Iran upbeat on nuclear talks, West wary

ALMATY (Reuters) - Iran gave an upbeat assessment of two days of nuclear talks with world powers that ended on Wednesday, but Western officials said Tehran must start taking concrete steps to ease mounting concerns about its atomic activity.

The first negotiations between Iran and six world powers in eight months ended without a breakthrough in Almaty, but they agreed to meet again at expert level in Istanbul next month and resume political discussions in the Kazakh city on April 5.

Israel, assumed to be the Middle East's only nuclear-armed power, is watching the talks closely. It has strongly hinted it might attack Iran if diplomacy and sanctions fail to stop it from acquiring nuclear weapons. Iran denies any such aim.

Iran's foreign minister said he was optimistic an agreement could be reached with the powers - the United States, France, Russia, Britain, Germany and China - on the country's disputed nuclear program.

"Very confident," Ali Akbar Salehi told Reuters when asked on the sidelines of a U.N. conference in Vienna how confident he was of a positive outcome.

The six powers offered at the February 26-27 Almaty meeting to lift some sanctions if Iran scaled back nuclear activity that the West fears could be used to build a bomb.

Tehran, which says its program is entirely peaceful, did not agree to do so and the sides did not appear any closer to a deal to resolve a decade-old dispute that could lead to another war in the Middle East if diplomacy fails.

But Iran still said the talks were a positive step in which the six powers tried to "get closer to our viewpoint".

Western officials had made clear they did not expect major progress in Almaty, aware that the closeness of Iran's presidential election in June is raising political tensions in Tehran and makes significant concessions unlikely.

"I hope the Iranian side is looking positively on the proposal we put forward," said European Union foreign policy chief Catherine Ashton, who led the talks on behalf of the powers. "We have to see what happens next."

The United States did not expect a breakthrough and "the result was clearly in line with those expectations," a senior U.S. official said.

The meeting was "useful" as the two sides agreed dates and venues for follow-up talks but there was a need for progress on confidence building measures, the official added.

UNDERGROUND NUCLEAR SITE

The West's immediate priority is that Iran halts higher-grade uranium enrichment and closes an underground facility, Fordow, where this work is carried out. The material is a relatively short technical step from bomb-grade uranium.

"What we care about at the end is concrete results," the U.S. official said.

One diplomat in Almaty said the Iranians appeared to be suggesting at the negotiations that they were opening new avenues, but that it was not clear if this was really the case.

Both sides said experts would meet for talks in the Turkish city of Istanbul on March 18 and that political negotiators would return to Almaty on April 5-6.

Russian negotiator Sergei Ryabkov confirmed that the powers had offered to ease sanctions on Iran if it stops enriching uranium to 20 percent fissile purity - a short technical step from weapons grade - at the Fordow underground site where it carries out its most controversial uranium enrichment work.

Western officials said the offer of sanctions relief included a resumption of trade in gold and precious metals.

One diplomat said that lifting an embargo on imports of Iranian petrochemical products to Europe, if Iran responded, was also on the table. But a U.S. official said the world powers had not offered to suspend oil or financial sanctions.

The sanctions are hurting Iran's economy and its chief nuclear negotiator, Saeed Jalili, suggested Iran could discuss its production of higher-grade nuclear fuel, although he appeared to rule out shutting Fordow.

In comments in Persian translated into English, Jalili told a news conference Fordow was under the supervision of the U.N. nuclear watchdog and there was no justification for closing it.

MOOD "MORE OPTIMISTIC"

Asked about the production of 20-percent enriched fuel, he reiterated Iran's position that it needed this for a research reactor and had a right to produce it.

Iran says its enrichment program is aimed solely at fuelling nuclear power plants so that it can export more oil, and that Israel's assumed nuclear arsenal is the main threat to peace in the region.

But Jalili did indicate that Iran might be prepared to talk about the issue, saying: "This can be discussed in the negotiations ... in view of confidence building."

Iran has also previously suggested that 20-percent enrichment was up for negotiation if it received the fuel from abroad instead. It also wants sanctions lifted.

"While an agreement to meet again may not impress skeptics of diplomacy, an important development did occur," said Trita Parsi, an expert on Iran. "The parties began searching for a solution by offering positive measures in order to secure concessions from the other side.

Another expert, Dina Esfandiary of the International Institute for Strategic Studies, said: "I note that the mood is more optimistic and that's great, but a deal still hasn't been reached and in my view its unlikely to be reached before the Iranian elections have come and gone."

(Additional reporting Fredrik Dahl in Almaaty, Georgina Prodhan in Vienna, Zahra Hosseinian in Zurich, Gabriela Baczynska in Moscow, Dan Williams in Jerusalem and Marcus George in Dubai; Writing by Timothy Heritage and Fredrik Dahl; Editing by Jon Hemming)

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Italy parties seek way out of election stalemate

ROME (Reuters) - Italy's stunned political parties looked for a way forward on Tuesday after an election that gave none of them a parliamentary majority, posing the threat of prolonged instability and European financial crisis.

The results, notably by the dramatic surge of the anti-establishment 5-Star Movement of comic Beppe Grillo, left the center-left bloc with a majority in the lower house but without the numbers to control the powerful upper chamber, the Senate.

Financial markets fell sharply at the prospect of a stalemate that reawakened memories of the crisis that pushed Italy's borrowing costs toward unsustainably high levels and brought the euro zone to the brink of collapse in 2011.

"The winner is: Ingovernability," ran the headline in Rome newspaper Il Messaggero, reflecting the deadlock the country will have to confront in the next few weeks as sworn enemies are forced to work together to form a government.

Pier Luigi Bersani, head of the center-left Democratic Party (PD), has the difficult task of trying to agree a "grand coalition" with former prime minister Silvio Berlusconi, the man he blames for ruining Italy, or striking a deal with Grillo, a completely unknown quantity in conventional politics.

The alternative is new elections either immediately or within a few months, although both Berlusconi and Bersani have indicated that they want to avoid a return to the polls if possible: "Italy cannot be ungoverned and we have to reflect," Berlusconi said in an interview on his own television station.

For his part, Grillo, whose "non-party" movement won the most votes of any single party, has indicated that he believes the next government will last no more than six months.

"They won't be able to govern," he told reporters on Tuesday. "Whether I'm there or not, they won't be able govern."

He said he would work with anyone who supported his policy proposals, which range from anti-corruption measures to green-tinted energy measures but rejected suggestions of entering a formal coalition: "It's not time to talk of alliances... the system has already fallen," he said.

The election, a massive rejection of the austerity policies applied by Prime Minister Mario Monti with the backing of international leaders from U.S. President Barack Obama to German Chancellor Angela Merkel, caused consternation across Europe.

"This is a jump to nowhere that does not bode well either for Italy or Europe," said Spanish Foreign Minister Jose Manuel Garcia-Margallo.

In a sign of worry at the top over what effect the elections could have on the economy, Monti, whose austerity policies were repudiated by voters who shunned his centrist bloc, met the governor of the central bank, the economy minister and the European affairs minister to discuss the situation on Tuesday.

The former EU commissioner and his team of technocrats, who were brought in to govern when Berlusconi was consumed by crisis and scandal, will stay on until a new administration is formed.

