Mistrust runs deep despite cease-fire

CAIRO/GAZA (Reuters) - A ceasefire between Israel and Gaza's Hamas rulers took hold on Thursday after eight days of conflict, although deep mistrust on both sides cast doubt on how long the Egyptian-sponsored deal can last.

Even after the ceasefire came into force late on Wednesday, a dozen rockets from the Gaza Strip landed in Israel, all in open areas, a police spokesman said. In Gaza, witnesses reported an explosion shortly after the truce took effect at 9 p.m (14:00 EDT), but there were no casualties and the cause was unclear.

The deal prevented, at least for the moment, an Israeli ground invasion of the Palestinian enclave following bombing and rocket fire which killed five Israelis and 162 Gazans, including 37 children.

But trust was in short supply. The exiled leader of Hamas, Khaled Meshaal, said his Islamist movement would respect the truce if Israel did, but would respond to any violations. "If Israel complies, we are compliant. If it does not comply, our hands are on the trigger," he told a news conference in Cairo.

Israeli Prime Minister Benjamin Netanyahu said he had agreed to "exhaust this opportunity for an extended truce", but told his people a tougher approach might be required in the future.

Both sides quickly began offering differing interpretations of the ceasefire, brokered by Egypt's new Islamist government and backed by the United States, highlighting the many actual or potential areas of discord.

If it holds, the truce will give 1.7 million Gazans respite from days of ferocious air strikes and halt rocket salvoes from militants that unnerved a million people in southern Israel and reached Tel Aviv and Jerusalem for the first time.

"Allahu akbar, (God is greatest), dear people of Gaza you won," blared mosque loudspeakers in Gaza as the truce took effect. "You have broken the arrogance of the Jews."

Fifteen minutes later, wild celebratory gunfire echoed across the darkened streets, which gradually filled with crowds waving Palestinian flags. Ululating women leaned out of windows and fireworks lit up the sky.

Meshaal thanked Egypt for mediating and praised Iran for providing Gazans with financing and arms. "We have come out of this battle with our heads up high," he said, adding that Israel had been defeated and failed in its "adventure".

Some Israelis staged protests against the deal, notably in the southern town of Kiryat Malachi, where three people were killed by a Gaza rocket during the conflict, army radio said.

Netanyahu said he was willing to give the truce a chance but held open the possibility of reopening the conflict. "I know there are citizens expecting a more severe military action, and perhaps we shall need to do so," he said.

The Israeli leader, who faces a parliamentary election in January, delivered a similar message earlier in a telephone call with U.S. President Barack Obama, his office said.

"AN OPEN PRISON"

According to a text of the agreement seen by Reuters, both sides should halt all hostilities, with Israel desisting from incursions and targeting of individuals, while all Palestinian factions should cease rocket fire and cross-border attacks.

The deal also provides for easing Israeli restrictions on Gaza's residents, who live in what British Prime Minister David Cameron has called an "open prison".

The text said procedures for implementing this would be "dealt with after 24 hours from the start of the ceasefire".

Israeli sources said Israel would not lift a blockade of the enclave it enforced after Hamas, which rejects the Jewish state's right to exist, won a Palestinian election in 2006.

However, Meshaal said the deal covered the opening of all of the territory's border crossings. "The document stipulates the opening of the crossings, all the crossings, and not just Rafah," he said. Israel controls all of Gaza's crossings apart from the Rafah post with Egypt.

Hamas lost its top military commander to an Israeli strike in the conflict and suffered serious hits to its infrastructure and weaponry, but has emerged with its reputation both in the Arab world and at home stronger.

Israel can take comfort from the fact it dealt painful blows to its enemy, which will take many months to recover, and showed that it can defend itself from a barrage of missiles.

"No one is under the illusion that this is going to be an everlasting ceasefire. It is clear to everyone it will only be temporary," said Michael Herzog, a former chief of staff at the Israeli ministry of defence.

"But there is a chance that it could hold for a significant period of time, if all goes well," he told Reuters.

Egypt, an important U.S. ally now under Islamist leadership, took centre stage in diplomacy to halt the bloodshed. Cairo has walked a fine line between its sympathies for Hamas, an offshoot of the Muslim Brotherhood to which President Mohamed Mursi belongs, and its need to preserve its 1979 peace treaty with Israel and its ties with Washington, its main aid donor.

Announcing the agreement in Cairo, Egyptian Foreign Minister Mohamed Kamel Amr said mediation had "resulted in understandings to cease fire, restore calm and halt the bloodshed".

U.S. Secretary of State Hillary Clinton, standing beside Amr, thanked Mursi for peace efforts that showed "responsibility, leadership" in the region.

The Gaza conflict erupted in a Middle East already shaken by last year's Arab uprisings that toppled several veteran U.S.-backed leaders, including Egypt's Hosni Mubarak, and by a civil war in Syria, where President Bashar al-Assad is fighting for survival.

In his call with Netanyahu, Obama in turn repeated U.S. commitment to Israel's security and promised to seek funds for a joint missile defence program, the White House said.

BUS BOMBING

The ceasefire was forged despite a bus bomb explosion that wounded 15 Israelis in Tel Aviv earlier in the day and despite more Israeli air strikes that killed 10 Gazans. It was the first serious bombing in Israel's commercial capital since 2006.

Israel, the United States and the European Union all classify Hamas as a terrorist organization. It seized the Gaza Strip from the Western-backed Palestinian President Mahmoud Abbas in 2007 in a brief but bloody war with his Fatah movement.

"This is a critical moment for the region," Clinton said. "Egypt's new government is assuming the responsibility and leadership that has long made this country a cornerstone for regional stability and peace."

In Amman, U.N. chief Ban Ki-moon urged both sides to stick to their ceasefire pledges. "There may be challenges implementing this agreement," he said, urging "maximum restraint".

