Iran upbeat on nuclear talks, West still wary

ALMATY (Reuters) - Iran was upbeat on Wednesday after talks with world powers about its nuclear work ended with an agreement to meet again, but Western officials said it had yet to take concrete steps to ease their fears of a secret weapons program.

The United States, China, France, Russia, Britain and Germany offered to ease sanctions slightly in return for Iran curbing its most sensitive work, but had made clear they expected no breakthrough in the talks in Kazakhstan, the first in eight months.

U.S. Secretary of State John Kerry said the talks had been "useful" and that a serious engagement by Iran could lead to a comprehensive deal in a decade-old dispute that has threatened to trigger a new Middle East war.

Iran's foreign minister said in Vienna he was "very confident" a deal could be reached and its chief negotiator said he believed the Almaty meeting could be a "turning point".

The two sides agreed to hold expert-level talks in Istanbul on March 18 to discuss the offer, and return to Almaty for political discussions on April 5-6, when Western diplomats made clear they wanted to see substantive movement by Iran.

"Iran knows what it needs to do, the president has made clear his determination to implement his policy that Iran will not have a nuclear weapon," Kerry said in Paris.

A senior U.S. official in Almaty added: "What we care about at the end is concrete results."

ISRAELI WARNING

Israel, assumed to be the Middle East's only nuclear-armed power, was watching the talks closely. It has strongly hinted it might attack Iran if diplomacy and sanctions fail to ensure that it cannot build a nuclear weapon. Iran denies any such aim.

Israeli Prime Minister Benjamin Netanyahu said economic sanctions were failing and urged the international community to threaten Iran with military action.

Western officials said the offer presented by the six powers included an easing of a ban on trade in gold and other precious metals, and a relaxation of an import embargo on Iranian petrochemical products. They gave no further details.

In exchange, a senior U.S. official said, Iran would among other things have to suspend uranium enrichment to a fissile concentration of 20 percent at its Fordow underground facility and "constrain the ability to quickly resume operations there".

This appeared to be a softening of a previous demand that Iran ship out its entire stockpile of higher-grade enriched uranium, which it says it needs to produce medical isotopes.

Iran says it has a sovereign right to enrich uranium for peaceful purposes, and wants to fuel nuclear power plants so that it can export more oil.

But 20-percent purity is far higher than that needed for nuclear power, and rings alarm bells abroad because it is only a short technical step away from weapons-grade.

Iran's growing stockpile of 20-percent-enriched uranium is already more than half-way to a "red line" that Israel has made clear it would consider sufficient for a bomb.

ELECTION LOOMING

The U.S. official said the latest proposal would "significantly restrict the accumulation of near-20-percent enriched uranium in Iran, while enabling the Iranians to produce sufficient fuel" for their Tehran medical reactor.

Iran had previously indicated that 20-percent enrichment was up for negotiation if it received the fuel from abroad instead.

Chief negotiator Saeed Jalili suggested Iran could discuss the issue, although he appeared to rule out shutting down Fordow. He said the powers had not made that specific demand.

Western officials were aware that the closeness of Iran's presidential election in June is raising political tensions in Tehran and made rapid progress unlikely.

One diplomat in Almaty said the Iranians appeared to be suggesting at the negotiations that they were opening new avenues, but that it was not clear if this was really the case.

"Everyone is saying Iran was more positive and portrayed the talks as a win," said Iran expert Dina Esfandiary of the International Institute for Strategic Studies. "I reckon the reason for that is that they are saving face internally while buying time with the West until after the elections."

The Iranian rial, which has lost more than half its foreign exchange value in the last year as sanctions bite, rose some 2 percent on Wednesday, currency tracking web sites reported.

(Additional reporting by Fredrik Dahl in Almaty, Georgina Prodhan in Vienna, Zahra Hosseinian in Zurich, Gabriela Baczynska in Moscow, Dan Williams in Jerusalem and Marcus George in Dubai; Writing by Timothy Heritage and Fredrik Dahl; Editing by Kevin Liffey)

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Dow, S&P rise as Bernanke defends policy, warns on cuts

NEW YORK (Reuters) - Stocks mostly rose on Tuesday after Federal Reserve Chairman Ben Bernanke defended the Fed's bond-buying stimulus before Congress, but warned forced spending cuts that could be triggered this week represented a headwind for the economy.

Gains in homebuilders and other consumer stocks, following strong economic data, kept the S&P 500 nearly unchanged, while a 5 percent jump in Home Depot lifted the Dow industrials. The PHLX housing sector index <.hgx> rose 2 percent.

