Getting comfortable with living on the edge

LONDON (Reuters) - Just as you learn to put up with a nagging toothache, this week is expected to provide fresh evidence that the U.S. economy is getting used to life on the edge of the fiscal cliff.

Of course, putting off that trip to the dentist is not necessarily wise. The longer Washington delays, the more painful it will become to narrow its gaping budget deficit.

But surveys of U.S. consumer confidence in January and of house builder sentiment in December are likely to show resilience, buttressing the argument of equity bulls that Wall Street's firm start to the year is more than a relief rally or a desperate search for higher returns on investment.

Bluford Puttnam, chief economist of CME Group, said the U.S. economy had managed to grow almost 2 percent last year and create about 1.8 million jobs despite stagnation in Europe, a slowdown in China and the deadlocked budget talks.

"So I see a lot of momentum going into 2013," Puttnam said. "If we can get past this fiscal cliff, the economy is poised to have a much more confident year."

Despite fiscal tightening, he said growth could reach 2.5 percent to 3.0 percent.

Puttnam said the next rounds in the budget battle later this quarter would again be bitterly fought and the resolution would again satisfy no one. But, as with the showdown at the end of 2012, the economy would quickly move on.

"There is a one-in-ten chance that the government may even shut down for a week. It's just going to be ugly. And then it will be over. There will be some kind of compromise, and by April it will fade quickly into the background," he said.

THREE GORGES

U.S. retail sales are likely to have increased only 0.2 percent in December, dampened by the budget worries, according to economists polled by Reuters.

But a pair of regional Federal Reserve surveys and the monthly Reuters/University of Michigan consumer poll are projected to improve, while housing starts, new building permits and builders' confidence should all show that the housing recovery stands on firm foundations.

"That's what's really encouraging consumers to feel that the economy is getting better and that the momentum is broadly positive," said Jerry Webman, chief economist at OppenheimerFunds in New York.

While the phrase fiscal cliff used by U.S. Federal Reserve chief Ben Bernanke conjured up an image of an immediate plunge at the start of this year, in truth any austerity was always likely to take effect on the economy gradually.

Bank of America Merrill Lynch describes the challenges the United States faces in coming months rather as three fiscal gorges it must leap over.

The government could hit the debt ceiling approved by Congress as early as mid-February; across-the-board spending cuts are due to kick in on March 1; and the ‘continuing resolution' to fund all discretionary government spending expires on March 27.

Ideally, investors would like Democrats and Republicans to resolve all three issues with an overarching agreement to slash the deficit by $4 trillion over the next decade.

Instead, given the dysfunctional state of politics, Webman said the best that could be hoped for was another short-term fix that cuts spending and ends some tax breaks.

"The U.S. doesn't move by grand bargains, by big deals. We move by incremental decisions, and I think we'll make some imperfect but improved decisions over the course of 2013," he said.

CHINA ON THE MEND, EUROPE EERILY CALM

Encouraging economic news from China, including stronger-than-expected exports and imports in December, has also supported the start-of-year move by financial market investors out of cash and into riskier assets.

Figures on Friday are expected to show that the world's second-largest economy grew 7.8 percent from a year earlier, rebounding from the 7.4 percent pace of the third quarter and further allaying fears of a hard landing.

"Given some of the bearish commentary on China a few months ago, this should be a relief for markets and it's good for the world economy," said Derry Pickford, macro analyst at investment managers Ashburton in London.

Continuing calm in the euro zone has also helped equities, even though full-year German GDP data on Tuesday will serve as a reminder of the area's economic malaise.

Europe's largest economy contracted last quarter as factories slashed output in response to weak demand from Germany's neighbors, the Economy Ministry said on Friday.

At a news conference a day earlier, European Central Bank President Mario Draghi said he expected a recovery in euro zone growth later this year. But he ruled out an early end to the ECB's crisis policy measures and cautioned that risks were still tilted to the downside. Markets shrugged.

In Europe as in the United States, investors seem to have got used to high levels of policy uncertainty, said Ethan Harris, chief U.S. economist at Bank of America Merrill Lynch.

"It appears that the markets will look past brinkmanship moments unless policy makers break new ground," he said.

In Europe, that might mean not just threatening to eject Greece from the euro zone but actually forcing the exit. In the United States, that might mean not just threatening to violate the debt ceiling but actually doing so, Harris said in a report.

As long as such extreme events do not occur, Harris expects periodic swoons in confidence but no acute crisis.

"This renewed resilience is important because we expect many brinkmanship moments in the months ahead. A now-regular pattern has been established where deals are only struck at the last minute and often under market pressure," he wrote.

