Senate to scrutinize FAA's approval of Dreamliner battery

A key U.S. Senate committee will hold a hearing in coming weeks to examine U.S. aviation safety oversight and the Federal Aviation Administration's decision to allow Boeing Co to use highly flammable lithium-ion batteries on board its new 787 Dreamliner, a congressional aide said on Tuesday.

U.S., Japanese and French authorities are investigating two separate cases in which lithium-ion batteries on board the new airliner failed. One of the batteries sparked a fire in a parked plane in Boston, while the other forced an emergency landing in Japan.

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As a result, authorities around the world last week grounded all 50 Boeing 787s.

The Dreamliner, with a list price of $207 million, is the world's newest airliner, a lightweight, advanced carbon-composite design that has more electrical power than any other aircraft and uses 20 percent less fuel.

"Certainly the issues of FAA certification will be a key component of the aviation safety oversight hearing we're planning," an aide to the Senate Commerce, Science and Transportation Committee told Reuters in an email.

The aide, who was not authorized to speak publicly, said committee chairman Senator John Rockefeller was "following the situation surrounding the Dreamliner and FAA's task force closely and he thinks the FAA and (Department of Transportation)are examining the issue carefully."

The House Transportation and Infrastructure Committee is also keeping a close eye on the 787 investigations and the issue of FAA oversight, congressional aides said, although no formal hearings were planned at this point.

Boeing officials have briefed both oversight committees and other key lawmakers about the matter, a Boeing spokesman said.

The Senate committee had already been planning to conduct "substantial and aggressive oversight" of aviation safety during the first quarter, but would now look closely at the 787 incidents and FAA oversight as part of that process, the committee aide said.

Problems with the 787's lithium-ion battery have sparked questions about why the FAA in 2007 granted Boeing a "special condition" to allow use of the batteries on the plane, despite the fact that they are highly flammable and hard to extinguish if they catch fire.

Boeing designed a special system that was supposed to contain any such fire and vent toxic gasses outside the plane, but the two recent incidents have raised questions about whether that was a good decision.

It remains unclear what caused the batteries to fail, but when it announced plans to ground U.S.-based 787s, the FAA said both battery failures released flammable chemicals, heat damage and smoke - all of which could affect critical systems on the plane and spark a fire in the electrical compartment.

The FAA has said it will keep the 787s grounded until airlines demonstrate that the battery system is safe and complies with safety regulations.
 

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Cameron promises Britons straight choice on EU exit

LONDON (Reuters) - Prime Minister David Cameron promised on Wednesday to give Britons a referendum choice on whether to stay in the European Union or leave if he wins an election in 2015, placing a question mark over Britain's membership for years.

Cameron ended months of speculation by announcing in a speech the plan for a vote sometime between 2015 and the end of 2017, shrugging off warnings that this could imperil Britain's economic prospects and alienate its biggest trading partner.

He said the island nation, which joined the EU's precursor European Economic Community 40 years ago, did not want to retreat from the world, but public disillusionment with the EU was at "an all-time high".

"It is time for the British people to have their say. It is time for us to settle this question about Britain and Europe," Cameron said. His Conservative party will campaign for the 2015 election promising to renegotiate Britain's EU membership.

"When we have negotiated that new settlement, we will give the British people a referendum with a very simple in or out choice to stay in the European Union on these new terms; or come out altogether. It will be an in-out referendum."

The speech firmly ties Cameron to an issue that was the bane of a generation of Conservative leaders. In the past, he has avoided partisan fights over Europe, the undoing of the last two Conservative prime ministers, John Major and Margaret Thatcher.

Britain would seek to claw back powers from Brussels, he said, a proposal that will be difficult to sell to other European countries. London will do an "audit" to determine which powers Brussels has that should be delegated to member states.

Sterling fell to its lowest in nearly five months against the dollar on Wednesday as Cameron was speaking.

The response from EU partners was predictably frosty. French Foreign Minister Laurent Fabius quipped: "If Britain wants to leave Europe we will roll out the red carpet for you," echoing Cameron himself, who once used the same words to invite rich Frenchmen alienated by high taxes to move to Britain.

German Foreign Minister Guido Westerwelle said his country wanted Britain to remain a full EU member, but London could not expect to pick and choose the aspects of membership it liked.

Business leaders have warned that the prospect of years of doubt over Britain's EU membership would damage the investment climate.

