Yemen president says will leave power in coming days (Reuters)

SANAA (Reuters) – Yemen's President Ali Abdullah Saleh said on Saturday he would leave power in the coming days, the closest the veteran leader has come to announcing he plans to step down after nine months of mass protests against his 33 year rule.

"I reject power and I will continue to reject it, and I will be leaving power in the coming days," Saleh said in a speech on state television.

Saleh has been clinging to his position while opposition and ruling party representatives cast about for a formula to see through a transition-of-power deal.

"I call on my supporters to persevere and to confront any challenge," Saleh said.

Protests against Saleh's rule have paralyzed Yemen, weakening government control over swathes of the country and fanning fears al Qaeda's regional wing may use the upheaval to expand its foothold near shipping routes through the Red Sea.

Saleh has thrice backed out of signing a Gulf-mediated power transition deal. The opposition says the government is holding up negotiations after Saleh's return from Saudi Arabia, where he had gone for treatment after a June assassination attempt.

(Reporting by Erika Solomon)

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Exclusive: Stark to leave ECB over bond-buying row (Reuters)

FRANKFURT (Reuters) – European Central Bank Executive Board member Juergen Stark is resigning his post in what sources say is a protest against its policy of buying bonds to help troubled euro zone debtor states.

A euro zone central bank source said Stark was at angry at being passed over when Bundesbank chief Axel Weber quit earlier this year, clearly unhappy with the ECB bond-buying program, and also felt the departure of ECB President Jean-Claude Trichet next month would mark the end of an era at the ECB.

Stark's decision to announce his departure now, rather than in a couple of months, was designed not to make it look like he was resigning because Italian Mario Draghi is succeeding Trichet from November 1, said the source.

News of Stark's shock departure highlights the size of the split at the ECB over the bond-buy plan and the extreme tension between its members, who have been at the center of the policy response to the euro zone debt crisis.

Stark is one of the most experienced policymakers at the ECB, a young institution facing the impending retirement of Trichet and uncertainty about how it will be led by Draghi, whose country is embroiled in the euro zone debt crisis.

Stark and Bundesbank head Jens Weidmann both opposed the ECB's decision last month to reactivate its bond plan following a 19-week pause. The bank decided to buy the bonds of Italy and Spain after they came closer to succumbing to the debt crisis.

The ECB has faced sharp criticism in Germany for buying bonds -- a move many here see as taking the bank into the fiscal arena and threatening its core role of fighting inflation.

The ECB confirmed Stark would be the second German policymaker to leave the bank this year after Weber quit in February, also in protest at the bond program.

"This is remarkable," said Manfred Neumann, emeritus economics professor at Bonn University and former thesis adviser to Weidmann.

"Stark held the same view of the bond-buying as Axel Weber and the current Bundesbank president. It is a position that all the Germans have. This is a sign of huge problems within the central bank. The Germans clearly have a problem with the direction of the ECB."

The ECB said Stark had resigned for personal reasons but two other sources told Reuters it was related to the bond-buying that has rescued Italy and Spain from crisis over the past month.

The euro, European and U.S. stock markets fell in response. Bond yield spreads, though, for Europe's struggling periphery were only slightly higher.

German Deputy Finance Minister Joerg Asmussen will replace Stark on the ECB's six-member Executive Board, a source familiar with the plan said.

"Asmussen will be more pragmatic," Bert Ruerup, former head of the 'wisemen' council of economic advisers to the German government told Reuters. "I don't think that he will fight as openly. This may calm down when the EFSF gets the power to buy bonds."

Asmussen has been a key figure in Germany's policy response to the euro zone debt crisis.

The ECB's policy orientation will not be altered by Stark's departure, Austrian ECB policymaker Ewald Nowotny said. German Finance Minister Wolfgang Schaeuble said he expected a German candidate to succeed Stark and that the successor would pursue the same policies of stability as Stark.

TEMPERS FRAY

News of Stark's departure came just a day after Trichet delivered an impassioned defense of the ECB's record and its handling of the euro zone debt crisis.

Trichet's emotional response to a question about calls from some in Germany for a return to the Deutschmark suggested tempers were running high at the bank.

German politicians immediately leapt on news of Stark's resignation to press for a change of direction at the ECB.

"His departure is a dramatic alarm signal which shows the ECB must correct its course," said Kurt Lauk, president of the economic council of Chancellor Angela Merkel's Christian Democrats.

"It is also a clear signal that the ECB must be freed from the role of aid provider that was foisted on it due to bad decisions by politicians," he added.

The ECB has been concerned that by buying the sovereign bonds of Italy -- the euro zone's third largest economy -- it is encouraging Rome to slacken efforts to shore up its finances, and has been irritated by flip-flopping over austerity measures.

However, Trichet said after the bank's policy meeting on Thursday that the latest decisions by the Italian government meant it was delivering on what it had promised.

