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[OMEN]

Hamas's leader in exile has said that his group will not consider a Gaza ceasefire until Israel ends its 15-day-old military offensive and opens border crossings.

'Let Israel pull out first, let the aggression stop first, let the crossings open and then people can look into the issue of calm,' said Khaled Meshaal in a televised speech in Damascus.

Israeli tanks and planes have bombarded Gaza and Hamas militants have fired rockets into Israel today.


Both sides have been ignoring a truce window and defying international efforts to stop the conflict.

An Israeli tank shell killed eight Palestinians in Jabalya, a refugee camp in the north of Gaza, and an air strike killed a woman in nearby Beit Lahiya, Palestinian medics said.

All of those killed in Jabalya were believed to be men from the same family. The deaths raised the Palestinian toll to at least 821, according to the Hamas-run Health Ministry in Gaza.

13 Israelis have been killed: 10 soldiers and three civilians hit in rocket fire.

The fighting continued even during a three-hour ceasefire window that Israel has established in recent days to allow humanitarian aid into Gaza to sustain the 1.5m people living there.

As Israeli tanks advanced in northern Gaza and aircraft hit targets across the coastal strip, Hamas rockets hit Ashkelon, 20 km north of Gaza, wounding three Israelis.

UN hopes to resume aid flows

Concerned about the deepening humanitarian impact of the war, with more than half Gaza's population dependent on UN food assistance, the UN said it hoped to resume full aid distribution after receiving Israeli assurances that its staff would not be harmed. A UN driver was killed on Thursday.

Israel has pressed on with its offensive despite a UN Security Council resolution calling for a ceasefire and Egyptian-European efforts at mediation, saying it is intent on stopping Hamas rocket fire. Hamas too has ignored calls for a halt to hostilities, firing at least eight rockets at Israel.

'Israel is determined to deal with this matter until its positive conclusion, so that there is no terrorism in Gaza against Israel,' Rafi Eitan, a member of Israel's security cabinet, told Israel Radio.

At least two Israeli tank shells hit northern Gaza immediately after the 1100-1400 GMT humanitarian truce window opened, residents said. Off the coast, Israeli ships trawled the water with their machineguns trained on northern Gaza.

Israeli tanks advanced from the north towards the city of Gaza, creeping in on the large refugee camp of Jabalya, home to around 100,000 people.

In an attempt to breathe life into a faltering Egyptian-led mediation effort, Palestinian President Mahmoud Abbas, whose Fatah party is a political foe of Hamas, met Egyptian President Hosni Mubarak for talks in Cairo.

They discussed the possible deployment of international forces along the Gaza-Egypt border under any ceasefire deal, but Abbas said they should be in Gaza itself, not along the border.

Egypt initiative thought in trouble

Privately, diplomats believe the Egyptian initiative, also sponsored by French President Nicolas Sarkozy, is in trouble, even if Israel has said talks over the proposal will continue and Hamas has sent representatives to Cairo.

'There is a growing sense that the Egyptian-French plan is not going to work,' a senior European diplomat told wire services.

European and Israeli diplomats said Egypt was objecting to proposals that foreign troops and technicians be stationed on its 15-km border with Gaza to prevent arms smuggling.

Instead, diplomats said, Egypt was ready to accept technical assistance for its own forces on the border. Israel says the Egyptians have failed in the past to prevent Hamas building up an arsenal of hundreds of Soviet-designed Katyusha missiles.

Likewise, the UN Security Council resolution late on Thursday calling for an immediate and durable ceasefire appears to have found no traction with either Israel or Hamas.

Israeli Prime Minister Ehud Olmert dismissed it as unworkable and Hamas officials in the Gaza Strip said they objected to it because they had not been consulted.

The US, which abstained in the UN vote, offered further public support for Israel's military goals.

'This situation will not improve until Hamas stops lobbing rockets into Israel,' White House spokesman Scott Stanzel said.

He said US President George W Bush had expressed concern to Mr Olmert about the humanitarian situation and the loss of civilian lives during the Israeli assault on the Gaza Strip.

With the Palestinian civilian death toll already in the hundreds, Israeli actions have drawn denunciations from the Red Cross, UN agencies and Arab and European governments.

