Stock futures climb ahead of ECB, claims data

NEW YORK (Reuters) - Stock index futures advanced on Thursday, indicating the S&P 500 may rise for a third straight session ahead of a European Central Bank rate decision and data on the U.S. labor market.

The central bank is expected to keep rates unchanged, and the market will give more attention to comments from ECB President Mario Draghi, who will give his views on the region's growth prospects and faces tough questions over the euro's sharp rise and his connection to an Italian banking scandal.

"The ECB will come out and talk about how they are going to have buying programs and all that stuff but this is a danger point for U.S. investors because sometimes traders do pay attention to the woes of Europe," said Kim Forrest, senior equity research analyst, Fort Pitt Capital Group in Pittsburgh.

Economic data due at 8:30 a.m. (1330 GMT) includes weekly jobless claims and preliminary fourth quarter productivity and unit labor costs. Initial claims are expected at 360,000 compared with 368,000 in the prior week. Estimates call for a 1.3 percent fall in productivity while unit labor costs are expected to rise 3.0 percent.

"The unemployment information, it has been interesting how much it's dropped off, but we could have a slowdown in firing, but that doesn't necessarily mean an uptick in hiring."

Recent data has pointed to a modest improvement in the economy, but one without enough strength to cause the Federal Reserve to back off it's easy monetary policy, helping the benchmark S&P index <.spx> climb 6 percent for the year.

S&P 500 futures rose 2.7 points and were above fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures gained 25 points, and Nasdaq 100 futures added 3.25 points.

Visa Inc's quarterly profit beat analysts' estimates for the ninth consecutive quarter as credit, debit and transactions grew at the world's largest payments network.

Green Mountain Coffee Roasters Inc stumbled 7.2 percent to $45.43 in premarket after forecasting sales growth for the current quarter that was slightly lower than analysts expected.

According to Thomson Reuters data through Wednesday morning, of 301 companies in the S&P 500 that have reported earnings, 68.1 percent have exceeded analysts' expectations, above a 62 percent average since 1994 and 65 percent over the past four quarters. In terms of revenue, 65.8 percent of companies have topped forecasts.

Looking ahead, fourth-quarter earnings for S&P 500 companies are now expected to grow 4.7 percent, according to the data, above a 1.9 percent forecast at the start of the earnings season.

Retailers will also be eyed as they report monthly sales results. Costco Wholesale Corp posted a 4 percent rise in comparable sales in January, marginally above analysts' estimates, despite the largest U.S. warehouse operator having one less sales day in the reporting period.

European shares were little changed after sharp falls the previous day, with any recovery capped by mixed earnings and concerns about economic and political developments in the euro zone. <.eu/>

Asian shares and the euro paused from recent gains as investors awaited the European Central Bank's policy meeting later in the day and Draghi's view on euro zone growth prospects.

(Reporting by Chuck Mikolajczak; Editing by Chizu Nomiyama)

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Tunisian opposition politician shot dead, protests erupt

Tunis (Reuters) - A Tunisian opposition politician was shot dead on Wednesday, sending thousands of protesters onto the streets of the capital and in Sidi Bouzid, the epicenter of uprisings that swept the Arab world and Tunisia's president from power.

Prime Minister Hamadi Jebali, who said the identity of the attacker was not known, condemned the killing of Shokri Belaid outside his Tunis home as a political assassination and a strike against the "Arab Spring" revolution.

Tension has been growing between Islamists and secularists such as Belaid, who was a staunch opponent of the moderate Islamist-led government elected in October 2011.

As news of the killing spread, more than 1,000 protesters gathered outside the Interior Ministry, many calling for the fall of the government elected after their uprising chased out veteran ruler Zine al-Abidine Ben Ali in January 2011.

Protesters also took to the streets in Sidi Bouzid, where jobless university graduate Mohamed Bouazizi set himself on fire in despair after police confiscated his unlicensed fruit cart, triggering protests that toppled the president.

"More than 4,000 are protesting now, burning wheels and throwing stones at the police", Mehdi Horchani a resident from Sidi Bouzid, told Reuters. "There is a great anger."