Stocks hit session highs shortly after Bernanke, in testimony before the Senate Banking Committee, strongly defended the Fed's bond-buying stimulus program that has been essential for the stock market's recovery.

However, he also urged lawmakers to avoid sharp spending cuts set to go into effect on Friday, which he warned could combine with earlier tax increases to create a "significant headwind" for the economic recovery.

"He really came down foursquare on the bearish camp with respect to the potential economic impact of these cuts. That's a surprise, and that's probably why the market's a little nervous right now," said Michael Jones, chief investment officer of Riverfront Investment Group in Richmond, Virginia.

The Dow Jones industrial average <.dji> rose 74.64 points or 0.54 percent to 13,858.81. The S&P 500 <.spx> gained 1.78 points or 0.12 percent to 1,489.63. The Nasdaq Composite <.ixic> dropped 5.84 points or 0.19 percent to 3,110.41.

The S&P 500 failed to move above 1,500, a closely watched level that was technical support until recently, but could now become a hurdle.

Cable network AMC Networks was the Nasdaq's biggest percentage decliner after the home of popular shows such as "The Walking Dead" and "Mad Men" reported a quarterly profit way below analysts' estimates. Its stock fell 7.4 percent to $53.77.

Equities continued to be weighed by concerns about a stalemate in Italy after a general election failed to give any party a parliamentary majority, posing the threat of prolonged instability and European financial crisis.

The FTSEurofirst-300 index of top European shares <.fteu3> unofficially closed down 1.3 percent at 1,150.58. The benchmark Italian index <.ftmib> tumbled 4.9 percent.

Dow component Home Depot Inc was the top gainer in both the Dow and the S&P 500 after the world's largest home improvement chain reported adjusted earnings and sales that beat expectations. Home Depot's shares jumped 5.5 percent to $67.46.

Macy's Inc shares climbed 2.8 percent to $39.60 after the department-store chain stated it expects full-year earnings to be above analysts' forecasts because of strong holiday sales.

Economic reports that showed strength in housing and consumer confidence also supported stocks.

U.S. home prices rose more than expected in December, according to the S&P/Case-Shiller index. Consumer confidence rebounded in February, jumping more than expected, and new-home sales rose to their highest in 4-1/2 years.

(Reporting by Rodrigo Campos; Additional reporting by Sam Forgione; Editing by Jan Paschal)

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Experts: Pistorius violated basic firearms rules

JOHANNESBURG (AP) — Even if Oscar Pistorius is acquitted of murder, firearms and legal experts in South Africa believe that, by his own account, the star athlete violated basic gun-handling regulations and exposed himself to a homicide charge by shooting into a closed door without knowing who was behind it.

Particularly jarring for firearms instructors and legal experts is that Pistorius testified that he shot at a closed toilet door, fearing but not knowing for certain that a nighttime intruder was on the other side. Instead of an intruder, Pistorius' girlfriend Reeva Steenkamp was in the toilet cubicle. Struck by three of four shots that Pistorius fired from a 9 mm pistol, she died within minutes. Prosecutors charged Pistorius with premeditated murder, saying the shooting followed an argument between the two. Pistorius said it was an accident.

South Africa has stringent laws regulating the use of lethal force for self-protection. In order to get a permit to own a firearm, applicants must not only know those rules but must demonstrate proficiency with the weapon and knowledge of its safe handling, making it far tougher to legally own a gun in South Africa than many other countries where a mere background check suffices.

Pistorius took such a competency test for his 9 mm pistol and passed it, according to the South African Police Service's National Firearms Center. Pistorius' license for the 9 mm pistol was issued in September 2010. The Olympic athlete and Paralympic medalist should have known that firing blindly, instead of at a clearly identified target, violates basic gun-handling rules, firearms and legal experts said.

"You can't shoot through a closed door," said Andre Pretorius, president of the Professional Firearm Trainers Council, a regulatory body for South African firearms instructors. "People who own guns and have been through the training, they know that shooting through a door is not going to go through South African law as an accident."

"There is no situation in South Africa that allows a person to shoot at a threat that is not identified," Pretorius added. "Firing multiple shots, it makes it that much worse. ...It could have been a minor — a 15-year-old kid, a 12-year-old kid — breaking in to get food."

The Pistorius family, through Arnold Pistorius, uncle of the runner, has said it is confident that the evidence will prove that Steenkamp's death in the predawn hours of Feb. 14 was "a terrible and tragic accident."

In an affidavit to the magistrate who last Friday freed him on bail, Pistorius said he believed an intruder or intruders had gotten into his US$560,000 (€430,000) two-story house, in a guarded and gated community with walls topped by electrified fencing east of the capital, Pretoria, and were inside the toilet cubicle in his bathroom. Believing he and Steenkamp "would be in grave danger" if they came out, "I fired shots at the toilet door" with the pistol that he slept with under his bed, he testified.

