FOREX WORLD TREND

Global oil prices have risen after recovering some ground after Wednesday's big falls.

US light crude was up 45 cents to $63.80 a barrel, while in London, Brent was ahead by 90 cents to $67.43.
The gains came after US light crude slumped $3.88, or almost 6%, on Wednesday due to data showing a large rise in US oil stockpiles.
Analysts said some of the rebound was expected, helped by rises on the global stock markets.
With Japan's Nikkei ending up 0.5%, and the UK's FTSE ahead by 1.4% in late morning trading, these gains helped restore investor confidence in future oil demand.
In July last year, the price of oil peaked at around $147 a barrel, before falling back to close to $30 at the start of 2009 due to the impact of the global recession.
Oil prices have recovered to around $60 since then, but volatility remains.
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MUMBAI: Buoyed by a good set of corporate earnings, the Sensex on Thursday closed 214.50 points higher than its last closing figure. The 30-scrip benchmark index of the Bombay Stock Exchange (BSE), which opened lower at 15,169.23 points, shut shop at 15387.96 points -- 214.50 points or 1.41% higher than Wednesday's closing figure.

Similarly, the S&P CNX Nifty of the National Stock Exchange (NSE) closed in the positive terrain, 1.28% up at 4571.45 points.

Broader market indices also ended in the green with the BSE midcap index ending 0.61% higher and the BSE smallcap index moving up 0.76%.
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FRANKFURT (Dow Jones)--Volkswagen AG (VOW.XE) said Thursday that it has paved the way to form an integrated car-manufacturing company with Porsche Automobil Holding SE (PAH3.XE), shortly after the resignations of Porsche Chief Executive Wendelin Wiedeking and Chief Financial Officer Holger Haerter.

"The Volkswagen supervisory board in an extraordinary meeting today supported the formation of an integrated car manufacturing company with Porsche under the leadership of Volkswagen," Europe's largest car maker said in a statement.

The company added its executive board now would begin talks with Porsche's management to work out a final agreement aimed at reaching this goal.

Christian Wulff, the governor of the German state of Lower Saxony, which is Volkswagen's second largest shareholder with a 20.1% stake, said the Volkswagen supervisory board would make a decision about that agreement at a meeting Aug. 13.

The two companies have been locked in a power struggle ever since Porsche's attempt to gain full control over its much larger German peer backfired when credit markets dried up amid the financial crisis.

Volkswagen in recent weeks pushed to take over Porsche's core sports-car operations and integrate them as its 10th brand along with name plates such as Audi, Bentley and Skoda. But Wiedeking instead rushed to hammer out a deal with Qatar to shore up the company's balance sheet and avoid an outright sale.

Wiedeking, Germany's highest-paid executive, had come under fire from Volkswagen's influential supervisory board chairman and Porsche co-owner Ferdinand Piech, Volkswagen's powerful labor unions and the German state of Lower Saxony, which can block important decisions at the Wolfsburg-based automaker through its stake of 20.1%.

But Porsche's plan to boost its stake to 75% and access Volkswagen's cash reserves derailed as credit markets contracted and a steep fall in demand hurt the sports-car operation's earnings. Tables finally turned in the two companies' power struggle when Porsche's net debt ballooned to around EUR10 billion as it built its holding in Volkswagen and the Wolfsburg-based company in March had to grant its parent a EUR700 million loan.
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SINGAPORE — Oil prices hovered near $64 a barrel Tuesday in Asia as investors weighed improving corporate results against weak crude demand.
Benchmark crude for August delivery was up 5 cents to $64.03 a barrel by late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. On Monday, the contract rose 42 cents to settle at $63.98.
Traders have been cheered by stronger than expected second quarter company earnings, which suggest the U.S. economy is recovering from its worst recession in decades. Crude prices have jumped from $58.78 a barrel two weeks ago.
Some positive economic data is also fueling optimism. The Conference Board's index of leading economic indicators improved more than expected in June. It was the third straight month of gains.
"The corporate reports have reinforced the sentiment that the worst is over," said Ben Westmore, an energy analyst with National Australia Bank in Melbourne. "But there haven't been any tangible signs that consumption has turned around."
Investors will be looking to a weekly inventory report from the Energy Department's Energy Information Administration on Wednesday for signs that crude demand may be growing.
Traders have been disappointed by evidence that gasoline consumption hasn't jumped during the summer driving season.
Analysts expect the EIA's gasoline inventory numbers to rise 800,000 barrels, according to a survey by Platts, the energy information arm of McGraw-Hill Cos.
"Weak gasoline demand is shadowing the oil market," Westmore said. "It's a big downside risk that we don't get drawdowns from the EIA supply data."
"If we don't see a pickup in consumption coming through in the data in the next two or three weeks, it will probably cause a slump in equity and commodity markets."
In other Nymex trading, gasoline for August delivery fell 1.14 cents to $1.78 a gallon and heating oil dropped 1.06 cents to $1.68. Natural gas for August delivery slid 5.4 cents to $3.64 per 1,000 cubic feet.
In London, Brent prices rose 6 cents to $66.50 a barrel on the ICE Futures exchange.
http://www.google.com/hostednews/ap/article