Tunisia was the first Arab country to oust its leader and hold free elections as uprisings spread around the region two years ago, leading to the ousting of the rulers of Egypt, Yemen and Libya and the civil war in Syria.

Since the revolution the government has faced a string of protests over economic hardship and Tunisia's future path, with many complaining hardline Salafis were hijacking the revolution in a country dominated previously by a secular elite.

Declining trade with the crisis-hit euro zone has left Tunisians struggling to achieve the better living standards many had hoped for following Ben Ali's departure.

President Moncef Marzouki, who last month warned the tension may lead to "civil war", called for calm and cut short a trip to France as well as cancelling a visit to Egypt scheduled for Thursday after the killing.

"We will continue to fight the enemies of the revolution," he told lawmakers at the European Parliament in Strasbourg, to applause.

FRANCE WORRIED BY RISING VIOLENCE

Compounding the political unrest, Tunisia says al Qaeda-linked militants have been accumulating weapons with the aim of creating an Islamic state.

"The murder of Belaid is a political assassination and the assassination of the Tunisian revolution. By killing him they wanted to silence his voice," said Jebali, who heads the government led by the Ennahda party, which won Tunisia's first post-Arab Spring election.

Belaid, who died in hospital, was a leading member of the opposition Popular Front party. A lawyer and human rights activist he had been a constant critic of the government, accusing it of being a puppet of the rulers in Gulf Arab state of Qatar, which Tunisia denies.

"Shokri Belaid was killed today by four bullets to the head and chest ... doctors told us that he has died. This is a sad day for Tunisia," Ziad Lakhader, a leader of the Popular Front, told Reuters.

French President Francois Hollande condemned the shooting, saying he was concerned by the rise of violence in France's former colony.

"This murder deprives Tunisia of one of its most courageous and free voices," Hollande's office said in a statement.

"France is concerned by the mounting political violence in Tunisia and calls for the ideas cherished by the Tunisian people during their revolution to be respected."

TENSION OVER RULE

Marzouki warned last month that the conflict between Islamists and secularists could lead to civil war and called for a national dialogue that included all political shades.

The secular opposition has accused Ennahda of being too close to hardline Salafi groups, while Salafis who complain Ennahda is failing to defend Islamic values. Ennahda rejects the charges from both sides.

Ennahda party won 42 percent of seats in 2011 elections but formed a government in coalition with two secular parties, the president's Congress for the Republic and Ettakatol.

Marzouki's party threatened on Sunday to withdraw from the government unless it dropped two Islamist ministers.

The opposition threatened unspecified retribution for the killing, that Ennahda president Rached Gannouchi condemned as "aimed at the democratic process of democratic transition". ‮‮‮‮‮‮ ‬‬‬‬‬‬ "The opposition will take historic decisions in response to this cowardly act", Maya Jribi secretary-general of the secularist Republican Party.

(Writing by Alison Williams; Editing by Jon Boyle)

(This story was corrected to fix typo in the third paragraph)

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Snoop Dogg Gets the Party Started with Ben Affleck and Jennifer Lawrence

Caught in the Act

02/06/2013 at 06:00 AM EST

Ben Affleck and Jennifer Lawrence, inset: Snoop Lion (Dogg)

Valerie Goodloe/PictureGroup; Frederick M. Brown/Getty

Guess the "O" in "O.G." stands for Oscar.

Ben Affleck and Jennifer Lawrence both attended the Hollywood Reporter's Nominees' Night 2013 at Spago in Beverly Hills on Monday.

It was a low-key affair at first, with Affleck holding court in a central area of the soiree, where he was animated while chatting with people and seemed excited and genuinely happy.

The Argo star and director, looking handsome in a suit, also obliged guests who approached him for photos.

Lawrence was spotted embracing her Silver Linings Playbook costar Julia Stiles. "You're so stunning!" Stiles told Lawrence just before taking a snapshot together.

As the evening continued, it was clear that Lawrence was the darling of event. Fellow guests were going up and telling her she is beautiful and they're so proud of her and Lawrence was ever the gracious guest, chatting with anyone who approached her.

But it wasn't until Snoop Lion (Dogg) arrived, who went by the deejay name Snoopadelic, that the party really went into full gear. After a lengthy intro that included a clip-filled video, Snoop emerged, gave an intro of his own – he praised Argo and shouted for Affleck to come take a photo with him before the night's end – and began playing an eclectic mix of songs, which included everything from Pat Benatar to 2 Chainz.

