Japan may release data proving Chinese radar incident: media

TOKYO (Reuters) - Japan may release data it says will prove a Chinese naval vessel directed its fire control radar at a Japanese destroyer near disputed islands in the East China Sea, local media reported.

Japan has said a Chinese frigate on January 30 locked its targeting radar on a Japanese destroyer - a step that usually precedes the firing of weapons - but China insists that its vessel used only ordinary surveillance radar.

The incident has added to tensions between the two nations over the disputed islands.

Japan will consider how much normally classified data it can release, the media reports said, citing comments by Japan Defence Minister Itsunori Onodera on local television.

"The government is considering the extent of what can be disclosed," Kyodo news agency quoted Onodera as saying.

China has accused Japan of smearing its name with the accusations, and on Saturday, the official Xinhua news agency continued the war of words.

"By spreading false accusations and posing as a poor victim, Japan had intended to tarnish China's image so as to gain sympathy and support, but a lie does not help," it said in an English language commentary.

"China has been exercising maximum restraint and stayed committed to solving the dispute through dialogue and consultation."

Japan and China have been involved in a series of incidents in recent months in the East China Sea where Chinese and Japanese naval vessels regularly shadow each others movements.

Both countries claim a small clusters of islands, known as Diaoyu in China and Senkaku in Japan, believed to be rich in oil and gas. Controlled by Japan, possession of the uninhabited outcrops and the sea surrounding them would provide China with easier access to the Pacific.

Hopes had been rising for an easing in tensions, including a possible summit between Japanese Prime Minister Shinzo Abe and Chinese Communist Party chief Xi Jinping. But the radar issue has seen China and Japan engage in a fresh round of invective.

China's Defence Ministry on Thursday said Japan's complaints did not "match the facts". The Chinese ship's radar, it said, had maintained regular alerting and surveillance operations and the ship "did not use fire control radar".

Japan's position against China has hardened since Abe led his conservative party to a landslide election victory in December, promising to beef up the military and stand tough in territorial disputes.

The commander of U.S. forces in the Asia-Pacific said the squabble between Japan and China underlined the need for rules to prevent such incidents turning into serious conflict.

China also has ongoing territorial disputes with other Asian nations including Vietnam and the Philippines over islands in the South China Sea.

(Reporting by Tim Kelly; Additional reporting by Ben Blanchard in BEIJING; Editing by Michael Perry)

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Minka Kelly: 'I'm Not Worthy' of Acting with Oprah

By Jennifer Cress

02/08/2013 at 07:40 PM EST

Minka Kelly as Jacqueline Kennedy Onassis

Pacific Coast News

It's intimidating enough to play Jackie O, but Minka Kelly felt even more pressure to perform when she found out who was joining the cast of her latest film, The Butler.

"I'm not worthy. I feel so lucky and grateful. I was like, 'What am I doing here?!' " Kelly tells PEOPLE of starring alongside Robin Williams, Forest Whitaker, John Cusack, Vanessa Redgrave, Jane Fonda and more in the upcoming film, which tells the story of a butler who served eight presidents.

The movie also features another major star: the one and only Oprah Winfrey. "I didn't get to meet Oprah because our shooting schedules were different, but she's a pretty loved lady," Kelly says. "I have yet to hear a bad thing about her!"

Kelly found that the most difficult part of playing Jackie Kennedy was nailing the former first lady's distinct accent. "I think she spoke in a way she thought she should speak, so getting that down was hard. There's a musicality and rhythm to the way she speaks," Kelly explains. "I went to sleep listening to her."

Another tough task? Slipping into the retro costumes. "My body is so different from her because I have curves, so fitting into those vintage clothes was actually really hard," she shares. "Also it was hot – and there was a lot of wool!"

Jennifer Graylock / Getty

But Kelly had no issue slipping into the stunning Oscar de la Renta gown (left) she strutted down the runway in at the Red Dress Collection fashion show in N.Y.C. on Wednesday night. The actress walked for the second year in a row in honor of The Heart Truth campaign, which encourages women to monitor their heart health.