Delegates for deposed Honduran President Jose Manuel Zelaya have agreed to a seven-point proposal that would return him to power. But representatives for provisional President Roberto Micheletti said late Saturday they need more time to study the matter.
Zelaya has proposed returning to Honduras on Friday, said his representative, Rixi Moncada.

The two sides are still far apart, said Costa Rican President Oscar Arias, who is holding the talks at his home. The two sides agreed to resume negotiations Sunday morning.

"We have had a dialogue, a debate, a discussion," Arias said after the daylong negotiations Saturday. "They were frank but constructive. Certainly there are many differences."

Earlier Saturday, Arias outlined seven steps he believes need to be taken. The first step, he said, is that Zelaya must be returned to power.

Micheletti's representatives said they need more time to review the suggestions, saying that they "have received with interest the proposal made by" Arias.

"There is no agreement but we are prepared to examine the different points that Mr. Mediator has proposed," said Micheletti representative Carlos Lopez.

Zelaya was removed from office June 28 in a military-led coup that has drawn international condemnation. Congressional leader Micheletti was sworn in hours later as provisional president.

Delegations representing Zelaya and Micheletti met at Arias' home in Costa Rica last week but did not reach an accord. The bitterness is so deep -- and the two sides are so entrenched -- that they would not shake hands at the conclusion of the day's negotiations.

Still, Arias held out hope Saturday.

"Force was the origin of this problem but it will never be its solution," he said before the talks began.
"We crossed this threshold aware of the challenges we face, but also convinced that there is no wall so tall that it can't be climbed by the force of willpower. We closed the door in order to reach accords. We expect to open them to announce those accords."

The talks started Saturday morning and continued late into the night.

Other steps proposed by Arias include moving up elections scheduled for late November, establishing a national unity government, providing amnesty for all political crimes and setting up an international commission to oversee implementation of the accord.

Under Arias' proposals, oversight of the Honduran military would switch from the executive branch of government to the Supreme Electoral Tribunal one month before the elections.

Arias also said Zelaya must renounce attempts for a referendum on whether to establish a constitutional assembly.

Zelaya, a leftist who took office in 2006 on a narrow victory, had been at odds with Honduran lawmakers, the country's supreme court and the military over the referendum, which he had planned to hold last month. Congress had forbidden it and the supreme court ruled it illegal. The military declined to participate in its usual role of safeguarding the vote, saying it could not take part in an illegal act.

Zelaya vowed to hold the vote anyway, but was toppled before the voting started.

He sought the referendum to see if voters wanted a measure on November's ballot to establish a constitutional assembly to study whether a president could run for re-election. Under the current charter, a president can serve only one four-year term.

Venezuelan President Hugo Chavez, a Zelaya ally, won a similar referendum this year and many Hondurans thought Zelaya was trying to maneuver a way to seek re-election in November -- an assertion he has denied. His term ends in January.

After 18 years of nearly uninterrupted military rule, Honduras returned to civilian control in 1981. Since then, the military did not seem interested in holding power.
http://edition.cnn.com

JAKARTA - Twin bomb attacks that hit luxury hotels in Indonesia's capital on Friday have shattered years of calm won through an innovative carrot-and-stick approach to fighting terror.

The suicide bombings at the JW Marriott and Ritz-Carlton hotels in Jakarta, the suspected work of a radical splinter faction of the Jemaah Islamiyah (JI) militant network, are the first of their kind since 2005.

Analysts say Indonesia has made valuable headway with a divide-and-rule strategy that has hobbled JI and sown division in its ranks, but that creeping complacency has allowed the radical fringe to fester.

"I think worldwide counter-terrorism has been looking at Indonesia as a successful model until now," Indonesia-based analyst Noor Huda Ismail told AFP.

"I think in terms of understanding the network we've been doing great. Look at Guantanamo, it was a disaster," he said of the confrontational "War on Terror" approach taken by the United States.

