IMF denies in Italy aid talks (Reuters)

By James Mackenzie and Francesca Landini James Mackenzie And Francesca Landini – Mon?Nov?28, 3:56?am?ET

ROME (Reuters) – Italy's prime minister faces a testing week as he seeks to shore up the country's strained public finances, with an IMF mission expected in Rome and market pressure building to a point where outside help may be needed to stem a full-scale debt emergency.

However, an IMF spokesperson poured cold water on a report in the Italian daily La Stampa that said up to 600 billion euros could be made available at a rate of between 4-5 percent to give Italy breathing space for 18 months.

"There are no discussions with the Italian authorities on a program for IMF financing," an IMF spokesperson said.

Adding to international pressure on euro zone leaders to stem the debt crisis, U.S. President Barack Obama will press senior European Union officials in Washington on Monday to reach a solution to the emergency that Moody's said now threatens the credit standing of all European government bond ratings.

After slumping last week, Asian shares and the euro rose on Monday on hopes that some measures may emerge this week to ease the crisis.

Euro zone finance ministers will meet on Tuesday to consider detailed rules to boost the impact of a 440-billion-euro rescue fund.

Germany and France are also exploring radical ways to secure deeper and more rapid fiscal integration among the bloc's 17 countries to shore up the region's defenses against the debt crisis.

Italian Prime Minister Mario Monti is expected to unveil measures on December 5 that could include a revamped housing tax, a rise in sales tax and accelerated increases in the pension age. But pressure from the markets could force him to act more quickly.

One source with knowledge of the matter said contacts between the International Monetary Fund and Rome had intensified in recent days as concern has grown that German opposition to an expanded role for the European Central Bank could leave Italy without a financial backstop if one were needed.

The IMF inspection team is expected to visit Rome in the coming days but no date has been announced.

EYE OF THE STORM

Italy is in the eye of the euro zone debt storm after its borrowing costs returned to the levels that triggered the collapse of former Prime Minister Silvio Berlusconi's center-right government. Yields on 10-year bonds ended last week at more than 7.3 percent.

Italian yields are now in the territory that forced Greece, Ireland and Portugal to seek international bailouts and an auction on Tuesday of up to 8 billion euros of BTP bonds will be a crucial test.

On Friday, Italy paid a euro lifetime high yield of 6.5 percent to sell new six-month paper, a level that analysts said cannot be maintained for long without pushing a public debt amounting to 120 percent of gross domestic product out of control.

European Central Bank member Christian Noyer said on Monday that Italy's economy was fundamentally sound and Rome should be able to restore market confidence if it shows fiscal discipline.

"Italy should not be considered a weak economy," Noyer told reporters on a visit to Tokyo.

Italy, the euro zone's third biggest economy, would be far too big for existing bailout mechanisms and default on its 1.8 trillion euro debt would cause a banking and financial crisis that would probably destroy the single currency.

It has more than 185 billion euros of bonds falling due between December and the end of April. Obama was due to hold talks on Monday with European Council President Herman Van Rompuy and European Commission President Jose Manuel Barroso, although no breakthroughs were expected.

The president was expected to reiterate he was confident that Europe's leaders could handle the crisis, which is emerging as a major worry for the 2012 U.S. elections, if they show political leadership.

Moody's warned in a report that it may take a series of shocks before the political impetus for a resolution to the debt crisis finally emerges. The crisis had deepened in recent weeks, it said.

"The probability of multiple defaults (in addition to Greece's private sector involvement program) by euro area countries is no longer negligible," it said.

Civil servants from Germany and France were exploring ways for more rapid fiscal integration after the realization that getting an agreement among all 27 countries in the EU will be difficult any time soon.

An agreement among just the euro zone countries is one option.

"The goal is for the member states of the common currency to create their own Stability Union and to concentrate on that," German Finance Minister Wolfgang Schaeuble told ARD television on Sunday.

Another option being explored is a separate agreement outside the EU treaty that could involve a core of around 8-10 euro zone countries, officials say.

PRESSURE

Monti outlined the broad thrust of his reform plans earlier this month, promising a mix of budget rigor and reforms to stimulate economic growth, and has stuck to Berlusconi's pledge to balance the budget by 2013.

But with growing signs that Italy's chronically sluggish economy could be entering recession, he has come under pressure to provide concrete details quickly.