"Having a referendum creates more uncertainty and we don't need that," Martin Sorrell, chief executive of advertising giant WPP, told the World Economic Forum in Davos.

"This is a political decision. This is not an economic decision. This isn't good news. You added another reason why people will postpone investment decisions."

The speech also opens a rift with Cameron's junior coalition partners, the Liberal Democrats. Their leader, Deputy Prime Minister Nick Clegg, said the plan would undermine a fragile economic recovery.

And even allies further afield are wary: the United States has said it wants Britain to remain inside the EU with "a strong voice".

EUROSCEPTICS THRILLED

Cameron has been pushed into taking such a strong position in part by the rise of the UK Independence Party, which favors complete withdrawal from the EU and has climbed to third in opinion polls, mainly at the expense of the Conservatives.

"All he's trying to do is to kick the can down the road and to try and get UKIP off his back," said UKIP leader Nigel Farage.

Eurosceptics in Cameron's party were thrilled by the speech. Conservative lawmaker Peter Bone called it "a terrific victory" that would unify 98 percent of the party. "He's the first prime minister to say he wants to bring back powers from Brussels," Bone told Reuters. "It's pretty powerful stuff".

Whether Cameron will ever hold the referendum remains as uncertain as the Conservatives' chances of winning the next election in 2015.

They trail the opposition Labour party in opinion polls, and the coalition government is grappling with a stagnating economy as it pushes through public spending cuts to reduce Britain's large budget deficit.

Cameron said he would prefer Britain, the world's sixth biggest economy, to remain inside the 27-nation EU. As long as he secured the reforms he wants, he would campaign for Britain to stay inside the EU "with all my heart and soul".

But he also made clear he believed the EU must be radically reformed. It was riskier to maintain the status quo than to change, he said.

"The biggest danger to the European Union comes not from those who advocate change, but from those who denounce new thinking as heresy," he said.

"WAFER THIN" CONSENT

The euro zone debt crisis was forcing the bloc to change, and Britain would fight to make sure new rules were fair to countries that didn't use the common currency, he said. Britain is the largest of the 10 EU members that do not use the euro.

Democratic consent for the EU in Britain was now "wafer thin", he said, reflecting the results of opinion polls that show a slim majority would vote to leave the bloc.

"Some people say that to point this out is irresponsible, creates uncertainty for business and puts a question mark over Britain's place in the European Union," said Cameron. "But the question mark is already there: ignoring it won't make it go away."

Asked after the speech whether other EU countries would agree to renegotiate Britain's membership, Cameron said he was an optimist and that there was "every chance of success."

"I want to be the prime minister who confronts and gets the right answer for Britain on these kind of issues," he said.

It is nearly 40 years since British voters last had a say in a referendum on Britain's membership of the European club. A 1975 vote saw just over 67 percent opt to stay inside with nearly 33 percent wanting to leave.

(Additional reporting by Paul Taylor in Davos and Alexandra Hudson in Berlin; Editing by Guy Faulconbridge and Peter Graff)

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Stock futures flat at five-year highs, investors await earnings

NEW YORK (Reuters) - Stock index futures were flat on Tuesday as investors held back from making large bets ahead of an onslaught of corporate earnings and after recently notching five-year highs.

Both the Dow and S&P 500 closed at their highest levels the earnings season. U.S. markets were closed on Monday for a public holiday.

Despite stronger-than-expected earnings results from major companies, including big banks, at the start of the quarterly reporting season, many investors are worried that other reports will reflect economic uncertainty in the fourth quarter.

"The market has been pleased with earnings thus far, and it is encouraging to see a cyclical company like DuPont show revenue strength, but I'm waiting on more tech and energy earnings until I come down one way or the other on this season," said Adam Sarhan, chief executive of Sarhan Capital in New York.

posted a steep drop in earnings on reduced demand for paint pigment, though revenue was ahead of expectations.

Verizon Communications Inc fell 1.1 percent to $42.06 in premarket trading after reporting a steep loss due to pension liabilities and charges related to superstorm Sandy that offset strength in its wireless business. Travelers Cos Inc also posted earnings that were hurt by losses related to Sandy.

DuPont, Verizon and Travelers are all Dow components, as is Johnson & Johnson , slated to report later Tuesday along with Google Inc and Texas Instruments . Tech earnings will be in particular focus after Intel Corp last week gave a revenue outlook that was below expectations.

