Air drops bring aid to typhoon-isolated Japanese (AP)

TOKYO – Helicopters ferried supplies Tuesday to thousands of people still cut off by Japan's worst storm in 28 years. Typhoon Talas left at least 46 dead and 54 missing in a nation still struggling to recover from its devastating tsunami just six months ago.

Aid-laden helicopters descended on towns in the hardest-hit areas as police, firefighters and soldiers mobilized to clear roads so they could distribute food, medicine and other assistance to communities fending for themselves since the typhoon made landfall on Saturday.

Dozens of hamlets with thousands of people in central Japan were still cut off, primarily because of flooding, landslides or other damage to access roads, Kyodo News service reported.

Nearly 3,000 people remained in evacuation centers.

As Talas approached Japan, nearly a half million people were advised to evacuate. It then dumped record amounts of rain on central and western Japan and lashed wide swaths of the country with destructive winds before being downgraded to a tropical storm.

In worst-hit Wakayama, rescuers recovered nine more bodies Tuesday afternoon, with 34 others still missing, according to prefectural police. That brought the nationwide death toll to 46. Japan's Fire and Disaster Management Agency said 54 people were missing Tuesday, including those in Wakayama.

The 100 dead or missing is the highest toll since heavy rains in 1983 left 117 people dead or unaccounted for, according to government records.

The path of the typhoon did not take it over the tsunami-devastated northeast coast, where nearly 21,000 people were killed or are missing after the March 11 disaster.

But as the eye of the slow-moving storm hovered offshore in the Sea of Japan on Tuesday, heavy rains began to fall anew on the northern island of Hokkaido, prompting evacuation advisories for hundreds of households as rivers began to swell.

Talas is a word from the Philippines that means "sharpness."

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Associated Press writer Mari Yamaguchi contributed to this report.

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Wall Street drops as economic, European worries weigh (Reuters)

NEW YORK (Reuters) – Stocks sank on Thursday as data fueled worries the economy was weakening and bank shares tumbled on fears the European financial crisis could spread havoc to other parts of the world.

The losses extended a slide in stocks that began in late July, with the S&P 500 now off 15.7 percent from its April 29 highs, as economic worries both here and abroad have caused investors to exit risky assets.

Factory activity in the Mid-Atlantic region as surveyed by the Philadelphia Federal Reserve Bank plummeted in August, falling to the lowest level since March 2009. For details, see

Bank shares contributed to the market's slide. While a Federal Reserve official said the Fed scrutinizes U.S. banks and the American units of European banks equally, a Wall Street Journal report said regulators are questioning the U.S. units of Europe's lenders more closely.

In the broad selloff, sectors associated with growth were also hit hard. Top drags on the Dow included shares of IBM, down 4.8 percent at $163.25 and United Technologies, down 5.3 percent at $68.21. On the Nasdaq, shares of Oracle fell 7.8 percent to $25.34.

"Europe is dealing with an escalating fiscal crisis," said Robert Van Batenburg, head of equity research at Louis Capital in New York.

"In the United States the momentum is slip-sliding. You've got a lot of corporations that also came out with very worrisome comments that by the end of the quarter things really started to slow down."

The Dow Jones industrial average was down 398.55 points, or 3.49 percent, at 11,011.66. The Standard & Poor's 500 Index was down 48.11 points, or 4.03 percent, at 1,145.78. The Nasdaq Composite Index was down 110.18 points, or 4.39 percent, at 2,401.30.

As the Dow fell more than 520 points early in the session, U.S. Treasury debt prices soared and spot gold rallied to a record $1,825.29 an ounce, evidence investors were headed for safer assets.

Traders were on the defensive, paying more for protection as U.S. stocks tumbled on disappointing economic data and renewed bank worries. The CBOE Volatility Index, Wall Street's favorite pulse of investor sentiment, rose 29.4 percent to 40.87.

"This jump in the VIX has caught people off guard and they are now scrambling for protection," said optionMonster analyst Chris McKhann. Although risk perceptions rose Thursday, Wall Street's "fear gauge" is still below the 15-month high set at the close of trading on August 8.

Puts on the SPDR S&P Trust were active, with more than two trading for every call. The fund fell 3.8 percent to $115.01. In SPY options, the soon-to-expire August out-of-the money $110 puts were among the most popular as 77,566 contracts traded. The August $115 SPY strike was the busiest, with 178,500 contracts traded, Trade Alert data showed.

Among banks, Citigroup Inc was off 7.7 percent at $27.54 and Morgan Stanley was down 6.4 percent at $15.92.

Shares of luxury retailer Tiffany & Co dropped 7.4 percent to $59.52.

Economists at Morgan Stanley lowered the outlook for global growth and said the United States and euro zone are "dangerously close to recession."