UNTHINKABLE WITHOUT GRILLO

Projections for the Senate by the Italian Centre for Electoral Studies indicated that the center-left would have 121 seats, against 117 for the center-right alliance of Berlusconi's PDL and the regionalist Northern League. Grillo would take 54.

That leaves no party with the majority in a chamber which a government must control to pass legislation and opened up the prospect of previously inconceivable partnerships that will test the sometimes fragile internal unity of the main parties.

"The idea of a majority without Grillo is unthinkable. I don't know if anyone in the PD is considering it but I'm against it," said Matteo Orfini, a member of Bersani's PD secretariat.

"The idea of a PD-PDL government, even if it's backed by Monti, doesn't make any sense," he said.

Berlusconi, a media magnate whose campaigning all but wiped out Bersani's once commanding opinion poll lead, hinted in a telephone call to a morning television show that he would be open to a deal with the center-left - but not with Monti, the economics professor who replaced him 15 months ago.

"Italy must be governed," Berlusconi said, adding that he "must reflect" on a possible deal with the center-left. "Everyone must be prepared to make sacrifices," he said of the groups which now have a share of the legislature.

The Milan bourse was down almost 4 percent and the premium Italy pays over Germany to borrow on 10-year widened to a yield spread of 338 basis points, the highest since December 10 and more than 80 points above the level seen earlier on Monday.

At an auction of six-month Treasury bills, Italy's borrowing costs jumped by more than two thirds with the yield reaching 1.237 percent, the highest since October and compared to just 0.730 percent in a similar sale a month ago.

The euro dropped to an almost seven-week low against the dollar in Asia on fears of a revival of the euro zone crisis. It fell as far as $1.3042, its lowest since January 10.

"What is crucial now is that a stable functioning government can be built as swiftly as possible," said German Foreign Minister Guido Westerwelle. "This is not only in the interests of Italy but in the interests of all Europe."

However the view from some voters, weary of the mainstream parties, was unrepentant: "It's good," said Roger Manica, 28, a security guard in Rome, who voted for the center-left PD.

"Next time I'll vote 5-Star. I like that they are changing things, even if it means uncertainty. Uncertainty doesn't matter to me, for me what's important is a good person who gets things done," he said. "Look how well they've done."

A long recession and growing disillusionment with mainstream parties and tax-raising austerity fed the bitter public mood and contributed to the massive rejection of Monti, whose centrist coalition was relegated to the sidelines.

Berlusconi's campaign, mixing sweeping tax cut pledges with relentless attacks on Monti and Merkel, echoed many of the themes pushed by Grillo and underlined the increasingly angry mood of the Italian electorate.

But even if the next government turns away from the tax hikes and spending cuts brought in by Monti, it will struggle to revive an economy that has scarcely grown in two decades.

Monti was widely credited with tightening Italy's public finances and restoring its international credibility after the scandal-plagued Berlusconi, who is currently on trial for having sex with an under-age prostitute.

However he struggled to pass the kind of structural reforms needed to improve competitiveness and lay the foundations for a return to economic growth. A weak center-left government may not find it any easier.

For Italian business, with an illustrious history of export success, the election result brought dismay that there would be no quick change to what they see as a regulatory sclerosis that has kept the economy virtually stagnant for a decade.

"This is probably the worst possible scenario," said Francesco Divella, whose family began selling pasta under its eponymous brand in 1890 in the southern region of Puglia.

"We are very concerned about the uncertainty and apparent ungovernability," said Silvio Pietro Angori, chief executive of Pininfarina, which has designed Ferrari sportscars since 1950. "A company competing on the global markets like Pininfarina needs the support of a stable government that inspires trust."

One of the country's leading bankers summed up his personal reaction: "I'm in shock," he told Reuters. "What a mess!"

(Additional reporting by Barry Moody, Gavin Jones, Lisa Jucca, Steven Jewkes, Steve Scherer Writing by Philip Pullella and James Mackenzie; Editing by Alastair Macdonald)

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Gloomy Italians vote in election crucial for euro zone

ROME (Reuters) - Italy voted on Sunday in one of the most unpredictable elections in years, with many voters expressing rage against a discredited elite and doubt that a government will emerge strong enough to combat a severe economic crisis.

"I am pessimistic. Nothing will change," said Luciana Li Mandri, 37, as she cast a ballot in the Sicilian capital Palermo on the first of two days of voting that continues on Monday.

"The usual thieves will be in government."

Her gloom reflected the mood across Italy, where many voters said they thought the new administration would not last long, just the opposite of what Italy needs to combat the longest slump in 20 years, mounting unemployment and a huge public debt.

The election is being closely watched by investors whose memories are fresh of a debt crisis which forced out scandal-plagued conservative premier Silvio Berlusconi 15 months ago and saw him replaced by economics professor Mario Monti.

"I'm not confident that the government that emerges from the election will be able to solve any of our problems," said Attilio Bianchetti, a 55-year-old building tradesman in Milan.

Underlining his disilluion with the established parties, he voted for the 5-Star Movement of comic Beppe Grillo.

An iconclastic, 64-year-old Genoese, Grillo has screamed himself hoarse with obscenity-laced attacks on politicians that have channeled the anger of Italians, especially a frustrated young generation hit by record unemployment.

"He's the only real new element in a political landscape where we've been seeing the same faces for too long," said Vincenzo Cannizzaro, 48, in Palermo.

Opinion polls give the centre-left coalition of Pier Luigi Bersani a narrow lead but the result has been thrown open by the prospect of a huge protest vote against Monti's painful austerity measures and rage at a wave of corruption scandals.

A weak government could usher in new instability in the euro zone's third largest economy and cause another crisis of confidence in the European Union's single currency.

Television tycoon Berlusconi, showing off unrivalled media skills and displaying extraordinary energy for a man of 76, has increased uncertainty over the past couple of months by halving the gap between his centre-right and Bersani.

"I am pessimistic. There is such political fragmentation that we will again have the problem of ungovernability" said Marta, a lawyer voting in Rome who did not want to give her family name. "I fear the new government won't last long."

Another Roman voter, lab technician Manila Luce, 34, said: "I am voting Grillo and I hope a lot of people do. Because it's the only way to show how sick to the back teeth we are with the old parties."

Voting continues until 10 p.m. (4 p.m. EST) and resumes on Monday at 7 a.m. Exit polls will be published shortly after polls close at 3 p.m. on Monday. Full official results are expected by early Tuesday.

Snow in the north was expected to last into Monday and could discourage some of the 47 million eligible voters. Authorities said they were prepared for the weather and in the central city of Bologna roads were cleared of snow before voting started.

TOPLESS FEMINISTS

Several bare-breasted women protested against Berlusconi when he voted in Milan. They were bundled away by police.

The four-time premier, known for off-color jokes and a constant target of feminists, is on trial for having sex with an underage prostitute during "bunga bunga" parties at his villa.

Most experts expect a coalition between Bersani and Monti to form the next administration, but whatever government emerges will have to try to reverse years of failure to revitalize one of the most sluggish economies in the developed world.

The widespread despair over the state of the country, where a series of corruption scandals has highlighted the stark divide between a privileged political elite and millions of ordinary Italians struggling to make ends meet, has left deep scars.

"It's our fault, Italian citizens. It's our closed mentality. We're just not Europeans," said voter Li Mandri in Palermo.