Overall, S&P 500 fourth-quarter earnings are forecast to have risen 2.5 percent, according to Thomson Reuters data. That estimate is above the 1.9 percent forecast from a week ago but well below the 9.9 percent fourth-quarter earnings forecast from October 1, the data showed.

S&P 500 futures rose 0.3 point but remained below fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures fell 8 points and Nasdaq 100 futures rose 5 points.

Monday was a market holiday for Martin Luther King Day in the United States, and also marked the start of a second term for President Barack Obama, who called for aggressive action on climate change, economic equality and the federal budget.

"It remains a question whether Obama will be able to deliver on his agenda, but a sector like solar power companies could continue to be strong as he pushes for action," Sarhan said.

Markets have recently been pressured by uncertainty stemming from Washington about the federal debt limit and spending cuts that could hamper U.S. growth.

Republican leaders in the House of Representatives said they aim to pass on Wednesday a nearly four-month extension of the U.S. debt limit, allowing the government to borrow enough to meet its obligations during that period.

U.S. shares of Research in Motion jumped 8.9 percent to $17.25 in premarket trading after its chief executive said the company may consider strategic alliances with other companies after the launch of devices powered by RIM's new BlackBerry 10 operating system.

The Dow and S&P 500 closed at five-year highs on Friday as the market registered a third straight week of gains on a solid start to the quarterly earnings season, including from Morgan Stanley and General Electric Co .

(Editing by Chizu Nomiyama)

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Democrats, environmentalists hail Obama’s focus on climate, but warn about Canada pipeline

WASHINGTON – Environmental groups hailed President Barack Obama’s warning about climate change, but said the president’s words will soon be tested as he decides whether to approve the Keystone XL oil pipeline from Canada to the Gulf Coast.

Obama pledged in his inaugural speech Monday to respond to what he called the threat of climate change, saying that “failure to do so would betray our children and future generations.”

By singling out climate change, Obama indicated a willingness to take on an issue that he acknowledges was often overlooked during his first term. He also was setting up a likely confrontation with congressional Republicans who have opposed legislative efforts to curb global warming.

Democratic Sen. Barbara Boxer, chairwoman of the Senate Environment and Public Works Committee, called Obama’s comments on climate change “exactly right.”

Andrew Hoffman, director of the Erb Institute for Global Sustainable Enterprise at the University of Michigan, said Obama’s focus on climate showed political backbone.

“He finally had the courage to acknowledge the words ‘climate change,’” Hoffman said, adding that Obama and other administration officials have frequently used words such as green jobs or clean energy to describe energy policy, instead of the more politically charged term climate change.

“So I find it very interesting that in this second term he’s just coming right out and saying that climate change is exactly what we’re dealing with,” Hoffman said.

Obama, in his address, said some people “may still deny the overwhelming judgment of science” that global warming exists and has human causes, “but none can avoid the devastating impact of raging fires and crippling drought and more powerful storms.”

The president has pledged to boost renewable energy sources such as wind and solar power, along with more traditional energy sources such as coal, oil and natural gas.

“The path toward sustainable energy sources will be long and sometimes difficult. But America cannot resist this transition. We must lead it,” Obama said.

He said developing new energy technologies will lead to jobs and new industries. “That is how we will preserve our planet,” he said.

Environmental groups said the president’s first test on climate change could come early this year as he decides whether to approve the Keystone XL oil pipeline that will carry tar sands oil from Alberta, Canada, to Texas.

Obama blocked the pipeline last year, citing uncertainty over the project’s route through environmentally sensitive land in Nebraska. The State Department has federal jurisdiction because the $ 7 billion pipeline begins in Canada.

Republicans and many business groups say the project would help achieve energy independence for North America and create thousands of jobs.

But environmental groups say the pipeline would transport “dirty oil” and produce heat-trapping gases that contribute to global warming. They also worry about a possible spill.

“Starting with rejecting the Keystone XL pipeline, the president must make fighting global warming a central priority,” said Margie Alt, executive director of Environment America.

Alden Meyer, director of strategy and policy at the Union of Concerned Scientists, said Obama’s “clarion call to action” on climate change “leaves no doubt this will be a priority in his second term.”

After Superstorm Sandy and other extreme weather events, there has been more political momentum than ever to address climate change, Meyer said.

“With presidential leadership, that shift will continue and deepen over the next four years, and meaningful progress on climate change will become an important part of Barack Obama’s legacy as president,” he said.