– Dahvi Shira

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Critics seek to delay NYC sugary drinks size limit

NEW YORK (AP) — Opponents are pressing to delay enforcement of the city's novel plan to crack down on supersized, sugary drinks, saying businesses shouldn't have to spend millions of dollars to comply until a court rules on whether the measure is legal.

With the rule set to take effect March 12, beverage industry, restaurant and other business groups have asked a judge to put it on hold at least until there's a ruling on their lawsuit seeking to block it altogether. The measure would bar many eateries from selling high-sugar drinks in cups or containers bigger than 16 ounces.

"It would be a tremendous waste of expense, time, and effort for our members to incur all of the harm and costs associated with the ban if this court decides that the ban is illegal," Chong Sik Le, president of the New York Korean-American Grocers Association, said in court papers filed Friday.

City lawyers are fighting the lawsuit and oppose postponing the restriction, which the city Board of Health approved in September. They said Tuesday they expect to prevail.

"The obesity epidemic kills nearly 6,000 New Yorkers each year. We see no reason to delay the Board of Health's reasonable and legal actions to combat this major, growing problem," Mark Muschenheim, a city attorney, said in a statement.

Another city lawyer, Thomas Merrill, has said officials believe businesses have had enough time to get ready for the new rule. He has noted that the city doesn't plan to seek fines until June.

Mayor Michael Bloomberg and other city officials see the first-of-its-kind limit as a coup for public health. The city's obesity rate is rising, and studies have linked sugary drinks to weight gain, they note.

"This is the biggest step a city has taken to curb obesity," Bloomberg said when the measure passed.

Soda makers and other critics view the rule as an unwarranted intrusion into people's dietary choices and an unfair, uneven burden on business. The restriction won't apply at supermarkets and many convenience stores because the city doesn't regulate them.

While the dispute plays out in court, "the impacted businesses would like some more certainty on when and how they might need to adjust operations," American Beverage Industry spokesman Christopher Gindlesperger said Tuesday.

Those adjustments are expected to cost the association's members about $600,000 in labeling and other expenses for bottles, Vice President Mike Redman said in court papers. Reconfiguring "16-ounce" cups that are actually made slightly bigger, to leave room at the top, is expected to take cup manufacturers three months to a year and cost them anywhere from more than $100,000 to several millions of dollars, Foodservice Packaging Institute President Lynn Dyer said in court documents.

Movie theaters, meanwhile, are concerned because beverages account for more than 20 percent of their overall profits and about 98 percent of soda sales are in containers greater than 16 ounces, according to Robert Sunshine, executive director of the National Association of Theatre Owners of New York State.

___

Follow Jennifer Peltz at http://twitter.com/jennpeltz

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Stock futures edge higher with earnings in focus

NEW YORK (Reuters) - Stock index futures rose on Wednesday, adding to the benchmark S&P 500's rally of more than 1 percent a day earlier, buoyed by solid corporate earnings and an optimistic outlook from Disney.

Walt Disney Co beat estimates for quarterly adjusted earnings and said it expected the next few quarters to be better due to a stronger lineup of movies and rising attendance at its theme parks. Shares advanced 3.2 percent to $56.03 in light premarket trading.

With a lack of economic catalysts on Wednesday, investor focus has turned to an earnings season that has been better than anticipated.

According to Thomson Reuters data through Tuesday morning, of the 278 companies in the S&P 500 <.spx> that have reported earnings, 68.7 percent have beat analysts' expectations, above a 62 percent average since 1994 and 65 percent over the past four quarters.

In another positive sign, sixty-six percent of companies have topped revenue forecasts. Fourth-quarter earnings for S&P 500 companies are now expected to rise 4.5 percent, according to the data, above the 1.9 percent forecast at the start of earnings season.

S&P 500 futures rose 1.6 points and were slightly above fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures gained 42 points, and Nasdaq 100 futures added 0.75 points.