Criminal law experts said that even if the prosecution fails to prove premeditated murder, firing several shots through a closed door could bring a conviction for the lesser but still serious charge of culpable homicide, a South African equivalent of manslaughter covering unintentional deaths through negligence.

Johannesburg attorney Martin Hood, who specializes in firearm law, said South African legislation allows gun owners to use lethal force only if they believe they are facing an immediate, serious and direct attack or threat of attack that could either be deadly or cause grievous injury.

According to Pistorius' own sworn statement read in court, he "did not meet those criteria," said Hood, who is also the spokesman for the South African Gun Owners' Association.

"If he fired through a closed door, there was no threat to him. It's as simple as that," he added. "He can't prove an attack on his life ... In my opinion, at the very least, he is guilty of culpable homicide."

The Associated Press emailed a request for comment to Vuma, a South African reputation management firm hired by the Pistorius family to handle media questions about the shooting.

The firm replied: "Due to the legal sensitivities around the matter, we cannot at this stage answer any of your questions as it might have legal implications for a case that still has to be tried in a court of law." Vuma said on Monday it referred the AP's questions to Pistorius' legal team, which by Tuesday had not replied.

Culpable homicide covers unintentional deaths ranging from accidents with no negligence, like a motorist whose brakes fail, killing another road user, "to where it verges on murder or where it almost becomes intentional," said Hood. Sentences — ranging from fines to prison — are left to courts to determine and are not set by fixed guidelines.

The tough standards for legally acquiring a gun were instituted in part because of a wave of weapons purchases after the end of racist white rule in 1994, said Rick De Caris, a former legal director in the South African police. Under South Africa's white-minority apartheid regime, gun owners often learned how to handle firearms during military service. Many of the new gun owners had little or no firearms training, which brought tragic results, De Caris said.

"People were literally shooting themselves when cleaning a firearm," said De Caris, who helped draft the Firearms Control Act of 2000.

Prospective gun owners must now take written exams that include questions on the law, have to show they can safely handle and shoot a gun and are required to hit a target the size of a glossy magazine in 10 of 10 shots from seven meters (23 feet), said Pretorius of the Professional Firearm Trainers Council.

In his affidavit, Pistorius said he wasn't wearing his prosthetic limbs "and felt extremely vulnerable" after hearing noise from the toilet.

"I grabbed my 9 mm pistol from underneath my bed. On my way to the bathroom, I screamed words to the effect for him/them to get out of my house and for Reeva to phone the police. It was pitch-dark in the bedroom and I thought Reeva was in bed," he testified.

Legal experts said they are puzzled why Pistorius apparently didn't first fire a warning shot to show the supposed intruder he was armed. Also unanswered is why, after he heard noise in his bathroom that includes the toilet cubicle, Pistorius still went toward the bathroom — toward the perceived danger — rather than retreat back into his bedroom.

"He should have tried to get out of the situation," said Hood, the attorney.

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Benedict: Pope aware of his flaws?

Pope Benedict XVI delivers his last Angelus Blessing to thousands of pilgrims gathered in Saint Peter's Square on February 24.

STORY HIGHLIGHTS

• Sister Mary Ann Walsh: Pope Benedict acknowledged that he made mistakes


• Walsh: In firestorm over scholarly quotes about Islam, he went to great lengths to atone


• Walsh: Similarly, he quickly reversed a decision that had angered Jews and repaired ties


• Even his stepping down is a nod to his humanity and his love of the church, she says

Editor's note: Sister Mary Ann Walsh is director of media relations for the U.S. Conference of Catholic Bishops and a member of the Sisters of Mercy of the Americas Northeast Regional Community. She is a former foreign correspondent at Catholic News Service (CNS) in Rome and the editor of "John Paul II: A Light for the World," "Benedict XVI: Essays and Reflections on his Papacy," and "From Pope John Paul II to Benedict XVI."

(CNN) -- One of the Bible's paradoxical statements comes from St. Paul's Epistle to the Galatians: "Power is made perfect in infirmity."

The poetic statement proclaims that when we are weak, we are strong. Pope Benedict XVI's stepping down from what many consider one of the most powerful positions in the world proves it. In a position associated with infallibility -- though that refers to formal proclamations on faith and morals -- the pope declares his weakness.

Sister Mary Ann Walsh

His acceptance of frailty speaks realistically about humanity: We grow old, weaken, and eventually die. A job, even one guided by the Holy Spirit, as we Roman Catholics believe, can become too much for us.