For the month of February, Diet Coke will donate $1 for every person who uploads a heart-inspired photo to Twitter or Instagram using the hashtag #showyourheart. Visit to dietcoke.com/showyourheart for more information.

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After early start, worst of flu season may be over

NEW YORK (AP) — The worst of the flu season appears to be over.

The number of states reporting intense or widespread illnesses dropped again last week, and in a few states there was very little flu going around, U.S. health officials said Friday.

The season started earlier than normal, first in the Southeast and then spreading. But now, by some measures, flu activity has been ebbing for at least four weeks in much of the country. Flu and pneumonia deaths also dropped the last two weeks, the Centers for Disease Control and Prevention reported.

"It's likely that the worst of the current flu season is over," CDC spokesman Tom Skinner said.

But flu is hard to predict, he and others stressed, and there have been spikes late in the season in the past.

For now, states like Georgia and New York — where doctor's offices were jammed a few weeks ago — are reporting low flu activity. The hot spots are now the West Coast and the Southwest.

Among the places that have seen a drop: Lehigh Valley Hospital-Cedar Crest in Allentown, Pa., which put up a tent outside its emergency room last month to help deal with the steady stream of patients. There were about 100 patients each day back then. Now it's down to 25 and the hospital may pack up its tent next week, said Terry Burger, director of infection control and prevention for the hospital.

"There's no question that we're seeing a decline," she said.

In early December, CDC officials announced flu season had arrived, a month earlier than usual. They were worried, saying it had been nine years since a winter flu season started like this one. That was 2003-04 — one of the deadliest seasons in the past 35 years, with more than 48,000 deaths.

Like this year, the major flu strain was one that tends to make people sicker, especially the elderly, who are most vulnerable to flu and its complications

But back then, that year's flu vaccine wasn't made to protect against that bug, and fewer people got flu shots. The vaccine is reformulated almost every year, and the CDC has said this year's vaccine is a good match to the types that are circulating. A preliminary CDC study showed it is about 60 percent effective, which is close to the average.

So far, the season has been labeled moderately severe.

Like others, Lehigh Valley's Burger was cautious about making predictions. "I'm not certain we're completely out of the woods," with more wintry weather ahead and people likely to be packed indoors where flu can spread around, she said.

The government does not keep a running tally of flu-related deaths in adults, but has received reports of 59 deaths in children. The most — nine — were in Texas, where flu activity was still high last week. Roughly 100 children die in an average flu season, the CDC says

On average, about 24,000 Americans die each flu season, according to the CDC.

According to the CDC report, the number of states with intense activity is down to 19, from 24 the previous week, and flu is widespread in 38 states, down from 42.

Flu is now minimal in Florida, Kentucky, Maine, Montana, New Hampshire and South Carolina.

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Online:

CDC: http://www.cdc.gov/flu/

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Stocks end higher for sixth straight week, tech leads

NEW YORK (Reuters) - The Nasdaq composite stock index closed at a 12-year high and the S&P 500 index at a five-year high, boosted by gains in technology shares and stronger overseas trade figures.

The S&P 500 also posted a sixth straight week of gains for the first time since August.

The technology sector led the day's gains, with the S&P 500 technology index <.splrct> up 1.0 percent. Gains in professional network platform LinkedIn Corp and AOL Inc after they reported quarterly results helped the sector.

Shares of LinkedIn jumped 21.3 percent to $150.48 after the social networking site announced strong quarterly profits and gave a bullish forecast for the year.

AOL Inc shares rose 7.4 percent to $33.72 after the online company reported higher quarterly profit, boosted by a 13 percent rise in advertising sales.

Data showed Chinese exports grew more than expected, a positive sign for the global economy. The U.S. trade deficit narrowed in December, suggesting the U.S. economy likely grew in the fourth quarter instead of contracting slightly as originally reported by the U.S. government.