Alt and other environmental leaders said they are counting on Obama to set tough limits on carbon pollution from coal-fired power plants and to continue federal investments in renewable energy sources such as wind and solar power.

Obama tried and failed in his first term to get a climate change bill through Congress. Some Democratic lawmakers and environmentalists have pushed for a tax on carbon pollution, but White House officials say they have no plan to propose one.

Scott Segal, an energy lobbyist who represents utilities and natural gas drillers, said Obama “missed the opportunity to remind listeners that climate change is an international phenomenon” that will require international solutions.

By imposing “inflexible” national policies to curb climate change, Obama could restrain the U.S. economy without delivering promised solutions, Segal said.

___

Follow Matthew Daly on Twitter: https://twitter.com/MatthewDaly

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Defterios: What keeps Davos relevant

STORY HIGHLIGHTS

• Since the late 20th Century, the ski resort of Davos has been synonymous with the World Economic Forum


• Defterios: I first came to Davos as a relatively junior correspondent, two months after the Berlin Wall fell


• Fall of Communism, China's opening, removal of apartheid in South Africa unfolded in the 90s
  
  


• It's the inter-play between geo-politics and business is what keeps the forum relevant

Davos (CNN) -- Veterans of Davos often refer to nature's awe-inspiring work as the Magic Mountain.

The name comes from an early 20th century novel by Thomas Mann -- reflecting on life in an alpine health retreat, and the mystery of time in this breath-taking setting.

Read more from John Defterios: Why Egypt's transition is so painful

Since the late 20th century, this ski resort has been synonymous with the World Economic Forum, which represents networking on its grandest scale.

This year nearly 40 world leaders -- a record for this annual meeting -- 2000 plus executives and it seems an equal number of people in the media, like yours truly, are in pursuit of them all. The setting is certainly more chaotic then a decade ago. The agendas of the Fortune 500 chief executives are to filled with bi-lateral meetings and back door briefings to allow for the spontaneity that made this venue unique.

Davos gets ready for leaders' gathering

HIDE CAPTION

I first came to Davos as a relatively junior correspondent in 1990, two months after the fall of the Berlin Wall. It was arguably then, after nearly two decades in the conference business, when the forum became a fixture on the global calendar.

Quest: U.S. economy to dominate Davos 2013

I can remember, quite vividly, working out of a bunker (like we do today) in the Davos Congress Centre. West German Chancellor Helmut Kohl sat side-by-side with his East German counterpart Hans Modrow. That meeting before the global community helped set the stage for monetary union, a huge unification fund for what became Eastern Germany and shortly thereafter German elections.

The early 90s at Davos were dominated by European reconstruction after the fall of communism. Former party bosses came to the forum to convince business leaders that a transition to market economics could be delivered. Boris Yeltsin made his Davos appearance during that chaotic transition from the USSR to today's Russia.

Davos 2013: New year, same old problems?

In 1992, Chinese Premier Li Peng used the setting here in the Alps to articulate plans for the country's economic opening up to the world. Not by chance, the architect of Washington's engagement with Beijing, the former U.S. Secretary of State Henry Kissinger also took a high profile that year.

Again only two years later in 1994, Yasser Arafat and Shimon Peres walked hand in hand on stage, holding a public dialogue leading up to the creation and recognition of the Palestinian Authority.

The World Economic Forum, as the saying goes, was positioned to be in the right place at the right time. While the author of the Magic Mountain talked about the complexity of time around World War I, in the 1990s time was compressed here.

The fall of communism, the lowering of global trade barriers, the opening up of China, the removal of apartheid in South Africa and the proliferation of the internet all unfolded in that decade.

Interactive: How's your economic mood?

As those events came together, so too did the major players as they made the journey to Davos. Michael Bloomberg, evolving as a global name in financial data and now the Mayor of New York City, sat alongside Microsoft CEO Bill Gates. U.S. President Bill Clinton outlined his party's historic move to the political center before a packed audience of global business executives.

To spice things up, rock stars and actors, as they became activists, chose the Davos platform: Bono, Richard Gere, Sharon Stone, Brad and Angelina would have the wealthiest and most powerful corporate titans freeze in their tracks.

Earlier this week, I walked into the main plenary hall as workers put the final touches on the stage and lighting. It is a venue which has welcomed countless political leaders and business executives, during internet booms and banking busts, in the midst of a Middle East crisis and even during the lead up to two Gulf Wars.