Acceptance of human frailty has marked this papacy. We all make mistakes, but the pope makes them on a huge stage.

He was barely into his papacy, for example, when he visited Regensburg, Germany, where he once taught theology. Like many a professor, he offered a provocative statement to get the conversation going. To introduce the theme of his lecture, the pope quoted from an account of a dialogue between the Byzantine Emperor Manuel II Paleologus and an unnamed Muslim scholar, sometime near the end of the 14th century -- a quote that was misinterpreted by some as a condemnation of Mohammed and Islam.

Opinion: 'Gay lobby' behind pope's resignation? Not likely

Twice, the pope emphasized that he was quoting someone else's words. Unfortunately, the statement about Islam was taken as insult, not a discussion opener, and sparked rage throughout the Muslim world.

The startled pope had to explain himself. He apologized and traveled two months later to Istanbul's Blue Mosque, where he stood shoeless in prayer beside the Grand Mufti of Istanbul. Later he hosted Muslim leaders at the Vatican at the start of a Catholic-Muslim forum for dialogue. It was a human moment -- a mistake, an apology and atonement -- all round.

A similar controversy erupted when he tried to bring the schismatic Society of St. Pius X back into the Roman Catholic fold.

In a grand gesture toward reconciliation, he lifted the excommunication of four of its bishops, unaware that one, Richard Williamson, was a Holocaust denier. This outraged many Jews. Subsequently the Vatican said the bishop had not been vetted, and in a bow to modernity said officials at least should have looked him up on the Internet.

In humble response, Benedict reiterated his condemnation of anti-Semitism and told Williamson that he must recant his Holocaust views to be fully reinstated. Again, his admission of a mistake and an effort to mend fences.

News: Scandal threatens to overshadow pope's final days

Pope Benedict XVI came from a Catholic Bavarian town. Childhood family jaunts included trips to the shrine of the Black Madonna, Our Lady of Altotting. He entered the seminary at the age of 13. He became a priest, scholar and theologian. He lived his life in service to the church. Even in resigning from the papacy, he embraces the monastic life to pray for a church he has ever loved.

With hindsight, his visit to the tomb of 13th century Pope Celestine V, a Benedictine monk who resigned from the papacy eight centuries before, becomes poignant.

In 2009, on a visit to Aquila, Italy, Benedict left at Celestine's tomb the pallium, a stole-like vestment that signifies episcopal authority, that Benedict had worn for his installation as pope. The gesture takes on more meaning as the monkish Benedict steps down.

We expect the pope to be perfect. Catholics hold him to be the vicar of Christ on earth. He stands as a spiritual leader for much of the world. Statesmen visit him from around the globe. He lives among splendid architecture, in the shadow of the domed St. Peter's Basilica. All testify to an almost surreal omnipotence.

Complete coverage of the pope's resignation

In this world, however, walked a vulnerable, human person. And in a paradox of life, his most human moment -- giving up the power of office -- may prove to be his most potent, delivering a message that, as St. Paul noted many centuries ago, "Power is made perfect in infirmity."

Follow @CNNOpinion on Twitter.

Join us at Facebook/CNNOpinion.

The opinions expressed in this commentary are solely those of Mary Ann Walsh.

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Snow, sleet beginning to hit

A winter weather advisory has been issued for the Chicago area as a powerful storm churning through the southern Plains is beginning to make its mark on Chicagoland with sleet, freezing rain and some snow.

The area will be hit with snow, sleet and rain in this storm and it will be all snow by late afternoon. The heaviest snow is expected to fall between 3  and 7 p.m.

North of I-80, snow accumulation could reach 3 to 6 inches by Wednesday morning. Some area could get 7 inches if the switch from rain to snow occurs sooner than expected, or if there is lake-enhanced snow.

South of I-80, including much of northwest Indiana, accumulation of less than 3 inches is possible because of an extended period of rain or a rain mixed with snow and sleet.

The storm bore down on the southern Plains on Monday, dumping more than a foot of snow and creating blizzard conditions in Oklahoma, Texas and parts of Kansas still digging out from a winter storm last week.

Highways in the Texas and Oklahoma panhandles and parts of Kansas were closed by the heavy and drifting snow that cut visibility and forced flight cancellations at airports across the region.

A man was killed Monday when his car slid off Interstate 70 in Sherman County, Kansas, near the western border, Governor Sam Brownback said. And in northern Oklahoma, one person died when the roof of a home partially collapsed in the city of Woodward, said Matt Lehenbauer, the city's emergency management director.

"We have roofs collapsing all over town," said Woodward Mayor Roscoe Hill Jr. "We really have a mess on our hands."