The measures outlined so far are broadly in line with directions previously given by the ECB, but there have been no detailed discussions with international bodies on the kinds of conditions normally attached to IMF assistance programs.

As well as loosening job protection measures, privatizing local services and opening up professions to more competition, additional budget measures estimated by Italian media at up to 15 billion euros could be announced.

Monti can take some comfort from surveys showing broad popular support for his technocrat government, but austerity measures have yet to bite deeply and surveys also show a mixed picture on individual austerity measures.

On pensions, the government is expected to bring forward an already-planned increase in retirement ages, with a wider reform possible in the coming weeks.

Monti may reintroduce a housing tax that was scrapped by Berlusconi in a last-minute campaign pledge before the 2008 election. The move cost the Treasury an estimated 3.5 billion euros a year.

Other ideas under consideration include raising the value-added tax band in bars and restaurants, which currently stands at 10 percent.

(Additional reporting by Gavin Jones and Steve Scherer and Lesley Wroughton in Washington; Ian Chua in Sydney and Stanley White and Rie Ishiguro in Tokyo; Editing by David Stamp, Alessandra Rizzo and Alex Richardson)

Florida senator denies embellishing family history (AP)

By BRENDAN FARRINGTON and LAURA WIDES-MUNOZ, Associated Press Brendan Farrington And Laura Wides-munoz, Associated Press – 7?mins?ago

MIAMI – In Florida, where Cuba and Fidel Castro can be highly combustible political issues, Republican Sen. Marco Rubio is defending himself against allegations he embellished his family's story in saying his parents left the island after Castro came to power.

So far, prominent members of the Cuban American community are standing by him, including the head of one of Miami's oldest and most respected exile groups, who said Friday that he is willing to give the rising GOP star and tea-party favorite a pass.

The 40-year-old freshman senator has always publicly identified with the exile community and has a strong following within it. Rubio's biography on his Senate website says he was "born in Miami to Cuban-born parents who come to America following Fidel Castro's takeover." And in a campaign ad last year, he said: "As the son of exiles, I understand what it means to lose the gift of freedom."

But The Washington Post reported that Rubio's parents actually left Cuba in 1956, nearly three years before Castro seized power in a revolution against dictator Fulgencia Batista. Rubio's father was a store security guard when he and his wife left, according to Rubio's staff, and came to the U.S. for economic reasons.

Rubio responded to the story with a statement saying his parents had tried to return to Cuba in March 1961 but quickly left because they did not want to live under communism.

"After arriving in the United States, they had always hoped to one day return to Cuba if things improved and traveled there several times," he said. "In 1961, my mother and older siblings did in fact return to Cuba while my father stayed behind wrapping up the family's matters in the U.S. After just a few weeks living there, she fully realized the true nature of the direction Castro was taking Cuba and returned to the United States one month later, never to return."

In addition, Rubio has said publicly on previous occasions that his parents left Cuba before the revolution.

Rubio's staff said it would change his Senate website.

The issue is magnified because of the formidable political clout of the Cuban exile community in Florida and the fierce passions in Miami that still surround Castro and the communist island, and because Rubio is often mentioned as a potential vice presidential pick. Republican presidential candidates Mitt Romney, Michele Bachmann and Newt Gingrich have said he would make a great running mate.

Democrats are trying to make an issue of it, saying it calls into question Rubio's character. The Florida Democratic Party accused Rubio of "self-serving deception," and the Democratic Senatorial Campaign Committee said Rubio has a credibility problem.

"The latest bombshell confirms that Rubio seriously struggles to tell the truth and can't be trusted," said DSCC spokesman Matt Canter.

But Sean Spicer, a spokesman for the GOP National Committee, said the attacks will only strengthen Rubio by causing Republicans to come to his defense. The conservative was elected in 2010 after an upset over the GOP establishment's choice, Gov. Charlie Crist.

"There's no question he has an amazing life story. His family came here to pursue a better life, and that is all accurate. There's folks out there who have seen a great success story and are plotting to figure out how to take him down," Spicer said.

The head of the Miami-based Cuban American National Foundation, Pepe Hernandez, himself an exile and longtime opponent of Castro, said Rubio's parents' initial departure date was unimportant.

"There were a number of people who came here during the Batista regime because they were against Batista somehow," he said. "Then they returned to Cuba when Castro came in because they thought now things were going to change, and then after some time they realized this was not going to happen."

