Jackson doctor's girlfriend talks calls, shipments (AP)

By LINDA DEUTSCH, AP Special Correspondent Linda Deutsch, Ap Special Correspondent – Tue?Oct?4, 2:59?pm?ET

LOS ANGELES – Prosecutors on Tuesday called the girlfriend of the doctor charged in Michael Jackson's death to detail the physician's busy schedule on the day the singer died and her own interactions with the late King of Pop.

Nicole Alvarez told jurors during the involuntary manslaughter trial of Dr. Conrad Murray that the doctor had first told her that he was Jackson's personal physician for a year before the singer's June 2009 death.

Alvarez beamed as she described meeting Jackson for the first time in Las Vegas, where Murray maintains a medical practice.

"I was speechless," Alvarez said. "I couldn't believe I was meeting Michael Jackson."

Alvarez said she and Murray met Jackson several other times, including after the birth of the couple's young son.

Prosecutors also asked Alvarez, 29, about shipments that Murray had sent to her Santa Monica, Calif. apartment. She admitted receiving the items, but never opening them. Authorities contend the shipments contained the anesthetic propofol, which Murray was giving to Jackson as a sleep aid.

Authorities accuse the Houston-based cardiologist of giving Jackson a lethal dose of propofol and other sedatives in the bedroom of the singer's rented mansion. Murray's attorneys claim Jackson took the fatal dose himself.

In opening statements, a prosecutor said Murray had received more than four gallons of propofol while working with Jackson.

Murray has pleaded not guilty.

The doctor told police after Jackson's death that he was giving the singer propofol as a sleep aid.

Alvarez said after April 2009, Murray would frequently leave her apartment at night and return early the next day. She said she knew Murray was working as Jackson's personal doctor while the singer prepared for a series of comeback concerts.

Phone records displayed in court Monday showed Murray called Alvarez four times the afternoon of Jacksons' death in 2009, including once while he was in the ambulance with Jackson's lifeless body on the way to the hospital.

For two days, prosecutors kept jurors focused on the doctor's phone records from the day Jackson died, attempting to show that Murray was trying to juggle his medical practice, personal life and superstar patient all at the same time.

With Alvarez and another witness, pharmacy owner Tim Lopez, the case shifted its focus to propofol.

Lopez told jurors Murray first contacted him about obtaining a skin lightening cream used to treat vitiligo, a pigment condition Jackson had, but that by early 2009 he was inquiring about propofol.

Earlier Tuesday, a woman who was speaking on the phone with Murray on the day the singer died said the call was interrupted and the physician was no longer paying attention to her.

Sade Anding said she heard voices, coughing and mumbling on Murray's end of the line. She told jurors that it sounded like his cell phone was in his pocket. Anding said Murray called her at 11:51 a.m. on June 25, 2009. About five or six minutes into their call is when she noticed Murray was no longer paying attention.

"There was a pause," Anding said. "That's when I realized he was no longer on the phone."

"I heard mumbling of voices, it sounded like the phone was in his pocket," she said. "I heard coughing, and nobody answered."

With the exception of Alvarez, witnesses who testified about the phone calls Murray made have been relatively brief, but have filled in the government's timeline of Murray's actions in the hours leading up to Jackson's death.

The phone records have revealed the special relationship Murray kept with his patients.

Houston-based Dr. Joanne Prashad told jurors she called Murray the morning of Jackson's death to inquire whether it would be safe to operate on a patient whom Murray had treated. Prashad said she was surprised that Murray remembered the patient and the exact dosage of medicine that he was taking.

Murray's lead defense attorney Ed Chernoff asked Prashad whether Murray's recall was unusual for a doctor.

She said yes. "I was impressed," Prashad said.

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AP Special Correspondent Linda Deutsch contributed to this report.

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Anthony McCartney can be reached at http://twitter.com/mccartneyAP

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U.S. calls online poker site a "global Ponzi scheme" (Reuters)

NEW YORK (Reuters) – U.S. prosecutors accused poker website Full Tilt Poker on Tuesday of running a Ponzi scheme in which the company's owners and board members paid themselves nearly half a billion dollars while defrauding players.

The allegations were filed in a proposed amended civil complaint in Manhattan federal court, five months after a criminal indictment was unsealed on April 15.

That indictment accused three Internet poker companies -- Full Tilt Poker, Absolute Poker and PokerStars -- and 11 people, including Full Tilt director Raymond Bitar, of bank fraud, illegal gambling and money laundering offenses.

"In reality, Full Tilt Poker did not maintain funds sufficient to repay all players, and in addition, the company used player funds to pay board members and other owners more than $440 million since April 2007," the office of Manhattan U.S. Attorney Preet Bharara said in a statement.

