Health Benefits of Green Tea

By Robert Birsel

ISLAMABAD (Reuters) - The top U.S. military officer has sought to defuse tensions between Pakistan and India, urging Islamabad to use the Mumbai attacks as an opportunity to work with India to fight extremism.

India and the United States have blamed Pakistan-based militant group Lashkar-e-Taiba (LeT) for the attacks which have provoked a sharp rise in rhetoric between the countries which have fought three wars since 1947.

U.S. Joint Chiefs of Staff Chairman Admiral Mike Mullen arrived in Pakistan on Monday on his second visit since last month's attacks and met army chief General Ashfaq Kayani and the head of the military's Inter-Services Intelligence agency, Lieutenant-General Ahmed Shujaa Pasha, the embassy said.

"Mullen encouraged the Pakistani leaders to use this tragic event as an opportunity to forge more productive ties with India and to seek ways in which both nations can combat the common threat of extremism together," the U.S. embassy said in a statement.

Tension between nuclear-armed India and Pakistan has simmered since last month's assault on India's financial heart, which killed 179 people, and Pakistani Prime Minister Yousaf Raza Gilani said on Monday the armed forces were fully capable of defending the country if war eventuated.

Pakistan denies any links to the assault, blaming "non-state actors," and has promised to cooperate in investigations.

"He thanked both men for their efforts -- and the efforts of the Pakistani government -- to arrest members of Lashkar-e-Taiba and other extremist groups involved in the attacks," the embassy said in release on Tuesday.

Pakistan has detained scores of militants, including several top leaders, and shut offices and frozen the assets of the Jamaat-ud-Dawa (JuD) group, which the United Nations says is an alias for the LeT.

LeT was set up to fight Indian rule in Kashmir and has been linked by U.S. officials and analysts to Pakistan's powerful Inter-Services Intelligence military spy agency, who they say use it as a tool to destabilize India.

"INFRASTRUCTURE OF TERRORISM"

In response to the attack, India has put on hold a five-year old peace process that had brought better ties. It has also canceled a cricket tour of Pakistan.

Indian Foreign Minister Pranab Mukherjee told a meeting of Indian envoys from 120 countries on Monday the "infrastructure of terrorism in Pakistan" had to be dismantled permanently.

Mukherjee reiterated that India was keeping all its options open after the Mumbai attacks, comments the Indian media have widely interpreted to mean that a military response was still possible. Mukherjee said that was not his intent.

Amid the war of words, the Pakistani air force said it had "enhanced its vigilance" and Gilani said Pakistan's desire for peaceful coexistence should not be taken as weakness.

"If war is imposed upon us the whole nation would be united and the armed forces are fully capable of safeguarding and defending the territorial integrity," Gilani's office quoted him as telling Pakistan's high commissioner to India.

Army chief Kayani said Pakistan would give an equal response within minutes if India carried out a strike in Pakistan, the News newspaper reported.

(Editing by Augustine Anthony and Jeremy Laurence)

By Mike Peacock

LONDON (Reuters) - The world's economies limped toward Christmas on Tuesday, with Britain contracting more sharply than first thought, Spain tumbling into recession and New Zealand's downturn deepening.

U.S. GDP figures at 8:30 a.m. EST are forecast to show an unrevised 0.5 percent slide by the world's biggest economy, more evidence that global stimulus measures, bank bail outs and interest rates heading for zero may not prevent the worst downturn in decades.

The British economy shrank by 0.6 percent in the third quarter, revised data showed, the worst quarterly decline since 1990 and worse also than the earlier 0.5 percent estimate.

"It really does paint an exceptionally gloomy picture about the speed with which the UK economy has lapsed into recession," said Matthew Sharratt, UK economist at Bank of America.

He forecast worse to come.

New Zealand's economy declined by a seasonally adjusted 0.4 percent in the third quarter, the biggest drop in eight years, following a 0.2 percent fall in Q2.

And Spain succumbed to recession for the first time in 15 years. Spain's ISA activity indicator, which tracks gross domestic product, contracted 1.5 percent year-on-year between October and December, according to Economy Ministry data.

