Saturday, August 31, 2013

Reuters: Most Read Articles: Verizon, Vodafone boards set to vote on $130 billion wireless deal

Reuters: Most Read Articles
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Verizon, Vodafone boards set to vote on $130 billion wireless deal
Sep 1st 2013, 02:17

A sign of Verizon Wireless is seen at its store in Westminster, Colorado April 26, 2009. REUTERS/Rick Wilking

A sign of Verizon Wireless is seen at its store in Westminster, Colorado April 26, 2009.

Credit: Reuters/Rick Wilking

By Soyoung Kim and Michelle Sierra

NEW YORK | Sat Aug 31, 2013 10:17pm EDT

NEW YORK (Reuters) - The boards of Verizon Communications and Vodafone Group Plc are expected to vote this weekend on a $130 billion deal, funded by about $65 billion of debt, to give the U.S. telecom giant complete ownership of Verizon Wireless, people familiar with the matter said on Saturday.

A deal, which the sources said could be announced as soon as Monday, would cap Verizon's decade-long effort to win full control of the No. 1 U.S. wireless provider.

At $130 billion, it would be the third-largest corporate acquisition of all time and mark British telecom giant Vodafone's exit from the large but mature U.S. market. Vodafone owns 45 percent of the Verizon Wireless joint venture that was formed in 2000.

Verizon Communications and Vodafone declined to comment.

Verizon plans to pay for half of the purchase with its own stock, the sources said. For the rest, it has tapped JPMorgan Chase & Co, Morgan Stanley, Barclays Plc and Bank of America Merrill Lynch to help raise the funds through a mix of bonds and bank loans, the sources said.

The banks are joint lead arrangers of the financing, with JPMorgan and Morgan Stanley serving as global coordinators, the sources said. The four banks are also advising Verizon, along with former Morgan Stanley banker Paul Taubman and Guggenheim Partners, the sources said.

Taubman, the former co-president of Morgan Stanley's institutional securities business and a top dealmaker, left the Wall Street firm earlier this year after 27 years there.

Goldman Sachs Group Inc and UBS AG are advising Vodafone, the sources said.

Goldman Sachs declined to comment, while the other banks were not immediately available for comment.

Since Verizon, led by Chief Executive Lowell McAdam, already had operational control of the wireless company, the deal is not expected to create any changes for its customers, but its additional financial firepower could help the company boost its service going forward.

After the deal, Vodafone, the world's second largest mobile operator, will have assets in Europe and emerging markets such as India, Turkey and Africa. But it raises questions about what the company will do with the windfall. Top investors in Vodafone contacted by Reuters earlier this week were split between those wanting to see the cash returned as dividends and those wanting the firm to invest it.

A deal would come amid a spate of consolidation attempts, both successful and failed, in the telecom industry over the past few years. Most recently, Japan's SoftBank Corp took control of Sprint Nextel Corp, the No. 3 U.S. wireless provider, in a $21.6 billion deal. In a related plan, Sprint agreed to buy out the portion of wireless company Clearwire Corp that it already did not own.

ON AGAIN, OFF AGAIN

An agreement over Verizon Wireless would mark the culmination of on-again, off-again discussions going as far back as 2004, when Vodafone bid for AT&T Inc's wireless business and would have had to shed its Verizon Wireless stake. The British company, however, lost that bid to Cingular, and has since held on to the Verizon Wireless stake for its exposure to the U.S. wireless market.

The news of Verizon's latest efforts was first reported by Reuters in April. At the time, sources said Verizon had hired advisers to prepare a $100 billion cash and stock bid to take full control of Verizon Wireless. Verizon was ready to push aggressively but preferred a friendly deal.

But Vodafone Chief Executive Vittorio Colao was biding his time, making it clear he would only sell the 45 percent stake at what he considered the right price.

Talks picked up in earnest a few weeks ago, however, as Verizon grew concerned that its window of opportunity may be closing, with interest rates going up and its own stock declining, one of the sources said. Verizon's stock fell more than 4 percent in August.

That prompted Verizon to raise the offer price from the $100 billion it had initially envisioned to around $130 billion, sources have said.

Even after the bump in price, the deal is expected to be accretive to earnings, the source said.

With 2012 free cash flow of $28.6 billion at Verizon Wireless, RBC Capital Markets analyst Doug Colandrea said earlier that Verizon has the ability to rapidly repay the debt raised to fund the deal.