(Reporting by Caroline Valetkevitch, additional reporting by Doris Frankel; Editing by Kenneth Barry)

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Wall Street drops as euro zone troubles linger (Reuters)

NEW YORK (Reuters) – Stocks dropped more than 1 percent on Tuesday as German growth data and a meeting of French and German leaders failed to ease worries about the euro zone debt crisis.

After a meeting with German Chancellor Angela Merkel, French President Nicolas Sarkozy said the leaders planned a tax on financial transactions and closer joint governance of economic policy to stop the debt crisis. But they did not propose increasing the euro-zone bailout fund or selling euro-zone bonds.

Analysts said investors saw little in the comments that would mean a resolution to the trouble, which has plagued the region for more than a year.

"The market was holding out hope that we would be closer to a euro bond, but it sounds like they're trying to do everything but, as it won't be politically acceptable to Germany," said

Phil Flynn, senior market analyst with PFG Best in Chicago.

"What we're moving toward is more uncertainty."

All three indexes initially pared losses on the comments but quickly reversed course to trade sharply lower. Shares of financials, seen as vulnerable to a European fiscal crisis, added to their decline and were the worst-performing sector in the S&P 500. The S&P financial index was down 2.1 percent.

Worries about the euro-zone troubles and a weakening U.S. economy have pushed U.S. stocks into correction territory after the S&P 500's closing high on April 29.

The Dow Jones industrial average was down 176.26 points, or 1.53 percent, at 11,306.64. The Standard & Poor's 500 Index was down 22.03 points, or 1.83 percent, at 1,182.46. The Nasdaq Composite Index was down 56.46 points, or 2.21 percent, at 2,498.74.

In another blow to the outlook for the region, data showed Germany's gross domestic product expanded just 0.1 percent from April to June versus the previous quarter, missing forecasts and knocking regional growth figures below expectations.

(Reporting by Caroline Valetkevitch, additional reporting by Ryan Vlastelica; Editing by Kenneth Barry)

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Wall Street drops on French bank worry day after rally (Reuters)

NEW YORK (Reuters) – Stocks fell sharply on Wednesday, wiping out most of the previous session's gains, on fears of tumult in the French banking sector, which has significant exposure to shaky European debt.

U.S. financial stocks led the decline on worries that any French bank problems could spread to them. The KBW bank index slid 6 percent. Large financial institutions' shares sank, including Bank of America Corp, down 7.2 percent at $7.05.

French banks' shares tumbled in Paris trading even after a Societe Generale spokeswoman denied rumors of trouble. Societe General, where U.S. traders have focused their attention, fell 14.7 percent and BNP Paribas dropped 9.5 percent.

"You've already had situations in Greece, Spain has been in there, Portugal, and now if you are talking about France, which because it's a bigger economy, it probably generates more concern on a comparison basis," said Gordon Charlop, managing director of Rosenblatt Securities in New York.

"So there are investors who are a little bit more cautious about European financials and that translates into financials here."

Stocks rallied on Tuesday after the Federal Reserve promised to keep interest rates near zero for at least two more years. The S&P 500 index had its best performance in more than two years.

"Investors are kind of pondering Bernanke's message and are probably looking for something more than they got. They might be selling into the meeting that he is having at Jackson Hole -- that could be part of it, too," Charlop said.

The Fed chairman is due to give his yearly speech at the Jackson Hole, Wyoming, meeting at the end of August.

The Dow Jones industrial average dropped 363.17 points, or 3.23 percent, to 10,876.60. The Standard & Poor's 500 Index lost 36.12 points, or 3.08 percent, to 1,136.41. The Nasdaq Composite Index fell 70.01 points, or 2.82 percent, to 2,412.51.

The CBOE Volatility Index shot up 19.1 percent. Earlier, the VIX had climbed slightly more than 20 percent, representing the third session in the last five that the index has jumped at least 20 percent.

Walt Disney Co was among the Dow's worst performers, tumbling 9.6 percent to $31.38 a day after the company's quarterly results failed to reassure investors that the entertainment company could do well in a weak U.S. economy.

Even after Tuesday's snap-back rally, the S&P 500 is down nearly 17 percent since its 2011 closing high set on April 29. Worries about the U.S. economy and high levels of public debt in Europe have sent stocks cascading down sharply over the last two weeks.

(Reporting by Chuck Mikolajczak; Additional reporting by Ashley Lau; Editing by Jan Paschal)

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Murdoch drops bid for British Sky Broadcasting (AP)

LONDON – In a stunning retreat, Rupert Murdoch's News Corp. media empire dropped its bid Wednesday to take over full control of British Sky Broadcasting amid a political and legal firestorm over phone hacking at one of its British newspapers.

