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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Kashmir talks appear to end in deadlock (Reuters)

NEW DELHI (Reuters) â€" A meeting of the Indian government and opposition parties to resolve spiralling separatist protests in Kashmir appeared to end in deadlock on Wednesday as four more protesters were killed in police clashes.

Prime Minister Manmohan Singh's meeting came two days after 18 people were killed in the worst single episode of violence in two decades of violent rebellion against Indian rule and are the latest in a three-month long series of protests.

The meeting failed to agree on a partial lifting of a widely-hated law that gives the army immunity from prosecution in case of civilian killings in the region. The only decision taken was to send a delegation of politicians to Kashmir.

Another 40 people were injured in the latest round of protests, in the Mendhar area of Poonch, a district which has rarely seen separatist demonstrations, about 120 km (75 miles) south of Kashmir's summer capital, Srinagar.

At least 90 people have been killed this summer, nearly all by police bullets.

The protests appeared to have been sparked by reports of the Koran being destroyed in the United States but may have ballooned into anti-India demonstrations.

"We had to open fire when our repeated attempts failed to disperse the mob who were trying to reach to a nearby Christian missionary school in the area," a police official said.

Despite a U.S. pastor abandoning his plans to burn the Koran to mark the anniversary of the Sept. 11, 2001, attacks on the United States, there have been protests in Kashmir.

The latest deaths added pressure on the 77-year-old Singh, who has been criticised as being out of touch for failing to treat the protests seriously, underscoring policy limbo in New Delhi that may spill over into tension with Pakistan, which claims the region.

"Obviously it's a deadlock," Ajai Sahni, head of the Institute for Conflict Management think tank.

"But then what did you expect? Nothing could have come out of it. Is there anything that they could have said that would make people say let's end this?"

The government has largely painted the protesters as inspired by Pakistan-based militant groups but Singh on Wednesday appeared to signal a slight shift in opinion, hinting that some of the demonstrators may be inspired by local grievances.

"While some of these protests may have been impulsive or spontaneous, it cannot be denied that some incidents were orchestrated by certain groups," Singh said.

"What we have seen over the past three months must persuade us to reflect and deliberate on the way forward. We have to talk to each other."

NO MOVE ON SPECIAL ARMY POWERS

The Armed Forces Special Powers Act in Jammu and Kashmir state gives security forces sweeping powers to shoot, arrest, search and detain people in battling a separatist insurgency.

The law is widely hated by Kashmiris and is blamed in part for fuelling anti-India sentiment in the Muslim-majority valley.

The opposition Hindu nationalist Bharatiya Janata Party, the army and some government members oppose any lifting of the act.

Militant attacks, which first broke out in 1989, have declined considerably. But in the last two years street protests have mushroomed as many young Kashmiris have grown increasingly angry at living in one of the world's most militarised regions.

While a previous generation of Kashmiris often embraced militancy, a new generation has used street protests, Facebook and mobile phones to spread opposition, mindful of how violent attacks and an army backlash led to more than 47,000 deaths after 1989.

But the protesters face a government that has placed little priority on finding a solution to Kashmir. Once a central issue to relations with Pakistan, it has lost some regional weight to the war in Afghanistan and Pakistan's own militant problems.

The international community, including the United States, has largely been silent over the deaths of many unarmed protesters.

Kashmir is not a huge issue for many Indians and the controversy will unlikely play into electoral politics ahead of a host of state elections in the coming year.

(Additional reporting by Ashok Pahalwan in Jammu and Sheikh Mushtaq in Srinagar; Writing by Alistair Scrutton; Editing by C.J. Kuncheria and Sugita Katyal)

(For more news visit Reuters India)

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Nokia hits back with new phones amid turmoil at top (Reuters)

LONDON (Reuters) â€" Nokia unveiled an arsenal of smartphones crucial to its fightback against Apple's iPhone and Research in Motion's BlackBerry after its most fundamental management shake-up in decades.

