Wall Street Week Ahead: Political wrangling to pinch market's nerves

NEW YORK (Reuters) - Volatility is the name of this game.


With the S&P 500 above 1,400 following five days of gains, traders will be hard pressed not to cash in on the advance at the first sign of trouble during negotiations over tax hikes and spending cuts that resume next week in Washington.


President Barack Obama and U.S. congressional leaders are expected to discuss ways to reduce the budget deficit and avoid the "fiscal cliff" of automatic tax increases and spending cuts in 2013 that could tip the economy into recession.


As politicians make their case, markets could react with wild swings.


The CBOE Volatility Index <.vix>, known as the VIX, Wall Street's favorite barometer of market anxiety that usually moves in an inverse relationship with the S&P 500, is in a long-term decline with its 200-day moving average at its lowest in five years. The VIX could spike if dealings in Washington begin to stall.


"If the fiscal cliff happens, a lot of major assets will be down on a short-term basis because of the fear factor and the chaos factor," said Yu-Dee Chang, chief trader and sole principal of ACE Investments in Virginia.


"So whatever you are in, you're going to lose some money unless you go long the VIX and short the market. The 'upside risk' there is some kind of grand bargain, and then the market goes crazy."


He set the chances of the economy going over the cliff at only about 5 percent.


Many in the market agree there will be some sort of agreement that will fuel a rally, but the road there will be full of political landmines as Democrats and Republicans dig in on positions defended during the recent election.


Liberals want tax increases on the wealthiest Americans while protecting progressive advances in healthcare, while conservatives make a case for deep cuts in programs for the poor and a widening of the tax base to raise revenues without lifting tax rates.


"Both parties will raise the stakes and the pressure on the opposing side, so the market is going to feel much more concerned," said Tim Leach, chief investment officer of U.S. Bank Wealth Management in San Francisco.


"The administration feels really confident at this point, or a little more than the Republican side of Congress may feel," he said. "But it's still a balanced-power Congress so neither side can feel that they can act with impunity."


THE MIDDLE EAST AND EUROPE


Tension in the Middle East and unresolved talks in Europe over aid for Greece could add to the uncertainty and volatility on Wall Street could surge, analysts say.


An Egypt-brokered ceasefire between Israel and Hamas came into force late on Wednesday after a week of conflict, but it was broken with the shooting of a Palestinian man by Israeli soldiers, according to Palestine's foreign minister.


Buoyed by accolades from around the world for mediating the truce, Egyptian President Mohamed Mursi assumed sweeping powers, angering his opponents and prompting violent clashes in central Cairo and other cities on Friday.


"Those kinds of potential large-scale conflicts can certainly overwhelm some of the fundamental data here at home," said U.S. Bank's Leach.


"We are trying to keep in mind the idea that there are a lot of factors that are probably going to contribute to higher volatility."


On a brighter note for markets, Greece's finance minister said the International Monetary Fund has relaxed its debt-cutting target for Greece and a gap of only $13 billion remains to be filled for a vital aid installment to be paid.


Still, a deal has not been struck, and Greece is increasingly frustrated at its lenders, still squabbling over a deal to unlock fresh aid even though Athens has pushed through unpopular austerity cuts.


HOUSING DATA COULD CONFIRM RECOVERY


Next week is heavy on economic data, especially on the housing front. Some of the numbers have been affected by Superstorm Sandy, which hit the U.S. East Coast more than three weeks ago, killing more than 100 people in the United States alone and leaving billions of dollars in damages.


The housing data, though, could continue to confirm a rebound in the sector that is seen as a necessary step to unlock spending and lower the stubbornly high unemployment rate.


Tuesday's S&P/Case-Shiller home price index for September is expected to show the eighth straight month of increases, extending the longest continuous string of gains since prices were boosted by a homebuyer tax credit in 2009 and 2010.


New home sales for October, due on Wednesday, and October pending home sales data, due on Thursday, are also expected to show a stronger housing market.


Other data highlights next week include durable goods orders for October and consumer confidence for November on Tuesday and the Chicago Purchasing Managers Index on Friday.


At Friday's close, the S&P 500 wrapped up its second-best week of the year with a 3.6 percent gain. Encouraging economic data next week could confirm that regardless of the ups and downs that the fiscal cliff could bring, the market's fundamentals are solid.


Jeff Morris, head of U.S. equities at Standard Life Investments in Boston, said that "it's kind of noise here" in terms of whether the market has spent "a few days up or down. It has made some solid gains over the course of the year as the housing recovery has come into view, and that's what's underpinning the market at these levels.