"Maybe their case is not exactly the same. They really came here as immigrants, but the second time the reason was that they couldn't live in Cuba under those circumstances. I don't see any difference between his parents and myself and everyone else who came here."

Former Sen. Mel Martinez, R-Fla., who left Cuba as a teenager after the revolution, said the Post story showed "a gross lack of understanding about the Cuban exile experience. The fact is that they would not have left Cuba permanently if not for extreme fear of persecution and in search of freedom, like so many of us did."

Fernand Amandi, a pollster whose company specializes in Hispanic public opinion and works more often with Democrats than Republicans, said the episode alone might not be that damaging, but it could invite further scrutiny of Rubio's record.

"It's a chink in his armor of what was somebody who up to this point had almost uniformly positive and favorable coverage," he said.

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Brendan Farrington reported from Tallahassee, Fla.

Farrington can be followed on Twitter at http://twitter.com/bsfarrington

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Cameron denies staff tried to halt hacking probe (AP)

LONDON – Prime Minister David Cameron emphatically denied claims that his staff tried to stop an inquiry into phone hacking at the News of the World and defended his decision to hire one of the tabloid's editors as his communications chief.

In a raucous emergency session Wednesday in Parliament, Cameron did admit that both the ruling Conservatives and the opposition Labour parties had failed to pursue key developments in the hacking case and had actively courted media baron Rupert Murdoch.

"The clock has stopped on my watch and we need to sort it out," Cameron told lawmakers, promising that a government inquiry would examine the cozy relationship between British politicians and media and investigate whether other news organizations may have broken the law.

Police are also probing whether news media breached privacy laws.

Cameron cut short his Africa trip and the House of Commons delayed its summer break to debate issues engulfing both Britain's political and media elite and Murdoch's global communications empire, News Corp.

Murdoch owned the troubled News of the World, where the phone hacking claims first emerged in 2005, when the royal household alerted police that the tabloid may have learned about Prince William's knee injury by illegally intercepting phone messages.

Cameron's former communications chief Andy Coulson — a former editor at the tabloid — is among 10 people who have been arrested in the scandal. One has been cleared.

Lawmakers wanted to know why Cameron insisted on hiring Coulson despite warnings and how much the prime minister knew about the phone hacking investigation. There have been allegations that some people on Cameron's staff may have met with police to pressure them to drop the investigation.

"To risk any perception that No 10 (Downing Street) was seeking to influence a sensitive police investigation in any way would have been completely wrong," he said.

Cameron did, however, meet with News Corp. executives more than two dozen times from May 2010 to this month — meetings that were criticized in Parliament by Labour leader Ed Miliband, who said Cameron had made a "catastrophic error of judgment" in hiring Coulson.

Coulson was an editor at the News of the World when royal reporter Clive Goodman and private investigator Glenn Mulcaire were arrested and jailed in 2007 for phone hacking. The original police inquiry into phone hacking was dropped, Coulson quit the paper and Cameron — then opposition leader — hired him.

This January, police reopened the hacking investigation. They are now investigating some 3,870 people whose names and telephone numbers were found in the News of the World files. It remains unclear how many were hacking victims. Coulson resigned his government post that same month.

News Corp. said Wednesday it had now eliminated legal payments to Mulcaire — a day after Murdoch told lawmakers in a special parliamentary committee hearing that he would try to find a way to stop the payments. Mulcaire's lawyer, Sarah Webb, declined to comment on the development.

In other phone hacking news, a judge Wednesday awarded "Notting Hill" actor Hugh Grant — one of the most prominent celebrity critics of the Murdoch empire — the right to see whether he was one of the tabloid hacking victims.

The scandal captivated television audiences from America to Murdoch's native Australia on Tuesday, as Murdoch endured a three-hour grilling by U.K. lawmakers. The media baron said he had known nothing of allegations that staff at News of the World hacked into cell phones and bribed police to get information on celebrities, politicians and crime victims.

He also said he had been humbled by the allegations and apologized for the "horrible invasions" of privacy.

Murdoch flew out of London on Wednesday.

Politicians from both the Conservative Party and Labour Party have been tainted by the scandal.

During Wednesday's session, Miliband reminded Cameron that his own Deputy Prime Minister Nick Clegg had warned Cameron against bringing Coulson into Downing Street last year as communications chief. Clegg sat stone-faced during much of Wednesday's rowdy session.