Bharara said: "Full Tilt was not a legitimate poker company, but a global Ponzi scheme." A Ponzi scheme is usually one in which early investors are paid with the money of new clients, but collapses when funds run out.

The U.S. Attorney's previous civil complaint did not contain allegations of the company defrauding players or owners taking payments improperly.

Representatives of Full Tilt Poker could not immediately be reached to comment on the amended complaint, which has yet to be approved by a U.S. District Court judge. This type of filing is usually approved as a formality.

The prosecutors said Full Tilt Poker's board of directors, including Bitar, Howard Lederer, Christopher Ferguson and Rafael Furst, defrauded players by misrepresenting that their funds in accounts were safe, secure and available for withdrawal.

The case is USA v Pokerstars, et al, U.S. District Court for the Southern District of New York, No. 11-02564.

(Reporting by Grant McCool, editing by Gerald E. McCormick)

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Major Yahoo shareholder calls for new board (Reuters)

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Spain's embattled premier calls early elections (AP)

By ALAN CLENDENNING and HAROLD HECKLE, Associated Press Alan Clendenning And Harold Heckle, Associated Press – 2?hrs?57?mins?ago

MADRID – Spanish Prime Minister Jose Luis Rodriguez Zapatero on Friday announced early general elections in November, scheduling the race four months earlier than anticipated to give his Socialist Party a better chance to stay in power amid growing outrage over the nation's economic woes.

Zapatero set the election date for Nov. 20 even though he was not required to call elections until March and had resisted repeated calls by the conservative opposition for early polling.

"I want a new government to take control of the economy from January 1st next year," said Zapatero, who announced earlier this year he would not seek a third term.

"It is convenient to hold elections this fall so a new government can take charge of the economy in 2012, fresh from the balloting," he said.

The early elections are expected to help the Socialist Party candidate, Alfredo Perez Rubalcaba, Zapatero's former Interior Minister. While the Socialists have trailed Popular Party candidate Mariano Rajoy, a poll released Wednesday suggested they are closing the gap.

The miserable state of the economy is the single largest concern in Spain — hours before Zapatero's announcement, ratings agency Moody's warned it could soon downgrade the country's credit rating.

Investors are asking for higher rates to lend money to Spain, raising fears that it could be next in Europe to require a rescue package.

And a nationwide malaise has set in, with highly educated young Spaniards dumbing down their resumes because they are overqualified for what jobs are available — and increasingly looking to move abroad as unwilling expatriates.

The country's biggest international companies, including telecommunications firm Telefonica SA and Banco Santander SA, are increasingly relying on branches in booming Latin America while their Spain businesses dwindle.

"The only solution is to leave Spain, but that is a shame," said 25-year-old Monica Lopez, a college journalism graduate forced to work in a low level administrative post at a debt collector's office before she was laid off. "I am completely fed up.

The discontent is due not only to unemployment — at a eurozone-record of 20.9 percent — but also the austerity cuts enforced by Zapatero in the hope of reassuring markets that Spain can avoid needing a rescue package like neighboring Portugal.

The government lifted the retirement age to 67, hiked taxes, cut wages for public sector workers like teachers and police and forced mergers of troubled banks holding billions in unpaid mortgages.

Large anti-austerity protests have mushroomed around the country in recent months, mainly from young demonstrators ages 16-29 who face a stunning 35 percent joblessness rate.

There is not doubt the Socialists are under pressure. They hold a minority in Parliament, have just barely managed to rule through alliances with a handful of small parties, and were trounced in nationwide regional and municipal elections in May.

Rajoy claimed the announcement as a victory for himself, insisting Spaniards have had enough of the economic policies of Zapatero and his administration.

"Early elections are what the majority of the electorate wanted, so this is good news," Rajoy said.

Rajoy isn't expected to map out his campaign platform on the economy until September, but has said he favors labor reforms beyond what Zapatero has pushed through to try to help small and medium sized businesses start growing again. He said he has no intention of making further cuts to Spain's social welfare system and would govern from the center, but offered no details.

New polls showed that early elections are "the least bad" moment for Zapatero's party to try to retain control, said Ramon Cotarelo, a political science professor at Spain's Open University.

Adding to Spain's economic woes, Moody's warned Friday it may downgrade Spain's credit rating because of the country's weak economic growth prospects and high debt.

The move was a further sign that last week's bailout of Greece has not ended fears of debt crisis contagion elsewhere in Europe. Spain has the eurozone's fourth largest economy, and many economists say Europe can't afford to bail out the country.

