Angelina Jolie has double mastectomy to elude cancer

Oscar-winning film star Angelina Jolie revealed on Tuesday that she underwent a double mastectomy after learning she had inherited a high risk of breast cancer and said she hoped her story would inspire other women fighting the life-threatening disease.

Jolie, an actress who has long embodied Hollywood glamour and has in recent years drawn nearly as much attention for her globe-trotting work on behalf of refugees as for her role as a celebrity mom, disclosed her choice in an op-ed column in the New York Times.

The 37-year-old performer, raising a family with fellow film star and fiance Brad Pitt, wrote that she went through with the operation in part to reassure her six children that she would not die young from cancer, as her own mother did at age 56.

"We often speak of 'Mommy's mommy,' and I find myself trying to explain the illness that took her away from us. They have asked if the same could happen to me," wrote Jolie.

"I have always told them not to worry, but the truth is I carry a 'faulty' gene."

The actress, who won an Oscar as best supporting actress for her 1999 role in the film "Girl, Interrupted," said she opted for the surgery after her doctors had estimated she had an 87 percent risk of breast cancer and 50 percent risk of ovarian cancer, due to an inherited genetic mutation.

"Once I knew this was my reality, I decided to be proactive and to minimize the risk as much as I could. I made a decision to have a preventive double mastectomy," she said. She said her breast cancer risk had dropped to under 5 percent as a result.

Celebrities, cancer survivors and doctors expressed admiration for her openness, saying she was an inspiration for other women.

"I commend Angelina Jolie for her courage and thoughtfulness in sharing her story today regarding her mastectomy. So brave!" tweeted singer Sheryl Crow, who was diagnosed with breast cancer in 2006.

Singer Kylie Minogue, another cancer survivor, thanked Jolie for helping women, as did television host Giuliana Rancic, who also had surgery after being diagnosed with the disease.

"Angelina Jolie reveals double mastectomy. Proud of her for using her incredible platform to educate women," Rancic said on Twitter.

PITT AT HER SIDE

Pitt was by Jolie's side through three months of treatment that ended late in April, she said. The two became engaged last year.

"Having witnessed this decision firsthand, I find Angie's choice, as well as so many others like her, absolutely heroic," Pitt told London's Evening Standard newspaper.

"All I want is for her to have a long and healthy life, with myself and our children. This is a happy day for our family."

Jolie opted for reconstruction with implants. Breast tissue was removed during surgery and temporary fillers were inserted in their place. Nine weeks later the surgery was completed with the implants.

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"On a personal note, I do not feel any less of a woman," she wrote. "I feel empowered that I made a strong choice that in no way diminishes my femininity."

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The actress decided to be open about her surgery after finishing treatment to help women who might be living under the shadow of cancer.

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"It is my hope that they, too, will be able to get gene tested," she said.

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Breast cancer kills about 458,000 people each year, according to the World Health Organization. It is estimated that one in 300 to one in 500 women carry a BRCA 1 or BRCA 2 gene mutation, as Jolie does.

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CNN anchor Zoraida Sambolin announced on Tuesday that she had breast cancer and was also getting a double mastectomy.

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Sambolin, who anchors CNN's "Early Start" morning show, discussed her condition on the show while talking about Jolie's procedure.

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"I struggled for weeks trying to figure out how to tell you that I had been diagnosed with breast cancer and was leaving to have surgery," Sambolin, 47, said on Facebook. "Then ... Angelina Jolie shares her story of a double mastectomy and gives me strength and an opening."

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Dr Chet Nastala, a breast surgeon at PRMA Plastic Surgery in San Antonio, Texas, said Jolie's fame and openness about her treatment will have a big impact on women faced with the same decision.

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"It is difficult to go public," he said in an interview. "It shows a lot of courage."

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In past 10 years the PRMA practice has done about 5,000 reconstructive breast surgeries and about 20-30 percent have been for preventative mastectomies.

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Dr. Kristi Funk, director of the Pink Lotus Breast Center in Beverly Hills where Jolie was treated, also applauded her choice.

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"We hope that the awareness she is raising around the world will save countless lives," said Funk at a brief news conference outside the clinic.

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Richard Francis, head of research at the Breakthrough Breast Cancer charity in Britain, said it demonstrated the importance of educating women with the gene fault.

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"For women like Angelina it's important that they are made fully aware of all the options that are available, including risk-reducing surgery and extra breast screening," Francis told Reuters.

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Jolie also lends her star power to a range of humanitarian causes, including serving more than 10 years as a goodwill ambassador for the U.N. High Commissioner for Refugees.

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In April, she urged governments to step up efforts to bring wartime sex offenders to justice.

(Additional reporting by Paul Casciato, Eric Kelsey, Steve Gorman, Elaine Lies and Belinda Goldsmith; Editing by Mary Milliken and Cynthia Osterman)

Cannes set to ditch austerity with 'Great Gatsby' launch

The Cannes film festival may get some of its swagger back on Wednesday when it opens with Baz Luhrmann's lavish 3D period drama "The Great Gatsby", an opportunity to shed the caution of recent years overshadowed by broader economic gloom.

Leonardo DiCaprio and his British co-star Carey Mulligan will walk the red carpet on the French Riviera to promote the $105 million adaptation of F. Scott Fitzgerald's novel which has already opened in North America.

Over 12 days of world premieres, champagne parties and sun- and celebrity worship, Michael Douglas, Matt Damon, Ryan Gosling, Emma Watson and Bollywood legend Amitabh Bachchan are among the big names in town promoting their latest pictures.

Festival veterans are eager to see if Luhrmann can top his opening in 2001, viewed as the last truly extravagant launch on the palm-lined Croisette waterfront, when he filled the red carpet with can-can girls to promote his movie "Moulin Rouge".

"For a few years the mood at Cannes was a bit more subdued but the economy has picked up a bit and business is good so people are expecting a big opening," said Wendy Mitchell, editor of trade magazine Screen International.

"The Great Gatsby" was seen as a surprise choice for Cannes, given that the prestigious opening slot is traditionally reserved for a world premiere and all the media buzz and excitement that can bring.

But "The Great Gatsby" has already screened to mixed reviews in North America, where it opened to a larger-than-expected $51 million at the box office for distributor Warner Bros, a unit of Time Warner Inc..

Some industry insiders said the concession was indicative of increasingly cosy ties between Tinseltown and the French festival that champions eclectic, low-budget movies as well as big-budget blockbusters produced on the U.S. west coast.

A decade ago relatively few U.S. studios ventured to the annual cinema showcase, but festival director Thierry Fremaux has strengthened ties with Hollywood and the event is now the prime industry marketplace where titles are bought and sold.

HOLLYWOOD MUSCLE

In Luhrmann's "The Great Gatsby", DiCaprio stars in the title role, a millionaire pining for a lost love during the height of the "Roaring Twenties". Tobey Maguire and Joel Edgerton also appear and rapper Jay-Z produced the soundtrack.

DiCaprio's performance and the glamorous costumes have been widely praised by critics, but some said the movie failed to grasp the vision of the 1925 book that exposes the emptiness of excess while others disliked its "lurid overabundance".

"It's best to accept before buying the popcorn that this is not a literary adaptation but a 3-D blockbuster with Gatsby as a superhero," wrote critic Kate Muir in Britain's Times.

After the opening night the focus will shift to hundreds of other films screening at Cannes, including 20 movies from 10 countries competing for the coveted Palme D'Or award presented on the final day, May 26.

The list includes five U.S. movies - the highest number in six years - from directors Steven Soderbergh, Jim Jarmusch, Alexander Payne, the Coen brothers, and James Gray.

Oscar-winning filmmaker Steven Spielberg is heading a star-studded jury to decide the prizes along with Australian actress Nicole Kidman and two of 2013's Oscar winners, Taiwan-born director Ang Lee and Austrian actor Christoph Waltz.

(Reporting by Belinda Goldsmith; editing by Mike Collett-White)

Billy Crystal to revive one-man play, '700 Sundays,' on Broadway

Actor Billy Crystal will give his autobiographical one-man play "700 Sundays" a Broadway send-off later this year with a nine-week run, promoters said on Tuesday.

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Previews of the two-act play, which deals with Crystal's coming of age and the death of his father, are set to begin on November 5 at New York's Imperial Theater with a formal opening night on November 13. Its final show will be on January 5, 2014.

"'700 Sundays' has, without question, been the most satisfying experience of my career," Crystal said in a statement. "It is a privilege to return to Broadway to say goodbye to one of the greatest thrills of my life."

The play debuted with success in 2004 on Broadway and won a Tony Award for Special Theatrical Experience. Crystal, 65, has toured "700 Sundays" throughout the United States and internationally in Canada and Australia.

The play takes its name from how many Sundays Crystal was able to spend with his father, who died from a heart attack when the actor was 15 years old.

Crystal, who is best known for his comedic acting in films "When Harry Met Sally..." and "Analyze This," authored the play with Alan Zweibel.

(Reporting by Eric Kelsey, editing by Piya Sinha-Roy, Bernard Orr)

Christina Aguilera in talks to return to 'The Voice'

Pop singer Christina Aguilera is in discussions to return as a judge on NBC television singing competition "The Voice" next season, sources with knowledge of the talks said on Tuesday.

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Aguilera, 32, went on hiatus from the program this season to promote her latest album, "Lotus," with a concert tour. The singer had been a judge on the first three seasons of the program, which debuted in 2011.

The sources, who were not authorized to speak publicly about the talks, said the former Disney child star would earn about $12 million to serve as a judge, less than the $15 million Britney Spears reportedly earned on rival "The X Factor."

Representatives for Aguilera and NBC did not immediately respond to messages seeking comment.

Aguilera and R&B singer Cee Lo Green both left the show last year. They were replaced by Colombian singer Shakira and R&B singer Usher, who joined returning judges country singer Blake Shelton and Adam Levine, frontman of pop-rock band Maroon 5.

If Aguilera returns, it was unclear who she would replace on the current judging panel when the next season starts in September.

"The Voice," which competes against rival broadcaster Fox's singing contests "American Idol" and "The X Factor," averages about 14 million viewers over its two weekly shows.

Its finale is set for June 18.

NBC is owned by Comcast Corp and Fox is part of News Corp.

