North Korea's new leader burnishes credentials with rocket


SEOUL/TOKYO (Reuters) - North Korea successfully launched a rocket on Wednesday, boosting the credentials of its new leader and stepping up the threat the isolated and impoverished state poses to its opponents.


The rocket, which North Korea says put a weather satellite into orbit, has been labeled by the United States, South Korea and Japan as a test of technology that could one day deliver a nuclear warhead capable of hitting targets as far as the continental United States.


"The satellite has entered the planned orbit," a North Korean television news-reader clad in traditional Korean garb triumphantly announced, after which the station played patriotic songs with the lyrics "Chosun (Korea) does what it says".


The rocket was launched just before 10 a.m. Korea time (9 p.m. ET on Tuesday), according to defense officials in South Korea and Japan, and easily surpassed a failed April launch that flew for less than two minutes.


The North American Aerospace Defense Command (NORAD) said that it "deployed an object that appeared to achieve orbit", the first time an independent body has verified North Korean claims.


North Korea followed what it said was a similar successful launch in 2009 with a nuclear test that prompted the United Nations Security Council to stiffen sanctions that it originally imposed in 2006 after the North's first nuclear test.


The state is banned from developing nuclear and missile-related technology under U.N. resolutions, although Kim Jong-un, the youthful head of state who took power a year ago, is believed to have continued the state's "military first" programs put into place by his deceased father Kim Jong-il.


Washington condemned Wednesday's launch as a "provocative action" and breach of U.N. rules, while Japan's U.N. envoy called for a Security Council meeting. However, diplomats say further tough sanctions are unlikely to be agreed at the body as China, the North's only major ally, will oppose them.


"The international community must work in a concerted fashion to send North Korea a clear message that its violations of United Nations Security Council resolutions have consequences," the White House said in a statement.


Japan's likely next prime minister, Shinzo Abe, who is leading in opinion polls ahead of an election on December 16 and who is known as a North Korea hawk, called on the United Nations to adopt a resolution "strongly criticizing" Pyongyang.


There was no immediate official reaction from the Chinese government, which is North Korea's only major ally.


China had expressed "deep concern" over the launch which was announced a day after a top politburo member, representing new Chinese leader Xi Xinping, met Kim Jong-un in Pyongyang.


STUMBLING BLOCK


On Wednesday, China's state news agency Xinhua said North Korea had the "right to conduct peaceful exploration of outer space" but also called on it to abide by U.N. resolutions.


"China has been the stumbling block to firmer U.N. action and we'll have to see if the new leadership is any different than its predecessors," Bruce Klingner, a Korea expert at the Heritage Foundation, a U.S. thinktank told a conference call.


A senior adviser to South Korea's president said last week it was unlikely there would be action from the U.N. and that Seoul would expect its allies to tighten sanctions unilaterally.


Kim Jong-un, believed to be 29 years old, took office after his father died on December 17 last year and experts believe that Wednesday's launch was intended to commemorate the first anniversary of the death.


The April launch was timed for the centennial of the birth of Kim Il Sung, the founder of North Korea and the grandfather of its current ruler.


Wednesday's success puts the North ahead of the South which has not managed to get a rocket off the ground.


"This is a considerable boost in establishing the rule of Kim Jong-un," said Cho Min, an expert at the Korea Institute of National Unification.


There have been few indications the secretive and impoverished state, where the United Nations estimates a third of the population is malnourished, has made any advances in opening up economically over the past year.


North Korea remains reliant on minerals exports to China and remittances from tens of thousands of its people working on labor projects overseas.


The 22 million population often needs handouts from defectors who have escaped to South Korea in order to afford basic medicines.


Given the puny size of its economy - per capita income is less than $2,000 a year - one of the few ways the North can attract world attention is by emphasizing its military threat.


Pyongyang wants the United States to resume aid and to recognize it diplomatically, although the April launch scuppered a planned food deal.


It is believed to be some years away from developing a functioning nuclear warhead although it may have enough plutonium for around half a dozen nuclear bombs, according to nuclear experts.


The North has also been enriching uranium which would give it a second path to nuclear weapons as it sits on vast natural uranium reserves.