"The ISA shows the trend, and the trend is that the fall in fourth quarter GDP is going to be steeper than in the third," a ministry spokeswoman said.

Italian consumer confidence fell for a third month running in December but French consumer spending rose unexpectedly in November, driven by purchases of household goods and despite a continued slump in car sales.

Analysts were not taking that as much of a ray of hope.

"At the moment, (French) consumer spending is the only thing that's holding up amid the crisis, because everything else is going down," said Alexander Law, chief economist at Xerfi.

Nonetheless, European stocks edged up 0.4 percent, breaking a four-day losing run as investors bought banks, which have endured a battering this year.

U.S. stock futures pointed to a steady start on Wall Street.

Oil prices extended their sharp fall to drop further below $40 a barrel, weakened anew by growing signs of dwindling world demand.

MORE SPENDING, FEWER JOBS

Governments around the world have ramped up spending to try to cushion the economic blow of the worst financial crisis in 80 years, underscored by a record $38 billion two-year note auction by the U.S. government on Monday.

The auction drew bids worth more than twice that amount, showing the government is so far having no trouble attracting buyers for its debt, even as yields drop below 1 percent.

Even more stimulus is on the way when U.S. President-elect Barack Obama takes office next month. His staff is discussing how much money Congress should authorize for a package that is likely to be well over $600 billion.

Governments should be ready to increase their spending on economic programs if circumstances require it, the International Monetary Fund's chief economist Olivier Blanchard said in comments published on Tuesday.

"The coming months will be very bad. Halting this loss of confidence, providing stimulus and, if necessary, replacing private demand are essential if we want to prevent the recession from becoming a Great Depression," Blanchard told Le Monde.

Companies around the globe are facing evaporating demand, which has prompted many of them to slash jobs and investment.

U.S. heavy equipment maker Caterpillar Inc said on Monday it would cut white-collar pay by as much as half and offer buyouts to some employees as it looks to cut costs during what it characterized as "uncertain times."

Textron Inc, the world's largest maker of corporate jets, said it will eliminate 2,200 jobs worldwide.

China resorted to moral suasion to urge its companies to hold on to as many workers as possible and vowed to support important industries, as it faces the prospect of increasing unrest in the face of rising unemployment.

"Companies must not lay off workers easily," Premier Wen Jiabao said during a visit to carmaker Changan Group in the southwestern city of Chongqing, the official China Daily said.

"The automobile industry has a long industrial chain and it is an industry the government should strongly support," he said.

(Editing by Jon Boyle)

By MacDonald Dzirutwe

HARARE (Reuters) - Zimbabwean President Robert Mugabe described U.S. President George W. Bush on Tuesday as a "dying horse" after the United States said it could no longer support a Harare government that includes him.

U.S. Assistant Secretary of State Jendayi Frazer said on Sunday Mugabe reneged on a power-sharing deal and he was "completely out of touch" and was responsible for turning the once prosperous country into a "failed state."

Mugabe and opposition leader Morgan Tsvangirai agreed on September 15 to form a unity government, a pact supported at the time by the United States. But that agreement has unraveled due to a fight over control of important ministries.

"The inclusive government does not include Mr. Bush and his administration. It doesn't even know him. It has no relationship with him, so let him keep his comments, they are undesired, irrelevant, quite stupid and foolish," Mugabe said at a burial ceremony for a ruling party official.

"We realize these are the last kicks of a dying horse. We obviously are not going to pay attention."

Zimbabwe has sunk deeper into crisis while the stalemate drags on.

Hyper-inflation means prices double every day, a cholera epidemic has killed more than 1,100 people and the opposition has accused the ruling party of abducting its supporters, a charge it denies.

Western countries including the United States blame Mugabe for Zimbabwe's woes and have intensified calls for him to step down.

There is little Western powers can do to force Mugabe out. Sanctions have failed to weaken him and analysts say his Western foes would not contemplate military intervention because Zimbabwe is not seen as a strategic country with key resources such as oil.

Mugabe has also remained defiant in the face of tough criticism from regional leaders.

Most African leaders, including neighbor South Africa, Africa's biggest economy, have stopped short of calling on him to quit.