"I would caution against reading too much into the next few days."


(Wall St Week Ahead runs every Friday. Questions or comments on this column can be emailed to: rodrigo.campos(at)thomsonreuters.com)


(Reporting by Rodrigo Campos; Editing by Tim Dobbyn and Jan Paschal)


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Crisis over president's powers exposes Egypt divisions

CAIRO (Reuters) - Youths clashed with police in Cairo on Saturday as protests at new powers assumed by President Mohamed Mursi stretched into a second day, confronting Egypt with a crisis that has exposed the split between newly empowered Islamists and their opponents.


A handful of hardcore activists hurling rocks battled riot police in the streets near Tahrir Square, where several thousand protesters massed on Friday to demonstrate against a decree that has rallied opposition ranks against Mursi.


Following a day of violence in Cairo, Alexandria, Port Said and Suez, the smell of teargas hung over the square, the heart of the uprising that swept Hosni Mubarak from power in February 2011.


More than 300 people were injured on Friday. Offices of the Muslim Brotherhood, which propelled Mursi to power, were attacked in at least three cities.


Egypt's highest judicial authority said the decree marked an "unprecedented attack" on the independence of the judiciary, the state news agency reported.


Leftist, liberal and socialist parties have called for an open-ended sit-in with the aim of "toppling" the decree which has also drawn statements of concern from the United States and the European Union. A few dozen activists manning makeshift barricades kept traffic out of the square on Saturday.


Calling the decree "fascist and despotic", Mursi's critics called for a big protest on Tuesday against a move they say has revealed the autocratic impulses of a man jailed by Mubarak, who outlawed Mursi's Muslim Brotherhood.


"We are facing a historic moment in which we either complete our revolution or we abandon it to become prey for a group that has put its narrow party interests above the national interest," the liberal Dustour Party said in a statement.


Issued late on Thursday, the decree marks an effort by the Mursi administration to consolidate its influence after it successfully sidelined Mubarak-era generals in August.


The decree reflects the Muslim Brotherhood's suspicion towards sections of a judiciary unreformed from Mubarak's days: it guards from judicial review decisions taken by Mursi until a new parliament is elected in a vote expected early next year.


It also shields the assembly writing Egypt's new constitution from a raft of legal challenges that have threatened the Islamist-dominated assembly with dissolution.


The Mursi administration has defended the decree on the grounds that it aims to speed up a protracted transition from Mubarak's rule to a new system of democratic government.


"It aims to sideline Mursi's enemies in the judiciary and ultimately to impose and head off any legal challenges to the constitution," said Elijah Zarwan, a fellow with The European Council on Foreign Relations.


"We are in a situation now where both sides are escalating and its getting harder and harder to see how either side can gracefully climb down," Zarwan said.


"INTIFADA"


A central element of Egypt's transition, the drafting of the constitution has been plagued by divisions between Islamists and their more secular-minded opponents, nearly all of whom have withdrawn from the body writing the document.


Mursi's new powers allowed him to replace the prosecutor general - a Mubarak holdover who the new president had tried to replace in October only to kick up a storm of protest from the judiciary, which said he had exceeded his authorities.


At an emergency meeting called to discuss the decree, the Supreme Judicial Council, Egypt's highest judicial authority, urged "the president of the republic to distance this decree from everything that violates the judicial authority".


Al-Masry Al-Youm, one of Egypt's most widely read dailies, hailed Friday's protest as "The November 23 Intifada", invoking the Arabic word for uprising. "The people support the president's decisions," declared Freedom and Justice, the newspaper run by the Brotherhood's political party.


The ultraorthodox Salafi Islamist groups that have been pushing for tighter application of Islamic law in the new constitution have rallied behind the decree.


The Nour Party, one such group, stated its support for the Mursi decree. Al-Gama'a al-Islamiya, which carried arms against the state in the 1990s, said it would save the revolution from what it described as remnants of the Mubarak regime.


Facing the biggest storm of criticism since he won the presidential election in June, Mursi addressed his supporters outside the presidential palace on Friday. He said opposition did not worry him, but it had to be "real and strong".


Candidates defeated by Mursi in the presidential vote joined the protests against his decision on Friday. Former Arab League Secretary General Amr Moussa was photographed linking arms with leftist Hamdeen Sabahi, liberal Mohamed ElBaradei and others.


Mursi is now confronted with a domestic crisis just as his administration won international praise for mediating an end to the eight-day war between Israel and Palestinians in the Gaza Strip.


"The decisions and declarations announced on November 22 raise concerns for many Egyptians and for the international community," State Department spokeswoman Victoria Nuland said in a statement.