(Reporting by Eric Kelsey; Editing by Piya Sinha-Roy and Eric Beech)

ABC bets TV viewers will marvel at superhero show

Walt Disney Co's ABC network is tapping its blockbuster "Avengers" franchise for a new TV show, looking to reverse a ratings decline that put it last of the four largest networks among audiences coveted by advertisers.

The network is so confident in "Marvel's Agents of S.H.I.E.L.D." that it scheduled the show on Tuesdays at 8 p.m. eastern time, where it will face off against TV's top-rated scripted show, CBS' crime juggernaut "NCIS."

ABC plans to air a total eight new shows this fall, according to a schedule of its Fall lineup that was released by the network. It will also retool its long-running hit "Dancing with the Stars," cutting it back from two nights to one after its ratings weakened.

Its "S.H.I.E.L.D." offering is ABC's first effort to translate the big-screen success of Disney's Marvel comics movie franchise to television.

Last year's Marvel movie "The Avengers" and current hit "Iron Man 3" had the industry's largest- and second-largest box office openings in the United States and Canada, and "The Avengers" ranks third in all-time domestic ticket sales behind "Avatar" and "Titanic."

The new TV show will star "Avengers" actor Clark Gregg as agent Phil Coulson, who assembles a small group of agents to investigate strange happenings around the world. "Avengers" movie director Joss Whedon, who created the hit sci-fi TV show "Buffy the Vampire Slayer," will serve as executive producer.

"We believe S.H.I.E.L.D. is going to recruit a whole new audience coming in," ABC Entertainment President Paul Lee told reporters on a conference call. "And we don't necessarily think that audience is the same as NCIS."

The show tested well in "all four quadrants," meaning young and old, men and women, Lee said.

It faces a tough opponent in "NCIS," the top-rated non-sports show on television. The show, which debuted in 2003, this year attracted an average of 21.3 million total viewers, according to Nielsen data, slightly behind only NBC's "Sunday Night Football."

SKEWING YOUNG

ABC hopes to lure younger viewers with the fast-paced, special effects laden show instead of "NCIS," whose viewers have a median age of 60, Horizon Media analyst Brad Adgate said.

"ABC needs a youth-targeted, male-skewing show," Adgate said.

The network hopes S.H.I.E.L.D. will attract viewers to Tuesday night, where ABC plans an entire night of new shows, including "Lucky 7," a drama produced by Steven Spielberg that follows seven gas station employees in Astoria, Queens who win the lottery.

Lee will unveil the lineup of shows to advertisers Tuesday afternoon at New York's Lincoln Center during a presentation for the "upfront" selling season, when networks try to convince advertisers to buy billions of dollars of ad time in advance.

ABC, like rival broadcasters, wants to bring in new viewers to help reverse audience declines this season. Prime time viewing has shrunk 9 percent at ABC, according to Nielsen data provided by Horizon Media and based on viewing the same day a program airs.

ESPN TO PAY FOR DATA?

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Another Disney-owned network, ESPN, confirmed on Tuesday it is in preliminary talks with wireless carriers about subsidizing data plans to boost mobile usage of its sports content.

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"We've had lots of preliminary conversation, but there's nothing imminent," ESPN President John Skipper told reporters following his network's upfront presentation in New York.

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"If you remember, in the first generation of smart phones, there was lots of concern that a lot of video ate up the plans in a hurry," Skipper said. "So that's a concern to us because we have lots of fans."

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Skipper did not say which carriers ESPN was talking to. The Wall Street Journal reported last week that ESPN had spoken to at least one major U.S. wireless carrier.

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The sports network previously tried the mobile market with its own cellular service, Mobile ESPN, which shut down in 2006.

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(Reporting By Liana B. Baker in New York and Lisa Richwine in Los Angeles; Editing by Ron Grover and Tim Dobbyn)

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Actress Gina Lollobrigida's diamonds fetch $4.9 million at auction

Diamond jewelry belonging to Italian actress Gina Lollobrigida sold for more than 4.74 million Swiss francs ($4.9 million) on Tuesday in Geneva and set a record for pearl earrings, auctioneer Sotheby's said.

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Lollobrigida, a leading sex symbol of the 1950s and 1960s, said she was selling the jewelry to raise money for stem cell research.

A pair of diamond and natural pearl earrings sold for 2.29 million francs ($2.37 million), an auction record.

The earrings beat the $1.98 million figure set in 2011 from the sale of natural pearl and diamond earrings by Bulgari, owned by late actress Elizabeth Taylor.

Other prized items from Lollobrigida's collection included a Bulgari necklace and bracelet combination, and a Bulgari ring featuring a 19.03-carat cushion-shaped diamond. Each fetched 749,000 francs ($776,056).

The 85-year-old actress attended the auction and said she hoped the money raised would be put towards advancing stem cell research in Italy.

"Jewels are meant to give pleasure and for many years I had enormous pleasure wearing mine," Lollobrigida said in a statement. "Selling my jewels to help raise awareness of stem cell therapy, which can cure so many illnesses, seems to me a wonderful use to which to put them."

The jewelry was part of Sotheby's "Magnificent Jewels and Nobel Jewels" auction, held in Geneva after going on display in London, New York and Rome.

Overall, the auction of more than 600 lots of gems and jewelry fetched 74.8 million francs ($78.2 million).

Other top-sellers included a late 19th-century 74.53-carat fancy yellow diamond owned by the Imperial Majesty Sultan Ahmad Shah Qajar, the last ruler of the Qajar dynasty in Persia.

It sold for 2.85 million francs ($2.95 million), an auction record for a fancy yellow diamond.

A ring featuring a 27.9-carat brilliant-cut white diamond sold for 4.25 million francs ($4.45 million).

($1 = 0.965 Swiss francs)

(Reporting By Piya Sinha-Roy in Los Angeles; Editing by Eric Kelsey and Xavier Briand)

Gay South Korean film director to marry in bid to pry open closet

A gay South Korean film director is set to symbolically marry his long-term partner, saying he aims to pry open the closet in this conservative Asian country where homosexuality is still taboo and gays have been subjected to hate crimes.

Kim Jho Gwang-soo announced plans to marry his partner of nine years on Wednesday, becoming the first South Korean show business personality to do so and only the second to ever come out. The other, an actor, now says he regrets his decision.

"We wanted to convey the message that all sexual minorities should be given rights equally in a beautiful way," the 49-year-old Kim told a news conference in the South Korean capital of Seoul as he sat next to his partner, Kim Seung-hwan.

The two then kissed in an unprecedented display of affection for a same-sex couple in Korea, where traditional Confucian and Christian values remain strong.

Kim has directed a handful of films that were well received by domestic audiences and came out in 2005 during a screening for one of them. When not producing movies, he works for LGBT (lesbian, gay, bisexual, and transgender) rights advocacy.

The two will marry on Sept 7, a symbolic move since Korea remains far from legalizing same-sex unions despite a wave of such approval in Europe and the United States. On Tuesday, Minnesota became the 12th U.S. state to allow them.

Homosexuality is not illegal in Korea, but like elsewhere in Asia the pressure to marry someone of the opposite sex to continue the family blood line is strong and leads many to hide their homosexuality.

In 2000, actor Hong Seok-cheon became the first celebrity in this idol-obsessed culture to come out. But work dried up and he has since said he regretted the move.

Kim has been subject to less social opprobrium due to his role behind the camera rather than in front of it, but Korean gays doubted the announcement of his marriage would do much.

"I support his personal choice, but I don't think it'll change anything," said Yu Sang-geun, a 25-year-old gay Seoul student and activist with Solidarity for LGBT Human Rights in Korea, the nation's largest LGBT rights group.

"South Koreans' understanding of gays is very stunted," said Yu. "Kim's decision could be the foundation of more things to come, but there is so much to do regarding gay rights."

Gays and lesbians in South Korea have been subject to hate crimes. A gay man was sprayed with hydrochloric acid in 2008 by a friend, while one of Yu's acquaintances was raped while doing his compulsory military service.

Some South Korean lawmakers have pushed the country to adopt a comprehensive anti-discrimination law that would embrace gay rights, but amendments have foundered due to conservative Christian legislators who oppose recognition.

(Editing by David Chance, Elaine Lies and Michael Perry)

CBS adds Robin Williams to veteran hits in fall TV lineup

Top-rated U.S. broadcast network CBS will bring comedian Robin Williams back to television next season to plug one of the few holes in its primetime schedule.

CBS Corp unveiled eight new series on Wednesday ahead of its upfront presentation in New York, an annual rite when broadcasters try to persuade advertisers to spend billions of dollars in commercials for their new shows.

CBS is riding a stable of megahits, including crime drama "NCIS" and comedies "The Big Bang Theory" and "Two and a Half Men." Last week, the network had five of the six highest-rated programs on broadcast primetime TV, according to Nielsen ratings.

As such, the network is bringing back 20 shows, more than any of its competitors. Chief Executive Les Moonves said CBS has never been so profitable, which helped drive the stock to an all time high on Tuesday.

"The key is getting hits on this network," Moonves told reporters. "Our schedule going into next year is going to be even stronger than it's ever been before."

The Williams vehicle "The Crazy Ones" also stars Sarah Michelle Gellar of "Buffy the Vampire Slayer" fame and is produced by David E. Kelly, best known for shows like "Ally McBeal."

Williams plays an eccentric advertising executive who works alongside his daughter, played by Gellar. The show will air Thursdays at 9 p.m. ET.

Williams rose to fame in the 1970s playing the wildly comic space alien Mork in the hit television show "Mork and Mindy." He later built a successful career in movies performing in comedies, dramas, big Hollywood flicks and low-budget art house films. He won an Oscar in 1998 for his role in "Good Will Hunting" and has been nominated three other times.

NUMBER ONE

CBS, the ratings leader in total viewers, is projected to score the largest uptick in ad rates this upfront season at 6.5 percent, Barclays forecast.

Lifted by February's Super Bowl broadcast, the network also is poised to win the advertiser-coveted 18-to-49 age group for the first time since the 1991-92 season.

Excluding the Super Bowl, though, CBS is facing a year-over-year ratings decline like its competitors Fox and ABC. Without the big game, CBS' same-day ratings for total viewers fell 5.7 percent, according to Nielsen data provided by Horizon Media.

With fewer holes to fill than peers, CBS presented a smaller lineup Wednesday. Other comedies CBS touted were "We Are Men" starring Tony Shalhoub; and "Mom," the latest from hit comedy producer Chuck Lorre.

