOBACCO SPIT

South Africa's High Commissioner to India Harris Majeke told reporters a snake had been found in the room of an athlete at the Games village.

"That was really a threat to the lives of our athletes," he said, complaining of filth in the living quarters. "When everything is done, then we will ask our teams to come."

The Times Now news channel said about 150 rooms meant for athletes were unliveable. Indian boxer Akhil Kumar was in shock when his bed caved in on Saturday. It was found the mattress had just been placed on the bed frame without any support underneath.

"Labourers have done a very bad job. They had spit 'paan' (chewing tobacco) on the walls, stains of which are almost unremovable," Lalit Bhanot, secretary general of the Games organising committee, told Reuters.

"We are identifying rooms which are dirty and shutting them down. But we have adequate rooms so there is nothing to worry."

The Games are estimated to have cost $6 billion. India was awarded them in 2003 but did not begin proper preparations until two years ago. Michael Fennell, chief of Commonwealth Games Federation, has said India's image has taken a beating.

Athletes from 11 countries have arrived so far and contingents from seven more nations, including New Zealand and Canada which had delayed their arrival, are expected on Sunday.

The English team, which had checked into hotels because their accommodation was not ready, began moving some support staff into the Village on Sunday. The athletes will follow on Monday.

"Work is on track. About 66 flats will be handed over by tomorrow (Monday) and everything will be complete by Wednesday," Delhi Chief Minister Sheila Dikshit told reporters.

India had hoped to use the Games to display its growing global economic and political influence, rivalling neighbour China which put on a spectacular 2008 Beijing Summer Olympics.

Instead, they have become a major embarrassment for the world's largest democracy, where infrastructure projects have progressed slowly and are a drag on economic growth.

Desperate officials on Friday asked the Indian Army to build a temporary bridge to replace the $1.1 million footbridge that collapsed last week. The bridge, providing access to the main Jawaharlal Nehru stadium, should be finished within five days.

The bridge collapse and a suspected militant attack on two foreign visitors threw the Games into crisis. An outbreak of dengue has only compounded worries.

(Writing by Krittivas Mukherjee; Editing by Sanjeev Miglani)

(For more news visit Reuters India)

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Japan to "ease policy appropriately if necessary" (Reuters)

KOBE, Japan (Reuters) â€" Japan will ease monetary policy appropriately if necessary, while keeping an eye on the impact of the yen's rise on the economy, Bank of Japan Governor Masaaki Shirakawa said on Sunday.

Shirakawa, speaking at an event hosted by the Japan Society of Monetary Economics in Kobe, western Japan, also said the BOJ was watching the "downside risk" to the economy more closely.

He said the Japanese central bank had done the most aggressive easing in the world when looking at the size of its balance sheet in comparison with gross domestic product but that it did not mean he saw no need for further action.

"We'll respond (to the need of easing) timely and appropriately," Shirakawa told the seminar.

Tokyo intervened in the currency market on September 15 by selling yen for the first time in more than six years as the yen's surge to a 15-year high versus the dollar threatened to derail Japan's export-reliant recovery and worsen deflation.

The BOJ's next scheduled policy meeting is on October 4-5. Easing policy at this meeting cannot be ruled out, and options include increasing government bond purchases and expanding a cheap fund-supply tool, sources say.

(Reporting by Tetsushi Kajimoto; Editing by Nick Macfie)

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Govt says will review Kashmir security deployment (Reuters)

NEW DELHI (Reuters) â€" India will consider scaling back security in the disputed Kashmir region, the government said on Saturday, in a bid to calm public anger after months of anti-India protests that have killed more than 100 people.

Palaniappan Chidambaram also said the government will soon announce a team to begin a dialogue with a broad section of Kashmir, including political parties and groups.

The decisions are the latest effort by the government to reach out to Kashmir where an air of defiance unseen for years has threatened to undermine India's rule over a region also claimed by its rival and neighbour, Pakistan.

Prime Minister Manmohan Singh has been accused of not taking seriously enough the largest pro-independence protests in two decades in Kashmir this summer. Saturday's announcement comes after a delegation of Indian lawmakers visited the region this week and met separatist leaders.

"We will request the state government to immediately convene a meeting of the (security) Unified Command and to review the deployment of security forces in Kashmir valley, especially Srinagar," Chidambaram told reporters after a meeting of the Indian cabinet's committee on security.

He said the state government will look at the options for scaling down the number of bunkers and check points in Srinagar, Kashmir's summer capital, and other towns. Kashmir has been in a siege-like state since June with shops and offices closed and education institutions shut. Roads have remained empty.

Chidambaram, seeking to assuage popular anger over a law that gives security forces sweeping powers to shoot, arrest and search people, said the state will seek to limit the areas where the law operates.

Most of Kashmir has, for years, been declared as "disturbed", a necessary step for the application of the hated Armed Forces Special Powers Act.

"We will request the state government to review the notification (of the disturbed areas). They will decide which notifications have to be continued (and) which need not be continued," Chidambaram said.

"We think these steps should address the concerns of different sections of the people in Jammu and Kashmir, including the protesters."

Kashmiri separatists, who accuse the Indian army of large scale violation of human rights, want the armed forces law withdrawn.

Tens of thousands of people have been killed in Kashmir since an armed revolt erupted in 1989, but militancy has weakened over the years.

While a previous generation of Kashmiris often embraced the militancy, a new generation has used street protests, Facebook and mobile phones to spread revolt.

(Editing by Sanjeev Miglani)

(For more news, visit Reuters India)

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Japan refuses China demand for apology in boat row (Reuters)

TOKYO/BEIJING (Reuters) â€" Japan refused to apologize on Saturday for detaining a Chinese boat captain, showing no signs of softening in a dispute between the two economic powers after Japan gave ground and released him.

The fishing trawler captain, Zhan Qixiong, flew out of Japan to the coastal Chinese city of Fuzhou on Saturday.

The release followed the detention of four Japanese nationals on suspicion of violating Chinese law regarding the protection of military facilities, though Japanese Chief Cabinet Secretary Yoshito Sengoku has denied a link between the two incidents.

Japanese diplomats met the four on Saturday, Kyodo news agency reported. They have been under residential surveillance, meaning they were likely restricted at a hotel or lodging, it quoted an official at the Japanese Embassy in Beijing as saying.

China's Foreign Ministry said Beijing was angry at the detention of the captain, arrested by Japan over two weeks ago after his trawler collided with two Japanese patrol boats in waters near islands that both sides claim. It demanded an apology and compensation.

China said its claim to the islands -- which it calls the Diaoyu and Japan calls the Senkaku -- was "indisputable," but Japan did not agree.

"There is no territorial issue that needs to be resolved over the Senkaku," Japan's Foreign Ministry said in a statement. "China calling for apology or compensation is groundless and is absolutely not acceptable."

Katsuya Okada, who was Japan's foreign minister until a cabinet reshuffle on September 17, criticized China for demanding an apology and compensation, Kyodo reported.

"Everybody knows that China is not a democratic country, but (the latest demand) will make that explicit," Okada, who is now secretary-general of the ruling Democratic Party of Japan, was quoted as saying.