"We're all about getting favors when we study, getting a protected job when we work," she said. "That's the way we are and we can only be represented by people like that as well."

ECONOMIC AGENDA

Even if Bersani wins as expected, Analysts are divided over whether he will be able to form a stable majority that can force through sweeping economic reforms.

His centre-left is expected to have firm control of the lower house, thanks to rules that give a strong majority to whichever party wins the most votes nationally.

But a much closer battle will be fought for the Senate which is elected on a regional basis and which has equal law making powers to the chamber.

Berlusconi has clawed back support by promising to repeal Monti's hated new housing tax, the IMU, and to refund the money. He relentlessly attacked what he called the "Germano-centric" policies of the former European Union commissioner.

Think-tank consultant Mario, 60, said on his way to vote in Bologna that Bersani's Democratic Party was the only group serious enough to repair the economy: "They're not perfect," he said. "But they've got the organization and the union backing that will help them push through structural reforms."

Despite Berlusconi's success, Grillo has tapped into the same public frustration as the conservative tycoon and pollsters say his 5-Star Movement of political novices could overtake the centre-right to take second place in the vote.

Rivals have branded Grillo a threat to democracy - a vivid image in a country ruled by fascists for two decades until World War Two. Several voters who spoke to Reuters said Grillo was not the answer because of his lack of concrete policies and the inexperience of those who will sit in parliament for 5-Star.

"Grillo is a populist and populism doesn't work in a democracy," said retired notary Pasquale Lebanon, 76, as he voted for Bersani's Democratic Party in Milan.

"I'm very worried. There seems to be no way out from a political point of view, or for being able to govern," said Calogero Giallanza, a 45-year-old musician in Rome as he also voted for Bersani.

"There's bound to be a mess in the Senate because, as far as I can see the 5-Star Movement is unstoppable."

(Additional reporting by Cristiano Corvino, Lisa Jucca, Jennifer Clark, Matthias Baehr, Jennifer Clark and Sara Rossi in Milan, Stephen Jewkes in Bologna, Wladimir Pantaleone in Palermo, Stefano Bernabei and Massimiliano Di Giorgio in Rome; Writing by James Mackenzie and Barry Moody; Editing by Alastair Macdonald)

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Iran announces uranium finds, days before nuclear talks

DUBAI (Reuters) - Days before resuming talks over its disputed atomic program, Iran said on Saturday it had found significant new deposits of raw uranium and identified sites for 16 more nuclear power stations.

State news agency IRNA quoted a report by the Atomic Energy Organisation of Iran (AEOI) which said the reserves were discovered in northern and southern coastal areas and had trebled the amount outlined in previous estimates.

There was no independent confirmation. With few uranium mines of its own, Western experts had previously thought that Iran might be close to exhausting its supply of raw uranium.

"We have discovered new sources of uranium in the country and we will put them to use in the near future," Fereydoun Abbasi-Davani, head of the AEOI, was quoted as saying at Iran's annual nuclear industry conference.

The timing of the announcement suggested Iran, by talking up its reserves and nuclear ambitions, may hope to strengthen its negotiating hand at talks in Kazakhstan on Tuesday with the United States, Russia, China, Britain, France and Germany.

Diplomats say the six powers, known as the P5+1, are set to offer Iran some relief from international sanctions if it agrees to curb its production of higher-grade enriched uranium.

The West says Iran's enrichment of uranium to a fissile purity of 20 percent demonstrates its intent to develop a nuclear weapons capability, an allegation the Islamic republic denies.

FROM MINE TO CENTRIFUGE

The enriched uranium required for use in nuclear reactors or weapons is produced in centrifuges that spin uranium hexafluoride gas (UF6) at high speeds. The UF6 is derived from yellow cake, a concentrate from uranium ore discovered in mines.

Iran's reserves of raw uranium now stood at around 4,400 tonnes, taking into account discoveries over the past 18 months, IRNA quoted the report as saying.

In another sign that Iran is intent on pushing forward with its nuclear ambitions, the report also said 16 sites had been identified for the construction of nuclear power stations.

It did not specify the exact locations but said they included coastal areas of the Gulf, Sea of Oman, Khuzestan province and the Caspian Sea.

Iranian authorities have long announced their desire to build more nuclear power plants for electricity production. Only one currently exists, in the southern city of Bushehr, and that has suffered several shutdowns in recent months.

The announcements could further complicate the search for a breakthrough in Kazakhstan, after three unsuccessful rounds of talks between the two sides in 2012.

"We are meeting all of our obligations under the nuclear Non-Proliferation Treaty and we should be able to benefit from our rights. We don't accept more responsibilities and less rights," Saeed Jalili, Iran's chief nuclear negotiator, was quoted as telling Saturday's conference.

In what Washington has called a provocative move, Iran is also installing new-generation centrifuges, capable of producing enriched uranium much faster, at a site in Natanz in the centre of the country.

Western diplomats say the P5+1 will reiterate demands for the suspension of uranium enrichment to a purity of 20 percent, the closure of Iran's Fordow enrichment plant, increased access for International Atomic Energy Agency inspectors and agreement to address concerns on existing uranium stockpiles.

In return, the latest embargoes on gold and metals trading with Iran would be lifted. Iran has criticized the offer and says its rights need to be fully recognized.

"If the P5+1 group wants to start constructive talks with Tehran it needs to present a valid proposal," said Jalili. "It needs to put its past errors to one side ... to win the trust of the Iranian nation."

In a statement issued before the Iranian announcement, German Foreign Minister Guido Westerwelle said the six-power group wanted to enter a 'substantial negotiation process' over Tehran's nuclear program.

"The talks in Almaty are a chance which I hope Iran takes," he said.

(Additional reporting by Alexandra Hudson in Berlin; Editing by Mark Trevelyan)

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Nigerian troops surround French family's kidnappers: source

YAOUNDE/MAIDUGURI, Nigeria (Reuters) - Nigerian security forces surrounded the kidnappers of a French family in northeast Borno state on Thursday in an operation to rescue the hostages, a Nigerian military source said.

French, Nigerian and Cameroonian officials earlier denied French media reports that the family, who were seized in Cameroon and taken over the border, had been freed.

The Nigerian military located the hostages and kidnappers between Dikwa and Ngala in the far northeast, the military source in Borno said, asking not to be identified.

Dikwa is less than 80 km (50 miles) from the border with Cameroon where the three adults and four children were taken hostage on Tuesday.

A senior Cameroonian military official declined to comment saying the matter was too sensitive.

Citing a Cameroon army officer, French media reported earlier on Thursday that the hostages had been found alive in a house in northern Nigeria.

"This is a crazy rumor that we cannot confirm. We do not know where is it coming from," Cameroon Communications Minister Issa Tchiroma Bakary told Reuters by telephone from the capital Yaounde.

"What is certain is that the French tourists who were abducted are no longer on our territory. However, we are in touch with the Government of Nigeria to intensify measures to continue the search for them along our common border," he said.

French gendarmes backed by special forces arrived in northern Cameroon on Wednesday to help locate the family, a local governor and French defense ministry official said.

Nigerian military spokesman Sagir Musa earlier also said the report on France's BFM television of the hostages being released was "not true," while Didier Le Bret, the head of the French foreign ministry's crisis center, said the information was "baseless."

The abduction was the first case of foreigners being seized in the mostly Muslim north of Cameroon, a former French colony.