TAX BILL

Another hindrance to a deal has been the possibility of a huge tax bill for Vodafone from the sale, based on the massive growth Verizon Wireless has experienced since it was established. But the sources said the deal would be structured in such way that Vodafone's tax bill could be cut to around $5 billion.

Verizon Communications will buy Vodafone's U.S. holding company, Vodafone Americas, that owns the Verizon Wireless stake and some other assets, the sources said. Verizon will then keep the Verizon Wireless stake and sell European assets back to Vodafone, they said.

Since the seller of Vodafone Americas would not be a U.S.-based entity, no U.S. capital gains tax would be due, tax experts have said. And Vodafone may be able to take advantage of Britain's substantial shareholdings exemption on the money it repatriates. The clause, under certain conditions, exempts from UK corporation taxation any gains realized when one company disposes of shares in another company.

The deal is also likely to be a fee bonanza for banks. At a $130 billion price tag, total advisory fees for banks involved would be in the $200 million to $250 million range, according to Freeman estimates.

Moreover, banks arranging the financing would get fees as well. Fees for loan syndication could be around 0.2 percent to 0.4 percent of the proceeds raised, according to Freeman.

(Reporting by Soyoung Kim and Michelle Sierra; Additional reporting by Nicola Leske; Editing by Paritosh Bansal and Sandra Maler)

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Reuters: Most Read Articles: Nadal and Federer on collision course at U.S. Open

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Nadal and Federer on collision course at U.S. Open
Sep 1st 2013, 04:52

Rafael Nadal of Spain hits a return to Ivan Dodig of Croatia at the U.S. Open tennis championships in New York August 31, 2013. REUTERS/Gary Hershorn

1 of 15. Rafael Nadal of Spain hits a return to Ivan Dodig of Croatia at the U.S. Open tennis championships in New York August 31, 2013.

Credit: Reuters/Gary Hershorn

By Julian Linden

NEW YORK | Sat Aug 31, 2013 11:20pm EDT

NEW YORK (Reuters) - Rafa Nadal, growing in confidence with each match, blasted his way into the fourth round of the U.S. Open on Saturday with an ominous display as the upsets continued at the last grand slam of the year.

The world number two turned on a master class of power and precision as he brushed aside Croatia's Ivan Dodig 6-4 6-3 6-3 to lead a trio of Spanish men into the fourth round.

French Open runner-up David Ferrer also moved through, beating Mikhail Kukushkin 6-4 6-3 4-6 6-4, while a third Spaniard, Tommy Robredo, ended the Cinderella run of British qualifier Dan Evans, winning 7-6 (6) 6-1 4-6 7-5.

Former world number one Caroline Wozniacki and the 2011 Wimbledon champion Petra Kvitova were among the high-profile casualties in a women's draw packed with surprises.

Four of the eight women already through to the fourth round are unseeded and three of the eight are Italian.

Camila Giorgi, who had to come through the qualifiers to reach the main draw, sent Wozniacki packing with a 4-6 6-4 6-3 win on Arthur Ashe Stadium while Flavia Pennetta knocked out the former U.S. Open champion Svetlana Kuznetsova 7-5 6-1. Roberta Vinci also won for Italy.

Nadal has been in great form in the past month, winning warm-up tournaments in Montreal and Cincinnati. He has not dropped a single set in getting to the last 16 at Flushing Meadows and believes he is still improving.

"I played better today than in the previous matches. (That's) always a positive thing," he said.

FEDERER LOOMING

Nadal's next opponent is Germany's Philipp Kohlschreiber, who beat towering American John Isner 6-4 3-6 7-5 7-6 (5), with Roger Federer looming as a possible quarter-final opponent.

While Nadal cruised into the next round and most of the men's results went as expected, a feisty Victoria Azarenka dropped her first set of the tournament before recovering to book her place in the last 16 of the women's draw.

A finalist last year and one of the favorites to win the title this season, the world number two and reigning Australian Open champion overcame a shaky start to beat Alize Cornet of France 6-7(2) 6-3 6-2.

The Belarussian was given a tough workout from Cornet and allowed her frustrations to boil over when the umpire ordered a point she had won be replayed.

"That was the most ridiculous thing there is," Azarenka said.

Former world number one Ana Ivanovic had to dig deep to avoid joining the exit queue. The Serbian was on the brink of defeat in her match against American Christina McHale before recovering to win 4-6 7-5 6-4. She plays Azarenka next.