Moody's said funding pressures on Spain are likely to increase following last week's bailout package for Greece, which has set the "precedent" of asking the private sector to take some losses on their investments in government bonds. Banks are being asked to rollover and swap their Greek debt holdings in an effort to relieve the burden on the country.

Moody's said Greece's second bailout package "has signaled a clear shift in risk for bondholders of countries with high debt burdens or large budget deficits."

Spain is struggling with the aftermath of a collapsed real-estate boom, and experts are predicting years of sluggish growth ahead. Though Spain's debt burden is not as high as Greece's, the country has a fairly sizable budget deficit, which requires constant funding in the bond markets.

The cost of borrowing for that funding has increased sharply in recent weeks, and continued to rise after last week's Greek deal, which was also aimed at easing pressure on the larger economies of Spain and Italy.

___

Iain Sullivan contributed from Madrid, and Pan Pylas contributed from London.

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Fitch calls default, Greece pledges no let-up on debt (Reuters)

ATHENS/LONDON (Reuters) – Fitch ratings agency declared Greece would be in temporary default as the result of a second bailout, which Athens said had bought it breathing space.

But the agency pledged to give Greece a higher, "low speculative grade" after its bonds had been exchanged and said Athens now had some hope of tackling its debt mountain, which most economists still expect to force a deeper restructuring in the future.

An emergency summit of leaders of the 17-nation currency area agreed a second rescue package on Thursday with an extra 109 billion euros ($157 billion) of government money, plus a contribution by private sector bondholders estimated to total as much as 50 billion euros by mid-2014.

Under the bailout of Greece, which supplements a 110 billion euro rescue plan by the European Union and the International Monetary Fund in May last year, banks and insurers will voluntarily swap their Greek bonds for longer maturities at lower rates.

"Fitch considers the nature of private sector involvement... to constitute a restricted default event," said David Riley, Head of Sovereign Ratings at Fitch.

"However, the reduction in interest rates and extension of maturities potentially offers Greece a window of opportunity to regain solvency, despite the formidable challenges that it faces," he said.

The summit agreed the region's rescue fund, the European Financial Stability Facility, will be allowed to buy bonds in the secondary market if the European Central Bank deems that necessary to fight the crisis.

It can also for the first time give states precautionary credit lines before they are shut out of credit markets, and lend governments money to recapitalize banks, both moves which Germany blocked earlier this year.

German central bank chief Jens Weidmann was openly critical of the package, saying it shifted risks onto taxpayers in countries with stronger finances and weakened incentives for governments to keep their finances under control.

"This weakens the foundation for a currency union based on fiscal self-responsibility," said Weidmann, a European Central Bank policymaker, although he conceded the deal could help ease financial market tensions.

As part of the package, the euro zone leaders also made detailed provisions for limiting the damage of a temporary default -- the first in western Europe for more than 40 years.

"There is a great breath of relief for the Greek economy and this will gradually pass on to the real economy," Greek Finance Minister Evangelos Venizelos told reporters. "But by no means does this mean we can relax our efforts."

Riley told Reuters Greece may languish in default for only a few days and would likely get re-rated at single B or CCC.

Among other steps, the leaders agreed to ease terms on bailout loans to Greece, Ireland and Portugal; maturities will be extended to 15 years from 7.5 and interest cut to around 3.5 percent from 4.5-5.8 percent now.

Doubts remain about whether the plan went far enough to assure not only Greece's debt sustainability but that of Ireland, Portugal and other heavily indebted nations.

The package yielded "more than expected but not enough to make us sleep comfortably," Barclays economists said. They were disappointed that European leaders did not agree to expand a euro zone rescue fund.

The wider EFSF role is designed to prevent bigger euro zone states such as Spain and Italy from being shut out of markets because of fears of a weaker country defaulting.

Funds are sufficient so far but the burden could rise substantially. A precautionary credit line for a large country like Italy might total more than 500 billion euros over several years, overwhelming the EFSF's current 440 billion euros.

German Chancellor Angela Merkel said all euro zone debtors had to act decisively to repair their finances.

"Italy's austerity program was absolutely good. But it will be a process and demands further steps in the future," she told a news conference.

DEBT MOUNTAIN

French President Nicolas Sarkozy said the measures would reduce Greece's debt by 24 percentage points of gross domestic product from about 150 percent today.

That still leaves a colossal debt for an economy deep in recession with no recourse to a competitive devaluation.

What is more, the figures are based on what analysts say are optimistic projections for growth and returns from a sweeping privatization program.

"Our estimates suggest that Greek debt/GDP ratios will fall around 25 percentage points over 5 years as a result of these measures but will still be a whopping 120 percent in 2016 even assuming that the full 50 billion euros of privatization measures are implemented," analysts at JP Morgan said.

