Michelle Kwan Shed 'So Many Tears' on Wedding Day















01/23/2013 at 10:15 AM EST







Michelle Kwan and Clay Pell


Courtesy of Caitlin Maloney


As Michelle Kwan, dressed in a cascading veil and a classic ivory gown, walked down the aisle on Jan. 19, the figure skater was filled with the emotion of a bride on her wedding day.

"The whole energy came from family and friends," she says of the ceremony in Providence, R.I. "People were crying. There were so many tears shed, especially from me!"

Her new husband, White House staffer and Coast Guard Lieutenant Clay Pell, was also swept up in the moment. "As she was walking into the church, I could feel her," he tells PEOPLE. "I could feel this energy, this sense of grace and movement and comfort to me the whole time. This contentedness, whether we were holding hands, or hugging, or kissing – she has such warmth for me and I just felt this fire the whole day, and I still do."

Although not everything at the First Unitarian Church went as planned, the couple improvised. "The Christ candle didn't light because the wick had gone down," Kwan says. "We had both of our candles and everyone was staring at us, and we're like, 'It's not lighting!' So Clay took one of the matches and stuck it on there, we lit the match, and everyone started clapping. It turned out perfect."

After the couple walked through an arch of sabers formed by Pell's friends in the Coast Guard, they led guests in lighting sparklers before entering the Hope Club for dinner and dancing.

Olympic champion figure skater Brian Boitano, 49, spoke at the reception. "It was hard because I couldn't look at her too much because I get kind of emotional," Boitano tells PEOPLE. "It's like a little sister growing up. My brotherly instincts are on the high end for her! I think she's incredibly loyal and she is truly filled with so much grace on and off the ice."

Kwan, 32, and Pell, 31, who got engaged in September, chose "We've Only Just Begun" for their first dance. Kwan's sister Karen, 34, "tried to choreograph it," Pell says, "but we went off-script a little bit."

"We were having the time of our lives," Kwan says. "We were supposed to twirl but where the button goes to bustle my dress, it ripped off, but Clay loves to dance."

Turning to Pell, Kwan adds, "You danced like no one was watching, or people were watching but you didn't care because you were having the time of your life. I love that!"

For more on Kwan's wedding, including photos and all the details – from the dress to the decor – pick up a copy of next week's PEOPLE, on newsstands Friday

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Foes of NYC soda size limit doubt racial fairness


NEW YORK (AP) — Opponents of the city's limit on the size of sugary drinks are raising questions of racial fairness alongside other complaints as the novel restriction faces a court test.


The NAACP's New York state branch and the Hispanic Federation have joined beverage makers and sellers in trying to stop the rule from taking effect March 12. With a hearing set Wednesday, critics are attacking what they call an inconsistent and undemocratic regulation, while city officials and health experts defend it as a pioneering and proper move to fight obesity.


The issue is complex for the minority advocates, especially given obesity rates that are higher than average among blacks and Hispanics, according to the federal Centers for Disease Control. The groups say in court papers they're concerned about the discrepancy, but the soda rule will unduly harm minority businesses and "freedom of choice in low-income communities."


The latest in a line of healthy-eating initiatives during Mayor Michael Bloomberg's administration, the beverage rule bars restaurants and many other eateries from selling high-sugar drinks in cups or containers bigger than 16 ounces. Violations could bring $200 fines; the city doesn't plan to start imposing those until June.


The city Board of Health OK'd the measure in September. Officials cited the city's rising obesity rate — about 24 percent of adults, up from 18 percent in 2002 — and pointed to studies linking sugary drinks to weight gain. Care for obesity-related illnesses costs more than $4.7 billion a year citywide, with government programs paying about 60 percent of that, according to city Health Commissioner Dr. Thomas Farley.


"It would be irresponsible for (the health board) not to act in the face of an epidemic of this proportion," the city says in court papers. The National Association of Local Boards of Health and several public health scholars have backed the city's position in filings of their own.