"I know what to expect," said Ivanovic. "I really want to play against the best and challenge myself, because I'm ready to take them on."

BEATEN CHAMPIONS

Kvitova, the 2011 Wimbledon champion and seventh seed at Flushing Meadows, fell 6-3 6-0 to American wildcard Alison Riske.

The U.S. Open is the only grand slam where Kvitova has failed to at least make the quarter-finals and the Czech said she was unable to play near her best after contracting a virus.

"Unfortunately I was lying in the bed yesterday and I had a fever," Kvitova said. "I tried to play, tried to fight. But my body wouldn't let me fight."

Riske burst into tears after her win. The 23-year-old, who still travels with a security blanket that was given to her on the day she was born, has had a long road to her first fourth round appearance at a grand slam.

She first tried to qualify for the U.S. Open in 2007 and had never won a main draw match until this year. Now she is through to the last 16, and facing a showdown with Daniela Hantuchova, who saved four match points in her 3-6 7-5 7-6 (4) win over Israeli qualifier Julia Glushko.

"The blankie story is out," Riske said. "I'm used to it now. I can't deny it now. It's getting smaller by the week. It can fit in the palm of my hand."

(Editing by Nick Mulvenney)

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Reuters: Most Read Articles: Bones unearthed in search at former Florida reform school

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Bones unearthed in search at former Florida reform school
Sep 1st 2013, 02:45

University of South Florida assistant professor of anthropology Dr. Erin Kimmerle exhumes a grave at the Boot Hill cemetery at the now closed Arthur G. Dozier School for Boys in Marianna, Florida, August 31, 2013. REUTERS/Edmund D Fountain/Pool

1 of 10. University of South Florida assistant professor of anthropology Dr. Erin Kimmerle exhumes a grave at the Boot Hill cemetery at the now closed Arthur G. Dozier School for Boys in Marianna, Florida, August 31, 2013.

Credit: Reuters/Edmund D Fountain/Pool

By Bill Cotterell

MARIANNA, Florida | Sat Aug 31, 2013 10:45pm EDT

MARIANNA, Florida (Reuters) - Teams of searchers recovered human bones from the sands of Florida Panhandle woodlands on Saturday in a "boot hill" graveyard where juveniles who disappeared from a notorious Old South reform school more than a half-century ago are believed to have been secretly buried.

"We have found evidence of burial hardware - hinges on coffins," said Dr. Christian Wells, an anthropologist from the University of South Florida, in a briefing about a mile from the closed excavation site near the former Arthur G. Dozier School for Boys.

"There appear to be a few pieces associated with burial shrouds, and there are pins consistent with the 1920s and 1930s, - based on the style of the pins - and they appear to be brass," he said.

Some "large-bone fragments" were found on the first day of digging, Wells said. They were human bones, he added, but it was impossible to know if they came from any of the teenaged boys who were housed at Dozier during its infamous 111-year existence. The school was closed in mid-2011.

The bones will be examined in laboratories at the University of South Florida and the University of North Texas, as part of a program funded by the U.S. Department of Justice and state of Florida.

After forensic investigators, using ground-piercing radar and old public records, detected 31 spots showing possible human remains, researchers planted crude white crosses on a nearby hillside to commemorate the unaccounted-for boys.

Some former residents of Dozier, now in their 60s and 70s, have told of brutal beatings and boys - mostly black juveniles - disappearing without explanation more than 50 years ago. Blood relatives of some of the boys have given DNA samples, to be matched against evidence taken from the skeletal remains.

Earlier on Saturday, Dr. Erin Kimmerle, a forensic anthropologist from USF, met with some family members and survivors.

"We're approaching it much like you would an archeological excavation," Kimmerle said. "It's all done carefully and by hand."

'NEVER HAD A CHANCE'

Tananarive Due, who came to the dig with some family members, said her great-uncle, Robert Stephens, died at the school in 1937.

"The story was ... he tried to run away at one point," she said. "The official cause of death was a stabbing by another inmate, that's what it was listed as. But with so many of these boys, who knows how they died? Their families never had a chance to say 'good-bye' to their loved ones."

Johnny Lee Gaddy, 67, said he was locked up from 1957 to 1961 for truancy. He said he was severely beaten, but in his teens became a good farm worker, hoping to get released.

Gaddy said he had heard of teens disappearing without explanation.

"I know some they said went home, but they hadn't been here long enough to go home," said Gaddy. "They said some others ran away or were transferred to other places. We never saw any bodies or funerals."