"We therefore believe that (bond) spreads will widen again as short covering dissipates and reality sinks in."

Greek, Irish and Portuguese bonds jumped before relinquishing their gains and traders said expectations of a larger restructuring down the road were undimmed.

The European leaders' promise of a "Marshall Plan" of European public investment to help revive the Greek economy may help, though details were thin.

Ratings agencies Standard & Poor's and Moody's are likely to follow Fitch's lead since banks and insurers are set to write down the value of Greek bonds by 21 percent, with more losses maybe to follow.

"We have long thought that the most likely outcome for Greek bondholders would be that they would take a small haircut first followed by a larger one at a later date. To give Greece a fighting chance they probably need a write down close to 65 percent," said Gary Jenkins, head of fixed income research at Evolution.

Shares in Europe's banks rose as it became apparent that the major players had limited their losses on Greek bonds to just over 5 billion euros.

The summit accord was based on a common position crafted by Merkel and Sarkozy in late night talks in Berlin on Wednesday with ECB President Jean-Claude Trichet.

The ECB relented and signaled it was willing to let Greece default temporarily as long as it was strictly a one-off.

But Fitch said it would expect similar private creditor involvement in any future help for Ireland and Portugal if they had not stabilized their finances by 2013.

Many economists believe the only way out of the euro zone's debt crisis in the long run may be closer integration of national fiscal policies -- for example, a joint euro zone guarantee for countries' bonds, or issuance of a joint euro zone bond to finance all countries. Germany has opposed this.

Sarkozy, at least, is looking to more sweeping reforms.

He said France and Germany would make proposals by the end of August on how to improve the governance of the bloc, to "clarify our vision of the future of the euro zone."

Merkel said she would not allow a union of automatic transfers from richer to poorer states. "This shall not happen according to my conviction," she told a news conference.

(Writing by Mike Peacock; editing by Janet McBride/Ruth Pitchford, Ron Askew)

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Obama calls Democratic leaders to White House (AP)

WASHINGTON – President Barack Obama summoned top Democratic lawmakers back to the White House Wednesday to resume negotiations on averting a potentially crippling government default, as attention focused on a new bipartisan budget plan emerging in the Senate.

The White House also indicated Obama would be willing to sign a short-term debt limit increase — something he's opposed — if it's merely a stop-gap measure to allow time for a broader plan to get into place, something that likely couldn't be finished by the Aug. 2 deadline to increase the government's borrowing limit.

Obama's meeting with House and Senate Democratic leaders, planned for mid-afternoon Wednesday, marked a partial resumption of talks that ended last week after five days straight of Obama huddling with lawmakers from both parties, with little progress to show for it. But the announcement Tuesday of a possible deal by the Senate "Gang of Six" was seized on by Obama as a possible breakthrough. Now the job ahead for the president, if he is to build momentum behind the plan, includes selling members of his own party on the cuts to entitlement programs that it embraces.

"We are in the 11th hour," said White House press secretary Jay Carney, repeating what Obama had said Wednesday. "We need to meet, talk, consult and narrow down in fairly short order what train we're riding into the station."

Carney also indicated that the president would be willing to support a short-term extension as a stop-gap measure. Carney said Obama would not support a short-term extension "absent an agreement on a larger deal."

The plan by the Gang of Six is far too complicated and contentious to advance before the Aug. 2 deadline to avoid a default that Treasury Secretary Timothy Geithner and other experts warn would roil the markets, drive up interest rates and threaten to take the country back into a recession. But the plan's authors clearly hope it could serve as a template for a "grand bargain" later in the year that could erase perhaps $4 trillion from the deficit over the coming decade.

It includes tax hikes on some that are opposed by Republicans and cuts to Medicare and other entitlements that many Democrats are against.

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Syrian opposition calls for civil disobedience (Reuters)

ISTANBUL (Reuters) – Syrians should wage a campaign of civil disobedience to try to force President Bashar al-Assad from power, an exiled dissident said on Saturday at a meeting in Turkey aimed at forging a united opposition.

The opposition, divided between Islamists and liberals, is holding a "National Salvation Congress" to try to unite behind the goal of ending 41 years of Assad family rule, but is struggling to agree on whether to form a shadow government.

"I'm for anything that unifies the Syrian people and helps our people inside, and unifies our ranks in confronting this illegitimate repressive regime that has usurped power and human rights," opposition figure Wael al Hafez told the meeting in Istanbul, echoing comments made by others.

"We want to raise the intensity of the peaceful confrontation by civil disobedience and to choke the regime economically and paralyze the state with the least damage."