But that inter-play between geo-politics and business -- during the best and worst of times -- is what keeps the forum relevant. It allows this setting at the base of the Magic Mountain to endure and recreate something unique during what Mann rightly described as the ongoing complexity of our times.

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Body of cyanide-poisoned lottery winner is reburied

Mohammed Zaman on the exhumation of his brother-in-law, poisoned lottery winner Urooj Khan. (Posted on: Jan. 21, 2013.)

The body of a West Rogers Park man who died of cyanide poisoning last summer after winning a million-dollar lottery was laid to rest again Monday, three days after his remains were exhumed for an autopsy as part of a homicide investigation.

The scene at Rosehill Cemetery on Monday afternoon was in sharp contrast to Friday morning, when a throng of reporters and TV cameramen had massed outside an entrance gate as numerous Chicago police, Cook County medical examiner officials and cemetery workers surrounded the gravesite while Urooj Khan's remains were unearthed.

About half a dozen people — two in light blue coveralls — wheeled a gurney carrying Khan's body Monday from the back of an unmarked white minivan to under a tent at his gravesite in the Far North Side cemetery. The body was then lowered into the ground while two of Khan's relatives stood at the gravesite in the bitter cold.

Haroon Firdausi, a funeral director and imam, gave a brief prayer during the reburial.

The entire reburial took about 20 minutes.

Shortly before the reburial, one of Khan's relatives, Mohammed Zaman, talked briefly at the cemetery about the family's discomfort with his body being exhumed for the police investigation.

"The sad part is that he wasn't resting in peace," Zaman said of the exhumation. "... Now we have to bury him back again. For any religion, it's hard."

As the Tribune first revealed earlier this month, the medical examiner's office initially ruled that Khan's death in July was from hardening of the arteries, after no signs of trauma were found on the body and a preliminary blood test did not raise any questions. But the investigation was reopened about a week later after a relative raised concerns that Khan may have been poisoned.

Chicago police were notified in September after tests showed cyanide in Khan's blood. By late November, more comprehensive testing showed lethal levels of the toxic chemical, leading the medical examiner's office to declare the death a homicide.

After Khan's body was exhumed Friday, an autopsy was performed for evidence that could aid in the homicide investigation. At the time, Chief Medical Examiner Stephen Cina said it could take several weeks for the tests to be completed. The medical examiner's office hopes samples taken from Khan's organs will show whether he ingested or inhaled the cyanide.

Although a motive has not been determined, police have not ruled out that Khan was killed because of his lottery win a few weeks before his death, a law enforcement source has told the Tribune. At the time of his death, he hadn't collected his winnings — a lump-sum payment of about $425,000 after taxes.

Zaman said he hopes the autopsy sheds more light on his brother-in-law's death.

"It's very hard for the family," Zaman said of the exhumation and reburial. "But it's the only way to find out what happened to him."

jgorner@tribune.com

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Israel goes to polls, set to re-elect Netanyahu

JERUSALEM (Reuters) - Israelis voted on Tuesday in an election that is expected to see Prime Minister Benjamin Netanyahu win a third term in office, pushing the Jewish state further to the right, away from peace with the Palestinians and towards a showdown with Iran.

However, Netanyahu's own Likud party, running alongside the ultra-nationalist Yisrael Beitenu group, looks set to have fewer seats than in the previous parliament, with opinion polls showing a surge in support for the far-right Jewish Home party.

Political sources said Netanyahu, concerned by his apparent fall in popularity, might approach centre-left parties after the vote in an effort to broaden his coalition and present a more moderate face to Washington and other concerned allies.

"We want Israel to succeed, we vote Likud-Beitenu ... The bigger it is, the more Israel will succeed," Netanyahu said after casting his ballot alongside his wife and two sons.

Some 5.66 million Israelis are eligible to vote, with polling stations closing at 10 p.m. (2000 GMT). Full results are due by Wednesday morning, opening the way for coalition talks that could take several weeks.

The lackluster election campaign failed to focus on any single issue and with a Netanyahu victory predicted by every opinion poll, the two main political blocs seemed to spend more time on internal feuding than confronting each other.

"There is a king sitting on the throne in Israel and I wanted to dethrone him, but it looks like that won't happen," said Yehudit Shimshi, a retired teacher voting in central Israel, on a bright, hot mid-winter morning.

No Israeli party has ever secured an absolute majority, meaning that Netanyahu, who says that dealing with Iran's nuclear ambitions is his top priority, will have to bring various allies onboard to control the 120-seat Knesset.