Opponents portray the regulation as government nagging that turns sugary drinks into a scapegoat when many factors are at play in the nation's growing girth.


The American Beverage Association and other groups, including movie theater owners and Korean grocers, sued. They argue that the first-of-its-kind restriction should have gone before the elected City Council instead of being approved by the Bloomberg-appointed health board.


Five City Council members echo that view in a court filing, saying the Council is "the proper forum for balancing the city's myriad interests in matters of public health." The Bloomberg administration counters that the health board, made up of doctors and other health professionals, has the "specialized expertise" needed to make the call on limiting cola sizes.


The suit also argues the rule is too narrow to be fair. Alcohol, unsweetened juice and milk-based drinks are excluded, as are supermarkets and many convenience stores — including 7-Eleven, home of the Big Gulp — that aren't subject to city health regulations.


The NAACP and the Hispanic Federation, a network of 100 northeastern groups, say minority-owned delis and corner stores will end up at a disadvantage compared to grocery chains.


"This sweeping regulation will no doubt burden and disproportionally impact minority-owned businesses at a time when these businesses can least afford it," they said in court papers. They say the city should focus instead on increasing physical education in schools.


During Bloomberg's 11-year tenure, the city also has made chain restaurants post calorie counts on their menus and barred artificial trans fats in french fries and other restaurant food.


In general, state and local governments have considerable authority to enact laws intended to protect people's health and safety, but it remains to be seen how a court will view a portion-size restriction, said Neal Fortin, director, Institute for Food Laws and Regulations at Michigan State University.


___


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IBM's outlook lifts Dow, Nasdaq amid tech rally

NEW YORK (Reuters) - Stocks edged higher on Wednesday as IBM and other tech companies continued a trend of results that beat Wall Street's expectations and propelled the market to a five-day advance.


Internet search company Google Inc added to the advance, rising 5.1 percent to $738.65 a day after Google reported its core business outpaced expectations. Revenue was also higher than expected.


International Business Machines Corp late Tuesday forecast better-than-anticipated 2013 results and also posted fourth-quarter earnings and revenue that beat expectations. The results helped to allay concerns about the tech sector after Intel Corp gave a weak outlook last week. IBM, the world's largest technology services company, rose 3.8 percent to $203.57.


"Tech companies are really shattering expectations, which is obviously helping markets. There doesn't seem to be an end to this rally," said Todd Schoenberger, managing partner at LandColt Capital in New York.


But gains were limited in the S&P 500 a day after it closed at a level not seen since December 2007. Many investors were also holding off to see earnings from Apple Inc , the most valuable U.S. company which was due to report after the market closes.


McDonald's edged higher 0.2 percent to $93.11 after reporting a rise in fourth-quarter earnings, lifted by an increase in same-store sales. United Tech's earnings fell from the prior year, hurt by large restructuring charges. Shares edged up at $87.91.


On the downside, Coach Inc slumped 15 percent to $51.40 as the S&P's biggest percentage loser after reporting sales that missed expectations.


After the market closes, investors will scour Apple's results for signs the tech giant can continue to grow at an accelerated pace. The stock has been pressured recently by questions raised about demand for Apple's prospects. The stock has fallen 5 percent since the start of the year, compared with gains of 4.6 percent in the S&P 500. It rose 0.4 percent to $507.04 on Wednesday.


"If Apple comes out with a blockbuster number, that would reinforce the argument that stocks are poised to do well in the first part of 2013," Schoenberger said.


The Dow Jones industrial average <.dji> was up 55.48 points, or 0.40 percent, at 13,767.69. The Standard & Poor's 500 Index <.spx> was up 0.06 points, or 0.00 percent, at 1,492.62. The Nasdaq Composite Index <.ixic> was up 10.89 points, or 0.35 percent, at 3,154.06.