UN sources said Israel was also stepping up operations in the West Bank, detaining Palestinian suspects in rising numbers.

Hamas wants any ceasefire deal to include the ending of Israel's crippling economic blockade of Gaza and the withdrawal of all Israeli forces from the territory, from which Israel withdrew in 2005 after a 38-year occupation.

Israel's key demands are for a complete halt to Hamas rocket fire and for international guarantees to stop the group rearming via smuggling tunnels under the border with Egypt.

RTE

[John]

Tesco and DSG eyed as two-tier Christmas unfolds

Tesco , Britain's biggest retailer, is expected to report a modest rise in underlying sales on Tuesday, held back compared to some of its supermarket rivals by a greater exposure to non-food lines like clothing and electricals.

In contrast DSG International , the country's biggest electrical goods retailer, and top household goods group Home Retail are forecast to deliver big falls in underlying sales on Thursday.

Trading updates published so far suggest there was no collapse in spending over Christmas, as some had feared.

This has sparked a rally of about 6.8 percent in the FTSE All-Share Retail Index since the start of the year, and to some speculation the worst might be over for retail stocks, with falling interest rates, food and fuel prices all set to help the beleaguered consumer in the coming months.

But with store groups warning trade will stay tough while unemployment is rising, house prices are falling and the economy is sinking deeper into recession, many analysts remain cautious.

"Consumers are being buffeted by very serious headwinds that will substantially limit their spending over the coming months," said IHS Global Insight economist Howard Archer.

This will force retailers to keep prices low and could drive more out of business, following the collapse of toys-to-DVDs chain Woolworths and furniture group MFI last year, he said.

VALUE RETAILERS SHINE

Tesco, the world's third-biggest retailer, will report a rise in sales from UK stores open at least a year, excluding fuel, of between 1.7 percent and 3 percent for the six weeks to Jan 3, according to a Reuters poll of six analysts.

That would be below the 4.5 percent reported by smaller rival J. Sainsbury for the 13 weeks to January 3, in part because of Tesco's greater presence in the non-food market.

Tesco has also seen a strong uptake for its new range of discount brands which, because they are cheaper products, has depressed sales values. It believes the higher sales volumes the new range is generating will stand it in good stead if consumers rein in spending further in the coming year.

Discount clothing retailer Primark is also likely to sound upbeat when its parent Associated British Foods releases a first-quarter trading update on Thursday.

Sellers of expensive or discretionary items, however, are likely to be finding life much tougher.

ELECTRICALS, HOUSEHOLD GOODS SUFFER

DSG, Europe's second-biggest electrical goods group, is expected to report a drop in like-for-like sales of between 7 and 12 percent for the 12 weeks to January 10, according to a company poll of analysts.

Shares in the owner of PC World and Currys chains in Britain, UniEuro in Italy and Elkjop in Nordic countries, have slumped 73 percent over the past year amid concerns it might breach the rules covering its debt arrangements and worries over U.S. rival Best Buy's entry into Europe next year.

Carphone Warehouse , Europe's biggest mobile phone retailer, is also likely to sound downbeat at a third- quarter trading update on Thursday, though JP Morgan analysts think the bad news is factored in after a profit warning last year.

News from Home Retail, the owner of Argos stores and the Homebase do-it-yourself chain, is likely to be grim as well.

Argos is set to report a drop in underlying sales of 7 percent to 9 percent for the 18 weeks to January 3, with Homebase down by 8.5 percent to 12 percent, according to a Reuters poll of four analysts.

As well as weak consumer demand, non-food retailers have had to contend with clearance sales at casualties of the downturn, such as Woolworths and rival entertainments chain Zavvi.

This could impact computer games retailer Game Group and music and books group HMV , which have sales updates on Tuesday and Thursday respectively. However, analysts think both will be benefit in the long term from reduced competition.

Analysts also expect a big fall in sales at sporting goods chain JJB Sports on Thursday and are keen to hear how talks on long-term funding for the company are progressing.

[John]

Police on alert after Gaza protest

Two dozen people were arrested in London as a pro-Palestinian demonstration turned nasty near the Israeli Embassy.