DIALOGUE

China's statement had said that the two countries should solve their disputes through dialogue. Japanese Prime Minister Naoto Kan also said it was time for Asia's two biggest economies to put relations back on a steady footing.

"I believe it is necessary for Japan and China to handle matters calmly," he said in New York, where he attended the U.N. General Assembly.

The dispute has underscored the brittleness of ties long troubled by Chinese memories of Japanese wartime occupation and territorial disputes over parts of the East China Sea that could hold rich reserves of gas.

Some Japanese newspapers decried Zhan's release as a backdown that would encourage Chinese assertiveness.

"There is a possibility that it has left an impression that Japan will cave in when pressured," a leading daily, Asahi Shimbun, said in an editorial.

Sun Cheng, an expert on relations between the two countries at the China University of Political Science and Law in Beijing, said it would take time for relations to improve.

"China will want to keep up its case over the Diaoyu islands. Whether Japan actually apologies or gives compensation is not so much the point as making it clear that China won't compromise on sovereignty," he said.

($1=85.15 Yen)

(Additional reporting by Yoko Nishikawa, Chikako Mogi and Charlotte Cooper in Tokyo and Andrew Quinn in Washington; Editing by Nick Macfie and Sanjeev Miglani)

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India, RIM working on glitches in email access - source (Reuters)

NEW DELHI (Reuters) â€" India and Research in Motion have hit technical glitches in their talks on access to corporate email, but access to the messenger services is satisfactory, a government source said on Friday.

"Messenger service is working fine, so far. We are getting manual reports, we are satisfied," the source said.

"Some technical glitches have come up, more than what we evaluated, on enterprise mail. Efforts (are) underway to solve it," the source said.

India, which along with several other countries has expressed concerns that BlackBerry services could be used to stir political or social instability, had threatened RIM with a ban if it were denied access to data.

(Reporting by Bappa Majumdar)

(For more news visit Reuters India)

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Instant View: Durable goods orders fall 1.3 percent in August (Reuters)

NEW YORK (Reuters) â€" New orders for long-lasting U.S. manufactured goods fell more than expected in August to post their largest decline in a year as bookings for aircraft and motor vehicles tumbled, but business spending rebounded strongly, a government report showed on Friday.

KEY POINTS: * The Commerce Department said durable goods orders dropped 1.3 percent after a revised 0.7 percent increase in July. * Markets had expected orders to fall 1.0 percent from a previously reported 0.4 percent gain. * The decline last month reflected a 40.2 percent plunge in non-defense aircraft orders after a 69.1 percent surge in July. * Orders for defense aircraft fell 2.7 percent, and motor vehicle orders fell 4.4 percent. * Excluding transportation, orders rose by a more-than-expected 2.0 percent after falling by a revised 2.8 percent in July, previously reported as a 3.7 percent fall. * Markets had expected a 1.0 percent rise in orders excluding transportation. * Non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending, rebounded 4.1 percent in August after a 5.3 percent drop in July. * Markets had expected a 2.0 percent rise.

COMMENTS:

LAWRENCE GLAZER, MANAGING PARTNER, MAYFLOWER ADVISORS, BOSTON:

"Investors are looking at this (the durable goods report) as just one of many data points. You had an incredibly pessimistic view of the economy a little over a month ago, where investors were increasingly convinced we were headed toward a double dip (recession)."

"That view is a little less pessimistic today than it was over a month ago, even after this report."

MARC PADO, U.S. MARKET STRATEGIST, CANTOR FITZGERALD & C0, SAN

FRANCISCO:

"Good numbers. They were looking for a bounce back from last month, yet transportation orders are always a wild card. You throw that in there and it can really move the number around, get the needle moving, that was the case last month, it was a bounce back this month.

"The one good number within the numbers, computer and electronic orders up 3.8 percent. it was only down 0.8 percent last month . Machinery up 3.9 percent, that is a bounce from down 9.6 percent. But I like seeing those computer and electronic orders -- that is business spending, those are orders getting ready for the IT fourth quarter. Big driver for earnings in the fourth quarter. So you like to see that component -- I'm digging them."

FRANK LESH, FUTURES ANALYST, BROKER, FUTUREPATH TRADING LLC,

CHICAGO:

"It was better than expected on half of it and worse than expected on the other half so I guess we'll call it neutral for the time being. Durable goods tend to be volatile. They can change drastically every month but overall are supportive for the market, we extended our gains a little bit."

TOM SIMONS, MONEY MARKET ECONOMIST, JEFFERIES & CO., NEW YORK:

"The headline a little bit weaker than expected but all of the internals look good. The ex transportation number was up 2 percent versus consensus call of one. Capital goods orders non-defense ex aircraft much better than expected. Overall, I think it's a much stronger number than the headline suggests. It was a weak report last month but I think this definitely shows underlying improvement.

"I think that it's a sell for Treasuries, which--it seems like the market kind of got it right. It seems like the number on the headline would be a good reason to buy, but the internals of the number would indicate that that's not the case."

MARKET REACTION: STOCKS: U.S. stock index futures extend gains after durable goods orders. BONDS: U.S. Treasury debt prices extend losses. DOLLAR: U.S. dollar falls versus euro.

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Nations delay departure in Commonwealth Games fiasco (Reuters)

NEW DELHI (Reuters) â€" More nations delayed departure for the Commonwealth Games in India as organisers raced against time on Thurday to address security and health concerns that have already prompted several top athletes to pull out.

New Zealand joined Canada and Scotland in delaying departure for New Delhi due to poor accommodation for athletes, compounded by heavy monsoon rains and a dengue epidemic.

Australian Prime Minister Julia Gillard highlighted security fears surrounding the Games and said athletes should decide for themselves whether or not to attend. Two foreign visitors were shot and wounded by suspected militants in the city on Sunday.

"There is obviously widespread concern about the Commonwealth Games," Gillard told reporters in Canberra.

(For a SLIDESHOW: Countdown to Delhi Games, click http://in.reuters.com/news/pictures/slideshow?articleId=INRTR2HWG7)

(For more on Delhi Games, click http://in.reuters.com/subjects/commonwealth-games-2010)

For graphical timeline: http://link.reuters.com/nah84p

Commonwealth Games Federation president Michael Fennell has asked for an emergency meeting, expected later in the day, with Prime Minister Manmohan Singh to evaluate the Games in what is being seen as last ditch attempt to avoid national withdrawals.

The Games, held every four years for members of the organisation of mostly former British colonies, are estimated to have cost $3-6 billion. India had hoped to use them to display its growing global economic and political clout, rivalling China.

Instead, they have snowballed into a major embarrassment for the government, having to fend off criticism of shoddy construction, inadequate security and unfit accommodation.

In a sign of desperation, the federal government ordered the organising committee to hand over management of the Games Village, which will house 6,500 athletes, to the government.

In contrast, preparations for the November's Asian Games in China, which held a hugely successful Summer Olympics in 2008, are on track, with organisers in Guangzhou handing the athletes' village over to the Asian Games authorities for sign-off earlier this week.