With close Western backing since 2002 bombings that killed more than 200 mostly foreign holidaymakers on the resort island of Bali, Indonesia has pursued a dual strategy of arresting JI members plotting attacks, while not disturbing and even rewarding radicals that swear off violence.

"As long as an individual member of JI doesn't do any crime they won't be arrested," Ismail said. "But once they break the law in any way the Indonesian government will arrest them."

The analyst said that at least 400 militants have been captured by Indonesian authorities since 2002 and a long list of plots have been foiled.

At the same time, authorities have fostered disquiet within JI over spectacular attacks that kill large numbers of civilians -- a strategy based on changing the tactics of radicals, not their ideology, Ismail said.

This has meant discreetly monitoring, but not shutting down, radical boarding schools that have traditionally supplied willing recruits for suicide attacks.

To the unease of many, it has also seen a decision not to censor a network of radical publishing houses, or the utterances of high-profile radicals including the three bombers executed last year over the 2002 Bali attack.

International indignation was also sparked in 2004 when Ali Imron, a brother of two of the Bali bombers who is serving a life sentence for his role, was seen sipping coffee with a senior policeman at a Jakarta cafe.

The blame for Friday's attacks has been pointed at a splinter group led by fugitive Malaysian radical Noordin Mohammed Top, the reputed mastermind of a string of bloody bombings in Indonesia since 2003.

Noordin's approach has alienated the mainstream JI leadership to the extent that he "is no longer acting in the name of JI", International Crisis Group (ICG) analyst Sidney Jones said.

The latest attacks revealed a "complacency that terrorism is no longer a problem" which had helped Noordin and his network consolidate and thrive after it was shunned by the main JI group.

Taufik Andrie, from the Institute for International Peacebuilding in Jakarta, said Indonesian authorities are on the right path but have lost sight of the immediate danger posed by Noordin's faction.

"They have to catch Noordin and hardline JI cells first. After that they have to guide along moderate JI so they can influence JI hardliners and new recruits so that they don't follow Noordin-style jihad," he said.

Slack enforcement in Indonesia's prison system, which analysts argue has become a breeding ground for radicals, is also seen as a factor in the re-emergence of terrorism on the streets of Jakarta.

Ismail is the co-author of an Australian Strategic Policy Institute paper released a day before the bombings that warned a "new generation" of fringe radicals alienated from the JI mainstream were emerging hardened from prisons.
http://www.channelnewsasia.com

Mumbai, July 18 The images were striking, as the US Secretary of State, Ms Hillary Rodham Clinton, sat at the round table, flanked by Mr Ratan Tata and Mr Mukesh Ambani, at the Taj Mahal Palace Hotel in Mumbai.

The images were poignant too, as Ms Clinton wrote her tribute in the memorial book at the Taj Hotel, with the hotel’s Mr Karambir Kang standing close by. The Taj was one of the locations where gunmen unleashed terror last November, and Mr Kang lost his wife and two children in the attack. She expressed solidarity with the victims of the terror attacks of 26/11, stressing the need to fight terrorism globally.Interacting with top corporate honchos , on her first visit to India after assuming office, Ms Clinton spoke of increased strategic cooperation in agriculture, healthcare, education and climate-change.

The interaction was also attended by Mr Jamshyd Godrej, Chairman and Managing Director, Godrej & Boyce Manufacturing Co. Ltd; Mr O. P. Bhatt, State Bank of India Chairman; Ms Chanda Kochhar, ICICI Bank Managing Director and CEO; Dr Amrita Patel, Chairperson of the National Dairy Development Board; Ms Sudha Murty of Infosys Foundation; and Dr Swati Piramal, Vice-Chairperson of Piramal Life Sciences Ltd.

Later, at a media interaction, Ms Clinton highlighted the need to adopt green technologies, urging India not to repeat the “mistakes” made by the US and developed countries. Ms Clinton’s three-day visit seeks to enhance strategic relations between the two countriesassumes significance given the recently formalised India-US civilian nuclear agreement. Ms Clinton will meet the Prime Minister, Dr Manmohan Singh, and the External Affairs Minister, Mr S. M. Krishna, in New Delhi, on Sunday.
www.thehindubusinessline.com

One of two attacks Friday on hotels in Jakarta happened during a round table of foreign business leaders. The business community debates whether political strife will curb investments.
Reporting from Jakarta, Indonesia -- For years, James Castle has been Mr. Indonesia, a well-known Western face here promoting the world's most populous Muslim nation as a sensible international investment destination.