But the region - like others in West and North Africa with porous borders - is considered within the operational sphere of Boko Haram and fellow Nigerian Islamist militants Ansaru.

On Sunday, seven foreigners were snatched from the compound of Lebanese construction company Setraco in northern Nigeria's Bauchi state, and Ansaru took responsibility.

Northern Nigeria is increasingly afflicted by attacks and kidnappings by Islamist militants. Ansaru, which rose to prominence only in recent months, has claimed the abduction in December of a French national who is still missing.

Three foreigners were killed in two failed rescue attempts last year after being kidnapped in northern Nigeria and Ansaru, blamed for those kidnaps, warned this could happen again.

The threat to French nationals in the region has grown since France deployed thousands of troops to Mali to oust al Qaeda-linked Islamists who controlled the country's north.

The kidnapping in Cameroon brought to 15 the number of French citizens being held in West Africa.

(Reporting By Emile Picy and Nicholas Vinocur in Paris; Additional reporting by Joe Brock in Abuja and Bate Felix and John Irish in Dakar; Writing by Bate Felix and John Irish; Editing by Angus MacSwan)

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Bulgarian government resigns amid growing protests

SOFIA (Reuters) - Bulgaria's government resigned on Wednesday after mass protests against high power prices and falling living standards, joining a long list of European administrations felled by austerity during four years of debt crisis.

Prime Minister Boiko Borisov, an ex-bodyguard who took power in 2009 on pledges to root out graft and raise incomes in the European Union's poorest member, faces a tough task of propping up eroding support ahead of an expected early election.

Wage and pension freezes and tax hikes have bitten deep in a country where earnings are less than half the EU average and tens of thousands of Bulgarians have rallied in protests that have turned violent, chanting "Mafia" and "Resign".

Moves by Borisov on Tuesday to blame foreign utility companies for the rise in the cost of heating homes was to no avail and an eleventh day of marches saw 15 people hospitalized and 25 arrested in clashes with police.

"My decision to resign will not be changed under any circumstances. I do not build roads so that blood is shed on them," said Borisov, who began his career guarding the Black Sea state's communist dictator Todor Zhivkov.

A karate black belt, Borisov has cultivated a Putin-like "can-do" image since he entered politics as Sofia mayor in 2005 and would connect with voters by showing up on the capital's rutted streets to oversee the repair of pot-holes.

But critics say he has often skirted due process, sometimes to the benefit of those close to him, and his swift policy U-turns have wounded the public's trust.

The spark for the protests was high electricity bills, after the government raised prices by 13 percent last July. But it quickly spilled over into wider frustration with Borisov and political elites with perceived links to shadowy businesses.

"He made my day," said student Borislav Hadzhiev in central Sofia, commenting on Borisov's resignation. "The truth is that we're living in an extremely poor country."

POLLS, PRICES

The prime minister's final desperate moves on Tuesday included cutting power prices and risking a diplomatic row with the Czech Republic by punishing companies including CEZ, moves which conflicted with EU norms on protection of investors and due process.

CEZ officials were hopeful on Wednesday that it would be able to avoid losing its distribution license after all and officials from the Bulgarian regulator said the company would not be punished if it dealt with breaches of procedure.

But shares in what is central Europe's largest publicly-listed company fell another 1 percent on Wednesday.

If pushed through, the fines for CEZ and two other foreign-owned firms will not encourage other investors in Bulgaria, who already have to navigate complicated bureaucracy and widespread corruption and organized crime to take advantage of Bulgaria's 10-percent flat tax rate.

Financial markets reacted negatively to the turbulence on Wednesday. The cost of insuring Bulgaria's debt rose to a three-month high and debt yields rose some 15 basis points, though the country's low deficit of 0.5 percent of gross domestic product means there is little risk to the lev currency's peg against the euro.

Borisov's interior minister indicated that elections originally planned for July would probably be pulled forward by saying that his rightist GERB party would not take part in talks to form a new government.

MILLIONS GONE

GERB's woes have echoes in another ex-communist EU member, Slovenia, where demonstrators have taken to the streets and added pressure to a crumbling conservative government.

A small crowd gathered in support of Borisov outside Sofia's parliament, which is expected to approve his resignation on Thursday, while bigger demonstrations against the premier were expected in the evening.

Unemployment in the country of 7.3 million is far from the highs hit in the decade after the end of communism but remains at 11.9 percent. Average salaries are stuck at around 800 levs ($550) a month and millions have emigrated, leaving swathes of the country depopulated and little hope for those who remain.

GERB's popularity has held up well and it still led in the latest polls before protests grew in size last weekend, but analysts say the opposition Socialists should draw strength from the demonstrations.

The leftists, successors to Bulgaria's communist party, have proposed tax cuts and wage hikes and are likely to raise questions about public finances if elected.

(Additional reporting by Angel Krasimirov; editing by Patrick Graham)

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Venezuela's Maduro would win vote if Chavez goes: poll

CARACAS (Reuters) - Venezuelan Vice President Nicolas Maduro would win a presidential vote should his boss Hugo Chavez's cancer force him out, according to the first survey this year on such a scenario in the South American OPEC nation.

Local pollster Hinterlaces gave Maduro 50 percent of potential votes, compared to 36 percent for opposition leader Henrique Capriles.

Chavez made a surprise return to Venezuela on Monday, more than two months after cancer surgery in Cuba, to continue treatment at home for the disease that is jeopardizing his 14-year socialist rule.

He has named Maduro, 50, a former bus driver and union activist, as his preferred successor.

Capriles, 40, a center-left state governor who lost to Chavez in a presidential vote last year, likely would run again.

Chavez still has not spoken in public since his December 11 operation in Cuba. Venezuelans were debating on Tuesday the various possible scenarios after his homecoming - from full recovery to resignation or even death from the cancer.

There was widespread expectation Chavez would soon be formally sworn in for his new six-year term at the Caracas military hospital where officials said he was staying. The January 10 ceremony was postponed while he was in Cuba.

"The president's timeline is strictly linked to his medical evolution and recovery," said Rodrigo Cabezas, a senior member of Chavez's ruling Socialist Party who, like other officials, would not comment on when he might be sworn in.

CAPRILES ANGRY

Should Chavez be forced out, Venezuela's constitution stipulates an election must be held within 30 days, giving Capriles and the opposition Democratic Unity coalition another chance to end the socialists' lengthy grip on power.

Capriles, who crossed swords with Hinterlaces at various points during the presidential election, again accused its director, Oscar Schemel, of bias in the latest survey.

"That man is not a pollster, he's on the government's payroll," Capriles told local TV.

"He said in December I would lose the Miranda governorship," he added, referring to his defeat of government heavyweight Elias Jaua, now foreign minister, in that local race.

Opinion surveys are notoriously controversial and divergent in Venezuela, with both sides routinely accusing pollsters of being in the pocket of the other. But Hinterlaces successfully forecast Chavez's win with 55 percent of the vote in October.

Its latest poll was of 1,230 people between January 30-February 9.

Polls last year showed Capriles - an energetic basketball-playing lawyer who admires Brazil's centrist mix of free-market economics with strong social welfare policies - as more popular than any of Chavez's senior allies.

But Chavez's personal blessing of Maduro, on the eve of his last cancer surgery, has transformed his status and made him the heir apparent for many of the president's supporters.