Stark, 63, has been a member of the ECB's six-member Executive Board -- whose members form the Governing Council along with the 17 euro zone national bank chiefs -- since June 2006.

He holds the board's influential economics portfolio, a role that allows him to present a template of the ECB's monetary policy statement that forms a basis for the Governing Council's final view.

The ECB said Stark's successor would be appointed before the end of the year. Stark's term on the board was due to run until May 31, 2014.

In addition to Trichet and Stark, Lorenzo Bini Smaghi, another heavyweight ECB board member, is expected to leave the bank this year. Their departures leave the ECB without some of its most experienced policymakers while the euro zone crisis shows no sign of abating.

(Additional reporting by Marc Jones, Sakari Suoninen, Daniel Flynn and Noah Barkin; Writing by Paul Carrel; Editing by Ruth Pitchford/Mike Peacock)

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Kadhafi 'may leave' bombed capital, Obama rebuked (AFP)

TRIPOLI (AFP) – Moamer Kadhafi is reportedly mulling leaving Tripoli after blistering NATO air raids, as the rebels hinted they may let him stay in Libya if he quits and US lawmakers rebuked US President Barack Obama.

The Wall Street Journal quoted a senior US national security official as saying American intelligence shows Kadhafi "doesn't feel safe anymore" in the capital where he has ruled for more than four decades.

However, officials told the paper they did not see the move as imminent and did not believe Kadhafi would leave Libya, a key demand of rebels battling his forces.

Kadhafi is believed to have numerous safe houses and other facilities both within and outside Tripoli where he could go.

In Washington, the House of Representatives on Friday rejected a resolution authorising US military action in Libya, in a symbolic but scathing rebuke to Obama.

Lawmakers voted 123-295 to defeat the measure and moved to take up a companion resolution aimed at sharply reducing the US role in the NATO-led, UN-mandated operations against Kadhafi's forces.

"We are disappointed by that vote. We think that now is not the time to send the kind of mixed message that it sends," White House spokesman Jay Carney told reporters aboard Air Force One.

Rebel spokesman Mahmud Shamam told French daily Le Figaro the insurgents were in indirect contact with the Kadhafi regime and may be prepared to allow him to stay in the country, but that he and his family must agree to leave power.

"Our conditions remain the same. It is totally excluded that Kadhafi or members of his family take part in a future government. We are discussing with them the mechanism for Kadhafi's departure," he said.

In the rebel capital Benghazi, however, National Transitional Council deputy chairman Abdel Hafiz Ghoga told AFP: "There is no contact, direct or indirect, with the Kadhafi regime."

Another rebel leader, Colonel Ahmed Omar Bani, on Thursday pleaded for foreign allies to provide the equipment needed to defeat Kadhafi.

Bani said the rebels were up against vastly superior firepower. Much of their arsenal comprises Soviet-era tanks and artillery up to 50 years old.

The mostly volunteer force has, with the help of NATO air strikes, kept Kadhafi's forces at bay on several fronts, but has made limited progress toward Tripoli -- allowing loyalist forces to dig in.

Rights group Amnesty International said on Friday Kadhafi's forces were using rockets packed with ball bearings to bombard civilians in rebel-held Misrata in the west.

At least three civilians -- two women and a 14-year-old boy -- were killed recently when Grad rockets hit a residential neighbourhood of the port city, it said in a statement.

"These rockets are indiscriminate weapons which cannot be directed at a particular target and their use may amount to war crimes," Amnesty said.

A senior US commander, meanwhile, said that NATO and Libya's African allies had not adequately planned for the aftermath of Kadhafi's possible fall.

"We, the international community, could be in post-conflict Libya tomorrow and there isn't a plan, there is not a good plan," the senior US commander in Africa, General Carter Ham, told the Wall Street Journal.

He predicted that Kadhafi could fall quickly, and said there may be a need for substantial ground forces in Libya to preserve order.

Despite the intensive NATO bombing, stalemate on the battlefield and a wave of defections of regime officials and soldiers, Kadhafi remains defiant.

"We will resist and the battle will continue to the beyond, until you're wiped out. But we will not be finished," he said in an audio message on Wednesday.

Around 300 people, including 51 freed detainees, arrived in Benghazi on Friday aboard the Ionis, chartered by the International Committee of the Red Cross, after a 22-hour journey from Tripoli, an AFP correspondent said.

Families who had been separated for weeks were reunited.

The ICRC said the arrival of the group was part of a broader exchange negotiated between Libya's two warring factions.

The 28-member International Energy Agency said on Thursday that 60 million barrels of oil would be taken from reserves over the next month to cover lost Libyan output.

World oil prices sank on Friday, extending Thursday's plunge after the IEA decision.

New York's main contract, West Texas Intermediate for delivery in August, eased ten cents to $90.92 a barrel after plummeting $4.39 or 4.6 percent on Thursday.

In London afternoon trade on Friday, Brent North Sea crude for August fell $1.31 to $105.95, one day after plunging by $6.95, or 6.0 percent in value.

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