PRE-GAMES GLITCHES

Many sporting events have suffered glitches in the run-up to the opening ceremony, such as the 2004 Athens Olympics, and some infrastructure projects, like a new metro and international airport in Delhi, have been widely praised.

But polls in Indian newspapers show that a vast majority of Indians are ashamed.

Singh has been accused of being out of touch and failing to recognise that events like the Games carry huge international prestige. Much of the Congress-led government remains focused on its rural vote.

"I genuinely feel sorry for what has happened and would like to apologise not only on my behalf and on behalf of the organising committee, but for everyone connected," A.K. Mattoo, Organising Committee Secretary General, told NDTV broadcaster.

"This is a collective failure."

Organisers have promised a prompt clean up. Teams start arriving this weekend for the Oct. 3 official start and so far no one has said the Games will be cancelled or delayed.

New Zealand chef de mission Dave Currie said the organisers' failure to admit to problems had seen them lose the faith of competing countries.

"Every time we raised an issue (we received) 'yes that will be fixed tomorrow', but you know clearly that it won't be fixed tomorrow," he said. "And they weren't."

ATHLETES PULL OUT

World discus champion Dani Samuels of Australia has pulled out of the Games because of security and health concerns, as did England's world triple jump champion Phillips Idowu. Four other champions have quit due to various reasons, including injuries.

Triple Olympic sprint champion Usain Bolt of Jamaica is the highest profile athlete to skip the event.

A dengue epidemic has also spread through the Indian capital, sending thousands of people to hospital. Nevertheless Games organisers were upbeat.

"We had a meeting with all the chefs de missions today and they are all much happier than before," Suresh Kalmadi, chairman of the organising committee, told reporters on Thursday.

"Everything will be all right today."

Some officials blamed the athletes.

"They (athletes who compete in numerous competitions) may not be able to sustain their performance so they find out some reason or other why they are not participating, but these things happen in every game, every competition," Lalit Bhanot, secretary general of the organising committee, told CNN IBN.

Scotland and Canada had already announced they were delaying sending athletes to New Delhi and Wales said it had sought guarantees that venues and athletes' accommodation were safe.

Other nations have also threatened to stay home.

The New Zealand Olympic Committee (NZOC) told their athletes to delay their arrival until at least next Tuesday, just five days before the Games are due to open.

"It is tremendously disappointing," said NZOC President Mike Stanley in a statement. "The long list of outstanding issues has made it clear the village will now not be ready for New Zealand athletes to move in as planned."

Images of stray dogs, stagnant water, workers urinating in public and human faeces found at the unfinished athletes' village in central Delhi have overshadowed the successes of the Games -- the main stadium and other sporting venues.

A portion of false ceiling in the weightlifting venue caved in on Wednesday, a day after the collapse of a footbridge by the main stadium, injuring 27 workers.

The event has also been plagued by security concerns.

Two foreign tourists were shot and wounded at the weekend by unknown assailants in Delhi.

(Additional reporting by Amlan Chakraborty in NEW DELHI, Greg Stutchbury in WELLINGTON and Rob Taylor in CANBERRA; Editing by Alistair Scrutton and Nick Macfie; To query or comment on this story email sportsfeedback@thomsonreuters.com)

(For more news visit Reuters India)

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Initial claims for unemployment aid rise to 465K (AP)

WASHINGTON â€" The tally of newly laid-off workers requesting unemployment benefits rose last week for the first time in five weeks as the job market remains sluggish.

Initial claims for jobless aid rose by 12,000 to a seasonally adjusted 465,000, the Labor Department said Thursday. Many economists had expected a flat reading or small drop.

The rise suggests that jobs remain scarce and some companies are still cutting workers amid sluggish economic growth. Initial claims have fallen from a recent spike above a half-million last month. But they have been stuck above 450,000 for most of the year.

Claims typically fall below 400,000 when hiring is robust and the economy is growing.

The four-week average of claims, a less volatile measure, declined by 3,250 to 463,250. That's the lowest level since the end of July, but down by only 4,000 since January.

Initial claims, while volatile, are considered a real-time snapshot of the job market. The weekly claims figures are considered a measure of the pace of layoffs and an indication of companies' willingness to hire.

New requests for jobless benefits have fallen sharply since June 2009, the month the recession ended. They topped 600,000 at the end of that month. But most of the decline took place last year.

Economic growth has slowed considerably since the beginning of the year, and many employers are reluctant to add new employees. The economy grew at a 1.6 percent annual rate in the second quarter, an anemic pace that isn't fast enough to reduce the jobless rate, now at 9.6 percent. Growth in the current July-September quarter isn't expected to be much faster.

The number of people continuing to receive jobless benefits fell by 48,000 to 4.49 million, the department said. But that doesn't include several million people who are receiving unemployment aid under extended programs approved by Congress during the recession.

The extended benefit rolls rose by about 200,000 to nearly 5.2 million in the week ending Sept. 4, the latest data available.

Some companies are still cutting jobs. Cessna Aircraft said Tuesday that it will lay off 700 workers because the economy hasn't recovered as strongly as the company had hoped earlier this year. The latest reductions are on top of 8,000 jobs the company has shed since late 2008, reducing its work force by half.

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FACTBOX - Commonwealth Games pullouts (Reuters)

REUTERS â€" The Delhi Commonwealth Games have been hit by a series of pullouts by high-profile athletes, taking much of the shine off next month's multi-sport gathering which is already besieged by a raft of other problems.

(For a slideshow: Countdown to Commonwealth, click http://in.reuters.com/news/pictures/slideshow?articleId=INRTR2HWG7)

Following is a list of the biggest-name athletes who will miss the Oct. 3-14 Games for reasons ranging from injury to security.

USAIN BOLT:

The Jamaican triple Olympic champion sprinter pulled out because the event is taking place too late in the year.

SHELLY-ANN FRASER:

Like Bolt, the Olympic 100 metres champion also had problems with the timing of the Delhi Games. She subsequently tested positive for a prohibited substance that earned her a provisional ban.

DAVID RUDISHA:

The Kenyan 800 metres world record holder said he was tired and felt competing in Delhi would affects his performance in next year's world championships in South Korea.

SAMANTHA STOSUR:

The Australian tennis player is skipping the Commonwealth Games because it coincides with tour events.

ASBEL KIPROP:

Kenya's Olympic 1,500 metres champion has suffered an Achilles injury, Kenyan officials said.

DANI SAMUELS:

Australia's discus world champion has pulled out due to security and health concerns.

CHRISTINE OHURUOGU:

The Olympic 400 metres gold medallist from England suffered cramps and said she did not want to aggravate the injury.

PHILLIPS IDOWU:

England's world triple jump champion has security concerns.

CHRIS HOY:

The quadruple Olympic gold medallist cyclist pulled out because the Games clash with the European championships, which carry qualification points for the 2012 London Olympics.

STEPHANIE RICE:

The Australian triple Olympic gold medallist swimmer is skipping the Commonwealth Games to undergo shoulder surgery.