Murdoch stepped back from making potentially his biggest, most lucrative acquisition, accepting that he could not win British government acceptance of the takeover since the country's major political parties had united against it.

"It has become clear that it is too difficult to progress in this climate," News Corp. deputy chairman and president Chase Carey said in a brief statement to the London Stock Exchange.

Shares in BSkyB dived 4 percent lower after the announcement, but quickly rebounded to trade around 1 percent down.

Hours earlier, Prime Minister David Cameron announced he was putting a senior judge in charge of an inquiry into phone hacking and alleged police bribery by one of Murdoch's British tabloids, News of the World. The British leader also vowed to investigate an allegation that a U.K. reporter may have sought the phone numbers of 9/11 terror victims in a quest for sensational scoops.

"There is a firestorm, if you like, that is engulfing parts of the media, parts of the police, and indeed our political system's ability to respond," Cameron said in the House of Commons. He said the focus must now be on the victims — police say they will be contacting over 3,700 people in the probe — and making sure the guilty are prosecuted.

It is a bitter irony for Murdoch that News of the World, his first British acquisition in 1969, sabotaged his ambitions to control the nation's most profitable broadcaster. The media baron had shut down the 168-year-old muckraking tabloid Sunday and flew to London in a desperate scramble to keep the BSkyB bid alive.

The scandal cost another media executive his job. News International, the British unit of News Corp., said its legal director, Tom Crone, had left the company. Crone had led an internal inquiry that concluded only two people at the News of the World had been involved in phone hacking of celebrities, politicians, top athletes and murder victims — a stance that collapsed as numerous revelations tumbled out this year.

"This is a victory for people up and down this country who have been appalled by the revelations of the phone hacking scandal and the failure of News International to take responsibility," said Labour Party leader Ed Miliband, who had mobilized all of Britain's major parties to unite behind a motion urging Murdoch to back off the BSkyB bid.

Murdoch had hoped to gain control of the 61 percent of BSkyB shares that his News Corp. doesn't already own.

"People thought it was beyond belief that Mr. Murdoch could continue with his takeover after these revelations," Miliband said.

Outrage has grown and Murdoch's News Corp.'s share price has fallen since a report last week that his News of the World tabloid hacked into the phone of teenage murder victim Milly Dowler in 2002 and may have impeded a police investigation into her disappearance. That was followed by claims of intrusion into private records by Murdoch's other U.K. papers, The Sun and The Sunday Times.

Police have arrested eight people so far in their investigation, including Cameron's former communications director Andy Coulson, a former editor of News of the World. No one has been charged.

Dowler's family met with Cameron at 10 Downing Street on Wednesday. Mark Lewis, a lawyer for the family, said they were pleased that politicians reacted "so quickly in response to the outrage of the public."

Cameron appointed Lord Justice Brian Leveson to lead the inquiry, which will be able to compel witnesses — including government figures — to give evidence under oath.

Leveson will first investigate the culture, practices and ethics of the press, its relationship with police and the failure of the current system of self-regulation. That inquiry is expected to last up to one year. Only then will the inquiry focus shift to what went wrong at the News of the World and other papers, Cameron said.

The judge said some aspects of his work would have to wait until the criminal investigation is complete.

"The press provides an essential check on all aspects of public life. That is why any failure within the media affects all of us," Leveson said. "At the heart of this inquiry, therefore, may be one simple question: who guards the guardians?"

The suggestion that 9/11 victims may have been targeted surfaced Monday in the Mirror, a British competitor of The Sun. It quoted an anonymous source as saying an unidentified American investigator had rejected approaches from unidentified journalists who showed a particular interest in British victims of the terror attacks. It cited no evidence that any phone had actually been hacked.

In Washington, Sen. Jay Rockefeller, a Democrat from West Virginia, urged an investigation into whether Murdoch's News Corp. had violated U.S. law because of the British paper's activities.

If there was any hacking of phones belonging to 9/11 victims or other Americans, "the consequences will be severe," said Rockefeller, chairman of the Senate Committee on Commerce, Science and Transportation.

A report Wednesday in The Wall Street Journal, which is part of News Corp., said Murdoch has met with advisers over recent weeks to discuss possible options, including the sale of his remaining British newspapers — The Sun, The Times and The Sunday Times.

The Journal, citing unidentified people familiar with the situation, said there didn't appear to be any buyers given the poor economics of the newspaper division.

Still, a defiant mood was evident at one News International paper, The Sun tabloid, which slapped the headline "Brown Wrong" across its front page in response to claims by former Prime Minister Gordon Brown that the paper had obtained confidential medical records of his younger son.

Brown accused Murdoch's papers, including The Sun and The Sunday Times, of obtaining his confidential bank accounts, tax records and even health information about his son, Fraser, who suffers from cystic fibrosis, using fraudulent, criminal means. But, the newspaper insisted it learned of the boy's ailment from the father of another child with the same condition, and that it contacted the Browns, who consented to the story.