As de facto leader since mid-December, Maduro also has built up a stronger public profile, copying the president's techniques of endless live TV appearances, especially to inaugurate new public works or promote popular policies like subsidized food.

He lacks Chavez's charisma, however, and opponents have slammed him as a "poor imitation" and incompetent.

EMOTION

Local analyst Luis Vicente Leon said that should Chavez die, Maduro would benefit from the emotion unleashed among his millions of passionate supporters in Venezuela.

"The funeral wake for Chavez would merge into the election campaign," he told a local newspaper, noting how Argentine President Cristina Fernandez's popularity surged when her husband and predecessor Nestor Kirchner died in 2010.

Maduro already has implemented an unpopular devaluation of the local currency and said more economic measures are coming this week in what local economists view as austerity measures after blowout spending prior to last year's election.

In Caracas, the streets were quieter after tumultuous celebrations of Chavez's homecoming by supporters on Monday. A few journalists stood outside the military hospital.

Prayer vigils were planned in various parts of Venezuela.

"We hope Chavez will stay governing because he is a strong man," supporter Cristina Salcedo, 50, said in Caracas.

Student demonstrators who had chained themselves near the Cuban Embassy last week, demanding more information on Chavez's condition, called off their protest after his return.

Until photos were published of him on Friday, the president had not been seen by the public since his six-hour December 11 operation, the fourth since cancer was detected in mid-2011.

The government has said Chavez is breathing through a tracheal tube and struggling to speak.

Bolivian President Evo Morales arrived in Caracas on Tuesday in the hope of visiting his friend and fellow leftist.

(Additional reporting by Deisy Buitrago, Mario Naranjo, Girish Gupta in Caracas, Carlos Quiroga in La Paz; Editing by Bill Trott)

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Time to refer Syrian war crimes to ICC, U.N. inquiry says

GENEVA (Reuters) - United Nations investigators said on Monday that Syrian leaders they had identified as suspected war criminals should face the International Criminal Court (ICC).

The investigators urged the U.N. Security Council to "act urgently to ensure accountability" for violations, including murder and torture, committed by both sides in a conflict that has killed an estimated 70,000 people since a revolt against President Bashar al-Assad began in March, 2011.

"Now really it's time...We have a permanent court, the International Criminal Court, who would be ready to take this case," Carla del Ponte, a former ICC chief prosecutor who joined the U.N. team in September, told a news briefing in Geneva.

The inquiry, led by Brazilian Paulo Pinheiro, is tracing the chain of command to establish criminal responsibility and build a case for eventual prosecution.

"Of course we were able to identify high-level perpetrators," del Ponte said, adding that these were people "in command responsibility...deciding, organizing, planning and aiding and abetting the commission of crimes".

She said it was urgent for the Hague-based war crimes tribunal to take up cases of "very high officials", but did not identify them, in line with the inquiry's practice.

"We have crimes committed against children, rape and sexual violence. We have grave concerns. That is also one reason why an international body of justice must act because it is terrible."

Del Ponte, who brought former Yugoslav President Slobodan Milosevic to the ICC on war crimes charges, said the ICC prosecutor would need to deepen the investigation on Syria before an indictment could be prepared.

Pinheiro, noting that only the Security Council could refer Syria's case to the ICC, said: "We are in very close dialogue with all the five permanent members and with all the members of the Security Council, but we don't have the key that will open the path to cooperation inside the Security Council."

Karen Koning AbuZayd, an American member of the U.N. team, told Reuters it had information pointing to "people who have given instructions and are responsible for government policy, people who are in the leadership of the military, for example".

The inquiry's third list of suspects, building on lists drawn up in the past year, remains secret. It will be entrusted to U.N. High Commissioner for Human Rights, Navi Pillay, upon expiry of its mandate at the end of March, the report said.

Pillay, a former ICC judge, said on Saturday Assad should be probed for war crimes, and called for outside action on Syria, including possible military intervention.

Pinheiro said the investigators would not speak publicly about "numbers, names or levels" of suspects, adding that it was vital to pursue accountability for international crimes "to counter the pervasive sense of impunity" in Syria.

SEVEN MASSACRES IDENTIFIED

The investigators' latest report, covering the six months to mid-January, was based on 445 interviews conducted abroad with victims and witnesses, as they have not been allowed into Syria.

"We identified seven massacres during the period, five on the government side, two on the armed opponents side. We need to enter the sites to be able to confirm elements of proof that we have," del Ponte said.

"For example, in the attack on the university of Aleppo, there is information that it came from the government side and from the rebel side. If we had been able to enter and examine the site and carry out a scientific investigation, we would have a definitive answer," she said.

The U.N. report said the ICC was the appropriate institution for the fight against impunity in Syria. "As an established, broadly supported structure, it could immediately initiate investigations against authors of serious crimes in Syria."

Government forces have carried out shelling and air strikes across Syria including Aleppo, Damascus, Deraa, Homs and Idlib, the 131-page report said, citing corroborating satellite images.

"In some incidents, such as in the assault on Harak, indiscriminate shelling was followed by ground operations during which government forces perpetrated mass killing," it said, referring to a town in the southern province of Deraa where residents told them that 500 civilians were killed in August.

"Government forces and affiliated militias have committed extra-judicial executions, breaching international human rights law. This conduct also constitutes the war crime of murder. Where murder was committed as part of a widespread or systematic attack against a civilian population, with knowledge of that attack, it is a crime against humanity," the U.N. report said.

Those forces have targeted bakery queues and funeral processions to spread "terror among the civilian population".

Rebels fighting to topple Assad have also committed war crimes including murder, torture, hostage-taking and using children under age 15 in hostilities, the U.N. report said.

"They continue to endanger the civilian population by positioning military objectives inside civilian areas" and rebel snipers had caused "considerable civilian casualties", it said.

"The violations and abuses committed by anti-government armed groups did not, however, reach the intensity and scale of those committed by government forces and affiliated militia."

(Reporting by Stephanie Nebehay; Editing by Alistair Lyon)

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Pope, near abdication, says pray "for me and next pope"

VATICAN CITY (Reuters) - Pope Benedict asked the faithful to pray for him and for the next pope, in his penultimate Sunday address to a crowded St. Peter's Square before becoming the first pontiff in centuries to resign.

The crowd chanted "Long live the pope!," waved banners and broke into sustained applause as he spoke from his window. The 85-year-old Benedict, who will abdicate on February 28, thanked them in several languages.

Speaking in Spanish, he told the crowd which the Vatican said numbered more than 50,000: "I beg you to continue praying for me and for the next pope".

It was not clear why the pope chose Spanish to make the only specific reference to his upcoming resignation in his Sunday address.

A number of cardinals have said they would be open to the possibility of a pope from the developing world, be it Latin America, Africa or Asia, as opposed to another from Europe, where the Church is crisis and polarized.

"I can imagine taking a step towards a black pope, an African pope or a Latin American pope," Cardinal Kurt Koch, a Swiss Vatican official who will enter the conclave to choose the next pope, told Reuters in an interview.

After his address, the pope retired into the Vatican's Apostolic Palace for a scheduled, week-long spiritual retreat and will not make any more public appearances until next Sunday.