"That may have sent a ray of optimism," said Fred Dickson, chief market strategist at D.A. Davidson & Co in Lake Oswego, Oregon.

Trading volume on Friday was below average for the week as a blizzard swept into the northeastern United States.

The U.S. stock market has posted strong gains since the start of the year, with the S&P 500 up 6.4 percent since December 31. The advance has slowed in recent days, with fourth-quarter earnings winding down and few incentives to continue the rally on the horizon.

"I think we're in the middle of a trading range and I'd put plus or minus 5.0 percent around it. Fundamental factors are best described as neutral," Dickson said.

The Dow Jones industrial average <.dji> ended up 48.92 points, or 0.35 percent, at 13,992.97. The Standard & Poor's 500 Index <.spx> was up 8.54 points, or 0.57 percent, at 1,517.93. The Nasdaq Composite Index <.ixic> was up 28.74 points, or 0.91 percent, at 3,193.87, its highest closing level since November 2000.

For the week, the Dow was down 0.1 percent, the S&P 500 was up 0.3 percent and the Nasdaq up 0.5 percent.

Shares of Dell closed at $13.63, up 0.7 percent, after briefly trading above a buyout offering price of $13.65 during the session.

Dell's largest independent shareholder, Southeastern Asset Management, said it plans to oppose the buyout of the personal computer maker, setting up a battle for founder Michael Dell.

Signs of economic strength overseas buoyed sentiment on Wall Street. Chinese exports grew more than expected in January, while imports climbed 28.8 percent, highlighting robust domestic demand. German data showed a 2012 surplus that was the nation's second highest in more than 60 years, an indication of the underlying strength of Europe's biggest economy.

Separately, U.S. economic data showed the trade deficit shrank in December to $38.5 billion, its narrowest in nearly three years, indicating the economy did much better in the fourth quarter than initially estimated.

Earnings have mostly come in stronger than expected since the start of the reporting period. Fourth-quarter earnings for S&P 500 companies now are estimated up 5.2 percent versus a year ago, according to Thomson Reuters data. That contrasts with a 1.9 percent growth forecast at the start of the earnings season.

Molina Healthcare Inc surged 10.4 percent to $31.88 as the biggest boost to the index after posting fourth-quarter earnings.

The CBOE Volatility index <.vix>, Wall Street's so-called fear gauge, was down 3.6 percent at 13.02. The gauge, a key measure of market expectations of short-term volatility, generally moves inversely to the S&P 500.

"I'm watching the 14 level closely" on the CBOE Volatility index, said Bryan Sapp, senior trading analyst at Schaeffer's Investment Research. "The break below it at the beginning of the year signaled the sharp rally in January, and a rally back above it could be a sign to exercise some caution."

Volume was roughly 5.6 billion shares traded on the New York Stock Exchange, the Nasdaq and the NYSE MKT, compared with the 2012 average daily closing volume of about 6.45 billion.

Advancers outpaced decliners on the NYSE by nearly 2 to 1 and on the Nasdaq by almost 5 to 3.

(Additional reporting by Angela Moon; Editing by Bernadette Baum, Nick Zieminski, Kenneth Barry and Andrew Hay)

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Tens of thousands mourn slain Tunisia opposition leader

TUNIS (Reuters) - Tens of thousands of Tunisians took to the streets amid scattered violence on Friday to mourn secular opposition leader Chokri Belaid, whose assassination has plunged Tunisia deeper into political crisis.

Braving chilly rain, at least 50,000 people turned out for Belaid's funeral in his home district of Jebel al-Jaloud in the capital, chanting anti-Islamist and anti-government slogans.

It was Tunisia's biggest funeral since the death of Habib Bourguiba, independence leader and first president, in 2000.

Tunisia, cradle of the Arab uprisings, is riven by tensions between dominant Islamists and their secular opponents, and by frustration at the lack of social and economic progress since President Zine al-Abidine Ben Ali was ousted in January 2011.

"The people want a new revolution," shouted mourners in Tunis, who also sang the national anthem.

