BBC News - Freezing Europe hit by Russian gas shortage

Freezing weather sweeping across Europe has led to a shortage of vital Russian gas supplies to several countries, officials say.

Even Rome has seen a rare fall of snow, closing schools and the Colosseu

An EU energy spokeswoman said eight countries had seen a reduction in gas due to increased demand in Russia.

She said the situation was not an emergency but was being monitored.

The cold snap is being blamed for scores of deaths in eastern Europe where temperatures have plunged to below -35C.

Freezing temperatures have spread to Italy and France, and the UK is also on alert for snowfall over the weekend.

"I can confirm that there has been a decrease in gas deliveries in various member states - Poland, Slovakia, Austria, Hungary, Bulgaria, Romania, Greece and Italy," EU spokeswoman Marlene Holzner said.

"It's not a situation of emergency yet," she added.

Correspondents say the sudden drop in Russian gas supplies - which pass through Ukraine - is raising fears of a repeat of a crisis in 2009 when tension between Moscow and Kiev cut supplies to parts of Europe for about two weeks.

Countries including Bulgaria, Serbia and Bosnia are almost completely dependent on supplies via Ukraine.

Gazprom, the Russian gas export monopoly, said on Friday it was supplying as much gas as it could spare.

"We are doing everything possible... all the systems are working in a stable manner," spokesman Sergey Komlev said.

Meanwhile, Ukraine says more than 100 people have died from the freezing weather, most of them homeless.

Authorities have set up nearly 3,000 heating and food shelters across the country and instructed hospitals not to discharge homeless patients.

The Polish interior ministry said that eight people died from the cold on Friday and two others died of carbon monoxide poisoning from charcoal heaters.

In other developments:

• Rome has seen some rare snowfall and Venice's canals have reportedly started to freeze over
• In Bulgaria, parts of the River Danube have frozen over
• More than 20 people have died from the cold in Romania and hundreds of school remained closed
• Officials in Paris say they are trying to cram as many homeless people as possible into shelters as temperatures plummet

Meanwhile, the UK's Met Office has put severe weather warnings in place until Sunday.

It says heavy snow is forecast across much of England and Wales with southern and central areas likely to be the worst hit.

BBC News - Greece crisis talks over EU bailout to resume

Party leaders in Greece's governing coalition are to resume crisis talks on backing a 130bn-euro (£108bn; $171bn) European Union rescue plan.

Many Greeks have been hit hard by austerity measures

The meeting between PM Lucas Papademos and the leaders of three parties ended on Sunday without any deal.

The premier is seeking support for tough reforms as a condition for the bailout. Athens needs the money by mid-March to avoid a debt default.

Meanwhile, the German and French leaders are due to hold talks in Paris.

Chancellor Angela Merkel and President Nicolas Sarkozy - who have worked closely on resolving the eurozone debt crisis - will take part in a joint Franco-German cabinet session in the French capital.

'Unable to bear'

Mr Papademos had hoped to reach a deal with the leaders by Sunday night - but the talks ended without agreement on the painful reforms demanded by the EU and also the International Monetary Fund (IMF).

"Political leaders should give a response in principle tomorrow [Monday] afternoon," Socialist Party (Pasok) spokesman Panos Beglitis told Reuters news agency.

The leaders of the other two parties in the coalition said after the end of Sunday's talks that they were still opposed to further austerity measures.

"I am not going to contribute to a revolution that will humiliate us and that will burn Europe", said Giorgos Karatzaferis, leader of the far-right Laos party.

Antonis Samaras, leader of the conservative New Democracy party, said the country was "being asked for more austerity, which it is unable to bear," AFP reports.

However, the BBC's Mark Lowen in Athens reports that Mr Papademos's office has put out a statement saying some agreement was reached on the reduction of public spending by 1.5% of GDP, and on bank recapitalisation.

But there was no deal on cuts to the minimum wage or to holiday bonuses, he said.

If there is no agreement, then Greece's international loan will be blocked and the country would be staring default in the face - something that could send shockwaves through the global economy, our correspondent adds.

Athens faces loan repayments to private lenders of 14.4bn euros on 20 March.

Eurozone ministers had hoped to meet on Monday to finalise the bailout - Greece's second - but that meeting had already been cancelled.

High stakes

EU officials have expressed frustration with Greece over delays in backing the terms of the latest rescue package.

Reforms that international lenders want to see include a lower minimum wage, the removal of a "13th and 14th month" extra salary which is paid to workers as an annual bonus, and the liberalisation of workplace regulations.