"A successful launch puts North Korea closer to the capability to deploy a weaponized missile," said Denny Roy a senior fellow at the East-West Center in Hawaii.


"But this would still require fitting a weapon to the missile and ensuring a reasonable degree of accuracy. The North Koreans probably do not yet have a nuclear weapon small enough for a missile to carry."


Pyongyang says that its development is part of a civil nuclear program, but has also boasted of it being a "nuclear weapons power".


(Additional reporting by Jumin Park and Yoo Choonsik in SEOUL; David Alexander, Matt Spetalnick and Paul Eckert in WASHINGTON; Linda Sieg in TOKYO; Sui-Lee Wee in BEIJING; Rosmarie Francisco in MANILA; Writing by David Chance; Editing by Raju Gopalakrishnan)



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Panasonic may sell Sanyo digital camera business: source






TOKYO (Reuters) – Panasonic Corp may sell its Sanyo digital camera business to Japanese private equity fund Advantage Partners by the end of March, a source familiar with the plan said.


A final decision on the sale will be made by the end of the year, the source said on condition he was not identified.






Advantage Partners will pay several hundreds of millions of yen for the business, which makes digital cameras for other companies, including Olympus Corp, the Nikkei business daily reported earlier.


Panasonic declined to comment saying it had not announced the plan.


The Japanese company aims to sell 110 billion yen ($ 1.34 billion) of assets, including buildings and land by the end of March to boost free cashflow to 200 billion yen for the business year. The company expects an annual net loss of close to $ 10 billion as it writes off billions in deferred tax assets and goodwill.


Panasonic acquired rival Sanyo, a leading maker of lithium ion batteries and solar panels, in 2010. Sales of compact digital cameras are under pressure from increasingly powerful smartphones.


Panasonic’s shares gained as much as 4 percent in early trading in Tokyo, compared with a 0.5 percent rise in the benchmark Nikkei 225 index. ($ 1 = 82.3900 Japanese yen)


(Reporting by Reiji Murai; Writing by Tim Kelly; Editing by Jeremy Laurence)


Gadgets News Headlines – Yahoo! News


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Hugh Hefner's Engagement Ring to Crystal Harris Revealed















12/11/2012 at 07:00 PM EST



The wedding's back on – though it may be a good idea to save that gift receipt.

Hugh Hefner, 86, officially confirms that he is once again engaged to Crystal Harris, 26, telling his Twitter followers, "I've given Crystal Harris a ring. I love the girl."

And to prove it, Harris posted photos of the big diamond sparkler, calling it "my beautiful ring."

Neither announced a wedding date, though sources tell PEOPLE they're planning to tie the knot at the Playboy Mansion in Los Angeles on New Year's Eve.

Whether that still happens remains to be seen.

This is the plan they had in 2011 – a wedding at the mansion – except that Harris called it off just days before the nuptials were scheduled to happen in front of 300 invited guests.

Hugh Hefner's Engagement Ring to Crystal Harris Revealed| Engagements, Crystal Harris, Hugh Hefner

Hugh Hefner and Crystal Harris

David Livingston / Getty

The onetime Playmate of the Month then ripped Hef's bedroom skills, calling him a two-second man, to which Hefner replied, "I missed a bullet" by not marrying her.

A year later, Hefner's "runaway bunny" bounded back to him.

Reporting by JENNIFER GARCIA

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DA investigating Texas' troubled $3B cancer agency


AUSTIN, Texas (AP) — Turmoil surrounding an unprecedented $3 billion cancer-fighting effort in Texas worsened Tuesday when its executive director offered his resignation and the state's chief public corruption prosecutor announced an investigation into the beleaguered agency.


No specific criminal allegations are driving the latest probe into the Cancer Prevention and Research Institute of Texas, said Gregg Cox, director of the Travis County district attorney's public integrity unit. But his influential office opened a case only weeks after the embattled agency disclosed that an $11 million grant to a private company bypassed review.


That award is the latest trouble in a tumultuous year for CPRIT, which controls the nation's second-largest pot of cancer research dollars. Amid the mounting problems, the agency announced Tuesday that Executive Director Bill Gimson had submitted his letter of resignation.


"Unfortunately, I have also been placed in a situation where I feel I can no longer be effective," Gimson wrote in a letter dated Monday.