(Compiled by Amlan Chakraborty; Editing by Sonia Oxley; To comment on this story: sportsfeedback@thomsonreuters.com)

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CarMax 2Q profit rises on used car sales (AP)

RICHMOND, Va. â€" The used car dealership chain CarMax Inc. reported a 4.8 percent profit increase for its fiscal second quarter on Wednesday as a shaky economy continued to push consumers toward previously owned cars and trucks.

Its overall revenue climbed 13 percent while revenue at its outlets open at least a year rose 4 percent even though last year's sales were boosted by the government's Cash for Clunkers rebate program.

The Richmond, Va.-based company said its net income rose to $107.9 million, or 48 cents per share, in the three months ended Aug. 31. That's up from $103 million, or 46 cents per share, a year ago.

Its revenue rose to $2.34 billion from $2.08 billion a year ago.

The results beat Wall Street estimates. Thomson Reuters says analysts it surveyed expected earnings of 40 cents per share on revenue of $2.27 billion.

CEO Tom Folliard said in a statement that CarMax dealerships had about the same amount of customer traffic as last year's second quarter despite Cash for Clunkers, but the sales force was able to convince more of those people to buy.

"We are especially pleased with the strength of our comparable store used unit sales where, despite our toughest comparison in recent quarters, we still delivered positive comps," Folliard said.

CarMax was able to boost gross profit per used vehicle by $85 to $2,205 as used car prices continued to remain strong. The company said the improvement came because it obtained more of its vehicles directly from consumers, more efficient reconditioning operations and wholesale used car prices that were above last year's numbers.

CarMax runs more than 100 stores that mainly sell used cars and trucks.

Its shares rose 18 cents to $24.30 in pre-market trading.

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Bridge collapse adds to Commonwealth Games woes (Reuters)

NEW DELHI (Reuters) â€" A footbridge being built for the Commonwealth Games in India collapsed on Tuesday, injuring 23 people and highlighting the raft of problems that have so far blighted the event, meant to showcase the emerging global power.

Preparations for next month's Commonwealth Games, intended to be the coming out party for India the Olympics were for China, are down to the wire and the event risks descending into farce.

The shooting of two foreign visitors by suspected militants in Delhi on Sunday has combined with a dengue fever epidemic, heavy monsoon rains, delayed construction, graft scandals and traffic chaos to give the Games that sinking feeling.

Police said the collapsed bridge was just outside the main stadium, putting India's sometimes lax construction standards again in the spotlight.

Commonwealth Games Federation president Michael Fennell said on Tuesday the two-week event, starting Oct. 3, was seriously compromised by conditions at the Games village that have "shocked the majority."

But officials remained upbeat about the event.

"I am not worried at all. I am as confident and as cool as ever about our organizing of the Commonwealth Games in a very successful, comfortable way. These are all minor hiccups," Urban Development Minister S. Jaipal Reddy told reporters.

(For a slideshow: Countdown to Commonwealth, click http://in.reuters.com/news/pictures/slideshow?articleId=INRTR2HWG7)

(For a slideshow: Mishap near Games venue, click http://in.reuters.com/news/pictures/slideshow?articleId=INRTXSH8Y)

Dismal preparations have, for many, underscored the out-of-touch, slow-paced leadership of Prime Minister Manmohan Singh and his Congress government, raising questions how a graft-ridden, inefficient state can hope to compete with China.

The government's pro-poor voter image may suffer from tales of billions of wasted dollars. A perception of India's entrepreneurial prowess threatening Western jobs may slip if roofs leak and journalists wonder where the Wi-Fi is.

"Fingers crossed, India may pull off a miracle," said Boria Majumdar, a sports historian who has written the book 'Sellotape Legacy: Delhi and the Commonwealth Games'.

"But it will have to be a miracle. No doubt about that".

The Games village and security -- construction delays mean venues have been locked down by police only two weeks before the Games -- are the two major weakness of the Games, Majumdar said.

Some four or five accommodation towers at the Games village are still unfinished, lacking facilities such as wireless Internet, fitted toilets and plumbing. Rubble, unused masonry and discarded bricks litter the unfinished gardens.

On a recent visit to the village, the lack of preparation was stark. A Reuters reporter witnessed dirty apartments with empty boxes strewn about, as labourers worked on paths and pavements.

A crude cement slope appeared to be an unplanned fix for disabled athletes requiring access to one apartment block.

The athletes' training centre was still to be fitted out. The water in the training and recreational swimming pools was dirty, with insect larvae breeding on the surface.

"There have had some delegations staying there and they have been reporting constantly about the filth in the village," Fennell told CNN-IBN TV.

Organisers say there is no question the Games will be put off, but the nightmare is that one delegation exits and that leads to an avalanche. And the problems are not receding.

Of the nearly 100,000 accreditations for officials and media, only around a quarter have been issued.

With the $6 billion Games way behind schedule, there have been worries stagnant puddles in construction sites have proved breeding grounds for mosquitoes. Hundreds of Delhi residents are hospitalised in one of the worst dengue epidemics in years.

NOT ALL BAD?

With costs running 17 times more than original estimates, the government's anti-corruption watchdog identified 16 projects with suspect financing.

The insistence to hold the Games in October has led to some athletes pulling out due to conflicts with Olympic qualifiers. October also means the opening ceremony may be ruined by rains.

Triple Olympic sprint champion Usain Bolt of Jamaica is the most high profile of a bunch of top athletes who have decided to skip the event.

But many venues, including the main Jawaharlal Nehru stadium have been praised as world class. The hope for organisers is that TV coverage of the Games will focus on events, not arrangements.

Other events like the 2004 Athens Olympics were dogged by problems but turned out fine. Beijing was hit by worries over the torch relay and Tibet protests but ended in media glory.

Some officials say foreigners do not understand how India works. Sport Minister Manohar Singh Gill said it is like an Indian wedding where chaos ends in a well-planned ceremony.

But scandals have sent shivers down the government that since the summer has effectively replaced many organisers with top civil servants, giving the Games access to more funds.

However, the Congress government was late getting involved, highlighting its slow pace in dealing with issues ranging from economic reforms to separatist violence in Kashmir.

General elections later this year also may have put on hold many preparations, with politicians not knowing if they would be able to take the credit for any effort.

While high inflation is the biggest issue for a government that has eyes on millions of poor rural voters rather than Delhi residents, graft stories will worsen the Congress party's image.

"It's just one of so many goof-ups," said Paranjoy Guha Thakurta, a political economist. "This will not do the government any good. When you have a big bash and benefits are minimal it sharpens and widens the inequalities in India. People notice."

(Additional reporting by Amlan Chakraborty and Henry Foy)

(Editing by Paul de Bendern and Miral Fahmy. To query or comment on this story email sportsfeedback@thomsonreuters.com)

(For more news, visit Reuters India)

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China snubs Japan PM over boat row, rules out meeting (Reuters)

TOKYO/BEIJING (Reuters) â€" China snubbed Japanese Prime Minister Naoto Kan on Tuesday, saying a territorial dispute ruled out any meeting with Premier Wen Jiabao in New York this week and adding to the ire dividing Asia's top two economies.

China's confirmation that Wen will not meet Kan when they both attend a U.N. meeting marked another swipe at Tokyo after a Japanese court extended the detention of a Chinese skipper whose boat collided with two Japanese coastguard ships earlier this month near islands in the East China Sea claimed by both sides.