John Due, father of Tananarive, said descendants and civil-rights activists who pressed the state for disclosure of what happened to the young men ran into rigid resistance from authorities for decades.

"People didn't want to talk about it, and we found that particularly among black families," he said. "That's what racism does. It beats you down and you think you don't matter, so you won't speak up."

The forensic teams will work through Tuesday. Remains that can be identified will be re-interred at family plots and any unidentified remains will be numbered and buried - with records kept for later return to families, if any come forward.

(Editing by Scott Malone and Gunna Dickson)

(This story was refiled to add hyphen to word "large-bone" in the fourth paragraph; corrects name of school to University of South Florida from University of Southern Florida in the fifth paragraph; corrects last name of anthropologist to Kimmerle from Kimmerly in the eighth paragraph)

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Reuters: Most Read Articles: China official PMI hits 16-month high in August

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China official PMI hits 16-month high in August
Sep 1st 2013, 03:11

An employee works inside a silk factory in Neijiang, Sichuan province, July 3, 2013. REUTERS/China Daily

An employee works inside a silk factory in Neijiang, Sichuan province, July 3, 2013.

Credit: Reuters/China Daily

By Aileen Wang and Jonathan Standing

BEIJING | Sat Aug 31, 2013 11:11pm EDT

BEIJING (Reuters) - China's factory activity expanded at the fastest pace in more than a year in August with a jump in new orders, official data showed on Sunday, raising hopes that a rapid economic slowdown in the world's second-largest economy may have been arrested.

The purchasing managers' index (PMI) figure, published by the National Bureau of Statistics, rose to 51.0 in August from 50.3 in July, the highest level since last April and ahead of market expectations of 50.6 in a Reuters poll.

A reading above 50 indicates expanding activity, while a reading below 50 points to a contraction.

Beijing has stepped up efforts to prevent a sharp economic slowdown by quickening railway investment and public housing construction and introducing a series of measures to help smaller companies, which could sustain the revival of internal demand in the coming months.

"We are seeing clearer signs of economic conditions improving," said Haibin Zhu, chief China economist at JP Morgan in Hong Kong.

"One of the reasons is the lagging effect of credit growth earlier in the year, while the second is the recent shift in the policy stance and more concrete policy announcement."

As one of the first leading indicators gauging economic momentum, the improved reading could bode well for other August data, further confirming a stabilizing trend in the economy.

The official survey showed an across-the-board recovery in all sub-indices, ranging from new orders and quantity of purchases to input prices and employment, pointing to a positive picture for the vast factory sector.

"The PMI figure showed evident recovery in August, suggesting the economy is further stabilizing," Zhang Liqun, an economist at the Development Research Centre, a top government think tank in Beijing, said in a statement accompanying the PMI.

"The improvement in all sub-indices also showed market expectations are turning better and companies are adapting to the changing business environment," he added.

The sub-index measuring new orders rose to 52.4 in August from 50.6 in July, indicating stronger demand for Chinese goods.

Export orders returned to expansionary territory, rising to 50.2 from 49.0 in July, suggesting external demand is also up.

SMALL FIRMS ALSO PICKING UP

A separate PMI survey sponsored by HSBC, which focuses more on small-and medium-sized firms in the private sector, is scheduled to be published on Monday.

Its preliminary August reading, published last week, rose to 50.1, the highest level in four months, mainly due to a rebound in new orders.

Together with Sunday's official data and its focus on larger state-owned firms, the two surveys should show a broad-based stabilization in manufacturing.

Chinese officials have been optimistic about the growth outlook, saying there are clear signs of stabilization emerging from the economy and that the annual GDP target of 7.5 percent is achievable.

Vice Finance Minister Zhu Guangyao said on Tuesday there was no need for government stimulus and that growth can instead be supported through structural adjustments.

The commerce ministry has also said China's trade flows steadied in early August, with global demand improving and measures to help exporters kicking in.

JP Morgan's Zhu said the thrust of Beijing's recent measures is to stabilize the economy to create a platform for reform.

He said the government has been talking about specific policy measures, such as railway investment, which has given some clarity.

Despite an uptick in manufacturing activity, analysts cautioned that a strong rebound in the economy appears unlikely because most Chinese firms still face relatively high financing costs, in part due to Beijing's campaign to curb shadow banking.

An uncertain export environment and a strong yuan currency are also risk factors.