PARIS (Reuters) - Governments should be ready to increase their spending on economic stimulus programs if circumstances require it, the International Monetary Fund's chief economist Olivier Blanchard said in comments published on Tuesday.

In an interview with French daily Le Monde, Blanchard called on Germany in particular to boost its spending in the next few months as some of its European partners such as France have called for.

"The coming months will be very bad. Halting this loss of confidence, providing stimulus and, if necessary, replacing private demand are essential if we want to prevent the recession from becoming a Great Depression," Blanchard told Le Monde.

Blanchard said the IMF was sticking to a target of 2 percent of global gross domestic product for the fiscal stimulus required, but warned that more may be needed.

"If the circumstances require it, states must be ready to do more, 3 percent or more if necessary," he said, adding: "We must think about it now because it is not easy to spend such large sums of money efficiently."

Germany has been criticized by some other European countries, particularly France, for not being prepared to spend more on an EU-wide stimulus program to kickstart growth as the global financial crisis hits the real economy.

Berlin says it will review its stimulus program in January to see if more spending is necessary.

"The important thing is to support activity and boost confidence now. The coming six months are of capital importance," Blanchard said. "If Germany did not participate sufficiently in this stimulus, many other countries would also hesitate to do so and the effect would be disastrous for Europe."

Blanchard also criticized Britain's decision to cut value-added tax by 2.5 percentage points, saying it would not influence consumers' behavior significantly.

"Temporarily cutting VAT, a measure that was adopted in Great Britain, does not seem to me to be a good idea -- 2 percent less is not perceived by consumers as a real incentive to spend," he said.

By contrast, he said a French measure aimed at encouraging people to buy cars was a good idea.

(Reporting by Francois Murphy; editing by David Stamp)

By Jessica Wohl

CHICAGO (Reuters) - Just 38.7 percent of Americans went shopping during the final weekend before Christmas, the lowest turnout in at least six years, according to a survey released on Tuesday.

The traffic was especially weak in the U.S. Northeast and Midwest, which were hit by winter storms from Friday through Sunday. People who did shop flocked to stores offering deep discounts, led by Wal-Mart Stores Inc.

The percentage of Americans shopping this past weekend is down from 41.6 in 2007, according to the survey by America's Research Group and UBS.

Wal-Mart was the big winner of the weekend, with 69 percent of shoppers saying they visited its stores, up from just 33 percent during the same weekend last year.

The last Saturday before Christmas, or "Super Saturday," usually ranks just behind "Black Friday" -- the day after the U.S. Thanksgiving holiday -- as the single largest holiday sales day. But snowstorms and frigid temperatures hit several areas of the United States, putting a damper on what is already expected to be the weakest holiday season in decades.

"Even in areas where the weather wasn't bad, though, the shopper levels were not good. In areas where there was bad weather, obviously it was even more of a downer," said Britt Beemer, founder and chief executive of America's Research Group.

The U.S. economy has been suffering from a recession since December 2007, and tighter credit and more job losses are pressuring consumers' already tight budgets.

Shoppers are also buying fewer gift cards this year, worried that retailers might go out of business before the cards can be used.

Beemer and other retail experts expect there could be more retail bankruptcies in 2009 than usual as chains that came up short this holiday season fight to survive. Circuit City Stores Inc and KB Toys are among the companies that have already filed for Chapter 11 bankruptcy protection.

Wal-Mart was the only retailer Beemer called a "star performer" because it retained 91.2 percent of last year's holiday shoppers this season, according to the survey.

Retailers that kept less than 69 percent of last holiday season's shoppers included American Eagle Outfitters Inc, Lowe's Cos Inc, Macy's Inc, Wal-Mart's Sam's Club, Walgreen Co, Dillard's Inc and Sports Authority Inc.

Just 51.5 percent of people surveyed said they have bought gift cards so far this year, down from 57.6 percent at the same time last year. By this time in 2006, 66.8 percent had bought gift cards, Beemer said.

Once again, toys topped the list as the top gift.

The sixth and final installment of the America's Research Group/UBS Christmas Survey for 2008 included 1,000 telephone interviews conducted on Saturday and Sunday and has a margin of error of plus or minus 3.8 percent.

(Editing by Jeffrey Benkoe)