Gimson said the troubles have resulted in "wasted efforts expended in low value activities" at the agency, instead of a focused fight against cancer. Gimson offered to stay on until January, and the agency's board must still approve his request to step down.


His departure would complete a remarkable house-cleaning at CPRIT in a span of just eight months. It began in May, when Dr. Alfred Gilman resigned as chief science officer in protest over a different grant that the Nobel laureate wanted approved by a panel of scientists. He warned it would be "the bomb that destroys CPRIT."


Gilman was followed by Chief Commercialization Officer Jerry Cobbs, whose resignation in November came after an internal audit showed Cobbs included an $11 million proposal in a funding slate without a required outside review of the project's merits. The lucrative grant was given to Dallas-based Peloton Therapeutics, a biomedical startup.


Gimson chalked up Peloton's award to an honest mistake and has said that, to his knowledge, no one associated with CPRIT stood to benefit financially from the company receiving the taxpayer funds. That hasn't satisfied some members of the agency's governing board, who called last week for more assurances that no one personally profited.


Cox said he has been following the agency's problems and his office received a number of concerned phone calls. His department in Austin is charged with prosecuting crimes related to government officials; his most famous cases include winning a conviction against former U.S. House Majority Leader Tom DeLay in 2010 on money laundering charges.


"We have to gather the facts and figure what, if any, crime occurred so that (the investigation) can be focused more," Cox said.


Gimson's resignation letter was dated the same day the Texas attorney general's office also announced its investigation of the agency. Cox said his department would work cooperatively with state investigators, but he made clear the probes would be separate.


Peloton's award marks the second time this year that a lucrative taxpayer-funded grant authorized by CPRIT instigated backlash and raised questions about oversight. The first involved the $20 million grant to M.D. Anderson Cancer Center in Houston that Gilman described as a thin proposal that should have first been scrutinized by an outside panel of scientific peer-reviewers, even though none was required under the agency's rules.


Dozens of the nation's top scientists agreed. They resigned en masse from the agency's peer-review panels along with Gilman. Some accused the agency of "hucksterism" and charting a politically-driven path that was putting commercial product-development above science.


The latest shake-up at CPRIT caught Gilman's successor off-guard. Dr. Margaret Kripke, who was introduced to reporters Tuesday, acknowledged that she wasn't even sure who she would be answering to now that Gimson was stepping down. She said that although she wasn't with the agency when her predecessor announced his resignation, she was aware of the concerns and allegations.


"I don't think people would resign frivolously, so there must be some substance to those concerns," Kripke said.


Kripke also acknowledged the challenge of restocking the peer-review panels after the agency's credibility was so publicly smeared by some of the country's top scientists. She said she took the job because she felt the agency's mission and potential was too important to lose.


Only the National Institutes of Health doles out more cancer research dollars than CPRIT, which has awarded more than $700 million so far.


Gov. Rick Perry told reporters in Houston on Tuesday that he wasn't previously aware of the resignation but said Gimson's decision to step down was his own.


Joining the mounting criticism of CPRIT is the woman credited with brainstorming the idea for the agency in the first place. Cathy Bonner, who served under former Texas Gov. Ann Richards, teamed with cancer survivor Lance Armstrong in selling Texas voters in 2007 on a constitutional amendment to create an unprecedented state-run effort to finance a war on disease.


Now Bonner says politics have sullied an agency that she said was built to fund research, not subsidize private companies.


"There appears to be a cover-up going on," Bonner said.


Peloton has declined comment about its award and has referred questions to CPRIT. The agency has said the company wasn't aware that its application was never scrutinized by an outside panel, as required under agency rules.


___


Follow Paul J. Weber on Twitter: www.twitter.com/pauljweber


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Asian shares rise, Fed outcome pressures dollar

TOKYO (Reuters) - Asian shares rose on Wednesday buoyed by strength in global equities markets, firmer economic sentiment in Germany and hopes of a deal from U.S. budget talks, while the dollar came under pressure ahead of the Federal Reserve's policy decision.


MSCI's broadest index of Asia-Pacific shares outside Japan <.miapj0000pus> gained 0.5 percent to a 16-month peak. The index has hit successive 16-month highs since December 5.