A group of 200 protesters from the otherwise-peaceful 12,000-strong crowd hurled missiles and smashed windows in Kensington High Street. One police officer was knocked unconscious and two others receive facial injuries.

Several officers were also injured when dozens of demonstrators attacked the US Consulate in Edinburgh.

In London's Trafalgar Square a pro-Israeli rally is taking place later "to show an appreciation for the intolerable situation of those who have faced years living in the shadow of relentless Hamas rocket attacks".

A similar event is also planned for Manchester where speakers will call for an end to Hamas "terror and peace".

Scotland Yard said: "There will be an appropriate policing contingent in place, depending on how many people attend."

At the rally demonstrators gathered in Hyde Park where actress Lauren Booth criticised her brother-in-law Tony Blair, saying his suggestions for a ceasefire in Gaza would condemn Palestinians "to a slow agonising death".

Police ensured a heavy presence after a similar protest last Saturday was also marred by confrontations.

When the trouble broke out, there were running skirmishes between lines of police and groups of young men.

[John]

Dumped Baby's Mum Helps Cops

She contacted officers on Saturday night following their appeal to trace her and has been given medical attention.

The baby was a few hours old when she was found on Saturday afternoon in a school field in Kempston, Bedford.

She was unclothed apart from the pink blanket wrapped around her, and also partially covered by twigs and leaves.

Police took her to Bedford Hospital South Wing where nurses named her Chloe.

A Bedford Police spokeswoman said: "The mother has been found. She has come forward and made herself known to the police.

"She is a teenage girl who does live locally to where the baby was found."

The baby remains in the care of the hospital.

She was discovered at 1.30pm on Saturday and had not spent long out in the cold, police said.

The two teenagers who found the child, along with an older boy who drove them to the hospital, were praised by police for their "quick and speedy efforts".

[John]

Ukraine signs gas deal with Russia and EU

Officials said monitors would begin work within hours to oversee gas flows via Ukraine to Europe, cut off last week amid a price dispute between Kiev and Moscow and Russian accusations that Ukraine was "stealing" gas.

"We were able to reach a political agreement aimed at getting out of the deadlock ... Ukraine has accepted all the terms needed for Russia to supply gas," said Czech Prime Minister Mirek Topolanek, representing the EU presidency.

Some experts say it could take something like 36 hours from the time gas starts flowing for capacity to build up in pipelines so that supplies reach consumers in Europe, which relies on Russia for a quarter of its gas needs.

After getting Russia's signature Saturday, Topolanek travelled to Kiev to persuade Ukraine to sign the deal to allow European Union, Ukrainian and Russian observers to monitor gas flows across Ukrainian territory.

The agreement, sealed in the early hours of Sunday, applied only to Russian gas passing through Ukraine for European consumption. Russia and Ukraine have not reached agreement on supplies to Ukraine and they remain cut off.

The deal is designed to assuage Russian fears that Ukraine is siphoning off fuel for its own use. Kiev denies the charge.

Asked when Russian gas supplies would resume, Topolanek told reporters: "According to the agreement, Russia will start supplying gas when the (monitors) have been deployed."

Ukrainian Prime Minister Yulia Tymoshenko said: "We signed the protocol today to show that Ukraine is not an obstacle for Russian gas sent.

"This protocol envisages also the entry of experts on Russian territory to observe gas supplies from the Russian side."

"As soon as the mechanism of control starts working, we will send the gas to the system. If we see that it is stolen again, we will again cut flows," Russian Prime Minister Vladimir Putin said after talks with Topolanek in Moscow.

EUROPEAN SHIVERS

The dispute, which began when Russia and Ukraine could not agree on this year's gas prices, has led to the worst disruption of Russian gas supplies to Europe.

Eighty percent of Russian gas to Europe is piped through Ukraine.

Eastern and central Europe have borne the brunt of the dispute, which has shut down factories and left tens of thousands of households shivering in sub-zero temperatures without heating. Supplies to 18 countries have been disrupted.

Despite clearing the deal, Putin showed no sign of easing his tough rhetoric on Ukraine.

