Confrontation between rival protesters looms in Egypt crisis

CAIRO (Reuters) - Egypt's Muslim Brotherhood called for a rally backing President Mohamed Mursi outside his palace on Wednesday and leftists planned a counter-demonstration, raising fears of clashes in a crisis over a disputed push for a new constitution.

Mursi returned to work at his compound a day after it came under siege from opposition protesters furious at his drive to ratify a new constitution in a snap referendum set for December 15 after temporarily expanding his powers by decree.

The Islamist president said he acted to prevent courts still full of appointees from the era of autocratic predecessor Hosni Mubarak from derailing the draft constitution meant to complete a political transition in the Arab world's most populous state.

The Brotherhood, from which Mursi emerged to narrowly win a free election in June, summoned supporters to a demonstration outside the palace in response to what it termed "oppressive abuses" by opposition parties.

Brotherhood spokesman Mahmoud Ghozlan was quoted on its Facebook page as saying opposition groups "imagined they could shake legitimacy or impose their views by force".

Leftist opposition leader Hamdeen Sabahy promptly urged his supporters to go to the streets as well, heightening the chances of confrontation between Islamists and their opponents.

A spokeswoman for Sabahy's Popular Current movement asked protesters to head to the palace to reinforce those still camped out there after Tuesday evening's protests, in which officials said 35 protesters and 40 police were wounded.

Although they fired tear gas when protesters broke through barricades to reach the palace walls, riot police appeared to handle those disturbances with restraint.

About 200 protesters camped out overnight, blocking one gate to the palace in northern Cairo, but traffic was flowing normally and riot police had been withdrawn.

"Our demands to the president: retract the presidential decree and cancel the referendum on the constitution," read a placard hung by demonstrators on a palace gate.

The rest of the Egyptian capital was calm, despite the political furor over Mursi's November 22 decree handing himself wide powers and shielding his decisions from judicial oversight.

Crowds had gathered on Tuesday for what organizers dubbed a "last warning" to Mursi. "The people want the downfall of the regime," they chanted, roaring the signature slogan of last year's uprising that ousted Mubarak.

But the "last warning" may turn out to be one of the last gasps for a disparate opposition that has little chance of stopping next week's vote on a constitution drafted over six months and swiftly approved by an Islamist-dominated assembly.

MURSI STANDS HIS GROUND

Facing the gravest crisis of his six-month-old tenure, the Islamist president has shown no sign of buckling under pressure, confident that the Muslim Brotherhood and its Islamist allies can win the referendum and a parliamentary election to follow.

Many Egyptians yearn for an end to political upheaval that has scared off investors and tourists, damaging the economy.

Ahmed Kamel, spokesman for the Congress Party led by former Arab League chief Amr Moussa, said Mursi should meet opposition demands, not call for an Islamist counter-demonstration.

Some protesters have already gone beyond opposition calls for Mursi to scrap his decree, defer the referendum and set up a "representative committee" to revise the draft constitution, instead demanding the president's overthrow.

"The demands of the street are moving faster than those of the politicians," said Elijah Zarwan, a fellow with the European Council on Foreign Relations. "Now is the time for the Egyptian liberals to negotiate without conditions."

COURT PROTEST

Dozens of pro-Mursi demonstrators, watched by equal numbers of police, waved flags outside the Supreme Constitutional Court, whose rulings have complicated the Islamists' rise to power.

"You are not a political agency," read one banner held by the demonstrators, addressing a court that in June ordered the dissolution of the Islamist-led lower house of parliament.

Mursi issued his decree temporarily putting his actions above the law to forestall any court ruling to dissolve the upper house or the assembly that wrote the constitution.

State institutions, with the partial exception of the judiciary, have mostly fallen in behind Mursi.

The army, the power behind all previous Egyptian presidents in the republic's six-decade history, has gone back to barracks, having apparently lost its appetite to intervene in politics.