Speaking in Italian in part of his address about Lent, the period when Christians reflect on their failings and seek guidance in prayer, the pope spoke of the difficulty of making important decisions.

"In decisive moments of life, or, on closer inspection, at every moment in life, we are at a crossroads: do we want to follow the ‘I', or God? The individual interest, or the real good, that which is really good?" he said.

FOR THE GOOD OF THE CHURCH

The pope has said his physical and spiritual forces are no longer strong enough to sustain him in the job of leading the world's 1.2 billion Roman Catholics at a time of crisis for the Church in a fast-changing world.

Benedict's papacy was rocked by crises over the sex abuse of children by priests in Europe and the United States, most of which preceded his time in office but came to light during it.

His reign also saw Muslim anger after he compared Islam to violence. Jews were upset over his rehabilitation of a Holocaust denier. During a scandal over the Church's business dealings, his butler was convicted of leaking his private papers.

Since his shock announcement last Monday, the pope has said several times that he made the difficult decision to become the first pope in more than six centuries to resign for the good of the Church. Aides said he was at peace with himself.

"In a funny way he is even more peaceful now with this decision, unlike the rest of us, he is not somebody who gets choked up really easily," said Greg Burke, a senior media advisor to the Vatican.

"I think that has a lot to do with his spiritual life and who he is and the fact he is such a prayerful man," Burke told Reuters Television.

People in the crowd said the pope was a shadow of the man he was when elected on April 19, 2005.

"Like always, recently, he seemed tired, moved, perplexed, uncertain and insecure," said Stefan Malabar, an Italian in St. Peter's Square.

"It's something that really has an effect on you because the pope should be a strong and authoritative figure but instead he seems very weak, and that really struck me," he said.

The Vatican has said the conclave to choose his successor could start earlier than originally expected, giving the Roman Catholic Church a new leader by mid-March.

Some 117 cardinals under the age of 80 will be eligible to enter the secretive conclave which, according to Church rules, has to start between 15 and 20 days after the papacy becomes vacant, which it will on February 28.

But since the Church is now dealing with an announced resignation and not a sudden death, Vatican spokesman Federico Lombardi said the Vatican would be "interpreting" the law to see if it could start earlier.

CONSULTATIONS BEGUN

Cardinals around the world have already begun informal consultations by phone and email to construct a profile of the man they think would be best suited to lead the Church in a period of continuing crisis.

The Vatican appears to be aiming to have a new pope elected and then formally installed before Palm Sunday on March 24 so he can preside at Holy Week services leading to Easter.

New details emerged at the weekend about Benedict's health.

Peter Seewald, a German journalist who wrote a book with the pope in 2010 in which Benedict first floated the possibility of resigning, visited him again about 10 weeks ago.

"His hearing had deteriorated. He couldn't see with his left eye. His body had become so thin that the tailors had difficulty in keeping up with newly fitted clothes ... I'd never seen him so exhausted-looking, so worn down," Seewald said.

The pope will say one more Sunday noon prayer on February 24 and hold a final general audience on February 27.

The next day he will take a helicopter to the papal summer retreat at Castel Gandolfo, south of Rome, where he will stay for around two months before moving to a convent inside the Vatican where he will live out his remaining years.

(Additional reporting by Hanna Rantala; Editing by Robin Pomeroy)

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Pistorius, slain girlfriend had planned future: uncle

JOHANNESBURG (Reuters) - South African Paralympic champion Oscar Pistorius, known as the "Blade Runner", was planning a future with the girlfriend he is accused of shooting dead this week, his uncle said on Saturday.

Pistorius, 26, one of the world's most recognizable athletes, was charged on Friday with murdering swimsuit model and law graduate Reeva Steenkamp in the early hours of the previous day.

He broke down during a 40-minute bail hearing at a Pretoria court but was not asked to enter a plea.

"They had plans together and Oscar was happier in his private life than he had been for a long time," Anthony Pistorius said in a statement released by his nephew's agent.

"We are in a state of total shock - firstly about the tragic death of Reeva who we had all got to know well and care for deeply over the last few months," he said. "All of us saw at first hand how close she had become to Oscar during that time and how happy they were."

The suggestion that Pistorius' family was close to Steenkamp runs counter to comments from Pistorius' father, Henke, who told the New York Times he had never met his son's partner.

"I don't discuss my son's relationships. I have, in fact, not met the lady," he was quoted as saying.

Prosecutors alleged the shooting was premeditated, a charge that could put Pistorius behind bars for life if convicted.

Police have said there are no other suspects and the pair were the only people in the house at the time. Initial reports suggested he may have mistaken her for an intruder.

Anthony Pistorius reiterated the family's belief that the track star - a double amputee who became one of the biggest names in world athletics when he ran at last year's Olympics - had not shot Steenkamp deliberately.

"After consulting with legal representatives we deeply regret the allegation of premeditated murder," Anthony said.

"We have no doubt there is no substance to the allegation and that the state's own case, including its own forensic evidence, strongly refutes any possibility of a premeditated murder or indeed any murder at all."

NUMB

Pistorius is being held in a Pretoria police station before the resumption of his bail hearing on Tuesday. He is "numb" with shock and grief, the statement said.

Several South African media reports have said Steenkamp was shot through the bathroom door and was hit four times - in the head, hip, arm and hand.

Police said on Thursday witnesses had heard disturbances at the home before the shots, adding that there had been previous incidents of a "domestic nature" at the home.

The shooting has shocked South Africa, where Pistorius was revered as a hero whose achievements transcended the racial divides that linger in Nelson Mandela's "Rainbow Nation" 19 years after the end of apartheid.

The disbelief was felt across the globe among the millions who saw in Pistorius the ultimate tale of triumph over adversity - a man who rose to the highest pinnacles of athletics despite having no lower legs.

He was born without either fibula but reached the semi-final of the 400-metres in the London 2012 Olympics, running on high-technology carbon fiber prosthetic 'blades'. He also won two Paralympic gold medals and one silver medal.

Although the public image was of a charming and easy-going young man, a Twitter posting by Pistorius in November paints the picture of a would-be action man obsessed with security.

"Nothing like getting home to hear the washing machine on and thinking it's an intruder to go into full combat recon mode into the pantry! waa," read the Tweet on the morning of November 27

Police recovered a 9mm pistol from his home after the shooting. The Afrikaans-language Beeld newspaper said Pistorius had a license for one firearm and applications pending for a further seven, including a semi-automatic rifle.

Police declined to comment on the Beeld report.

"We're releasing nothing," spokeswoman Katelgo Mogale said. "Details of the incident will come out in court."

South African state broadcaster SABC will on Saturday evening air the first episode of a tropical island reality show featuring Steenkamp that was filmed last year in the Caribbean.

SABC said her family had given their blessing to the show's airing, which will be preceded by a short tribute.

(Reporting by Ed Cropley; Editing by Angus MacSwan and Jason Webb)

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Meteor explodes over central Russia, 500 people hurt

CHELYABINSK, Russia (Reuters) - A meteor streaked across the sky and exploded over central Russia on Friday, sending fireballs crashing to earth which shattered windows and damaged buildings, injuring more than 500 people.

People heading to work in Chelyabinsk heard what sounded like an explosion, saw a bright light and then felt a shockwave, according to a Reuters correspondent in the industrial city 950 miles east of Moscow.