At its annual showcase conference -- attended by neither outgoing Chief Executive Olli-Pekka Kallasvuo nor incoming CEO Stephen Elop -- the world's biggest cellphone maker introduced three new models it is banking on to be a hit this Christmas.

"Nokia is back!," the company's sales chief, Niklas Savander, declared to an audience of software developers, analysts and journalists at the opening of Nokia World, in a speech peppered with references to Nokia's competitors.

Nokia still controls around 40 percent of the global smartphone market and sells about one in three of all phones, but has lost out in the fatter-margin market for the most expensive cellphone models.

"We've lost a little bit of the shine in our high-end devices. That's being solved today," Colin Giles, head of global sales, told Reuters. "We need to rebuild our brand, for sure."

Nokia's answers to the competition were presented in an opening keynote by Anssi Vanjoki, the head of Nokia's smartphones and services, who had announced his resignation a day earlier after being passed over for the CEO role a second time.

The new models all come with large touchscreens -- following a trend started three years ago by the iPhone -- and use Nokia's latest Symbian software.

The E7, C7 and a new version of the C6 will go on sale before the end of the year at prices ranging from 260-495 euros, excluding subsidies and taxes.

"The products are a clear improvement... but we know they are not where Nokia needs to be yet, and any other promise around 'we are working on it' would have not convinced anyone," said Gartner analyst Carolina Milanesi.

"A new CEO and the old guard stepping down might give investors more confidence that things are really changing."

Last week, Nokia announced it was hiring Stephen Elop, a Canadian Microsoft executive with Silicon Valley credentials, to replace Kallasvuo, who had presided over a near-halving of Nokia's market value.

Chairman Jorma Ollila, who led Nokia's transformation from a rubber boots-to-TVs conglomerate into a mobile phones giant in the 1990s, said he would also step down after helping with the management transition.

Nokia shares were 1.8 percent lower at 7.75 euros by 1225 GMT on Tuesday, but had risen 15 percent over the last two weeks on expectations of an improving smartphone portfolio.

Executives at the Nokia World event in London did their best to carry on business as usual.

"I'm very excited about Symbian 3," services chief Tero Ojanpera said when asked by Reuters about upheaval at the company. "We are here to talk about the Nokia World today."

Ben Wood, chief analyst at UK-based telecoms research firm CCS Insight, said: "In the midst of management turmoil Nokia is attempting to keep a steady hand on the tiller."

"Although many questions are being raised about its future strategic direction, in the near term we expect the company to stick with the vision it has outlined today."

(Editing by Elaine Hardcastle)

(For more news visit Reuters India)

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Thirteen killed in Kashmir, Koran protests (Reuters)

SRINAGAR, India (Reuters) â€" At least 13 people were killed on Monday in anti-government and Koran demonstrations across Kashmir, police said, in the biggest single death toll from protests in the disputed region in years.

The toll includes at least seven people killed in police clashes after thousands of Muslim protesters set fire to a Christian missionary school and government buildings in two Kashmiri districts to denounce reports that copies of the Koran, the Muslim holy book had been damaged in the United States.

Police said these demonstrations, attended by thousands in western Kashmir, quickly turned into separatist protests against the Indian central government -- a day after authorities slapped a curfew on much of the restive Himalayan region.

The deaths are a huge challenge for the Congress-led government, which has been criticised for failing to treat the protests seriously, underscoring a policy limbo in New Delhi that may spill over into tension with Pakistan, which claims Kashmir.

The crowds massed in Budgam and Tangmarg areas chanting slogans denouncing the United States. They set fire to government buildings and a school owned by a Protestant church, witnesses and officials said.

At least 75 people were injured, 12 of them by bullet wounds, police said.

Kashmir has seen mass rallies against Indian rule in the last three months and at least 70 protesters have been killed by police. Demonstrations on other issues -- such as the Koran -- can often balloon into wider anti-government sentiment.

On Sunday, two people were killed in a third straight day of violent protests in Afghanistan sparked by a U.S. pastor's threat to burn copies of the Koran.