The European Union urged Mursi to respect the democratic process, while the United Nations expressed fears about human rights.


(Additional reporting by Omar Fahmy and Reuters TV; Editing by Alison Williams)


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Jake Owen Welcomes a Daughter




Celebrity Baby Blog





11/22/2012 at 08:30 PM ET



Jake Owen Welcomes Daughter Olive Pearl Courtesy Jake Owen


It’s a Thanksgiving baby!


Jake Owen and his wife Lacey welcomed their first child, daughter Olive Pearl Owen, on Thursday, Nov. 22 in Nashville, Tenn., his rep confirms to PEOPLE.


Pearl, as she will be called after Owen’s late godmother, weighed in at 6 lbs., 3 oz. and is 19½ inches long.


“Lacey and I are so excited to start our own family,” Owen, 31, tells PEOPLE. “We are looking forward to teaching Pearl everything we learned from our parents and also learning from her.”


Sharing a photo of his newborn daughter on Twitter, the musician wrote, “Today is the greatest day of my life. Turkey baby!!! Happy Thanksgiving.”

It’s been a whirlwind year for Owen and his wife, 22. After getting engaged on stage in April, the couple wed on the beach in May and announced the pregnancy in July.


– Sarah Michaud with reporting by Julie Dam


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AP PHOTOS: Simple surgery heals blind Indonesians

PADANG SIDEMPUAN, Indonesia (AP) — They came from the remotest parts of Indonesia, taking crowded overnight ferries and riding for hours in cars or buses — all in the hope that a simple, and free, surgical procedure would restore their eyesight.

Many patients were elderly and needed help to reach two hospitals in Sumatra where mass eye camps were held earlier this month by Nepalese surgeon Dr. Sanduk Ruit. During eight days, more than 1,400 cataracts were removed.

The patients camped out, sleeping side-by-side on military cots, eating donated food while fire trucks supplied water for showers and toilets. Many who had given up hope of seeing again left smiling after their bandages were removed.

"I've been blind for three years, and it's really bad," said Arlita Tobing, 65, whose sight was restored after the surgery. "I worked on someone's farm, but I couldn't work anymore."

Indonesia has one of the highest rates of blindness in the world, making it a target country for Ruit who travels throughout the developing world holding free mass eye camps while training doctors to perform the simple, stitch-free procedure he pioneered. He often visits hard-to-reach remote areas where health care is scarce and patients are poor. He believes that by teaching doctors how to perform his method of cataract removal, the rate of blindness can be reduced worldwide.

Cataracts are the leading cause of blindness globally, affecting about 20 million people who mostly live in poor countries, according to the World Health Organization.

"We get only one life, and that life is very short. I am blessed by God to have this opportunity," said Ruit, who runs the Tilganga Eye Center in Katmandu, Nepal. "The most important of that is training, taking the idea to other people."

During the recent camps, Ruit trained six doctors from Indonesia, Thailand and Singapore.

Here, in images, are scenes from the mobile eye camps:

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Gaza ceasefire holds but mistrust runs deep

GAZA/JERUSALEM (Reuters) - A ceasefire between Israel and Hamas held firm on Thursday with scenes of joy among the ruins in Gaza over what Palestinians hailed as a victory, and both sides saying their fingers were still on the trigger.


In the sudden calm, Palestinians who had been under Israeli bombs for eight days poured into Gaza streets for a celebratory rally, walking past wrecked houses and government buildings.


But as a precaution, schools stayed closed in southern Israel, where nerves were jangled by warning sirens - a false alarm, the army said - after a constant rain of rockets during the most serious Israeli-Palestinian fighting in four years.


Israel had launched its strikes last week with a declared aim of ending rocket attacks on its territory from Gaza, ruled by the Islamist militant group Hamas, which denies Israel's right to exist. Hamas had responded with more rockets.


The truce brokered by Egypt's new Islamist leaders, working with the United States, headed off an Israeli invasion of Gaza.


It was the fruit of intensive diplomacy spurred by U.S. President Barack Obama, who sent his secretary of state to Cairo and backed her up with phone calls to Israeli Prime Minister Benjamin Netanyahu and Egyptian President Mohamed Mursi.


Mursi's role in cajoling his Islamist soulmates in Gaza into the U.S.-backed deal with Israel suggested that Washington can find ways to cooperate with the Muslim Brotherhood leader whom Egyptians elected after toppling former U.S. ally Hosni Mubarak, a bulwark of American policy in the Middle East for 30 years.