Action film producer Jerry Bruckheimer is producing "Hostages," a suspenseful drama where Toni Collette plays a surgeon who is held hostage with her family and ordered to assassinate the President.

CBS will present clips of its new shows to advertisers in Carnegie Hall in New York on Wednesday afternoon. CBS shares fell 13 cents to $49.90 in morning trading. CBS shares hit an all-time high of $50.73 on Tuesday, and ended that session up 31 percent this year, in line with rallies for most of its media peers.

(Reporting By Liana B. Baker in New York and Lisa Richwine in Los Angeles; Editing by David Gregorio)

As tallying goes on, top Florida Democrat cheers Obama's win

The chairman of Florida's Democratic Party congratulated President Barack Obama on Thursday on winning the battleground state on Tuesday, while blasting the state's Republican governor for his handling of the election.

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"On behalf of Florida Democrats, I wish President Barack Obama congratulations on his re-election and on winning Florida's 29 electoral votes," said Rod Smith in a statement posted on the party's website.

Vote counting in Florida continued on Thursday, with Obama holding a narrow 58,000 vote lead that Republican challenger Mitt Romney appeared unlikely to overturn.

If Obama's victory is confirmed, the Florida result would give the president 332 electoral college votes and 206 for Romney.

The Republican Party in Florida has yet to officially concede the race, though one party strategist was quoted by The Miami Herald accepting defeat.

Said Smith: "It is appalling that two days after the election, Florida was not able to report our presidential election results."

"This embarrassment lays at the feet of Governor Rick Scott, who made a decision to cut early voting in half and continually refused to extend early-voting hours," he added, issuing a call to Scott and the state Legislature "to reform Florida's voting systems ... to ensure that we correct this affront to our system of democratic participation."

(Writing by David Adams; editing by Philip Barbara)

Obama to make statement on economy Friday

Newly re-elected President Barack Obama will make a statement on the economy on Friday, the White House said, setting the stage for a showdown with congressional Republicans over contentious tax and spending issues.

The president is likely to discuss looming tax increases and government spending cuts - the so-called fiscal cliff - that would go into effect early next year unless Congress acts to prevent them. He is due to make the statement from the East Room of the White House at 1:05 p.m. (1805 GMT).

Obama, who defeated Republican challenger Mitt Romney on Tuesday in a race in which the two candidates offered different visions for jump-starting the sluggish economy, is not expected to put forward a new or specific plan.

Instead, he is more likely to urge Congress to tackle the fiscal cliff and try to cut the massive U.S. budget deficit. Analysts have said that if left unaddressed, the abrupt fiscal tightening would knock the economy back into recession.

Congressional Republicans have already begun to stake out their position on ways to spare the already modest economic recovery from a fiscal shock. House of Representatives Speaker John Boehner is scheduled to hold a news conference earlier on Friday.

The president's advisers told reporters earlier on Thursday that dealing with the fiscal cliff would be an immediate priority. The administration sees Obama's re-election an endorsement of his position that affluent Americans should see their taxes rise, they said.

"One of the messages that was sent by the American people throughout this campaign is ... (they) clearly chose the president's view of making sure that the wealthiest Americans are asked to do a little bit more in the context of reducing our deficit in a balanced way," senior White House adviser David Plouffe said.

(Reporting By Mark Felsenthal; Editing by Mohammad Zargham)

Election blurring of church, state separation draws complaints

Political watchdog and secularist groups are asking the U.S. government to investigate whether Catholic bishops and a Christian evangelical group headed by preacher Billy Graham should lose tax breaks for telling followers how to vote in this year's election.

Under constitutional protections of free speech and separation of church and state, churches are free to speak on any issue. But they risk losing tax breaks worth $145 billion in the past decade if they violate Internal Revenue Service rules by promoting or opposing any particular candidate. Other non-profits also have special tax status.

Citizens for Responsibility and Ethics in Washington, a political watchdog group, in its complaint to the U.S. Internal Revenue Service, cited reports of individual bishops "abusing their positions to advocate against the election of President Barack Obama."

The group's executive director, Melanie Sloan, said some bishops went too far by saying a vote for Democrats would mean going to hell. "I don't think the Catholic bishops should be intimidating parishioners to advocate for any particular candidate," said Sloan.

The Wisconsin-based Freedom from Religion Foundation complained to the IRS about possible illegal political campaign intervention by Wisconsin Catholic bishops and the Charlotte, North Carolina-based Billy Graham Evangelistic Association.

IRS spokesman Dean Patterson declined to comment on the complaints or on whether there was any investigation. "Federal law prohibits the IRS from discussing specific taxpayers or situations," Patterson said.

The U.S. Conference of Catholic Bishops, through its spokeswoman Sister Mary Ann Walsh, said it would not comment on what a bishop says in his diocese.

The Billy Graham group said that its newspaper ads in publications like the Wall Street Journal and USA Today advocated votes for candidates who support "biblical values" but mentioned no candidate or party.

The ads, signed by Graham, asked voters to back candidates who support "the biblical definition of marriage between a man and woman" and who protect "the sanctity of life," an apparent reference to the group's opposition to abortion.

The conference of bishops waged a campaign this year against the Obama administration's health care requirement birth control be covered by health insurance.

Church doctrine is opposed to contraception as a means of birth control. Church leaders also spoke out against same-sex marriage but were on the losing side in four states where the issue was on the ballot.

THE POWER OF THE PULPIT

Nicholas Cafardi, a law professor at Duquesne University who worked for the Catholic diocese of Pittsburgh, said some bishops seemed particularly politically active in this election.

In Cafardi's opinion, the bishops' conference did not cross any tax-law lines but some individual bishops may have done so.

"The larger issue is that, irrespective of what the tax code says, churches should be sacred spaces, free of partisan politics," said Cafardi.

Among those whose political positions created controversy in this campaign season was Springfield, Illinois, Bishop Thomas Paprocki who warned his flock in a letter of "intrinsic evils" in the Democratic platform's support of abortion and same-sex marriage. A vote for someone who promotes such actions "places the eternal salvation of your own soul in serious jeopardy," he said.

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Peter Breen, executive director of the Chicago-based Thomas More Society, a law firm focused on Catholic issues, said the complaint against Catholic bishops was meant to frighten people of faith from challenging their political leaders, which religious people have always been called to do.

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"That's not electioneering - it's merely making statements about public concern," said Breen of Paprocki's statement. "He's not saying vote for Candidate A as opposed to Candidate B."

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Green Bay, Wisconsin, Bishop David Ricken made a statement similar to Paprocki's in an October 24 letter to parishioners, but later said his comments "should not be misunderstood as an endorsement of any political candidates or parties."

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In an April sermon, Peoria, Illinois, Bishop Daniel Jenky said Obama, with his "radical, pro-abortion and extreme secularist agenda, now seems intent on following a similar path" to that of former Soviet dictator Joseph Stalin and German dictator Adolf Hitler. The homily is posted on the diocese newspaper's web site.

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Americans United for Separation of Church and State urged the IRS in October to investigate a Texas church that advised on its marquee to "Vote for the Mormon, not the Muslim!" - a reference to Mormon Republican presidential candidate Mitt Romney and Obama, who is not a Muslim.

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Conservatives were not the only ones getting support from the pulpit. According to an October Pew Research Center report, 40 percent of Black Protestants reported hearing about presidential candidates from clergy at church, and the messages overwhelmingly favored Obama.

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Americans United also complained in the 2008 election about a North Carolina Baptist group that invited Michelle Obama to speak at an event that they said appeared to be a campaign rally.

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The Reverend Barry Lynn, executive director of Americans United, said the IRS needs to start vigorously enforcing restrictions against political speech by churches.

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"This is extraordinarily important - one of the few remaining restrictions on campaign spending," said Lynn. He warned that if churches are allowed to say anything they want politically and keep their tax benefits, "this would be a gigantic new loophole and would not serve the church's interest, or the public's."

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(Reporting by Mary Wisniewski; Additional reporting by Nanette Byrnes; Editing by Greg McCune and Jackie Frank)

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Hit political blogger Nate Silver on future of predictive modeling,,,,

Nate Silver is an oxymoron come to life: the famous statistician.

After successfully calling the Electoral College results in all 50 states ahead of the U.S. presidential election, Silver, the man behind the popular FiveThirtyEight blog, has quickly become a symbol of the new power of data in politics.

Television pundits across the political spectrum praised his accuracy on the night of the election. His book, "The Signal and the Noise," about the science of prediction, shot up to number two on Amazon.com.

Silver spoke with Reuters Thursday evening. Here is an edited and condensed version of the conversation.

Q: Some of the more established polls this year had some of the worst results. Why do you think that was?

A: I think pollsters have to get back to the basics here. Do you have a poll that is actually calling everyone? Some of the polls that didn't include cellphones had bad years and that's what you would expect. If you aren't taking a representative sample, you won't get a representative snapshot. Polls on the Internet, like Ipsos, and those like it did pretty well. We are living our lives more online and you need to have different ways to capture that. (Ipsos is the polling partner of Reuters. A report by Fordham University ranked Ipsos/Reuters first of 28 polling organizations in accuracy of final, national pre-election estimates.)

Q: Before the election, you were criticized by some politicians and pundits who said the race was much closer than what your model suggested. Where was the discrepancy?

A: It helps to have a set of rules that you set up. You have to look at the data in a consistent way and an unbiased way and not be fooled by the noise associated with polling. So many people were distracted by the fact that you had polling firms that had outliers, whether from error or poor methodology. The outlier polls got the headlines, whereas the consensus was clear that Obama had a lead in the swing states.

Q: How did you get interested in forecasting?

A: A lot of it was baseball. It was hoping to win my fantasy league that drew me to sabermetrics (which applies statistical analysis to predict the performance of athletes). I was drafting Bobby Bonilla and Robin Ventura, these players who had big, brand names that weren't that good anymore. I then started to apply this stuff to analyze real world problems.

Q: What are the limitations of predictive modeling? Where doesn't it work?

A: A lot of things can't be modeled very well. In the book, I look at how difficult it is for economists to forecast jobs and growth. The techniques used are either algorithms or you spitball it (guess at the answer). Neither works all that well. Some of that is acknowledging that the economy is an incredibly complex organization. It's hard to predict 3 million people interacting with each other. Politics are an empirically answerable question. The polls in general elections are pretty reliable, and you can trust them 90 percent of the time. That's not as true in primary elections because it's a different turnout.