The graying, bespectacled American met with presidents and generals, his CastleAsia consulting firm guiding outside investors with advice about political risk and economic trends.
http://www.latimes.com/news

CHENNAI: The Indian Space Research Organisation's (ISRO) first lunar mission Chandrayaan-I may have suffered technical setbacks within a year of

its launch, but the organisation is confident that the spacecraft will complete its mission.

"The failure of electronic components within a year of a satellite's launch is one of the risks that a mission faces. Once the satellite crosses one year, then one can expect stable operation for several years to come," M. Annadurai, project director of Chandrayaan-I and II, told IANS from Bangalore on phone.

Chandrayaan-I's onboard star sensor -- a critical component that guides the spacecraft -- failed May 16 owing to heat around the moon. What compounded the problem was that the standby unit also failed.

Though another component on the spacecraft -- the Bus Management Unit -- also failed, the satellite was able to switch on the standby unit.

To manage the situation, ISRO hit upon an innovate technique. It used the redundant sensors-gyroscopes -- along with antenna pointing information and images of specific location on the surface of the moon -- for determining the spacecraft's orientation.

Curiously on May 20, ISRO raised the spacecraft that was orbiting the moon at a height of 100 km (originally intended orbital height) since November last year to 200 km stating that it would now be imaging the lunar surface with a wider swath.

According to Annadurai, the satellite will function normally provided no other component fails.

His confidence stems from the fact that a similar critical situation arose when India's communication satellite Insat-2E was launched in 1999.

"Couple of years after its launch Insat 2E encountered a critical problem as its main and standby earth sensors failed," recalled Annadurai, who was also the mission director for that satellite launch.

According to him, the communication satellite mission was saved by out of box thinking to use alternate components to perform the functions of the failed ones.

"Insat 2E is even now functioning very well, much beyond its projected life span. The satellite's transponders are now transmitting several television channels," he remarked.

The other satellite that is being partly utilised as it didn't reach its intended orbit is the GSAT-1 launched in 2001 by the first geosynchronous satellite launch vehicle (GSLV), the second rocket of ISRO.

"Though GSAT-1 drifted, as we had some experimental instruments in that we used other means to make the satellite functional to get the required data," he remarked.

According to him, India's lunar satellite has already visited and photographed all the spots it had to visit till date.

"Prior to the launch we thought of downloading the data sent by Chandrayaan-I only from India. The effective download time was 12 hours. However a satellite observation centre in the US agreed to download the data at its end so that there is a continuous data download for 24 hours. As such scientific data required has already been acquired," Annadurai explained.

ISRO's Polar Satellite Launch Vehicle (PSLV) put into orbit Chandrayaan-I Oct 22, 2008 from its launch centre at Sriharikota around 80 km from here.
economictimes.indiatimes.com

CHENNAI: The Indian Space Research Organisation's (ISRO) first lunar mission Chandrayaan-I may have suffered technical setbacks within a year of

its launch, but the organisation is confident that the spacecraft will complete its mission.

"The failure of electronic components within a year of a satellite's launch is one of the risks that a mission faces. Once the satellite crosses one year, then one can expect stable operation for several years to come," M. Annadurai, project director of Chandrayaan-I and II, told IANS from Bangalore on phone.

Chandrayaan-I's onboard star sensor -- a critical component that guides the spacecraft -- failed May 16 owing to heat around the moon. What compounded the problem was that the standby unit also failed.

Though another component on the spacecraft -- the Bus Management Unit -- also failed, the satellite was able to switch on the standby unit.

To manage the situation, ISRO hit upon an innovate technique. It used the redundant sensors-gyroscopes -- along with antenna pointing information and images of specific location on the surface of the moon -- for determining the spacecraft's orientation.

Curiously on May 20, ISRO raised the spacecraft that was orbiting the moon at a height of 100 km (originally intended orbital height) since November last year to 200 km stating that it would now be imaging the lunar surface with a wider swath.

According to Annadurai, the satellite will function normally provided no other component fails.

His confidence stems from the fact that a similar critical situation arose when India's communication satellite Insat-2E was launched in 1999.

"Couple of years after its launch Insat 2E encountered a critical problem as its main and standby earth sensors failed," recalled Annadurai, who was also the mission director for that satellite launch.

According to him, the communication satellite mission was saved by out of box thinking to use alternate components to perform the functions of the failed ones.

"Insat 2E is even now functioning very well, much beyond its projected life span. The satellite's transponders are now transmitting several television channels," he remarked.