Mursi, preoccupied with Egypt's economic crisis, cannot afford to tamper with a 1979 peace treaty with Israel, despite its unpopularity with Egyptians, and needs U.S. financial aid.


MORE DEATHS


Despite the quiet on the battlefield, the death toll from the Gaza conflict crept up on both sides.


The body of Mohammed al-Dalu, 25, was recovered from the rubble of a house where nine of his relatives - four children and five women - were killed by an Israeli bomb this week.


That raised to 163 the number of Palestinians killed, more than half of them civilians, including 37 children, during the Israeli onslaught, according to Gaza medical officials.


Nearly 1,400 rockets struck Israel, killing four civilians and two soldiers, including an officer who died on Thursday of wounds sustained the day before, the Israeli army said.


Israel dropped 1,000 times as much explosive on the Gaza Strip as landed on its soil, Defense Minister Ehud Barak said.


Municipal workers in Gaza began cleaning streets and removing the rubble of bombed buildings. Stores opened and people flocked to markets to buy food.


Jubilant crowds celebrated, with most people waving green Hamas flags but some carrying the yellow emblems of the rival Fatah group, led by Western-backed President Mahmoud Abbas.


That marked a rare show of unity five years after Hamas, which won a Palestinian poll in 2006, forcibly wrested Gaza from Fatah, still dominant in the Israeli-occupied West Bank.


Israel began ferrying tanks northwards, away from the border, on transporters. It plans to discharge gradually tens of thousands of reservists called up for a possible Gaza invasion.


But trust between Israel and Hamas remains in short supply and both said they might well have to fight again.


"The battle with the enemy has not ended yet," Abu Ubaida, spokesman of Hamas's armed wing Izz el-Deen Al-Qassam Brigades, said at an event to mourn its acting military chief Ahmed al-Jaabari, whose killing by Israel on November 14 set off this round.


"HANDS ON TRIGGER"


The exiled leader of Hamas, Khaled Meshaal, said in Cairo his Islamist movement would respect the truce, but warned that if Israel violated it "our hands are on the trigger".


Netanyahu said he had agreed to "exhaust this opportunity for an extended truce", but told Israelis a tougher approach might be required in the future.


Facing a national election in two months, he swiftly came under fire from opposition politicians who had rallied to his side during the fighting but now contend he emerged from the conflict with no real gains for Israel.


"You don't settle with terrorism, you defeat it. And unfortunately, a decisive victory has not been achieved and we did not recharge our deterrence," Shaul Mofaz, leader of the main opposition Kadima party, wrote on his Facebook page.


In a speech, Ismail Haniyeh, Hamas's prime minister in Gaza, urged all Palestinian factions to respect the ceasefire and said his government and security services would monitor compliance.


According to a text of the agreement seen by Reuters, both sides should halt all hostilities, with Israel desisting from incursions and targeting of individuals, while all Palestinian factions should cease rocket fire and cross-border attacks.


The deal also provides for easing Israeli curbs on Gaza's residents, but the two sides disagreed on what this meant.


Israeli sources said Israel would not lift a blockade of the enclave it enforced after Hamas won a Palestinian election in 2006, but Meshaal said the deal covered the opening of all of the territory's border crossings with Israel and Egypt.


Israel let dozens of trucks carry supplies into the Palestinian enclave during the fighting. Residents there have long complained that Israeli restrictions blight their economy.


Barak said Hamas, which declared November 22 a national holiday to mark its "victory", had suffered heavy military blows.


"A large part of the mid-range rockets were destroyed. Hamas managed to hit Israel's built-up areas with around a metric tone of explosives, and Gaza targets got around 1,000 metric tonnes," he said.


He dismissed a ceasefire text published by Hamas, saying: "The right to self-defense trumps any piece of paper."


He appeared to confirm, however, a Hamas claim that the Israelis would no longer enforce a no-go zone on the Gaza side of the frontier that the army says has prevented Hamas raids.


(Additional reporting by Noah Browning in Gaza, Ori Lewis, Crispian Balmer and Dan Williams in Jerusalem; Writing by Jeffrey Heller and Alistair Lyon; Editing by Giles Elgood)


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Samsung wins U.S. court order to access Apple-HTC deal details
















SAN FRANCISCO (Reuters) – A U.S. judge has ordered Apple Inc to disclose to rival Samsung Electronics details of a legal settlement the iPhone maker reached with Taiwan’s HTC Corp, including terms of a 10-year patents licensing agreement.


The Korean electronics giant had earlier filed a motion to compel its U.S. rival — with whom it is waging a bitter legal battle over mobile patents across several countries — to reveal details of the settlement that was reached on November 10 with HTC but which have been kept under wraps.













