Euro, shares fall as euro zone recession deepens

LONDON (Reuters) - The euro and shares fell on Thursday after data showed the euro zone's two biggest economies shrank even more than expected late last year, throwing a first quarter recovery into doubt.

The German economy contracted 0.6 percent in the final quarter of 2012, marking its worst performance since the global financial crisis was raging in 2009. Exports, normally the motor of its economy, did most of the damage.

Overall the euro zone's 17-country economy shrank 0.6 percent, with France's 0.3 percent fall slightly worse than forecast.

Germany is expected to rebound but the figures suggest the bloc overall could remain in recession in the first quarter of this year, despite a jump in market sentiment this year as fears that the currency bloc could fall apart faded.

The data pushed the euro down more than 0.9 percent to a session low $1.3328 by 5:30 a.m. ET.

"It is kind of disappointing that Germany, which had shown so much resilience, is now showing signs of suffering from the debt crisis," said Anita Paluch, sales trader at Gekko Capital Markets.

Stock markets had managed to turn around initial falls but were back down by mid-morning. The pan-European FTSEurofirst 300 index <.fteu3> was down 0.4 percent at 1162.58. Frankfurt's DAX <.gdaxi> and Milan's <.ftmib> fell 0.9 percent while Paris's CAC-40 <.fchi> and London's FTSE <.ftse> were 0.4 percent lower.

German bonds rose as demand for traditional safe-haven assets returned. Bund futures were 45 ticks higher on the day at 142.51, having extended gains after Italian GDP figures also came in weak.

Italy, which holds parliamentary elections in just over a week, suffered its sixth successive quarterly fall in GDP - this time a sharp 0.9 percent - putting it into a longer recession than it suffered during the crisis of 2008/2009.

YEN STEADIES

Data from the European Central Bank also weighed on confidence as one of its quarterly surveys showed professional forecasters now see no growth in the euro zone this year, having last quarter expected a modest 0.3 percent rise.

The pain is not just in Europe. Japan - under pressure over its aggressive monetary and fiscal policies which are driving down the yen - reported earlier on Thursday that its GDP shrank 0.1 percent in the fourth quarter, leaving it in recession and crushing expectations of a modest return to growth.

The yen steadied after swinging wildly this week following a muddled warning on currencies from the G7 nations on Tuesday. It slipped against the dollar but gained on the euro after the Bank of Japan announced, as expected, that it would keep the pace of asset purchases and interest rates unchanged.

The dollar traded at 93.51 yen, up 0.1 percent and off its recent lows of 92.83 yen but still well below a 33-month high of 94.46 set on Monday. The euro was down 0.8 percent at 124.60 yen.

The yen's recent rapid depreciation, after years of sharp appreciation, has drawn some criticism from overseas, with rhetoric heating up before a Group of 20 nations meeting on Friday and Saturday in Moscow.

"Usually the BOJ doing nothing causes a bit of disappointment, but since there are concerns about the flak Japan might get at the G20 this weekend for the weakening yen, standing pat will actually be a relief to the market," said Masayuki Doshida, senior market analyst at Rakuten Securities.

IRAN TENSIONS

Oil prices rose as fresh tensions over Iran's nuclear program revived global supply concerns and offset the GDP data from the euro zone.

Crude futures prices had dropped after the German and French data but changed direction shortly afterwards when the United Nations nuclear watchdog said it had again failed to clinch a deal in talks with Iran on investigating its nuclear program.

Brent crude was up 28 cents to $118.17 by 5:10 a.m. ET, U.S. crude was up 27 cents at $97.28.

"News that the IAEA (International Atomic Energy Agency) and Iran failed to reach a deal created a rebound in prices after an initial drop following the GDP data that was weaker than expected," Olivier Jakob, an analyst at Petromatrix, said.

Markets in China and Taiwan remain shut for the Lunar New Year holiday but Hong Kong resumed trading on Thursday.

Metals markets were quieter as a result of the thin Asian trading. Copper hit a 4-month high of $8,346 a tonne on February 4, but has since struggled to find momentum with the Shanghai Futures Exchange closed this week.

Gold regained some strength, steadying at $1,642.50 an ounce as recent losses started to draw buying interest.

(Reporting by Marc Jones; Editing by David Stamp)

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Pope asks for support after decision to resign

VATICAN CITY (Reuters) - Pope Benedict, in his first public comments since he announced that he would become the first pontiff in centuries to resign, on Wednesday said he was fully aware of the gravity of his decision but confident that it would not hurt the Church.

"Continue to pray for me, for the Church and for the future pope," he said in unscripted remarks at the start of his weekly general audience, one of his last public appearances before he resigns on February 28.

The pope, who looked and sounded strong, was interrupted several times by thunderous applause from the some 8,000 faithful and tourists who packed the vast audience hall.