The fireball, travelling at a speed of 19 miles per second according to Russia's space agency Roscosmos, had blazed across the horizon, leaving a long white trail in its wake which could be seen as far as 125 miles away.

Car alarms went off, windows broke and mobile phone networks were interrupted. The Interior Ministry said the meteor explosion had caused a sonic boom.

"I was driving to work, it was quite dark, but it suddenly became as bright as if it was day," said Viktor Prokofiev, 36, a resident of Yekaterinburg in the Urals Mountains.

"I felt like I was blinded by headlights," he said.

No fatalities were reported, but President Vladimir Putin, who was due to host Finance Ministry officials from the Group of 20 nations in Moscow, told Emergencies Minister Vladimir Puchkov to help those affected.

"Unfortunately, the normal work of some industrial enterprises was disrupted, people have suffered as has social infrastructure - kindergartens, schools," Putin told his Emergencies Minister Sergei Puchkov in televised comments.

"First of all, it is necessary to think about how to help the people, and not only to think about it, but to do it immediately," Putin said.

A local ministry official said such incidents were extremely rare and Friday's events might have been linked to an asteroid the size of an Olympic swimming pool due to pass earth. However, the European Space Agency on its Twitter website said its experts had confirmed there was no connection.

"There have never been any cases of meteorites breaking up at such a low level over Russia before," said Yuri Burenko, head of the Chelyabinsk branch of the Emergencies Ministry.

Russia's Emergencies Ministry said 514 people had sought medical help, mainly for light injuries caused by flying glass, and that 112 of them were kept in hospital.

Despite warnings not to approach any unidentified objects, some enterprising locals were hoping to cash in.

"Selling meteorite that fell on Chelyabinsk!," one prospective seller, Vladimir, said on a popular Russian auction website. He attached a picture of a black piece of stone that on Friday afternoon was priced at $49.46.

WINDOWS BREAK, FRAMES BUCKLE

The blast at around 9.20 a.m. (12:20 a.m. ET) shattered windows on Chelyabinsk's central Lenin Street and some of the frames of shop fronts buckled. The shockwave could be felt in apartment buildings in the city's center.

"I was standing at a bus stop, seeing off my girlfriend," said Andrei, a local resident who did not give his second name. "Then there was a flash and I saw a trail of smoke across the sky and felt a shockwave that smashed windows."

Chelyabinsk city authorities urged people to stay indoors unless they needed to pick up their children from schools and kindergartens. They said what sounded like a blast had been heard at an altitude of 32,800 feet.

A wall was damaged at the Chelyabinsk Zinc Plant but a spokeswoman said there was no environmental threat.

Although a rare occurrence, a meteorite is thought to have devastated an area of more than 1,250 miles in Siberia in 1908, smashing windows as far as 125 miles from the point of impact.

The Emergencies Ministry described Friday's events as a "meteor shower in the form of fireballs" and said background radiation levels were normal. It urged residents not to panic.

Simon Goodwin, an astrophysics expert from Britain's University of Sheffield, said it was estimated between 1,000 and 10,000 tonnes of material rained down from space onto the earth every day, but most burned up in the atmosphere.

"While events this big are rare, an impact that could cause damage and death could happen every century or so," he said. "Unfortunately there is absolutely nothing we can do to stop impacts."

The meteor struck just as an asteroid known as 2012 DA14, about 46 meters in diameter was due to pass closer to earth than any other known object of its size since scientists began routinely monitoring them about 15 years ago.

The small asteroid was expected to pass at a distance of 17,100 miles from earth on Friday.

(Additional reporting by Gabriela Baczynska in Moscow, Writing by Alexei Anishchuk and Timothy Heritage, Editing by Michael Holden)

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"Blade Runner" Pistorius charged with murdering girlfriend

JOHANNESBURG (Reuters) - South African "Blade Runner" Oscar Pistorius, a double amputee who became one of the biggest names in world athletics, was charged on Thursday with shooting dead his girlfriend at his upscale home in Pretoria.

Police said they opened a murder case after a 30-year-old woman was found dead at the Paralympic and Olympic star's house in the Silverlakes gated complex on the capital's outskirts.

Pistorius, 26, and his girlfriend, model Reeva Steenkamp, had been the only people in the house at the time of the shooting, police brigadier Denise Beukes told reporters, adding witnesses had been interviewed about the early morning incident.

"We are talking about neighbors and people that heard things earlier in the evening and when the shooting took place," Beukes said outside the heavily guarded residential complex.

Police said a 9mm pistol had been found at the scene.

Beukes said police were aware of previous incidents at the Pistorius house. "I can confirm that there has previously been incidents at the home of Mr Oscar Pistorious, of allegations of a domestic nature," she said.

Pistorius, who uses carbon fiber prosthetic blades to run, is due to appear in a Pretoria court on Friday.

"He is doing well but very emotional," his lawyer Kenny Oldwage told SABC TV, but gave no further comment.

A sports icon for triumphing over disability to compete with able-bodied athletes at the Olympics, his sponsorship deals, including one with sports apparel group Nike, are thought to be worth $2 million a year.

South Africa's M-Net cable TV channel said it was pulling adverts featuring Pistorius off air immediately after blanket coverage of the arrest in a country more used to honoring Pistorius as a national hero.

"WE ARE ALL DEVASTATED"

Steenkamp's colleagues in the modeling world were distraught. "We are all devastated. Her family is in shock," her agent, Sarita Tomlinson, tearfully told Reuters. "They did have a good relationship. Nobody actually knows what happened."

Pistorius, who was born without a fibula in both legs, was the first double amputee to run in the Olympics and reached the 400-metre semi-finals in London 2012.

In last year's Paralympics he suffered his first loss over 200 meters in nine years. After the race he questioned the legitimacy of Brazilian winner Alan Oliveira's prosthetic blades, though he was quick to express regret for the comments.

South Africa has some of the world's highest rates of violent crime, and many home owners have weapons to defend themselves against intruders, although Pistorius's complex is surrounded by a three-meter high wall and electric fence.

In 2004, Springbok rugby player Rudi Visagie shot dead his 19-year-old daughter after he mistakenly thought she was a robber trying to steal his car in the middle of the night.

Before the murder charge was announced, Johannesburg's Talk Radio 702 said the athlete may have mistaken Steenkamp for a burglar.

Pistorius was arrested in 2009 for assault after slamming a door on a woman and spent a night in police custody. Family and friends said it was just an accident and charges were dropped.

OLYMPIAN UNDERGOES POLICE TESTS

Steenkamp, a regular on the South African social scene, was reported to have been dating Pistorius for several months.

In the social pages of last weekend's Sunday Independent she described him as having "impeccable" taste. "His gifts are always thoughtful," she was quoted as saying.

Some of her last Twitter postings indicated she was looking forward to Valentine's Day on Thursday. "What do you have up your sleeve for your love tomorrow???" she posted.

Pistorius was on Thursday being processed through the police system. "At this stage he is on his way to a district surgeon for medical examination," the police brigadier said.

"When a person has been accused of a crime like murder they look at things like testing under the finger nails, taking a blood alcohol sample and all kinds of other test that are done. They are standard medical tests," Beukes said.

Pistorius is also sponsored by British telecoms firm BT, sunglasses maker Oakley and French designer Thierry Mugler.