The West has criticized Assad's crackdown on four months of protests demanding political freedoms. On Friday, his troops killed at least 32 civilians, including 23 in the capital Damascus.

Secret police killed one protester and wounded five on Saturday when they opened fire at pro-democracy demonstrators in the eastern border town of Albu Kamal near Iraq's Sunni heartland.

U.S. Secretary of State Hillary Clinton, visiting Turkey, said Friday's protests in Syria had been the largest yet, and Assad's repression was "troubling."

"The brutality has to stop," she said in a televised interview with a group of young Turkish people at an Istanbul coffee shop on Saturday.

LINGERING HOPE OF REFORM, RECONCILIATION

Later at a joint news conference with Turkey's Foreign Minister Ahmet Davutoglu, Clinton said: "Now Syria's future is up to the Syrian people, but of course the efforts by the opposition to come together to organize and to articulate an agenda are an important part of political reform."

She expressed hope that the people and Assad's government could be reconciled to work together.

"It's what the Syrian people are doing, trying to form an opposition that can provide a pathway hopefully in peaceful cooperation with government to a better future."

Davutoglu repeated warnings to Assad's government to implement reform or face being swept away by democratic forces.

"A government that does not consider the demands of its society won't survive," said Davutoglu, who had earlier urged Assad to undertake "shock therapy" reforms.

"Assad said he was going to have multi -party groups in parliament ... I hope Syria has opposition parties and that Syria has opposition parties that raise their voice," he said.

The opposition said security forces had targeted a wedding hall in Damascus where it had planned to hold a simultaneous conference, connected by video link to the one in Istanbul.

"Several martyrs are fallen and others have been arrested," said Haitham al-Maleh, a former judge who was among political prisoners released by Assad in March when the uprising began.

"The regime cannot deny us our freedoms. This state is for the Syrians, not Assad family's property," Maleh told the meeting in Istanbul of several hundred people.

Most of his audience have lived in exile for years, if not decades, and many have paid a heavy price for their dissent in previous crackdowns by the ruling Baath Party. Unlike other meetings in recent months in Turkey, some members of the opposition inside Syria managed to attend.

Assad's promises of reform have failed to quell the protests. Rights groups say some 1,400 civilians have been killed in the crackdown.

"My feeling is that the situation has reached a point of no return and the regime has also reached a point it cannot retreat after such a level of bloodshed," said Hassan Najar, an exiled Syrian originally from Aleppo, now based in Germany.

"After 41 years, the question is how can you bring together a fragmented opposition? We have had only four months and what has been achieved is a miracle."

The dissidents at the meeting appeared to fall into two camps -- Islamist and secular liberals. Splits seemed to open among them over whether to form a government-in-waiting or wait to see how the uprising unfolds, and they could opt form a united body without presuming a leadership role.

"People are demanding that the opposition speed up unifying its efforts so that people deal with it as a credible alternative," Ali Sadreddin Bayanouni, the former head of Syria's Muslim Brotherhood told Reuters.

(Writing by Simon Cameron-Moore; editing by Elizabeth Piper)

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Exclusive: EU calls emergency meeting as crisis stalks Italy (Reuters)

BRUSSELS (Reuters) – European Council President Herman Van Rompuy has called an emergency meeting of top officials dealing with the euro zone debt crisis for Monday morning, reflecting concern that the crisis could spread to Italy, the region's third largest economy.

European Central Bank President Jean-Claude Trichet will attend the meeting along with Jean-Claude Juncker, chairman of the region's finance ministers, European Commission President Jose Manuel Barroso and Olli Rehn, the economic and monetary affairs commissioner, three official sources told Reuters.

Van Rompuy's spokesman Dirk De Backer said: "It's a coordination, not a crisis meeting." He added that Italy would not be on the agenda and declined to say what would be discussed.

However, two official sources told Reuters that the situation in Italy would be discussed. The talks were organized after a sharp sell-off in Italian assets on Friday, which has increased fears that Italy, with the highest sovereign debt ratio relative to its economy in the euro zone after Greece, could be next to suffer in the crisis. A second international bailout of Greece will also be discussed, the sources said.

The spread of the Italian 10-year government bond yield over benchmark German Bunds hit euro lifetime highs around 2.45 percentage points on Friday, raising the Italian yield to 5.28 percent, close to the 5.5-5.7 percent area which some bankers think could start putting heavy pressure on Italy's finances.

Shares in Italy's biggest bank, Unicredit Spa, fell 7.9 percent on Friday, partly because of worries about the results of stress tests of the health of European banks that will be released on July 15. The leading Italian stock index sank 3.5 percent.