"Our actions do not aim to worsen but rather to improve the situation in Ukraine, to help Ukraine get rid of crooks and bribe-takers and make its economy more transparent," he said.

Putin said in addition to monitors from Russia, Ukraine and the EU, specialists from European gas firms would join the teams checking flows across Ukraine, something Kiev has opposed.

He said Topolanek had also asked to include specialists from Norway.

Relations between Moscow and Kiev, already tense because of Russian opposition to Ukraine's push to join NATO, have suffered a further sharp downward lurch.

Russia has accused Ukraine of corruption and stealing gas meant for Europe, and Kiev said Russia's actions amounted to blackmail to extract an unjustifiably high price for the gas it sells to Ukraine.

Sources close to the talks, speaking on condition of anonymity, said the agreement signed in Moscow had been tweaked slightly at Russia's request, but had not changed substantially from an earlier draft.

Russia, which cut off supplies to Ukraine on New Year's Day because of the dispute over pricing and debts, has repeatedly said Kiev must pay the going market rate for gas.

Oleh Dubyna, chief executive of Ukrainian state energy company Naftogaz, returned from Moscow Saturday having failed to agree a 2009 gas supply deal in the latest round of talks with Russian gas export monopoly Gazprom.

"Unfortunately the talks with Gazprom have finished with nothing," Dubyna told reporters at Kiev airport on his return. "The talks now have to proceed at a higher level."

Dubyna said Gazprom had again demanded a price of $450 per 1,000 cubic metres of gas, which he said Ukraine could not accept. Naftogaz has previously insisted on a price of $201, up from $179.50 in 2008.

[John]

Obama-stimulus plan can add and save up to 4 million U.S. jobs

Obama said previously his estimated $800 billion (£525 billion) plan to lift the country out of a yearlong recession would create or save 3 million jobs, but the new analysis showed that number would range between 3 million and 4 million.

"The jobs we create will be in businesses large and small across a wide range of industries," Obama said on his weekly radio and Internet address. "And they'll be the kind of jobs that don't just put people to work in the short term, but position our economy to lead the world in the long-term."

The analysis was submitted by the head of Obama's council of economic advisers, Christina Romer, and Vice President-elect Joe Biden's chief economic adviser, Jared Bernstein.

It came just after official figures showed U.S. employers slashed more than half a million jobs in December, pushing the unemployment rate to 7.2 percent and bringing the number of jobs lost last year to 2.6 million -- the most since 1945.

Obama's top aides visited Capitol Hill on Friday to allay lawmakers' concerns about his proposal, which would combine tax cuts, aid to states and public works projects. He has faced opposition from Republican and Democratic lawmakers over the plan because of its high cost and proposed tax cuts.

Obama said his plan would create nearly 500,000 jobs by investing in clean energy, by committing to double the production of alternative energy in the next three years and by improving the energy efficiency of 2 million American homes.

"These made-in-America jobs building solar panels and wind turbines, developing fuel-efficient cars and new energy technologies pay well, and they can't be outsourced," he said.

Obama repeated his warning a recovery would not happen overnight and that the situation was likely to get worse before getting better.

In excerpts from an interview with ABC News to be broadcast on Sunday, Obama said it would also require personal sacrifice from Americans and scaling back other priorities.

"I want to be realistic here, not everything that we talked about during the campaign are we going to be able to do on the pace we had hoped," he said in a taped interview with ABC's "This Week with George Stephanopoulos."

"Everybody's going to have (to) give," Obama said.

REPAIRING INFRASTRUCTURE

Obama said the report showed the recovery plan would also put nearly 400,000 people back to work repairing infrastructure like crumbling roads, bridges and schools and laying down miles (km) of broadband lines.

"Finally, we won't just create jobs, we'll also provide help for those who've lost theirs, and for states and families who've been hardest-hit by this recession," he said.

"That means bipartisan extensions of unemployment insurance and health care coverage; a $1,000 tax cut for 95 percent of working families; and assistance to help states avoid harmful budget cuts in essential services like police, fire, education and health care."

Obama has not put a price tag on his American Recovery and Reinvestment Plan, but in the report his advisers said they were using a figure of "just slightly over the $775 billion currently under discussion."