The other satellite that is being partly utilised as it didn't reach its intended orbit is the GSAT-1 launched in 2001 by the first geosynchronous satellite launch vehicle (GSLV), the second rocket of ISRO.

"Though GSAT-1 drifted, as we had some experimental instruments in that we used other means to make the satellite functional to get the required data," he remarked.

According to him, India's lunar satellite has already visited and photographed all the spots it had to visit till date.

"Prior to the launch we thought of downloading the data sent by Chandrayaan-I only from India. The effective download time was 12 hours. However a satellite observation centre in the US agreed to download the data at its end so that there is a continuous data download for 24 hours. As such scientific data required has already been acquired," Annadurai explained.

ISRO's Polar Satellite Launch Vehicle (PSLV) put into orbit Chandrayaan-I Oct 22, 2008 from its launch centre at Sriharikota around 80 km from here.
economictimes.indiatimes.com

NEW DELHI: A week after the concrete girder of a Delhi Metro viaduct collapsed at Zamrudpur in south Delhi, site clearing operations continued atthe spot.
A Delhi Metro Rail Corporation (DMRC) spokesperson said restoration work was continuing as per plan. "A mock-up exercise using diamond cutters was tested successfully at the site. The girder, which has been supported with trestles and pebble bags, will be cut now. Adequate precaution is being taken to prevent a further collapse,'' said the spokesperson. The concrete segment is made up of 10 smaller segments and cutting each of them will take about three hours.

Meanwhile, all the shops and houses located in the vicinity that were damaged have been assessed and an action plan for their repair has been prepared. "Metro engineers has also inspected Kailash Apartments where some cracks had been noticed in the basement. Even though the residents claimed these were caused by Metro construction, the inspection revealed the cracks are old and not connected with the construction work in the area,'' said a DMRC official.

The different committees continued their probes, but reports into all the incidents are still expected. The examination of other structures of Phase II is also underway, said DMRC officials.
timesofindia.indiatimes.com

Only someone with a crystal ball may be able to predict the outcome of the three-day Moscow summit.
However, the meetings between President Barack Obama, Russian President Dmitry Medvedev and Prime Minister Vladimir Putin will be seen as an extension of the ongoing struggle between global heavyweights America and Russia to increase their zone of influence with minimum bargains.

A glance at their relations since 1945 shows that America and Russia have never compromised on their respective national interests, no matter which leaders held the reins of power. Mr Obama’s offer to reset the relations button with Russia appears to be a placebo since this action can only restore the machine to its default conditions. Underlying conflicts resurface unless paradigms change.

While there have been improvements in relations on the surface, recent events in Europe, the Caucasus, Central Asia and elsewhere point to a different direction. The Moscow summit is not likely to achieve anything substantial except that there may be minor bargains encapsulated in a lot of rhetoric. However, these can be a matter of survival for the smaller players.

The argument can be better understood by comparing core Russian and American interests to the summit agenda. Russia’s aspirations did not diminish by the disintegration of the former Soviet Union. Thanks to Putin, Russia is waking up from a rather short slumber. Russia is projected to lose a staggering 40 million from its current population of 140 million in the next 50 years, after Cold War Russia’s vulnerable borders shrunk from a 1,000km-plus buffer against Nato to less than 200km with no geographical barrier in between. Moreover, its economy lacks diversity and stands on the single pole of abundant energy resources.

Owing to these geopolitical imperatives, Russia cannot avoid reasserting its power and reclaim it former zone of influence. Its interest in Europe brings it in direct clash with the US with the potential to spark another Cold War. America may be ready to concede some ground on certain issues but will not let Russia expand its influence in the former Soviet states. As geographer Halford John Mackinder said, 'Who rules East Europe (Russian Europe) commands the Heartland; who rules the Heartland commands the World-Island (Eurasia); who rules the World-Island controls the world.'

With diametrically opposite grand strategies their agendas cannot be different. It is difficult to understand how Russia and the US will a strike compromise at this summit; at best it will be a test of wills. The Obama-Medvedev meeting in April this year set a bad precedent as there was no unanimity of views.

To stop the further expansion of Nato, Russia desperately wants America to recognise it as a regional power that dictates policies in the Caucasian region, Ukraine, Belarus and Central Asia. To show its muscle, Russia got Kyrgyzstan to close America’s Manas air base in May and then offered the carrot to Americans last week by asking Bishkek to reverse the decision.