(Editing by Patrick Graham)

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France bombs Islamist strongholds in north Mali

BAMAKO/PARIS (Reuters) - French fighter jets pounded Islamist rebel strongholds deep in northern Mali on Sunday as Paris poured more troops into the capital Bamako, awaiting a West African force to dislodge al Qaeda-linked insurgents from the country's north.

The attacks on Islamist positions near the ancient desert trading town of Timbuktu and Gao, the largest city in the north, marked a decisive intensification on the third day of the French mission, striking at the heart of the vast area seized by rebels in April.

France is determined to end Islamist domination of northern Mali, which many fear could act as a base for attacks on the West and for links with al Qaeda in Yemen, Somalia and North Africa.

Defense Minister Jean-Yves Le Drian said France's sudden intervention on Friday had prevented the advancing rebels from seizing Bamako. He vowed that air strikes would continue.

"The president is totally determined that we must eradicate these terrorists who threaten the security of Mali, our own country and Europe," he told French television.

Residents and rebel leaders had reported air raids early on Sunday in the towns of Lere and Douentza in central Mali, forcing Islamists to withdraw. As the day progressed, French jets struck targets further to the north, including near the town of Kidal, the epicenter of the rebellion.

In Gao, a dusty town on the banks of the Niger river where Islamists have imposed an extreme form of sharia law, residents said French jets pounded the airport and rebel positions. A huge cloud of black smoke rose from the militants' camp in the city's north, and pick-up trucks ferried dead and wounded to hospital.

"The planes are so fast you can only hear their sound in the sky," resident Soumaila Maiga said by telephone. "We are happy, even though it is frightening. Soon we will be delivered."

Paris said four Rafale jets flew from France to strike rebel training camps, logistics depots and infrastructure around Gao with the aim of weakening the rebels and preventing them from returning southward.

"We blocked the terrorists' advance and from today what we've started to do is to destroy the terrorists' bases behind the front line," French Foreign Minister Laurent Fabius told LCI television.

France has deployed about 550 soldiers to Mali under "Operation Serval" -- named after an African wildcat -- split between Bamako and the town of Mopti, 500 km (300 miles) north.

In Bamako, a Reuters cameraman saw more than 100 French troops disembark on Sunday from a military cargo plane at the international airport, on the outskirts of the capital.

The city's streets were calm, with the sun streaking through the dusty air as the seasonal Harmattan wind blew from the Sahara. Many cars had French flags draped from the windows to celebrate Paris's intervention.

"We thank France for coming to our aid," said resident Mariam Sidibe. "We hope it continues till the north is free."

AFRICAN TROOPS EXPECTED

More than two decades of peaceful elections had earned Mali a reputation as a bulwark of democracy, but that image unraveled in a matter of weeks after a military coup in March which left a power vacuum for the Islamist rebellion.

France convened a U.N. Security Council meeting for Monday to discuss Mali. French President Francois Hollande's intervention has won plaudits from leaders in Europe, Africa and the United States but it is not without risks.

It raised the threat level for eight French hostages held by al Qaeda allies in the Sahara and for the 30,000 French expatriates living in neighboring, mostly Muslim states.

Concerned about reprisals, France has tightened security at public buildings and on public transport. It advised its 6,000 citizens to leave Mali as spokesmen for Ansar Dine and al Qaeda's north Africa wing AQIM promised to exact revenge.

In its first casualty of the campaign, Paris said a French pilot was killed on Friday when rebels shot down his helicopter.

Hours earlier, a French intelligence officer held hostage in Somalia by al Shabaab extremists linked to al Qaeda was killed in a failed commando raid to free him.

Hollande says France's aim is simply to support a mission by West African bloc ECOWAS to retake the north, as mandated by a U.N. Security Council resolution in December.

With Paris pressing West African nations to send their troops quickly, Ivory Coast President Alassane Ouattara, who holds the rotating ECOWAS chairmanship, kick-started the operation to deploy 3,300 African soldiers.

Ouattara, installed in power with French military backing in 2011, convened a summit of the 15-nation bloc for Saturday in Ivory Coast to discuss the mission.

"The troops will start arriving in Bamako today and tomorrow," said Ali Coulibaly, Ivory Coast's African Integration Minister. "They will be convoyed to the front."

The United States is considering sending a small number of unarmed surveillance drones to Mali as well as providing logistics support, a U.S. official told Reuters. Britain and Canada have also promised logistical support.

Former French colonies Senegal, Niger and Burkina Faso have all pledged to deploy 500 troops within days. In contrast, regional powerhouse Nigeria, due to lead the ECOWAS force, has suggested it would take time to train and equip the troops.

HOUSE-TO-HOUSE SEARCHES

France, however, appeared to have assumed control of the operation on the ground. Its airstrikes allowed Malian troops to drive the Islamists out of the strategic town of Konna, which they had briefly seized this week in their southward advance.