China has repeatedly demanded the captain's release.

The Foreign Ministry stepped up the warnings and added the public snub of Japanese Prime Minister Kan, a step suggesting that it will take a while for diplomatic goodwill to return between the two neighbors, even after the boat case has passed.

"This issue has already seriously damaged China-Japan relations. The key to avoiding a further deterioration in the situation lies in Japan immediately and unconditionally releasing the man," Foreign Ministry spokeswoman Jiang Yu told a regular news briefing in Beijing.

It would not be right, Jiang said, for Wen Jiabao to meet Kan in New York during a United Nations development summit.

"Given the current atmosphere, arranging a meeting clearly would be inappropriate," she said.

The case of the boat captain has become a distillation of the distrust that threads through Sino-Japan relations, drawing in territorial disputes, Chinese bitterness over wartime occupation, Tokyo's anxieties about Chinese regional sway, and Japanese unease as China rises in global GDP rankings.

Many experts say neither country wants to risk their increasing trade flows through outright confrontation. But some said the boat case has re-opened nettlesome disputes put on hold as the two governments sought to end years of quarrels.

"This dispute is about problems between China and Japan that persisted even though both sides avoided or underplayed them for a while," said Sun Cheng, an expert on Japan at the China University of Political Science and Law in Beijing.

"How bad relations get now partly depends on how long the boat captain is detained," he said. "If he's released soon, we'll return to the status quo of before, but both sides have seen how even this small case became a major problem."

TRADE, TERRITORIAL DISPUTES, TOURISTS

Trade ties remain robust.

China has been Japan's biggest trading partner since 2009 and bilateral trade reached 12.6 trillion yen ($147 billion) in the January-June period, a jump of 34.5 percent over the same time last year, according to Japanese statistics.

But worries about a possible dip in the number of big-spending Chinese tourists to Japan in the wake of the dispute weighed on the share prices of department store operators such as Takashimaya.

A top Japanese government spokesman called for both sides to refrain from inflaming nationalism in the row over the islands, which China calls the Diaoyu and Japan calls Senkaku.

"What is most important is that government officials in Japan, China and other countries try not to fuel narrow-minded, extreme nationalism," Japan's Chief Cabinet Secretary Yoshito Sengoku told a news conference.

Japan's Finance Minister Yoshihiko Noda also called for a solution that would leave business ties unaffected.

Japan's National Tourism Organization, however, said it had made no change to its projection for the number of visitors from China to reach a record 1.5 million this year.

Japanese authorities have accused the Chinese captain of ramming a patrol ship and obstructing officers near the disputed, uninhabited islets in the East China Sea.

The two countries are also at odds over China's exploration for natural gas in the East China Sea, and Beijing is also involved in territorial disputes with Southeast Asian nations in the South China Sea.

Japanese prosecutors have until September 29 to decide whether to bring charges against the captain.

($1=85.69 yen)

(Additional reporting by Tetsushi Kajimoto, Yoko Kubota, Elaine Lies and James Topham in Tokyo, and Ben Blanchard in Beijing; Editing by Miral Fahmy and Sanjeev Miglani)

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India drop Yuvraj from tests against Australia (Reuters)

MUMBAI (Reuters) â€" Middle-order batsman Yuvraj Singh was dropped on Monday from India's test squad against Australia while Zaheer Khan and Shantakumaran Sreesanth have returned from injuries to bolster the pace department.

Yuvraj has been replaced by Cheteshwar Pujara, a prolific 22-year-old from Saurashtra, in the 15-man squad selected in Chennai for next month's Border-Gavaskar series.

Zaheer (shoulder) and Sreesanth (knee) were out of action during India's three-test tour of Sri Lanka.

The squad, led by Mahendra Singh Dhoni, contains nine batsmen, three medium-pacers and as many spinners.

"Pujara is a very good player, he has done really well in the India A series. You will have to give credit to domestic performance and A series and everything else," India selection committee chief Krish Srikkanth told reporters.

"Overall, we have selected the best team and I don't think there is any surprise inclusion or surprise exclusion. It was the sheer weight of performance, talent and of course fitness that was taken into account."

The Australia team, who arrived in India on Monday, start their tour with a three-day match in Chandigarh on Saturday.

Mohali hosts the first test from Oct. 1-5, while the second will be held in Bangalore from Oct. 9-13.

Australia will also play three one-day internationals.

India - MS Dhoni (captain), Virender Sehwag, Gautam Gambhir, M.Vijay, Rahul Dravid, Sachin Tendulkar, VVS Laxman, Suresh Raina, Cheteshwar Pujara, Harbhajan Singh, Zaheer Khan, Ishant Sharma, Pragyan Ojha, S.Sreesanth, Amit Mishra.

(Reporting by Sudipto Ganguly in Mumbai; editing by John Mehaffey; to query or comment on this story, email sportsfeedback@thomsonreuters.com)

(For more news visit Reuters India)

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Greece delays stress tests ahead of NBG rights deal (Reuters)

ATHENS (Reuters) â€" Greece will delay stress testing of its banks until October to allow its largest lender to complete a big rights issue, part of efforts to begin financing its economy again on international markets.

The central bank tests aim to check that banks, struggling with rising bad loans, deposit outflows and a lack of access to the wholesale funding market, are well-enough capitalized to weather Greece's debt crisis and an austerity-induced recession.

Greece has agreed to stress test its banks quarterly to strengthen the system's supervision as part of an emergency 110 billion euro funding package clinched with the International Monetary Fund (IMF) and its euro zone peers in May.

Greece's big banks took part in a broader stress test by the Committee of European Banking Supervisors (CEBS) in July with only one, ATEbank, failing to make the grade under the simulation's most adverse scenario.

"The delay is not significant. The CEBS stress test in a way dislocated the pre-arranged Bank of Greece-IMF tests. Doing another test in September after the CEBS one in July would bring the simulations too close," said UBS analyst Alexander Kyrtsis.

The overborrowed country's international lenders -- the IMF and its euro zone peers -- want to ensure banks can cope as austerity policies to slash deficits deepen the recession.

"The stress tests will not be done in September," said a central bank official who did not want to be named. "They will take place later in the autumn, very likely in October."

Although there was no set date for the Bank of Greece tests the official said there had been discussion internally on conducting them in September.

TIME FOR NATIONAL BANK

The main measure of investors' faith in Greece -- the government's cost of borrowing compared to German government bonds -- has fallen slightly but remains more than twice that of the next most risky bet in the euro zone, Ireland.

The government last week kicked off new monthly auctions of short-term debt, comfortably selling more than a billion euros ($1.5 billion) of six-month bills but still paying a high yield despite progress in cutting its deficit.

Analysts said the delay in the stress tests would allow for developments in Greek banking to settle, mainly a 2.8 billion euro capital increase by National Bank but also a report by privatization advisers and nine-month results.

"The central bank wants stress tests to encompass a series of upcoming developments," said Natasa Roumantzi, head analyst at Piraeus Securities. "Firstly, it's been a short time since the July stress tests and secondly it wants to see the completion of National Bank's capital boost."