Both the S&P 500 and Dow Jones industrial average hit five-year closing highs on Tuesday, with recent gains largely fueled by a strong start to the earning season.


According to the latest Thomson Reuters data, of the 74 S&P 500 companies that have reported earnings so far, 62.2 percent have topped expectations, roughly even with the 62 percent average since 1994, but below the 65 percent average over the past four quarters.


Overall, S&P 500 fourth-quarter earnings rose 2.6 percent, according to Thomson Reuters data. That estimate is above the 1.9 percent forecast from the start of earnings season, but well below the 9.9 percent fourth-quarter earnings forecast from October 1, the data showed.


Republican leaders in the U.S. House of Representatives aim on Wednesday to pass a bill to extend the U.S. debt limit by nearly four months, to May 19. The White House welcomed the move, saying it would remove uncertainty about the issue.


The debt limit issue has hung over the market for weeks, with many investors worried that if no deal is reached to raise the limit, it could have a negative impact on the economy.


(Editing by W Simon and Kenneth Barry)



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IHT Rendezvous: Two Views on Liberal Arts

This week, the IHT education section takes a look at the liberal arts, the largely North American education system that emphasizes a broad base of learning. It is slowly making inroads in Europe and Asia, where university courses have traditionally been more narrowly focused.

In Hong Kong, I met with Rebecca Chopp, the president of Swarthmore College, a top liberal arts colleges in the United States. Professor Chopp was on a whirlwind Asia tour that also included Tokyo, Seoul, Taipei, Shanghai and Suzhou, China. Like most college presidents on the road, she was there to visit alumni, raise funds and recruit students. She was also in a position to explain the pluses of a liberal arts education in a region where it’s still a foreign concept. She said:

“Liberal arts is founded on a whole person, developing a person athletically and academically. Liberal arts is going international. The 21st century is one of entrepreneurship and innovation. There will not be fixed careers. The liberal arts teaches you to think outside the box.”

Here’s a tidbit that didn’t make it into my article: The first semester for every student at Swarthmore is pass/fail. You cannot get an A (or a D, for that matter). Professor Chopp was frank about her own less-than-stellar academic beginnings, so maybe she is particularly forgiving of freshmen who are finding their way. She said that this system encouraged risk-taking — not something all academically driven students are wont to do. With a pass/fail system an aspiring doctor can try an art class, with no fear that it will bring down his or her grade-point average, or an artist can try a science class.

Speaking of doctors, Professor Chopp addressed a common (and inaccurate) worry about the liberal arts: that they lead to impractical degrees in obscure subjects that don’t lead to good careers. She points out that Swarthmore graduates who apply to medical school have a higher-than-average chance of getting in (81 percent).

A private liberal arts college in the U.K.?

In London, D.D. Guttenplan visited the leafy campus of Regent’s College, which is something of an anomaly in Britain. Once it gets government approval, probably next month, Regent’s will be only the second private university in the country (after the University of Buckingham).

Regent’s is also different because it is structured something like a U.S. liberal arts college – with a looser curriculum, small-group teaching, points for speaking up in class and a very international student body. (Only 15 percent come from Britain.)

Lawrence Phillips, who heads Regent’s American College (one of its specialist schools), said in an interview:

“I came here out of specific concerns about the narrowness of British universities, producing business graduates who can’t write and historians who can’t count.”

Mr. Guttenplan also spoke to foreign students like Lisa Marie Nyvoll, who said, “In Norway, you only study a single subject, and I wanted something more flexible.” You can read the full article here.

The liberal arts model is shaped like an inverted pyramid — broad on top, and then tapering down to a point. The traditional European or Asian model is shaped like a telescope — narrow and focused all the way through.

By the middle of high school, most European or Asian students have chosen their field of study and are taking courses and exams that will get them into their desired course. Meanwhile, there are 19-year-olds in America still debating whether they want to major in chemistry and minor in music. Many students and parents I meet in Europe and Asia are surprised to hear that some American students don’t declare their majors until the end of their second year – about half-way through their four-year degrees.