Whether America gives up on its embittered Georgian and Ukrainian allies will be clear soon. The improvement in relations will be subject to American neutrality towards the Baltic states and Poland, which is a long call given that these states are members of Nato.

During his April visit to Europe, Obama had promised not to abandon Prague and Warsaw and promised the Ballistic Missile Defence (BMD) Shield but linked it to a threat from Iran. Russia has stood for Iranian interests so far. The fate of these smaller players now hangs in balance over the test of US and Russian wills during the summit.

The dictates of America’s grand strategy demand the country’s continuity as a pre-eminent global power and Washington will seek such recognition from Moscow that would mean the dilution of the latter’s power and influence. Could this affect the interests of others? America’s main supply route through Pakistan to Afghanistan is highly vulnerable. After a long debate Russia has finally agreed to let US military cargo enhanced passage rights through its territory. This has grave implications for Pakistan since a less dependent America means a more demanding America.

As for Iran, the US needs Russian influence in two areas: coercing Iran into halting its alleged nuclear weapons programme and the cessation of advanced military technology supplies to Tehran, which affect the regional balance. Russia and America are likely to achieve a breakthrough in these two agendas since there is little to lose in doing so. America will be happy to save face in the region even if it has to temporarily jettison support to Poland and Nato’s expansion — it can always make a comeback like it does in Pakistan.

Granting lebensraum to the Russians in Europe is a risky business. In February, Russians used their gas supply through Ukraine as a lever to bring the latter and other European powers to agree to its terms. Russia will be further emboldened once America looks the other way and it may be difficult to contain it later. There is deep-seated anti-Russian sentiment in the former Soviet states of Europe and ditching them at this stage may affect long-term US credibility.

Disregarding domestic sentiment in relations with Russia can affect Mr Obama’s popularity although the same would not apply to his Russian counterpart who can afford to disregard it. At this point, one can only keep one’s fingers crossed and hope that world politics are not affected negatively by the state of US-Russia ties in the months ahead.
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As unrest continues in Xinjiang, people from the area and those with relatives there are continuing to send their accounts to the BBC.

Huang Xiusheng is a businessman from Guangdong who just went back home from a trip in Urumqi.
There were many many people in the streets, mostly Uighurs, but also many foreigners. The foreigners were taking photos with their phones.
The group of Uighurs were very angry. They would attack anybody who crossed their way. I stayed outside for about half an hour and I got scared and went back to the hotel.
The next day I stayed in the hotel, as I was afraid to go out. I was looking from the window and I could see many people in the streets and a heavy army presence.
Just before I came back they announced that people should stay indoors, and traffic of cars and vehicles would be stopped. I don't know what to make of it. I am not a political person and I've no idea who caused it.
http://news.bbc.co.uk

Barack Obama said Ghana could be a model of success for other African countries as he arrived today after the G8 summit for a visit meant to show that "Africa is not separate from world affairs".
Obama in Africa BBC News
Obama: 'Africa not separate from world affairs' The Associated Press
Telegraph.co.uk - Voice of America - CNN International - Wikipedia: Ghana
all 2,409 news articles »
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MOSCOW — The Russian government has agreed to let U.S. troops and weapons bound for Afghanistan fly over Russian territory, officials on both sides said Friday. The arrangement will provide an important new corridor for the U.S. military as it escalates efforts to win the 8-year-old war.

The agreement, to be announced when President Obama visits Moscow on Monday and Tuesday, represents one of the most concrete achievements in the administration's attempt to ease relations with Russia after years of tension.

But the two sides failed to make a trade deal or resolve differences over missile defense, and are struggling to draft a preliminary nuclear-weapons agreement.

The blend of success and stalemate leading to Obama's visit suggests it is easier to talk about a "reset" button than to press it. The promise of a new era of cooperation was always predicated on the tenuous notion that a change of tone and a shift in emphasis might be enough to bridge deep divisions.

But even with both sides eager for warmer ties, the issues that have torn the two nations apart did not go away with the transition at the White House.

Obama is less enthusiastic than President George W. Bush was about an anti-missile system in Eastern Europe or NATO membership for Ukraine and Georgia, but has not abandoned either goal, to the consternation of Kremlin officials.

Despite U.S. pressure, Russia has not yielded in its continuing confrontation with Georgia a year after their brief war.

So Obama's first visit as president will be a test of his foreign policy. U.S. officials said the larger message is that if the Russians do not take his open hand, he will move on to other priorities.