Calm returned to Konna after three nights of combat as the Malian army crushed any remaining rebel fighters. A senior army official said more than 100 rebels had been killed.

"Soldiers are patrolling the streets and have encircled the town," one resident, Madame Coulibaly, told Reuters by phone. "They are searching houses for arms or hidden Islamists."

Analysts expressed doubt, however, that African nations would be able to mount a swift operation to retake north Mali -- a harsh, sparsely populated terrain the size of France -- as neither the equipment nor ground troops were prepared.

"My first impression is that this is an emergency patch in a very dangerous situation," said Gregory Mann, associate professor of history at Columbia University, who specializes in francophone Africa and Mali in particular.

While France and its allies may be able to drive rebel fighters from large towns, they could struggle to prise them from mountain redoubts in the region of Kidal, 300 km (200 miles) northeast of Gao.

Human Rights Watch said at least 11 civilians, including three children, had been killed in the fighting. A spokesman for Doctors Without Borders in neighboring Mauritania said about 200 Malian refugees had fled across the border to a camp at Fassala and more were on their way.

In Bamako, civilians tried to contribute to the war effort.

"We are very proud and relieved that the army was able to drive the jihadists out of Konna. We hope it will not end there, that is why I'm helping in my own way," said civil servant Ibrahima Kalossi, 32, one of over 40 people who queued to donate blood for wounded soldiers.

(Additional reporting by Adama Diarra, Tiemoko Diallo and Rainer Schwenzfeier in Bamako, Pascal Fletcher in Johannesburg, Joe Bavier in Abidjan, Catherine Bremer, Leila Aboud and John Irish in Paris and Phil Stewart in Washington; Writing by Daniel Flynn; Editing by Will Waterman and Roger Atwood)

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4 gadgets that defined Vegas electronics show

LAS VEGAS (AP) — The world’s largest gadget show wrapped up on Friday, and the organizers said it was the biggest ever, beating last year’s record in terms of the floor space companies purchased to display their wares.

What was it that drew more than 3,500 companies and 150,000 people to Las Vegas for this mega-event? Here are four gadgets that exemplified the top trends at this year’s International CES.

— Sony‘s 55-inch ultra-high-definition TV

The introduction of high-definition and flat-panel TVs sent U.S. shoppers on a half-decade buying spree as they tossed out old tube sets. Now that the old sets are mostly gone, sales of new TVs are falling. To lure buyers back, Asian TV makers are trying to pull the same trick again. They’re making the sets sharper. This fall, Sony and LG introduced 84-inch sets with four times the resolution of regular high-definition sets. They provide stunning sharpness, but they’re too big for most homes, and at more than $ 20,000, too expensive. At the show, the companies unveiled smaller “ultra-high-definition” sets, measuring 55 inches and 65 inches on the diagonal. They will go on sale this spring. Prices were not announced, but will presumably be a lot lower than for the 84-inch sets, perhaps under $ 10,000.

Both the size and price of these smaller ultra-HD TVs should make them easier buys, but the higher resolution will be a lot less noticeable on a smaller screen, unless viewers sit very close. Analysts expect ultra-HD to remain an exclusive niche product for some years. There’s no easy way to get ultra-HD video content to the sets, so they will mostly be showing regular HD movies. However, the sets can “upscale” the video to make it look better than it does on a regular HD set.

Analyst James McQuivey of Forrester Research believes the TV makers are focusing on the wrong thing. He doesn’t think consumers really care that much about picture quality.

“What matters most is not the number of pixels or the quality of the pixels themselves … but the increasing convenience of the content’s discovery and delivery. This is why TV makers should be investing in a better experience rather than a bigger one,” McQuivey wrote in a blog post.

— LG’s 55-inch OLED TV

Organic light-emitting diodes, or OLEDs, make for thin, extremely colorful screens. They’re already established in smartphone screens, and they have a lot of promise for other applications as well. For years, a promise is all they’ve represented. OLED screens are very hard to make in larger sizes. Now, LG is shipping a 55-inch OLED TV set in Korea, and is expected to bring it to the U.S. this spring for about $ 12,000.

Beyond being thin, power-thrifty and capable of extremely high color saturation, OLEDs are interesting for another reason: they can bend. LCDs have to be laid down on flat glass substrates, but OLEDs can be laid down on flexible glass or plastic. The major obstacle here is that flexible substrates tend to let through air, which destroys OLEDs, but manufacturers seem to have tackled the problem. Samsung showed off a phone that can bend into a tube. It consisted of a rigid plastic box with electronics and an attached display that is as thin as a piece of paper. The company suggested that in the future, it could make displays that fold up like maps — big screens that fit in a pocket.