The market pressure is due partly to Italy's high sovereign debt and sluggish economy, but also to concern that Prime Minister Silvio Berlusconi may be trying to undermine and even push out Finance Minister Giulio Tremonti, who has promoted deep spending cuts to control the budget deficit.

"We can't go on for many more days like Friday," a senior ECB official said. "We're very worried about Italy."

Monday's emergency meeting will precede a previously scheduled gathering of the euro zone's 17 finance ministers to discuss how to secure a contribution of private sector investors to the second bailout of Greece, as well as the results of the stress tests of 91 European banks.

GREECE

Greece is already receiving 110 billion euros ($157 billion) of international loans under a rescue scheme launched in May last year but this has failed to change market expectations that it will eventually default on its debt.

Senior euro zone officials worry that progress toward a second Greek bailout, which would also total around 110 billion euros, is not being made quickly enough and that the delay is poisoning investors' confidence in weak economies around the region.

"We need to move on this in the next couple of weeks. It's not a case of waiting until late August or early September as Germany is saying. That's too late and markets will make us pay for it," a top euro zone official told Reuters on Saturday.

German officials insist they too want to put together the second Greek bailout as quickly as possible, but the private sector's contribution is proving to be a major sticking point.

Germany, the Netherlands, Austria and Finland are determined that banks, insurers and other private holders of Greek government bonds should bear some of the costs of helping Athens. But more than two weeks of negotiations with bankers represented by the Institute of International Finance (IIF), a lobby group, have made next to no progress on agreeing a formula acceptable to all sides.

Initially talks focused on a complex French plan for private creditors to roll over up to 30 billion euros of Greek debt, buying new bonds as their existing ones matured. Around half of proceeds from Greek bonds maturing before the end of 2014 would be rolled over into very long-term debt while 20 percent would be put into a "guarantee fund" of AAA-rated securities.

But as that plan has floundered, Berlin has revived a proposal to swap Greek bonds for longer-dated debt that would extend maturities by seven years. Proposals to buy back Greek bonds and retire them have also been floated.

In a buy-back, the euro zone's bailout fund, the European Financial Stability Facility, might buy Greek bonds from the market, or the EFSF might lend Greece money to buy bonds. However, these schemes would require further changes to the EFSF's rules and would therefore have to go through national parliaments, an official source said.

SQUARE ONE

A senior euro zone official told Reuters on Friday that rather than progress being made in the talks with the IIF, as IIF managing director Charles Dallara has said, all sides were close to being "back to square one."

Dallara will attend the meeting of euro zone finance ministers in Brussels on Monday.

Since the euro zone's debt crisis erupted last year, the region's rich governments have aimed to limit it to Greece, Ireland and Portugal, which have signed up to bailouts totaling 273 billion euros -- a sum that is small compared to the financial resources of the zone as a whole.

Spain, commonly seen as the next potential domino in the crisis, has managed to retain its access to market funding through fiscal reforms. But because of the large sizes of the Spain and Italy, pressure on the euro zone would increase dramatically if those countries eventually needed financial assistance.

(Additional reporting by Francesca Landini in Milan and Gernot Heller in Berlin; Editing by Andrew Torchia)

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Obama calls meeting with leaders 'constructive' (AP)

By ANDREW TAYLOR and JIM KUHNHENN, Associated Press Andrew Taylor And Jim Kuhnhenn, Associated Press – 25?mins?ago

WASHINGTON – President Barack Obama described a debt-crisis session Thursday with congressional leaders as "very constructive" but said the parties were still far apart on deficit reduction proposals. He said he would reconvene the negotiators on Sunday.

Thursday's meeting came amid signals that the White House was willing to reduce costs for major benefit programs including Social Security and Medicare, while Republicans indicated they might consider new steps to raise government revenue.

"People were frank," Obama said, just moments after adjourning the one-and-a-half hour meeting with the eight lawmakers who make up the bipartisan leadership of Congress.

Obama acknowledged that the ultimate agreement will not satisfy partisans on both sides, but he said the deal would require both Republican and Democratic votes to pass Congress.

"Everyone acknowledged that pain will be involved politically on all sides," he said.

Obama met with the leaders of both parties around a table in the White House Cabinet Room as they struggled to reach a deal on raising the government's debt limit with less than four weeks remaining before a possible first-ever default on U.S. financial obligations. The Obama administration says the government needs to raise the current $14.3 trillion debt limit by Aug. 2.

Returning to the Capitol after the meeting, House Speaker said: "We had a conversation. It was productive."

While discussions on trimming the costs of entitlement programs had centered on Medicare, the health care program for older Americans, the White House is revisiting a proposal raised earlier in the negotiations to change the inflation measurement used to calculate Social Security cost-of-living adjustments, thus reducing annual increases, officials said Thursday.