In brief, prepared remarks that mirrored those he read to stunned cardinals when he announced his decision on Monday, the pope said God would continue to guide the Church because it was much more than its earthly leader.

"I took this decision in full freedom for the good of the Church after praying for a long time and examining by conscience before God," he said.

He said he was, "well aware of the gravity of such an act but at the same time aware of not being able to carry out my (papal) ministry with the physical and spiritual force that it requires".

Benedict said he was sustained by the "certainty that the Church belongs to Christ, who will never stop guiding it and caring for it".

He said that "he felt almost physically" the affection and kindness he had received since he announced the decision.

Later on Wednesday, an Ash Wednesday Mass that was originally scheduled to have taken place in a small church in Rome, has been moved to St Peter's Basilica so more people can attend.

Unless the Vatican changes the pope's schedule, it will be his last public Mass.

(Reporting By Philip Pullella; editing by Barry Moody)

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Study questions kidney cancer treatment in elderly

In a stunning example of when treatment might be worse than the disease, a large review of Medicare records finds that older people with small kidney tumors were much less likely to die over the next five years if doctors monitored them instead of operating right away.

Even though nearly all of these tumors turned out to be cancer, they rarely proved fatal. And surgery roughly doubled patients' risk of developing heart problems or dying of other causes, doctors found.

After five years, 24 percent of those who had surgery had died, compared to only 13 percent of those who chose monitoring. Just 3 percent of people in each group died of kidney cancer.

The study only involved people 66 and older, but half of all kidney cancers occur in this age group. Younger people with longer life expectancies should still be offered surgery, doctors stressed.

The study also was observational — not an experiment where some people were given surgery and others were monitored, so it cannot prove which approach is best. Yet it offers a real-world look at how more than 7,000 Medicare patients with kidney tumors fared. Surgery is the standard treatment now.

"I think it should change care" and that older patients should be told "that they don't necessarily need to have the kidney tumor removed," said Dr. William Huang of New York University Langone Medical Center. "If the treatment doesn't improve cancer outcomes, then we should consider leaving them alone."

He led the study and will give results at a medical meeting in Orlando, Fla., later this week. The research was discussed Tuesday in a telephone news conference sponsored by the American Society of Clinical Oncology and two other cancer groups.

In the United States, about 65,000 new cases of kidney cancer and 13,700 deaths from the disease are expected this year. Two-thirds of cases are diagnosed at the local stage, when five-year survival is more than 90 percent.

However, most kidney tumors these days are found not because they cause symptoms, but are spotted by accident when people are having an X-ray or other imaging test for something else, like back trouble or chest pain.

Cancer experts increasingly question the need to treat certain slow-growing cancers that are not causing symptoms — prostate cancer in particular. Researchers wanted to know how life-threatening small kidney tumors were, especially in older people most likely to suffer complications from surgery.

They used federal cancer registries and Medicare records from 2000 to 2007 to find 8,317 people 66 and older with kidney tumors less than 1.5 inches wide.

Cancer was confirmed in 7,148 of them. About three-quarters of them had surgery and the rest chose to be monitored with periodic imaging tests.

After five years, 1,536 had died, including 191 of kidney cancer. For every 100 patients who chose monitoring, 11 more were alive at the five-year mark compared to the surgery group. Only 6 percent of those who chose monitoring eventually had surgery.

Furthermore, 27 percent of the surgery group but only 13 percent of the monitoring group developed a cardiovascular problem such as a heart attack, heart disease or stroke. These problems were more likely if doctors removed the entire kidney instead of just a part of it.

The results may help doctors persuade more patients to give monitoring a chance, said a cancer specialist with no role in the research, Dr. Bruce Roth of Washington University in St. Louis.

Some patients with any abnormality "can't sleep at night until something's done about it," he said. Doctors need to say, "We're not sticking our head in the sand, we're going to follow this" and can operate if it gets worse.

One of Huang's patients — 81-year-old Rhona Landorf, who lives in New York City — needed little persuasion.

"I was very happy not to have to be operated on," she said. "He said it's very slow growing and that having an operation would be worse for me than the cancer."

Landorf said her father had been a doctor, and she trusts her doctors' advice. Does she think about her tumor? "Not at all," she said.

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Online:

Kidney cancer info: http://www.cancer.net/cancer-types/kidney-cancer

and http://www.cancer.gov/cancertopics/types/kidney

Study: http://gucasym.org

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

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Stock futures edge higher, Deere jumps after outlook

NEW YORK (Reuters) - Stock index futures edged higher on Wednesday, suggesting the market would continue a recent advance that lifted benchmark indexes to multi-year highs.

While the long-term trend in markets should remain positive, some investors may take profit at current levels, analysts said, with the S&P near its highest since November 2007. Recent daily moves have been small and trading volume light as investors search for fresh impetus to drive stocks higher.