Crowds surged around an open army truck carrying Belaid's coffin, draped in a red and white Tunisian flag, from a cultural center in Jebel al-Jaloud towards the leafy Jallaz cemetery, as a security forces helicopter flew overhead.

Police fired teargas and shots in the air to disperse youths who were smashing cars near the cemetery, forcing some mourners to run from the choking clouds. Police also used teargas against demonstrators outside the Interior Ministry.

"Belaid, rest in peace, we will continue the struggle," mourners chanted, holding portraits of the politician killed near his home on Wednesday by a gunman who fled on a motorcycle.

Some demonstrators denounced Rachid Ghannouchi, leader of the ruling Islamist Ennahda party. "Ghannouchi, assassin, criminal," they chanted. "Tunisia is free, terrorism out."

Police fired teargas to disperse anti-government protesters throwing stones and petrol bombs in the southern mining town of Gafsa, a stronghold of support for Belaid, witnesses said.

Crowds there had chanted "The people want the fall of the regime", a slogan first used against Ben Ali.

CRADLE OF REVOLT

In Sidi Bouzid, the southern town where the revolt against the ousted strongman began, about 10,000 marched to mourn Belaid and shout slogans against Ennahda and the government.

Banks, factories and some shops were closed in Tunis and other cities in response to a strike called by unions in protest at Belaid's killing, but buses were running normally.

Tunis Air suspended all its flights because of the strikes, a spokesman for the national airline said, adding that flights operated by other airlines were not affected.

However, airport sources in Cairo said Egypt's national airline EgyptAir had canceled two flights to Tunisia after staff at Tunis airport joined the general strike.

After Belaid's assassination, Prime Minister Hamdi Jebali, an Islamist, said he would dissolve the government and form a cabinet of technocrats to rule until elections could be held.

But his own Ennahda party and its secular coalition partners complained they had not been consulted, casting doubt over the status of the government and compounding political uncertainty.

No one has claimed responsibility for the killing of Belaid, a lawyer and secular opposition figure.

His family have blamed Ennahda but the party has denied any hand in the shooting. Crowds have attacked several Ennahda party offices in Tunis and other cities in the past two days.

"Hope still exist in Tunisia," Fatma Saidan, a noted Tunisian actor, told Reuters at Belaid's funeral. "We will continue to struggle against extremism and political violence."

She called for national unity, saying: "We are ready to accept Islamists, but they don't accept us."

SECULAR SYMBOL

While Belaid had only a modest political following, his criticism of Ennahda policies spoke for many Tunisians who fear religious radicals are bent on snuffing out freedoms won in the first of the revolts that rippled through the Arab world.

Secular groups have accused the Islamist-led government of a lax response to attacks by ultra-orthodox Salafi Islamists on cinemas, theatres and bars in recent months.

The economic effect of political uncertainty and street unrest could be serious in a country which has yet to draft a new constitution and which relies heavily on the tourist trade.

Mohamed Ali Toumi, president of the Tunisian Federation of Travel Agencies, described the week's events as a catastrophe that would have a negative impact on tourism, but he told the national news agency TAP no cancellations had been reported yet.

France, which had already announced the closure of its schools in Tunis on Friday and Saturday, urged its nationals to stay clear of potential flashpoints in the capital.

"Unless unavoidable, it is best to stay away from the city center today, and steer clear of demonstrations and major road crossings or sensitive buildings," said Helene Conway-Mouret, minister in charge of French people living abroad.

The Austrian foreign ministry issued a similar warning.

The cost of insuring Tunisian government bonds against default rose to its highest level in more than four years on Thursday and ratings agency Fitch said it could further downgrade Tunisia if political instability continues or worsens.

(For an interactive look at Tunisia please click on http://link.reuters.com/tub85t )

(Additional reporting by Alexander Dziadosz in Cairo, Brian Love in Paris and Michael Shields in Vienna; Editing by Andrew Heavens)

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American Idol: Early Favorites Eliminated in Hollywood

TV Watch

American Idol

By Steve Helling

02/07/2013 at 10:30 PM EST

From left: Randy Jackson, Mariah Carey, Ryan Seacrest, Nicki Minaj and Keith Urban

Michael Becker/FOX.