We’re likely to see the benefits of bendy OLEDs sooner in a less eyebrow-raising but more practical implementation. It may never have occurred to you, but all electronic screens, except for cathode-ray tubes, are flat. With OLEDs, they don’t have to be. LG and Sony showed TV sets with concave screens at the show — not very useful, but an interesting demonstration. In the future, you could have a phone with a screen that laps over onto the edges, providing you with “smart” buttons with labels that change depending on whether you’re in camera mode or music mode. You could have a coffee mug with a wrap-around news and weather ticker. A revolution in design awaits.

By the way, you won’t have to choose between ultra-HD and OLED screens — Sony, Panasonic and LG showed prototype TVs that combine the technologies.

— The Pebble Watch

The Pebble is a “smart” timepiece that can be programmed to do various things, including showing text messages sent to your phone. The high-resolution display is all digital, so it can be programmed with various cool “watch faces.” But what’s really interesting about the Pebble is how it came to be —and that it exists at all.

Young Canadian inventor Eric Migicovsky couldn’t find conventional funding to make the watch, so he asked for money on Kickstarter, the biggest “crowdfunding” website. In essence, he asked people to buy watches before he actually had any to sell. The fundraising was a blowout success. Migicovsky raised $ 10.3 million by pre-selling 85,000 Pebbles. At CES, he announced that the watches were ready to ship.

Kickstarter’s goal is to bring things and events into fruition that otherwise wouldn’t happen, by creating a shortcut between the people who want to create something and the people willing to pay for it. The effect is starting to become apparent at CES. At least two other “smart” watches funded through Kickstarter were on display. Some startups were at the show to drum up interest in ongoing Kickstarter campaigns, including a Swedish company that wants to make a speaker with a transparent body, and a California outfit that wants to produce a swiveling, remote-controlled platform for cameras.

— Creative Technology Ltd.’s Interactive Gesture Camera

This $ 150 camera, promoted by Intel, attaches to a computer much like a Webcam. From a single lens, it shoots the world in 3-D, using technology similar to radar. The idea is that you can perform hand gestures in the air in front of the camera, and it lets the computer interpret them. Why would you want this? That’s not really clear yet, but a lot of effort is going into finding an answer. CES was boiling with gadgets attempting to break new ground when it comes to how we interact with computers and appliances like TV sets. The Nintendo Wii game console, with its innovative motion-sensing controllers, and the Microsoft Kinect add-on for the Xbox 360 console, which has its own 3-D-sensing camera, have inspired engineers to pursue ways to ditch —or at least complement— the keyboard, mouse, remote control and even the touchscreen.

Samsung’s high-end TVs already let viewers use hand gestures to control volume, and it expanded the range of recognized gestures with this year’s models. Startup Leap Motion was at the show with another depth-sensing camera kit, this one designed to mount next to a laptop’s touch pad, looking upward.

So far, though, the “new interaction” field hasn’t had a real hit since the Kinect. Consumers may be eager to lose the TV remote, but there’s a holdup caused by the nature of the setup: to effectively control the TV, you need to take command not just of the TV, but of the cable or satellite set-top box. TV makers and the cable companies don’t really talk to each other, and there’s no sign of them uniting on a common approach. Only when both devices can be controlled by hand-waving can we permanently let the remote get lost between the couch cushions.

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Q&A: Scramble for vaccine as flu season heats up

WASHINGTON (AP) — Missed flu-shot day at the office last fall? And all those "get vaccinated" ads? A scramble for shots is under way as late-comers seek protection from a miserable flu strain already spreading through much of the country.

Federal health officials said Friday that there is still some flu vaccine available and it's not too late to benefit from it. But people may have to call around to find a clinic with shots still on the shelf, or wait a few days for a new shipment.

"We're hearing of spot shortages," said Dr. Thomas Frieden, director of the Centers for Disease Control and Prevention.

Colorado offers an example. Kaiser Permanente, which has 535,000 members in the state, stopped giving flu shots this week. But it expected to resume vaccinations when new shipments arrive, expected this weekend.

Some questions and answers about flu vaccines:

Q: Are we running out of vaccine?

A: It's January — we shouldn't have a lot left. The traditional time to get vaccinated is in the fall, so that people are protected before influenza starts spreading.

Indeed, manufacturers already have shipped nearly 130 million doses to doctors' offices, drugstores and wholesalers, out of the 135 million doses they had planned to make for this year's flu season. At least 112 million have been used so far.

The nation's largest manufacturer, Sanofi Pasteur, said Friday that it still has supplies of two specialty vaccines, a high-dose shot for seniors, and an under-the-skin shot for certain adults, available for immediate shipment. But it also is working to eke out a limited supply of its traditional shots — some doses that it initially hadn't packaged into syringes, said spokesman Michael Szumera. They should be available late this month.

And MedImmune, the maker of the nasal spray vaccine FluMist, said it has 620,000 extra doses available.

Q: Can't they just make more?