China's economy has slowed for nine out of the past 10 quarters, with GDP growth dipping to 7.5 percent in the second quarter from 7.7 percent in the previous three months.

Beijing has said it is willing to tolerate slower growth as it pushes reforms designed to quit an economic model which has an over-reliance on debt-financed construction and exports and embrace one driven by domestic consumption.

(Editing by Paul Tait)

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Reuters: Most Read Articles: Wildfire in Yosemite expands and obscures scenic views

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Wildfire in Yosemite expands and obscures scenic views
Sep 1st 2013, 04:35

By Jonathan Allen and Kevin Murphy

Sun Sep 1, 2013 12:35am EDT

(Reuters) - A massive wildfire that has charred the northwest edge of Yosemite National Park in California has sent smoke into a scenic and previously unaffected area, obscuring views of popular landmarks on Saturday for tourists who visited the area.

The smoke from the fire, which broke out two weeks ago, spread to the area during a holiday weekend that in the past years has seen the park fill with visitors.

Shifting winds brought heavy smoke from the so-called Rim Fire to Yosemite Valley, an area famed for its towering granite rock formations, waterfalls and pine forests, according to the park's website and footage from cameras posted on the site that showed smoky conditions.

Yosemite Valley has been open to visitors and largely smoke free in recent weeks, but a park official said smoke began wafting into the area late on Friday. It also reached the Wawona area to the south, the park's website said.

The Rim Fire had charred nearly 223,000 acres by late Saturday. Most of the damage was in the Stanislaus National Forest which spreads out from Yosemite's western edge.

The blaze has blackened about 6 percent of Yosemite's wilder backcountry, said National Park Service Director Jonathan Jarvis.

The Rim Fire was 40 percent contained on Saturday afternoon, up from 35 percent earlier in the day.

"We are moving in the right direction," said Trevor Augustino, spokesman for the U.S. Fire Service at Rim Fire command center.

Flames early on Saturday were heading toward two groves of the park's famed sequoia trees, Jarvis said.

"This is not a catastrophe for Yosemite National Park," he said in a phone interview after surveying the affected areas. "These trees are very old and it's not the first fire they've ever seen."

Firefighters carried out controlled burnings the previous night around the groves to clear away debris from the forest floor that could otherwise fuel a fire to such an intensity that it dangerously licks at the trees' crowns.

Lower-intensity fires, on the other hand, play a vital role in the reproductive cycle of the tough-barked sequoia, many of which bear the scars of past wildfires, by releasing the seeds from their cones and clearing the soil in which they germinate.

The blaze has edged out the 1932 Matilija wildfire in Ventura County to become the fourth-largest California wildfire on record, according to figures from the California Department of Forestry and Fire Protection.

Jarvis estimated that firefighting efforts had cost state and federal agencies about $54 million. He criticized a decline in federal funding for fire-prevention work, including the practice of controlled fires that make a wildfire of this intensity less likely.

More than 5,000 people are working to put out the fire, including firefighters from agencies across California and nearly 700 specially trained California prison inmates.

Some 4 million people visit Yosemite each year, most going during the peak months of June through August. Some 620,000 normally visit the park in August alone, but due to the fire, attendance has dropped.

"It's not super substantial, but it is noticeable," park spokeswoman Kari Cobb said earlier this week about the drop.

Tourism-dependent businesses around the park have bemoaned a slump in visitors at the peak of the late-summer tourist season.

The cause of the fire remains under investigation.

(Reporting by Jonathan Allen in New York and Kevin Murphy in Kansas City; Editing by Alex Dobuzinskis and Mohammad Zargham)

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Reuters: Most Read Articles: A hawkish Kerry emerges as point man in Obama's push to punish Syria

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A hawkish Kerry emerges as point man in Obama's push to punish Syria
Sep 1st 2013, 05:01

U.S. Secretary of State John Kerry speaks about the situation in Syria at the State Department in Washington, August 30, 2013. REUTERS/Jason Reed

U.S. Secretary of State John Kerry speaks about the situation in Syria at the State Department in Washington, August 30, 2013.

Credit: Reuters/Jason Reed

By Arshad Mohammed

WASHINGTON | Sun Sep 1, 2013 1:01am EDT

WASHINGTON (Reuters) - When the Senate takes up whether to back White House plans to attack Syria, there may be few more effective or passionate lobbyists for the administration than Secretary of State John Kerry, who was a member of that exclusive club for 28 years.