In a bold move, Mursi sacked Mohamed Hussein Tantawi, the Mubarak-era army commander and defense minister, in August and removed the sweeping powers that the military council which took over after Mubarak's fall had grabbed two months earlier.

The liberals, leftists, Christians, ex-Mubarak followers and others opposed to Mursi, elected in a close result against a secular rival, have yet to generate a mass movement or a grassroots political base to challenge the Brotherhood.

Protesters have scrawled "leave" over Mursi's palace walls, but the president has made clear he is not going anywhere.

"The crisis we have suffered for two weeks is on its way to an end, and very soon, God willing," Saad al-Katatni, head of the Brotherhood's Freedom and Justice Party, told Reuters.

Investors have seized on hopes that Egypt's turbulent transition, which has buffeted the economy for two years, may soon head for calmer waters, sending stocks 1.6 per cent higher after a 3.5 percent rally on Tuesday.

The most populous Arab nation has turned to the IMF for a $4.8 billion loan to help it out of a crisis that has depleted its foreign currency reserves.

The government said on Wednesday the process was on track and Egypt's request would go to the IMF board as expected.

(Additional reporting by Tom Perry and Yasmine Saleh; Writing by Alistair Lyon; Editing by Mark Heinrich)

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John Krasinski: I'm 'Totally in Love' with Matt Damon

By Paul Chi

12/05/2012 at 08:55 AM EST

John Krasinski and Matt Damon at the Promised Land premiere in N.Y.C.

Andrew H. Walker/WireImage

Move over, Ben Affleck! John Krasinski wants to be Matt Damon's new best friend.

"Matt is one of the coolest guys I know, and I'm totally in love with the guy, but he doesn't even know my name," Krasinski joked to PEOPLE at the New York premiere of his new movie Promised Land on Tuesday.

"I would love to have a bromance with him," he continues, "but I don't even know if I could even use the word 'bromance' because he and Ben are so tight and like a married couple that I'll never get in there."

The Office star, 33, first met Damon through his wife Emily Blunt when she starred in 2011's The Adjustment Bureau with him.

Soon, he got the opportunity to work with Damon himself in Promised Land (out in theaters Dec. 28), a new film the pair wrote and star in together. Although Krasinski spent multiple weekends at Damon's house to write the script, he is not satisfied with their strictly working relationship.

"I must be the bromance mistress," he said. "I'm on the outside of the relationship, only working with him on the side while really he's suppose to be with Ben. I'm clearly the mistress and this has got to change!"

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Longer tamoxifen use cuts breast cancer deaths

Breast cancer patients taking the drug tamoxifen can cut their chances of having the disease come back or kill them if they stay on the pills for 10 years instead of five years as doctors recommend now, a major study finds.

The results could change treatment, especially for younger women. The findings are a surprise because earlier research suggested that taking the hormone-blocking drug for longer than five years didn't help and might even be harmful.

In the new study, researchers found that women who took tamoxifen for 10 years lowered their risk of a recurrence by 25 percent and of dying of breast cancer by 29 percent compared to those who took the pills for just five years.

In absolute terms, continuing on tamoxifen kept three additional women out of every 100 from dying of breast cancer within five to 14 years from when their disease was diagnosed. When added to the benefit from the first five years of use, a decade of tamoxifen can cut breast cancer mortality in half during the second decade after diagnosis, researchers estimate.

Some women balk at taking a preventive drug for so long, but for those at high risk of a recurrence, "this will be a convincer that they should continue," said Dr. Peter Ravdin, director of the breast cancer program at the UT Health Science Center in San Antonio.

He reviewed results of the study, which was being presented Wednesday at a breast cancer conference in San Antonio and published by the British medical journal Lancet.

About 50,000 of the roughly 230,000 new cases of breast cancer in the United States each year occur in women before menopause. Most breast cancers are fueled by estrogen, and hormone blockers are known to cut the risk of recurrence in such cases.

Tamoxifen long was the top choice, but newer drugs called aromatase inhibitors — sold as Arimidex, Femara, Aromasin and in generic form — do the job with less risk of causing uterine cancer and other problems.