(Additional reporting by Noah Browning in Gaza, Ori Lewis, Allyn Fisher-Ilan and Crispian Balmer in Jerusalem, Yasmine Saleh, Shaimaa Fayed and Tom Perry in Cairo, Suleiman al-Khalidi in Amman and Margaret Chadbourn in Washington; Writing by Alistair Lyon and David Stamp; Editing by Louise Ireland)

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AP Exclusive: Syrian rebels seize base, arms trove

BASE OF THE 46TH REGIMENT, Syria (AP) — After a nearly two-month siege, Syrian rebels overwhelmed a large military base in the north of the country and made off with tanks, armored vehicles and truckloads of munitions that rebel leaders say will give them a boost in the fight against President Bashar Assad‘s army.

The rebel capture of the base of the Syrian army’s 46th Regiment is a sharp blow to the government’s efforts to roll back rebels gains and shows a rising level of organization among opposition forces.

More important than the base’s fall, however, are the weapons the rebels found inside.

At a rebel base where the much of the haul was taken after the weekend victory, rebel fighters unloaded half a dozen large trucks piled high with green boxes full of mortars, artillery shells, rockets and rifles taken from the base. Parked nearby were five tanks, two armored vehicles, two rocket launchers and two heavy-caliber artillery cannons.

Around 20 Syrian soldiers captured in the battle were put to work carrying munitions boxes, barefoot and stripped to the waist. Rebels refused to let reporters talk to them or see where they were being held.

“There has never been a battle before with this much booty,” said Gen. Ahmad al-Faj of the rebels Joint Command, a grouping of rebel brigades that was involved in the siege. Speaking on Monday at the rebel base, set up in a former customs office at Syria’s Bab al-Hawa border crossing with Turkey, he said the haul would be distributed among the brigades.

For months, Syria’s rebels have gradually been destroying government checkpoints and taking over towns in the northern provinces of Idlib and Aleppo along the Turkish border.

Rebel fighters say that weapons seized in such battles have been essential to their transformation from ragtag brigades into forces capable of challenging Assad’s professional army. Cross-border arms smuggling from Turkey and Iraq has also played a role, although the most common complaint among rebel fighters is that they lack ammunition and heavy weapons, munitions and anti-aircraft weapons to fight Assad’s air force.

It is unclear how many government bases the rebels have overrun during the 20-month conflict, mostly because they rarely try to hold captured facilities. Staying in the captured bases would make them sitting ducks for regime airstrikes.

“Their strategy is to hit and run,” said Elias Hanna, a retired Lebanese army general and Beirut-based strategic analyst. “They’re trying to hurt the regime where it hurts by bisecting and compartmentalizing Syria in order to dilute the regime’s power.”

The 46th Regiment was a major pillar of the government’s force near the northern city of Aleppo, Syria’s economic hub, and its fall cuts a major supply line to the regime’s army, Hanna said. Government forces have been battling rebels for months over control of Aleppo.

“It’s a tactical turning point that may lead to a strategic shift,” he said.

At the 46th Regiment’s base, about 25 kilometers (15 miles) west of Aleppo, the main three-story command building showed signs of the battle — its walls punctured apparently from rebel rocket attacks. The smaller barracks buildings scattered around the compound, about 2.6 square kilometers (1 square mile) in size, had been looted, with mattresses overturned. A number of buildings had been torched.

Reporters from The Associated Press who visited the base late Monday saw no trace of the government troops who had been defending it — other than the dead bodies of seven soldiers.

Two of them, in camouflage uniforms, lay outside the command building. One of them was missing his head, apparently blown off in an explosion.

The rest were in a nearby clinic. Four dead soldiers were on stretchers set on the floor, one with a large gash in his arm, another with what appeared to be a large shrapnel hole in the back of his head. The last lay on a gurney in another room, his arms and legs bandaged, a bullet hole in his cheek and a splatter of blood on the wall and ceiling behind him as if he had been shot where he lay.

It could not be determined how or when the soldiers had been killed.

The final assault that took the base came after more than 50 days of siege that left the soldiers inside demoralized, according to fighters who took part.

Working together and communicating by radio, a number of different rebels groups divided up the area surrounding the base and each cut the regime’s supply lines, said Abdullah Qadi, a rebel field commander. Over the course of the siege, dozens of soldiers defected, some telling the rebels that those inside were short of food, Qadi said.

The rebels decided to attack Saturday afternoon when they felt the soldiers inside were weak and the rebels had enough ammunition to finish the battle, Qadi said. The battle was over by nightfall on Sunday. Seven rebel fighters were killed in the battle, said al-Faj of the rebels’ Joint Command. Other rebel leaders gave similar numbers.

It remains unclear how many soldiers remained in the base when the rebels launched their attack and what happened to them.

Al-Faj said all soldiers inside were either killed or captured. He said he didn’t know how many were killed, but that the rebels had taken about 50 prisoners, all of whom would be tried in a rebel court. Aside from the 20 prisoners seen at the rebel’s Bab al-Hawa base, the AP was unable to see any other captured soldiers.

The Syrian government does not respond to requests for comment on military affairs and said nothing about the base’s capture. It says the rebels are terrorists backed by foreign powers that seek to destroy the country.

Disorganization has plagued the Syrian opposition since the start of the anti-Assad uprising in March 2011, with exile groups pleading for international help even when they have no control over those fighting inside of Syria.

A newly formed Syrian opposition coalition received a boost Tuesday, when Britain officially recognized it as the sole representative of the Syrian people.

The National Coalition of the Syrian Revolutionary and Opposition Forces was formed in the Gulf nation of Qatar on Oct. 11 under pressure from the United States for a stronger, more united opposition body to serve as a counterweight to more extremist forces.