Equities have been strong performers of late, buoyed largely by healthy growth in corporate earnings, with the S&P 500 gaining 6.5 percent so far this year. The Dow is about 1 percent from an all-time intraday high, reached in October 2007.

"This is a market that refuses to go down, and the trend suggests that we'll not only hit a new high on the Dow, but move well beyond it," said Adam Sarhan, chief executive of Sarhan Capital in New York.

Sarhan noted that the S&P 500 was well over its 50-day moving average of 1,460.92, which he said was a sign the market was overbought.

"A light-volume pullback should be expected and embraced at these levels," he said.

Industrial and construction shares will be in focus a day after President Barack Obama's State of the Union address, during which he called for a $50 billion spending plan to create jobs by rebuilding degraded roads and bridges. He also backed higher taxes for the wealthy.

Retail sales data for January is scheduled for release at 8:30 a.m. ET and are seen up 0.1 percent as consumer paychecks shrank following a recent tax increase. Sales rose 0.5 percent in December.

Investors have cheered strength in recent company results, even as economic data, including recent reads on gross domestic product, have indicated some weakness.

Deere & Co jumped 2.1 percent to $95.99 in premarket trading after the farm equipment maker reported results and raised its full-year profit outlook.

S&P 500 futures rose 2.9 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 19 points and Nasdaq 100 futures rose 7.25 points.

Comcast Corp agreed late Tuesday to buy General Electric Co's remaining 49 percent stake in NBC Universal for $16.7 billion. Comcast jumped 8 percent to $42.10 in premarket trading while Dow component GE was up 3.2 percent to $23.31.

Yahoo Inc Chief Executive Marissa Mayer said Tuesday the company's search partnership with Microsoft Corp was not delivering the market share gains or the revenue boost that it should.

Companies scheduled to report quarterly results on Wednesday include MetLife Inc , Applied Materials and Whole Foods Market .

According to the latest Thomson Reuters data, of 353 companies in the S&P 500 that have reported results, 70.3 percent have exceeded analysts' expectations, above a 62 percent average since 1994 and 65 percent over the past four quarters.

Fourth-quarter earnings for S&P 500 companies are estimated to have risen 5.3 percent, according to the data, above a 1.9 percent forecast at the start of the earnings season.

Also in economic news, business inventories are seen rising 0.3 percent in December, a repeat of the November increase. The data is due at 10:00 a.m. ET

Stocks closed modestly higher Tuesday as investors awaited President Barack Obama's State of the Union address.

(Editing by Bernadette Baum)

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China joins U.S., Japan in condemning North Korea nuclear test

SEOUL (Reuters) - North Korea conducted its third nuclear test on Tuesday in defiance of existing U.N. resolutions, drawing condemnation from around the world, including from its only major ally, China, which summoned the North Korean ambassador to protest.

The reclusive North said the test was an act of self-defense against "U.S. hostility" and threatened further, stronger steps if necessary.

It said the test had "greater explosive force" than the 2006 and 2009 tests. Its KCNA news agency said it had used a "miniaturized" and lighter nuclear device, indicating that it had again used plutonium which is more suitable for use as a missile warhead.

North Korean leader Kim Jong-un, the third of his line to rule the country, has presided over two long-range rocket launches and a nuclear test during his first year in power, pursuing policies that have propelled his impoverished and malnourished country closer to becoming a nuclear weapons power.

China, which has shown signs of increasing exasperation with the recent bellicose tone of its neighbor, summoned the North Korean ambassador in Beijing and protested sternly, the Foreign Ministry said.

Foreign Minister Yang Jiechi said China was "strongly dissatisfied and resolutely opposed" to the test and urged North Korea to "stop any rhetoric or acts that could worsen situations and return to the right course of dialogue and consultation as soon as possible".

China is a permanent member of the Security Council.

U.S. President Barack Obama labeled the test a "highly provocative act" that hurt regional stability and pressed for new sanctions.

"The danger posed by North Korea's threatening activities warrants further swift and credible action by the international community. The United States will also continue to take steps necessary to defend ourselves and our allies," Obama said in a statement.

The Security Council will meet on Tuesday to discuss its reaction to the test, although North Korea is already one of the most heavily sanctioned states in the world and has few external economic links that can be targeted.

Japanese Prime Minister Shinzo Abe said the test was a "grave threat" that could not be tolerated. U.N. Secretary-General Ban Ki-moon said the test was a "clear and grave violation" of U.N. Security Council resolutions.

Russian Foreign Minister Sergei Lavrov urged North Korea to abandon its nuclear arms program and return to talks. NATO condemned the test as an "irresponsible act" that posed a grave threat to world peace.

The test "was only the first response we took with maximum restraint", an unnamed spokesman for the North Korean Foreign Ministry, which acts as Pyongyang's official voice to the outside world, said in a statement carried by the official KCNA news agency.