But the newer drugs don't work well before menopause. Even some women past menopause choose tamoxifen over the newer drugs, which cost more and have different side effects such as joint pain, bone loss and sexual problems.

The new study aimed to see whether over a very long time, longer treatment with tamoxifen could help.

Dr. Christina Davies of the University of Oxford in England and other researchers assigned 6,846 women who already had taken tamoxifen for five years to either stay on it or take dummy pills for another five years.

Researchers saw little difference in the groups five to nine years after diagnosis. But beyond that time, 15 percent of women who had stopped taking tamoxifen after five years had died of breast cancer versus 12 percent of those who took it for 10 years. Cancer had returned in 25 percent of women on the shorter treatment versus 21 percent of those treated longer.

Tamoxifen had some troubling side effects: Longer use nearly doubled the risk of endometrial cancer. But it rarely proved fatal, and there was no increased risk among premenopausal women in the study — the very group tamoxifen helps most.

"Overall the benefits of extended tamoxifen seemed to outweigh the risks substantially," Dr. Trevor Powles of the Cancer Centre London wrote in an editorial published with the study.

The study was sponsored by cancer research organizations in Britain and Europe, the United States Army, and AstraZeneca PLC, which makes Nolvadex, a brand of tamoxifen, which also is sold as a generic for 10 to 50 cents a day. Brand-name versions of the newer hormone blockers, aromatase inhibitors, are $300 or more per month, but generics are available for much less.

The results pose a quandary for breast cancer patients past menopause and those who become menopausal because of their treatment — the vast majority of cases. Previous studies found that starting on one of the newer hormone blockers led to fewer relapses than initial treatment with tamoxifen did.

Another study found that switching to one of the new drugs after five years of tamoxifen cut the risk of breast cancer recurrence nearly in half — more than what was seen in the new study of 10 years of tamoxifen.

"For postmenopausal women, the data still remain much stronger at this point for a switch to an aromatase inhibitor," said that study's leader, Dr. Paul Goss of Massachusetts General Hospital. He has been a paid speaker for a company that makes one of those drugs.

Women in his study have not been followed long enough to see whether switching cuts deaths from breast cancer, as 10 years of tamoxifen did. Results are expected in about a year.

The cancer conference is sponsored by the American Association for Cancer Research, Baylor College of Medicine and the UT Health Science Center.

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Marilynn Marchione can be followed at http://twitter.com/MMarchioneAP

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Stock futures edge higher on China optimism

NEW YORK (Reuters) - Stock futures rose on Wednesday after comments from China's new leader boosted global growth expectations.

Still, some earlier gains were trimmed after data showed U.S. private-sector employers added 118,000 jobs in November, shy of economists' expectations.

Chinese Communist Party chief Xi Jinping said the country would maintain its fine-tuning of economic policies in 2013 to ensure stable economic growth. That sparked a rally in Chinese shares, with the Shanghai Composite Index <.ssec> surging 2.9 percent.

Among his key priorities, Xi listed tax reform, urbanization and allowing the market to play a bigger role in setting resource prices.

"Investors' bullish receptors were earlier tickled by overnight events in China, where the new leadership announced a drive towards 'urbanization', which means more infrastructure investment," said Andrew Wilkinson, chief economic strategist at Miller Tabak & Co in New York.

"At the same time, rules preventing insurance companies from taking a larger stake in banking companies were relaxed."

Other data due later in the day include factory orders and ISM's November non-manufacturing index, both at 10:00 a.m. ET (1500 GMT).

Nokia is to partner with China Mobile , the world's biggest operator, to launch a version of its flagship Lumia smartphone tailored for the world's largest market. U.S.-listed shares of Nokia rose 4.1 percent to $3.58 in premarket trading.

S&P 500 futures rose 2.8 points and were above 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 rose 41 points, and Nasdaq 100 futures added 1 point.