Q: Politicians take their own polls, of course, and have their own ways of analyzing data. Did you talk with either the Obama or Romney campaigns about how they were doing it?

A: Only a little bit. I think there are a lot of great reporters who have good conversations with the campaigns, and I had conversations with the campaigns, too. I trust the public information more.

Q: How will polling change before the 2016 election?

A: Polls did pretty well on the whole, but in four years you will see more Internet-based polling. That's really a success story this year, and those firms did quite well for themselves. The Google poll was almost perfect, much better than the Gallup poll. We're living in a world where Google beats Gallup.

(Editing by Mary Milliken and Philip Barbara)

Obama, buoyed by election win, faces new battles,,

President Barack Obama had little time to savor victory on Wednesday after voters gave him a second term in the White House where he faces urgent economic challenges, a looming fiscal showdown and a still-divided Congress able to block his every move.

Despite a decisive win over Republican Mitt Romney in Tuesday's election, Obama must negotiate with a Republican majority in the House of Representatives to try to overcome the partisan gridlock that gripped Washington for much of his first term.

The Democratic president's most immediate concern is the "fiscal cliff" of scheduled tax increases and spending cuts that could crush the U.S. economic recovery if it kicks in at the start of next year.

The prospect of Obama and Congress struggling to agree on the issue weighed heavily on global financial markets on Wednesday and helped send Wall Street stocks into a post-election swoon.

Obama also faces challenges abroad including the West's nuclear standoff with Iran, the civil war in Syria, the winding down of the war in Afghanistan and dealing with an increasingly assertive China.

At home, Obama's triumph could embolden him in his dealings with the Republicans, who were in disarray after failing to unseat him or reclaim control of the U.S. Senate, an outcome many conservatives had predicted. Their party is now headed for a period of painful soul-searching.

Voters gave Obama a second chance despite stubbornly high unemployment and a weak economic recovery, but they preserved the status quo of divided government in Washington.

Obama's fellow Democrats retained control of the Senate and Republicans kept their majority in the House, giving them power to curb the president's legislative ambitions on everything from taxes to immigration reform.

This is the political reality facing Obama - who won a far narrower victory over Romney than his historic 2008 victory over John McCain when he became the country's first black president.

He headed back to Washington on Wednesday after basking in the glow of his re-election together with thousands of elated supporters at a victory rally in his hometown of Chicago in the early hours of the morning.

"We can seize this future together because we are not as divided as our politics suggests," Obama told the gathering.

Before leaving Chicago, he visited his downtown campaign headquarters to thank staff and volunteers.

Romney, a multimillionaire former private equity executive, came back from a series of campaign stumbles to fight a close battle after besting Obama in the first of three presidential debates.

But the former Massachusetts governor failed to convince voters of his argument that his business experience made him the best candidate to repair a weak U.S. economy.

CALL TO CONGRESS LEADERS

Trying to make good on his promise to seek compromise, Obama followed up in telephone calls with congressional leaders, including the two top Republican lawmakers, John Boehner and Mitch McConnell, to express his determination to work together.

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"The president reiterated his commitment to finding bipartisan solutions to: reduce our deficit in a balanced way, cut taxes for middle-class families and small businesses and create jobs," a White House official said.

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The problems that dogged Obama in his first term, which cast a long shadow over his 2008 campaign message of hope and change, still confront him. He must tackle the $1 trillion annual deficits, rein in the $16 trillion national debt and overhaul expensive social programs.

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The most urgent focus for Obama and U.S. lawmakers will be to deal with the "fiscal cliff," a mix of tax increases and spending cuts due to extract some $600 billion from the economy starting early next year, barring a deal with Congress. Economists warn it could push the United States back into recession.

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Obama has pledged to increase tax rates on Americans earning more than $250,000 as a part of his "balanced approach" to deficit reduction - something Republicans still vow to resist.

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In remarks to reporters, House Speaker Boehner struck a conciliatory tone but stuck to the Republican position that they will consider boosting revenues to help reduce deficits, but only as a "byproduct" of tax reform that lowers rates and eliminates loopholes and deductions.

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Boehner said lawmakers and Obama should find a short-term solution to avoid the fiscal cliff and work on a long-term debt reduction plan in 2013.

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"In order to garner Republican support for new revenues, the president must be willing to reduce spending and shore up the entitlement programs that are the primary drivers of our debt," Boehner said.

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Senate Republican leader McConnell gave no sign he was willing to concede his conservative principles.

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"The voters have not endorsed the failures or excesses of the president's first term, they have simply given him more time to finish the job they asked him to do together with a Congress that restored balance to Washington after two years of one-party control," McConnell said.

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Vice President Joe Biden told reporters the election delivered a mandate on moving closer to the administration's views on tax policy, and Republicans would have to do some "soul-searching" about issues they would be willing to compromise on, according to a pool report.

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Post-election concern about U.S. fiscal problems contributed to a fall in global financial markets as jittery investors scrambled for less-risky assets.

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All three major U.S. stock indexes fell more than 2 percent, with the Dow Jones industrial average losing more than 300 points and the S&P 500 posting its biggest drop since June. Euro zone debt worries were also a factor in the market decline.

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COMFORTABLE WIN IN ELECTORAL COLLEGE

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The nationwide popular vote in Tuesday's election was extremely close with Obama taking about 50 percent to 48 percent for Romney after a campaign in which the candidates and their party allies spent a combined $2 billion. But in the state-by-state system of electoral votes that decides the White House, Obama notched up a comfortable victory.

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By late on Wednesday, he had 303 electoral votes, well over the 270 needed to win, to Romney's 206. Florida's close race was not yet declared, leaving its 29 electoral votes still to be claimed.

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The Republican Party, after losing the past two presidential contests, is expected to analyze at length what went wrong and how to fix it, especially how it has alienated Hispanic voters who were an important constituency in Obama's victory.

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Some critics have argued that the Republican Party, with its conservative Tea Party faction, have moved too far from the American mainstream to attract enough independent voters to reclaim the White House.

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"The fact is, Republicans are going to have to do a lot of rethinking at the presidential level," Newt Gingrich, a former House speaker who lost the Republican nominating race to Romney, told CBS's "This Morning" program.

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Obama's win put to rest the prospect of wholesale repeal of his 2010 healthcare reform law.

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Obama, who took office in 2009 as the ravages of the financial crisis were hitting the U.S. economy, must continue his efforts to ignite strong growth and recover from the worst downturn since the Great Depression of the 1930s. An uneven recovery has been showing some signs of strength but the country's jobless rate, at 7.9 percent, remains stubbornly high.

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Obama may now reshuffle his cabinet. Treasury Secretary Timothy Geithner and Secretary of State Hillary Clinton plan to step down soon.

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Democrats widened their control of the 100-member Senate by two. The Republican majority in the 435-member House means that Congress still faces a deep partisan divide.

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"That means the same dynamic. That means the same people who couldn't figure out how to cut deals for the past three years," said Ethan Siegel, an analyst who tracks Washington politics for institutional investors.

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(Reporting by staff in Washington and other bureaus; Editing by Alistair Bell and Eric Walsh)

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Boehner: ""Obamacare is law of the land""",,,,

Top Republican lawmaker John Boehner said on Thursday he would not make it his mission to repeal the Obama administration's healthcare reform law following the re-election of President Barack Obama.

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"The election changes that," Boehner, speaker of the U.S. House of Representatives, told ABC news anchor Diane Sawyer when asked if repealing the law was "still your mission."

"It's pretty clear that the president was re-elected," Boehner added. "Obamacare is the law of the land."

Under Boehner's leadership, the House tried repeatedly to repeal the healthcare law, the signature domestic measure of Obama's first term. While a few provisions were eliminated or changed, Senate Democrats blocked outright termination of the law.

Boehner added that parts of the law were going to be difficult to implement and that everything had to be on the table as lawmakers try to create a path to a balanced budget.

A spokesman for Boehner said later the speaker and House Republicans "remain committed to repealing the law, and he said in the interview it would be on the table."

The 2010 Patient Protection and Affordable Care Act, the biggest overhaul of the $2.8 trillion U.S. healthcare system since the 1960s, aims to extend health coverage to more than 30 million uninsured Americans beginning in January 2014.

The U.S. Supreme Court upheld the reforms in a landmark June ruling.

Defeated Republican presidential candidate Mitt Romney had vowed to repeal the law if he were elected.

In Tuesday's election, Republicans kept their majority in the House and Democrats maintained control of the Senate.

In the ABC interview, Boehner also said a comprehensive approach to immigration reform was needed and he was confident that Republicans could find common ground with Obama on the issue.

(Reporting By Rachelle Younglai; Editing by Peter Cooney)

Florida governor orders review of election laws after voting snafus,,,,

Florida Governor Rick Scott ordered his top elections official on Wednesday to figure out what caused long lines at polling stations and delays in ballot counting in the battleground state on Election Day.

A week after Florida again made headlines for an election fiasco that forced voters to wait hours to cast ballots after polls closed and caused long delays in counting votes, Scott urged lawmakers to review recent changes to state election laws that critics say contributed to the problems.

"Floridians should not have to wait several days for the results of a major presidential election to be tabulated because of the delays in a few counties when the majority of counties, including major metropolitan areas, have been counted," Scott said in a statement.

Scott, a Republican, has faced intense criticism over the delays and long lines.

Last year, Scott backed a law passed by Florida's Republican-controlled Legislature that reduced the number of early voting days and put in place restrictions making it harder to register voters.

Democrats and voting rights groups criticized the law, arguing it unfairly targeted Democrats and specifically minorities who disproportionately voted early.

The result of the reduced early voting was long lines that stretched around blocks and lasted for hours in parts of Florida.

Advocacy groups, led by the Florida League of Women Voters, have called for the changes to be rolled back.

The governor said the state's top elections official, Secretary of State Kenneth Detzner, will focus on problems that plagued Miami-Dade, Broward, Palm Beach and St. Lucie counties.

Each of the counties experienced delays reporting voting results.

Scott also said the voting law should be addressed in the upcoming legislative session, which begins in March.

"We encourage legislators to have a bipartisan, open and vigorous discussion about what changes need to be made to current Florida election law," Scott said.

The governor's comments come as Democrats began putting forward their own reform proposals and Republican legislative leaders also called for another review of state election laws.

