UPDATE 2-Libya, Italy patch up Mohammad T-shirt row

Reuters: [2008-05-09 23:26:00]

(Recasts after Libya accepts apology)

By Gavin Jones

ROME, May 9 (Reuters) - Libya accepted on Friday an apology from an Italian minister whose T-shirt offended Muslims in 2006, and withdrew threats of "repercussions" against Italy over the anti-immigrant party politician's inclusion in a new government.

Roberto Calderoli of the Northern League was named this week as a member of the new administration of Silvio Berlusconi, who was installed as prime minister for a third term.

A statement from the Libyan embassy in Rome said Libya noted "with satisfaction" the "public statement of regret" by Calderoli and, after further contacts with the Italian authorities, considered that "the case is closed".

Berlusconi, facing a diplomatic clash -- and possible energy sanctions -- after Libya made clear its anger at his choice of minister, said earlier he was "confident we will be able to clarify and calm down the situation with Libyan authorities".

Calderoli quit Berlusconi's last government in 2006 after wearing a T-shirt with a Danish cartoon of the Prophet Mohammad that angered Muslims worldwide. He was blamed for rioting that broke out at Italy's consulate in the Libyan city of Benghazi.

Libya had warned of "catastrophic consequences" if Calderoli became a minister again and reacted to his swearing-in on Thursday by saying it would no longer cooperate on preventing illegal immigrants from Africa landing on Italian shores.

The Libyan government was reported to be preparing sanctions against Italy such as shelving an agreement to extend the activities of Italian energy company ENI in Libya.

ANGRY RESPONSE

Returning as minister for "simplification" -- a new post without a full ministerial portfolio -- Calderoli was asked by Italian television about Libya's angry response to his appointment, and whether he regretted the T-shirt incident.

"Mine was a message of peace and rapprochement between the monotheistic religions but was misunderstood," he said. "I hope there aren't any problems today linked to something in the past that should be considered water under the bridge."

The Libyan embassy's statement said Calderoli had had further talks with the ambassador "during which he clarified the sense of the declarations he had already made to the media of the two countries."

New Foreign Minister Franco Frattini earlier on Friday called Libya "a friend" and said Italy "is committed to helping to develop those initiatives of strong collaboration with Europe that Libya wants."

Italy is Libya's main trading partner in Europe and ENI's Libyan assets are the subject of negotiations in the company's landmark cooperation deal with Russia's Gazprom.

Earlier on Friday Libya had demanded that Calderoli either step down or apologise for the 2006 episode.

"If the Italian government does not adopt one of these two options, it has to prepare itself for confronting the repercussions from its choice," the Gaddafi International Foundation said in a statement posted on its Web site.

The Foundation is chaired by Libyan leader Muammar Gaddafi's son Saif al-Islam, widely thought to play a major role in Libya's diplomacy with Western states.

Since the T-shirt incident, Calderoli has continued to offend Muslims in Italy by protesting at the construction of new mosques and threatening "pig day" protests to defile them. He once walked his own pet pig over a site intended for a mosque.

The Northern League, a long-standing ally of Berlusconi, is know for its vehement anti-immigrant rhetoric. The party made surprise gains in mid-April's election and was rewarded with four cabinet posts, including the Interior Ministry.

(Additional reporting by Stephen Brown and Lamine Ghanmi; Editing by Charles Dick) ((gavin.jones@reuters.com; +39 06 8522 4351; Reuters Messaging: stephen.brown.reuters.com@reuters.net))

Keywords: ITALY LIBYA/

UPDATE 2-Files show ties of Venezuela-Colombia rebels - U.S.

Reuters: [2008-05-09 23:22:00]

(Adds additional quotes)

WASHINGTON, May 9 (Reuters) - Venezuelan President Hugo Chavez's ties to Colombian rebels are deeper than previously thought, U.S. officials said on Friday, following an analysis of files on a dead guerrilla leader's laptops.

The files appear to be authentic and underscore U.S. concerns about Chavez's quest for more influence in the region, an intelligence official said. Their discovery in March raised speculation the United States would put Venezuela on its list of state sponsors of terrorism.

"It (the analysis) reinforces the U.S. government's strong position that Chavez is attempting in various ways to project his influence throughout the region and that influence in some ways could be construed as destabilizing," the intelligence official said.

Another U.S. official, who spoke on condition of anonymity because the issue involves classified information, described the files as a huge public relations win for Colombia, which is battling the guerrillas of the leftist Revolutionary Armed Forces of Colombia, or FARC.

"The involvement does seem to extend fairly high up in the Venezuelan government. This isn't a bunch of local yokels on the border doing their own thing," the official said.

Chavez contends the Colombian government faked the files.

Although Chavez's sympathies for the FARC are well known, Colombia has said the files seized in a March attack show Chavez offered financial support to the group.