A: No. Flu vaccine is complicated to brew, with supplies for each winter made months in advance and at the numbers expected to sell. Although health officials recommend a yearly flu vaccination for nearly everybody, last year 52 percent of children and just 39 percent of adults were immunized. Most years, leftover doses have to be thrown out.

Q: Should I still hunt for a vaccine?

A: It does take two weeks for full protection to kick in. Still, health officials say it's a good idea to be vaccinated even this late, especially for older people, young children and anyone with medical conditions such as heart or lung diseases that put them at high risk of dangerous flu complications. Flu season does tend to be worst in January and February, but it can run through March.

Q: I heard that a new flu strain is spreading. Does the vaccine really work?

A: Flu strains constantly evolve, the reason that people need an updated vaccine every year. But the CDC says this year's is a good match to the types that are circulating, including a new kind of the tough H3N2 strain. That family tends to be harsher than other flu types — and health officials warned last fall that it was coming, and meant this winter would likely be tougher than last year's flu season, the mildest on record.

Q: But don't some people get vaccinated and still get sick?

A: Flu vaccine never is 100 percent effective, and unfortunately it tends to protect younger people better than older ones. But the CDC released a study Friday showing that so far this year, the vaccine appears 62 percent effective, meaning it's working about as well as it has in past flu seasons.

While that may strike some people as low, Frieden said it's the best protection available. "It's a glass 62 percent full," he said. "It's well worth the effort."

Q: What else can I do?

A: Wash your hands often, and avoid touching your eyes, nose and mouth. Viruses can spread by hand, not just through the air. Also, cough in your elbow, not your hand. When you're sick, protect others by staying home.

And people who are in those high-risk groups should call a doctor if they develop symptoms, added CDC spokesman Tom Skinner. They might be prescribed antiviral medication, which works best if given within the first 48 hours of symptoms.

___

AP Medical Writers Lindsey Tanner and Mike Stobbe contributed to this report.

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Wall Street Week Ahead: Attention turns to financial earnings

NEW YORK (Reuters) - After over a month of watching Capitol Hill and Pennsylvania Avenue, Wall Street can get back to what it knows best: Wall Street.

The first full week of earnings season is dominated by the financial sector - big investment banks and commercial banks - just as retail investors, free from the "fiscal cliff" worries, have started to get back into the markets.

Equities have risen in the new year, rallying after the initial resolution of the fiscal cliff in Washington on January 2. The S&P 500 on Friday closed its second straight week of gains, leaving it just fractionally off a five-year closing high hit on Thursday.

An array of financial companies - including Goldman Sachs and JPMorgan Chase - will report on Wednesday. Bank of America and Citigroup will join on Thursday.

"The banks have a read on the economy, on the health of consumers, on the health of demand," said Quincy Krosby, market strategist at Prudential Financial in Newark, New Jersey.

"What we're looking for is demand. Demand from small business owners, from consumers."

EARNINGS AND ECONOMIC EXPECTATIONS

Investors were greeted with a slightly better-than-anticipated first week of earnings, but expectations were low and just a few companies reported results.

Fourth quarter earnings and revenues for S&P 500 companies are both expected to have grown by 1.9 percent in the past quarter, according to Thomson Reuters I/B/E/S.

Few large corporations have reported, with Wells Fargo the first bank out of the gate on Friday, posting a record profit. The bank, however, made fewer mortgage loans than in the third quarter and its shares were down 0.8 percent for the day.

The KBW bank index <.bkx>, a gauge of U.S. bank stocks, is up about 30 percent from a low hit in June, rising in six of the last eight months, including January.

Investors will continue to watch earnings on Friday, as General Electric will round out the week after Intel's report on Thursday.

HOUSING, INDUSTRIAL DATA ON TAP

Next week will also feature the release of a wide range of economic data.

Tuesday will see the release of retail sales numbers and the Empire State manufacturing index, followed by CPI data on Wednesday.

Investors and analysts will also focus on the housing starts numbers and the Philadelphia Federal Reserve factory activity index on Thursday. The Thomson Reuters/University of Michigan consumer sentiment numbers are due on Friday.

Jim Paulsen, chief investment officer at Wells Capital Management in Minneapolis, said he expected to see housing numbers continue to climb.

"They won't be that surprising if they're good, they'll be rather eye-catching if they're not good," he said. "The underlying drive of the markets, I think, is economic data. That's been the catalyst."

POLITICAL ANXIETY

Worries about the protracted fiscal cliff negotiations drove the markets in the weeks before the ultimate January 2 resolution, but fear of the debt ceiling fight has yet to command investors' attention to the same extent.

The agreement was likely part of the reason for a rebound in flows to stocks. U.S.-based stock mutual funds gained $7.53 billion after the cliff resolution in the week ending January 9, the most in a week since May 2001, according to Thomson Reuters' Lipper.