The storm was slowly moving out of Texas on Monday, while residents of Kansas City in turn were preparing for a foot or more of snow into Tuesday.

Tornado watches were in place Monday evening in parts of Mississippi and heavy rain was expected through the night in parts of Alabama and Georgia, according to the National Weather Service. The weather service Monday also issued flood watches for parts of the Carolinas and an ice storm warning for portions of West Virginia.

Some 17 inches of snow fell near Amarillo, Texas, according to the National Weather Service. Other areas in the Texas Panhandle reported more than a foot of snow and Texas Governor Rick Perry activated Texas military forces to be ready to respond to calls for assistance.

Amarillo could break the all-time record for the amount of snow in one day of just over 18 inches set in 1934, said Kristin Scotten of the National Weather Service.

Airports in Amarillo and in Lubbock, Texas, were closed and Interstate 27 between the cities was shut because of blowing snow, state officials said. Wind gusts of 75 miles per hour (121 km per hour) were clocked at the Amarillo airport.

Visibility was near zero on some roads around Amarillo, said Paul Braun, a Texas Department of Transportation spokesman.

"I am hearing that we have a lot of vehicles that are stalled in the main lanes of our roadways and they can't be seen because of the blowing snow," Braun said.

Texas State Trooper Gabriel Medrano said the snow was too deep to measure in Lubbock.

"We are having a lot of problems getting our troopers to these crash scenes," Medrano said. "Our troopers are getting stuck out there."

In Oklahoma, a state of emergency was declared for 56 of 77 counties, with northwest Oklahoma hit hardest in the storm. All highways in the Oklahoma panhandle were closed because of blizzard conditions.

Parts of northwestern Oklahoma could get 16 inches to 24 inches of snow, with high winds creating drifts up to 6 feet high, the National Weather Service said.

"It's the biggest in the last several years, really," said James Hand, emergency management director in the small town of Mooreland. "Last year, we didn't have anything to shovel."

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Italy parties seek way out of election stalemate

ROME (Reuters) - Italy's stunned political parties looked for a way forward on Tuesday after an election that gave none of them a parliamentary majority, posing the threat of prolonged instability and European financial crisis.

The results, notably by the dramatic surge of the anti-establishment 5-Star Movement of comic Beppe Grillo, left the center-left bloc with a majority in the lower house but without the numbers to control the powerful upper chamber, the Senate.

Financial markets fell sharply at the prospect of a stalemate that reawakened memories of the crisis that pushed Italy's borrowing costs toward unsustainably high levels and brought the euro zone to the brink of collapse in 2011.

"The winner is: Ingovernability," ran the headline in Rome newspaper Il Messaggero, reflecting the deadlock the country will have to confront in the next few weeks as sworn enemies are forced to work together to form a government.

Pier Luigi Bersani, head of the center-left Democratic Party (PD), has the difficult task of trying to agree a "grand coalition" with former prime minister Silvio Berlusconi, the man he blames for ruining Italy, or striking a deal with Grillo, a completely unknown quantity in conventional politics.

The alternative is new elections either immediately or within a few months, although both Berlusconi and Bersani have indicated that they want to avoid a return to the polls if possible: "Italy cannot be ungoverned and we have to reflect," Berlusconi said in an interview on his own television station.

For his part, Grillo, whose "non-party" movement won the most votes of any single party, has indicated that he believes the next government will last no more than six months.

"They won't be able to govern," he told reporters on Tuesday. "Whether I'm there or not, they won't be able govern."

He said he would work with anyone who supported his policy proposals, which range from anti-corruption measures to green-tinted energy measures but rejected suggestions of entering a formal coalition: "It's not time to talk of alliances... the system has already fallen," he said.

The election, a massive rejection of the austerity policies applied by Prime Minister Mario Monti with the backing of international leaders from U.S. President Barack Obama to German Chancellor Angela Merkel, caused consternation across Europe.

"This is a jump to nowhere that does not bode well either for Italy or Europe," said Spanish Foreign Minister Jose Manuel Garcia-Margallo.

In a sign of worry at the top over what effect the elections could have on the economy, Monti, whose austerity policies were repudiated by voters who shunned his centrist bloc, met the governor of the central bank, the economy minister and the European affairs minister to discuss the situation on Tuesday.

The former EU commissioner and his team of technocrats, who were brought in to govern when Berlusconi was consumed by crisis and scandal, will stay on until a new administration is formed.

UNTHINKABLE WITHOUT GRILLO

Projections for the Senate by the Italian Centre for Electoral Studies indicated that the center-left would have 121 seats, against 117 for the center-right alliance of Berlusconi's PDL and the regionalist Northern League. Grillo would take 54.