The benchmark S&P index rose 1.04 percent Tuesday, its biggest percentage gain since a 2.5-percent advance on January 2, when legislators sidestepped a "fiscal cliff" of spending cuts and tax hikes that could have hurt a fragile U.S. economic recovery.

Visa , the world's largest credit and debit card network, is expected to report earnings per share of $1.79 for its first quarter, up from $1.49 a year earlier. Smaller rival MasterCard recently reported better-than-expected results but said its revenue growth could slow in the first half of the year due to economic uncertainty.

Zynga Inc jumped 6.9 percent to $2.93 in premarket trading after the online gaming company reported an unexpected fourth-quarter profit, following steep cost cuts and shifting forward deferred revenue.

European stocks rose, extending the previous session's recovery with an upbeat outlook from ArcelorMittal reassuring investors. <.eu/>

Asian shares rose, with Japanese equities climbing to their highest since October 2008 on hopes of central bank monetary policy easing and optimism about the prospects for a global economic recovery.

(Editing by Bernadette Baum)

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Iran's Ahmadinejad in Egypt on historic visit

CAIRO (Reuters) - Mahmoud Ahmadinejad arrived in Egypt on Tuesday on the first trip by an Iranian president since the 1979 revolution, underlining a thaw in relations since Egyptians elected an Islamist head of state.

President Mohamed Mursi, the Muslim Brotherhood politician elected in June, kissed Ahmadinejad as he disembarked from his plane at Cairo airport. The leaders walked down a red carpet, Ahmadinejad smiling as he shook hands with waiting dignitaries.

Visiting Cairo to attend an Islamic summit that begins on Wednesday, the president of the Shi'ite Islamist republic is due to meet later on Tuesday with the grand sheikh of al-Azhar, one of the oldest seats of learning in the Sunni world.

Such a visit would have been unthinkable during the rule of Hosni Mubarak, the military-backed autocrat who preserved Egypt's peace treaty with Israel during his 30 years in power and deepened ties between Cairo and the West.

"The political geography of the region will change if Iran and Egypt take a unified position on the Palestinian question," Ahmadinejad said in an interview with Al Mayadeen, a Beirut-based TV station, on the eve of his visit.

He said he wanted to visit the Gaza Strip, the Palestinian territory which neighbors Egypt to the east and is run by the Islamist movement Hamas. "If they allow it, I would go to Gaza to visit the people," Ahmadinejad said.

Analysts doubt that the historic changes that brought Mursi to power in Egypt will result in a full restoration of diplomatic ties between states whose relations were broken off after the Iranian revolution and the conclusion of Egypt's peace treaty with Israel in 1979.

OBSTACLES TO FULL TIES

At the airport the two leaders discussed ways of boosting relations between their countries and resolving the Syrian crisis "without resorting to military intervention", Egyptian state media reported.

Egypt is concerned by Iran's support for Syrian President Bashar al-Assad, who is trying to crush an uprising inspired by the revolt that swept Mubarak from power two years ago. Egypt's overwhelmingly Sunni Muslim population is broadly supportive of the uprising against Assad's Alawite-led administration.

The Mursi administration also wants to safeguard relations with Gulf Arab states that are supporting Cairo's battered state finances and are deeply suspicious of Iran.

Egyptian Foreign Minister Mohamed Kamel Amr reassured Gulf Arab allies that Egypt would not jeopardize their security.

"The security of the Gulf states is the security of Egypt," he told the official MENA news agency, in response to questions about Cairo's opening to Iran and its impact on other states in the region.

Mursi wants to preserve ties with the United States, the source of $1.3 billion in aid each year to the influential Egyptian military.

His government has established close ties with Hamas, a movement backed by Iran and shunned by the West because of its hostility to Israel, but its priority is addressing Egypt's deep economic problems.

"The restoration of full relations with Iran in this period is difficult, despite the warmth in ties ... because of many problems including the Syrian crisis and Cairo's links with the Gulf states, Israel and the United States," said one former Egyptian diplomat.

Speaking to Reuters on the sidelines of preparatory meetings for the two-day Islamic summit, Iranian Foreign Minister Ali Akbar Salehi said he was optimistic that ties could grow closer.

"We are gradually improving. We have to be a little bit patient. I'm very hopeful about the expansion of the bilateral relationship," he said. Asked where he saw room for closer ties, he said: "Trade and economics."