"We are not aware of Mr. Brown, nor any of his colleagues to whom we spoke, making any complaint about it at the time," The Sun said.

News International responded to Brown's accusations by asking him for any information that would help to investigate them.

Police in the U.K. are pursuing two investigations of News International, one on phone hacking and the other on allegations that the News of the World bribed police officers for information.

Hugh Orde, president of the Association of Chief Police Officers, urged News International to come clean about any payments.

"Let's not play around with legal games here: If they have names, dates, times, places, payments to officers, we would like to see them so that we can lock these officers up and throw away the key," Orde told the British Broadcasting radio.

Police officials have indicated the bribery investigations involve about half a dozen officers.

London Mayor Boris Johnson said Wednesday that he had been informed that his telephone had been hacked, but he decided not to take legal action.

"Why on earth should I go through some court case in which it would have inevitably involved going over all the pathetic so-called revelations that the News of the World had dug up?" Johnson said.

"Why should I, when the police had made it clear to me when they had abundant evidence?" he added.

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French military confirms arms drops to Libyan rebels (AFP)

PARIS (AFP) – The French military confirmed on Wednesday that earlier this month it had air dropped arms shipments to Libyan rebels fighting Moamer Kadhafi's forces in the highlands south of Tripoli.

The NATO military operation in Libya was launched under a UN Security Council resolution authorising world powers to take action to "protect civilians" and this was the first time France has admitted arming rebels.

The news came as a surprise even to France's closest allies, and Britain -- which has joined Paris in spearheading the air campaign against Kadhafi -- distanced itself from the move and said it would not follow suit.

The Le Figaro newspaper and a well-placed non-government source said that France had dropped several tonnes of arms including Milan anti-tank rockets and light armoured vehicles to the revolt.

But Colonel Thierry Burkhard, spokesman for the French general staff, told AFP that the shipments were essentially of "light arms" such as assault rifles to help civilian communities protect themselves from regime troops.

Mahmud Shamman, a spokesman for the rebel National Transitional Council, the revolutionary high command, visiting Paris, told reporters he could not comment on the reported arms shipments.

The British foreign ministry was also cautious, telling reporters: "Our position is clear: there is an arms embargo on Libya.

"But at the same time UN Security Council Resolution 1973 allows all necessary measures to protect civilians and civilian populated areas under threat of attack," it said in a statement.

"We do think the United Nations resolutions allow, in certain limited circumstances, defensive weapons to be provided but the UK is not engaged in that. Other countries will interpret the resolution in their own way."

In New York, a UN diplomat speaking on condition on anonymity, told AFP that while there is an arms embargo a "close reading of the resolution would suggest air drops of arms are not illegal if they are to protect civilians."

Burkhard said France had become aware in early June that rebel-held Berber villages in the Djebel Nafusa highland region south of the capital had come under pressure from the Libyan strongman's loyalist forces.

"We began by dropping humanitarian aid: food, water and medical supplies," he said. "During the operation, the situation for the civilians on the ground worsened. We dropped arms and means of self-defence, mainly ammunition."

Burkhard described the arms as "light infantry weapons of the rifle type" and said the drops were carried out over several days "so that civilians would not be massacred".

According to Le Figaro, which said it had seen a secret intelligence memo and talked to senior officials, the drops were designed to help rebel fighters encircle Tripoli and encourage a popular revolt in the city itself.

"If the rebels can get to the outskirts of Tripoli, the capital will take the chance to rise against Kadhafi," said an official quoted in the report.

"The regime's mercenaries are no longer getting paid and are scarcely getting fed. There's a severe fuel shortage, the population has had enough."

A well-placed non-government source told AFP that 40 tonnes of weapons including "light armoured cars" had been delivered to rebels in western Libya.

According to Le Figaro the French arms shipments were dropped from planes across the Djebel Nafusa region, where Berber tribes have risen to join the revolt against Kadhafi's rule and seized several provincial towns.

The crates hold assault rifles, machine guns and rocket-propelled grenades, it said, and also European-made Milan anti-tank missiles, a powerful addition to the rebel arsenal that can destroy a tank or a bunker.

Qatar has also reportedly been involved in sending weapons to the rebels, and the Figaro report said that opposition fighters control two small desert air strips south of Djebel Nafusa where its planes have landed.

France has taken a leading role in organising international support for the uprising against Kadhafi's four-decade old rule, and French and British jets are spearheading a NATO-led air campaign targeting his forces.

Rebel forces are based in Benghazi in the east of the country, and hold a besieged enclave supplied by sea in the western coastal town of Misrata, but have been unable to mount a convincing advance on the capital.

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