Markets are unlikely to move on debt ceiling news unless prominent lawmakers signal that they are taking a surprising position in the debate.

The deal in Washington to avert the cliff set up another debt battle, which will play out in coming months alongside spending debates. But this alarm has been sounded before.

"The market will turn the corner on it when the debate heats up," Prudential Financial's Krosby said.

The CBOE Volatility index <.vix> a gauge of traders' anxiety, is off more than 25 percent so far this month and it recently hit its lowest since June 2007, before the recession began.

"The market doesn't react to the same news twice. It will have to be more brutal than the fiscal cliff," Krosby said. "The market has been conditioned that, at the end, they come up with an agreement."

(Reporting by Gabriel Debenedetti; editing by Rodrigo Campos)

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Russia rejects Assad exit as precondition for Syria deal

MOSCOW/BEIRUT (Reuters) - Russia voiced support on Saturday for international peace envoy Lakhdar Brahimi but insisted Syrian President Bashar al-Assad's exit cannot be a precondition for a deal to end the country's conflict.

Some 60,000 Syrians have been killed during the 21-month-old revolt and world powers are divided over how to stop the escalating bloodshed. Government aircraft bombed outer districts of Damascus on Saturday after being grounded for a week by stormy weather, opposition activists in the capital said.

A Russian Foreign Ministry statement following talks on Friday in Geneva with the United States and Brahimi reiterated calls for an end to violence in Syria, but there was no sign of a breakthrough.

Brahimi said the issue of Assad, who the United States, European powers and Gulf-led Arab states insist must step down to end the civil war, appeared to be a sticking point.

Russia's Foreign Ministry said: "As before, we firmly uphold the thesis that questions about Syria's future must be decided by the Syrians themselves, without interference from outside or the imposition of prepared recipes for development."

Russia has been Assad's most powerful international backer, joining with China to block three Western- and Arab-backed U.N. Security Council resolutions aimed to pressure him or push him from power. Assad can also rely on regional powerhouse Iran.

Russia called for "a political transition process" based on an agreement by foreign powers last June.

Brahimi, who is trying to build on that agreement, has met three times with senior Russian and U.S. diplomats since early December and met Assad in Damascus.

Russia and the United States disagreed over what the June agreement meant for Assad, with Washington saying it sent a clear signal he must go and Russia contending it did not.

Qatar on Saturday made a fresh call for an Arab force to end bloodshed in Syria if Brahimi's efforts fail, according to the Doha-based al Jazeera television.

"It is not a question of intervention in Syria in favor of one party against the other, but rather a force to preserve security," Qatar's Prime Minister and Foreign Minister, Sheikh Hamad bin Jassim al-Thani, said in an al Jazeera broadcast.

CONFLICT INTENSIFIES

Moscow has been reluctant to endorse the "Arab Spring" popular revolts of the last two years, saying they have increased instability in the Middle East and created a risk of radical Islamists seizing power.

Although Russia sells arms to Syria and rents one of its naval bases, the economic benefit of its support for Assad is minimal. Analysts say President Vladimir Putin wants to prevent the United States from using military force or support from the U.N. Security Council to bring down governments it opposes.

However, as rebels gain ground in the war, Russia has given indications it is preparing for Assad's possible exit, while continuing to insist he must not be forced out by foreign powers.

Opposition activists say a military escalation and the hardship of winter have accelerated the death toll.

Rebel forces have acquired more powerful anti-tank and anti-aircraft weapons during attacks on Assad's military bases.

Assad's forces have employed increasing amounts of military hardware including Scud-type ballistic missiles in the past two months. New York-based Human Rights Watch said they had also used incendiary cluster bombs that are banned by most nations.

STALEMATE IN CITIES

The weeklong respite from aerial strikes has been marred by snow and thunderstorms that affected millions displaced by the conflict, which has now reached every region of Syria.

On Saturday, the skies were clear and jets and helicopters fired missiles and dropped bombs on a line of towns to the east of Damascus, where rebels have pushed out Assad's ground forces, the Syrian Observatory for Human Rights said.

The British-based group, which is linked to the opposition, said it had no immediate information on casualties from the strikes on districts including Maleiha and farmland areas.

Rebels control large swathes of rural land around Syria but are stuck in a stalemate with Assad's forces in cities, where the army has reinforced positions.

State TV said government forces had repelled an attack by terrorists - a term it uses for the armed opposition - on Aleppo's international airport, now used as a helicopter base.

Reuters cannot independently confirm reports due to severe reporting restrictions imposed by the Syrian authorities and security constraints.

On Friday, rebels seized control of one of Syria's largest helicopter bases, Taftanaz in Idlib province, their first capture of a military airfield.