Opponents say that more cuts will worsen living conditions which have already been affected by two years of austerity measures.

Unless Greece promises to implement reforms, the eurozone ministers say Greece will not be able to go ahead with a plan to restructure its privately-held debt.

Greece has prepared a debt plan with private creditors to halve the value of Greek debt and in return receive new, 30-year bonds with an average interest rate of less than 4%.

The restructuring is to help cut Greek debt to 120% of GDP in 2020 from 160% now.

BBC News - Deutsche Bank chief Ackermann fears 'social time bomb'

The chief executive of Deutsche Bank has warned of a "social time bomb" from wealth and income inequality.

Josef Ackermann says bankers have a social responsibility

Josef Ackermann, who also heads the Institute of International Finance which represents the world's banks, told the BBC that bankers had a responsibility to be philanthropic with their bonuses.

He is due to receive a partially deferred bonus of 8m euros (£6.6m).

However, he said, he felt people in his position had to make a contribution.

"We have a social responsibility, because if this inequality increases in income distribution or wealth distribution we may have a social time bomb ticking and no-one wants to have that."

However, Dr Ackermann said he "preferred not" to talk about philanthropic gestures.

Pay disclosure

His comments come as an annual survey of chairman and non-executive directors, who sit on company boards, carried out by head-hunters Hanson Green and Directorbank found just 32% of chairman think the way top executives are paid is working.

The survey of 298 chairman and 190 non-executive directors found 45% agreed with a proposal that the ratio of chief executive pay to average employee pay should be disclosed in company reports.

Some 94% agreed that companies should have the right to claw back pay if performance changes over the medium term.

The firms said that total remuneration for the average FTSE chief executive rose by 13% in 2011.

The latest figures from the Office for National Statistics showed weekly earnings rose at an annualised rate of 1.9% in the three months to November 2011.

BBC News - UK economy to enter recession soon, says report

The UK economy will enter recession in the first half of the year as households continue to cut back, an influential think tank has warned.

The UK economy could rebound in 2013 if the eurozone crisis is resolved, Niesr said

The National Institute of Economic and Social Research (Niesr) said the government should temporarily ease its spending cuts to promote growth.

It expects the economy to shrink 0.1% in 2012, but to grow 2.3% in 2013 if the eurozone debt crisis is resolved.

Niesr said, however, that deficit cuts had bolstered market confidence.

The UK is already close to another recession - defined as two consecutive quarters of economic contraction - after official figures in January showed that the economy shrank by 0.2% in the final three months of 2011.

In its UK and World Economy Forecast Niesr said: "We forecast a return to technical recession in the first half of this year, as households continue to retrench, credit conditions remain tight, and businesses are reluctant to invest given uncertainty about both domestic and foreign demand."

Niesr said economic conditions will not improve in the short term, as both the private the public sectors are still focused on paying off debts. "Over the near term we do not expect economic conditions to improve," the report said.

The think tank predicted that inflation would fall sharply, with the consumer price index down to 2.2% this year and 1.4% in 2013.

But there were grim forecasts on unemployment, which Niesr expects will rise to about 9% this year, from 8.4% in the three months to November, and will remain above 7% in 2014.

"Unemployment at this elevated level for such a long period is likely to do permanent damage to the supply side of the economy, with large long-run economic costs," the report said.

Niesr suggests relaxing the government's austerity programme. "The UK economy currently suffers from deficient demand; the current stance of fiscal policy is contributing to this deficiency. A temporary easing of fiscal policy in the near term would boost the economy," the group said.

Little scope

More investment would not derail the chancellor's long term fiscal goals, Niesr said.

On Monday, the Institute of Fiscal Studies said the government could safely cut taxes temporarily, without worrying that the Bank of England would raise rates in response.

But the IFS that there was little scope for big or long-term tax cuts, which risked undermining investor confidence.

"The chancellor faces his third budget with the economy and public finances in considerably weaker shape than he had hoped a year ago," said Paul Johnson, director of the IFS.

Last month, Chancellor of the Exchequer George Osborne said he would continue with the coalition government's efforts to reduce the deficit, despite criticism that it is choking off recovery.

A Treasury spokesman said: "As Niesr have said, the government's commitment to deficit reduction has helped maintain market confidence.

"They expect the government to meet its fiscal mandate and for the UK economy to grow more strongly than the euro area this year and next."

Meanwhile, Niesr forecast global growth of 3.5% for 2012, led by China and India, and 4% in 2013. It forecast US economic growth of 2% this year.An independent Scotland could be more constrained on economic policy than at present, a study has suggested.