British Foreign Secretary William Hague said Tuesday the body’s members gave assurances to be a “moderate political force committed to democracy” and that the West must “support them and deny space to extremist groups.”

The United States and the European Union have both spoken well of the body but stopped short of offering it full recognition.

Key to the body’s success will be its ability to build ties with the disparate rebel groups fighting inside Syria. Many rebel leaders say they don’t recognize the new body, and a group of extremist Islamist factions on Monday rejected it, announcing that they had formed an “Islamic state” in Aleppo.

Anti-regime activists say nearly 40,000 people have been killed since Syria’s crisis started 20 months ago.

___

Associated Press write Elizabeth Kennedy contributed reporting from Beirut, Lebanon.

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Review: Gift guide to full-size tablets

NEW YORK (AP) — Tablets are at the top of many wish lists this holiday season. But what to get? The choice used to be pretty limited, with the iPad dominating the latecomers. But this year, the field is more even, as tablets from Apple‘s competitors have matured. In addition, Google and Microsoft are diving in with their own tablets, providing more choice.

The first step in the buying process is to decide on the size of the tablet. They fall into two rough categories: the full-sized tablet, pioneered by the iPad, and the half-size tablet, epitomized by the Kindle Fire.

Full-sized tablets, which generally have screens measuring about 10 inches on the diagonal, are better for surfing websites designed for PCs, and far better when it comes to displaying magazines and documents. Overall, they go further toward replacing a laptop. They cost $ 400 and up.

Half-sized tablets, which have screens measuring roughly 7 inches on the diagonal, are cheaper and lighter, but just as good as full-sized tablets for e-book reading. It’s an excellent first computing device for a kid, or a gentle nudge into the digital world for an older adult with little computing experience. This year’s crop costs $ 199 and up, but last year’s models are available for less.

If you’ve settled on a large tablet, here are some top choices. A review of smaller tablets ran Monday.

— Apple iPad, fourth generation (starts at $ 499)

Apple usually updates the iPad once a year, so it was a surprise when it dropped a new model in October, with a faster processor and the new “Lightning” connection and charging port, replacing the wide port inherited from the iPod. Like the third-generation iPad launched in March it has an ultra-high-resolution “Retina” screen. The model’s resolution of 2,048 by 1,536 pixels is only surpassed by the Google Nexus 10.

That means the current iPad is two generations ahead of the iPad 2 that was on sale last holiday season. It packs enough improvements to make the upgrade worth it. The iPad 2 is still on sale for $ 100 less, but it’s not a very good value for the money: if $ 400 is all you can spend, there are better tablets out there than the iPad 2.

While other tablets are starting to approach it in terms of hardware, the iPad still enjoys the best support by far from third parties, both in terms of quality applications and accessories like cases.

One caveat: the base model of the iPad has only 16 gigabytes of storage, which fills up fast these days. The thoughtful giver goes for at least a 32-gigabyte model, for $ 100 more.

Other than that, there are few downsides to the iPad: no one will frown when opening this package.

— Barnes & Noble Nook HD+ (starts at $ 269)

For a book store, Barnes & Noble makes some amazing tablets. The HD+ is its first model that approaches the iPad in size, with a screen that’s 9 inches on the diagonal. That makes it slightly smaller than the iPad, and the resolution is lower as well, but still very respectable. At 1,920 by 1,280 pixels, it can show more detail than a living-room HDTV.

The Nook is family-friendly too. You can create user accounts and restrict them from certain content, so there’s less risk that your kids will stumble on your copy of “Fifty Shades of Grey.”

Like the basic iPad, the basic Nook HD+ comes with just 16 gigabytes of storage memory, but it can be expanded with a microSD memory card. That means another 32 gigabytes will cost you just $ 25 — a good deal.

But the Nook is the least versatile tablet in our roundup. The number of apps available is small, and it’s focused on Barnes & Noble content like e-books, magazines and movies. It doesn’t have any cameras, while the competitors have two each. It’s best for someone who’s likely to stick to media consumption, and doesn’t need the latest apps and games.

— Samsung Galaxy Note 10.1 (starts at $ 499)

If the Nook is for the avid reader or movie watcher, the Galaxy Note 10.1 is for the creative type. It’s the only tablet in our roundup that comes with a “pen” that can be used to write and draw on the screen. In our test, this worked well, though the number of apps that take advantage of the pen is still small. (Other tablets, like the iPad, only respond to finger-like objects, so third-party styluses for them are of necessity thick and clumsy.)

The Note 10.1 runs Google‘s Android software, giving it access to a wide array of apps originally written for smartphones. The selection is not on par with the iPad’s but better than other alternatives.

The Note’s screen falls into the low-resolution category, sporting 1,280 by 800 pixels. That’s a third of what the iPad musters.

Like the Nook, the Note 10.1′s storage memory can be expanded with cards.

The Note’s appeal is somewhat niche, but it could be just the thing for the budding or established artist.

— Microsoft Surface (starts at $ 499)

Microsoft’s first tablet seems at first like a throwback to the first iPad. It’s thick, heavy and rugged. But it’s really doesn’t have much in common with the first iPad or any Apple- or Google-powered tablet. It runs Windows RT, a version of Windows 8 adapted for tablets. It comes with a version of Microsoft’s Office suite and the ability to connect to wireless printers and some other peripherals, like USB drives. The covers for it have functional keyboard printed on the inside.

The screen resolution is 1,366 by 768 pixels, placing it in the low-resolution category.

The Surface screams “work, work, work.” It’s the tablet for those who are wedded to Word and want to take their writing on the go.

One thing to note about the Surface: the basic model starts out with “32 gigabytes” of memory, but of that, only 16 gigabytes are available to the user. It accepts memory cards of up to 64 gigabytes, however, so expanding the memory is cheap.