The former commando has traditionally looked to religious, conservative parties for backing and is widely expected to seek out the surprise star of the campaign, self-made millionaire Naftali Bennett who heads the Jewish Home party.

Bennett has ruled out any peace pact with the Palestinians and calls for the annexation of much of the occupied West Bank.

His youthful dynamism has struck a chord amongst Israelis, most of whom no longer believe in the possibility of a Palestinian deal, and has eroded Netanyahu's support base.

The Likud has also shifted further right in recent months, with hardline candidates who reject the so-called two-state solution, dominating the top of the party list.

"TRENDY PARTIES"

Surveys suggest Bennett may take up to 14 seats, many at the expense of Likud-Beitenu, which was projected to win 32 in the last round of opinion polls published on Friday -- 10 less than the two parties won in 2009 when they ran separate lists.

Acknowledging the threat, Netanyahu's son Yair urged young Israelis not to abandon the old, established Likud.

"Even if there are more trendy parties, there is one party that has a proven record," he said on Tuesday.

Amongst the new parties standing for the first time in an election were Yesh Atid (There is a Future), a centrist group led by former television host Yair Lapid, seen winning 13 seats.

"All our lives we voted Likud, but today we voted for Lapid because we want a different coalition," said Ahuva Heled, 55, a retired teacher voting with her husband north of Tel Aviv.

Lapid has not ruled out joining a Netanyahu cabinet, but is pushing hard for ultra-Orthodox Jews to do military service -- a demand fiercely rejected by some allies of the prime minister.

Israel's main opposition party, Labour, which is seen capturing up to 17 seats, has already ruled out a repeat of 2009, when it initially hooked up with Netanyahu, promising to promote peace negotiations with the Palestinians.

U.S.-brokered talks collapsed just a month after they started in 2010 following a row over settlement building, and have laid in ruins ever since. Netanyahu blamed the Palestinians for the failure and says his door remains open to discussions.

Palestinian President Mahmoud Abbas says he won't return to the table unless there is a halt to settlement construction.

That looks unlikely, with Netanyahu approving some 11,000 settler homes in December alone, causing further strains to his already notoriously difficult relations with U.S. President Barack Obama, who was sworn in for a second term on Monday.

IRAN THREAT

Tuesday's vote is the first in Israel since Arab uprisings swept the region two years ago, reshaping the Middle East.

Netanyahu has said the turbulence - which has brought Islamist governments to power in several countries long ruled by secularist autocrats, including neighboring Egypt - shows the importance of strengthening national security.

If he wins on Tuesday, he will seek to put Iran back to the top of the global agenda. Netanyahu has said he will not let Tehran enrich enough uranium to make a single nuclear bomb - a threshold Israeli experts say could arrive as early as mid-2013.

Iran denies it is planning to build the bomb, and says Israel, widely believed to have the only nuclear arsenal in the Middle East, is the biggest threat to the region.

The issue has barely registered during the election campaign, with a poll in Haaretz newspaper on Friday saying 47 percent of Israelis thought social and economic issues were the most pressing concern, against just 10 percent who cited Iran.

One of the first problems to face the next government, which is unlikely to take power before the middle of next month at the earliest, is the stuttering economy.

Data last week showed the budget deficit rose to 4.2 percent of gross domestic product in 2012, double the original estimate, meaning spending cuts and tax hikes look certain.

(Additional reporting by Ori Lewis, Jeffrey Heller and Tova Cohen; Editing by Giles Elgood)

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European shares test two-year highs, yen volatile before BOJ

LONDON (Reuters) - European shares inched towards two-year highs and German Bund futures dipped on Monday, as a political attempt to break a budget impasse in the United States revived appetite for shares and dented demand for safe-haven assets.

U.S. House Republican leaders said on Friday they would seek to pass a three-month extension of federal borrowing authority in the coming days to buy time for the Democrat-controlled Senate to pass a plan to shrink budget deficits.

European shares <.fteu3> were supported by the news <.eu>, but with no clear response from the Democrats and a thin session expected due to a market holiday in the United States, the impact on other assets such as Bunds is likely to be limited.