Mitch McConnell, the Republican minority leader in the U.S. Senate, said he wanted to make sure the massive proposal actually created jobs.

"We want to make sure it's not just a trillion-dollar spending bill, but something that actually can reach the goal that he has suggested," McConnell said on Saturday.

Although Obama did not mention it in his radio address, the report suggested that tax cuts, especially temporary ones, and fiscal relief to the states were likely to create fewer jobs than direct increases in government purchases.

[John]

US faulted for poorly managing private security in Iraq

"The department's security operation in Iraq has been highly effective in ensuring the safety of chief of mission personnel," according to the report by the department Office of Inspector General (OIG).

"However, the rapid rise in use and scale of private security contractors has strained the department's ability to effectively manage them," the OIG added.

"The department's management of the security program in Iraq has been undermined by frequent staff turnover, understaffing, increased workload, and the lack of standardized operating policies and procedures," it added.

It said that under the security contract, the embassy in Baghdad's regional security office overseeing logistics is responsible for managing and controlling government-furnished vehicles, arms, communications and other equipment.

The office is directed by a personnel services contractor (PSC) which oversees six Blackwater administrative logistics security specialists, it added.

And OIG said it believes the use of "a PSC to direct -- and Blackwater administrative specialists to carry out" -- the mission of the logistics office to control "government-furnished equipment is a poor management practice."

Such a practice may also violate Federal Acquisition Regulation policy stipulating that contractors not be used to carry out "inherently government functions," it added.

"This arrangement is particularly troubling because Blackwater personnel have inspected their own company," it added.

The report comes as five former Blackwater guards stand trial on charges of killing 14 Iraqi civilians and wounding 18 others by gunfire and grenades in Baghdad in 2007.

[John]

Prince Harry apologises for "Paki" remark

The video obtained by the News of the World plunges the 24-year-old prince, the third in line to the throne, into fresh controversy four years after he sparked outcry by wearing a Nazi swastika at a fancy dress party.

The newspaper posted the video on its website and said it was made in 2006 when the prince was still an officer cadet.

It begins as he is waiting with his platoon in an airport departure lounge for a flight to a training exercise in Cyprus.

Touring the room with a video camera as his colleagues snooze, he spots an Asian cadet and says: "Anybody else around here?... Ah, our little Paki friend, Ahmed."

The royal family issued an apology, but insisted the prince had used the term without malice.

"Prince Harry fully understands how offensive this term can be, and is extremely sorry for any offence his words might cause," a spokesman said.

"However, on this occasion three years ago, Prince Harry used the term without any malice and as a nickname about a highly popular member of his platoon.

"There is no question that Prince Harry was in any way seeking to insult his friend."

The report said Harry made the "raghead" remark while on the exercise.

Once again he is behind the camera when he spots one of his comrades with camouflage netting over his head and as he looks up at the lens, Harry says: "It's Dan the Man... Fuck me, you look like a raghead."

The royal spokesman said: "Prince Harry used the term 'raghead' to mean Taliban or Iraqi insurgent."

The prince served with the army battling the Taliban in Afghanistan last year but was forced to return home after his security was compromised when a carefully arranged media blackout on his deployment was broken.

Harry, an army lieutenant, is to begin training soon as a combat helicopter pilot.

The Equality and Human Rights Commission, said the racism claims "appear to be disturbing allegations".

"We will be asking the MoD to see the evidence, share that evidence with us and their plans for dealing with it," a spokeswoman said.

"We will then consider what further action might be necessary."

A spokeswoman for the Ministry of Defence said: "Neither the Army nor the Armed Forces tolerates inappropriate behaviour in any shape or form.

"The Army takes all allegations of inappropriate behaviour very seriously and all substantive allegations are investigated.

"We are not aware of any complaint having been made by the individual," the spokeswoman said, referring to "Ahmed".

She added: "Bullying and racism are not endemic in the Armed Forces."

In another clip from the three-minute video, Harry pretends to make a mobile phone call to his grandmother, Queen Elizabeth II.

He says: "Granny, I've got to go. Send my love to the corgis. And grandpa... God Save You... yeah, that's great. See you, bye."