Australian shares <.axjo> were up 0.4 after touching a nearly 17-month high on the back of Wall Street gains and higher iron ore prices.


"Definitely the momentum is to the upside," said Stan Shamu, a market analyst at IG Markets. "Everyone seems to be pricing in a fairly positive outcome to the fiscal cliff negotiations as well."


South Korean shares <.ks11> inched up 0.2 percent, shrugging off news of North Korea's rocket launch, but profit-taking on large caps limited gains.


"North Korea is no longer an economic match for the South, so, short of a full-scale conflict, the North's actions will have little impact on the KOSPI," Im No-jung, chief economist at IM Investment & Securities, said of the Seoul stock market.


North Korea launched the second rocket this year on Wednesday just before 10 a.m. and may have finally succeeded in putting a satellite into space, the stated aim of what critics say is a disguised ballistic missile test.


Japan's Nikkei share average <.n225> rose 0.5 percent after hitting a 7-1/2-month high earlier, led by gains in tech shares and other exporters on the weak yen. <.t/>


The dollar remained broadly under pressure on expectations the Fed will take further monetary easing step, pushing the currency down to a three-month low against the Australian dollar. The euro popped back above $1.3000, pulling away from a two-week low of $1.2876 plumbed Friday.


The Fed is expected to announce it will buy $45 billion per month of longer-dated Treasuries beginning in January on top of the $40 billion in mortgage-backed security purchases it announced in September. The new buying will replace the Fed's current program, Operation Twist, which expires at the end of December.


"Although the view that the Fed will shift to outright Treasury purchases is now very widely shared by market participants, we do not believe it has been fully reflected into markets or in positioning," said Vassili Serebriakov, a strategist at BNP Paribas.


"Accordingly, dollar weakness is highly likely should the Fed shift to outright U.S. Treasury purchases."


Against the yen, the dollar steadied at 82.54 yen. The Japanese currency has also been pressured by expectations for more easing from the Bank of Japan, which meets next week.


Data on Wednesday showed Japan's core machinery orders rose 2.6 percent in October from the previous month, up for the first time in three months but below a 3 percent rise forecast, highlighting how uncertainty over the global outlook continued to weigh on business investment and the broader economy.


Investors also closely followed developments in U.S. budget talks to avert the "fiscal cliff," some $600 billion of tax hikes and spending cuts scheduled to start in January, which economists have warned could send the U.S. economy into recession and drag down the fragile global economy.


Negotiations to avert the "fiscal cliff" ahead of a year-end deadline intensified as President Barack Obama and U.S. House of Representatives Speaker John Boehner spoke by phone on Tuesday after exchanging new proposals, in a possible sign of progress ahead of the end-of-year deadline.


A group of high-profile chief executives urged President Barack Obama and Republican congressional leaders on Tuesday to strike a deal, reflecting mounting urgency to resolve the issue with time running out.


U.S. crude futures inched up 0.2 percent to $85.96 a barrel and Brent rose 0.3 percent to $108.37.


(Additional reporting by Maggie Lu Yueyang in Canberra, Somang Yang and Joyce Lee in Seoul and Ian Chua in Sydney; Editing by Jacqueline Wong)



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Unknown attackers fire at Cairo protesters, nine hurt


CAIRO (Reuters) - Nine people were hurt when unknown attackers fired at protesters camping at Tahrir Square in central Cairo on Tuesday, according to witnesses and Egyptian media, as opponents and supporters of President Mohamed Mursi's plans to vote on a new constitution geared up for a day of street demonstrations.


Police cars surrounded the square, the first time they had appeared in the area since November 23, shortly after a decree by the Islamist president giving himself sweeping temporary powers touched off widespread protests.


The attackers also threw petrol bombs which started a small fire, witnesses said. Many of the protesters, awakened by the noise, chanted: "The people want the downfall of the regime." Recorded recitations of the Koran were played over speakers in the square.


Leftists, liberals and other opposition groups have called for marches to the presidential palace in the afternoon to protest against the hastily arranged referendum on a new constitution planned for Saturday, which they say is polarizing the country.