NBG is set to boost its capital via a rights issue, a convertible bond and the sale of a stake in Turkish unit Finansbank to give it a bigger cushion to cope with the economic slump at home and a liquidity quagmire that has forced Greek banks to rely on the European Central Bank for funding.

Funding from the lender of last resort reached 19 percent of the system's assets in August.

NBG's move also addresses the new capital rules drawn up by global banking regulators known as Basel III. The rights issue will run from September 27 to October 11.

Analysts said that with the rights issue window being small, about 10 days, there would be a limited ability for the market to fully digest stress test information.

In the pan-European tests in July, ATEbank's Tier 1 ratio fell to 4.36 percent under the simulation's most adverse scenario, below a 6.0 percent safety threshold.

The CEBS test was tough for Greek lenders, showing on average banks were strong enough to cope with a rise in non-performing loans to 17 percent by the end of 2011 without needing significant amounts of capital.

A senior banker at a large Greek bank said the Bank of Greece stress tests would likely be more tailor-made compared to the CEBS test which was based on across the board assumptions.

"If the IMF-Bank of Greece stress test is similar to the CEBS one there is no reason to run it. It will either be more punitive on loan-losses or on sovereign exposure in some way," Kyrtsis said.

Greek bank shares were trading 1.79 percent lower mid-day, slightly underperforming the general index, which was losing 1.18 percent.

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Stoner holds off Pedrosa to win in Aragon (Reuters)

MADRID (Reuters) â€" Former world champion Casey Stoner held off local favourite Dani Pedrosa to win the Aragon MotoGP on Sunday and record his first victory of the season.

Spanish Honda pilot Pedrosa recovered from a poor start and began to reel the Australian Ducati rider in during the middle stages of the race at the new Motorland circuit in Alcaniz to the north east of Madrid.

But 2007 champion Stoner, who started from pole having recovered from a minor crash during the warmup, pulled away to win by a comfortable margin of more than five seconds.

Stoner's team mate Nicky Hayden of the United States pipped championship leader Jorge Lorenzo for third, just over nine seconds off the pace, after overtaking the Spaniard on an exciting final lap.

With five races remaining and 25 points awarded for a win, Pedrosa is the only rider who can catch Lorenzo in the overall standings. The Yamaha rider leads his compatriot by 56 points and Stoner is 129 points back in third.

"It was a difficult race today and I was very nervous for the first few laps after the crash this morning," Stoner said in an interview with Spanish television.

"I was lucky not to make too big a mistake and tried to put in some smooth, consitent laps and pull away for the win," the 24-year-old added.

Current world champion Valentino Rossi, who is struggling with a shoulder injury, finished sixth.

TOMIZAWA TRIBUTE

The sport is still reeling from the death of Shoya Tomizawa at the San Marino Grand Prix two weeks ago and riders had earlier gathered in bright sunshine in the paddock to pay tribute to the Japanese Moto2 pilot.

Members of his team placed his bike on the starting grid and a minute's silence was held for the 19-year-old, whose number 48 has been retired from the championship.

Andrea Iannone of Italy won the Moto2 race and Spaniard Pol Espargaro was victorious in the 125cc category.

(Reporting by Iain Rogers, editing by John Mehaffey; To query or comment on this story email sportsfeedback@thomsonreuters.com)

(For more news visit Reuters India)

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Fed expected to wait and see as economy convalesces (AFP)

WASHINGTON (AFP) â€" Glimmers of a revived economic recovery are expected to give the US Federal Reserve some breathing space when its top committee meets Tuesday, avoiding a renewed battle inside the central bank.

Members of the Fed's policymaking panel will gather for the last time before November's mid-term elections, with the economic outlook transformed since their last meeting from apocalyptic to vaguely promising.

The Federal Open Market Committee (FOMC) is expected to anchor the fragile recovery by promising to leave interest rates at historic lows and keep stimulus spending at current levels.

But with the economic picture brightening it is expected to hold off from dramatic increases in spending designed to speed up growth.

"We see the improved data as buying time for the Fed to sit on the sidelines at the September FOMC meeting," said Michael Gapen of Barclays Capital.

The US economy, after months of languishing in the doldrums, has regained some momentum since the Fed meet at the end of June, when members expressed concern about a "sluggish" economic recovery.

In July and August private firms continued to add jobs, albeit at pace that was too slow to offset the loss of tens of thousands of Census taking jobs.

A rapidly narrowing trade deficit and recovering consumer prices have also pointed to a tempered, if tepid, recovery.

Most economists now expect the economy to grow faster in July, August and September than the previous three months.

That could help avoid a showdown at the Fed over the need for more stimulus.

At recent meetings Fed members have tussled over how and when to restart even modest crisis measures, which some fear would send the wrong signal to financial markets and forestall a return to normal monetary policy.

While "all but one member" agreed on the need to reinvest crisis spending that had expired, minutes showed deep divisions about the impact these measures would have.

Any move to increase stimulus spending would likely deepen divisions, especially if the case for action was not clear cut.

Given this many analysts believe a shift in policy will not now come until the Fed's November or December meetings, and will be contingent on signs that the economy is in deep distress.

"We believe the bar for further stimulus includes some combination of below-trend growth in real GDP (gross domestic product), a worsening labor market, and heightened deflation probabilities," said Gapen.

But not all economists were convinced that the Fed should wait.

"The 'better-than-expected' tone of many recent indicators says more about the gloom that has overtaken the markets than it does the improvement in economic fundamentals," said David Resler of Nomura Securities.

"Marginally stronger economic data have not altered the case for a new round of quantitative easing and we see no compelling reason to wait."

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Karzai votes for female Hindu candidate - sources (Reuters)

KABUL (Reuters) â€" Afghan President Hamid Karzai chose a female, Hindu candidate when he voted in Saturday's parliamentary election, two palace officials close to him said.

Just two Hindu candidates were on the list of about 600 vying for parliamentary seats in the Afghan capital. Karzai's choice could annoy supporters in deeply conservative, Muslim Afghanistan.

His backers include powerful ex-warlords who were fielding their own candidates and religious conservatives who are opposed to female politicians and unlikely to be happy Karzai is backing a non-Muslim.

"It was Anar Kali Honaryar," one palace official told Reuters, giving the name of a female activist who largely relied on Muslim supporters during her campaigning.

Hindus and Sikhs lived in Afghanistan and dominated trade long before the advent of Islam in the 7th century.

Their numbers shrank over the centuries and tens of thousands of those who remained fled Afghanistan after civil war broke out in 1992, leaving just a few thousand behind.

Women are a minority in Afghan public life, although 25 percent of the 249 seats in parliament are reserved for them.

Many of the 406 female candidates running in the election have been a particular target for threats and intimidation, and overall women's grip on rights won since the 2001 ouster of the Taliban -- like education and the vote -- remains tenuous.

Karzai's wife joined the millions of Afghans who did not make it to the polls -- although not because of the security concerns or frustration about corruption that kept others away.

The couple's only child is sick and she did not want to leave him alone, Karzai told a female election worker who later recounted the conversation to a Reuters reporter.