Ahmadinejad's visit to Egypt follows Mursi's visit to Iran in August for a summit of the Non-Aligned Movement.

Sheikh Ahmed al-Tayeb, head of the 1,000-year-old al-Azhar mosque and university, will meet Ahmadinejad at his offices in mediaeval Islamic Cairo, al-Azhar's media office said.

Salehi, the Iranian foreign Minister, stressed the importance of Muslim unity when he met Sheikh al-Tayeb at al-Azhar last month.

Egypt and Iran have taken opposite courses since the late 1970s. Egypt, under Mubarak's predecessor Anwar Sadat, concluded a peace treaty with Israel in 1979 and became a close ally of the United States and Europe. Iran from 1979 turned into a center of opposition to Western influence in the Middle East.

Symbolically, Iran named a street in Tehran after the Islamist who led the 1981 assassination of Sadat.

Egypt gave asylum and a state funeral to Iran's exiled Shah Reza Pahlavi, who was overthrown by the 1979 Iranian revolution. He is buried in a medieval Cairo mosque alongside his ex-brother-in-law, Egypt's last king, Farouk.

(Additional reporting by Ayman Samir and Alexander Diadosz; Editing by Andrew Roche and Paul Taylor)

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Eva Longoria Reveals Valentine's Day (and Upcoming Birthday!) Plans

Caught in the Act

02/05/2013 at 06:00 AM EST

Eva Longoria

Denise Truscello/WireImage

Eva Longoria already knows what she'll be doing on Valentine's Day.

The actress visited the new restaurant and nightclub, She by Morton's, in Las Vegas – in which she is a part owner – on Saturday night, and revealed what's on her agenda for the heartfelt holiday.

"Eva said she would be spending Valentine's Day with her girlfriends – like she always does," a source tells PEOPLE. But that's not the only thing on her agenda. The former Desperate Housewives star also said she's also made plans for her March birthday.

"She's taking a charity trip to South America, which she is really excited about," the source says. "She joked that you shouldn't celebrate birthdays after a certain age because we don't want to remind people how old we are!"

– Patrick Gomez

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Bullying study: It does get better for gay teens

CHICAGO (AP) — It really does get better for gay and bisexual teens when it comes to being bullied, although young gay men have it worse than their lesbian peers, according to the first long-term scientific evidence on how the problem changes over time.

The seven-year study involved more than 4,000 teens in England who were questioned yearly through 2010, until they were 19 and 20 years old. At the start, just over half of the 187 gay, lesbian and bisexual teens said they had been bullied; by 2010 that dropped to 9 percent of gay and bisexual boys and 6 percent of lesbian and bisexual girls.

The researchers said the same results likely would be found in the United States.

In both countries, a "sea change" in cultural acceptance of gays and growing intolerance for bullying occurred during the study years, which partly explains the results, said study co-author Ian Rivers, a psychologist and professor of human development at Brunel University in London.

That includes a government mandate in England that schools work to prevent bullying, and changes in the United States permitting same-sex marriage in several states.

In 2010, syndicated columnist Dan Savage launched the "It Gets Better" video project to encourage bullied gay teens. It was prompted by widely publicized suicides of young gays, and includes videos from politicians and celebrities.

"Bullying tends to decline with age regardless of sexual orientation and gender," and the study confirms that, said co-author Joseph Robinson, a researcher and assistant professor of educational psychology at the University of Illinois in Urbana-Champaign. "In absolute terms, this would suggest that yes, it gets better."

The study appears online Monday in the journal Pediatrics.

Eliza Byard, executive director of the Gay, Lesbian & Straight Education Network, said the results mirror surveys by her anti-bullying advocacy group that show bullying is more common in U.S. middle schools than in high schools.

But the researchers said their results show the situation is more nuanced for young gay men.

In the first years of the study, gay boys and girls were almost twice as likely to be bullied as their straight peers. By the last year, bullying dropped overall and was at about the same level for lesbians and straight girls. But the difference between men got worse by ages 19 and 20, with gay young men almost four times more likely than their straight peers to be bullied.

The mixed results for young gay men may reflect the fact that masculine tendencies in girls and women are more culturally acceptable than femininity in boys and men, Robinson said.