Cameron later countered, saying the Labour Party was also guilty of hiring questionable characters, including Miliband's current strategist, Tom Baldwin, another former Murdoch journalist from a different paper.

Conservative donor Lord Ashcroft, a Belize-based billionaire who has funded the party for more than a decade, has accused Baldwin of trying to get private banking information in 1999.

Cameron defended Coulson's work and said if it emerged that Coulson had lied to him about his role in the hacking case he would take it seriously.

"Andy Coulson is innocent until proven guilty," Cameron said.

Buckingham Palace reacted sharply to a claim by one lawmaker that it had raised concerns with Cameron's office over his decision to hire Coulson. "It is outrageous to suggest this," said a palace spokesman.

Britain's Conservative Party reported it had just learned that another recently arrested phone-hacking suspect, former News of the World executive editor Neil Wallis, may have advised Coulson before the 2010 national election that put Cameron into power. It said Wallis was not paid for the advice, however.

Cameron also said the hacking affair raises questions over the ethics and values of London's police force and vowed Wednesday that he would bring in new leadership to the force. Two top police resigned this week over their close ties to Wallis.

Meanwhile, a House of Commons committee on Wednesday blasted both News International, the News Corp. unit that operates the British papers, and the London Metropolitan Police for their performance on the scandal.

"We deplore the response of News International to the original investigation into hacking. It is almost impossible to escape the conclusion ... that they were deliberately trying to thwart a criminal investigation," said the Home Affairs committee, which has been grilling past and present Metropolitan Police officials about their decision not to reopen the hacking investigation in 2009.

On Wednesday, police charged Jonathan May-Bowles, 26, with behavior causing harassment, alarm or distress in a public place for trying to hit Murdoch with a foam pie at the U.K. hearing.

As the scandal exploded this month, Murdoch shut down the 168-year-old News of the World, gave up on buying full control of British Sky Broadcasting, Britain's biggest commercial television company, and accepted the resignations of two top executives.

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Cassandra Vinograd, Danica Kirka, Meera Selva and Robert Barr contributed to this report

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Cassandra Vinograd, Danica Kirka, Meera Selva and Robert Barr contributed to this report from London.

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Hospital denies 'Mubarak in full coma' report (AFP)

CAIRO (AFP) – A Red Sea hospital on Sunday denied a report that Egypt's ailing former president Hosni Mubarak had fallen into a "full coma," two weeks before he is due to go on trial for murder and corruption.

"The former president is in a full coma after his health suddenly deteriorated," state television quoted Mubarak's lawyer as saying.

But minutes later, the head of the hospital in the Red Sea resort of Sharm el-Sheikh where Mubarak is being treated denied that the former strongman, now 83, had gone into a coma, the channel reported.

"Sharm el-Sheikh hospital chief denies reports of Mubarak coma," according to a scrolling headline on the television.

However, another medical source was less clearcut, telling AFP: "It seems there has been some deterioration in his health, but the reports of a coma are still unclear."

Mubarak has been in the Sharm el-Sheikh hospital since April when he suffered a heart attack during questioning over alleged fraud and the killing of protesters during the uprising which ousted him in February.

The former president has denied accusations he was involved in corruption and ordered the killing of protesters during the unrest that broke out on January 25, leaving nearly 850 people dead and more than 6,000 injured.

"I would never participate in the killing of Egyptian citizens and would never seize state money and I have never acquired anything illegally," he told investigators, in a transcript published by the independent daily Al-Dustur.

"I gave orders to deal with the protesters without violence, peacefully, without the use of weapons, or bullets or even carrying weapons during the protests," Mubarak reportedly said.

The former president is due to go on trial on August 3.

On Saturday, officials said Mubarak's trial would most likely be held in Sharm el-Sheikh for security reasons.

He could either be put in the dock or questioned by court officials in his hospital room, with the rest of the trial proceedings taking place in a court room, the official said.

An interior ministry official told AFP the trial location "has not been completely settled, but Mubarak will most likely be tried in Sharm el-Sheikh."

It was not immediately clear whether his two sons would be transferred to a Sharm el-Sheikh prison from Cairo if the hearings take place in the resort.

Protesters who have staged a sit-in for more than a week in Cairo's Tahrir Square, epicentre of the demonstrations that ousted Mubarak, demand his transfer to Cairo and accuse the ruling military of delaying the trials of former regime officials.

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