"If the United States continues to come out with hostility and complicates the situation, we will be forced to take stronger, second and third responses in consecutive steps."

North Korea often threatens the United States and its "puppet", South Korea, with destruction in colorful terms.

North Korea told the U.N. disarmament forum in Geneva that it would never bow to resolutions on its nuclear program and that prospects were "gloomy" for the denuclearization of the divided Korean peninsula because of a "hostile" U.S. policy.

South Korea, still technically at war with the North after the 1950-53 civil war ended in a mere truce, also denounced the test.

The magnitude was roughly twice as large as that of 2009, Lassina Zerbo, director of the international data centre division of the Vienna-based Comprehensive Nuclear-Test Ban Treaty Organization, said. The U.S. Geological Survey said that a seismic event measuring 5.1 magnitude had occurred.

"It was confirmed that the nuclear test that was carried out at a high level in a safe and perfect manner using a miniaturized and lighter nuclear device with greater explosive force than previously did not pose any negative impact on the surrounding ecological environment," KCNA said.

Despite China's strong response, the test is likely to be a major embarrassment for Beijing, the North's sole major economic and diplomatic ally.

"The test is hugely insulting to China, which now can be expected to follow through with threats to impose sanctions," said Mark Fitzpatrick of the International Institute for Strategic Studies think tank.

North Korea trumpeted the announcement on its state television channel to patriotic music against the backdrop of an image of its national flag.

It linked the test to its technical prowess in launching a long-range rocket in December, a move that triggered the U.N. sanctions, backed by China, that Pyongyang said prompted it to take Tuesday's action.

The North's ultimate aim, Washington believes, is to design an intercontinental ballistic missile capable of carrying a nuclear warhead that could hit the United States. North Korea says the program is aimed merely at putting satellites in space.

North Korea used plutonium in previous nuclear tests and prior to Tuesday there had been speculation it would use highly enriched uranium so as to conserve its plutonium stocks as testing eats into its limited supply of the material that could be used to construct a nuclear bomb.

"VICIOUS CYCLE"

Despite its three nuclear tests and long-range rocket tests, North Korea is not believed to be close to manufacturing a nuclear missile capable of hitting the United States.

South Korea's Yonhap news agency said Pyongyang had informed China and the United States of its plans to test on Monday, although this could not be confirmed.

When North Korean leader Kim, 30, took power after his father's death in December 2011, there were hopes the he would bring reforms and end Kim Jong-il's "military first" policies.

Instead, the North, whose economy is smaller than it was 20 years ago and where a third of children are believed to be malnourished, appears to be trapped in a cycle of sanctions followed by further provocations.

"The more North Korea shoots missiles, launches satellites or conducts nuclear tests, the more the U.N. Security Council will impose new and more severe sanctions," said Shen Dingli, a professor at Shanghai's Fudan University. "It is an endless, vicious cycle."

But options for the international community appear to be in short supply.

Tuesday's action appeared to have been timed for the run-up to February 16 anniversary celebrations of Kim Jong-il's birthday, as well as to achieved maximum international attention.

Significantly, the test comes at a time of political transition in China, Japan and South Korea, and as Obama begins his second term. He will likely have to tweak his State of the Union address due to be given on Tuesday.

Japanese Prime Minister Shinzo Abe is bedding down a new government and South Korea's new president, Park Geun-hye, prepares to take office on February 25.

China too is in the midst of a once-in-a-decade leadership transition to Xi Jinping, who takes office in March. Both Abe and Xi are staunch nationalists.

The longer-term game plan from Pyongyang may be to restart talks aimed at winning food and financial aid. China urged it to return to the stalled "six-party" talks on its nuclear program, hosted by China and including the two Koreas, the United States, Japan and Russia.

Its puny economy and small diplomatic reach mean the North struggles to win attention on the global stage - other than through nuclear tests and attacks on South Korea, last made in 2010.

"Now the next step for North Korea will be to offer talks... - any form to start up discussion again to bring things to their advantage," said Jeung Young-tae, senior research fellow at the Korea Institute for National Unification in Seoul.

The European Union's foreign policy chief, Catherine Ashton, urged North Korea to refrain from further provocation.

EU member Denmark called on China to step up to the plate and use its influence to rein in its ally.

"This deserves only one thing and that is a one-sided condemnation," said Foreign Minister Villy Sovndal. "North Korea is likely the most horrible country on this planet."