Savage, who was not involved in the study, agreed.

"A lot of the disgust that people feel when you bring up homosexuality ... centers around gay male sexuality," Savage said. "There's more of a comfort level" around gay women, he said.

Kendall Johnson, 21, a junior theater major at the University of Illinois, said he was bullied for being gay in high school, mostly when he brought boyfriends to school dances or football games.

"One year at prom, I had a guy tell us that we were disgusting and he didn't want to see us dancing anymore," Johnson said. A football player and the president of the drama club intervened on his behalf, he recalled.

Johnson hasn't been bullied in college, but he said that's partly because he hangs out with the theater crowd and avoids the fraternity scene. Still, he agreed, that it generally gets better for gays as they mature.

"As you grow older, you become more accepting of yourself," Johnson said.

___

Online:

Pediatrics: http://www.pediatrics.org

It Gets Better: http://www.itgetsbetter.org

___

AP Medical Writer Lindsey Tanner can be reached at http://www.twitter.com/LindseyTanner

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Stock futures indicate rebound from recent sell-off

NEW YORK (Reuters) - Stock index futures advanced on Tuesday retracing ground lost the prior day, indicating that Wall Street would rebound off its worst daily session since November.

Major averages dropped about 1 percent on Monday, pressured by renewed worries over the euro zone's sovereign debt crisis. While the day's decline pushed the S&P 500 into negative territory for February, equities have been strong performers of late, and the benchmark index is up 4.9 percent for 2013.

Wall Street has advanced on strong fourth-quarter earnings and signs of improved economic growth, suggesting the market's longer-term trend remains higher.

"Markets may have been slightly ahead of themselves, but investors recognize that earnings and data are both more positive than we previously thought, so no one should worry that yesterday was the start of anything bigger," said Oliver Purshe, president of Gary Goldberg Financial Services in Suffern, New York.

Archer Daniels Midland , Walt Disney Co and Kellogg Co are among the companies on tap to report on Tuesday. According to Thomson Reuters data, of the 256 S&P 500 companies that have reported earnings thus far, 68.4 percent have beaten profit expectations, compared with the 62 percent average since 1994 and the 65 percent average over the past four quarters.

Fourth-quarter earnings for S&P 500 companies are expected to rise 4.4 percent, according to the data. That estimate is above the 1.9 percent forecast at the start of earnings season, but well below the 9.9 percent forecast on October 1.

S&P 500 futures rose 7.2 points and were above fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures added 69 points and Nasdaq 100 futures rose 11.5 points.

At current levels, the S&P is about 5.4 percent away from its all-time intraday high of 1,576.09, reached in October 2011.

Investors will also be looking to the Institute for Supply Management's January non-manufacturing index, due at 10 a.m. Economists forecast a reading of 55.2, versus 55.7 in December.

Last week, the ISM's manufacturing index for January showed the pace of growth in manufacturing picked up to its highest level in nine months.

In company news, McGraw-Hill will be in focus a day after news the U.S. Justice Department plans to sue the company's Standard & Poor's unit over its mortgage bond ratings. The action would mark the first such federal action against a credit rating agency related to the recent financial crisis.

The stock plummeted almost 14 percent in Monday's session, its worst daily losses since the October 1987 market crash.

U.S. shares of BP Plc rose 1.9 percent to $44.49 before the bell after the company reported earnings that beat expectations and said underlying financial momentum would be "strongly evident" by 2014.

Dell Inc may also be volatile as the company moved closer to a nearly $24 billion buyout deal to take the company private. The stock rose 1.1 percent to $13.42 in light premarket trading.

U.S. stocks slid on Monday as worries about Europe caused the market to pull back from recent gains.

(Editing by Theodore d'Afflisio)

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Mali Tuaregs seize two Islamist leaders fleeing French strikes

KIDAL, Mali (Reuters) - Tuareg rebels in northern Mali said on Monday they had captured two senior Islamist insurgents fleeing French air strikes toward the Algerian border, and France pressed ahead with its bombing campaign against al Qaeda's Saharan desert camps.