An early morning push by London's FTSE 100 <.ftse>, Paris's CAC-40 <.fchi> and Frankfurt's DAX <.gdaxi> was beginning to fade by mid-morning, leaving the pan-European FTSEurofirst 300 up 0.1 percent and MSCI's world index <.miwd00000pus> steady at a 20-month high. <.l><.eu/>

"There's a bit of encouragement coming out of the U.S.," said Toby Campbell-Gray, head of trading at Tavira Securities in Monaco.

He added that equity markets had remained resilient in the face of an uncertain economic outlook as many investors had stepped in to buy "on the dip" on days when shares had fallen.

Ahead of the region's first finance ministers' meeting of the year, the euro was down slightly at just over $1.33 against the dollar, while the yen firmed after touching a new low, ahead of a Bank of Japan decision expected to deliver bold monetary easing.

According to sources familiar with the Bank of Japan's thinking, the government of new Prime Minister Shinzo Abe and the central bank have agreed to set 2 percent inflation as a new target, supplanting a softer 1 percent 'goal'.

The dollar rose to as high as 90.25 yen earlier on Monday, its highest since June 2010. It later slipped 0.7 percent on the day to 89.39 yen, as traders cut short positions given the BOJ has often fallen short of market expectations.

"Investors are being mindful that the moves we have seen over the course of the last month or two are just worth locking in at least until we understand how the BOJ are really going to play in the future," said Jeremy Stretch, head of currency strategy at CIBC World Markets.

CURRENCY WAR

Japanese equities have surged in recent weeks in anticipation of a more aggressive monetary policy stance, but not everyone is happy.

The slump in the yen has prompted Russia's deputy central bank governor to warn of a new round of 'currency wars' and the medium-term risk of running ultra-loose monetary policies is likely to be a theme of the World Economic Forum in Davos, which opens on Wednesday.

With little in the way of economic data or debt issuance and U.S. markets shut for the Martin Luther King public holiday, the rest of the day was expected to be a fairly quite day for investors.

In bond markets, German Bund yields rose close to the top of this year's 30 basis points range, after Republican lawmakers' efforts to give the U.S. government leeway to pay its bills for another three months. Most other euro zone bonds were trading virtually flat.

The U.S. Treasury needs congressional authorisation to raise the current $16.4 trillion limit on U.S. debt sometime between mid-February and early March. A failure to achieve that could lead to a debt default.

"This is part of the political game, it remains to be seen whether the Democrats will accept it," KBC strategist Piet Lammens said, adding that investors' working scenario was that a solution to raise the ceiling would be eventually found anyway.

OIL OVERSUPPLY

German markets showed no reaction after the country's centre-left opposition party edged Chancellor Angela Merkel's conservatives from power in a regional election on Sunday, reviving its flagging hopes for September's national election.

Oil prices took their cues from a report in the United States at the end of last week that showed consumer sentiment at its weakest in a year as a result of the uncertainty surrounding the country's debt crisis.

Concerns about demand overshadowed supply disruption fears reinforced by the Islamist militant attack and hostage-taking at a gas plant in Algeria, a member of the Organization of Petroleum Exporting Countries.

Brent futures were down by 17 cents to $111.72 per barrel by 1030 GMT. U.S. crude shed 40 cents to $95.16 per barrel after touching a four-month high last week.

"The over-riding fundamental feeling in the market is that crude oil is over-supplied in 2013," said Tony Nunan, an oil risk manager at Mitsubishi.

Last week's data showing a pick-up in the Chinese economy helped keep growth-sensitive copper prices steady at roughly $8,058 an ounce. Gold, meanwhile, reversed Friday's losses to stand at $1,688 an ounce.

(Additional reporting by Sudip Kar-Gupta, Marious Zaharia and Anooja Debnath; Editing by Will Waterman and Giles Elgood)

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Harbaugh brothers take 49ers, Ravens to Super Bowl

This Super Bowl will be filled with firsts — and one significant last.

The Harbaughs, San Francisco's Jim and Baltimore's John, will be the first pair of brothers to coach against each other in the NFL title game.

Quarterbacks Colin Kaepernick of the 49ers and Joe Flacco of the Ravens each will be playing in his first Super Bowl — where success is the ultimate measure of elite QBs.

It'll be Baltimore's first crack at a championship in a dozen years, San Francisco's first in 18. They are a combined 6-0 in Super Bowls (the 49ers own five of those victories), so one club will lose the big game for the first time.

And middle linebacker Ray Lewis, Baltimore's emotional leader and top tackler, will be playing in the final game of his 17-year career before heading into retirement.