That leaves no party with the majority in a chamber which a government must control to pass legislation and opened up the prospect of previously inconceivable partnerships that will test the sometimes fragile internal unity of the main parties.

"The idea of a majority without Grillo is unthinkable. I don't know if anyone in the PD is considering it but I'm against it," said Matteo Orfini, a member of Bersani's PD secretariat.

"The idea of a PD-PDL government, even if it's backed by Monti, doesn't make any sense," he said.

Berlusconi, a media magnate whose campaigning all but wiped out Bersani's once commanding opinion poll lead, hinted in a telephone call to a morning television show that he would be open to a deal with the center-left - but not with Monti, the economics professor who replaced him 15 months ago.

"Italy must be governed," Berlusconi said, adding that he "must reflect" on a possible deal with the center-left. "Everyone must be prepared to make sacrifices," he said of the groups which now have a share of the legislature.

The Milan bourse was down almost 4 percent and the premium Italy pays over Germany to borrow on 10-year widened to a yield spread of 338 basis points, the highest since December 10 and more than 80 points above the level seen earlier on Monday.

At an auction of six-month Treasury bills, Italy's borrowing costs jumped by more than two thirds with the yield reaching 1.237 percent, the highest since October and compared to just 0.730 percent in a similar sale a month ago.

The euro dropped to an almost seven-week low against the dollar in Asia on fears of a revival of the euro zone crisis. It fell as far as $1.3042, its lowest since January 10.

"What is crucial now is that a stable functioning government can be built as swiftly as possible," said German Foreign Minister Guido Westerwelle. "This is not only in the interests of Italy but in the interests of all Europe."

However the view from some voters, weary of the mainstream parties, was unrepentant: "It's good," said Roger Manica, 28, a security guard in Rome, who voted for the center-left PD.

"Next time I'll vote 5-Star. I like that they are changing things, even if it means uncertainty. Uncertainty doesn't matter to me, for me what's important is a good person who gets things done," he said. "Look how well they've done."

A long recession and growing disillusionment with mainstream parties and tax-raising austerity fed the bitter public mood and contributed to the massive rejection of Monti, whose centrist coalition was relegated to the sidelines.

Berlusconi's campaign, mixing sweeping tax cut pledges with relentless attacks on Monti and Merkel, echoed many of the themes pushed by Grillo and underlined the increasingly angry mood of the Italian electorate.

But even if the next government turns away from the tax hikes and spending cuts brought in by Monti, it will struggle to revive an economy that has scarcely grown in two decades.

Monti was widely credited with tightening Italy's public finances and restoring its international credibility after the scandal-plagued Berlusconi, who is currently on trial for having sex with an under-age prostitute.

However he struggled to pass the kind of structural reforms needed to improve competitiveness and lay the foundations for a return to economic growth. A weak center-left government may not find it any easier.

For Italian business, with an illustrious history of export success, the election result brought dismay that there would be no quick change to what they see as a regulatory sclerosis that has kept the economy virtually stagnant for a decade.

"This is probably the worst possible scenario," said Francesco Divella, whose family began selling pasta under its eponymous brand in 1890 in the southern region of Puglia.

"We are very concerned about the uncertainty and apparent ungovernability," said Silvio Pietro Angori, chief executive of Pininfarina, which has designed Ferrari sportscars since 1950. "A company competing on the global markets like Pininfarina needs the support of a stable government that inspires trust."

One of the country's leading bankers summed up his personal reaction: "I'm in shock," he told Reuters. "What a mess!"

(Additional reporting by Barry Moody, Gavin Jones, Lisa Jucca, Steven Jewkes, Steve Scherer Writing by Philip Pullella and James Mackenzie; Editing by Alastair Macdonald)

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Dow, S&P slip after uncertain Italian election

NEW YORK (Reuters) - U.S. stocks mostly fell on Monday on fears that a divided parliament in Italy would get in the way of the country's reforms and hamper the euro zone's stability.

Election projections showed the center-right coalition led by former prime minister Silvio Berlusconi was leading in the race for the Italian Senate, contradicting initial exit polls and raising the specter of deadlock in parliament.

Earlier polls pointing to a center-left victory lifted stocks in Milan and other European markets on investors' belief that they would continue the path to pay down Italian debt, said Art Hogan, managing director of Lazard Capital Markets in New York.

"What we don't want to hear is a renewed fear about a euro- zone fracture," he said.

Last week, the benchmark S&P 500 closed below its 14-day moving average on Wednesday for the first time this year. At midday, the S&P 500 was trading just below that level, now near 1,515.