At the beginning of Thursday's American Idol, there were 43 men left in the competition. The next hour was a bloodbath, with many tears and a few tantrums – as well as some standout performances. Curtis Finch Jr., for example, performed a version of Christina Perri's "Jar Of Hearts" that was arguably the strongest of the evening. It may be the season's most overdone song, yet Finch successfully infused it with a rising gospel vibe.

Like every reality show, the contestants learned valuable life lessons as they fought to stay in the game. Here are five:

1. Never Let Them See You Sweat
Paul Jolley looked like he was going to throw up when he took the stage. "I'm so nervous," he said as he fought back tears. The judges watched quietly as he pulled himself together and gave a strong performance of Carrie Underwood's "Blown Away." He advanced, but not before Nicki Minaj criticized him for showing his nerves. "You walked out so defeated and that really irritated me," she said. "Just give us one minute of professionalism."

2. Be Funny and Unexpected
Admit it: It was kind of funny watching Gurpreet Singh Sarin nail "Georgia On My Mind." The judges liked him, perhaps because he doesn't fit any mold. Neither does Charlie Askew, who worked his quirky awkwardness into an intriguing version of Gotye's "Somebody that I Used To Know," complete with a spoken-word intro. "I am obsessed with you," Minaj said, prompting Askew to respond, "Baby, I could say the same thing." She ate it up.

3. Too Much of A Good Thing Can Be Lethal
Matheus Fernandes, one of the standouts from the Los Angeles auditions, was eliminated after a shaky rendition of Kelly Clarkson's "Stronger." The 4'9" contestant made one too many self-depreciating comments about his height, prompting Minaj to say, "Sometimes things can go from being inspiring to becoming you wanting a pity party." When Carey called him a "good person," his face said it all – Fernandes knew he wouldn't be advancing to the next round. In contrast, Lazaro Arbos said nary a word about his stutter, yet he advanced easily, despite an unspectacular rendition of Lady Gaga's "Edge of Glory."

4. If You Lose, Lose Gracefully
The night's "Sour Grapes Award" goes to Papa Peachez, who performed a karaoke-worthy version of Gaga's "Yoü and I." Minaj was unimpressed. "I'm so disappointed," she said. "I don't know why you chose that song." After he was eliminated, Peachez decided he didn't want to win American Idol, after all. "This isn't the competition for me," he said. "I just don't like singing other people's songs."

5. Big Risks Can Reap Big Rewards
Nick Boddington was eliminated in Las Vegas last season, so he came back determined to take some risks. He accompanied himself on the piano while singing Grace Potter's "Stars." It was a strong performance that the judges loved.

After the dust settled, 28 contestants remained. The judges corralled them onto the stage and announced that they would eliminate eight more male contestants next week, after the ladies' auditions.

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Southern diet, fried foods, may raise stroke risk

Deep-fried foods may be causing trouble in the Deep South. People whose diets are heavy on them and sugary drinks like sweet tea and soda were more likely to suffer a stroke, a new study finds.

It's the first big look at diet and strokes, and researchers say it might help explain why blacks in the Southeast — the nation's "stroke belt" — suffer more of them.

Blacks were five times more likely than whites to have the Southern dietary pattern linked with the highest stroke risk. And blacks and whites who live in the South were more likely to eat this way than people in other parts of the country were. Diet might explain as much as two-thirds of the excess stroke risk seen in blacks versus whites, researchers concluded.

"We're talking about fried foods, french fries, hamburgers, processed meats, hot dogs," bacon, ham, liver, gizzards and sugary drinks, said the study's leader, Suzanne Judd of the University of Alabama in Birmingham.

People who ate about six meals a week featuring these sorts of foods had a 41 percent higher stroke risk than people who ate that way about once a month, researchers found.