It is not the first time that the youngest son of Prince Charles and the late Princess Diana has been forced to apologise for his actions.

His decision to attend a friend's fancy dress birthday party wearing a swastika armband in 2005 sparked widespread criticism. The publication of photographs of that incident was followed by a swift apology from the royals.

In the past, it emerged he had smoked cannabis as a teenager and he was once involved in a scuffle outside a nightclub with a paparazzi photographer, but in recent years Harry has sought to shake off his 'playboy prince' reputation.

He is heavily involved in a charity in Lesotho to support children orphaned by AIDS which was launched in memory of his mother, and is patron of several other children's charities.

[John]

Mother's Pain Over Robbery Death

Craig Hodson-Walker, 29, was blasted in the chest as three masked men raided his parents' village post office and shop on Friday morning.

The three men who raided the shop - all believed to be in their 20s or 30s - were armed with a handgun and a sledgehammer.

They shot Craig's father, Ken, in the leg during the attack on the Fairfield Post Office and Stores in north Worcestershire.

Craig's mother, Judy Hodson-Walker, said she was "devastated at the death of our beautiful boy who died protecting the people that he loved".

"Why did such a beautiful, honest, hard working human being have his life taken away in that way?" she said.

"He didn't do anybody any harm and will be so greatly missed by each and everyone who knew him.

"I just don't understand why it happened like it did �?? it all just seems so senseless."

Police think the three "dangerous" men were joined by a getaway driver.

More than 100 officers have been signed up to track them down, and the Post Office has offered a £50,000 reward for information.

One of the gang was white and about 6ft tall and wearing a dark hooded top and tracksuit bottoms. The other two were shorter but also wearing dark clothing.

The fourth offender is thought to have been a getaway driver who waited outside in a silver VW Golf.

The robbery happened at about 8.20am on Friday and the offenders sped from the scene - the Golf was later found abandoned on a nearby road.

Detectives said it was likely that the car, which had false number plates, had been caught in rush-hour traffic near the post office and they are urging anyone who saw the vehicle to contact them.

They are also interested in hearing from anyone who saw a white car driving at speed in Bournheath Road between 8.15am and 8.30am yesterday.

Sky News correspondent David Crabtree, at the scene, said police have a tough job on their hands to catch the "ruthless" killers.

"They could be anywhere in the country by now," he said.

But Detective Superintendent Jon Groves has made his goal clear, saying: "I can assure you that we are determined to bring these offenders to justice as soon as possible."

Ken Hodson-Walker is said to be in a stable condition in hospital following surgery.

Friends of Craig, who was engaged to be married, have been remembering him as someone who "loved his parents to bits".

Close pal Alice Raybould, 29, said: "He is - I should say he was - the nicest and kindest person I've known in my life."

A group has been started on social-networking site Facebook, called Rest In Peace Craig Hodson-Walker.

A post-mortem examination is scheduled to take place tomorrow.

:: Anyone with information should contact police on 0300 333 3000.

[John]

Prayers for killed postmaster's son

A church service will be held in Fairfield, Worcestershire, as more than 100 officers investigate the fatal shooting of Craig Hodson-Walker during an armed raid at the family's post office on Friday morning.

The 29-year-old, who had recently become engaged, was shot in the chest while his father, Ken Hodson-Walker, 56, received injuries after being shot in the leg at Fairfield Post Office and Stores.

The Post Office has offered a reward of £50,000 to catch the gang of men responsible.

The church service will be held St Mark's Church near the scene of the shooting, or in the village hall if the church remains cordoned off.

Mr Hodson-Walker's fiancee, Lisa Bundy, described him as her "soulmate and best friend" who "didn't deserve to die like that".

The couple met 10 years ago and became engaged at Christmas.

The teaching assistant, from Ross-on-Wye, Herefordshire, said in a statement released by West Mercia Constabulary: "I can't even start to describe the pain - it feels like someone has ripped out my insides. It just seems like a bad dream."

The managing director of Post Office Ltd, Alan Cook, has offered a £50,000 reward for information leading to the arrest and conviction of Mr Hodson-Walker's killers.