"The effectiveness and fairness of the laws governing our elections have been brought into question by the past election," Rep. Darryl Rouson, a Democrat, said in a statement. "Our Legislature should not be a prisoner to its own laws."

Incoming Republican House Speaker Will Weatherford said the election law passed last year may have contributed to the problems, but that it was too early to tell.

He rejected assertions the changes were intended to blunt turnout in Florida by supporters of U.S. President Barack Obama.

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"It's not a good thing when it's Friday, three days after the election, and every state in the country is either red or blue (except) there is one that is yellow because they haven't counted the votes," Weatherford said.

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"That is something we should be embarrassed by," he added.

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(Editing by Kevin Gray and Stacey Joyce)

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White House lists two dozen leaders to meet with Obama on deficit,,,,

Two dozen business, labor and civic leaders, including the chief executives of major U.S. corporations such as Ford, IBM and Wal-Mart, will meet President Barack Obama to discuss how to control the federal deficit, said the White House on Monday.

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Obama was scheduled to meet labor and civic leaders on Tuesday, followed by a meeting with business executives on Wednesday. A White House official said the leaders would discuss "the best ways to move our economy forward and find a balanced approach to reduce the deficit."

Unless the president and lawmakers agree, a combination of tax increases and government spending cuts will take effect in early 2013, the so-called fiscal cliff that would reduce the deficit but harm the U.S. economy.

Expected at the meeting on Tuesday were four labor leaders - Mary Kay Henry of the Service Employees International Union, Lee Saunders of the public employees union AFSCME, Dennis Van Roekel of the National Education Association and Richard Trumka of the AFL-CIO, the umbrella organization for U.S. labor.

Also at the session on Tuesday would be leaders of civic and politically progressive groups. They were John Podesta and Neera Tanden of the Center for American Progress, Robert Greenstein of the think tank Center on Budget and Policy Priorities, Laura Burton Capps of Common Purpose Project, Max Richtman of the National Committee to Preserve Social Security, Justin Ruben of MoveOn and Deepak Bhargava of Center for Community Change.

Business executives invited to meet the president on Wednesday were Mark Bertolini of Aetna Inc, Ursula Burns of Xerox Corp, Kenneth Chenault of American Express Co, David Cote of Honeywell International Inc, Michael Duke of Wal-Mart Stores Inc, Jeffrey Immelt of General Electric Co, Andrew Liveris of Dow Chemical Co, Robert McDonald of Procter & Gamble Co, Alan Mulally of Ford Motor Co, Indra Nooyi of PepsiCo Inc, Ginni Rometty of IBM, and John Watson of Chevron Corp.

(Reporting by Charles Abbott; Editing by Lisa Shumaker)

US STOCKS-Wall St extends rally as tech shares lead

The S&P 500 and the Nasdaq rose for a fourth straight day on Wednesday as tech shares gained and offset some weak economic data.

Equities have rallied in recent weeks, with both the Dow and S&P 500 hitting all-time highs as investors expect central bank stimulus measures will keep supporting market gains.

Such policies have helped spur advances of about 15 percent in major indexes this year despite data showing signs of slowing growth. Activity in New York state's manufacturing sector unexpectedly contracted in May, falling to minus 1.43 from 3.05, below expectations for an increase to 4. Another report showed that U.S. industrial production fell 0.5 percent in April, more than expected.

"It's disconcerting that the data was so much lower than what we were looking for, but there's no reason for investors to sell," said Michael Binger, senior portfolio manager at Gradient Investments in Minneapolis. "The main things driving the market - the Fed, earnings, consumer confidence - are holding up, and people put money in the market on any down day. I still see a lot of value."

Agilent Tech was one of the S&P 500's top percentage gainers a day after the company posted adjusted earnings that beat expectations and doubled its stock-buyback program to $1 billion. The company also said it would cut 2 percent of its global work force.

Tech shares also got a lift from Netflix Inc, up 4.5 percent at $244.55, and Yahoo Inc, up 3 percent at $27.44.

The Dow Jones industrial average was up 37.98 points, or 0.25 percent, at 15,253.23. The Standard & Poor's 500 Index was up 5.87 points, or 0.36 percent, at 1,656.21. The Nasdaq Composite Index was up 8.54 points, or 0.25 percent, at 3,471.15.

On the downside, Deere & Co gave a cautious outlook even as earnings topped forecasts. The stock fell 4.6 percent to $89.45. Deere's decline dragged on on the S&P industrial index , which was up only 0.1 percent.

In other data released on Wednesday, the U.S. Producer Price Index recorded its largest drop in three years in April, falling a seasonally adjusted 0.7 percent.

The NAHB/Wells Fargo Housing Market index rose to 44 from a downwardly revised 41 in April, according to data from the National Association of Home Builders. The May reading was above forecasts and closer to the 50 mark, which indicates builders see market conditions in a more favorable light.

An improving housing market has been seen as a tailwind to the economic recovery.

Crude oil fell 1.8 percent after data showed the euro zone was in its longest recession ever, while a stronger dollar and rising U.S. refined products stockpiles put additional pressure on prices.

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The drop in crude pressured shares of energy companies, with Marathon Oil down 1.8 percent at $34.74, and Cliffs Natural Resources, off 3.2 percent at $21.44.

"One of the biggest things we're watching today is commodity prices, which are down pretty big across the board," said Binger, who helps oversee about $330 million.

Macy's shot up 2 percent to $48.34 after the retailer reported higher first-quarter profit and sales, and raised its quarterly dividend 25 percent.

SunPower Corp shares surged 16.2 percent to $22.12 after the maker of solar panels and solar power plants said it expects to post an adjusted profit for the current quarter.

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Southwest Air boosts dividend, revises plane deliveries

Southwest Airlines Co on Wednesday announced a boost in its dividend and its share repurchase program and said it is changing some plane orders and deliveries.

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The discounter said its board boosted the quarterly dividend to 4 cents a share from 1 cent a share, to begin with the payment on June 26 to shareholders of record on June 5.

The company said its share buyback authorization was increased to $1.5 billion from $1 billion.

Southwest also said it plans to buy 10 pre-owned 737-700s airplanes to be delivered in 2014 and 2015, and it made changes to some existing aircraft orders. The carrier said it would be the first customer to take the 7 series of Boeing's upcoming 737 MAX plane in 2019. Southwest has an all-Boeing fleet.

CBS adds Robin Williams to veteran hits in fall TV lineup

Top-rated U.S. broadcast network CBS will bring comedian Robin Williams back to television next season to plug one of the few holes in its primetime schedule.

CBS Corp unveiled eight new series on Wednesday ahead of its upfront presentation in New York, an annual rite when broadcasters try to persuade advertisers to spend billions of dollars in commercials for their new shows.

CBS is riding a stable of megahits, including crime drama "NCIS" and comedies "The Big Bang Theory" and "Two and a Half Men." Last week, the network had five of the six highest-rated programs on broadcast primetime TV, according to Nielsen ratings.

As such, the network is bringing back 20 shows, more than any of its competitors. Chief Executive Les Moonves said CBS has never been so profitable, which helped drive the stock to an all time high on Tuesday.

"The key is getting hits on this network," Moonves told reporters. "Our schedule going into next year is going to be even stronger than it's ever been before."

The Williams vehicle "The Crazy Ones" also stars Sarah Michelle Gellar of "Buffy the Vampire Slayer" fame and is produced by David E. Kelly, best known for shows like "Ally McBeal."

Williams plays an eccentric advertising executive who works alongside his daughter, played by Gellar. The show will air Thursdays at 9 p.m. ET.

Williams rose to fame in the 1970s playing the wildly comic space alien Mork in the hit television show "Mork and Mindy." He later built a successful career in movies performing in comedies, dramas, big Hollywood flicks and low-budget art house films. He won an Oscar in 1998 for his role in "Good Will Hunting" and has been nominated three other times.

NUMBER ONE

CBS, the ratings leader in total viewers, is projected to score the largest uptick in ad rates this upfront season at 6.5 percent, Barclays forecast.

Lifted by February's Super Bowl broadcast, the network also is poised to win the advertiser-coveted 18-to-49 age group for the first time since the 1991-92 season.

Excluding the Super Bowl, though, CBS is facing a year-over-year ratings decline like its competitors Fox and ABC. Without the big game, CBS' same-day ratings for total viewers fell 5.7 percent, according to Nielsen data provided by Horizon Media.

With fewer holes to fill than peers, CBS presented a smaller lineup Wednesday. Other comedies CBS touted were "We Are Men" starring Tony Shalhoub; and "Mom," the latest from hit comedy producer Chuck Lorre.

Action film producer Jerry Bruckheimer is producing "Hostages," a suspenseful drama where Toni Collette plays a surgeon who is held hostage with her family and ordered to assassinate the President.

CBS will present clips of its new shows to advertisers in Carnegie Hall in New York on Wednesday afternoon. CBS shares fell 13 cents to $49.90 in morning trading. CBS shares hit an all-time high of $50.73 on Tuesday, and ended that session up 31 percent this year, in line with rallies for most of its media peers.

JPMorgan, Portugal in talks to resolve swaps tussle-source

The Portuguese government and JP Morgan Chase & Co are attempting to resolve a tussle over potentially costly derivative contracts sold by the U.S. investment bank to state-owned companies.

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One source familiar with the situation, who spoke on condition of anonymity, said talks had begun after both sides threatened legal action over a series of complex hedging products described as "toxic" by Lisbon.

No further information was immediately available.

The row between JP Morgan and Lisbon, which is trying to stem potential losses of up to 3.0 billion euros ($4.0 billion)from complex hedging products sold to companies such as the Lisbon and Porto Metro, echoes similar battles in countries such as Italy as bank clients say they were missold products.

JPMorgan launched a London lawsuit as a "protective measure" after Portugal's cash-strapped government vowed on April 26 to challenge in court swap contracts with JP Morgan and the local unit of Spain's Santander.

Metro firms, alongside other publicly-owned entities, signed derivative contracts between 2003 and 2010 with banks such as Credit Suisse, Deutsche Bank, BBVA and Merrill Lynch to protect against any rise in Euribor-based interest rates.

But rates slumped in the past few years, leaving those companies on the wrong side of the bet.

Treasury Secretary Maria Luiz Albuquerque said last month the government had managed to renegotiate swap contracts containing "highly speculative elements" with some banks, cutting by 20 percent potential liabilities from swaps that could total 3 billion euros.