Note that even though it runs Windows, the Surface doesn’t run standard Windows applications. It will run only programs specifically adapted for Windows RT. The selection is, for now, quite limited.

— Asus Vivo Tab RT (starts at $ 599 with a dock)

Asus has a quality line of Android tablets they call “Transformer” because they dock into a keyboard with an extra battery. The combination folds up just like a small laptop and has excellent battery life. The Vivo Tab RT essentially takes a Transformer and stuffs it with Windows RT instead of Android.

The tablet part is smaller and thinner than the Surface. Together with the keyboard, it makes for a familiar little setup: a tiny laptop running Windows. Like the Surface, it has a memory card slot and a USB port. The screen resolution is the same.

The Vivo Tab is a good tool for those who want to get some work done on the commute or plane, or those who can’t decide if they want a laptop or a tablet.

— Google Nexus 10 (starts at $ 399)

This is Google’s first full-size tablet and the only tablet from any manufacturer that beats the screen resolution of the iPad. It boasts 2,560 by 1,600 pixels, a third more than the fourth-generation iPad.

It’s also the only tablet in this roundup that has speakers on either side of the screen when it’s held horizontally, making for good stereo reproduction when you’re watching movies. It has a grippy, rubberized back and widely rounded corners. There’s no memory card slot or an option for a cellular modem.

The array of third-party software is wide, just as it is for the Note 10.1. Most people don’t associate Google with online books, music or movies, so it may feel odd that the Nexus steers buyers to Google’s Play store. Of course, given the open nature of Google’s Android operating system, there are apps available for other entertainment stores, including Amazon’s, and for streaming services like Netflix.

The Nexus 10 is a snappy performer, and among the iPad’s competitors, it comes the closest to matching the versatility of Apple products.

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Peter Svensson can be reached at http://www.twitter.com/petersvensson

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Elmo puppeteer Clash resigns following new sex claims

NEW YORK (Reuters) – Kevin Clash, the puppeteer behind the “Sesame Street” character Elmo, resigned on Tuesday following new allegations that he had sex with an underage boy, adding to an ongoing controversy involving one of America’s most popular children’s brands.

In a lawsuit filed on Tuesday, Cecil Singleton is seeking more than $ 5 million in damages from Clash. Singleton claims he met the then-32-year-old puppeteer in 1993 in a gay chat room when he was 15.

It added that on numerous occasions over a period of years Clash engaged in sexual activity with Singleton.

The news came just a week after another man recanted his claims that Clash had sex with him when he was 16 years old.

Clash, 52, said he was leaving Sesame Workshop, the company behind the television show, after nearly 30 years with a very heavy heart.

“I have loved every day of my 28 years working for this exceptional organization. Personal matters have diverted attention away from the important work Sesame Street is doing and I cannot allow it to go on any longer,” he said in a statement issued by his publicist, Risa B. Heller.

“I am deeply sorry to be leaving and am looking forward to resolving these personal matters privately,” he added.

The New York-based Sesame Workshop said it was a sad day for “Sesame Street,” which premiered in 1969 and has been educating and entertaining children for decades with characters such as Elmo, Big Bird, Bert and Ernie, Oscar the Grouch and Cookie Monster.

“Unfortunately, the controversy surrounding Kevin’s personal life has become a distraction that none of us wants, and he has concluded that he can no longer be effective in his job and has resigned from Sesame Street,” the company said in a statement.

A representative declined further comment.

The unnamed 23-year-old man who first accused Clash recanted his claims last week, saying the relationship was consensual. His lawyers were not immediately available to comment on the lawsuit.

Clash had denied the allegations and acknowledged a past relationship with his first accuser. He added the pair were both consenting adults at the time.

“I am a gay man. I have never been ashamed of this or tried to hide it,” Clash said at the time.

Sesame Workshop said the first allegations involving Clash came to its attention in June when the earlier accuser contacted the company by email.

The Elmo character debuted on “Sesame Street” in 1979. While Clash was the third performer to animate the child-like shaggy red monster, Sesame Workshop credits him with turning Elmo into the international sensation he became.

(Reporting by Patricia Reaney; additional reporting by Steve Gorman; Editing by Ellen Wulfhorst and Cynthia Osterman)

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Ex-hedge fund trader charged in $276M insider ploy

NEW YORK (AP) — A former hedge fund portfolio manager was arrested Tuesday in what prosecutors called perhaps the most lucrative insider trading scheme of all time — an arrangement to obtain secret, advance results of tests on an experimental Alzheimer’s drug that netted more than $ 276 million for his fund and others.

The case also led authorities to investigate the activities of one of the nation’s wealthiest hedge fund managers, billionaire Steven A. Cohen.

The portfolio manager, Mathew Martoma, was accused in U.S. District Court in Manhattan of using the information to advise other investment professionals to buy shares in the companies developing the drug, then later to dump those investments and place financial bets against the companies when the tests returned disappointing results.

“The charges unsealed today describe cheating coming and going,” U.S. Attorney Preet Bharara said at a news conference. The scheme unfolded “on a scale that has no historical precedent.”

Martoma’s trades helped reap a hefty profit from 2006 through July 2008, while he worked for CR Intrinsic Investors LLC of Stamford, Conn., an affiliate of SAC Capital Advisors, a firm owned by Cohen.

Cohen is not referred to by name in court papers but is frequently alluded to for his dealings with the defendant in the weeks leading up to an announcement about the drug trial.

The government has been scrutinizing SAC since at least November 2010, when the FBI subpoenaed SAC and other influential hedge funds. Martoma is the fourth person associated with SAC Capital to be arrested on insider trading charges in the last four years.