Kerry last week described Syria's suspected use of chemical weapons as "a moral obscenity" and, in a separate appearance, called Syrian President Bashar al-Assad "a thug and a murderer."

According to people with knowledge of the administration's debates, Kerry has argued for a more muscular U.S. involvement in the conflict even as he has been its point man on searching for a diplomatic solution.

"He has been much more open-minded about potential lethal action than others in the administration," said a former U.S. official who spoke on condition of anonymity.

The son of a U.S. diplomat, Kerry came to the job of secretary of state after nearly three decades in the Senate, all of them on the Foreign Relations Committee, and a record as a Vietnam veteran.

That experience could come in handy as the White House makes its case to Congress for action on Syria in retaliation for the military's August 21 attack that U.S. officials say killed more than 1,400 people.

Kerry's strong remarks came on an issue where other top U.S. officials, including President Barack Obama at times, have kept a lower profile.

Obama on Saturday said he believed that military force should be used against Syria but backed away from an imminent strike to seek the approval of Congress.

"The value of John Kerry getting out there to the president is that he can speak to that audience, and he can speak to the international audience, and he can speak to the American people," said Tamara Cofman Wittes, director of the Saban Center for Middle East Policy at the Brookings Institution think tank.

In a sign Kerry will actively advance the president's approach, he was scheduled to appear on several major U.S. television talk shows on Sunday morning.

The timing of a U.S. response, most likely with cruise missiles from U.S. Navy destroyers in the eastern Mediterranean, is unclear given the decision to seek congressional approval.

DISCORDANT NOTES

That Kerry has become a primary exponent of the Obama administration's policy might come as a surprise given his penchant for making statements that have given officials at the White House and the State Department heartburn.

Speaking in June of the U.S. effort to bring the warring parties in Syria to the table, Kerry said, "This is a very difficult process, which we come too late," a statement that can be read as an implicit criticism of Obama's largely hands-off policy over the previous two years.

And earlier this summer he said the Egyptian military had been "restoring democracy" when it toppled first freely elected president, Islamist Mohamed Mursi, in July - a widely criticized endorsement of the military rulers who brutally cracked down on Mursi's Muslim Brotherhood supporters.

Those discordant notes aside, the White House appears to see Kerry, the 2004 Democratic presidential nominee, as one of its most effective spokesmen when it comes to reaching out to the American public, Congress and the wider world.

Last week, Kerry was Obama's main advocate for using force, belying the former Massachusetts senator's reputation as a somewhat wooden speaker.

"The indiscriminate slaughter of civilians, the killing of women and children and innocent bystanders, by chemical weapons is a moral obscenity," Kerry said on Monday.

"If we choose to live in a world where a thug and a murderer like Bashar al-Assad can gas thousands of his own people with impunity, even after the United States and our allies said no, and then the world does nothing about it, there will be no end to the test of our resolve and the dangers ... from those others who believe that they can do as they will," he said on Friday.

'TOUGH NEW POSITION'

"On both Egypt and Syria, Kerry led the administration's articulation of a tough new position," said Jon Alterman, head of the Middle East program at the Center for Strategic and International Studies think tank in Washington.

The Syrian civil war has presented the White House with policy options that it found unpalatable at best for a U.S. president elected in part on the premise that he would get the United States out of wars in the Muslim world.

Loath to be drawn into another one, Obama has tried to keep his distance from the conflict, holding off for months before calling for Assad to go in August 2011 and rejecting advice from then-Secretary of State Hillary Clinton and CIA Director David Petraeus in 2012 that he give U.S. arms to the Syrian rebels.

Kerry, who took over from Clinton on February 1, has been an advocate for doing more to help the Syrian rebels.

In Rome in late February, during his first foreign trip as secretary of state, Kerry unveiled a marked U.S. policy shift - a decision to send non-lethal assistance such as medical supplies and food directly to the rebels.

After striking a deal with Russia on May to try to revive moribund efforts to bring both sides of the conflict to the negotiating table, Kerry hinted two weeks later that the West might arm the rebels if Syria refused to come to the talks.

Obama eventually decided to take that step, but it is unclear whether any U.S. weaponry has reached the rebels.

Kerry's diplomatic initiative, however, had begun to unravel within a month when Syrian government forces in early June retook the strategic town of Qusair, which lies on a cross-border supply route with Lebanon.

A week later on June 12, in a meeting of Obama's top national security team, Kerry argued for the United States going beyond arming opposition fighters by employing air strikes, a person familiar with the talks said.