Repsol filed a U.S. lawsuit to block Chevron Corp's deal with Argentina's YPF , ramping up the Spanish oil company's legal response to the loss of its assets in Argentina.

Pandora Media Inc

lowered its fourth-quarter earnings forecast, blaming a pull-back by advertisers on concerns about the U.S. budget, but analysts suggested it was due more to increasing competition.

The U.S. Senate voted 98-0 on Tuesday to approve a wide-ranging defense bill that authorizes $631.4 billion in funding for the U.S. military, the war in Afghanistan and nuclear weapons.

Walt Disney gave a much needed boost to Netflix , becoming the first major Hollywood studio to use the video service to bypass premium channels like HBO that traditionally controlled the delivery of movies to TV subscribers.

The U.S. securities regulator is investigating a $10 million stock sale in March by Steven Fishman, chief executive of close-out retailer Big Lots Inc , who announced his retirement on Tuesday, the Wall Street Journal reported, citing a person familiar with the inquiry.

U.S. stocks finished slightly lower in quiet trading Tuesday as the back-and-forth wrangling over the U.S. budget gave investors little reason to act.

(Editing by Bernadette Baum)

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NATO warns Syria not to use chemical weapons

BEIRUT (Reuters) - NATO told Syrian President Bashar al-Assad on Tuesday that any use of chemical weapons in his fight against encroaching rebel forces would be met by an immediate international response.

The warning from NATO Secretary-General Anders Fogh Rasmussen came as Syrian forces bombarded rebel districts near Damascus in a sustained counter-attack to stem rebel gains around Assad's power base.

Syrian state media said a rebel mortar attack on a school had killed 28 students and a teacher.

International concern over Syria's intentions has been heightened by reports that its chemical weapons have been moved and could be prepared for use.

"The possible use of chemical weapons would be completely unacceptable for the whole international community and if anybody resorts to these terrible weapons I would expect an immediate reaction from the international community," Rasmussen told reporters at the start of a meeting of alliance foreign ministers in Brussels.

The chemical threat made it urgent for the alliance to send Patriot anti-missile missiles to Turkey, Rasmussen said.

The French Foreign Ministry referred to "possible movements on military bases storing chemical weapons in Syria" and said the international community would react if the weapons were used.

U.S. President Barack Obama on Monday told Assad not to use chemical weapons, without saying how the United States might respond. The Foreign Ministry in Damascus said it would never use such weapons against Syrians.

Western military experts say Syria has four suspected chemical weapons sites, and it can produce chemical weapons agents including mustard gas and sarin, and possibly also VX nerve agent. The CIA has estimated that Syria possesses several hundred liters of chemical weapons and produces hundreds of tonnes of agents annually.

FLIGHTS SUSPENDED

The fighting around Damascus has led foreign airlines to suspend flights and prompted the United Nations and European Union to reduce their presence in the capital, adding to a sense that the fight is closing in.

The army fightback came a day after the Syrian foreign ministry spokesman was reported to have defected in a potentially embarrassing blow to the government.

The Syrian Observatory for Human Rights said 200 people were killed across Syria on Monday, more than 60 of them around Damascus. Assad's forces bombarded districts to the south-east of the capital on Tuesday, near to the international airport, and in the rebel bastion of Daraya to the south-west.

Opposition footage posted on the Internet showed a multiple rocket launcher fire 20 rockets, which activists said was filmed at the Mezze military airport in Damascus.

Reuters could not independently verify the footage due to the government's severe reporting restrictions.

In central Damascus, shielded for many months from the full force of a civil war in which 40,000 people have been killed, one resident reported hearing several loud explosions.

"I have heard four or five thunderous blows. It could be barrel bombs," she said, referring to makeshift bombs which activists say Assad's forces have dropped from helicopters on rebel-dominated areas.

The state news agency said that 28 students and a teacher were killed near the capital when rebels fired a mortar bomb on a school. Rebels have targeted government-held residential districts of the capital.