Do private U.S.-style colleges have a place in Britain, which has its own proud academic culture? Which system better prepares students for the real world? One that gives students three years of intense study in one field? Or one that takes four years to produce literate scientists and numerate writers?

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Canada wants RIM organic growth, may have to review handset sale






OTTAWA (Reuters) – The Canadian government wants BlackBerry maker Research in Motion to continue to be a global leader and grow organically, and Ottawa may have to review a future sale of its handset business, Industry Minister Christian Paradis said on Tuesday.


“We hope to see RIM remain a global leader and player, and make sure it grows organically,” Paradis told Reuters by phone from Germany, where he is meeting with industrial leaders.






He also said the government did not intend at present to open up Canada’s telecommunications sector further to foreign investment.


(Reporting by Randall Palmer Editing by W Simon)


Wireless News Headlines – Yahoo! News





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Adrienne Maloof Steps Out with Sean Stewart






Buzz








01/22/2013 at 10:00 AM EST







Adrienne Maloof and Sean Stewart


Splash News Online


After her bitter divorce battle, Adrienne Maloof is apparently getting back into the dating scene with a little help from rock royalty two decades her junior.

The Real Housewives of Beverly Hills star, 51, has been getting close with Sean Stewart, 32, son of the legendary British rocker Rod Stewart.

"Adrienne is enjoying dating," a source close to Maloof tells PEOPLE.

The pair were spotted kissing as they left the Crustacean restaurant in Beverly Hills on Saturday. Maloof later told TMZ.com of their age difference: "Age is just a number."

She added: "It's about how good of a person you are. ... [Sean] is a very funny guy. He's very giving, he mentors at the mission, works with at-risk children, and gives his time and money to get children off the streets."

Stewart has had his share of bumps in the road, too. He appeared on season 2 of Celebrity Rehab with Dr. Drew after battling substance abuse.

The Stewart men have a thing for older women. Rod's first big hit, back in 1971, was "Maggie May," which told the autobiographical story of a young man involved with an older woman.

• Reporting by RAHA LEWIS

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Flu season fuels debate over paid sick time laws


NEW YORK (AP) — Sniffling, groggy and afraid she had caught the flu, Diana Zavala dragged herself in to work anyway for a day she felt she couldn't afford to miss.


A school speech therapist who works as an independent contractor, she doesn't have paid sick days. So the mother of two reported to work and hoped for the best — and was aching, shivering and coughing by the end of the day. She stayed home the next day, then loaded up on medicine and returned to work.


"It's a balancing act" between physical health and financial well-being, she said.


An unusually early and vigorous flu season is drawing attention to a cause that has scored victories but also hit roadblocks in recent years: mandatory paid sick leave for a third of civilian workers — more than 40 million people — who don't have it.


Supporters and opponents are particularly watching New York City, where lawmakers are weighing a sick leave proposal amid a competitive mayoral race.


Pointing to a flu outbreak that the governor has called a public health emergency, dozens of doctors, nurses, lawmakers and activists — some in surgical masks — rallied Friday on the City Hall steps to call for passage of the measure, which has awaited a City Council vote for nearly three years. Two likely mayoral contenders have also pressed the point.


The flu spike is making people more aware of the argument for sick pay, said Ellen Bravo, executive director of Family Values at Work, which promotes paid sick time initiatives around the country. "There's people who say, 'OK, I get it — you don't want your server coughing on your food,'" she said.


Advocates have cast paid sick time as both a workforce issue akin to parental leave and "living wage" laws, and a public health priority.


But to some business owners, paid sick leave is an impractical and unfair burden for small operations. Critics also say the timing is bad, given the choppy economy and the hardships inflicted by Superstorm Sandy.


Michael Sinensky, an owner of seven bars and restaurants around the city, was against the sick time proposal before Sandy. And after the storm shut down four of his restaurants for days or weeks, costing hundreds of thousands of dollars that his insurers have yet to pay, "we're in survival mode."