Martin Dempsey, who as chairman of the U.S. Joint Chiefs is the United States top military officer, pushed back strongly, arguing that such a mission would be complex and costly.

Kerry appeared to have lost that argument, until now.

(Editing by Alistair Bell and Philip Barbara)

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Reuters: Most Read Articles: Obama will hold off on Syria strike until Congress has its say

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Obama will hold off on Syria strike until Congress has its say
Aug 31st 2013, 20:22

U.S. President Barack Obama speaks about Syria next to Vice President Joe Biden (L) at the Rose Garden of the White House August 31, 2013, in Washington. REUTERS/Mike Theiler

1 of 2. U.S. President Barack Obama speaks about Syria next to Vice President Joe Biden (L) at the Rose Garden of the White House August 31, 2013, in Washington.

Credit: Reuters/Mike Theiler

By Roberta Rampton and Jeff Mason

WASHINGTON | Sat Aug 31, 2013 3:46pm EDT

WASHINGTON (Reuters) - President Barack Obama on Saturday backed away from an imminent military strike against Syria to seek the approval of the U.S. Congress, in a decision that likely delays U.S. action for at least 10 days.

Obama, in a stern statement from the White House Rose Garden, said he had authorized the use of military force to punish Syria for a chemical weapons attack August 21 that U.S. officials say killed 1,429 people. Military assets to carry out a strike are in place and ready to move on his order, he said.

But in an acknowledgement of protests from U.S. lawmakers and concerns from war-weary Americans, Obama added an important caveat: he wants Congress to approve.

"We should have this debate, because the issues are too big for business as usual," he said.

Congress is in recess and not scheduled to return to work until September 9. It is unclear which way any vote would go.

"Today I'm asking Congress to send a message to the world that we are ready to move as one nation," Obama said.

Obama's decision was a high-stakes gamble that he can gain approval from Congress for a limited strike against Syria to safeguard an international ban on chemical weapons usage, defend U.S. national security interests and protect regional allies like Turkey, Jordan and Israel.

"I have long believed that our power is rooted not just in our military might, but in our example as a government of the people, by the people, and for the people," Obama said.

His decision was also a significant shift away from what was perceived to be preparations for a speedy strike against Syrian targets. He had made clear he was prepared to act unilaterally after the British parliament refused to go along with American plans.

Protracted and expensive wars in Afghanistan and Iraq have left Americans reluctant to get involved in Middle Eastern conflicts.

Most Americans do not want the United States to intervene in Syria. A Reuters/Ipsos poll taken this week showed only 20 percent believe the United States should take action, but that was up from 9 percent last week.

DEBATE IN WASHINGTON

A debate has raged for days among members of the U.S. Congress over whether, or how quickly, Obama should take action.

House of Representatives Speaker John Boehner, the top U.S. Republican, welcomed the move, which he said is a response to "serious, substantive questions" being raised about the ability of the president to launch a military move on his own.

"In consultation with the president, we expect the House to consider a measure the week of September 9. This provides the president time to make his case to Congress and the American people," he said.

Obama, who only on Friday had said nobody was more war-weary than he is, has nonetheless been appalled by searing video images of Syrians who fell under the chemical weapons onslaught.

In his Saturday speech, he left no doubt that he feels action must be taken and is confident that a strike would deter this kind of behavior and degrade Syria's ability to carry out similar attacks.

But his decision may well lead to criticism that he conceivably is stepping away again from a "red line" he established against Syrian use of chemical weapons.

"President Obama is abdicating his responsibility as commander in chief and undermining the authority of future presidents. The president does not need Congress to authorize a strike on Syria," said Republican Representative Peter King.

Obama's decision was announced after he met his national security team at the White House. Top aides were to brief senators later in the day and members of the House of Representatives are to receive a classified briefing from administration officials on Sunday.

The objective is to show the intelligence U.S. officials say is solid proof that the Syrian government of President Bashar al-Assad launched a large chemical weapons assault in Damascus suburbs that left among the dead 426 children.

Obama has broad legal powers to take military action, and he insisted he felt he had the authority to launch a strike on his own. Now, he has to launch a major effort to convince Congress.

"Here's my question for every member of Congress and every member of the global community: What message will we send if a dictator can gas hundreds of children to death in plain sight and pay no price?" he said.