SAC spokesman Jonathan Gasthalter said the company and Cohen “are confident that they have acted appropriately and will continue to cooperate with the government’s inquiry.”

The FBI said the scheme developed after Martoma met a doctor in Manhattan involved in an Alzheimer’s drug trial in October 2006. According to a criminal complaint, he later obtained confidential information related to the final results of a drug trial.

Martoma’s attorney, Charles Stillman, called his client “an exceptional portfolio manager who succeeded through hard work and the dogged pursuit of information in the public domain. What happened today is only the beginning of a process that we are confident will lead to Mr. Martoma’s full exoneration.”

Martoma was arrested at his home in Boca Raton, Fla., and made an initial appearance in federal court in West Palm Beach, Fla., where he was released on $ 5 million bail on charges of conspiracy to commit securities fraud and securities fraud. He was scheduled to return to court Monday in Manhattan.

The defendant will have great incentive to cooperate with the government because the size of the gains would add years, if not decades, to any potential sentence upon conviction, said John Sylvia, co-chairman of the securities litigation practice at the Mintz Levin law firm in Boston.

He said it was clear from reading the court papers that Cohen was referenced frequently and was a likely target of investigators, though they might not be able to build a sufficient case against him.

“There’s little doubt as to where the government’s sights are,” Sylvia said. “I don’t think it takes Sherlock Holmes to figure it out.”

The Securities and Exchange Commission filed civil papers in the case against CR Intrinsic Investors, Mathew Martoma and Dr. Sidney Gilman. The civil complaint said the illegal money was earned in July 2008, when various hedge funds traded ahead of a negative public announcement involving the clinical trial results of an Alzheimer drug being jointly developed by Elan Corp. and Wyeth, both pharmaceutical companies.

The SEC complaint said that Martoma carried out the scheme with Gilman, an 80-year-old professor of neurology at the University of Michigan Medical School who served as chairman of a safety committee overseeing the clinical trial. Gilman was selected by Elan and Wyeth to present the final clinical trial results at a July 29, 2008, medical conference.

Messages left with the University of Michigan Medical School were not immediately returned.

Gilman’s lawyer, Marc Mukasey, said his client is cooperating with the SEC and the U.S. Attorney’s Office, and has entered into a non-prosecution agreement with federal prosecutors.

A copy of the agreement released by federal prosecutors Tuesday showed that Gilman will forfeit nearly $ 187,000 that he received from Elan for consulting work in 2007 and 2008 and from an expert networking firm for consultations between 2006 and 2009 with Martoma’s hedge fund.

Bharara said Martoma gained from “cultivating and corrupting” Gilman, eventually receiving $ 9 million in bonus pay for the year when the trades were made.

Martoma met with the doctor about 42 times, beginning in the summer of 2006, and eventually convinced him to start talking about the drug trial, prosecutors said.

The SEC said leaks by Martoma caused hedge fund portfolios managed by CR Intrinsic and by an affiliated investment adviser to liquidate more than $ 700 million in holdings in Elan and Wyeth.

The massive repositioning, the SEC said, allowed CR Intrinsic and various hedge funds to reap huge illicit profits and avoid steep losses.

“By cultivating and corrupting a doctor with access to secret drug data, Mathew Martoma and his hedge fund benefited from what might be the most lucrative inside tip of all time,” Bharara said.

The prosecutor said the doctor sent him a draft of the 24-page presentation he planned to make at a conference announcing the results.

That is when Martoma “had to do a spectacular about-face because he understood that — with these negative results looming — the hedge fund’s massive $ 700 million stake had become a terrible bet,” Bharara said. “And so, just like that, overnight, Martoma went from bull to bear as he tried to dig his hedge fund out of a massive hole.”

The news caused Elan’s stock price to plunge by more than 40 percent. The price of Wyeth fell about 12 percent.

The bets against the drug developers brought additional profits totaling $ 76.2 million. That is roughly the same amount that prosecutors said former hedge fund manager Raj Rajaratnam made in illegal profits before he was arrested. The one-time billionaire is serving an 11-year prison sentence in what was once considered the biggest insider trading case in U.S. history.

A year later, a hedge fund employee recommended that Martoma be terminated, and he was let go in 2010, Bharara said.

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AP Business Writer Daniel Wagner in Washington contributed to this report.

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Securing Gaza cease-fire proves elusive

JERUSALEM (AP) — Israel and the Hamas militant group edged closer to a cease-fire Tuesday to end a weeklong Israeli offensive in the Gaza Strip, but after a day of furious diplomatic efforts involving the U.S. secretary of state, U.N. chief and Egypt's president, a deal remained elusive and fighting raged on both sides of the border.

Israeli tanks and gunboats pummeled targets in Gaza in what appeared to be a last-minute burst of fire, while at least 200 rockets were fired into Israel. As talks dragged on near midnight, Israeli and Hamas officials, communicating through Egyptian mediators, expressed hope that a deal would soon be reached, but cautioned that it was far from certain.

"If there is a possibility of achieving a long-term solution to this problem by diplomatic means, we prefer that. But if not, then I am sure you will understand that Israel will have to take whatever actions are necessary to defend its people," Israeli Prime Minister Benjamin Netanyahu said at a late-night meeting with visiting Secretary of State Hillary Rodham Clinton.

Clinton was hastily dispatched to the region by President Barack Obama to join a high-profile group of world leaders working to halt the violence. Standing alongside the Israeli leader, Clinton indicated it could take some time to iron out an agreement.

"In the days ahead, the United States will work with our partners here in Israel and across the region toward an outcome that bolsters security for the people of Israel, improves conditions for the people of Gaza and moves toward a comprehensive peace for all people of the region," she said.

Clinton expressed sorrow for the heavy loss of life on both sides, but called for the Palestinian rocket attacks on Israel to end and stressed that the American commitment to Israel's security is "rock solid."