The White House has also said the president is aiming for deficit reduction closer to $4 trillion over 10 years — an ambitious number that would nearly double the roughly $2 trillion that had been at the center of negotiations.

Democratic and Republican officials familiar with the discussions said Thursday that Social Security was in the mix for potential cost savings. Reintroducing the retirement program to the talks is likely to cause anxiety among congressional Democrats who have insisted that Social Security does not contribute to the nation's deficit problems. White House spokesman Jay Carney said the same after Obama spoke.

The officials spoke on the condition of anonymity because of the sensitivity of the talks. They stressed that no aspect of the deal had been accepted by either side.

Obama ignored a question about Social Security during a photo session at the beginning of the meeting. Carney also declined to discuss options before the negotiators.

One official said that an option under discussion would allow Republicans to make a commitment to overhaul and simplify the tax system, an effort that would lower individual and corporate tax rates while closing loopholes, ending some deductions and limiting other tax subsidies. Those changes could generate tax revenue and were a central element of a deficit reduction plan proposed by a bipartisan commission early this year.

Some Republicans argue that a simplified tax system would increase economic activity and that in itself would result in increased tax revenue.

Amid media reports Thursday of Social Security's inclusion in the debt-cutting talks, Obama spokesman Carney pushed back.

"There is no news here — the president has always said that while Social Security is not a major driver of the deficit, we do need to strengthen the program," Carney said, providing that any such effort "doesn't slash benefits." His statement did not directly address the possibility of reducing annual Social Security increases by changing the inflation adjustments.

Later, while briefing reporters, Carney added: "We have not put restrictions on what is brought into the room or put on the table."

Two Democratic officials allied with Obama said the president believes it would be easier to win bipartisan support in the House and Senate for a deal that embraces larger deficit cuts closer to the $4 trillion over 12 years that Obama proposed in April.

The officials, speaking on the condition of anonymity to discuss the private negotiations more freely, said the precise number was still in flux, but they said Obama would be making the case for more rather than less deficit reduction in his discussions with congressional leaders Thursday. The negotiations were the first official sit-down since last month, when House Majority Leader Eric Cantor, R-Va., left talks that had been led by Vice President Joe Biden, citing an insistence by Democrats on raising taxes.

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Casey Anthony weeps as prosecutor calls her a liar (AP)

ORLANDO, Fla. – Casey Anthony briefly broke down crying Sunday as prosecutors told jurors during closing arguments that she murdered her 2-year-old daughter Caylee because the child prevented her from having a relationship with a club promoter.

Prosecutor Jeff Ashton said Anthony wanted a relationship with her boyfriend, to go out with her friends and to live the carefree life she had lived before Caylee's birth.

"Something needed to be sacrificed, that something was either the life she wanted or the life thrust upon her. She chose to sacrifice her child," Ashton said during his 90-minute argument.

Prosecutors contend Caylee was suffocated with duct tape by a mother who then crafted elaborate lies to mislead everyone from investigators to her own parents. Defense attorneys countered that the toddler accidentally drowned in the family swimming pool, and that her seemingly carefree mother in fact was hiding emotional distress caused by alleged sexual abuse from her father. Her father has denied that claim.

Judge Belvin Perry ruled Sunday morning that there was no evidence of such a claim and that the defense could not allude to it in its closing argument. But Perry did say the defense could again present the drowning theory because there "is a reasonable inference that can be drawn" to suggest it.

Defense attorney Jose Baez began his closing argument by telling the jurors that they have more questions than answers, including the biggest: How did Caylee die? Neither prosecutors nor the defense have offered firm proof of how Caylee died.

"It can never be proven," he said. That by itself should give them reasonable doubt that Anthony killed her daughter, he said.

He said the prosecutors' case is so weak they tried to portray Anthony as "a lying, no-good slut."

"Then you'll start to look at this evidence in a different light, you'll start to, wait a minute, maybe I'm seeing something that's not there and start to actually discriminate against her rather than give her the standard that is afforded to each and every citizen in our country," Baez said, noting that the state must prove its case beyond a reasonable doubt.

Earlier during Ashton's argument, Anthony appeared mostly stone-faced for about the first 45 minutes, but then she closed her eyes and rested her chin on her hand. She began to cry when Ashton said that the story that Caylee drowned was also false.

Ashton said Caylee's death wasn't an accident because three pieces of duct tape were placed on her face — one on the mouth, one on the nose and one over those to be "thorough."

The jury is expected to begin deliberating after the defense finishes its closing argument. Perry said those deliberations will continue Monday on the July Fourth holiday if necessary.