The index was, nonetheless, still near highs not seen in five years, as bets on a strong U.S. economy have given equities support. The S&P 500's slight fall last week was the first weekly drop after a seven-week string of gains.

Banks and other financial stocks led Monday's decline on concern about the sector's exposure to Italy's massive debt. The KBW Bank Index <.bkx> fell 0.7 percent.

The Dow Jones industrial average <.dji> slipped 18.58 points or 0.13 percent, to 13,981.99. The Standard & Poor's 500 <.spx> shed 2.30 points or 0.15 percent, to 1,513.30. But the Nasdaq Composite <.ixic> rose 3.03 points or 0.10 percent, to 3,164.85.

Barnes & Noble Inc shares climbed 11.9 percent to $15.12 after the bookseller's chairman offered to buy its declining retail business.

The Nasdaq received support from Amgen Inc , up 4.2 percent at $90.47, after a rival issued a voluntary recall of its only drug, an anemia treatment that competes with Amgen's top-selling red blood cell booster, Epogen.

The FTSEurofirst-300 index of top European shares <.fteu3> unofficially closed up 0.1 percent and Italy's main FTSE MIB <.ftmib> ended up 0.7 percent after earlier gaining near 4 percent.

U.S. equities will face a test with the looming debate over the so-called sequestration, U.S. government budget cuts that will take effect starting on Friday if lawmakers fail to reach an agreement over spending and taxes. The White House issued warnings about the harm the cuts are likely to inflict on the economy if enacted.

With 83 percent of the S&P 500 companies having reported results so far, 69 percent beat profit expectations, compared with a 62 percent average since 1994 and 65 percent over the past four quarters, according to Thomson Reuters data.

Fourth-quarter earnings for S&P 500 companies are estimated to have risen 6 percent, according to the data, above a 1.9 percent forecast at the start of the earnings season.

(Editing by Kenneth Barry and Jan Paschal)

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Indiana stays No. 1 in AP Top 25, Gonzaga No. 2

Indiana is No. 1 in The Associated Press' Top 25 for the fourth straight week, while Gonzaga moved to No. 2 for the first time in school history.

While the West Coast Bulldogs made some news at the top of the poll Monday, Louisiana Tech, the Bulldogs from Down South, moved into the rankings for the first time since a 13-week run in 1984-85, their only appearance in the poll.

Louisiana Tech, which is 25th this week, was led back then to a ranking as high as No. 7 by a forward named Karl Malone. Gonzaga at that time had a point guard named John Stockton. They went on to become one of the greatest combinations in NBA history with the Utah Jazz, were members of the Dream Team and both were inducted in the Naismith Memorial Basketball Hall of Fame.

The Hoosiers, who have been ranked No. 1 for a total of 10 weeks this season, received all but one first-place vote from the 65-member national media panel.

Gonzaga, which got the other No. 1 vote, was ranked third last week. The Bulldogs were also that high in the poll for the final two weeks of 2003-04.

Duke moved up three spots to third and is followed by Michigan and Miami, which dropped from second after falling to Wake Forest, the Hurricanes' first Atlantic Coast Conference loss this season.

Kansas is sixth, followed by Georgetown, Florida, Michigan State and Louisville.

Saint Louis, which beat Butler and VCU last week, moved into 18th in the poll, the Billikens' first ranking since being in for one week last season.

Colorado State, which was 22nd and lost twice last week, and VCU, which was 24th, dropped out.

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Iran plans own response to 'Argo'

(File photo) Argo tells the story of a rescue of U.S. diplomats from revolutionary Iran.

STORY HIGHLIGHTS

• Ben Affleck's "Argo" tells the story of a dramatic rescue of U.S. diplomats from revolutionary Iran


• Iranian state media criticize the movie as "replete with historical inaccuracies and distortions"


• Iran's Art Bureau says it will fund its own film about the handing over of 20 U.S. hostages

(CNN) -- Ben Affleck has more than just a couple of Golden Globes to add to his resume.

His movie "Argo," about the suspenseful rescue of U.S. diplomats during the Iran hostage crisis, has also achieved the unusual honor of prompting Tehran to produce its own cinematic response.

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"Argo" was named best drama movie during the Golden Globes ceremony on Sunday night in Los Angeles, and Affleck won the award for best director, a category for which he was passed over in the recent Oscar nominations.

But his efforts to recreate on screen the drama of the secret operation by the CIA and Canada to extract six U.S. embassy workers from revolutionary Iran in 1980 haven't been overlooked by Tehran's Art Bureau.

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It plans to fund a movie entitled "The General Staff," about 20 American hostages who were handed over to the United States by Iranian revolutionaries, according to a report last week by Mehr News, the official Iranian agency.