"We're at the point, right now, where we cannot afford additional social initiatives," said Sinensky, whose roughly 500 employees switch shifts if they can't work, an arrangement that some restaurateurs say benefits workers because paid sick time wouldn't include tips.


Employees without sick days are more likely to go to work with a contagious illness, send an ill child to school or day care and use hospital emergency rooms for care, according to a 2010 survey by the University of Chicago's National Opinion Research Center. A 2011 study in the American Journal of Public Health estimated that a lack of sick time helped spread 5 million cases of flu-like illness during the 2009 swine flu outbreak.


To be sure, many employees entitled to sick time go to work ill anyway, out of dedication or at least a desire to project it. But the work-through-it ethic is shifting somewhat amid growing awareness about spreading sickness.


"Right now, where companies' incentives lie is butting right up against this concern over people coming into the workplace, infecting others and bringing productivity of a whole company down," said John A. Challenger, CEO of employer consulting firm Challenger, Gray & Christmas.


Paid sick day requirements are often popular in polls, but only four places have them: San Francisco, Seattle, Washington, D.C., and the state of Connecticut. The specific provisions vary.


Milwaukee voters approved a sick time requirement in 2008, but the state Legislature passed a law blocking it. Philadelphia's mayor vetoed a sick leave measure in 2011; lawmakers have since instituted a sick time requirement for businesses with city contracts. Voters rejected a paid sick day measure in Denver in 2011.


In New York, City Councilwoman Gale Brewer's proposal would require up to five paid sick days a year at businesses with at least five employees. It wouldn't include independent contractors, such as Zavala, who supports the idea nonetheless.


The idea boasts such supporters as feminist Gloria Steinem and "Sex and the City" actress Cynthia Nixon, as well as a majority of City Council members and a coalition of unions, women's groups and public health advocates. But it also faces influential opponents, including business groups, Mayor Michael Bloomberg and City Council Speaker Christine Quinn, who has virtually complete control over what matters come to a vote.


Quinn, who is expected to run for mayor, said she considers paid sick leave a worthy goal but doesn't think it would be wise to implement it in a sluggish economy. Two of her likely opponents, Public Advocate Bill de Blasio and Comptroller John Liu, have reiterated calls for paid sick leave in light of the flu season.


While the debate plays out, Emilio Palaguachi is recovering from the flu and looking for a job. The father of four was abruptly fired without explanation earlier this month from his job at a deli after taking a day off to go to a doctor, he said. His former employer couldn't be reached by telephone.


"I needed work," Palaguachi said after Friday's City Hall rally, but "I needed to see the doctor because I'm sick."


___


Associated Press writer Susan Haigh in Hartford, Conn., contributed to this report.


___


Follow Jennifer Peltz at http://twitter.com/jennpeltz


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Wall Street flat near five-year highs, Travelers rallies


NEW YORK (Reuters) - U.S. stocks were little changed near five-year highs on Tuesday as investors held back from making large bets ahead of earnings from key tech companies.


Both the Dow and S&P 500 closed at their highest levels so far in this earnings season, with the gains largely coming on better-than-expected results. But despite bullish statements from major companies, many investors are worried economic uncertainty in the fourth quarter hurt earnings and revenues.


Weaker-than-expected economic data had little impact on stocks. Existing-home sales unexpectedly fell in December, dropping 1 percent, according to the National Association of Realtors. Analysts were looking for a rise of 1.2 percent.


Recently Apple Inc and Intel Corp gave weak outlooks, calling the tech sector' outlook into question. Three tech companies are due to report after the market's close: Google Inc, International Business Machines and Texas Instruments.


"Markets are quiet today with many investors taking a wait-and-see approach to tonight's tech earnings," said Douglas DePietro, managing director at Evercore Partners in New York. "There's still room for us to rise from here, but right now most of the action is in specific stocks."