In August, the iPhone maker won a $ 1.05 billion verdict against Samsung after a U.S. jury found that certain Samsung gadgets violated Apple’s software and design patents.


Now, legal experts say the question of which patents are covered by the Apple-HTC settlement, and licensing details, could be instrumental in Samsung’s efforts to thwart Apple’s subsequent quest for a permanent sales ban on its products.


The Asian company has argued it is “almost certain” that the HTC deal covers some of the same patents involved in its own litigation with Apple.


The court on Wednesday ordered Apple to produce a full copy of the settlement agreement “without delay”, subject to an Attorneys-Eyes-Only designation.


Representatives for the U.S. company could not immediately be reached for comment.


Samsung also requested the California court to add three newly released Apple products — the iPod Touch 5, the iPad 4 and the iPad mini — to the list of devices that it claims to have infringed on some of its patents, according to court documents.


The settlement of Apple and HTC ended their worldwide litigation and brought to a close one of the first major flare-ups in the global smartphone patent wars.


Apple first sued HTC in 2010, setting in motion a legal conflagration that has since circled the globe and engulfed the biggest names in mobile technology, from Samsung to Google Inc’s Motorola Mobility unit.


(Reporting By Edwin Chan; Additional reporting by Miyoung Kim in SEOUL; Editing by Muralikumar Anantharaman)


Tech News Headlines – Yahoo! News



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Mayim Bialik and Michael Stone Divorcing















11/21/2012 at 05:00 PM EST



After "much consideration and soul-searching," Mayim Bialik announced Wednesday that she and husband Michael Stone are divorcing after nine years of marriage.

The Big Bang Theory star, who has sons Miles, 7, and Fred, 4, with Stone, cites "irreconcilable differences" for the split, which she revealed in a statement on her Kveller.com parenting blog.

"Divorce is terribly sad, painful and incomprehensible for children. It is not something we have decided lightly," she writes.

The former star of TV's Blossom, 36, also says that the split is not due to the attachment parenting she discusses in her book Beyond the Sling. "Relationships are complicated no matter what style of parenting you choose," she says.

"The main priority for us now is to make the transition to two loving homes as smooth and painless as possible," Bialik continues. "Our sons deserve parents committed to their growth and health and that’s what we are focusing on. Our privacy has always been important and is even more so now, and we thank you in advance for respecting it as we negotiate this new terrain."

She concludes by saying, "We will be ok."

The couple were married in August 2003 in Pasadena, Calif.

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Study finds mammograms lead to unneeded treatment

Mammograms have done surprisingly little to catch deadly breast cancers before they spread, a big U.S. study finds. At the same time, more than a million women have been treated for cancers that never would have threatened their lives, researchers estimate.

Up to one-third of breast cancers, or 50,000 to 70,000 cases a year, don't need treatment, the study suggests.

It's the most detailed look yet at overtreatment of breast cancer, and it adds fresh evidence that screening is not as helpful as many women believe. Mammograms are still worthwhile, because they do catch some deadly cancers and save lives, doctors stress. And some of them disagree with conclusions the new study reached.

But it spotlights a reality that is tough for many Americans to accept: Some abnormalities that doctors call "cancer" are not a health threat or truly malignant. There is no good way to tell which ones are, so many women wind up getting treatments like surgery and chemotherapy that they don't really need.

Men have heard a similar message about PSA tests to screen for slow-growing prostate cancer, but it's relatively new to the debate over breast cancer screening.

"We're coming to learn that some cancers — many cancers, depending on the organ — weren't destined to cause death," said Dr. Barnett Kramer, a National Cancer Institute screening expert. However, "once a woman is diagnosed, it's hard to say treatment is not necessary."

He had no role in the study, which was led by Dr. H. Gilbert Welch of Dartmouth Medical School and Dr. Archie Bleyer of St. Charles Health System and Oregon Health & Science University. Results are in Thursday's New England Journal of Medicine.

Breast cancer is the leading type of cancer and cause of cancer deaths in women worldwide. Nearly 1.4 million new cases are diagnosed each year. Other countries screen less aggressively than the U.S. does. In Britain, for example, mammograms are usually offered only every three years and a recent review there found similar signs of overtreatment.

The dogma has been that screening finds cancer early, when it's most curable. But screening is only worthwhile if it finds cancers destined to cause death, and if treating them early improves survival versus treating when or if they cause symptoms.

Mammograms also are an imperfect screening tool — they often give false alarms, spurring biopsies and other tests that ultimately show no cancer was present. The new study looks at a different risk: Overdiagnosis, or finding cancer that is present but does not need treatment.