Islamists, who dominated the body that drew up the constitution, have urged their followers to turn out "in millions" the same day in a show of support for the president and for a referendum they feel sure of winning and that critics say could put Egypt in a religious straitjacket.


Seven people were killed and hundreds wounded last week in clashes between the Islamist Muslim Brotherhood and opponents besieging Mursi's graffiti-daubed presidential palace.


The elite Republican Guard has yet to use force to keep protesters away from the palace, now ringed with tanks, barbed wire and concrete barricades, but a decree issued by Mursi late on Sunday gives the armed forces the power to arrest civilians during the referendum and until the announcement of the results.


OPPOSITION SAYS MURSI DESTROYING CONSENSUS


Leftist politician Hamdeen Sabahy, one of the most prominent members of the National Salvation Front opposition coalition, said Mursi was driving a wedge between Egyptians and destroying prospects for consensus.


As well as pushing the early referendum, Mursi has angered opponents by taking sweeping temporary powers he said were necessary to secure the country's transition to stability after a popular uprising overthrew autocratic former president Hosni Mubarak 22 months ago.


"The road Mohamed Mursi is taking now does not create the possibility for national consensus," said Sabahy.


If the constitution was passed, he said: "Egypt will continue in this really charged state. It is certain that this constitution is driving us to more political polarization."


The National Salvation Front also includes Nobel Peace Prize laureate Mohamed ElBaradei and former Arab League chief Amr Moussa.


The opposition says the draft constitution fails to embrace the diversity of 83 million Egyptians, a tenth of whom are Christians, and invites Muslim clerics to influence lawmaking.


But debate over the details has largely given way to noisy street protests and megaphone politics, keeping Egypt off balance and ill equipped to deal with a looming economic crisis.


Lamia Kamel, a spokeswoman for Moussa, said the opposition factions were still discussing whether to boycott the referendum or call for a "no" vote.


"Both paths are unwelcome because they really don't want the referendum at all," she said, but predicted a clearer opposition line if the plebiscite went ahead as planned.


Mahmoud Ghozlan, the Muslim Brotherhood's spokesman, said the opposition could stage protests, but should keep the peace.


"They are free to boycott, participate or say no; they can do what they want. The important thing is that it remains in a peaceful context to preserve the country's safety and security."


The army stepped into the conflict on Saturday, telling all sides to resolve their disputes via dialogue and warning that it would not allow Egypt to enter a "dark tunnel".


The continuing disruption is also casting doubts on the government's ability to push through tough economic reforms that form part of a proposed $4.8 billion IMF loan agreement.


(Writing by Edmund Blair; Editing by Will Waterman, Mohammad Zargham and Jim Loney)



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Google’s Gmail service suffers disruption






SAN FRANCISCO (Reuters) – Several Google Inc Web products, including the popular Gmail service, appeared to go dark for users on several continents on Monday.


Google confirmed that “service disruptions” had affected Gmail and Google Drive, its online storage service. The two products are part of Google’s Apps suite, a Microsoft Office rival that caters to both consumers and businesses.






By 10:10 a.m. Pacific Time (1.10 p.m. EST), Google’s Apps Dashboard monitoring service reported that Gmail and Drive service had resumed. The company did not specify how many users were affected, or where, but the outage prompted widespread complaints on social media on both coasts in the U.S. and other major markets, from the United Kingdom to Brazil.


Some users additionally reported that the outage had affected Google Docs, the company’s word-processing and spreadsheet programs, while Chrome, Google’s Internet browser, also crashed unexpectedly.


“We are currently experiencing an issue with some Google services,” Google spokeswoman Andrea Freund said in a statement. “For everyone who is affected, we apologize for any inconvenience you may be experiencing.”


Firmly entrenched in the consumer market, Gmail is one of Google’s most popular and important product offerings. The search giant, which has been pushing a corporate version of the email service and its Apps suite to businesses to compete with Microsoft, said this month that the package will no longer be free to business customers.


(Reporting By Gerry Shih; Editing by Andrew Hay and Nick Zieminski)


Tech News Headlines – Yahoo! News


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Hayden Panettiere Splits with Scotty McKnight















12/10/2012 at 07:50 PM EST







Hayden Panettiere and Scotty McKnight


Splash News Online


Is there a tear in her beer?