(Additional reporting by Tabassum Zakaria and Douwe Miedema; Writing by Steve Holland; Editing by Alistair Bell and Jackie Frank)

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Reuters: Most Read Articles: Syrian rebels plan raids to exploit Western strikes: commander

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Syrian rebels plan raids to exploit Western strikes: commander
Aug 31st 2013, 10:46

A Free Syrian Army fighter walks with his weapon on a street in Deir al-Zor August 30, 2013. REUTERS/Khalil Ashawi

A Free Syrian Army fighter walks with his weapon on a street in Deir al-Zor August 30, 2013.

Credit: Reuters/Khalil Ashawi

By Erika Solomon

BEIRUT | Sat Aug 31, 2013 6:46am EDT

BEIRUT (Reuters) - Opposition fighters across Syria are preparing to launch attacks that exploit anticipated U.S.-led military strikes, but there are no plans to coordinate with Western forces, a Syrian rebel commander said on Saturday.

The United States said on Friday it was planning a limited response to punish Syrian President Bashar al-Assad for a "brutal and flagrant" chemical weapons attack it says killed more than 1,400 people in Damascus 10 days ago. Washington has five cruise-missile equipped destroyers in the region.

The Syrian government denies using chemical arms.

Qassim Saadeddine, a former Syrian army colonel and spokesman for the rebels' Supreme Military Council, said the council had sent a selection of rebel groups a military plan of action to use if strikes took place.

"The hope is to take advantage when some areas are weakened by any strikes. We ordered some groups to prepare in each province, to ready their fighters for when the strike happens," he told Reuters, speaking by Skype.

"They were sent a military plan that includes preparations to attack some of the targets we expect to be hit in foreign strikes, and some others that we hope to attack at the same time."

The Supreme Military Council is the armed wing linked to the National Coalition, an umbrella group considered to be the opposition's political leadership abroad.

Saadeddine said the plans had been prepared without any help from foreign powers. He said no information had been offered to them by the United States or any other Western countries such as France, which has supported carrying out a strike on Assad.

MILITARY TARGETS

"The United States considers us to be one of the two parties engaged in a civil war, they haven't spoken to the rebel leadership at large, though they have communicated to the political leaders in the Coalition," Saadeddine said. "There may have been consultations with the head of our council, Salim Idriss, but I cannot confirm this."

Syria's two-and-a-half year old conflict began as a peaceful protests against four decades of Assad family rule but has become a civil war that has killed more than 100,000 people.

Activists said rockets loaded with poison-gas killed hundreds of people in rebel-held areas outside Damascus, many of them children, on August21. The Syrian government blames rebels fighting to topple Assad for the attack, but Washington says its intelligence shows Assad's forces were responsible.

Saadeddine said his forces assessed that a Western attack would happen in the coming days and would last about three days.

Saadeddine said the rebels liaising with the council had drawn up a list of potential targets for any strike.

"We think it will be something among military sites such as the headquarters of military leadership, military airports, certain weapon storage areas, or launchpads and installations for large missiles such as Scuds," he said.

Other sites seen by rebels as likely targets, Saadeddine said, were those belonging to elite forces believed most loyal to Assad - the Fourth Armored Division and the Republican Guard. The opposition blames those units for playing a role in the poison gas attack.

Other rebels contacted, without links to the council, said they were also trying to prepare for a potential strike, but that they were struggling to come up with a plan of action.

(Editing by William Maclean and Pravin Char)

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Reuters: Most Read Articles: Ammonia leak at Shanghai refrigeration plant kills 15, injures 26

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Ammonia leak at Shanghai refrigeration plant kills 15, injures 26
Aug 31st 2013, 10:02

1 of 6. Rescuers walk inside a refrigeration unit of Shanghai Weng's Cold Storage Industrial Co. Ltd., in the Baoshan district of Shanghai August 31, 2013.

Credit: Reuters/Aly Song

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Reuters: Most Read Articles: Putin says would be 'utter nonsense' for Assad to use chemical arms

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Putin says would be 'utter nonsense' for Assad to use chemical arms
Aug 31st 2013, 11:25

Russia's President Vladimir Putin looks on during a meeting with journalists in the far eastern city of Vladivostok, August 31, 2013. Putin said on Saturday that it would be ''utter nonsense'' for the Syrian government to use chemical weapons when it was winning the war, and urged U.S. President Barack Obama not to attack Syrian forces.

Credit: Reuters/Alexei Nikolskyi/RIA Novosti/Kremlin

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