In contrast, people whose diets were high in fruits, vegetables, whole grains and fish had a 29 percent lower stroke risk.

"It's a very big difference," Judd said. "The message for people in the middle is there's a graded risk" — the likelihood of suffering a stroke rises in proportion to each Southern meal in a week.

Results were reported Thursday at an American Stroke Association conference in Honolulu.

The federally funded study was launched in 2002 to explore regional variations in stroke risks and reasons for them. More than 20,000 people 45 or older — half of them black — from all 48 mainland states filled out food surveys and were sorted into one of five diet styles:

—Southern: Fried foods, processed meats (lunchmeat, jerky), red meat, eggs, sweet drinks and whole milk.

—Convenience: Mexican and Chinese food, pizza, pasta.

—Plant-based: Fruits, vegetables, juice, cereal, fish, poultry, yogurt, nuts and whole-grain bread.

—Sweets: Added fats, breads, chocolate, desserts, sweet breakfast foods.

—Alcohol: Beer, wine, liquor, green leafy vegetables, salad dressings, nuts and seeds, coffee.

"They're not mutually exclusive" — for example, hamburgers fall into both convenience and Southern diets, Judd said. Each person got a score for each diet, depending on how many meals leaned that way.

Over more than five years of follow-up, nearly 500 strokes occurred. Researchers saw clear patterns with the Southern and plant-based diets; the other three didn't seem to affect stroke risk.

There were 138 strokes among the 4,977 who ate the most Southern food, compared to 109 strokes among the 5,156 people eating the least of it.

There were 122 strokes among the 5,076 who ate the most plant-based meals, compared to 135 strokes among the 5,056 people who seldom ate that way.

The trends held up after researchers took into account other factors such as age, income, smoking, education, exercise and total calories consumed.

Fried foods tend to be eaten with lots of salt, which raises blood pressure — a known stroke risk factor, Judd said. And sweet drinks can contribute to diabetes, the disease that celebrity chef Paula Deen — the queen of Southern cuisine — revealed she had a year ago.

The National Institute of Neurological Disorders and Stroke, drugmaker Amgen Inc. and General Mills Inc. funded the study.

"This study does strongly suggest that food does have an influence and people should be trying to avoid these kinds of fatty foods and high sugar content," said an independent expert, Dr. Brian Silver, a Brown University neurologist and stroke center director at Rhode Island Hospital.

"I don't mean to sound like an ogre. I know when I'm in New Orleans I certainly enjoy the food there. But you don't have to make a regular habit of eating all this stuff."

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Marilynn Marchione can be followed at http://twitter.com/MMarchioneAP

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Euro near two-week low, shares up on rekindled rate cut hopes

LONDON (Reuters) - European shares rose and the euro hovered near a two-week low on Friday after the European Central Bank rekindled expectations that it could cut interest rates again.

Strong Chinese trade data also helped lift optimism about global growth prospects, boosting oil, copper and Asian shares, while the yen rose sharply after Japan's finance minister said the currency's recent drop had been overdone.

The ECB left rates at a record low 0.75 percent on Thursday but the bank's President Mario Draghi levered the door to a cut back open by saying it would monitor whether the euro's rise over recent months could push inflation below its comfort zone.

European shares were enjoying their best session of an otherwise low-key week as midday approached, on the hopes lower borrowing rates -- or at least the threat of them -- would reverse some of the 8 percent trade-weighted rise in the euro since August.

"The ECB had quite an impact on the euro-dollar and the positive Chinese data we have had has helped shares," said ABN Amro economist Aline Schuiling.

"Draghi signaled quite clearly yesterday that with the rise in the euro, the risks to price stability are to the downside. We expect the dollar to continue to strengthen, but if that reverses then markets would price in a rate cut."