(Additional reporting by Jack Kim, Christine Kim and Jumin Park in SEOUL; Linda Sieg in TOKYO; Louis Charbonneau at the UNITED NATIONS; Fredrik Dahl in VIENNA; Michael Martina and Chen Aizhu in BEIJING; Mette Fraende in COPENHAGEN; Adrian Croft, Charlie Dunmore and Justyna Pawlak in BRUSSELS; Editing by Nick Macfie)

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The Bachelor's Sean Lowe Blogs About His Dates in St. Croix

Sean Lowe is the star of season 17 of The Bachelor, which airs Mondays on ABC. The hunky Dallas businessman and entrepreneur is blogging about his romantic journey for PEOPLE.com.

I'd developed really strong feelings for the final six women on The Bachelor – and I could hardly wait to take them to St. Croix. Our previous week in Canada was great! My heart and head were back on track, and I felt as though the women put their focus back on me. And because of that, each of my relationships grew stronger.

But it was time to leave the cold weather behind and move on to some sandy beaches. This was a huge week for all of us because I would have to decide whose family I was ready to meet.

I had three one-on-one dates and one group date in St. Croix. I decided to give the one-on-one dates to women I had questions for – and the group date went to the women whose hometowns I was ready to visit.

My first date was with AshLee, who was a front-runner in my mind since we visited the theme park back in Los Angeles. She is sweet, loving and compassionate, and I knew she truly wanted to give her heart over to me. But I was still left with doubts about our relationship because I didn't seem to have as much fun with her as I did with the other women.

Given her traumatic childhood, it's understandable why AshLee has control issues. But I think that was preventing her from really letting go and allowing herself to have fun. I really want a partner that I can laugh uncontrollably with and someone who can make even mundane tasks feel exciting. I hoped AshLee had that quality in her, or that I brought it out in her, and I was ready to find out.

After taking the catamaran to the island, AshLee decided to take one for the team and tell me everything I needed to know about Tierra. Until that point, I had only heard the women say they didn't like Tierra, but they never gave specific reasons. It was actually a huge relief to hear all that AshLee had to say. It took a lot of courage for her to bring it up.

That evening, we ended our date with an oceanside dinner where she screamed her love for me while standing on a chair. For the first time, I felt like AshLee was finally letting go and stepping out of her comfort zone for me. I left that date thinking once again that AshLee might be the woman for me.

Connecting with Tierra

Next was my long-awaited date with Tierra. I had a lot of fun with her that day walking around the streets of St. Croix, but I couldn't shake what AshLee had told me. That night, as we had a romantic dinner in an old sugar mill, I tried to really figure out what my feelings were for Tierra, and if I could see a future for us.

I was nervous that if I ended up with Tierra, drama would follow her into our everyday lives. But when she told me she was falling in love with me, I softened a bit. She was always kind when she was with me, and I wanted to believe that the drama was circumstantial and that once she wasn't around a bunch of girls dating the same guy, she would be drama-free. I still ended the evening with questions, but remembering that my connection with Tierra was strong.

Group Date

The following day was the group date with Des, Lindsay and Catherine. I didn't have a lot of questions for these three women. They all have one thing in common: I always have fun with them. Since the beginning I've said that I want to marry my best friend, and they definitely fit that criterion.

We spent the day traveling and touring the island in a Jeep. At the end of the day, I really didn't know who I would give the rose to because they were all so deserving. But I decided to give it to Lindsay because she was so supportive, patient and encouraging throughout this entire journey.

My last date of the week was with Lesley. She was another person who fit the best-friend criteria, but I needed to see more from her. Lesley had a wall up and I always felt like she couldn't be completely vulnerable with me.

Our date was fun, but I needed more than fun. I desperately wanted to see her open up emotionally and allow me to see her true feelings, but that never happened. I was shocked to hear her say on TV that she loved me, and I was left confused as to why she didn't tell me that during our date. Had she told me, it could have changed everything.

Sisterly Advice

I flew my sister, Shay, to St. Croix for her birthday. She loves the show (she signed me up for The Bachelorette!), and I thought it would be a cool present for her. She is also a great judge of character and she knows me better than anyone else.

My sister's advice before I left Dallas for L.A. was to avoid the girl whom drama surrounded. After hearing everything that AshLee had to say about Tierra, I thought it would be a good idea to have my sister sit down and visit with Tierra so I could get her opinion.

I had no idea what I was walking into upon entering the women's suite. I was not aware of the big blowout AshLee and Tierra just had. I found Tierra crying on her bed with her head in her hands. I had already figured by this point that Tierra was not the woman I was going to marry, so when I saw how distraught she was, I knew I had to end it right then and there.

I still believe Tierra has more good in her than people see, but I also recognize that she doesn't have the maturity or social skills necessary to make it on The Bachelor.

When it came time to send someone home at the rose ceremony, I felt confident in my decision. As much as I enjoyed spending time with Lesley, I knew I had to send her home because she never allowed herself to open up emotionally.

I was sad to see Lesley leave, but I felt so confident in my final four. Knowing hometown dates were right around the corner, I was incredibly excited. I loved bringing Emily home to meet my family, and it changed everything for me, so I had really high hopes for the coming week. On to hometowns!