Scottish independence

The report also considered the monetary and fiscal policy choices facing Scotland if it leaves the union.

Niesr concluded that retaining sterling would be "sensible" for Scotland, but warned that currency union could restrict fiscal policy.

The Scottish government said the report "validates" its aim to retain sterling and insisted Scotland would be in a "healthier" financial position.

The report said that it is "doubtful" whether the Bank of England would extend lender-of-last-resort facilities to Scottish institutions, something First Minister Alex Salmond has argued for.

Niesr adds: "With a pro rata transfer of existing UK public debt, Scotland would enter independence heavily indebted with no insurance from fiscal risk sharing or fiscal transfer mechanism with the rest of the UK.

"Even with a favourable settlement on future oil revenues, its fiscal balances are likely to be volatile with large deficits in some years as a result of its dependence on oil revenues," the report said.

BBC News - Stock markets rise on manufacturing data

Promising figures for manufacturing output in economies throughout the world have boosted global stock markets.

Germany's manufacturing reading was the highest for six months

In the US, the ISM manufacturing index rose to 54.1, the strongest reading for seven months. A reading above 50 implies expansion.

In the eurozone, Markit's purchasing managers' index (PMI) rose to 48.8, up from December's figure of 46.9.

European markets were up by about 2%, while in the US the Dow was up 1%.

"The US manufacturing sector gained further growth momentum in January, adding to a raft of business surveys around the world that have signalled a better than expected start to 2012 for many countries," said Chris Williamson, chief economist at Markit.

Jerry Harris, president of asset management at Sterne Agee, said the ISM index figure showed the US economy was "doing pretty good".

"It is better than last month, and very acceptable. Even though it was slightly below expectations it was a good number," he said.

European manufacturing

The eurozone survey found German manufacturing returned to growth, while the declines in Spain and Italy slowed.

"Euro area manufacturing has started 2012 surprisingly well, suggesting the region may avoid a slide back into recession," said Mr Williamson.

James Ashley at RBC said: "The latest survey readings suggest that conditions in the euro area manufacturing sector have begun to stabilise in recent weeks after a difficult end to 2011."

"Output in January was slightly stronger than in December, and employment levels were unchanged on the month."

The more optimistic data was reflected in the major European stock markets.

Germany's Dax index closed 2.4% higher, while the French Cac 40 was up 2%.

Markets were also helped by better-than-expected figures showing an expansion in Chinese manufacturing activity.

In the UK, where manufacturing activity was the strongest for eight months, the FTSE was up almost 2%.

As well as the factory figures, stock markets were also helped by some very strong rises in bank shares.

'Shallow recession'

Germany's PMI reading rose to 51, the highest level for six months.

In Italy, the manufacturing PMI reading rose to 46.8, the best reading for four months, while in Spain the reading of 45.1 was the highest for five months.

However, in France the reading fell to 48.5, and Greece's level of 41 implied that production there was falling at the fastest pace in the survey's history, Markit said.

Gilles Moec, co-head of European economic research at Deutsche Bank, said: "The rebound in the PMI strengthens a 'shallow recession scenario'. That the periphery also rebounded in January is probably the best message from this batch."

However, the Markit survey also found that new orders declined in all eurozone nations except for Austria.

"The concern is that new orders have yet to return to growth, even in Germany, suggesting that companies will be reluctant to expand capacity and take on more staff until signs of stronger demand have appeared," Markit's Mr Williamson said.

BBC News - Afghanistan: Leon Panetta signals end to US combat role

The US will wind seek to down combat operations in Afghanistan during 2013, more than a year before a deadline for withdrawal, the defence secretary says.

Insurgents infiltrating Afghan security forces can often remain undetected

Speaking while travelling to a Nato summit, Leon Panetta said the US hoped to switch to a role training and supporting Afghan forces.

His comments are the first time a senior US official has given a timetable for transition.

Some 68,000 troops are due to remain in Afghanistan after the end of 2012.

There are currently some 99,000 US troops in the country, with 22,000 scheduled to return home during this year.

Until now, though, there had been now word on how the Pentagon planned to manage the main bulk of the drawdown, committing only to a full withdrawal of troops by the end of 2014.

"Hopefully by mid- to the latter part of 2013 we'll be able to make a transition from a combat role to a training, advice and assist role," Mr Panetta said en route to Brussels, site of the Nato summit.

He stressed that dangers would remain while Afghan forces were trained up to take over security duties in many areas currently wracked by conflict.

"It's still a pretty robust role that we'll be engaged in. It's not going to be a kind of formal combat role that we are now," he said. "That doesn't mean that we're not going to be combat-ready. We will be because we always have to be in order to defend ourselves."