London's FTSE 100 <.ftse>, Paris's CAC-40 <.fchi> and Frankfurt's DAX <.gdaxi> were up 0.5, 0.6 and 0.2 percent respectively by 1100 GMT pushing the pan-European FTSEurofirst 300 <.fteu3> up 0.5 percent, though it was still on course for its second consecutive weekly fall.

U.S. stock futures pointed to a steady start on Wall Street.<.n/>

Draghi said the euro's recent surge was a sign of a return of confidence, but cautioned: "We certainly want to see whether the appreciation is sustained and will alter our risk assessment as far as price stability is concerned."

The comments saw the currency tumble to $1.33705, the lowest since January 25, although a modest mid-morning rebound lifted it back to $1.3404. It had earlier also hit a two-week low against sterling and a one-week low versus the yen.

The yen, the other key focus of foreign exchange markets following the push by Japan's government to ease monetary policy, rose sharply after the country's finance minister said the currency's recent drop had been overdone.

The euro fell 1.5 percent against the yen to 123.54 yen with traders reporting selling by Asian funds. The dollar shed 1 percent to hit a session low of 92.17 yen as a U.S.-based investor sold the greenback.

HAPPY CHINESE NEW YEAR

Helping to bolster strengthening global growth hopes, China said its exports grew 25 percent in January from a year ago, the strongest showing since April 2011 and well ahead of market expectations, while imports also beat forecasts, surging 28.8 percent on the year.

It lifted commodities, including copper, which ended a four day losing streak. Brent crude oil edged towards $118 per barrel.

Brent has gained over the last three weeks as positive data suggested the global economy had turned a corner, which augurs well for fuel demand, while supply worries stemming from tensions in the Middle East have also supported prices.

Earlier MSCI's broadest index of Asia-Pacific shares outside Japan <.miapj0000pus> added 0.3 percent and Australian shares rallied 0.7 percent to 34-month highs. Chinese markets are closed next week for the Lunar New Year holiday, while Hong Kong will resume trading on Thursday. Despite Friday's rises, MSCI's world equity index <.miwd00000pus> was on course for a weekly fall of about one percent, which would be its biggest drop since November and the first weekly decline of 2013.

However, the global index is still up four percent for the year to date and is not far from its best levels since mid-2008.

"China's economic conditions are improving and the trade data confirms the continuation of a recovery trend. Not just the trade data but retail, production and investment flows clearly show that the economy bottomed out in the third quarter last year," said Hirokazu Yuihama, a senior strategist at Daiwa Securities in Tokyo.

BANK REPAYMENTS

Money markets rates reversed some of their recent gains following Draghi's insistence that the ECB's policy will remain accommodative.

The central bank also said on Friday that banks will return another 5 billion euros of its crisis loans next week, suggesting the initial flood of repayments has turned into a steady trickle.

In the bond market, benchmark German Bund futures continued to push higher as Draghi's cautious tone on the euro zone's economy underpinned demand for low risk assets.

Nagging concerns about political stability in Spain and Italy were piling pressure on higher-yielding peripheral bonds to the benefit of Bunds, overshadowing an Irish bank debt deal that will cut Dublin's borrowing costs over the next decade.

"On the 10-year Spanish bonds, we could go significantly above 5.50 percent and reach the 5.60 area and it can be quite fast and on the BTP 4.70-75 area could be reached as well," BNP Paribas strategist Patrick Jacq said.

But "On a longer-term view we still expect market friendly outcomes of the political issues and the setbacks offer some opportunities to enter long positions."

Spanish 10-year yields were last at 5.42 percent while equivalent Italian yields were about 1 basis point up at 4.58 percent.

(Additional reporting by Richard Hubbard and Emelia Sithole-Matarise; editing by Philippa Fletcher)

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Khamenei rebuffs U.S. offer of direct talks

DUBAI (Reuters) - Iran's highest authority, Ayatollah Ali Khamenei, on Thursday slapped down an offer of direct talks made by U.S. Vice President Joe Biden this week, saying they would not solve the problem between them.

"Some naive people like the idea of negotiating with America, however, negotiations will not solve the problem," Khamenei said in a speech to officials and members of Iran's air force carried on his official website.