Thanks for watching!
Sean

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Pope shows lifetime jobs aren't always for life

The world seems surprised that an 85-year-old globe-trotting pope who just started tweeting wants to resign, but should it be? Maybe what should be surprising is that more leaders his age do not, considering the toll aging takes on bodies and minds amid a culture of constant communication and change.

There may be more behind the story of why Pope Benedict XVI decided to leave a job normally held for life. But the pontiff made it about age. He said the job called for "both strength of mind and body" and said his was deteriorating. He spoke of "today's world, subject to so many rapid changes," implying a difficulty keeping up despite his recent debut on Twitter.

"This seemed to me a very brave, courageous decision," especially because older people often don't recognize their own decline, said Dr. Seth Landefeld, an expert on aging and chairman of medicine at the University of Alabama at Birmingham.

Age has driven many leaders from jobs that used to be for life — Supreme Court justices, monarchs and other heads of state. As lifetimes expand, the woes of old age are catching up with more in seats of power. Some are choosing to step down rather than suffer long declines and disabilities as the pope's last predecessor did.

Since 1955, only one U.S. Supreme Court justice — Chief Justice William Rehnquist — has died in office. Twenty-one others chose to retire, the most recent being John Paul Stevens, who stepped down in 2010 at age 90.

When Thurgood Marshall stepped down in 1991 at the age of 82, citing health reasons, the Supreme Court justice's answer was blunt: "What's wrong with me? I'm old. I'm getting old and falling apart."

One in 5 U.S. senators is 70 or older, and some have retired rather than seek new terms, such as Hawaii's Daniel Akaka, who left office in January at age 88.

The Netherlands' Queen Beatrix, who just turned 75, recently said she will pass the crown to a son and put the country "in the hands of a new generation."

In Germany, where the pope was born, Chancellor Angela Merkel, who is 58, said the pope's decision that he was no longer fit for the job "earns my very highest respect."

"In our time of ever-lengthening life, many people will be able to understand how the pope as well has to deal with the burdens of aging," she told reporters in Berlin.

Experts on aging agreed.

"People's mental capacities in their 80s and 90s aren't what they were in their 40s and 50s. Their short-term memory is often not as good, their ability to think quickly on their feet, to execute decisions is often not as good," Landefeld said. Change is tougher to handle with age, and leaders like popes and presidents face "extraordinary demands that would tax anybody's physical and mental stamina."

Dr. Barbara Messinger-Rapport, geriatrics chief at the Cleveland Clinic, noted that half of people 85 and older in developed countries have some dementia, usually Alzheimer's. Even without such a disease, "it takes longer to make decisions, it takes longer to learn new things," she said.

But that's far from universal, said Dr. Thomas Perls, an expert on aging at Boston University and director of the New England Centenarians Study.

"Usually a man who is entirely healthy in his early 80s has demonstrated his survival prowess" and can live much longer, he said. People of privilege have better odds because they have access to good food and health care, and tend to lead clean lives.

"Even in the 1500s and 1600s there were popes in their 80s. It's remarkable. That would be today's centenarians," Perls said.

Arizona Sen. John McCain turned 71 while running for president in 2007. Had he won, he would have been the oldest person elected to a first term as president. Ronald Reagan was days away from turning 70 when he started his first term as president in 1981; he won re-election in 1984. Vice President Joe Biden just turned 70.

In the U.S. Senate, where seniority is rewarded and revered, South Carolina's Strom Thurmond didn't retire until age 100 in 2002. Sen. Robert Byrd of West Virginia was the longest-serving senator when he died in office at 92 in 2010.

Now the oldest U.S. senator is 89-year-old Frank Lautenberg of New Jersey. The oldest congressman is Ralph Hall of Texas who turns 90 in May.

The legendary Alan Greenspan was about to turn 80 when he retired as chairman of the Federal Reserve in 2006; he still works as a consultant.

Elsewhere around the world, Cuba's Fidel Castro — one of the world's longest serving heads of state — stepped down in 2006 at age 79 due to an intestinal illness that nearly killed him, handing power to his younger brother Raul. But the island is an example of aged leaders pushing on well into their dotage. Raul Castro now is 81 and his two top lieutenants are also octogenarians. Later this month, he is expected to be named to a new, five-year term as president.

Other leaders who are still working:

—England's Queen Elizabeth, 86.

—Abdullah bin Abd al-Aziz al-Saud, king of Saudi Arabia, 88.

—Sabah al-Ahmad al-Jaber al-Sabah, emir of Kuwait, 83.

—Ruth Bader Ginsburg, U.S. Supreme Court associate justice, 79.

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Associated Press writers Paul Haven in Havana, Cuba; David Rising in Berlin; Seth Borenstein, Mark Sherman and Matt Yancey in Washington, and researcher Judy Ausuebel in New York contributed to this report.