While pastor Terry Jones dropped his plans, there were at least two incidents of abuse of the Koran in Lower Manhattan in New York on Saturday. Two evangelical preachers not affiliated with any mainstream church burned two copies of the Koran in Tennessee.

It was unclear which incidents the Kashmiri demonstrators were denouncing. Iranian TV reports were aired in Kashmir on Sunday about alleged discreations of the Koran - a grave insult to Muslims who believe the Koran to be the literal word of God.

(Writing by Alistair Scrutton; Editing by Paul de Bendern and Ron Popeski)

(For more news visit Reuters India)

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Violence erupts as thousands march in Srinagar (Reuters)

SRINAGAR (Reuters) â€" Tens of thousands of Muslims marched through Srinagar on Saturday, setting fire to government and police buildings in the latest of what are the biggest protests in two years against Indian rule.

Police fired tear gas and live ammunition into the air to disperse crowds in Srinagar, the heart of a 20-year insurgency against New Delhi's rule of a region crucial to peaceful relations between India and Pakistan.

Three-month-long protests have killed 70 people so far, mostly stone-throwing protesters amid a series of civilian deaths blamed on the heavy-handedness of security forces. The protests have shown no sign of abating despite calls for calm by New Delhi and separatist leaders.

After special Eid prayers to mark the end of the Ramadan fasting month, tens of thousands people poured into the streets from mosques in Srinagar, Kashmir's summer capital, waving green Islamic flags and chanting "There is no God but Allah" and "Go India, go back."

The main demonstration was led by the region's senior separatist leader Mirwaiz Umar Farooq.

"Mirwaiz Umar Farooq incited the situation by leading a procession to Lal Chowk from Eid Gah taking the advantage of the Eid congregation and thus vitiated the Eid celebration in Srinagar," a police statement said.

Hundreds of trucks and buses brought people, many of them sitting on roofs and hanging out of windows, for Eid prayers which later turned into an independence rally.

The violence comes as New Delhi is trying to respond to demonstrations reminiscent of the late 1980s when protests against India's rule sparked an armed separatist conflict that has so far officially killed more than 47,000 people.

Omar Abdullah, the chief minister of Jammu and Kashmir state, earlier this week said "efforts were on to break the ice" but on Saturday said the separatists had betrayed his trust in them.

The scenic region, claimed by nuclear-armed rivals Indian and Pakistan, has been hit by strikes and curfews for three months. Protesters have defied curfews to attack police with stones and set security camps and police stations on fire.

"The law of jungle was prevailing in Kashmir and the troops were randomly killing Kashmiri youth to frighten people to submission," Farooq said. "But our struggle will continue."

A radicalised young generation, which has grown up in 20 years of violence and strife, is driving the violent protests, and analysts say mass protests rather than militant attacks to promote the cause of independence may prove a huge political challenge for the Indian government.

(Editing by Matthias Williams, editing by Jonathan Thatcher)

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Capturing or killing bin Laden still priority - Obama (Reuters)

WASHINGTON (Reuters) â€" President Barack Obama said on Friday that capturing or killing al Qaeda leader Osama bin Laden remains a high priority as the United States marks the anniversary of the Sept. 11 attacks in 2001.

"Capturing or killing bin Laden and Zawahri would be extremely important to our national security," Obama said, referring to al Qaeda's second-in-command Ayman al-Zawahri.

"It doesn't solve all our problems but it remains a high priority to this administration," Obama said in response to a question at a news conference covering a range of domestic and international topics.

As the United States has "ramped up the pressure" on al Qaeda, "what's happened is bin Laden has gone deep underground," Obama said.

The consequence, he said, is bin Laden and others "may have been holed up in ways that have made it harder for them to operate."

Obama warned "there is always going to be the potential" for individuals or small groups to carry out strikes against U.S. targets.

Ultimately, the United States will "stamp out" threats from militants, he said, "but it's going to take some time."

(Editing by John O'Callaghan)

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