"This is our time," Lewis pronounced.

For all of those story lines, none is expected to command as much attention as Harbaugh vs. Harbaugh. The game in New Orleans on Feb. 3 was quickly given all manner of nicknames: The Brother Bowl. The Harbaugh Bowl. The Har-Bowl. The Super-Baugh.

The Harbaughs' sister, Joani Crean, wrote in a text to The Associated Press: "Overwhelmed with pride for John, Jim and their families! They deserve all that has come their way! Team Harbaugh!"

As John prepared to coach the Ravens in the AFC championship game Sunday night, he watched on the stadium's big video screen as Jim's 49ers wrapped up the NFC championship.

John looked into a nearby TV camera, smiled broadly and said: "Hey, Jim, congratulations. You did it. You're a great coach. Love you."

Less than four hours later, the Ravens won, too. Some siblings try to beat each other in backyard games. These guys will do it in the biggest game of all.

Who's a parent to cheer for?

During the 2011 regular season, the Harbaughs became the only brothers to coach against each other in any NFL game (the Ravens beat the 49ers 16-6 on Thanksgiving Day that year).

The NFC West champion 49ers (13-4-1) opened as 5-point favorites, seeking a record-tying sixth Super Bowl title to add to those won by Hall of Fame quarterbacks Joe Montana and Steve Young.

Lewis was the MVP when the AFC North champion Ravens (13-6) beat the New York Giants in 2001.

With Kaepernick's terrific passing — he was 16 of 21 for 233 yards and a touchdown in only his ninth career NFL start — and two TD runs by Frank Gore, San Francisco erased a 17-point deficit to beat the Atlanta Falcons 28-24 Sunday.

Baltimore then fashioned a comeback of its own, scoring the last 21 points to defeat the New England Patriots 28-13, thanks in large part to Flacco's three second-half touchdown tosses, two to Anquan Boldin. Lewis and the rest of Baltimore's defense limited the high-scoring Patriots to one touchdown.

In the often risk-averse NFL, each Harbaugh made a critical change late in the regular season in a bid to boost his team's postseason chances. Clearly, both moves worked.

After 49ers quarterback Alex Smith, the starter in last season's overtime NFC title game loss to the Giants, got a concussion, Jim switched to Kaepernick for Week 11 — and never switched back. Now San Francisco has its first three-game winning streak of the season, at precisely the right time.

Baltimore, meanwhile, was in the midst of a three-game losing streak when John fired offensive coordinator Cam Cameron and promoted quarterbacks coach Jim Caldwell to replace him.

The 50-year-old John is 15 months older than Jim and generally the less demonstrative of the pair, although John certainly did not lack intensity while making his case with officials a couple of times Sunday.

The ever-excitable Jim — who was treated for an irregular heartbeat in November — was up to his usual sideline antics in Atlanta.

He spun around and sent his headset flying when the original call stood after he threw his red challenge flag on a catch by the Falcons. He hopped and yelled at his defense to get off the field after their key fourth-down stop with less than 1½ minutes left. He made an emphatic-as-can-be timeout signal with 13 seconds remaining.

Expect CBS to fill plenty of time during its Super Bowl broadcast with shots of Jim, that trademark red pen dangling in front of his chest, and John, who usually wears a black Ravens hat. That is sure to be a focal point, right up until they meet for a postgame handshake in two weeks' time.

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AP Sports Writer Janie McCauley in San Francisco contributed to this report.

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Follow Howard Fendrich on Twitter at http://twitter.com/HowardFendrich

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Online: http://pro32.ap.org/poll and http://twitter.com/AP_NFL

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Snow woe: Winter weather causes delays, cancellations at Heathrow, other European airports

LONDON – Scores of fights have been cancelled as snow and ice blanket much of Britain.

London’s Heathrow airport says it has cancelled about 130 flights, 10 per cent of the daily total, compared to 20 per cent on Sunday.

Flights have been disrupted since Friday at Heathrow, Europe’s busiest airport, which has seen long lines and stranded passengers camping out on its terminal floors.

Heathrow says it has spent millions improving its winter resilience since the airport was virtually shut down by snow for several days in December 2010. But it says low visibility means it must leave bigger gaps between planes, triggering delays and cancellations.

Train services are also disrupted, and hundreds of schools across Britain are closed.

There are also delays and cancellations Monday at airports in Paris, Amsterdam and Frankfurt.

Weather News Headlines – Yahoo! News

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