Four Dow components reported early on Tuesday, and three rose on the results. Insurer Travelers Cos was the stand-out, climbing 3.4 percent to $78.90 as the S&P 500's biggest percentage gainer after it forecast higher premiums across its business.


DuPont, the largest U.S. chemical company by market capitalization, reported revenue that was ahead of Wall Street expectations, while Verizon Communications Inc also posted revenue that beat forecasts.


Shares of DuPont were up 0.6 percent at $47.24 while Verizon rose 0.3 percent to $42.67.


On the downside, Johnson & Johnson, the diversified health company, fell 0.5 percent to $72.87 after forecasting 2013 earnings below expectations.


The Dow Jones industrial average was down 6.07 points, or 0.04 percent, at 13,643.63. The Standard & Poor's 500 Index was down 1.56 points, or 0.10 percent, at 1,484.42. The Nasdaq Composite Index was down 2.52 points, or 0.08 percent, at 3,132.19.


Monday was a market holiday for Martin Luther King Jr. Day in the United States. President Barack Obama at his inauguration for a second term on Monday called for aggressive action on climate change, economic equality and the federal budget.


Markets have recently been pressured by uncertainty stemming from Washington about the federal debt limit and spending cuts that could hamper U.S. growth.


Republican leaders in the House of Representatives said they aim to pass on Wednesday a nearly four-month extension of the U.S. debt limit, allowing the government to borrow enough to meet its obligations during that period.


Overall, S&P 500 fourth-quarter earnings rose 2.5 percent, according to Thomson Reuters data.


U.S. shares of Research in Motion jumped 8.2 percent to $17.13 a day after its chief executive said the company may consider strategic alliances with other companies after the launch of devices powered by RIM's new BlackBerry 10 operating system.


(Editing by Chizu Nomiyama and Kenneth Barry)



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An Appointment With Kim Dotcom






Paul Spain is the host of the weekly NZ Tech Podcast, one of New Zealand’s leading locally produced podcasts and often appears on TV and video as a commentator on consumer and business technology topics.


AUCKLAND, NEW ZEALAND — It’s been said that Kim Dotcom is a villain. Many, particularly those in the film industry and law enforcement, believe it. To others, he is a hero standing up for the rights of Internet users everywhere.






[More from Mashable: Kim Dotcom’s Mega Begins Early Rollout]


I wanted to find out for myself where he stood.


I arrived at the Dotcom Mansion early Sunday afternoon New Zealand time. It was just a few hours after the launch of Kim Dotcom’s new website Mega.co.nz and one year since his mansion was raided and he was arrested by New Zealand police in conjunction with a U.S. request to extradite him.


[More from Mashable: Kim Dotcom’s Mega Loses Web Domain Before Debut]


A friendly Kim Dotcom greeted each of us in a small media gathering, before sitting at the head of the table flanked by Ira Rothken, his California-based attorney.


I expected a prepared statement. That wasn’t the case. Dotcom shared his excitement about the 250,000 Mega signups in the first two hours and soon led into Q&A session for the remaining 45-minutes. He proved to be extremely adept in the way he responded to questions, working effortlessly to position Mega as an innovator. He indicated a desire to help the film industry succeed in the world of digital downloads and streaming — rather than being just a company out to line its own pockets.


Dotcom’s opinions and arguments for his cause were strong and generally well thought out, though on occasion seemed less robust. For instance he suggested he’d found a great way films could be funded in the future. His concept involves studios signing up digital streaming distributors around the world to fund a movie ahead of its production.


He felt distributors might pay for streaming rights before production, thereby funding the production. Unfortunately, I feel revenues from streaming (now and for the foreseeable future) are typically so low this would only provide a small fraction of the funds needed to produce a movie. And who wants to risk paying up front for a movie that might be a flop?