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

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Yen steady, euro dips after G7 urges against FX war

LONDON (Reuters) - The yen hovered near three-year lows against the dollar and the euro fell on Tuesday after the G7 nations urged countries to refrain from competitive devaluations and a U.S. official backed Japan's new anti-deflation policies.

The Group of Seven industrialized nations published a statement saying it remained committed to "market-determined" exchange rates, reacting to weeks of concern that Japan's monetary easing policy, which has also weakened its currency, could trigger far-reaching currency wars.

"We reaffirm that our fiscal and monetary policies have been and will remain oriented towards meeting our respective domestic objectives using domestic instruments, and that we will not target exchange rates," the group said.

Japan's Finance Minister Taro Aso welcomed the G7 statement, saying it showed the group recognized Japan's new anti-deflation policy was not aimed at affecting foreign exchange markets.

By 5:30 a.m. ET the yen was close to a three-year low of 94.31 to the dollar. The euro was down 0.2 percent versus the dollar and 0.5 percent lower at 125.90 yen after rising over 2 percent on Monday.

Treasury Undersecretary Lael Brainard said on Monday the United States supported Japanese efforts to end deflation, but also noted the G7 has long been committed to exchange rates determined by market forces.

The euro, the main riser among major currencies over the last few months as confidence in the euro zone has rebounded and the yen has slumped, was back at $1.3405 following the G7 statement.

It had risen briefly earlier after ECB Vice President Vitor Constancio said the bank's employment growth and inflation forecasts next month were likely to be close to the December figures.

The comments doused rate cut hopes, only re-kindled last week by the head of the bank, Mario Draghi, who said it was looking to see whether the euro's recent rise risked pushing inflation below its comfort zone.

SPAIN FOCUS

Having started the day down 0.2 percent, European shares were almost level again by 5:30 a.m. ET as London's FTSE 100 <.ftse> and Paris's CAC-40 <.fchi> recovered, though Frankfurt's DAX <.gdaxi> remained down 0.2 percent.

In the bond market, Spanish and Italian bonds inched up as domestic buyers took advantage of a recent sell-off, but the recovery looked fragile given political uncertainty in both countries.

Spain sold 5.6 billion euros ($7.5 billion) of 6- and 12-month Treasury bills, beating the top end of the target amount, but paid a higher yield on the longer-term paper as a political corruption scandal weighed on shaky confidence.

The ECB's Draghi is due to address Spanish lawmakers later on Tuesday to explain and defend the ECB's current monetary policy strategy against a backdrop of heightened concerns about the strong euro.

Draghi is also expected to meet Prime Minister Mariano Rajoy, but the market does not expect them to discuss whether Madrid might need financial aid, which would trigger the ECB's bond purchase scheme.

Financial markets showed a muted reaction, meanwhile, to the news that North Korea has conducted a nuclear test.

The nuclear test monitoring agency said the blast was double the size of its 2009 test. NATO condemned the move, calling it an "irresponsible act" that posed a grave threat to world peace.

"The test was not something that makes your heart pound as much as a pressing situation between Iran and Israel," said Kaname Gokon, research manager at brokerage Okato Shoji, referring to the threat of possible military action to prevent Iran from developing nuclear weapons.

Brent oil dipped to just under $118 a barrel, copper was flat, while spot gold stayed near a one-month low.

(Editing by Will Waterman)

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Pope Benedict surprises world, steps down citing frailty

ROME (Reuters) - Pope Benedict surprised the world on Monday by saying he no longer had the mental and physical strength to cope with the demands of his ministry, becoming the first pontiff to step down since the Middle Ages and leaving his aides "incredulous".

The 85-year-old German-born Pope, hailed as a hero by conservative Catholics and viewed with suspicion by liberals, said he had noticed that his strength had deteriorated over recent months.

A Vatican spokesman said the Pope had not resigned because of "difficulties in the papacy" and the decision had been a surprise, indicating that even his closest aides were unaware that he was about to quit. The Pope does not fear schism in the Church after his resignation, the spokesman said.

The Pope's leadership of 1.2 billion Catholics has been beset by a child sexual abuse crisis that tarnished the Church, one address in which he upset Muslims and a scandal over the leaking of his private papers by his personal butler.

In a statement, the pope said in order to govern "...both strength of mind and body are necessary, strength which in the last few months, has deteriorated in me to the extent that I have had to recognize my incapacity to adequately fulfill the ministry entrusted to me.

"For this reason, and well aware of the seriousness of this act, with full freedom I declare that I renounce the ministry of Bishop of Rome, Successor of Saint Peter."

Before he was elected Pope, the former Cardinal Joseph Ratzinger was known by such critical epithets as "God's rottweiler" because of his stern stand on theological issues.