The mainly Sunni Muslim rebel forces have made advances in recent weeks, seizing military bases, including some close to Damascus, from forces loyal to Assad, who is from Syria's Alawite minority linked to Shi'ite Islam.

Faced with creeping rebel gains across the north and east of the country, and the growing challenge around the capital, Assad has increasingly resorted to air strikes against the insurgents.

A diplomat in the Middle East said Syrian Foreign Ministry spokesman Jihad Makdissi had left the country and defected, while the British-based Observatory said it had information that he flew from Beirut on Monday afternoon heading for London.

In Beirut, a diplomat said Lebanese officials had confirmed that Makdissi spent several days in Beirut before leaving on Monday, but could not confirm his destination.

"We're aware of reports that he has defected and may be coming to the UK. We're seeking clarification," a Foreign Office spokeswoman in London said.

Makdissi was the public face to the outside world of Assad's government as it battled the 20-month-old uprising. But he had barely appeared in public for several weeks before Monday's report of his defection.

He had little influence in a system largely run by the security apparatus and the military. But Assad's opponents will see the loss of such a high profile figure, if confirmed, as further evidence of a system crumbling from within.

ESCALATED VIOLENCE

The United Nations and European Union both said they were reducing their presence in Syria in response to the escalated violence around the capital.

A spokesman for U.N. humanitarian operations said the move would not stop aid deliveries to areas which remained accessible to relief convoys.

"U.N.-funded aid supplies delivered through SARC (Syrian Arab Red Crescent) and other charities are still moving daily where the roads are open," Jens Laerke told Reuters in Geneva.

"We have not suspended our operation, we are reducing the non-essential international staff."

Three remaining international staff at the European Union delegation, who stayed on in Damascus after the departure of most Western envoys, crossed the border into Lebanon on Tuesday after pulling out of the Syrian capital.

The Syrian army appears to have focused most of its energy on Damascus, where rebels have been planning to push into the capital from the surrounding suburbs.

Neither side appears to have the upper hand in the fighting and a previous attempt by rebels last July to hold ground in the city was crushed as the fighters fell back into the suburbs and nearby countryside.

Clashes have continued around Damascus International Airport and along the airport highway, which has become an on-and-off battleground that forced foreign airlines to suspend flights to Damascus since Thursday evening.

(Additional reporting by David Brunnstrom in Brussels, Khaled Yacoub Oweis in Cairo, Erika Solomon, Oliver Holmes and Ayat Basma in Beirut, Mohammed Abbas and David Cutler in London, and Stephanie Nebehay in Geneva)

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Cops Seek Subway Killer After Man Is Pushed to His Death in Manhattan

By Tim Nudd

12/04/2012 at 08:15 AM EST

Suspect in N.Y.C. subway killing

New York City police are searching for a man who allegedly pushed another man to his death in front of a subway train in Manhattan on Monday.

Ki-Suck Han, 58, of Elmhurst, Queens, was shoved in front of a southbound R train at the 49th Street station at around 12:30 p.m., according to NBC New York. He was later pronounced dead at St. Luke's Hospital.

Witnesses said the suspect had been mumbling to himself before getting into an argument with Han on the platform.

After being pushed, Han tried to climb back up on the platform but was struck by the train before he could make it to safety.

One witness videotaped part of the verbal altercation and turned the tape over to police, which released it publicly in an effort to identify the suspect. The man was last seen wearing a dark jacket, a gray T-shirt and a cap.

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Fossil fuel subsidies in focus at climate talks

DOHA, Qatar (AP) — Hassan al-Kubaisi considers it a gift from above that drivers in oil- and gas-rich Qatar only have to pay $1 per gallon at the pump.

"Thank God that our country is an oil producer and the price of gasoline is one of the lowest," al-Kubaisi said, filling up his Toyota Land Cruiser at a gas station in Doha. "God has given us a blessing."

To those looking for a global response to climate change, it's more like a curse.