The Wall Street Journal reported on Friday that the files also indicate Venezuela offered to arm the rebel group, possibly with rocket-propelled grenades and ground-to-air missiles. It said Venezuela offered FARC the use of a port to receive arms shipments.

The files document discussions between the rebels and Chavez about closer ties and portray a "deeper relationship than previously known," the intelligence official said.

The March attack by Colombia on a rebel camp in Ecuador killed a senior FARC leader and inflamed regional tensions. That and other recent attacks are seen as having weakened the rebel group that has been fighting a four-decade civil war in Colombia, to the point where FARC is "on its heels," the intelligence official said.

"However, they have shown an ability in the past to regroup and to regenerate leadership."

Bernardo Alvarez, Venezuela's ambassador to the United States, told the Journal in an interview on Wednesday, that the computer files were "false and an attempt to discredit the Venezuelan government."

The files indicate Venezuela has raised the prospect of drawing up a joint security plan with FARC and has sought basic training in guerrilla-warfare techniques, the Journal said, suggesting Chavez was preparing for a possible U.S. invasion of Venezuela.

(Reporting by Randall Mikkelsen at Guantanamo Bay U.S. Naval Base, Cuba, and David Morgan in Washington; Editing by Eric Beech)

((Reuters messaging: randall.mikkelsen@reuters.com; 1 202 898 8300)) Keywords: COLOMBIA CHAVEZ/REBELS

UPDATE 3-Toronto stocks hit by profit-taking despite oil

Reuters: [2008-05-09 23:08:00]

(Adds details)

By Wojtek Dabrowski

TORONTO, May 9 (Reuters) - The Toronto Stock Exchange's main index finished in the red on Friday as profit-taking cooled the energy sector even though oil prices hit another record high.

The S&P/TSX composite index <.GSPTSE> dropped 86.80 points, or 0.59 percent, to close at 14,521.19.

"We had such a very good day yesterday and this market is still a very tricky market, so we probably ran into some profit-taking today," said John Kinsey, portfolio manager at Caldwell Securities Ltd. The index rose more than 200 points on Thursday.

Eight of the 10 main subgroups on the benchmark ended lower, including the key energy and materials sectors, which dropped 0.52 percent and 1.83 percent, respectively. Financials inched 0.06 percent lower.

The S&P/TSX 60 index of Canadian large-cap stocks lost 5.99 points, or 0.69 percent, to end at 863.46.

Oil shares fell even though crude jumped to a record high above $126 a barrel, extending its gains on fuel supply concerns and speculator buying.

Canadian Natural Resources Ltd <CNQ.TO> was among the energy companies that fell, losing C$1.85, or 1.9 percent, to C$94.15 a day after it reported a surge in quarterly profit because of rocketing oil prices.

Oil and gas powerhouse EnCana Corp <ECA.TO> fell 96 Canadian cents, or 1.1 percent, to end at C$86.52.

"The stocks are down for a change, they're not following their commodity," Kinsey said.

Gold prices moved higher on the back of oil on Friday -- an increase not reflected in the shares of gold producers such as Barrick Gold <ABX.TO>, which fell C$1.49, or 3.6 percent, to finish at C$39.51.

Among companies reporting results, ACE Aviation Holdings <ACEa.TO>, parent of airline Air Canada <ACa.TO>, posted a first-quarter loss on Friday because of one-time charges and said it would buy back about 42 percent of its stock. Its shares spiked C$1.41, or 7 percent, to C$21.46.

In the United States, the Dow Jones industrial average shed 120.90 points, or 0.94 percent, to close at 12,745.88. There, a dismal set of results from insurance behemoth American International Group <AIG.N> raised doubts that the end of the credit crisis was near. The tech-heavy Nasdaq moved lower by 5.72 points, or 0.23 percent, to 2,445.52.

($1=$1.02 Canadian) (Reporting by Wojtek Dabrowski; editing by Peter Galloway) ((wojtek.dabrowski@reuters.com; +1-416-941-8009; Reuters Messaging: wojtek.dabrowski.reuters.com@reuters.net)) Keywords: MARKETS CANADA STOCKS

UPDATE 3-US urges Iran, Syria to stop support for Hezbollah

Reuters: [2008-05-09 23:07:00]

(Adds quotes and background)

CRAWFORD, Texas, May 9 (Reuters) - The White House said on Friday it was "very troubled" by Hezbollah's actions in Beirut and urged Iran and Syria to halt support for the militant group after its fighters in the Lebanese capital routed forces loyal to the government.

The Bush administration also said it was conferring with the U.N. Security Council and other regional governments on possible action against Hezbollah for the violence that has racked Beirut for days.