But he faces a reservoir of resentment among Russians who believe the United States has rarely followed through on such gestures. Richard Burt, a former U.S. weapons-control negotiator and part of a Russian-American group called Global Zero that is pushing for nuclear disarmament, said Obama must overcome that suspicion. "I just get the sense that the Russians are kind of grumpy, so there's still some sharpness on the Russian side, despite pushing the reset button," he said.

At the same time, Obama faces pressure not to go soft on Russia. He sounded a tough note this week, saying Prime Minister Vladimir Putin "has one foot in the old ways." He is also sending Vice President Joseph Biden to Georgia and Ukraine.

The new transit agreement represents an important step. Until now, Russia has restricted use of its territory for the Afghan war to railroad shipments of nonlethal supplies. Under the new arrangement, officials said, military planes carrying lethal equipment and troops will be allowed to make thousands of flights a year through Russian airspace.

The agreement was a priority for Obama, who has ordered 21,000 more U.S. troops to fight the Taliban and al-Qaida. Supply routes through Pakistan have become complicated by its increasing volatility, while Uzbekistan evicted U.S. troops from a base in 2005 and Kyrgyzstan threatened to do the same. U.S. negotiators just persuaded Kyrgyzstan to reverse itself by increasing the rent.

VATICAN CITY (AP) — President Barack Obama sat down with Pope Benedict XVI at the Vatican on Friday for a meeting in which frank but constructive talks were expected between two men who agree on helping the poor but disagree on abortion and stem cell research.

"It's a great honor," Obama said as he greeted the pope, thanking him for the meeting. They sat down at the pontiff's desk and exchanged pleasantries before reporters and photographers were ushered out of the ornate room.

The pope was heard asking about the Group of Eight summit, the meeting of developed nations that concluded before Obama's arrival at Vatican City. Obama said it "was very productive."

With some Catholic activists and American bishops outspoken in their criticism of Obama, even as polls have shown he received a majority of Catholic votes, the audience was much awaited.

Obama's election presented a challenge for the Vatican after eight years of common ground with President George W. Bush in opposing abortion, an issue that drew them together despite the Vatican's opposition to the war in Iraq.

But the Vatican has been openly interested in Obama's views and scheduled an unusual afternoon meeting to accommodate him at the end of his Italian stay for a G-8 summit meeting in the earthquake-stricken city of L'Aquila and just before he leaves for Ghana.

In the tradition-conscious Vatican, most such meetings are held at midday. The Vatican has also arranged live TV coverage of the open session of the meeting after their private talks.

www.google.com/hostednews/ap/article

LONDON (Reuters) - The pension deficit of the 200 largest corporate pension schemes in Britain soared 82 percent to 73 billion pounds in June due to a fall in corporate bond yields, according to an estimate on Wednesday.

Consultancy Aon said the defined benefit pension deficit at the end of June was the worst for three years. Aon estimated the asset loss since September 2007 stands at 50 billion pounds.

Corporate bond yields are used to estimate pension liabilities, which can be extremely volatile.

UK pension schemes have traditionally been more exposed to equity than their European counterparts but in the last few years allocations have been cut to align investments to pension liabilities.

The fall in equity prices over the last year has prompted pension schemes to be five to 10 percent underweight in the asset class compared to their long-term target position.

Pension trustees may also look for further diversification to spread risk.

"This decision not to rebalance is a passive form of asset reallocation and it is indicative of things to come as pension schemes may opt for lower allocations to pure equities," the consultant said.

Proposed changes in regulations may also encourage lower equity allocation, Aon said.
www.reuters.com

Stock futures were higher on Wednesday, one day after investors closed the books on the best quarter since 203.

Less than 45 minutes before the start of trading in New York, futures on the Dow Jones Industrial Average were higher by about 33 points. Futures on the S&P 500 and Nasdaq were also stronger. Changes in futures don't always accurately predict early market moves after the opening bell.

Futures dipped slightly after a report from ADP showed private-sector job losses of 473,000 last month, surpassing expectations that the report would show job losses of about 400,000.
The Dow industrials rose 11% in the second quarter. But investors remain wary – the benchmark is still negative for the year to date, down 3.8%, and it remains 40% from the all-time high hit in Oct. 2007.

Overseas Wednesday, China's Shanghai Composite climbed 1.7% to move over the 3,000 mark for the first time in more than a year after the China Federation of Logistics & Purchasing said its purchasing managers' index rose for a fourth straight month. Elsewhere in Asia, a Japanese gauge of business activity for the second quarter rose but came in below expectations.

Manufacturing gauges in the U.K. and the euro zone showed improvement but remained below the level that indicates economic expansion. European stocks strengthened nonetheless, with the FTSE 100 rising 1.4% in London.