"The goal must be a durable outcome that promotes regional stability and advances the security and legitimate aspirations of Israelis and Palestinians alike," she said.

In Washington, State Department spokeswoman Victoria Nuland said Clinton met with Netanyahu and other Israeli officials for two hours.

"They discussed efforts to de-escalate the situation and bring about a sustainable outcome that protests Israel's security and improves the lives of civilians in Gaza," Nuland said. "They also consulted on her impending stops in Ramallah and Cairo, including Egyptian efforts to advance de-escalation."

Israel launched the offensive on Nov. 14 in a bid to end months of rocket attacks out of the Hamas-run territory, which lies on Israel's southern flank. After assassinating Hamas' military chief, it has carried out a blistering campaign of airstrikes, targeting rocket launchers, storage sites and wanted militants.

The campaign has killed more than 130 Palestinians, including dozens of civilians, and wounded hundreds of others. Five Israelis have been killed by rocket fire, including a soldier and a civilian contractor on Tuesday.

With Israel massing thousands of ground troops on the Gaza border, diplomats raced throughout the region in search of a formula to halt the fighting.

In a meeting with Netanyahu, U.N. chief Ban Ki-moon condemned Palestinian rocket attacks, but urged Israel to show "maximum restraint."

"Further escalation benefits no one," he said.

Israel demands an end to rocket fire from Gaza and a halt to weapons smuggling into Gaza through tunnels under the border with Egypt. It also wants international guarantees that Hamas will not rearm or use Egypt's Sinai region, which abuts both Gaza and southern Israel, to attack Israelis.

Hamas wants Israel to halt all attacks on Gaza and lift tight restrictions on trade and movement in and out of the territory that have been in place since Hamas seized Gaza by force in 2007. Israel has rejected such demands in the past.

Egypt's new Islamist government is expected to play a key role in maintaining a deal.

The crisis has thrust Egypt's president, Mohammed Morsi, into the spotlight as he plays a difficult balancing act.

Morsi belongs to the Muslim Brotherhood, Hamas' parent movement, and clearly sympathizes with the Islamic militant group. At the same time, he relies heavily on U.S. aid and is trying to preserve a historic peace agreement with Israel.

Earlier, Morsi raised hopes that a cease-fire was near when he predicted the negotiations would yield "positive results" during the coming hours.

Netanyahu also said his country would be a "willing partner" in a cease-fire agreement.

But as the talks stretched into the evening, it became clear that a deal remained a ways off.

"Most likely the deal will be struck tomorrow. Israel has not responded to some demands, which delayed the deal," Hamas official Izzat Risheq said.

Hamas officials refused to discuss the remaining sticking points.

Israeli media quoted Defense Minister Ehud Barak as telling a closed meeting that Israel wanted a 24-hour test period of no rocket fire to see if Hamas could enforce a truce.

Palestinian officials briefed on the negotiations said Hamas wanted assurances of a comprehensive deal that included new border arrangements — and were resisting Israeli proposals for a phased agreement. The officials spoke on condition of anonymity because they were not authorized to talk to the media.

Although Israel claims it has inflicted heavy damage on militants' capabilities, its roughly 1,550 airstrikes and shelling attacks have failed to halt the rocket fire.

More than 1,400 rockets have been fired at Israel, including about 200 on Tuesday. A U.S.-financed Israeli rocket-defense system has knocked down roughly 400 of the incoming projectiles.

Violence raged on as the talks continued. An airstrike late Tuesday killed two journalists who work for the Hamas TV station, Al-Aqsa, according to a statement from the channel. A third journalist, from Al Quds Educational Radio, a private station, also was killed.

The Al-Aqsa TV cameramen were in a car hit by an airstrike, Gaza health official Ashraf al-Kidra said. Israel claims that many Hamas journalists are involved in militant activities. Earlier this week it targeted the station's offices, saying they served as a Hamas communications post.

Late Tuesday, a Palestinian rocket hit a house in the central Israeli city of Rishon Lezion, wounding two people and badly damaging the top two floors of the building, police spokesman Micky Rosenfeld said.

Minutes before Ban's arrival in Jerusalem from Egypt, Palestinian militants fired a rocket toward Jerusalem, just the second time it has targeted the city. The rocket fell in an open area southeast of the city.

Jerusalem had previously been considered beyond the range of Gaza rockets — and an unlikely target because it is home to the Al-Aqsa Mosque compound, Islam's third-holiest shrine.

Israeli warplanes dropped leaflets on several Gaza neighborhoods asking residents to evacuate and head toward the center of Gaza City along specific roads. The army "is not targeting any of you, and doesn't want to harm you or your families," the leaflets said. Palestinian militants urged residents to ignore the warnings, calling them "psychological warfare."

Israeli security officials acknowledge they rely on a network of Palestinian informants to identify targets. Masked gunmen publicly shot dead six suspected collaborators with Israel in a large Gaza City intersection Tuesday, witnesses said.

An Associated Press reporter saw a mob surrounding five of the bloodied corpses shortly after the killing, and one of the bodies was dragged through the streets by a motorcycle.

Hamas did not provide any evidence against the alleged collaborators.

Clinton was also scheduled to meet with Palestinian President Mahmoud Abbas in the West Bank and Egyptian leaders in Cairo on Wednesday. Turkey's foreign minister and a delegation of Arab League foreign ministers traveled to Gaza on a separate truce mission. Airstrikes continued to hit Gaza even as they entered the territory.

"Turkey is standing by you," Turkish Foreign Minister Ahmet Davutoglu told the Hamas prime minister in Gaza, Ismail Haniyeh. "Our demand is clear. Israel should end its aggression immediately and lift the inhumane blockade imposed on Gaza."