The case has played out on national TV since Caylee's disappearance in the summer of 2008 and continued through her mother's trial, with spectators traveling from all over the U.S. to jockey for coveted seats in the courtroom gallery.

Ashton began his closing argument by showing a video of Anthony playing with Caylee, causing Anthony to apparently choke back tears. But she quickly regained her composure.

He then told the jury that Anthony worried Caylee was getting to the age where she would have told Anthony's parents that the woman was spending her days and nights with her boyfriend — not going to work and leaving Caylee with a nanny.

"Casey is very bright," Ashton said. "Her lies are very detailed. ... But when Casey wants to do what Casey wants to do, she finds a way."

He then described the lies Anthony told her parents, George and Cindy Anthony, about why she couldn't come home and why she couldn't produce Caylee after the toddler was last seen June 16, 2008. That she was with a nanny named Zanny, a woman who doesn't exist. That Anthony and her daughter were spending time in Jacksonville with a rich boyfriend who doesn't exist. That Zanny had been hospitalized after an out-of-town traffic accident and that they were spending time with her.

It only fell apart, Ashton said, a month later when a junk yard told George and Cindy Anthony their daughter's car had been towed. When they picked it up, they discovered a foul odor — George Anthony, a former police officer, and the tow yard operator said it smelled like human decomposition.

Cindy Anthony then tracked down her daughter. When she couldn't produce Caylee, her parents called police. Casey Anthony then told investigators she worked at Universal Studios theme park as an event planner. She went so far as to take them there, talk her way past security, take them to an office building and only give up the lie as she was walking down the hall.

Ashton then attacked the defense contention that Caylee drowned and that George Anthony helped Casey Anthony cover it up. No one faced with an accidental drowning would do that instead of calling 911, Ashton said.

"It is a trip down a rabbit hole into a bizarre world where men who love their granddaughters find them drowned and do nothing," Ashton said. "Where men who love their granddaughters take an accident, a completely innocent act, and make it look like a murder for no reason. A world where a man who buries his pets will take the granddaughter who was the love of his life and throw her in a swamp."

Casey Anthony has pleaded not guilty to first-degree murder. She could face a possible death sentence or life in prison if convicted of that charge.

Anthony also is charged with aggravated child abuse, aggravated manslaughter of a child and four counts of providing false information to law enforcement. The child abuse and manslaughter charges each carry a 30-year prison term if convicted.

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Obama calls for stimulus in debt talks (Reuters)

WASHINGTON (Reuters) – President Barack Obama called on Wednesday for new job-creation measures that are likely to further complicate talks with Republicans to bring the country's debt under control.

Obama said Congress should approve loans to encourage construction spending and consider a payroll tax break and other measures to bring down the 9.1 percent unemployment rate.

"It makes perfect sense for us to take a look at, can we extend the payroll tax, for example, an additional year, and other tax breaks for business investment that could make a big difference in terms of creating more jobs right now," he told a White House news conference.

Those measures likely would add hundreds of billions of dollars to budget deficits at a time when the White House and lawmakers are trying to narrow them by more than $1 trillion. Congressional Republicans oppose those measures and say they have no place in the talks.

"In the middle of a debt crisis, they want to borrow and spend more money as a solution to the problem. This isn't a negotiation, this is a parody," Senate Republican Leader Mitch McConnell said earlier on the Senate floor.

With budget talks at a standstill, Treasury Secretary Timothy Geithner said he would not be able to stave off default if Congress does not reach a deal to raise the $14.3 trillion debt ceiling by August 2.

The International Monetary Fund also said failure to reach a deal soon could deliver a "severe shock" to a still-fragile recovery and global markets.

Obama and congressional Republicans are deadlocked over whether tax increases should be part of a spending-cut deal that would give lawmakers political cover to extend the government's borrowing authority.

Financial markets have so far shown little concern, but that could change if a deal doesn't emerge in the coming weeks.

Geithner said investors would still shun U.S. debt after the August deadline even if Treasury made debt payments its top priority -- an approach backed by many Republicans.

"Ultimately, the notion of 'prioritizing' payments is futile because the debt limit must be increased regardless of which spending path is adopted," he wrote in a letter to congressional Republicans.

"There is no credible budget plan under which a debt limit increase can be avoided."

Obama is due to meet with top Senate Democrats later on Wednesday to discuss the deficit reduction negotiations, which stalled last week. He has already met with top Republicans but no follow-up meetings have been set.

(Writing by Andy Sullivan; additional reporting by David Morgan, Glenn Somerville, Patricia Zengerle and Alister Bull)

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