Qatar — the host of U.N. climate talks that entered their final week Monday — is among dozens of countries that keep gas prices artificially low through subsidies that exceeded $500 billion globally last year. Renewable energy worldwide received six times less support — an imbalance that is just starting to earn attention in the divisive negotiations on curbing the carbon emissions blamed for heating the planet.

"We need to stop funding the problem, and start funding the solution," said Steve Kretzmann, of Oil Change International, an advocacy group for clean energy.

His group presented research Monday showing that in addition to the fuel subsidies in developing countries, rich nations in 2011 gave more than $58 billion in tax breaks and other production subsidies to the fossil fuel industry. The U.S. figure was $13 billion.

The Paris-based Organization for Economic Cooperation and Development has calculated that removing fossil fuel subsidies could reduce carbon emissions by more than 10 percent by 2050.

Yet the argument is just recently gaining traction in climate negotiations, which in two decades have failed to halt the rising temperatures that are melting Arctic ice, raising sea levels and shifting weather patterns with impacts on droughts and floods.

In Doha, the talks have been slowed by wrangling over financial aid to help poor countries cope with global warming and how to divide carbon emissions rights until 2020 when a new planned climate treaty is supposed to enter force. Calls are now intensifying to include fossil fuel subsidies as a key part of the discussion.

"I think it is manifestly clear ... that this is a massive missing piece of the climate change jigsaw puzzle," said Tim Groser, New Zealand's minister for climate change.

He is spearheading an initiative backed by Scandinavian countries and some developing countries to put fuel subsidies on the agenda in various forums, citing the U.N. talks as a "natural home" for the debate.

The G-20 called for their elimination in 2009, and the issue also came up at the U.N. earth summit in Rio de Janeiro earlier this year. Frustrated that not much has happened since, European Union climate commissioner Connie Hedegaard said Monday she planned to raise the issue with environment ministers on the sidelines of the talks in Doha.

Many developing countries are positive toward phasing out fossil fuel subsidies, not just to protect the climate but to balance budgets. Subsidies introduced as a form of welfare benefit decades ago have become an increasing burden to many countries as oil prices soar.

"We are reviewing the subsidy periodically in the context of the total economy for Qatar," the tiny Persian gulf country's energy minister, Mohammed bin Saleh al-Sada, told reporters Monday.

Qatar's National Development Strategy 2011-2016 states it more bluntly, saying fuel subsides are "at odds with the aspirations" and sustainability objectives of the wealthy emirate.

The problem is that getting rid of them comes with a heavy political price.

When Jordan raised fuel prices last month, angry crowds poured into the streets, torching police cars, government offices and private banks in the most sustained protests to hit the country since the start of the Arab unrest. One person was killed and 75 others were injured in the violence.

Nigeria, Indonesia, India and Sudan have also seen violent protests this year as governments tried to bring fuel prices closer to market rates.

Iran has used a phased approach to lift fuel subsidies over the past several years, but its pump prices remain among the cheapest in the world.

"People perceive it as something that the government is taking away from them," said Kretzmann. "The trick is we need to do it in a way that doesn't harm the poor."

The International Energy Agency found in 2010 that fuel subsidies are not an effective measure against poverty because only 8 percent of such subsidies reached the bottom 20 percent of income earners.

The IEA, which only looked at consumption subsidies, this year said they "remain most prevalent in the Middle East and North Africa, where momentum toward their reform appears to have been lost."

In the U.S., environmental groups say fossil fuel subsidies include tax breaks, the foreign tax credit and the credit for production of nonconventional fuels.

Industry groups, like the Independent Petroleum Association of America, are against removing such support, saying that would harm smaller companies, rather than the big oil giants.

In Doha, Mohammed Adow, a climate activist with Christian Aid, called all fuel subsidies "reckless and dangerous," but described removing subsidies on the production side as "low-hanging fruit" for governments if they are serious about dealing with climate change.

"It's going to oil and coal companies that don't need it in the first place," he said.