"After months of paralyzing the democratically elected Lebanese government, Hezbollah has now turned its arms against the Lebanese people and challenged Lebanon's security forces for control of the streets," White House spokesman Gordon Johndroe said in a statement.

"The United States is consulting with other governments in the region and with the U.N. Security Council about measures that must be taken to hold those responsible for the violence in Beirut accountable," he said. Earlier on Friday, Johndroe told reporters, "We are very troubled by the recent actions of Hezbollah."

Speaking in Crawford, Texas, where U.S. President George W. Bush was at his ranch preparing for his daughter's wedding, Johndroe said the United States was calling on Hezbollah to "stop their attempt to defy the lawful decisions taken taken by the democratically elected Lebanese government."

"We also urge Iran and Syria to stop their support of Hezbollah and its destabilizing effect on the government of Lebanon," he said. Bush has led international campaigns aimed at diplomatically isolating Tehran and Damascus.

"The United States stands firmly with the Lebanese government and the people of Lebanon," Johndroe said.

Bush is due to meet Lebanese Prime Minister Fouad Siniora on May 18 at the Egyptian Red Sea resort of Sharm el-Sheikh at the end of a week-long visit to the Middle East.

Johndroe said the talks were expected to go ahead, but that U.S. officials would understand if Siniora decided to stay in Lebanon to deal with the crisis.

U.S. Secretary of State Condoleezza Rice telephoned leaders in the region about the events in Lebanon, State Department spokesman Sean McCormack told reporters in Washington.

"I would restate our unswerving commitment and support for the Siniora government," he said. "They are doing all the right things. ... Its use and deployment of the military serve the best interests of the Lebanese people and Lebanon."

At least 18 people have been killed and 38 wounded in three days of battles between pro-government gunmen and fighters loyal to Hezbollah, a Shi'ite political movement with a powerful guerrilla army.

The fighting, the worst internal strife since the 1975-90 civil war, erupted this week after the government decided to dismantle Hezbollah's military communications network. The group said the pro-Western government had declared war. (Reporting by Jeremy Pelofsky and Susan Cornwell; writing by Matt Spetalnick; editing by David Alexander and Mohammad Zargham) ((jeremy.pelofsky@reuters.com ; +1 202 898 8300; Reuters Messaging: matt.spetalnick.reuters.com@reuters.net ))

Keywords: LEBANON USA/

UPDATE 4-Egypt, Saudi Arabia call for Arab meeting on Lebanon

Reuters: [2008-05-09 22:46:00]

(Adds Egypt minister comments, French support)

CAIRO, May 9 (Reuters) - Egypt and Saudi Arabia called on Arab foreign ministers on Friday to meet urgently in Cairo to discuss the political crisis in Lebanon.

The meeting could come in the next two days, an Egyptian spokesman said.

Egyptian Foreign Minister Ahmed Aboul Gheit said in a statement the meeting was aimed at stopping "the armed elements' domination of the Lebanese street".

Hezbollah gunmen took control of large areas of Beirut on Friday in a third day of fighting against forces loyal to the U.S.-backed coalition.

"Only parties which want Lebanon to stay in conflict would benefit from this situation," Aboul Gheit added.

Egypt's Foreign Ministry spokesman said earlier Egypt and Saudi Arabia had applied for an immediate meeting of the council of foreign ministers of the Arab League, and expected it to happen within the coming two days.

French Foreign Minister Bernard Kouchner said in a statement the meeting would be held on Sunday in Cairo.

Arab League officials were not immediately available to confirm the date of the meeting but it said secretary-general, Amr Moussa, had cut short a visit to the United States and was back in Cairo on Friday to start consultations.

A Saudi Foreign Ministry official said earlier his country "called on all political factions to listen to the voice of wisdom and to place the country's interests above all other considerations", Saudi state television said.

"Lebanon's plunge into blind turmoil would only be a victory for foreign extremist forces," the unnamed official said.

At least 18 people have been killed in gun battles since the U.S.-backed government took action against a communications network run by Hezbollah, a Shi'ite political bloc backed by Iran and Syria, which runs a well-trained guerrilla army.

Saudi Arabia has emerged as a leading Arab power, as surging world oil prices have enabled the U.S. ally to play a bigger role in settling regional disputes. Saudi Arabia sees itself as the centre of mainstream Sunni Islam.

The kingdom is a main backer of the Sunni-led government in Lebanon.

It has backed Lebanon's economy with injections of cash, and blamed Hezbollah for Israel's 2006 land and air assault on the Arab country, saying it had provoked the Jewish state. (Additional reporting by Wael Gamal in Cairo; Writing by Firouz Sedarat; editing by Richard Balmforth) ((Gulf newsroom, dubai.newsroom@thomsonreuters.com))

Keywords: LEBANON/SAUDI