"If some people want American rule to be established again in Iran, the nation will rise up to face them," he said.

"American policy in the Middle East has been destroyed and Americans now need to play a new card. That card is dragging Iran into negotiations."

Khamenei made his comments just days after Joe Biden said the United States was prepared to meet bilaterally with the Iranian leadership. "That offer stands but it must be real and tangible," Biden said in a speech in Munich.

With traditional fiery rhetoric, Khamenei lambasted Biden's offer, saying that since the 1979 revolution the United States had gravely insulted Iran and continued to do so with its threat of military action.

"You take up arms against the nation of Iran and say: 'negotiate or we fire'. But you should know that pressure and negotiations are not compatible and our nation will not be intimidated by these actions," he added.

Relations between Iran and the United States were severed in 1979 after the overthrow of Iran's pro-western monarchy and diplomatic meetings between officials have since been very rare.

ALL OPTIONS STILL "ON THE TABLE"

Currently U.S.-Iran contact is limited to talks between Tehran and a so-called P5+1 group of powers on Iran's disputed nuclear program which are to resume on February 26 in Kazakhstan.

Israel's Deputy Prime Minister Dan Meridor said he was skeptical the negotiations in Almaty could yield a result, telling Israel Radio that the United States needed to demonstrate to Iran that "all options were still on the table".

Israel, widely recognized to be the only nuclear power in the Middle East, has warned it could mount a pre-emptive strike on Iranian atomic sites. Israel sees its existence as directly threatened by the prospect of an nuclear-armed Iran, given Tehran's refusal to recognize the existence of the Jewish state.

"The final option, this is the phrasing we have used, should remain in place and be serious," said Meridor.

"The fact that the Iranians have not yet come down from the path they are on means that talks ...are liable to bring about only a stalling for time," he said.

Iran maintains its nuclear program is entirely peaceful but Western powers are concerned it is intent on developing a weapons program.

Many believe a deal on settling the nuclear issue is impossible without a U.S.-Iranian thaw. But any rapprochement would require direct talks addressing many sources of mutual mistrust that have lingered since Iran's 1979 Islamic Revolution and the subsequent U.S. embassy hostage crisis in Tehran.

Moreover, although his re-election last November may give President Barack Obama a freer hand to pursue direct negotiations, analysts say Iran's own presidential election in June may prove an additional obstacle to progress being made.

(Additional reporting by Dan Williams; Editing by William Maclean and Jon Boyle)

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Melissa McCarthy: It Was 'So Fun' to Look So Cheesy in Identity Thief

Stylewatch
Style News Now

02/05/2013 at 05:30 PM ET

Universal Pictures

What’s funnier than Melissa McCarthy? Melissa McCarthy in ridiculous hair and makeup. And lucky for us, the star dons some crazy-bad (or good, depending on how you look at it) crunchy curls and ’80s-inspired eye shadow, blush and lipstick in her new film, Identity Thief.

“It was so fun to put all that together,” McCarthy said of her character’s beauty choices at the film’s L.A. premiere on Tuesday. But it also was labor-intensive to look that (awesomely) cheesy. “[It took] maybe two hours — an hour and a half [to put it on everyday]. Good drag takes a while!”

To create her character Diana’s signature style, McCarthy started with her frizzy, teased and permed mane. “I’m obsessed with wigs, so I started there and once I sort of locked into [a hairstyle], it was kind of more is more [when it came to makeup],” she told reporters.

When it came to Diana’s over-the-top purple and blue eyeshadow, McCarthy looked to an old soap star for inspiration. “I kept saying, ‘Donna Mills’s eyes!’ So we just kept piling [makeup] on, and then one day [the character] appeared.”

McCarthy’s reaction when she finally saw herself as the identity thief? “I thought, I’d like to spend a couple of months with her!” Tell us: Are you excited to see McCarthy’s new movie?

–Jennifer Cress, reporting by Melody Chiu

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