Researchers used federal surveys on mammography and cancer registry statistics from 1976 through 2008 to track how many cancers were found early, while still confined to the breast, versus later, when they had spread to lymph nodes or more widely.

The scientists assumed that the actual amount of disease — how many true cases exist — did not change or grew only a little during those three decades. Yet they found a big difference in the number and stage of cases discovered over time, as mammograms came into wide use.

Mammograms more than doubled the number of early-stage cancers detected — from 112 to 234 cases per 100,000 women. But late-stage cancers dropped just 8 percent, from 102 to 94 cases per 100,000 women.

The imbalance suggests a lot of overdiagnosis from mammograms, which now account for 60 percent of cases that are found, Bleyer said. If screening were working, there should be one less patient diagnosed with late-stage cancer for every additional patient whose cancer was found at an earlier stage, he explained.

"Instead, we're diagnosing a lot of something else — not cancer" in that early stage, Bleyer said. "And the worst cancer is still going on, just like it always was."

Researchers also looked at death rates for breast cancer, which declined 28 percent during that time in women 40 and older — the group targeted for screening. Mortality dropped even more — 41 percent — in women under 40, who presumably were not getting mammograms.

"We are left to conclude, as others have, that the good news in breast cancer — decreasing mortality — must largely be the result of improved treatment, not screening," the authors write.

The study was paid for by the study authors' universities.

"This study is important because what it really highlights is that the biology of the cancer is what we need to understand" in order to know which ones to treat and how, said Dr. Julia A. Smith, director of breast cancer screening at NYU Langone Medical Center in New York. Doctors already are debating whether DCIS, a type of early tumor confined to a milk duct, should even be called cancer, she said.

Another expert, Dr. Linda Vahdat, director of the breast cancer research program at Weill Cornell Medical College in New York, said the study's leaders made many assumptions to reach a conclusion about overdiagnosis that "may or may not be correct."

"I don't think it will change how we view screening mammography," she said.

A government-appointed task force that gives screening advice calls for mammograms every other year starting at age 50 and stopping at 75. The American Cancer Society recommends them every year starting at age 40.

Dr. Len Lichtenfeld, the cancer society's deputy chief medical officer, said the study should not be taken as "a referendum on mammography," and noted that other high-quality studies have affirmed its value. Still, he said overdiagnosis is a problem, and it's not possible to tell an individual woman whether her cancer needs treated.

"Our technology has brought us to the place where we can find a lot of cancer. Our science has to bring us to the point where we can define what treatment people really need," he said.

___

Online:

Study: http://www.nejm.org/doi/full/10.1056/NEJMoa1206809

Screening advice: http://www.uspreventiveservicestaskforce.org/uspstf/uspsbrca.htm

___

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

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Global shares rally on brighter global economic outlook

LONDON (Reuters) - World share markets extended a week-long rally on Thursday as manufacturing surveys in China and the United States boosted confidence over the growth outlook and euro zone data was not as weak as some had feared.


The single currency also touched a two-week high against the dollar, despite data indicating the euro zone's economy is on course for its deepest downturn since early 2009, on renewed optimism of a deal emerging to provide aid payments to Greece.


"The driving factors behind euro/dollar are that the global macroeconomic backdrop seems to be improving and people are pricing out the tail risk on Greece," said Arne Lohmann Rasmussen, head of currency research at Danske Bank.


The euro rose 0.3 percent to $1.2869, its highest level since November 7.


The prospects of a deal to help Athens were boosted when German Chancellor Angela Merkel said on Wednesday after the failure of overnight talks that an agreement was possible when euro zone ministers meet again on Monday.


The likelihood of a deal, combined with better economic data and a growing view that a resolution can be found to the U.S. fiscal crisis lifted the MSCI's world equity index 0.3 percent to 325.75 points, putting it on track for its best week since mid-September.


Europe's FTSE Eurofirst 300 index rose 0.4 percent to a two-week high of 1,101.90 points, with London's FTSE 100, Paris's CAC-40 and Frankfurt's DAX between 0.3 and 0.7 percent higher.


However, trading across all markets was subdued, with U.S. markets closed for the Thanksgiving holiday.


CHINA BOOST


Confidence in the global economic outlook got its biggest lift from the HSBC flash Manufacturing Purchasing Managers Index (PMI) for China, which pointed to expansion after seven consecutive quarters of slowdown.


"There have been a lot of concerns regarding the outlook for global growth. In this context, any improvement in Chinese data is welcome, given that investors are still risk averse," said Robert Parkes, equity strategist at HSBC Securities.