At 10 a.m. Eastern time, the Institute for Supply Management will release its latest reading on U.S. manufacturing activity.

Shares of American International Group were down sharply after the insurer's shareholders approved a 1-for-20 reverse stock split. Many shareholders are likely evening out positions or getting in or out of the market now that the split has taken effect. The stock was recently down 38%.

Crude-oil futures rose more than $1, lifted by supportive supply. The front-month August contract on the New York Mercantile Exchange was recently trading $1.11 higher at $71 a barrel.

The dollar rose against the yen but fell against the euro. Treasury prices were mixed, with the 10-year note declining 14/32 to yield 3.591%.
online.wsj.com

An international human rights agency, Amnesty International, has released a 141-page report condemning the activities of oil companies in Nigeria's Delta region.

According to the report released on Tuesday, June 30; "the oil industry in the Niger Delta of Nigeria has brought impoverishment, conflict, human rights abuses and despair to the majority of the people in the oil-producing area.

"Pollution and environmental damage caused by the oil industry have resulted in violations of the rights to health and a healthy environment, the right to an adequate standard of living (including the right to food and water) and the right to gain a living through work for hundreds of thousands of people."

The report, Petroleum, Pollution and Poverty in the Niger Delta, also highlighted how the Nigerian government is failing to hold oil companies to account for the pollution they have caused.

"Oil companies have been exploiting Nigeria's weak regulatory system for too long.

"They do not adequately prevent environmental damage and they frequently fail to properly address the devastating impact that their bad practice has on people's lives."

The report also stated that the United Nations Development Program (UNDP) describes the region as suffering from "administrative neglect, crumbling social infrastructure and services, high unemployment, social deprivation, abject poverty, filth and squalor, and endemic conflict."

This poverty, and its contrast with the wealth generated by oil, has become one of the world's starkest and most disturbing examples of the "resource curse".

"Oil has generated an estimated US$600 billion since the 1960s. Despite this, many people in the oil-producing areas have to drink, cook with and wash in polluted water, and eat fish contaminated with oil and other toxins.

"More than 60 per cent of people in the region depend on the natural environment for their livelihood. Yet, pollution by the oil industry is destroying the vital resource on which they depend."


Impact of the pollution

The report stated that oil pollution kills fish, food sources and fish larvae, and damages the ability of fish to reproduce; causing both immediate damage and long-term harm to fish stocks and the oil pollution also damages fishing equipment. Oil spills and waste dumping have also seriously damaged agricultural land. And long-term effects include; damage to soil fertility and agricultural productivity, which in some cases can last for decades.

"In numerous cases, these long-term effects have undermined a family's only source of livelihood. The destruction of livelihoods and the lack of accountability and redress have led people to steal oil and vandalize oil infrastructure in an attempt to gain compensation or clean-up contracts."

Armed militant groups are increasingly demanding greater control of resources in the region, and engage in large-scale theft of oil and kidnapping for ransom of oil workers.

Reacting to the recent military onslaught in the region, the report stated that "government reprisals against militancy and violence frequently involve excessive force, and communities are subjected to violence and collective punishment, deepening anger and resentment."

On the major oil companies operating in the Niger delta, the report particularly pointed out Shell and condemned its activities. The report stated that "the oil industry in the Niger Delta involves both the government of Nigeria and subsidiaries of multinational companies."

Going by the reports and investigations by Amnesty international, Shell Petroleum Development Company, the main operator offshore is the major culprit in regions where oil spills, waste dumping, and gas flaring are notorious and endemic.

"The scale of pollution and environmental damage has never been properly assessed. The figures that exist vary depending on sources, but hundreds of spills occur each year," stated the report.

The report also quoted a UNDP report that more than 6,800 spills were recorded between 1976 and 2001 and also, according to the National Oil Spill Detection and Response Agency, some 2,000 sites require treatment because of oil-related pollution. "The real total may be higher," added the report.

Condemning the regulatory system in the region, the reports states that Nigeria has laws and regulations that require companies to comply with internationally recognized standards of "good oil field practice", and laws and regulations to protect the environment but these laws and regulations are poorly enforced.

The government agencies responsible for enforcement are ineffective and, in some cases, compromised by conflicts of interest.

"The people of the Niger Delta have seen their human rights undermined by oil companies that their government cannot - or will not - hold to account.

"They have been systematically denied access to information about how oil exploration and production will affect them, and they are repeatedly denied access to justice."

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