"This film, which will be a big production, should be an appropriate response to the ahistoric film 'Argo,'" said Ataollah Salmanian, the director of the Iranian film, according to Mehr.

"Argo" claims to be based on a true story rather than to constitute a scrupulous retelling of exactly what took place, and its deviations from reality have been documented.

But Iranian authorities have taken offense at the film's portrayal of the country and its people. "Argo" was officially viewed as "anti-Iranian" following its U.S. release last year, Mehr reported.

Iran's state-run broadcaster Press TV detailed its objections to the film in an online article on Sunday.

"The Iranophobic American movie attempts to describe Iranians as overemotional, irrational, insane, and diabolical while at the same, the CIA agents are represented as heroically patriotic," it complained.

In the movie, in which Affleck plays the lead role, the CIA operation is shown outwitting Iranian authorities through an elaborate plan based on pretending that the U.S. diplomats fleeing the country were part of team scouting locations for an outlandish science-fiction film.

But according to Press TV, the film is "a far cry from a balanced narration" and is "replete with historical inaccuracies and distortions."

On the other hand, "The General Staff," set to begin shooting next year, will be based on eyewitness accounts, Salmanian said.

The Art Bureau, which is to provide the financing, is affiliated with the Islamic Ideology Dissemination Organization, according to Mehr.

Press TV cited Salmanian as saying that his film would depict "the historical event unlike the American version which lacks a proper view of the story."

CNN's Samira Said contributed to this report.

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New storm to hit Chicago area on Tuesday: forecasts

For the second time in less than a week, the Chicago area is in line for a snowstorm that promises a mixture of freezing rain, sleet and snow with enough accumulation to bring out the snow shovels.

Early predictions from the National Weather Service pegged the potential snowfall at about 3-6 inches, about what the storm left the end of last week. But the weather service says it's still unclear which areas will be hit with what: If the temperature is above freezing, there will be less snow, and if it's below, there will be more.

The weather service has issued a winter storm watch from Tuesday morning through the evening.

The weather service said the snow will start sometime after midnight Tuesday morning, with freezing rain turning to sleet to wet snow by early afternoon. With winds gusting about 35 mph, some of that snow will drift and made Tuesday a bad day on the roads.

The track of the storm is over the Texas panhandle northeast and through Missouri and southern Illinois and central Indiana, the Lake Erie area early Wednesday. North of the low pressure path, winter storm watches are in effect from late Monday through Tuesday from Missouri through northern Illinois, the southeastern corner of Wisconsin, extreme northern Indiana and much of Lower Michigan.

In the Chicago area, there could be heavy snow of 6 inches or more Tuesday generally north of Interstate 80, with northeast winds at 25 to 35 mph whipping and blowing the snow, according to the Chicago Weather Center.

Rain, a period of freezing rain and sleet will spread north out of central Illinois early Tuesday, changing over to a heavy wet snow in the Chicago metro area and across the far west through north suburbs into southern Wisconsin.

A combination of freezing rain, sleet and snow will cause hazardous driving across northern Indiana Tuesday. The precipitation will be all snow across Illinois later Tuesday.

According to the Chicago Weather Center, February has been an unusually snowy month during a winter that has been unusually snowless. Through Saturday, there has been 10.1 inches of snow, about 136 percent of normal, while the winter's total has been 13.6 inches, way below normal.

Plains states hit again

A storm struck parts of the southern Plains today, creating blizzard conditions in Oklahoma and Texas and warnings in Kansas and Missouri that caught the brunt of a winter storm last week.

Snow fell at the rate of up to 2 inches per hour in the Amarillo, Texas, area, and the National Weather Service warned against travel, saying "most roads are impassable."

Airports in Amarillo and 120 miles to the south in Lubbock, Texas, were closed while Interstate 27 between the cities was shut down because of the blowing snow, state officials said.

Amarillo and parts north of Amarillo in the panhandle reported a foot of snow or more on Monday morning.

Parts of northwestern Oklahoma could get 16 inches to 24 inches of snow, with high winds that could create drifts up to 6 feet high, according to the National Weather Service in Norman, Oklahoma.

The Oklahoma Highway Patrol said it closed all highways in the Oklahoma panhandle because of blizzard conditions. Interstate 40 in the Texas panhandle was also closed, according to National Weather Service in Amarillo.

In Oklahoma City, some afternoon flights from Will Rogers World Airport were canceled in anticipation of the storm.

Kansas, hit by a foot or more of snow in spots last week, braced for possible worsening conditions on Monday and Tuesday.

Reuters contributed

chicagobreaking@tribune.com

Twitter: @ChicagoBreaking

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