(Editing by Emma Graham-Harrison and Janet Lawrence)

(For more Reuters coverage of Afghanistan and Pakistan, see: http://www.reuters.com/news/globalcoverage/afghanistanpakistan)

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U.S. woes are not our fault, Chinese economists say (Reuters)

BEIJING (Reuters) â€" China is not to blame for U.S. economic woes, Chinese economic researchers said in state media reports on Saturday, hitting back at U.S. complaints about unfair trade and China's currency policy.

"The actions and criticism against China makes no sense," Huo Jianguo, director of the Chinese Academy of International Trade and Economic Cooperation, a Ministry of Commerce think-tank, told China Daily in an interview.

He said the Obama administration had made China a scapegoat to please voters ahead of mid-term elections.

The comments follow U.S. Treasury Secretary Timothy Geithner's promise to rally other world powers to push China for trade and currency reforms.

China's central bank said in June it would let the currency fluctuate more freely. Since then it has risen 1.53 percent, but many economists say it is undervalued by up to 40 percent.

China's government could not have let the yuan appreciate faster because of China's own economic situation, Huo said. In the longer term, the yuan would rise against the dollar.

"The U.S. moves do not hold any water and China must come out strongly against them," he said.

Zhang Monan, an economist with the State Information Center, a top government think-tank, said the United States gained more than China from their relationship as the world's biggest debtor and the world's biggest creditor.

"Ironically, being the largest debtor nation has not restrained the mammoth that is the U.S. Instead, its huge debt has been used as an effective apparatus to maintain and extend Washington's decades-old global financial hegemony," she wrote in a commentary in China Daily.

She said the United States was able to take advantage of the dollar's falling value and the currency's dominant position in international financial transactions to cut the country's foreign debts.

"From 2002 to 2006 alone, an accumulated $3.58 trillion worth of U.S. debt evaporated because of the Federal Reserve's increased issuance of the dollar or the decision to devalue the greenback as the world's leading reserve currency."

At the same time, U.S. investments overseas earned much more than the 3.5 percent average return ratio that foreign creditors got from 10-year U.S. debts, she said.

"Compared with the advantage the U.S. enjoys in the global financial scope, China is still not a credit power in the real sense despite its status as the world's largest creditor nation. It is more like a depositor that puts its enormous funds into the bank only to gain a low interest, before borrowing from (the) bank by paying a much higher rate."

(Reporting by Tom Miles, editing by Miral Fahmy)

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Pope's security in spotlight after London arrests (Reuters)

LONDON (Reuters) â€" Pope Benedict's security was in the spotlight on Friday after London police arrested five men on suspicion of preparing an attack in Britain.

It was not clear if the planned attack was related to the pope's visit or when it was to have taken place, but it prompted police to take another look at security for the pontiff, who was on the second day of his visit to Britain.

The Vatican said the trip would go on unchanged. Police said they had reviewed their arrangements for the visit and concluded that their plan "remains appropriate".

The arrests were made by anti-terrorism police, who were searching a business in central London and homes in the north and east of the city but had not uncovered dangerous materials.

The five men, aged between 26 and 50, who were not named, were arrested around 5:45 a.m. (0445 GMT), police said in a statement.

The Pope has been heavily protected during his four-day visit to Britain, travelling in a custom-built bulletproof car surrounded by security officials.

Four young British Islamists killed 52 people and wounded hundreds when they set off suicide bombs on three underground trains and a bus on in July 2005.

The Vatican was told of the arrests as the pope was arriving at a Catholic university in southwest London.

"We are totally confident in police and there are no plans to change the programme," said Father Federico Lombardi. He said the pope was calm and looking forward to the rest of the visit.

At the university, Benedict reminded his church, reeling from evidence of widespread sexual abuse of children by priests, that its first priority was to provide a safe environment for children.

"Our responsibility towards those entrusted to us for their Christian formation demands nothing less," he told a gathering of Catholic schoolteachers and administrators.

In the first substantial protest of his delicate visit to Britain, several hundred people whistled and shouted "Pope must resign!" and "Shame!" as the papal motorcade entered a nearby Catholic school complex.

They held placards reading "Hypocrisy and lies" and "Catholic paedophile cover up".

The sex abuse scandal, in which priests who abused children were moved from parish to parish instead of turned over to police, has hounded Benedict's five-year-old papacy, even though most of the abuse took place decades ago.

On Thursday, the pope told reporters aboard the plane from Rome that he was shocked by what he called a "perversion" of the priesthood and acknowledged that the Church had not been sufficiently vigilant and decisive in dealing with the scandal.

(additional reporting by Avril Ormsby and Maria Golovnina; Editing by Kevin Liffey)

(For more on faith and ethics, see the Reuters religion blog FaithWorld at http://blogs.reuters.com/faithworld)

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Poverty rate hits 15-year high (Reuters)

WASHINGTON (Reuters) â€" The U.S. poverty rate rose to 14.3 percent in 2009 from 13.2 percent the year before, bringing the percentage of the population living in poverty to the highest level since 1994, as the economic downturn took its toll on jobs, the government said on Thursday.

The Census Bureau said 43.6 million people, or one in seven Americans, lived in poverty last year, up from 39.8 million in 2008. The data paints a picture of rising hardship and declining incomes for many living in the United States and hands more bad economic news to Democrats ahead of November 2 congressional elections.

"Our economy plunged into recession almost three years ago on the heels of a financial meltdown and a rapid decline in housing prices," President Barack Obama said in a statement.

"Last year we saw the depths of the recession, including historic losses in employment not witnessed since the Great Depression," Obama said. His economic recovery package enacted last year, he said, had helped keep millions from falling into poverty in 2009.

The poverty threshold for a family of four in 2009 was $21,954, the report said. The Census report relies on cash income and government payments, including unemployment insurance, to measure poverty.

But the data omits other government assistance, such as food stamps and low-income tax credits, that were increased in last year's economic package.

Republicans pounced on the report, saying it showed that the government aid enacted by Obama and his congressional Democrats was not working.

"What poor Americans, like all other Americans, need are jobs, not more government benefits," said Republican Representative John Linder.

The worst recession in decades began in December 2007 while Republican George W. Bush was president and the recovery has been slow to take hold.

DECLINING HEALTH COVERAGE

While poverty levels rose, the number of people without health insurance jumped to 50.7 million in 2009 from 46.3 million a year earlier, leaving 16.7 percent of the population without health coverage, the Census Bureau said in its annual report on income, poverty and health coverage.

The data show that the impact of the economic downturn hit people at lower income levels the hardest, and many more would have fallen into poverty but for the additional unemployment payments approved by Congress, Census spokesman Stanley Rolark told reporters.

The annual measure of how well Americans are living is important because lawmakers and analysts use it to assess the overall health of the U.S. economy as well as the effectiveness of government programs.

The poverty rate in 2009 was the highest since 1994, but was 8.1 percentage points lower than the poverty rate in 1959, the first year for which poverty estimates are available, the Census Bureau said.

Median income declined between 2008 and 2009 for non-Hispanic white and black households in the United States, while Asian households had the highest median income in 2009. Median income for Hispanic-origin households was about the same in 2009 as in 2008, the report said.