When asked about whether he would stay in New Zealand if he succeeds in stopping his extradition to the U.S. later this year, he was non-committal. On one hand he said he loved the country but on another he was worried he’d be persecuted by authorities, and in that case he’d leave. He spoke of journalists, music and movie producers on their way to visit him being harassed by customs officials upon arrival in the country –- including strip searches and even a request to view the content of one visitor’s laptop. I’ve not been able to verify these rather extreme occurrences.


Dotcom has positioned Mega as a service that sits between Dropbox and his previous site Megaupload -– with the added benefits of end-to-end encryption. He and Rothken went to great lengths to highlight that Mega would operate entirely within the law.


Dotcom made little effort to suggest Mega would be less prone to being a haven to copyright materials than Megaupload was. It seems there will continue to be a game of cat and mouse afoot as Dotcom and authorities try to outwit each other.


(A full audio recording of the discussion will be available later today at NZ Tech Podcast.)


In a one-on-one setting with Dotcom, I tried to gain more understanding about the open source elements of the Mega service and his commitment to New Zealand. Interestingly he was reticent to provide solid answers to either question and provided what I felt were just pat answers aimed at fobbing me off.


As we left the compound mid-afternoon, we saw Kim on stage rehearsing for the evening performance he would lead, with the support of musicians, his co-accused and investors in the new Mega. That performance included a dramatization of the raid on his home one year before. It was a gathering filled with media from around the country and a few from abroad. In the public context he continued to sell Mega extremely well –- to the point where someone commented to me that the event at times felt like a religious or marketing conference.


Dotcom currently remains on bail until his extradition hearing due in September. Amongst those in attendance, it appeared widely accepted that the bid to extradite him from New Zealand to the U.S. is likely to fail because of mistakes made by law enforcement and New Zealand spy agency GCSB.


After my visit, I’m left with a number of fairly clear impressions about Kim Dotcom and Mega. How you take these will depend on which side of the fence you stand:


  1. Mega’s management team is making every effort to operate in a manner that does not fall afoul of the law (though it could be argued they did the same with Megaupload).

  2. Mega will be used to distribute copyrighted materials such as movies, TV shows and music -– though likely to a lesser extent than Megaupload did.

  3. Kim Dotcom will continue to draw controversy and be outspoken about the rights of Internet users everywhere. He is not backing down.

Love him or hate him, Kim Dotcom is back in business and, if he’s to be believed, no fair court will be able to stop him.


Dotcom raid being re-enacted at the mansion.


Click here to view this gallery.


Photos by Paul Spain


This story originally published on Mashable here.


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European shares test two-year highs, yen volatile before BOJ

LONDON (Reuters) - European shares inched towards two-year highs on Monday, as a political attempt to break a budget impasse in the United States and expectations of aggressive Japanese stimulus bolstered the appetite for shares.


U.S. House Republican leaders said on Friday they would seek to pass a three-month extension of federal borrowing authority in the coming days to buy time for the Democrat-controlled Senate to pass a plan to shrink budget deficits.


European shares <.fteu3> were supported by the news <.eu>, but with no clear response from the Democrats and a thin session expected due to a market holiday in the United States, the impact on assets such as bonds and commodities was limited.


By 1500 GMT London's FTSE 100 <.ftse>, Paris's CAC-40 <.fchi> and Frankfurt's DAX <.gdaxi> were up 0.4 to 0.6 percent, leaving the pan-European FTSEurofirst 300 within touching distance of a two-year high and MSCI's world index <.miwd00000pus> steady at a 20-month high. <.l><.eu/>


Expectations that the Bank of Japan will deliver a bold monetary easing plan at the end of its two-day meeting on Tuesday also supported shares and created choppy conditions in the currency market.


According to sources familiar with the BoJ's thinking, the government of new Prime Minister Shinzo Abe and the central bank have agreed to set 2 percent inflation as a new target, supplanting a softer 1 percent 'goal'.