President Barack Obama ordered a "surge" in US troops in Afghanistan in 2009 in an effort to seize and retain Taliban-controlled areas.

The US has fought in Afghanistan since shortly after 9/11 attacks of 2001, seeking to oust the Taliban for their role in harbouring al-Qaeda.

Plans for peace talks between the US and the Taliban are being made.

The group has so far insisted they will only talk to the US and other allies of Kabul, not the Afghan government of Hamid Karzai.

Amid concern in Nato states and a reluctance by some in Europe to commit more troops to the bitter conflict, Nato agreed at a Lisbon summit in November 2010 to hand over security duties to Afghan forces by the end of 2014.

Mr Panetta said the US would maintain an "enduring presence" in Afghanistan after its combat troops had come home, and said the 2014 deadline was a pan-Nato ambition that all member states were aiming to meet.

"We all went in here together and we'll all go out together, but we have to do it on the basis of a strong alliance and a strong commitment that was made in Lisbon," he said.

'Insider attacks'

Hours before Mr Panetta detailed plans to hand over combat responsibility to Afghan forces, the Pentagon revealed evidence that members of the country's developing army and security forces had carried out a growing number of "insider" attacks on US troops.

Attacks had risen sharply in the past two years, the Pentagon told a congressional committee. Of 42 attacks since 2007, 75% took place in the last two years.

Most attackers were acting alone, not carrying out insurgent orders, although some attackers were insurgents disguised as soldiers.

Lawmakers said the screening process for Afghan forces was "tragically weak" and called for more stringent vetting.

"The screening and vetting has been tragically weak in picking up signs of threats after the Afghans joined either the Afghan National Security Force, or a private security contractor,'' Congressman Howard McKeon, chairman of the House Armed Services Committee, said.

Defence officials said some improvements had already been made after an attack in March 2011 killed two US soldiers and wounded four others.

The military has asked commanders on the ground in Afghanistan to carry out random checks on private companies that provide security for US soldiers, as well as cross-checking biometric data against watch lists.

But Deputy Assistant Defense Secretary Gary Motsek said that while the attacks were unacceptable he did not think they could be eliminated altogether.

BBC News - Two Koreas 'at a turning point' says South president

The Korean peninsula is at a "turning point" and there are opportunities for change, South Korean President Lee Myung-bak said in a new year speech.

South Korean President Lee Myung-bak said a window of opportunity to improve ties was open

He said Seoul would "respond strongly" if provoked by North Korea, with whom it remains technically at war.

But he said that the biggest goal was stability, and that aid-for-disarmament talks could resume if Pyongyang halted its nuclear activities.

On Sunday North Korea told citizens to defend leader Kim Jong-un to the death.

Kim Jong-un has succeeded his father, Kim Jong-il, who died on 17 December at the age of 69.

On Friday, the country's powerful National Defence Commission warned the outside world to expect no change from the new leadership.

Tense relations

In a nationally televised address, Lee Myung-bak said that peace was his priority and that a "window of opportunity" had opened for better ties with the North.

"The situation on the Korean peninsula is now entering a new turning point," he said. "But there should be a new opportunity amid changes and uncertainty."

Kim Jong-un took over after the death of his father, Kim Jong-il, two weeks ago

South Korea would, however, "thoroughly maintain national security as long as there is a possibility of provocation by the North", he added.

Kim Jong-il had ruled North Korea since the death of his father, Kim Il-sung, in 1994.

The impoverished and isolated communist country faces ongoing food shortages. Funds are channelled to the military and North Korea has conducted two nuclear tests since 2006.

In the last two years, ties between the two Koreas have been extremely tense.

Mr Lee's decision to link the provision of aid to North Korea to progress on nuclear disarmament has angered the North.

South Korea also blames its northern neighbour for sinking its warship in March 2010, killing 46 sailors. Eight months later, North Korea shelled a Southern border island, killing four people.

Pyongyang denies any role in the first incident and says South Korea provoked the second.

It has castigated the South for failing to send a formal delegation to pay respects to Kim Jong-il.

And in its new year message, the regime told North Koreans to defend their new, young leader.

"The whole party, the entire army and all the people should possess a firm conviction that they will become human bulwarks and human shields in defending Kim Jong-un unto death," the message carried by state news agency KCNA said.

Kim Jong-un, meanwhile, spent New Year's Day visiting a tank division, state media said. His father was regularly reported to have visited factories, military units and agricultural projects on inspection tours around the country.