But after several years into his new job he showed that he not only did not bite but barely even barked.

In recent months, the Pope has looked increasingly frail in public sometimes being helped to walk by those around him.

A Vatican spokesman said the pontiff would step down from 2 p.m. ET on February 28, leaving the office vacant until a successor was chosen to Benedict who succeeded John Paul, one of history's most popular pontiffs.

MEEK DEMEANOUR, STEELY INTELLECT

A spokesman for the German government said he was "moved" by the news while Israel's chief rabbi praised Benedict's inter-faith outreach and wished him good health.

Elected to the papacy on April 19, 2005 when he was 78 -- 20 years older than John Paul was when he was elected -- he ruled over a slower-paced, more cerebral and less impulsive Vatican.

But while conservatives cheered him for trying to reaffirm traditional Catholic identity, his critics accused him of turning back the clock on reforms by nearly half a century and hurting dialogue with Muslims, Jews and other Christians.

Under the German's meek demeanor lay a steely intellect ready to dissect theological works for their dogmatic purity and debate fiercely against dissenters.

After appearing uncomfortable in the limelight at the start, he began feeling at home with his new job and showed that he intended to be Pope in his way.

Despite great reverence for his charismatic, globe-trotting predecessor -- whom he put on the fast track to sainthood and whom he beatified in 2011 -- aides said he was determined not to change his quiet manner to imitate John Paul's style.

A quiet, professorial type who relaxed by playing the piano, he managed to show the world the gentle side of the man who was the Vatican's chief doctrinal enforcer for nearly a quarter of a century.

The first German pope for some 1,000 years and the second non-Italian in a row, he traveled regularly, making about four foreign trips a year, but never managed to draw the oceanic crowds of his predecessor.

STRING OF SCANDALS

The child abuse scandals hounded most of his papacy. He ordered an official inquiry into abuse in Ireland, which led to the resignation of several bishops.

Scandal from a source much closer to home hit in 2012 when the pontiff's butler, responsible for dressing him and bringing him meals, was found to be the source of leaked documents alleging corruption in the Vatican's business dealings, causing an international furor.

He confronted his own country's past when he visited the Nazi death camp at Auschwitz.

Calling himself "a son of Germany", he prayed and asked why God was silent when 1.5 million victims, most of them Jews, died there during World War Two.

Ratzinger served in the Hitler Youth during World War Two when membership was compulsory. He was never a member of the Nazi party and his family opposed Adolf Hitler's regime.

But his trip to Germany also prompted the first major crisis of his pontificate. In a university lecture he quoted a 14th century Byzantine emperor as saying Islam had only brought evil to the world and that it was spread by the sword.

After protests that included attacks on churches in the Middle East and the killing of a nun in Somalia, the Pope later said he regretted any misunderstanding the speech caused.

In a move that was widely seen as conciliatory, in late 2006 he made a historic trip to predominantly Muslim Turkey and prayed in Istanbul's Blue Mosque with a Turkish Mufti.

But months later, former Iranian President Mohammad Khatami met the Pope and said wounds between Christians and Muslims were still "very deep" as a result of the Regensburg speech.

(Editing by Ralph Boulton)

(Writing by Peter Millership,; editing by Janet McBride)

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Anne Hathaway on Winning An Oscar: Whatever Happens, Happens

By Phil Boucher

02/11/2013 at 07:00 AM EST

She's won big at the Golden Globes and now the BAFTAs, but will Anne Hathaway take home an Oscar?

Hathaway – who is nominated for Best Supporting Actress for her role in Les Misérables – isn't spending too much time worrying about it.

"Whatever happens in two weeks, happens. It won't be the worst thing that happens to me if I don't win, and with my husband by my side it won't be the best thing either. So I am feeling very good about whatever," the actress, 30, told reporters backstage after nabbing a best supporting actress statue at Sunday's British Academy of Film and Television Arts Awards in London.

"I really have to say that getting to do the work, getting to play the character with this cast and to have this opportunity, it is the most sublime experience. I don't know how I got so lucky. ... So I don't think ahead – I am just happy to be in the conversation in two weeks' time," she said.

But should she win, Hathaway has been imagining where to keep her statue.

"I kind of have this fantasy – because this year that I have been lucky enough to receive a few pieces of hardware – that I'm going to get a tool shed and keep it in my garage so that it opens to some music. But for now I am just going to keep it in my kitchen," she said.

While she's earned awards and received critical acclaim for her portrayal of Fantine, she says the best thing to come of filming the musical epic was meeting costar Russell Crowe.

"The biggest surprise of the whole experience was what a sweetie pie Russell Crowe was. The whole cast would kind of gather around his place and we would just sing for hours. We all bonded that way. He has become a dear, dear friend," she said, "and I feel very blessed to have him in our life."

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