Officials at Santander did not respond to phone messages or email.

Regulators set September deadline for derivatives deal

Financial regulators have given themselves until September to try to resolve differences over how to supervise derivatives markets in the wake of the financial crisis, a U.S. watchdog said on Wednesday.

Leaders of the Group of 20 economies (G20) pledged in 2009 to make off-exchange traded derivatives like credit default swaps more transparent. They wanted rules in place by the end of 2012, but this has proved difficult to achieve.

The delay is partly because regulators want a common approach to avoid costly overlaps that could distort markets and competition among banks.

"We have an aspirational goal of September for reaching resolution on some of these issues," Brian Bussey, associate director for derivatives policy at the U.S. Securities and Exchange Commission (SEC), told a Chatham House roundtable.

The September deadline coincides with a G20 summit in Russia to review progress on the rules.

The plan is for the $640 trillion derivatives sector, dominated by 16 big banks, to have all trades recorded and cleared by third party clearing houses that are backed by a default fund.

Regulators' focus is on derivatives because of the central role they played in the financial crisis. Lack of transparency created uncertainty over who was exposed when Lehman Brothers and insurer AIG got into trouble.

The United States and the European Union are trying to meet the G20 pledges with domestic rules, such as the U.S. Dodd Frank Act. But there are differences emerging over how far each country can regulate "cross-border."

The SEC and the main U.S. derivatives regulator, the Commodity Futures Trading Commission (CFTC), Mexico and Canada have outlined how they will treat cross-border derivatives.

"Very little is coming out of Europe," Eric Pan, SEC associate director for international affairs, said at the Chatham House event.

Until regulators publish their approaches it will be hard to tackle overlaps that risk distorting competition, Bussey said.

The EU's European Commission executive said it published an outline of its cross-border approach as far back as last August.

"Rather than Europe delaying things, we are actually a year ahead of the United States," Patrick Pearson, the commission official responsible for derivatives, told Reuters.

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Finance ministers from the EU, Asia and Latin America have asked the United States for a flexible approach to derivatives and a response is still awaited, Pearson said.

The SEC is keen for the EU to accept that U.S. rules for clearing houses are "equivalent" to the bloc's rules so clearers like ICE don't face multiple standards.

But Europe has criticised the CFTC for the cross-border reach of its new derivatives rules. As a result, the SEC is trying to broker a compromise by proposing a more accommodative "middle way" welcomed by global regulators.

The SEC's middle way achieves the goal of keeping global derivatives markets open, Anne Wetherilt of the Bank of England's markets division, told a Futures and Options Association seminar on Wednesday, which Bussey and Pan also attended.

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"We need to resolve how (bank) branches are treated differently. If we have our way we would rewrite Dodd Frank," Tom Springbett, a senior official at the UK Financial Conduct Authority told the seminar.

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Angola LNG fire mars latest start-up attempt

Angola's hopes of becoming this year's only major new liquefied natural gas supplier suffered another setback in April after fire occurred at its plant just hours before production was to begin.

This could further delay the troubled project, which is seen as key to relieving a global shortage of the fuel and could help push global LNG prices back towards record highs.

A small electrical fire broke out when a high voltage cable overloaded as operations were about to begin, according to a private report by energy consultants Poten & Partners, seen by Reuters and corroborated by industry sources.

In June 2012, a fire ignited at the site, delaying its opening, which is now 18 months behind schedule.

"Operators were just hours away from making LNG when the incident occurred," the Poten report said of the April 15 fire, adding the overloaded cable was connected to a helper motor linked to a compressor.

Helper motors are used to get the plant's turbines and compressors running during start up. Compressors act like engines, helping cool natural gas to liquid form so it can be put in special tankers for shipping overseas.

Angola LNG, a venture led by U.S. oil major Chevron, declined to comment on the fire, though a spokesman for the project said production is expected to begin by the end of June, as previously announced.

"Angola LNG is currently in the process of testing and restarting the plant in readiness for first LNG," the spokesman said. The plant was originally scheduled to begin in late 2011.

Angola's state-run oil and gas company Sonangol, which has a 22.8 percent stake in the plant, is planning for first LNG to be shipped at any point between May and November, according to the Poten report.

Sonangol did not respond to repeated calls and emails.

It is so far unclear how serious the damage was and how long it will take to fix, though Poten said in the report repairs could be completed within weeks of the incident.

Poten declined to comment on its own report.

Electrical fires are rare, but do occasionally happen when equipment is being used for the first time, experts said, and recovery times can vary depending on what has been affected.

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"Assuming there is not any significant cable damage outside the immediate area, that could be a relatively quick fix," said Jeffrey Beale, president of LNG engineering specialists CH-IV International.

"On the other hand, if they don't have readily available spare parts for that unit, it could be a long time."

The latest incident follows a fire in mid-summer 2012 after a gas heater unit was left running while the gas flow had been turned off, a source briefed by engineers said.

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MARKET AWAITS SUPPLY

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Some LNG traders said the first cargo could come as early as this month, although others are more sceptical.

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The project aims to produce one or two cargoes before shutting down again until August for a full battery of tests, traders briefed by Angola LNG representatives said, putting off commercial production still further.

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"The big thing in the market is this project. It is one of the reasons Asian prices have come down a bit because people are expecting it to start," one LNG market source said.

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Asian prices rose to $20 per million British thermal units (mmBtu) this winter, before slipping to about $14 per mmBtu currently.

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Angola LNG was initially meant to supply the United States when construction began in 2008, but subsequent large increases in U.S. natural gas output has dented import needs and left Angola seeking other buyers.

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Global supplies are however tight and prices have shot to near record highs over the past year as demand increases and output stagnates.

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Angola LNG is seen as a key relief to that shortage.

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The Soyo LNG tanker, which was expected to take on one of Angola's first cargoes for export, entered the facility on April 16 but sailed out of the port again on April 17, two days after the fire and has since left for Spain.

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Other Angola LNG stakeholders include Total, BP and ENI with 13.6 percent each.

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Colombia coal output slides 21.4 pct in 1st qtr - gov't

Colombia, the world's fourth-largest exporter of coal, said on Wednesday it produced 18.4 million tonnes of coal in the first quarter, a drop of 21.4 percent from the same quarter last year, due to labor disputes as well as port and rail disruptions.

Workers at Colombia's top coal miner, Cerrejon, walked off the job for more than a month in February, demanding better wages and benefits. Weeks of tough negotiations led to the signing of a three-year agreement in March, but Cerrejon said it will likely miss its 2013 output goal of 34 million tonnes.

Loading at a coal port controlled by U.S.-based Drummond Ltd , the country's second largest coal miner, was suspended by Colombia's environmental regulator in February after bad weather caused a coal spill from a barge into the water.

"Among the reasons that led to this performance are the stoppage at Cerrejon for 32 days and the suspension on loading ships at Drummond's port for 23 days," the government-run National Mining Agency said in a statement.

Meanwhile, transport on overnight trains at the country's main coal railway was halted for nearly a month over noise concerns.

Data released last week by the country's statistics agency, DANE, showed that the value of coal exports decreased by nearly 45 percent in the first quarter, which contributed to a 9.5 percent drop in the value of total exports for the period.

A drop in exports, as well as shrinking industrial output and retail sales, are expected to drag down economic growth in the first quarter. The Andean economy grew 4 percent in 2012, a slowing down from 6.6 percent the previous year.

ONGOING PROBLEMS

Last year, coal miners were hit by a spate of labor disputes, including a strike at the key coal railway and a walkout at a Glencore-owned mine, as well as delays in environmental permits and a rise in guerrilla attacks.

Coal production last year missed the government's target by nearly 9 million tonnes, even though national output rose 4 percent to 89.2 million tonnes.

The government forecasts this year's coal output at 94 million tonnes.

The majority of Colombia's coal goes to the United States and Europe, but the industry has increasingly looked to diversify into Latin American and Asian markets given the planned shutdown of coal-fired plants in Northern Hemisphere economies.

The country's coal sector is dominated by major producers such as Glencore, Drummond and Cerrejon, which is jointly owned by BHP Billiton Plc, Anglo American Plc and Xstrata Plc. Their output accounted for nearly 80 percent of all the coal produced in Colombia in the first three months of the year.

All major producers are expanding mines and infrastructure, and production is expected to increase to over 100 million tonnes in the coming years.

RPT-UPDATE 4-HSBC may cut 14,000 more jobs as revenue faces pressure

HSBC will redouble its cost-cutting efforts, including axing up to 14,000 more jobs, but Europe's largest bank was forced to soften a key performance target in the face of muted revenue.

London-headquartered HSBC is seeking up to $3 billion in additional annual savings by 2016, on top of $4 billion already achieved, but sluggish growth outside Asia, particularly in Europe, means its target to get costs below 52 percent of revenue has been eased.

The new goal is to keep the ratio near 55 percent, the level it was at in 2010 - the year before Chief Executive Stuart Gulliver took over and kickstarted a radical retrenchment at a bank that was criticised in the past for "planting flags" around the world.

"We're clearly hitting on the costs, but we're missing on the cost efficiency ratio because of revenue, which is hard for us to control," Gulliver told reporters. "Top line growth is clearly a challenge."

He added: "We need to have a cost-efficiency target that's realistic, so we're saying take a look at our peer group, they are all in the high 50s or low 60s, whether it's JPMorgan , Citi, Standard Chartered or Barclays ."

HSBC had a cost efficiency ratio of 63 percent last year, which improved to 53 percent in the first quarter. Banks do not release comparable data, but last year JPMorgan's expenses were 67 percent of revenue, at Citi it was 65 percent, Barclays had an adjusted cost/income ratio of 64 percent and Standard Chartered's normalised cost/income ratio was 54 percent.

Gulliver, former head of HSBC's investment bank, has already cut 46,000 jobs and sold or closed 52 businesses, including a minority stake in Chinese insurer Ping An and its U.S credit cards.

Such deals have reduced its risk-weighted assets by $95 billion and produced gains totalling about $8 billion.

"We're not even halfway through unlocking the value in HSBC. The strategy is not changing, it is working," Gulliver told analysts.

Gulliver said the run-off of its U.S. loan book and legacy investment bank assets would make it difficult for HSBC to meet its goal of a return on equity of over 12 percent this year, but he stuck with that target for the future. He also hardened his goal on capital, aiming for a core capital ratio of more than 10 percent.