Nashville star Hayden Panettiere has broken up with her boyfriend of more than a year, New York Jets wide receiver Scotty McKnight, a source confirms to PEOPLE.

But the split doesn't appear to be the stuff of a sad country song. The actress, 23, is still friends with McKnight, 24, and one source tells TMZ that their pals wouldn't be surprised if they got back together.

This is Panettiere's second go at a relationship with an athlete. Before dating McKnight she was with Ukrainian boxer Wladimir Klitschko for about two years.
Julie Jordan

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Surprise: New insurance fee in health overhaul law


WASHINGTON (AP) — Your medical plan is facing an unexpected expense, so you probably are, too. It's a new, $63-per-head fee to cushion the cost of covering people with pre-existing conditions under President Barack Obama's health care overhaul.


The charge, buried in a recent regulation, works out to tens of millions of dollars for the largest companies, employers say. Most of that is likely to be passed on to workers.


Employee benefits lawyer Chantel Sheaks calls it a "sleeper issue" with significant financial consequences, particularly for large employers.


"Especially at a time when we are facing economic uncertainty, (companies will) be hit with a multi-million dollar assessment without getting anything back for it," said Sheaks, a principal at Buck Consultants, a Xerox subsidiary.


Based on figures provided in the regulation, employer and individual health plans covering an estimated 190 million Americans could owe the per-person fee.


The Obama administration says it is a temporary assessment levied for three years starting in 2014, designed to raise $25 billion. It starts at $63 and then declines.


Most of the money will go into a fund administered by the Health and Human Services Department. It will be used to cushion health insurance companies from the initial hard-to-predict costs of covering uninsured people with medical problems. Under the law, insurers will be forbidden from turning away the sick as of Jan. 1, 2014.


The program "is intended to help millions of Americans purchase affordable health insurance, reduce unreimbursed usage of hospital and other medical facilities by the uninsured and thereby lower medical expenses and premiums for all," the Obama administration says in the regulation. An accompanying media fact sheet issued Nov. 30 referred to "contributions" without detailing the total cost and scope of the program.


Of the total pot, $5 billion will go directly to the U.S. Treasury, apparently to offset the cost of shoring up employer-sponsored coverage for early retirees.


The $25 billion fee is part of a bigger package of taxes and fees to finance Obama's expansion of coverage to the uninsured. It all comes to about $700 billion over 10 years, and includes higher Medicare taxes effective this Jan. 1 on individuals making more than $200,000 per year or couples making more than $250,000. People above those threshold amounts also face an additional 3.8 percent tax on their investment income.


But the insurance fee had been overlooked as employers focused on other costs in the law, including fines for medium and large firms that don't provide coverage.


"This kind of came out of the blue and was a surprisingly large amount," said Gretchen Young, senior vice president for health policy at the ERISA Industry Committee, a group that represents large employers on benefits issues.


Word started getting out in the spring, said Young, but hard cost estimates surfaced only recently with the new regulation. It set the per capita rate at $5.25 per month, which works out to $63 a year.


America's Health Insurance Plans, the major industry trade group for health insurers, says the fund is an important program that will help stabilize the market and mitigate cost increases for consumers as the changes in Obama's law take effect.


But employers already offering coverage to their workers don't see why they have to pony up for the stabilization fund, which mainly helps the individual insurance market. The redistribution puts the biggest companies on the hook for tens of millions of dollars.


"It just adds on to everything else that is expected to increase health care costs," said economist Paul Fronstin of the nonprofit Employee Benefit Research Institute.


The fee will be assessed on all "major medical" insurance plans, including those provided by employers and those purchased individually by consumers. Large employers will owe the fee directly. That's because major companies usually pay upfront for most of the health care costs of their employees. It may not be apparent to workers, but the insurance company they deal with is basically an agent administering the plan for their employer.


The fee will total $12 billion in 2014, $8 billion in 2015 and $5 billion in 2016. That means the per-head assessment would be smaller each year, around $40 in 2015 instead of $63.


It will phase out completely in 2017 — unless Congress, with lawmakers searching everywhere for revenue to reduce federal deficits — decides to extend it.