Eight-six people were killed on Friday, including 30 civilians, the Syrian Observatory said.

(Writing by Oliver Holmes; Editing by Tom Pfeiffer and Doina Chiacu)

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Biden seeks video game industry input on guns

WASHINGTON (AP) — Looking for broader remedies to gun violence, Vice President Joe Biden is reaching out to the video game industry for ideas as the White House seeks to assemble proposals in response to last month’s massacre at a Connecticut elementary school.

Biden is scheduled to meet with video game representatives Friday as the White House explores cultural factors that may contribute to violent behavior.

The vice president, who is leading a task force that will present recommendations to President Barack Obama on Tuesday, met with other representatives from the entertainment industry, including Comcast Corp. and the Motion Picture Association of America, on Thursday.

Friday’s meeting comes a day after the National Rifle Association rejected Obama administration proposals to limit high-capacity ammunition magazines and dug in on its opposition to an assault weapons ban, which Obama has previously said he will propose to Congress. The NRA was one of the pro-gun rights groups that met with Biden during the day.

NRA president David Keene, asked Friday if the NRA has enough support in Congress to fend off legislation to ban sales of assault weapons, indicated it does. “I do not think that there’s going to be a ban on so-called assault weapons passed by the Congress,” he said on NBC’s “Today.”

In previewing the meeting with the video game industry, Biden recalled how the late Sen. Daniel Patrick Moynihan of New York lamented during crime bill negotiations in the 1980s that the country was “defining deviancy down.”

It’s unclear what, if anything, the administration is prepared to recommend on how to address the depiction of violence in the media.

White House press secretary Jay Carney last month suggested that not all measures require government intervention.

“It is certainly the case that we in Washington have the potential, anyway, to help elevate issues that are of concern, elevate issues that contribute to the scourge of gun violence in this country, and that has been the case in the past, and it certainly could be in the future,” Carney said then.

In a statement, a half dozen entertainment groups, including the Motion Picture Association of America, said they “look forward to doing our part to seek meaningful solutions.”

On gun control, however, the Obama administration is assembling proposals to curb gun violence that would include a ban on sales of assault weapons, limits on high-capacity ammunition magazines and universal background checks for gun buyers.

“The vice president made it clear, made it explicitly clear, that the president had already made up his mind on those issues,” Keene said after the meeting. “We made it clear that we disagree with them.”

Opposition from the well-funded and politically powerful NRA underscores the challenges that await the White House if it seeks congressional approval for limiting guns and ammunition. Obama can use his executive powers to act alone on some gun measures, but his options on the proposals opposed by the NRA are limited without Congress’ cooperation.

Obama has pushed reducing gun violence to the top of his domestic agenda following last month’s mass shooting at an elementary school in Newtown, Conn., where a gunman slaughtered 20 children and six adults before killing himself. The president put Biden in charge of an administration task force and set a late January deadline for proposals.

“I committed to him I’d have these recommendations to him by Tuesday,” Biden said Thursday, during a separate White House meeting with sportsmen and wildlife groups. “It doesn’t mean it’s the end of the discussion, but the public wants us to act.”

The vice president later met privately with the NRA and other gun-owner groups for more than 90 minutes. Participants in the meeting described it as an open and frank discussion, but one that yielded little movement from either side on long-held positions.

Keene told NBC there is a fundamental disagreement over what would actually make a difference in curbing gun violence.

Richard Feldman, the president of the Independent Firearm Owners Association, said all were in agreement on a need to keep guns out of the hands of criminals and the mentally ill. But when the conversation turned to broad restrictions on high-capacity magazines and assault weapons, Feldman said Biden suggested the president had already made up his mind to seek a ban.

“Is there wiggle room and give?” Feldman said. “I don’t know.”

White House officials said the vice president didn’t expect to win over the NRA and other gun groups on those key issues. But the administration was hoping to soften their opposition in order to rally support from pro-gun lawmakers on Capitol Hill.

Biden’s proposals are also expected to include recommendations to address mental health care and violence on television, in movies and video games. Those issues have wide support from gun-rights groups and pro-gun lawmakers.

As the meetings took place in Washington, a student was shot and wounded at a rural California high school and another student was taken into custody.

During his meeting with sporting and wildlife groups, Biden said that while no recommendations would eliminate all future shootings, “there has got to be some common ground, to not solve every problem but diminish the probability that our children are at risk in their schools and diminish the probability that firearms will be used in violent behavior in our society.”

Several Cabinet members have also taken on an active role in Biden’s gun violence task force, including Attorney General Eric Holder. He met Thursday with Wal-Mart, the nation’s largest firearms seller, along with other retailers such as Bass Pro Shops and Dick’s Sporting Goods.

The president hopes to announce his administration’s next steps to tackle gun violence shortly after he is sworn in for a second term. He has pledged to push for new measures in his State of the Union address.