The U.S. considers Hamas, which has killed hundreds of Israelis in suicide and other attacks, to be a terror group and does not meet with its officials. The Obama administration blames Hamas for the latest eruption of violence and says Israel has the right to defend itself. At the same time, it has warned against a ground invasion, saying it could send casualties spiraling.

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Barzak reported from Gaza City, Gaza Strip. Associated Press writers Hamza Hendawi in Cairo, Karin Laub in Gaza City and Ian Deitch in Jerusalem contributed to this report.

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Turbulence on Cuba-Italy flight leaves 30 bruised

ROME (AP) — An airliner flying from Havana to Milan abruptly plunged some 1,000 meters (3,300 feet) when it hit unusually strong turbulence over the Atlantic on Monday, terrifying passengers and leaving some 30 people aboard with bruises and scrapes, airline officials said.

The flight continued to Milan’s Malpensa airport after the plane’s captain determined that it suffered no structural damage and two passengers who are physicians found no serious injuries, Giulio Buzzi, head of the pilots division at Neos Air, told Sky TG24 TV.

The ANSA news agency quoted bruised passenger Edoardo De Lucchi as saying meals were being served when suddenly there was “10 seconds of terror.” He recounted how plates went flying and some passengers not wearing seatbelts bounced about.

Buzzi had said that the drop measured some 3,000 meters (10,000 feet) in a cloudless sky. But Milan daily’s Corriere della Sera’s web site, quoting Neos official Davide Martini, later reported that the plane first bounced up some 500 meters (1,650 feet), then dropped some 1,000 meters (3,300 feet) to some 500 meters (1,650 feet) below the original altitude.

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Aussie rockers AC/DC’s music to be sold on iTunes

NEW YORK (Reuters) – AC/DC‘S entire catalogue, including 20 studio and live albums and three compilations will be available on iTunes for the first time worldwide, Columbia Records and Apple said on Monday.

Until now the Australian heavy metal group that was formed by two brothers, Angus and Malcolm Young, in 1973, had refused to put their music on Apple Inc’s online music store.

“AC/DC’s thunderous and primal rock and roll has excited fans for generations with their raw and rebellious brand of music, which also resonates with millions of new fans discovering AC/DC everyday,” Columbia Records and Apple, said in a statement announcing the deal.

“Their growing legion of fans will now experience the intensity of AC/DC’s music in a way that has never been heard before,” they added.

The group’s 1976 debut album “High Voltage,” its classic “Back In Black” and 2008′s “Black Ice” are among the albums available on iTunes.

All the of music has been mastered for iTunes and fans can download entire albums or individual songs.

(Reporting by Patricia Reaney; editing by Paul Casciato)

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Amid meningitis crisis, critics say Medicare may promote risky drug compounding

NEW YORK (Reuters) – With 34 deaths and 474 cases of fungal meningitis linked to tainted steroids from a Massachusetts compounding pharmacy, blame has fallen on everyone from the pharmacy to state and federal regulators. Now a new potential culprit has emerged: Medicare, which reimburses for almost all compounded drugs.

“Medicare’s reimbursement policy is certainly relevant in the government’s role in supporting purchases” of compounded drugs, Senator Richard Blumenthal told Reuters, referring to the customized medications meant to be prepared for an individual based on doctor directions.

Medicare is the federal health insurance program for the elderly and disabled. Because it is such a large player in healthcare policy, its coverage decisions have an outsized impact on the market.

As long as a physician has prescribed a compounded drug, Medicare as well as some private insurers cover it even if the Food and Drug Administration has approved a version of the drug from a pharmaceutical manufacturer.

In a letter sent on Monday to U.S. Department of Health and Human Services (HHS) Secretary Kathleen Sebelius, the consumer advocacy organization Public Citizen charged that by paying for compounded drugs Medicare “created an economic environment that allowed large-scale drug production by compounding pharmacies to flourish.”

“Medicare played a role in fostering the widespread use of compounded drugs,” Dr. Michael Carome, deputy director of Public Citizen’s Health Research Group, said.

In reply, an HHS spokesman told Reuters that if the FDA finds that a company is producing compounded drugs in violation of the law, “Medicare will not reimburse for drugs produced in that facility.” But because the FDA’s authority over compounding pharmacies is severely limited, “we urge Congress to strengthen FDA’s authority to ensure these kinds of outbreaks do not happen again.”

In a letter to Medicare on Monday, Senators Debbie Stabenow, Al Franken, Dianne Feinstein and Blumenthal – all Democrats – also raised concerns about how compounded drugs are “reimbursed at the state and federal level.”

The senators cited a section of Medicare’s policy manual which explains how the program can deny payment for compounded drugs. In addition, they asked how Medicare works with the FDA “to determine which companies have received violations for mass compounding of drugs.”

Medicare pays for compounded medications mostly under what is called Part B, which covers drugs that patients cannot administer themselves, such as spinal injections and intravenous cancer drugs. “These medications are vital and often life-sustaining and should be covered in full,” said David Ball, a spokesman for the International Academy of Compounding Pharmacists.

Also weighing in on compounding on Monday, the Senate Committee on Health, Education, Labor, and Pensions asked all 50 state boards of pharmacy – which, rather than federal regulators, oversee compounding pharmacies – for information on “actions you have taken to address this meningitis outbreak.”

Specifically, the committee asked the boards whether they had reported problems with drugs from New England Compounding Center, the company that produced the tainted steroids, to the FDA, and whether they require compounding pharmacies to report whether they produce large volumes of drugs.

Although traditional pharmacy compounding is small-scale, producing one prescription for one specific patient at a time, the company that produced the tainted steroids in the meningitis outbreak manufactured thousands of doses for hundreds of patients at once, documents show.