The Chinese data followed an report on Wednesday showing U.S. manufacturing grew in November at its quickest pace in five months, indicating strong economic growth in the fourth quarter.


PMI data on the manufacturing and services sectors in Europe's two biggest economies of Germany and France added to the better tone, revealing that conditions had not worsened in November, though both economies are still contracting.


However, the PMI numbers for the wider euro zone remain extremely weak, pointing to the recession-hit region shrinking by about 0.5 percent in the current quarter - its sharpest contraction since the first quarter of 2009.


BOND DEMAND


Amid the improving appetite for riskier assets, Spain sold 3.88 billion euros ($4.97 billion) of new government bonds on Thursday, though it has already raised enough funds for this year's needs.


The average yield on the three-year bonds in the auction was 3.617 percent, compared with 3.66 percent at a sale earlier in November and a 2012 average of 3.79 percent.


Ten-year Spanish yields were 6 basis points lower on the day at 5.67 percent, having traded above 6 percent at the start of the week.


German 10-year bonds yields, which tend to rise as investors' anxiety over the euro zone outlook ease, were up slightly at 1.439 percent.


COMMODITIES STEADY


Commodity prices gained some support form the improving outlook for world demand from all the PMI data, but prospects of only modest global growth in 2013 kept gains in check.


London copper rose 0.6 percent to $7,740 a metric tonne, and spot gold inched up to $1,730 an ounce.


Brent crude oil dipped under $111 per barrel as a ceasefire between Israel and Gaza's Hamas rulers eased concerns over the impact the unrest may have on supply from the region.


Brent slipped 34 cents to $110.52 a barrel, while U.S. crude was steady at $87.38.


(Reporting by Richard Hubbard; Editing by Will Waterman)


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Gaza ceasefire takes hold but mistrust runs deep

GAZA/JERUSALEM (Reuters) - A ceasefire between Israel and Gaza's Hamas rulers took hold on Thursday after eight days of conflict, although deep mistrust on both sides cast doubt on how long the Egyptian-sponsored deal can last.


Quiet reigned on both sides of the frontier overnight and during the morning after a dozen rockets landed in Israel in the initial hours after the truce came into force late on Wednesday. Israeli police said there had been no casualties or damage.


The deal brokered by Egypt's new Islamist government, working with the United States, prevented - at least for the moment - an Israeli invasion of the Palestinian enclave.


Gaza medical officials said 162 Palestinians, more than half of them civilians, including 37 children and 11 women, were killed. Nearly 1,400 rockets were fired into Israel, killing four civilians and a soldier, the Israeli military said.


Israel's defense minister said Israel dropped 1,000 times as much explosive on the Gaza Strip as had landed in Israel.


Municipal workers in Gaza began cleaning streets and removing the rubble of buildings bombed in Israel's air strikes. Stores opened and people flocked to markets to buy food.


"Israel learnt a lesson it will never forget," said 51-year-old Khalil al-Rass from Beach refugee camp in the city of Gaza.


In rocket-hit towns in southern Israel, schools remained closed as a precaution. Nerves were jangled when warning sirens sounded, in what the military quickly said was a false alarm.


Trust was in short supply. The exile leader of Hamas, Khaled Meshaal, said his Islamist movement would respect the truce if Israel did, but would respond to any violations. "If Israel complies, we are compliant. If it does not comply, our hands are on the trigger," he told a news conference in Cairo.


Israeli Prime Minister Benjamin Netanyahu said he had agreed to "exhaust this opportunity for an extended truce", but told his people a tougher approach might be required in the future.


Facing a national election in two months, he swiftly came under fire from opposition politicians who rallied to his side during the fighting but now contend he emerged from the conflict with no real gains for Israel.


"You don't settle with terrorism, you defeat it. And unfortunately, a decisive victory has not been achieved and we did not recharge our deterrence," Shaul Mofaz, leader of the main opposition Kadima party, wrote on his Facebook page.


BLOCKADE


If the truce holds, it will give the 1.7 million Gazans respite from days of air strikes and halt rocket salvoes from militants that have unnerved a million people in southern Israel and reached Tel Aviv and Jerusalem for the first time.


Both sides quickly began offering differing interpretations of the ceasefire, which highlighted the many actual or potential areas of discord.


According to a text of the agreement seen by Reuters, both sides should halt all hostilities, with Israel desisting from incursions and targeting of individuals, while all Palestinian factions should cease rocket fire and cross-border attacks.


The deal also provides for easing Israeli restrictions on Gaza's residents, who live in what British Prime Minister David Cameron has called an "open prison".