The yen, which has fallen 13 percent against the dollar over the last two months as the shift in Japanese policy has taken shape, touched a new 2-1/2 year low in early trading but then firmed as traders cut short positions given the BOJ has often fallen short of market expectations.


"Investors are being mindful that the moves we have seen over the course of the last month or two are just worth locking in at least until we understand how the BOJ are really going to play in the future," said Jeremy Stretch, head of currency strategy at CIBC World Markets.


CURRENCY WARS


Japanese equities have surged in recent weeks in anticipation of a more aggressive monetary policy stance, but not everyone is happy.


The slump in the yen has prompted Russia's deputy central bank governor to warn of a new round of 'currency wars' and the medium-term risk of running ultra-loose monetary policies is likely to be a theme of the World Economic Forum in Davos, which opens on Wednesday.


With little in the way of economic data or debt issuance and U.S. markets shut for the Martin Luther King public holiday, the rest of the day was expected to be a fairly quiet for investors.


As the first European finance ministers' meeting of the year got under way, most euro zone government bonds were trading virtually flat and the euro was steady at $1.3316.


Market pressure on Europe is now less intense thanks to the European Central Bank's promise to prevent a collapse of the euro. Policymakers are set to discuss Cyprus's plight and plans for the euro zone's bailout fund to directly recapitalize banks.


French Finance Minister Pierre Moscovici said as he arrived at the Brussels meeting that a proper recapitalization strategy was very important.


"Negotiations will be complex, and a final decision is unlikely to emerge soon. Risks for sovereign spreads in the periphery should be limited, but we have some concerns that the long-term solution may fall short of what a real banking union needs," said UniCredit economist Marco Valli.


POLITICAL GAME


The efforts by Republican lawmakers to give the U.S. government leeway to pay its bills for another three months dented demand for safe haven assets and pushed German government bond yields near the top of this year's range.


The U.S. Treasury needs congressional authorization to raise the current $16.4 trillion limit on U.S. debt sometime between mid-February and early March. A failure to achieve that could lead to a debt default.


"This is part of the political game, it remains to be seen whether the Democrats will accept it," KBC strategist Piet Lammens said, adding that investors' working scenario was that a solution to raise the ceiling would be eventually found anyway.


One of the key factors that drove 2-year German yields higher last week was also the prospect of sizeable early repayments of the 1 trillion euros euro zone banks took from the ECB roughly a year ago.


The central bank will publish on Friday how much banks plan to return at the optional first repayment date on January 30. A Reuters poll on Monday showed around 100 billion euros are expected to be repaid although some predict it could be as high as 250 billion.


OIL OVERSUPPLY


German markets showed no reaction after the country's center-left opposition party edged Chancellor Angela Merkel's conservatives from power in a regional election on Sunday, reviving its flagging hopes for September's national election.


The Bundesbank's latest report delivered an upbeat message on the country's economy, saying a recent slump should be short-lived and may have already bottomed out.


Oil prices took their cues from a report in the United States at the end of last week that showed consumer sentiment at its weakest in a year as a result of the uncertainty surrounding the country's debt crisis.


Concerns about demand overshadowed supply disruption fears reinforced by the Islamist militant attack and hostage-taking at a gas plant in Algeria, a member of the Organization of Petroleum Exporting Countries.


Brent futures were down by 40 cents to $111.47 per barrel by mid-afternoon. U.S. crude shed 43 cents to $95.13 per barrel after touching a four-month high last week.


"The over-riding fundamental feeling in the market is that crude oil is over-supplied in 2013," said Tony Nunan, an oil risk manager at Mitsubishi.


Last week's data showing a pick-up in the Chinese economy helped keep growth-sensitive copper prices steady at roughly $8,056 an ounce. Gold, meanwhile, reversed Friday's losses to stand at $1,688 an ounce.


(Additional reporting by Sudip Kar-Gupta, Marious Zaharia and Anooja Debnath; Editing by Peter Graff)



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