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Associated Press writers Abdullah Rebhy in Doha, Qatar, and Brian Murphy in Dubai, United Arab Emirates, contributed to this report

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Karl Ritter can be reached at www.twitter.com/karl_ritter

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Stock futures tick up, fiscal cliff angst lingers

NEW YORK (Reuters) - Stock futures edged up in low volume on Tuesday as the market remains hostage to negotiations in Washington on how to avert a "fiscal cliff" that could push the U.S. economy into recession.

Republicans in Congress proposed steep spending cuts to bring down the budget deficit on Monday but gave no ground on President Barack Obama's call to raise taxes on the wealthiest Americans, and the proposal was dismissed by the White House.

Headlines about the negotiations have dominated market action, with many investors expecting the two sides to come up with a deal before the year-end deadline that could trigger a rally in equities.

"Support (for the market) is based on a belief that Washington will come to some agreement before we go over the fiscal cliff," said Art Hogan, managing director of Lazard Capital Markets in New York.

He said that while the politicians are more concerned with showing a hard line in public, "their staffers are looking for middle ground. On the first show of flexibility from either side we'll get a relief rally."

Obama will meet with U.S. governors at the White House on Tuesday to talk about the fiscal cliff, a package of tax increases and federal spending cuts that are due to begin January 1.

Coach became the latest company to advance the date of its next dividend payment. Expectations of higher taxes on dividends kicking in next year have pushed many companies to pay special dividends this year or advance their next pay-back to investors.

S&P 500 futures rose 1.9 points and were slightly above 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 rose 10 points, and Nasdaq 100 futures added 3 points.

A light data calendar for Tuesday includes the Institute for Supply Management-New York release of its November index of regional business activity at 9:45 a.m. (1445 GMT).

Toll Brothers shares rose 5.2 percent in premarket trading after the largest U.S. luxury homebuilder reported a higher quarterly profit and said new orders rose sharply.

MetroPCS Communications shares dropped 5.2 percent after Sprint Nextel appeared unlikely to make a counter-offer for the wireless service provider.

Cerberus Capital Management is in talks to join Virtu Financial's bid for U.S. brokerage Knight Capital Group , the Wall Street Journal reported, citing people familiar with the discussions. Knight became a takeover target after a trading glitch left it nearly bankrupt earlier his year.

Shares of Pep Boys-Manny Moe and Jack were down 6.4 percent in light premarket trading a day after the release of the auto parts retailer's results.

U.S. stocks fell on Monday as disappointing numbers on U.S. factory activity overshadowed optimism about China's economic growth.

(Reporting by Rodrigo Campos; Editing by Chizu Nomiyama and Kenneth Barry)

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Netanyahu brushes off world condemnation of settlement plans

JERUSALEM (Reuters) - Prime Minister Benjamin Netanyahu on Sunday brushed off world condemnation of Israel's plans to expand Jewish settlements after the Palestinians won de facto U.N. recognition of statehood.

"We will carry on building in Jerusalem and in all the places that are on the map of Israel's strategic interests," a defiant Netanyahu said at the weekly cabinet meeting.

In another blow to the Palestinian Authority in the West Bank, Israel announced it was withholding Palestinian tax revenues this month worth about $100 million.

Israel said the reason for the move was a Palestinian debt of $200 million to the Israeli Electric Corporation, an obligation that has existed for some time.

Finance Minister Yuval Steinitz cautioned last month that if the Palestinians went ahead with the U.N. bid Israel would "not collect taxes for them and we will not transfer their revenues".

Yasser Abed Rabbo, a senior Palestinian official, said confiscation of the tax funds due the cash-strapped Authority, vital to meeting its payroll, was "piracy and theft".

Stung by the U.N. General Assembly's upgrading of the Palestinians' status from "observer entity" to "non-member state", Israel said on Friday it would build 3,000 more settler homes in the West Bank and East Jerusalem, areas Palestinians want for a future state, along with Gaza.

An Israeli official said the government also ordered "preliminary zoning and planning work" for thousands of housing units in areas including the so-called "E1" zone near Jerusalem.