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HSBC said it would "progressively grow" its dividends and would introduce a share buyback next year, if investors and regulators give their approval.

That would make it one of the first European banks to buy back shares since the financial crisis. Its aim would be to offset the impact of its scrip or share dividend, which is popular with Hong Kong retail investors but causes dilution for shareholders as more than $2 billion of shares are issued each year.

BIG ISSUE

"They are doing a good job on costs, capital looks good, balance sheet looks good, but the big issue is when does the revenue growth come through?" said Chris Wheeler, analyst with Mediobanca. "The big debate will rage about revenue growth."

Shares in HSBC, the world's third-largest by stock market value after China's ICBC and China Construction Bank , were up 0.9 percent at 753 pence by 1230 GMT against a 1.6 percent rise in the European sector.

The stock has risen around 13 percent since the start of 2011, compared with a 9 percent drop in the sector.

In the face of weak demand in Europe, HSBC plans to increase revenue by focusing on high-return markets in Asia, where it generated around two-thirds of its profit in the first quarter.

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It has scaled back its annual revenue growth targets for its wealth management division by $1 billion to an additional $3 billion, blaming tougher regulations for crimping its ability to sell products in countries such as Britain.

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Gulliver said the bank was unlikely to spend extra cash on any significant acquisition.

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He said the bank could also sell its 8 percent stake in Bank of Shanghai, which he said was likely to be worth between $500 million and $600 million. Its 19 percent stake in Bank of Communications remain core and was it key China associate, he said.

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The bank said this week it could sell its private banking business in Monaco, but its new cost-cutting campaign is set to focus less on disposals and outright closures and more on streamlining processes.

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The bank said employee numbers could fall to between 240,000 and 250,000 by 2016, from 254,000 when current disposals and announced cuts take effect. It did not say where the additional cuts would be made, saying only they would be "spread quite thinly around the world".

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With the banking industry assailed by a new world order of tougher regulation and weak investment returns, HSBC said it needed to take its cue from other sectors that faced major challenges including telecoms and car making.

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In a 83-page presentation for investors, HSBC said there were still significant opportunities to cut costs by simplifying operations, flagging a recent contract it had signed with one vendor to manage its facilities, replacing 1,100 different suppliers it had previously.

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BRIEF-Google says 900 million android devices activated as of now

Google Inc : * Says 900 million android devices activated as of now * Says revenue per user for app developers in Google play store now 2.5 times

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what it was a year ago

Google to face UK lawmakers again over tax

Google Inc faces another grilling over its tax affairs from a committee of British lawmakers on Thursday who have called the company back after questions were raised about testimony given in an earlier hearing.

Corporate tax avoidance has become a major issue in Britain, where there are concerns over rising government debt and accusations from lawmakers that the UK tax authority has adopted a light touch approach to taxing big businesses.

Google's Northern Europe boss, Matt Brittin, was called to testify to the Public Accounts Committee (PAC) in November about Google's low UK tax bill.

From 2006 to 2011, Google generated $18 billion in revenues from the UK, according to statutory filings, and paid just $16 million in taxes.

Brittin told the PAC Google was not taxed on the profits of its core advertising business in Britain, because all UK sales were conducted from Ireland.

Reuters revealed that the Internet search giant had described its London offices on its website as a base for sales teams and advertised dozens of London-based sales vacancies.

Committee chairwoman, Margaret Hodge said the company had questions to answer.

"When Google appeared before the Committee last year we were told they were not selling in the UK. There appears to be a clear discrepancy between that and the evidence that has now been uncovered by Reuters," she said.

"This hearing is their chance to explain themselves."

Google is just one of a raft of companies including Apple Inc., Microsoft, Starbucks and Amazon.com, whose tax affairs have come under scrutiny.

All the companies say they follow international tax rules.

On Wednesday, Amazon.com Inc, which was also called to testify at the November PAC hearing, attracted criticism from politicians over its tax bill for 2012.

Accounts published on Wednesday showed Amazon.co.uk Ltd, Amazon's main UK unit paid $3.7 million of taxes on its 2012 income. Amazon Group had UK sales of $6.5 billion (4 billion pounds) in 2012.

Google's auditor, Ernst & Young, and representatives from the UK tax authority are also being called to answer questions.

Google says 900 mln Android mobile devices activated

Some 900 million smartphones and tablets running Google Inc's Android software have been activated since the platform's inception in 2010, executives said at the company's annual developers' conference on Wednesday.

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Google said revenue from Android, the software used by Samsung and other mobile device makers that competes with Apple Inc, is also gaining momentum. Google executives said revenue per user for Android applications developers is now 2-1/2 times its year-earlier level.

Roughly 5,500 software developers are attending this year's "Google I/O" convention at San Francisco's Moscone Center from Wednesday through Friday.

Swiss stocks lift European shares to fresh heights

European shares scaled new five-year highs on Wednesday, led by gains for several major Swiss stocks after a fresh fall on the Swiss franc that should continue to buoy the country's exporters.

UBS technical analysts said European equity markets may retreat by June, but the majority of traders and investors felt any such pull-back would be short-lived and that European stock markets should continue to rise over the course of 2013.

The pan-European FTSEurofirst 300 index closed up 0.7 percent at 1,245.66 points, its highest level since mid-2008, while the euro zone's blue-chip Euro STOXX 50 index also rose 0.5 percent to 2,809.58 points.

The Swiss SMI index rose 1.5 percent to outperform other European markets, with gains at pharmaceutical groups Novartis and Roche, and food company Nestle adding the most points to the FTSEurofirst 300.

Clarinvest fund manager Ion-Marc Valahu said Swiss companies were benefiting from a fresh fall in the Swiss franc against the euro and U.S. dollar, which would continue to help the country's companies export products.

He added it was difficult to justify bets on a broad-market fall in the current environment, due to rate cuts and injections of liquidity by world central banks which have hit returns on bonds and caused investors to move money over to equities.

"It's tough to go against the flow of money coming from the central banks," he said.

PRICING PROBE HITS OIL STOCKS

The STOXX Europe 600 Oil and Gas Index underperformed with a 0.4 percent fall, as a probe into the industry's pricing of oil impacted companies such as Statoil and Royal Dutch Shell, among others.

UBS' technical analysts said any further gains on European equity markets could be limited in the near-term, after a strong first half of 2013 which has seen the FTSEurofirst 300 rise 10 percent since the start of the year.

However, McLaren Securities managing director Terry Torrison said any pull-back would be a minor one, since the fact that equities were offering better returns than bonds would continue to prop up stock markets.

"Any correction will be very short-lived and very small. It is definitely not a case of 'sell in May and go away'."

BRIEF-Google announces Google play music all access music subscription service

Google Inc : * Announces Google play music all access music subscription service * Says new music service will cost $9.99 a month in US

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Shoppers Drug Mart sells C$500 mln notes in 2 parts - term sheet

Shoppers Drug Mart Corp on Wednesday sold C$500 million ($490 million) of senior unsecured medium-term notes in two parts, according to a term sheet seen by Reuters.

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The sale included C$225 million ($221 million) of notes due May 24, 2016. The 2.01 percent notes were priced at 99.980 to yield 2.017 percent, or 79.7 basis points over the Canadian government benchmark, according to the term sheet.

It also included C$275 million ($270 million) of notes due May 24, 2018. The 2.36 percent notes were priced at 99.962 to yield 2.368 percent, or 94.8 basis points over the Canadian government benchmark.

The joint book-running managers on the sale were the investment dealer arms of Royal Bank of Canada, Bank of Nova Scotia, Canadian Imperial Bank of Commerce and Toronto-Dominion Bank.

US STOCKS-Dow, S&P 500 at new highs again as rally keeps rolling

U.S. stocks climbed on Wednesday, with the Dow and S&P 500 hitting new all-time highs as the market's recent upward momentum persisted and offset some weak economic data.

The S&P 500 and the Nasdaq have risen for four straight sessions, extending their gains for the year. Equities have rallied in recent weeks as investors bet that central bank stimulus measures will keep supporting market gains.

Such policies have helped spur advances of about 15 percent in major indexes this year despite data showing some signs of lackluster growth.

In the latest reads on the economy, activity in New York state's manufacturing sector unexpectedly contracted in May, falling to minus 1.43 from 3.05, below expectations for an increase to 4. Another report showed that U.S. industrial production fell 0.5 percent in April, more than expected.

"It's disconcerting that the data was so much lower than what we were looking for, but there's no reason for investors to sell," said Michael Binger, senior portfolio manager at Gradient Investments in Minneapolis. "The main things driving the market - the Fed, earnings, consumer confidence - are holding up, and people put money in the market on any down day. I still see a lot of value."

Agilent Tech was one of the S&P 500's top percentage gainers a day after the company posted adjusted earnings that beat expectations and doubled its stock-buyback program to $1 billion. The company also said it would cut 2 percent of its global work force. Shares rose 4 percent to $45.73.

Tech shares also got a lift from Netflix Inc, up 3.9 percent at $243, and Yahoo Inc, up 3.7 percent at $27.64. In contrast, Computer Sciences Corp was the S&P 500's biggest loser, dropping 10 percent to $44.39 after reporting results.

The Dow Jones industrial average shot up 82.37 points, or 0.54 percent, to 15,297.62. The Standard & Poor's 500 Index gained 10.90 points, or 0.66 percent, to 1,661.24. The Nasdaq Composite Index advanced 12.09 points, or 0.35 percent, to 3,474.70.

During the session, the Dow touched an all-time intraday high at 15,301.34, while the S&P 500 reached a record intraday peak at 1,661.49.

The Nasdaq hit a fresh 52-week high at 3,475.48.

Deere & Co fell 4.6 percent to $89.48 after the farm equipment maker gave a cautious outlook, though earnings were stronger than expected.

In other data released on Wednesday, the U.S. Producer Price Index recorded its largest drop in three years in April, falling a seasonally adjusted 0.7 percent.

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The NAHB/Wells Fargo Housing Market index rose to 44 from a downwardly revised 41 in April, according to data from the National Association of Home Builders. The May reading was above forecasts and closer to the 50 mark, which indicates builders see market conditions in a more favorable light.

An improving housing market has been seen as a tailwind to the economic recovery.

Crude oil was volatile, rebounding from a drop of almost 2 percent to trade flat on the day. Oil has dropped for five straight sessions, pressured by weakness in Europe, as well as a stronger dollar and rising U.S. stockpiles.