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Asian shares edge up; Fed move, fiscal cliff in focus

TOKYO (Reuters) - Asian shares edged higher while the euro steadied on Tuesday, but prices were capped as investors waited for the U.S. Federal Reserve's policy decision later this week and any progress in U.S. budget talks.


MSCI's broadest index of Asia-Pacific shares outside Japan <.miapj0000pus> nudged up 0.2 percent. The index has hit successive 16-month highs for the past four sessions.


Australian shares <.axjo> gained 0.4 percent to their highest in nearly two months on a strong resources sector, which was supported by a rise in metals and oil prices and hopes for the Fed to further ease monetary policy.


Hong Kong shares <.hsi> rose 0.4 percent to a 16-month high but Shanghai shares <.ssec> fell 0.5 percent.


"The market continues to trade sideways in an environment where headlines seem to have lost bite. Poor liquidity conditions as we approach the end of the year seem to keep portfolios on a tight leash around their benchmarks," said Barclays Capital analysts in a research note.


Japan's Nikkei share average <.n225> was the region's other laggard, slipping 0.3 percent to around 9,506 as investors became cautious over signs that the market is overbought after a 10 percent rally in the past month and took profit on export-focused firms. <.t/>


"The 9,500-level is still an important psychological line for both support and resistance purposes," said Yutaka Miura, a senior technical analyst at Mizuho Securities.


U.S. Treasury prices edged higher on Monday on worries about U.S. budget wrangling, Italy's political rumbling and expectations of further monetary easing by the Fed.


At the end of the two-day meeting which begins on Tuesday, the Fed is expected to announce it will buy $45 billion per month of longer-dated Treasuries beginning in January to replace the current Operation Twist program, which expires at the end of December.


Under the program, it sells shorter-dated U.S. government debt and buys longer-dated Treasuries to extend the duration of its balance sheet.


Such views weighed on the dollar and helped to underpin the euro, which traded at $1.2937, off Monday's low of $1.2880.


The dollar firmed 0.1 percent to 82.40 yen as the yen has also been pressured by expectations for more easing from the Bank of Japan, which meets next week.


The euro was also supported as Italian Prime Minister Mario Monti played down market fears over his decision to resign, saying there was no danger of a vacuum ahead of an election in the spring.


"I think people at this point are not sure whether there really will be the risk of Italy not pursuing its fiscal reforms pursued under Monti. So it's hard to really price that news in yet," said Takao Hattori, senior investment strategist at Mitsubishi UFJ Morgan Stanley Securities in Tokyo.


FISCAL WORRIES


European partners urged the next Italian government on Monday to stick to Monti's reform agenda, after his decision to resign early and Silvio Berlusconi's return to frontline politics rattled financial markets.


Monti had earned market confidence over the past year in indebted Italy, as he spearheaded a reform agenda to rescue the euro zone's third-largest economy from the threat of a Greek-style collapse.


His earlier-than-expected departure raised concerns about the prospects for Italy's fiscal reforms, lifting Italy's benchmark 10-year bond yield up to 4.83 percent, the highest in more than three weeks, while driving Italian shares <.ftmib> down more than 2 percent.


Investors also worry about the impact on neighboring Spain, which is struggling with high debt and studying the need for outside help.


Fiscal worries in the United States have also weighed on investor sentiment, limiting their activity as trading winds down towards the year-end holiday season.


Economists have warned that a failure by Congress to avert the "fiscal cliff," some $600 billion of tax hikes and spending cuts scheduled to start in January, could send the U.S. economy back into recession, further weighing on the fragile global economy.


The White House and House of Representatives Speaker John Boehner's office held more negotiations on Monday on ways to break the budget stalemate, but neither side showed any public signs that they were ready to give ground. The talks picked up pace after Boehner met with President Barack Obama on Sunday, raising hopes of progress.


U.S. crude futures were little changed at $85.56 a barrel and Brent eased 0.1 percent to $107.28.


Trading was subdued in Asian credit markets, with the slight rise in stocks helping to narrow the spreads on the iTraxx Asia ex-Japan investment-grade index marginally by 1 basis point.


(Additional reporting by Ayai Tomisawa in Tokyo; Editing by Jacqueline Wong)



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