Such construction could divide the West Bank in two and further dim Palestinian hopes, backed by the United States and other international sponsors of the Middle East peace process, for a contiguous country.

"It would represent an almost fatal blow to remaining chances of securing a two-state solution," United Nations Secretary-General Ban Ki-moon said in a statement on Sunday.

Israeli officials said it could up to two years before any building begins in E1.

At the cabinet meeting, Netanyahu said the "unilateral step the Palestinians took at the U.N. is a gross violation of previous agreements signed with Israel". The government of Israel, he added, "rejects the General Assembly's vote".

The upgrade, approved overwhelmingly, fell short of full U.N. membership, which only the Security Council can grant. But it has significant legal implications because it could allow the Palestinians access to the International Criminal Court where they could file complaints against Israel.

Israel's settlement plans, widely seen as retaliation for the Palestinians' U.N. bid, have drawn strong international condemnation from the United States, France, Britain and the European Union.

"The recognition of Palestine as a state changes a lot of the facts, and aims to establish new ones," Palestinian President Mahmoud Abbas told a cheering crowd in the West Bank city of Ramallah on his return from the United States.

"But we have to recognize that our victory provoked the powers of settlement, war and occupation."

INTERNATIONAL CRITICISM

Netanyahu heads a pro-settler government and opinion polls predict his Likud party will come out on top in Israel's January 22 parliamentary election, despite opponents' allegations that his policies have deepened Israeli diplomatic isolation.

"All settlement construction is illegal under international law and constitutes an obstacle to peace," the EU's foreign policy chief Catherine Ashton said in a statement on Sunday.

The United States said the plan was counterproductive to any resumption of direct peace talks, stalled for two years in a dispute over settlement expansion in the West Bank and East Jerusalem, both captured by Israel in a 1967 war.

Netanyahu says Israel, as a Jewish state, has a historic claim to land in the West Bank and to all of Jerusalem. Palestinians want East Jerusalem as the capital of a future state. Israel considers all of the holy city as its capital, a claim that is not recognized internationally.

Israeli Housing Minister Ariel Attias said that within weeks the government would publish invitations for bids from contractors to build 1,000 homes in East Jerusalem and more than 1,000 in West Bank settlement blocs.

"E1 is in planning, which means sketches on paper," Attias told Army Radio. "No one will build until it is clear what will be done there."

The E1 zone is considered especially sensitive. Israel froze much of its activities in E1 under pressure from former U.S. President George W. Bush and the area has been under the scrutiny of his successor Barack Obama.

Benny Kashriel, mayor of the Maale Adumim settlement adjacent to E1, told Army Radio building "will take a year or two".

Yariv Oppenheimer, head of the Israeli anti-settlement group Peace Now said: "If we build in E1 the two-state vision will truly be history ... it is a strategic point that if built, will prevent the Palestinians from having a normal state."

Approximately 500,000 Israelis and 2.5 million Palestinians live in the West Bank and East Jerusalem.

(Additional reporting by Jihan Abdalla and Ali Sawafta in Ramallah and Louis Charbonneau in New York; Editing by Jeffrey Heller and Andrew Roche)

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Johnny Depp Performs with Alice Cooper in L.A.

Caught in the Act

12/03/2012 at 07:15 AM EST

Johnny Depp and Alice Cooper

Todd Nakamine

Johnny Depp rocks!

The Lone Ranger actor joined Alice Cooper on stage at the Orpheum Theatre in Los Angeles on Thursday.

"Johnny was in great spirits," a fellow concertgoer tells PEOPLE. "He was really happy and at ease, especially on stage with the rest of the band."

During their performance, Depp and Cooper played several cover songs including The Doors' "Break On Through (To the Other Side)," The Beatles' "Revolution" and Jimi Hendrix's "Foxy Lady."

Depp – who stepped out solo – was enjoying a "guys night" and wasn't "with any ladies," the source adds.

– Jessica Herndon

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