Pro-autonomy Tuareg MNLA rebels said they had seized Mohamed Moussa Ag Mohamed, an Islamist leader who imposed harsh sharia law in the desert town of Timbuktu, and Oumeini Ould Baba Akhmed, believed to be responsible for the kidnapping of a French hostage by the al Qaeda splinter group MUJWA.

"We chased an Islamist convoy close to the frontier and arrested the two men the day before yesterday," Ibrahim Ag Assaleh, spokesman for the MNLA, told Reuters from Ouagadougou in Burkina Faso. "They have been questioned and sent to Kidal."

France has deployed 3,500 ground troops, and warplanes and armored vehicles in its three-week-old Operation Serval (Wildcat) in Mali which has broken the Islamists' 10-month grip on northern towns, where they imposed sharia law.

Paris and its international partners want to prevent the Islamists from using Mali's vast desert north as a base to launch attacks on neighboring African countries and the West.

The MNLA, which seized control of northern Mali last year only to be pushed aside by better-armed Islamist groups, regained control of its northern stronghold of Kidal last week when Islamist fighters fled French airstrikes into the nearby desert and rugged Adrar des Ifoghas mountains.

The Tuareg group says it is willing to help the French-led mission by hunting down Islamists. It has offered to hold peace talks with the government in a bid to heal wounds between Mali's restive Saharan north and the black African-dominated south.

"Until there is a peace deal, we cannot hold national elections," Ag Assaleh said, referring to interim Malian President Dioncounda Traore's plan to hold polls on July 31.

Many in the southern capital Bamako - including army leaders who blame the MNLA for executing some of their troops at the Saharan town of Aguelhoc last year - strongly reject any talks.

French special forces took the airport in Kidal on Tuesday, reaching the most northern city previously held by the Islamist alliance. Though the MNLA says it controls Kidal, a Reuters reporter in the town saw a contingent of Chadian troops - part of a U.N.-backed African mission being deployed to help retake northern Mali - backing up French special forces there.

TARGETING REBEL BASES, DEPOTS

French Foreign Minister Laurent Fabius said warplanes were continuing bombing raids on Islamists in Mali's far north to destroy their supply lines and flush them out of remote areas.

"The objective is to destroy their support bases, their depots because they have taken refuge in the north and north-east of the country and can only stay there in the long-term if they have the means to sustain themselves," Fabius said.

"The army is working to stop that," he told French radio.

Jets attacked rebel camps on Sunday targeting logistics bases and training camps used by the al Qaeda-linked rebels near Tessalit, close to the Algerian border.

French President Francois Hollande made a one-day trip to Mali on Saturday, promising to keep troops in the country until the job of restoring government control in the Sahel state was finished. He was welcomed as a savior by cheering Malians.

The rebels' retreat to hideouts in the remote Adrar des Ifoghas mountains - where Paris believes they are holding seven French hostages - heralds a potentially more complicated new phase of France's intervention in its former colony.

"We are still in the same war, but we're entering a new battle," said Vincent Desportes, a French former general and now associate professor at Science-Po university in Paris.

"We will look to gradually wear out and destroy the terrorists that are sheltering in the Ifoghas. It's now a war of intelligence (services), strikes and probably action by special forces in the background."

Hollande said on Saturday that Paris would withdraw its troops from Mali once the landlocked West African nation had restored sovereignty over its territory and a U.N.-backed African military force could take over from the French soldiers.

Drawn mostly from Mali's West African neighbours, this force is expected to number more than 8,000. But its deployment has been badly hampered by shortages of kit and airlift capacity and questions about who will fund the estimated $1 billion cost.

Fabius said French soldiers may soon pull back from Timbuktu. Its residents had celebrated their liberation from the Islamists, who had handed down punishments including whipping and amputation for breaking sharia law.

The rebels also smashed sacred Sufi mausoleums and destroyed or stole some 2,000 ancient manuscripts at the South African-sponsored Baba Ahmed Institute, causing international outcry.

"A withdrawal could happen very quickly," Fabius said. "We're working towards it because we have no desire to stay there for the long-term.

(Additional reporting by John Irish in Paris, Daniel Flynn in Dakar and David Lewis in Timbuktu; Writing by Daniel Flynn; Editing by Pascal Fletcher and Jon Boyle)

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