Among energy companies, Marathon Oil fell 0.8 percent to $35.11 and Cliffs Natural Resources lost 3.1 percent to $21.46.

Macy's shot up 2.7 percent to $48.66 after the retailer reported higher first-quarter profit and sales, and raised its quarterly dividend 25 percent.

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SunPower Corp shares surged 15.1 percent to $21.90 after the maker of solar panels and solar power plants said it expects to post an adjusted profit for the current quarter.

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UPDATE 1-EU regulators to investigate Spanish aid for Ford

EU antitrust regulators are investigating whether Spain's plan to offer a 25.2 million euros ($32.71 million) grant to Ford Motor Co's plant will give the U.S. carmaker an unfair advantage.

Ford is overhauling its European operations by cutting jobs and closing plants in Belgium and two British locations, as the economic downturn dampens consumer appetite for new cars and trucks.

The company, which holds about 8 percent of the European market, expects to lose $2 billion in Europe this year. The sector in general is struggling with over-capacity.

Ford plans to produce a new model of Ford Transit Connect in Valencia in the east of Spain, with the cost of the project estimated at 419.9 million euros. Spain informed the European Commission of its grant last year.

The European Commission said on Wednesday that a preliminary investigation showed that the project might exceed the authorised 5 percent increase in production capacity in a declining market.

"At this stage, the Commission has doubts that the data provided by Spain is appropriate to determine whether the market concerned is in decline," it said in a statement.

EU state aid rules allow EU governments to fund projects on condition certain market share and capacity increase thresholds are not exceeded.

Spain won EU approval for about 214 million euros in regional aid for Ford's Spanish subsidiary since 2007.

"We firmly believe that our state aid request for the Ford Transit Connect is line with EU law. We will work with the Spanish government and the EU Commission to clarify the situation," said Ford's spokesman Adrian Schmitz.

UPDATE 1-LulzSec hackers "at cutting edge" of cyber crime, court told

Four British hackers who took part in 2011 cyber-attacks on targets ranging from the CIA to Sony were audacious, arrogant men whose motivation was "anarchic self-amusement", a court heard on Wednesday.

The men, who have pleaded guilty to a variety of offences, were members of the hacking collective LulzSec, which caused millions of dollars of damage to corporate and government computer networks during an online crime spree that they boasted about on Twitter.

"They are at the cutting edge of a contemporary, emerging species of international criminal offending known as cyber crime," prosecutor Sandip Patel told a London court at the start of the men's sentencing hearing.

Among other attacks, the men hacked into Pentagon computers, crashed the CIA's website, stole millions of items of private individuals' data such as passwords and user names from companies including Fox and Sony and posted them online on sites such as Pirate Bay.

"LulzSec saw themselves as latter-day pirates," Patel said, who described them as being motivated by "anarchic self-amusement".

Their exploits, as they described them, also included hacking into News International's computer system to post a fake story, purporting to be from the Sun tabloid, announcing that owner Rupert Murdoch had committed suicide.

Ryan Cleary, 21, whose online moniker was ViraL, had constructed an illegal network of computers known as a "botnet" through which he was covertly in control of up to 100,000 computers at a time.

Cleary, who has pleaded guilty to six charges relating to computer misuse, provided the botnet to other hackers so they could attack websites by flooding them with traffic.

Cleary, who has Asperger's syndrome, became obsessed with computers during a childhood and adolescence spent alone in his bedroom without friends, his lawyer John Cooper told the court.

"CHAIN OF EVENTS"

In addition to the hacking offences, Cleary has pleaded guilty to charges of downloading pornographic images of babies and children, including rape scenes.

Cooper said he was "not some career sexual pervert" but rather that the images were also part of his compulsive behaviour, driven by Asperger's.

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"He was obsessed with his computer and with what he could find on his computer," the lawyer said.

In the dock alongside Cleary were Ryan Ackroyd, 26; Mustafa Al-Bassam, 18, and Jake Davis, 20. In their hacker days, they were known as Kayla, tFlow and Topiary, respectively.

The court heard that Davis, who has pleaded guilty to two counts, had become a reclusive Internet obsessive during an isolated childhood marked by several tragic deaths in the remote Shetland Islands off the coast of Scotland.

"Without friends, he sought companionship in cyberspace, a world that is artificial and potentially corrosive. He was sucked into a chain of events," said Davis's lawyer, Simon Mayo.

Lawyers for Ackroyd and Bassam, who have pleaded guilty to one and two counts respectively, will address the court about mitigating factors regarding those two defendants on Thursday, after which judge is expected to pass sentence on the four.

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Patel said LulzSec was a splinter group that had evolved out of Anonymous, a bigger, shapeless "hacktivist" collective, but that LulzSec lacked the libertarian political agenda of Anonymous.

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The name LulzSec is a combination of "lulz", a distortion of the commonly used "LOL" or "laugh out loud", and security.

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The alleged ringleader of LulzSec was U.S.-based Hector Xavier Monsegur, known as "Sabu", who was arrested in June 2011 but agreed to cooperate, maintaining his online persona for a time and leading the FBI to other members of the group.

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UPDATE 3-Macy's profit, sales rise even as some shoppers pull back

Macy's Inc reported higher first-quarter profit and sales on Wednesday as it won market share from rival department stores.

Its shares were up 2.8 percent to $48.72 in early-afternoon trading, hitting a record high.

The retailer, which operates the Macy's and high-end Bloomingdale's chains, said comparable sales rose 3.8 percent in the quarter, a slightly below Wall Street expectations. Overall sales were in line with expectations, according to Thomson Reuters I/B/E/S, up 4 percent to $6.39 billion.

Macy's has benefited from large investments in technology in recent years, which have allowed it to use hundreds of its stores to deliver orders placed online, fueling its e-commerce and giving it an edge over many department store rivals.

It has also gotten a bump from a sharp sales decline at rival J.C. Penney Co Inc and a middling performance at Kohl's Corp.

"I do think these guys (Macy's) continue to take share from the J.C. Penneys of this world and the Kohl's of the world," Edward Jones analyst Brian Yarbrough told Reuters.

Many U.S. shoppers, especially those with lower incomes, proved to be cautious earlier this year amid concerns about sharp cuts in government spending and a wobbly job market.

"We are seeing some weakness among our more budget-conscious, what we call deal-hunting customers," Macy's Chief Financial Officer Karen Hoguet told analysts on a conference call.

Penney last week reported same-store sales fell 16.6 percent in the first quarter, still feeling the effects of the company's decision last year to eliminate most discounting, a strategy it has since dropped. Kohl's is expected to report a 0.1 percent decrease in same-store sales when it posts results on Thursday.

Among department store operators, analysts expect only Nordstrom Inc to outperform Macy's in the first quarter.

Macy's merchandise inventory levels were up 3 percent at the end of the quarter, roughly in line with expected sales gains, lowering the potential damage to profit if Macy's has to discount more than expected because shoppers pull back.

Hoguet said women's clothing and apparel aimed at teenagers and young adults were among the company's slowest businesses, while handbags and menswear were top performers.

Macy's posted net income of $217 million, or 55 cents share, for the quarter that ended May 4, up from $181 million, or 43 cents per share, a year earlier, and topping analysts' average forecast by 2 cents.

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Despite the higher-than-expected profit, Macy's left its full-year earnings forecast unchanged at $3.90 to $3.95 a share on a same-store sales rise of 3.5 percent.

The company boosted its quarterly dividend to 25 cents a share from 20 cents and increased its share repurchase authorization by $1.5 billion.

UPDATE 3-EU warns China it is ready to launch telecoms dispute

The European Commission has told China it is prepared to launch an investigation into anti-competitive behaviour by producers of mobile telecoms equipment, opening a new front in a multi-billion-euro trade offensive against a critical partner.

European Trade Commissioner Karel De Gucht said he and fellow commissioners had agreed in principle to open an anti-dumping and anti-subsidy case against China, but would first seek to negotiate a solution with Chinese authorities.

"The clock is ticking. We have had an open-door policy for negotiations with our Chinese partners for approximately one year now and we hope that the Chinese authorities step forward and engage with us in a serious manner," De Gucht's spokesman told a news briefing on Wednesday.

While no companies were named in the statement from De Gucht, officials have in the past said Huawei and ZTE Corp, the world's second- and fifth-largest telecoms equipment makers, were the objects of their concern.

In a statement, Huawei said it was disappointed the Commission had taken the unprecedented step of threatening to launch a case on its own initiative, rather than based on complaints from European companies.

It also dismissed the allegation that it was selling telecoms equipment below cost to secure market share.

"Huawei is confident that these unfounded accusations can be addressed and amicable solutions can be found," it said.

"Regrettably, to date the Commission has not responded to Huawei's requests for meetings and has relied upon unsubstantiated and incorrect information."

ERICSSON OPPOSES MOVE

The Commission's move, which is not supported by all member states or by Sweden's Ericsson, the global industry leader, runs the risk of sparking a trade conflict with China.

The European Union is China's most important trading partner, while for the EU, China is second only to the United States. Chinese exports of goods to the 27-member bloc totalled 290 billion euros ($376 billion) last year, with 144 billion euros going the other way.

The EU now has 31 ongoing trade investigations, 18 of them involving China. The largest to date is that into 21 billion euros of imports from China of solar panels, cells and wafers, for which it is set to impose punitive duties.

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While European manufacturers such as Ericsson, Nokia Siemens Networks and Alcatel-Lucent have suffered as a result of cheap Asian imports, they are not prepared to make a formal complaint for fear of Chinese reprisals, which has made it hard for the Commission to gather evidence.

The EU said that by launching a case on its own initiative - known as an ex-officio case - it would provide a degree of protection for EU companies too concerned to step forward.

Chinese telecoms operators will start awarding contracts for super-fast mobile networks this year, expected to give a big boost to both Huawei and ZTE.

China exports network equipment, base stations and connections used by telecoms providers to transmit voice and data messages worth more than 1 billion euros a year to the European Union, giving it almost a quarter of the market.

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The investigation is not into end-user devices such as telephones and modems but into interconnecting equipment.

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Ericsson, the global leader with around 35 percent of the mobile equipment market, said it opposed the Commission move.

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"Ericsson is a strong supporter of free trade," said Ulf Pehrsson, Ericsson's head of government and industry relations. "We don't believe in this type of unilateral measure."

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