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Follow Julie Pace at http://twitter.com/jpaceDC

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Jason Sudeikis and Olivia Wilde Are Engaged

People Exclusive

By Julie Jordan

01/12/2013 at 04:45 PM EST

Jason Sudeikis and Olivia Wilde

AKM-GSI

Saturday Night Live funnyman Jason Sudeikis is definitely serious about his relationship with actress Olivia Wilde. The actor proposed to Wilde shortly after the holidays, PEOPLE has learned exclusively.

"They are so excited," says a source close to both. "And very, very happy."

Sudeikis, 37, and Wilde, 28, who has said she fell "blissfully, hopelessly, wildly in love" with the actor, began dating in November of 2011 and moved in together last year.

The couple has been spotted together everywhere from Lawrence, Kan., to Austin, Texas, and most recently in Rome, where Wilde is filming the drama The Third Person.

No word yet on a wedding date.

Wilde will next be seen in The Incredible Burt Wonderstone in March and Ron Howard's Rush, out in September.

Meanwhile, Sudeikis has the animated film Epic in May and We're the Millers, costarring Jennifer Aniston, which hits theaters in August.

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Flu season puts businesses and employees in a bind

WASHINGTON (AP) — Nearly half the 70 employees at a Ford dealership in Clarksville, Ind., have been out sick at some point in the past month. It didn't have to be that way, the boss says.

"If people had stayed home in the first place, a lot of times that spread wouldn't have happened," says Marty Book, a vice president at Carriage Ford. "But people really want to get out and do their jobs, and sometimes that's a detriment."

The flu season that has struck early and hard across the U.S. is putting businesses and employees alike in a bind. In this shaky economy, many Americans are reluctant to call in sick, something that can backfire for their employers.

Flu was widespread in 47 states last week, up from 41 the week before, the Centers for Disease Control and Prevention said Friday. The only states without widespread flu were California, Mississippi and Hawaii. And the main strain of the virus circulating tends to make people sicker than usual.

Blake Fleetwood, president of Cook Travel in New York, says his agency is operating with less than 40 percent of its full-time staff because of the flu and other ailments.

"The people here are working longer hours and it puts a lot of strain on everyone," Fleetwood says. "You don't know whether to ask people with the flu to come in or not." He says the flu is also taking its toll on business as customers cancel their travel plans: "People are getting the flu and they're reduced to a shriveling little mess and don't feel like going anywhere."

Many workers go to the office even when they're sick because they are worried about losing their jobs, says John Challenger, CEO of Challenger, Gray & Christmas, an employer consulting firm. Other employees report for work out of financial necessity, since roughly 40 percent of U.S. workers don't get paid if they are out sick. Some simply have a strong work ethic and feel obligated to show up.

Flu season typically costs employers $10.4 billion for hospitalization and doctor's office visits, according to the CDC. That does not include the costs of lost productivity from absences.

At Carriage Ford, Book says the company plans to make flu shots mandatory for all employees.

Linda Doyle, CEO of the Northcrest Community retirement home in Ames, Iowa, says the company took that step this year for its 120 employees, providing the shots at no cost. It is also supplying face masks for all staff.

And no one is expected to come into work if sick, she says.

So far, the company hasn't seen an outbreak of flu cases.

"You keep your fingers crossed and hope it continues this way," Doyle says. "You see the news and it's frightening. We just want to make sure that we're doing everything possible to keep everyone healthy. Cleanliness is really the key to it. Washing your hands. Wash, wash, wash."

Among other steps employers can take to reduce the spread of the flu on the job: holding meetings via conference calls, staggering shifts so that fewer people are on the job at the same time, and avoiding handshaking.

Newspaper editor Rob Blackwell says he had taken only two sick days in the last two years before coming down with the flu and then pneumonia in the past two weeks. He missed several days the first week of January and has been working from home the past week.

"I kept trying to push myself to get back to work because, generally speaking, when I'm sick I just push through it," says Blackwell, the Washington bureau chief for the daily trade paper American Banker.

Connecticut is the only state that requires some businesses to pay employees when they are out sick. Cities such as San Francisco and Washington have similar laws.

Challenger and others say attitudes are changing, and many companies are rethinking their sick policies to avoid officewide outbreaks of the flu and other infectious diseases.

"I think companies are waking up to the fact right now that you might get a little bit of gain from a person coming into work sick, but especially when you have an epidemic, if 10 or 20 people then get sick, in fact you've lost productivity," Challenger says.

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Associated Press writers Mike Stobbe in Atlanta, Eileen A.J. Connelly in New York, Paul Wiseman in Washington, Barbara Rodriguez in Des Moines, Iowa, and Jim Salter in St. Louis contributed to this report.

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