OUT OF BUSINESS

The suspicion that Medicare’s payment policy encourages large-scale compounding has arisen in part because in the single instance when Medicare denied payment for an entire class of compounded drugs – respiratory medications used in special inhalers called nebulizers – the decision drove compounders out of that business.

At the time, Medicare said that because compounded drugs are not tested for safety and effectiveness, they have “the potential of putting a patient at increased risk of injury, illness, or death.”

The nebulizer-drugs decision came in 2007, after patient advocates led by Allergy & Asthma Network Mothers of Asthmatics argued to Medicare that the compounded nebulizer drugs had contamination and potency problems, said Sandra Fusco Walker, who led that effort.

That coverage decision “is absolutely relevant” to the question of Medicare’s support for compounding pharmacies, Blumenthal said, “because it reflects an awareness of this issue. Whether that should be a precedent for denying coverage of all such (compounded) drugs is a separate question.”

The Center for Medicare and Medicaid Services (CMS), which is part of HHS and runs the Medicare, regularly decides whether to cover diagnostic tests, medications, surgical procedures and other medical treatments. It bases those decisions on whether the intervention is “reasonable and necessary.” For drugs, that almost always means that the medication has received approval from the FDA.

“We believe that Medicare’s policy manual clearly establishes the agency’s authority to deny coverage for compounded drugs,” said Carome.

But he admits that the manual is “internally contradictory.”

In a section of the manual related to compounded drugs, CMS says that compounded drugs that have not received FDA approval – which describes essentially all compounded drugs – are excluded from Medicare coverage.

“If the FDA has not approved the manufacturing and processing procedures used by these (compounding) facilities, the FDA has no assurance that the drugs these companies are producing are safe and effective,” the manual adds.

But the same section also says that payment for such a drug does not stop unless CMS notifies the local carriers that it contracts with to process Medicare claims “that it is appropriate to do so.”

“Clearly, if compounded drugs weren’t covered to the extent they are, there wouldn’t be an economic environment that allows large-scale compounding to continue,” said Carome.

(Editing by Cynthia Osterman)

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Israel's Gaza offensive was years in the making

JERUSALEM (AP) — With little notice, Israel has launched a blistering air offensive against the Gaza Strip's ruling Hamas militant group. Here's a look at why the violence erupted, the goals of the warring sides and how it may end:

LIGHTNING STRIKE

Israel opened its offensive with a surprise airstrike on Nov. 14 that killed the shadowy leader of Hamas' military wing. Since then, it has carried out hundreds of airstrikes in what it says is a systematic campaign to halt years of rocket attacks launched from Gaza. While Israel claims to have inflicted heavy damage, dozens of rockets have continued to fly out of Gaza each day.

WHY NOW?

Israel launched the operation in response to days of rocket attacks out of Gaza, highlighted by a rare missile strike on an Israeli military jeep that wounded four soldiers. But the operation was actually years in the making. Since a previous Israeli offensive four years ago, Hamas has restocked its arsenal with more sophisticated and powerful weapons smuggled in from Egypt through underground tunnels. After a lull following Israel's previous offensive, rocket fire has steadily climbed the past two years. The Israeli military says more than 700 rockets were launched into Israel this year before it launched the offensive last week. In this environment, Israeli officials have said it was only a matter of time before a new round of fighting broke out.

THE BATTELFIELD

Hamas seized control of Gaza, a densely populated strip of land sandwiched between southern Israel and Egypt's Sinai desert, five years ago from the rival Fatah movement of Palestinian President Mahmoud Abbas. Hamas, a militant group sworn to Israel's destruction, has developed is rocket arsenal to the point where nearly half of Israel's population is in range.

WHY FIRE ROCKETS?

Palestinian militants, led by Hamas, say the rocket fire is a legitimate response to continued Israeli attacks. They also claim they are resisting Israeli occupation of the territory. Israel withdrew from Gaza in 2005, ending a 38-year military occupation. But it has maintained a blockade of the territory in a step it says is needed to prevent arms smuggling. In the murky world of Gaza politics, the attacks also stem from internal rivalries between groups eager to prove their militant credentials. Israeli Prime Minister Benjamin Netanyahu says no country would tolerate repeated missile attacks on its civilians.

RISKY BUSINESS

Prolonged fighting carries great risks for both sides. As Israel presses forward, the number of Palestinian civilian casualties is likely to rise — a scenario that could quickly turn international opinion against it. Israel's previous offensive left hundreds of civilians dead, drawing international condemnation and war crimes accusations. By continuing to fire rockets, Hamas raises the risk of tougher Israeli attacks, including a possible ground offensive. Well aware of these risks, both sides are working through mediators to arrange a cease-fire.

TERMS OF THE DEAL

Israel wants a halt to the rocket attacks and an end to arms smuggling into Gaza, most likely in a deal that is guaranteed by Egypt or other international parties. Hamas wants a halt to Israeli assassinations of its leaders and a lifting of the Israeli blockade. While gaps remain wide, both sides have strong interests in a deal. Bringing quiet to Israel's embattled south will make Netanyahu a national hero, weeks before parliamentary elections. Hamas, branded a terrorist group by Israel and the West, has seen its influence grow as the Arab Spring brings Islamists to power across the region. A cease-fire, particularly an arrangement guaranteed with international partners, would cement Hamas' control of Gaza and give it more of the international recognition it covets so much.

BY THE NUMBERS

—More than 100 Palestinians, half of them civilians, have been killed, according to Palestinian medical officials. Three Israeli civilians have died from rocket fire.

—Israel has attacked more than 1,350 targets in the current offensive, according to the Israeli army. Hamas and smaller armed groups have responded with nearly 600 rockets, the army says.

—Israel says its new "Iron Dome" rocket-defense system has shot down more than 300 incoming projectiles.

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