The number of working men fell since 2007 by 2.5 million, while the number of working women fell by 1.3 million, the report said.

"No other set of income years surrounding the recessions dating from 1969 to the present has experienced such a large decline in the number of workers," the report said.

At the same time, earnings of working men fell by 4.1 percent, and earnings of working women fell by 2.8 percent. The data reflect a decline in the number of people working full-time, year-round jobs.

The number of people with health insurance fell for the first time in 2009 since the Census Bureau began collecting the data in 1987.

"The economic downturn exacerbated the steady erosion over the past decade in the number of people with employer-provided health coverage -- erosion caused by the unaffordable costs of health care for America's businesses," said Ron Pollack, of Families USA, a healthcare advocacy group.

The number of people covered by private health insurance fell from 2008 to 2009, while the number with government health insurance rose, the report said.

Some 194.5 million people in 2009 have private health coverage, compared to 201 million in 2008. The number of people covered by government plans rose to 93.2 million in 2009, from 87.4 million in 2008.

The newly enacted healthcare overhaul will require most people to obtain health insurance by 2014, and the government will offer subsidies to help them afford it.

(Editing by Philip Barbara)

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Commonwealth Games preparations go down to wire (Reuters)

NEW DELHI (Reuters) â€" When the head of next month's Commonwealth Games in India says that all the venues are complete, the constant noise of banging hammers and whirring drills that threatens to drown him out suggests otherwise.

Beset by stories of corruption, a dengue epidemic and leaking roofs of stadia, Indian authorities showed off new venues in the face of a storm of media criticism amid worries the Games, a showcase for this emerging global giant, could be a disaster.

"I am sorry to disappoint you, but the stadium is 100 percent ready. Everything is on time," Suresh Kalmadi, Organising Committee chairman, told reporters on a tour of the main Jawaharlal Nehru Stadium as labourers put down their tools to wave from the rafters above.

The opening ceremony, to be held in this renovated stadium is only 17 days away. Preparations for the Games, estimated to cost $6 billion and with 8,000 athletes expected, are going down to the wire.

Schools are being closed during the Games amid fears of gridlock in this chaotic city of 18 million. Many people that can afford it are leaving the city for holidays, fearful that plans to restrict traffic will cripple daily life.

But the government has told sceptical Indians and foreigners not to worry. This, officials say, is like a chaotic Indian wedding. Everything comes together at the last moment.

After weeks of criticism, much of the Indian media appears to have come behind the government. One TV station has broadcast a "Be The Solution" campaign.

The Games village, built over 63.5 hectares across the dirty Yamuna river from the city, is also complete, Kalmadi said. Yet the same sound of heavy drilling reverberates around the $230 million accommodation complex. Reports suggest 10 of the 34 tower blocks are under construction, while some delegates who have already arrived in Delhi are being asked to stay in hotels.

While the two towers open to the press are spacious, secure and well-equipped, many apartments are dirty and littered with empty boxes. Athletes are expected to arrive from next week.

Bags of rubbish and piles of unused cement are visible around the pathways, while the outdoor training pool shows insect larvae collecting on the surface of the unclean water.

As religious leaders bless the complex, the gardens are waterlogged as workers attempt to stimulate the growth of bare shrubs planted just weeks ago, while technicians rush to fill the designated internet cafe with networked computers.

Certainly, some venues support Kalmadi's declaration. The Thyagaraj Sports Complex, purpose-built in two and a half years at a cost of $64.5 million will host the netball competition. The impressive facility has been fully tested and is prepared.

Dhyan Chand National Stadium, built in 1951, was overhauled for the Men's Hockey World Cup in February. The changing rooms, VIP lounge and pitch are new, but the drab exterior betrays the venue's age. Mosquitos were breeding here just six weeks ago.

In the village's training complex, hurdles, pole vaulting equipment and crash mats lie wrapped in plastic as labourers finish installing bathroom fittings. It is evident that despite the claims of the organisers, Delhi's deadline looms.

"Everything has been left to the last minute. But they say 'Incredible India', and things really do come together," says Dennis Meredith, sports manager for the Hockey tournament.

(Editing by Alistair Scrutton)

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Inflation at wholesale level remains low in August (AP)

WASHINGTON â€" Wholesale prices rose last month, but outside of volatile food and energy costs inflation remained tame.

The Producer Price Index rose 0.4 percent in August after increasing 0.2 percent in July, the Labor Department said Thursday. The index measures price changes on products before they reach the consumer.

But excluding food and energy costs, so-called "core" producer prices were relatively flat. They rose just 0.1 percent and are up 1.3 percent in the past year.

There has been little threat of inflation in recent quarters. The weak economy has stifled demand at every stage of the production chain. That makes it tough for producers to raise the prices they charge to retailers.

Concerns about deflation grew this spring after prices declined for three straight months. July's increase quieted most of those fears. But economists are watching prices closely to make sure they don't start falling again.

Energy costs increased by the most since January. Gasoline costs rose 7.5 percent. Home heating oil costs increased 7.0 percent. After surging in early August, energy costs declined to more normal levels by the end of the month.

Food prices fell 0.3 percent, mostly because of a decline in the cost of vegetables. Irish potatoes were the outlier. Their prices rose 27.2 percent â€" the most since June 2008.

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Industrial production rises 0.2 percent in August (AP)

WASHINGTON â€" Production at U.S. factories grew in August for the 12th time in 14 months, but at a slower rate than earlier this year as consumers spent cautiously.

Overall output at the nation's factories, mines and utilities edged up 0.2 percent last month, the Federal Reserve reported Wednesday. It rose 0.6 percent in July.

Production gains at factories, the largest single element of industrial production, slowed to 0.2 percent after rising 0.7 percent in July. Much of the softness came from a decline in auto production, which spiked in July. Excluding autos, manufacturing output rose 0.5 percent.

Production rose for basic consumer goods such as food, clothing and paper by more than 1.0 percent. Factories produced 0.7 percent more business equipment in August.

Manufacturing has helped drive economic expansion over the past year. Companies built up their stockpiles in the first half of the year after slashing them during the recession.

But factory output has slowed in recent months. Businesses are no longer rebuilding their inventories. At the same time, demand for goods remains weak because consumers are saving more and spending with caution.

The economy could suffer if industrial production gains get any smaller, said Joseph LaVorgna, chief U.S. economist at Deutsche Bank. He said output is probably rising at a 5 percent annual rate this quarter, compared to 7.2 percent in the first quarter and 6.5 percent in the second.

"You don't want it to go much below where it is right now," LaVorgna said. "If you go down to 1 or 2 percent, there's not much buffer between that and economic contraction."

Still, LaVorgna said he expects the economy to keep growing slowly as financial markets strengthen and consumers grow more confident.

The nation's factories were operating at 74.7 percent of their capacity, up 0.1 percent from July. That's still well below the average since 1972 of 80.6 percent.

Production at mines grew 1.2 percent. The nation's mines are operating at 86.3 percent of their capacity, just 1.1 percent below the average since 1972. Utility production fell by 1.5 percent.

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