The text said procedures for implementing this would be "dealt with after 24 hours from the start of the ceasefire".


Israeli sources said Israel would not lift a blockade of the enclave it enforced after Hamas, which preaches the Jewish state's destruction, won a Palestinian election in 2006.


However, Meshaal said the deal covered the opening of all of the territory's border crossings. "The document stipulates the opening of the crossings, all the crossings, and not just Rafah," he said. Israel, trying to stop Hamas arming itself, controls all entry to Gaza apart from one crossing with Egypt.


Israel let dozens of trucks carry supplies into the Palestinian enclave during the fighting. Residents there have long complained that Israeli restrictions blight their economy.


HAMAS HOLIDAY


Meshaal thanked Egypt for mediating and praised Iran for providing Gazans with financing and arms. "We have come out of this battle with our heads up high," he said, adding that Israel had been defeated and failed in its "adventure".


Israeli Defense Minister Ehud Barak said Hamas had suffered a heavy military blow, including the death of its top commander, killed in an air strike at the start of the operation on November 14 and the deal merely let Hamas surrender while saving face.


"A large part of the mid-range rockets were destroyed. Hamas managed to hit Israel's built-up areas with around a metric tonne of explosives, and Gaza targets got around 1,000 metric tonnes," Barak told Israel Radio.


"So whoever misses what is happening in Gaza does not understand that this entire agreement is a paper bridge for the defeated so that they can explain to their public how they can even show their faces after what they were hit with for a week."


Hamas declared November 22 a national holiday marking "the victory of the resistance". Its spokesman, Sami Abu Zuhri, said: "Resistance has achieved and has imposed a new formula - if you hit Gaza, we will hit Tel Aviv and beyond Tel Aviv.


Some Israelis staged protests against the deal, notably in the southern town of Kiryat Malachi, where three civilians were killed by a rocket from Gaza last week, army radio said.


Interviewed on Israel's Army Radio, Barak dismissed a ceasefire text published by Hamas as "a piece of paper which I don't remember anyone going around with - there's no signature on it".


He appeared to confirm, however, a key Hamas claim that the Israelis would no longer enforce a no-go zone on the Gaza side of the frontier that the army says has prevented Hamas raids:


"If there are no attacks along the border ... then I tell you that there is no problem with them working the farmland on the perimeter up to the fence," Barak said.


But should the Palestinians exploit such measures to breach the truce, Israel would be "free to act," he said, adding: "The right to self-defense trumps any piece of paper."


CAIRO


Egypt, an important U.S. ally now under Islamist leadership, took centre stage in diplomacy to halt the bloodshed. Cairo has walked a fine line between sympathies for Hamas, an offshoot of the Muslim Brotherhood that produced President Mohamed Mursi and much of his government, and preserving its 1979 peace treaty with Israel and its ties with Washington, its main aid donor.


Announcing the agreement in Cairo, Egyptian Foreign Minister Mohamed Kamel Amr said mediation had "resulted in understandings to cease fire, restore calm and halt the bloodshed".


U.S. Secretary of State Hillary Clinton, standing beside Amr, thanked Mursi for peace efforts that showed "responsibility, leadership" in the region.


Gaza erupted in a Middle East already shaken by last year's Arab revolts that toppled several veteran U.S.-backed leaders, including Egypt's Hosni Mubarak, and by a civil war in Syria, where President Bashar al-Assad is fighting for survival.


Israel, the United States and the European Union all classify Hamas as a terrorist organization over its refusal to recognize Israel, renounce violence and accept existing interim Palestinian-Israeli peace deal.


But its stance is popular with many Palestinians and has kept the movement competitive with the secular Fatah movement of President Mahmoud Abbas, who remains in the occupied West Bank after losing Gaza to Hamas in a civil war five years ago.


The ceasefire was forged despite a bus-bomb explosion that wounded 15 Israelis in Tel Aviv on Wednesday and Israeli air strikes that killed 10 people in Gaza. It was the first serious bombing in Israel's commercial capital since 2006. There was no claim of responsibility, though Hamas praised the attack.


Israeli forces detained 55 suspected militants in the West Bank on Thursday, the military said, citing a need to prevent "the infiltration of terrorists into Israeli communities".


(Additional reporting by Noah Browning in Gaza, Ori Lewis, Allyn Fisher-Ilan, Crispian Balmer and Dan Williams in Jerusalem and Marwa Awad, Yasmine Saleh, Shaimaa Fayed and Tom Perry in Cairo; Writing by Jeffrey Heller, Alistair Lyon and David Stamp; Editing by Alastair Macdonald)


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