"We are shocked by this terrible, tragic news. We await the outcome of the South African police investigation," a BT spokeswoman said before Pistorius was charged.

A Nike spokesman in London said before hearing of the murder charge that the company was "saddened by the news, but we have no further comment to make at this stage".

Pistorius also has a sponsorship deal with Icelandic prosthetics manufacturer Ossur.

"I can only say that our thoughts and prayers are with Oscar and the families involved in the tragedy," Ossur CEO Jon Sigurdsson told Reuters. "It is completely premature to discuss or speculate on our business relationship with him."

Neighbors expressed shock at the arrest of a "good guy".

"It is difficult to imagine an intruder entering this community, but we live in a country where intruders can get in wherever they want to," said one Silverlakes resident, who did not want to be named.

"Oscar is a good guy, an upstanding neighbor, and if he is innocent I feel for this guy deeply," he said.

(Additional reporting by Sherilee Lakmidas, David Dolan, Ed Cropley, Jon Herskovitz, Keith Weir and Kate Holton; Writing by Ed Cropley; Editing by Will Waterman)

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Pope confident his resignation will not hurt Church

ROME (Reuters) - A visibly moved Pope Benedict tried to assure his worldwide flock on Wednesday over his stunning decision to become the first pontiff in centuries to resign, saying he was confident that it would not hurt the Church.

The Vatican, meanwhile, announced that a conclave to elect his successor would start sometime between March 15 and March 20, in keeping with Church rules about the timing of such gatherings after the papal see becomes vacant.

"Continue to pray for me, for the Church and for the future pope," he said in unscripted remarks at the start of his weekly general audience, his first public appearance since his shock decision on Monday that he will step down on February 28.

It was the first time Benedict, 85, who will retire to a convent inside the Vatican, exchanging the splendor of his 16th century Apostolic Palace for a sober modern residence, had uttered the words "future pope" in public.

Church officials are still so stunned by the move that the Vatican experts have yet to decide what his title will be and whether he will continue to wear the white of a pope, the red of a cardinal or the black of an ordinary priest.

His voice sounded strong at the audience but he was clearly moved and his eyes appeared to be watering as he reacted to the thunderous applause in the Vatican's vast, modern audience hall, packed with more than 8,000 people.

In brief remarks in Italian that mirrored those he read in Latin to stunned cardinals on Monday he appeared to try to calm Catholics' fears of the unknown.

He message was that God would continue to guide the Church.

EXAMINATION OF CONSCIENCE

"I took this decision in full freedom for the good of the Church after praying for a long time and examining my conscience before God," he said.

He said he was "well aware of the gravity of such an act," but also aware that he no longer had the strength required to run the 1.2 billion member Roman Catholic Church, which has been beset by a string of scandals both in Rome and round the world.

Benedict said he was sustained by the "certainty that the Church belongs to Christ, who will never stop guiding it and caring for it" and suggested that the faithful should also feel comforted by this.

He said that he had "felt almost physically" the affection and kindness he had received since he announced the decision.

When Benedict resigned on Monday, the Vatican spokesman said the pontiff did not fear schism in the Church after his decision to step down.

Some 115 cardinals under the age of 80 will be eligible to enter a secret conclave to elect his successor.

Cardinals around the world have already begun informal consultations by phone and email to construct a profile of the man they think would be best suited to lead the Church in a period of continuing crisis.

The likelihood that the next pope would be a younger man and perhaps a non-Italian, was increasing, particularly because of the many mishaps caused by Benedict's mostly Italian top aides.

Benedict has been faulted for putting too much power in the hands of his friend, Secretary of State Cardinal Tarcisio Bertone. Critics of Bertone, effectively the Vatican's chief administrator, said he should have prevented some papal mishaps and bureaucratic blunders.

ILL-SERVED POPE

"These scandals, these miscommunications, in many cases were caused by Pope Benedict's own top aides and I think a lot of Catholics around the world think that he was perhaps ill-served by some of the cardinals here," said John Thavis, author of a new book The Vatican Diaries.

Benedict's papacy was rocked by crises over sex abuse of children by priests in Europe and the United States, most of which preceded his time in office but came to light during it.

His reign also saw Muslim anger after he compared Islam to violence. Jews were upset over rehabilitation of a Holocaust denier. During a scandal over the Church's business dealings, his butler was accused of leaking his private papers.

"When cardinals arrive here for the conclave ... they are going to have this on their mind, they're going to take a good hard look at how Pope Benedict was served, and I think many of them feel that the burden of the papacy that finally weighed so heavy on Benedict was caused in part by some of this in-fighting (among his administration)," Thavis told Reuters.

Vatican spokesman Father Federico Lombardi urged the faithful to remain confident in the Church and its future.

"Those who may feel a bit disorientated or stunned by this, or have a hard time understanding the Holy Father's decision should look at it in the context of faith and the certainty that Christ will support his Church," Lombardi said.

Lombardi said that on his last day in office, Benedict would receive cardinals in a farewell meeting and after February 28 his ring of office, used to seal official documents, would be destroyed just as if he had died.

Later on Wednesday, an Ash Wednesday Mass that was originally scheduled to have taken place in a small church in Rome, has been moved to St Peter's Basilica so more people can attend.

Unless the Vatican changes the pope's schedule, it will be his last public Mass.

(Reporting By Philip Pullella; Editing by Giles Elgood)

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China joins U.S., Japan in condemning North Korea nuclear test

SEOUL (Reuters) - North Korea conducted its third nuclear test on Tuesday in defiance of existing U.N. resolutions, drawing condemnation from around the world, including from its only major ally, China, which summoned the North Korean ambassador to protest.

The reclusive North said the test was an act of self-defense against "U.S. hostility" and threatened further, stronger steps if necessary.

It said the test had "greater explosive force" than the 2006 and 2009 tests. Its KCNA news agency said it had used a "miniaturized" and lighter nuclear device, indicating that it had again used plutonium which is more suitable for use as a missile warhead.

North Korean leader Kim Jong-un, the third of his line to rule the country, has presided over two long-range rocket launches and a nuclear test during his first year in power, pursuing policies that have propelled his impoverished and malnourished country closer to becoming a nuclear weapons power.

China, which has shown signs of increasing exasperation with the recent bellicose tone of its neighbor, summoned the North Korean ambassador in Beijing and protested sternly, the Foreign Ministry said.

Foreign Minister Yang Jiechi said China was "strongly dissatisfied and resolutely opposed" to the test and urged North Korea to "stop any rhetoric or acts that could worsen situations and return to the right course of dialogue and consultation as soon as possible".

China is a permanent member of the Security Council.

U.S. President Barack Obama labeled the test a "highly provocative act" that hurt regional stability and pressed for new sanctions.

"The danger posed by North Korea's threatening activities warrants further swift and credible action by the international community. The United States will also continue to take steps necessary to defend ourselves and our allies," Obama said in a statement.

The Security Council will meet on Tuesday to discuss its reaction to the test, although North Korea is already one of the most heavily sanctioned states in the world and has few external economic links that can be targeted.

Japanese Prime Minister Shinzo Abe said the test was a "grave threat" that could not be tolerated. U.N. Secretary-General Ban Ki-moon said the test was a "clear and grave violation" of U.N. Security Council resolutions.

Russian Foreign Minister Sergei Lavrov urged North Korea to abandon its nuclear arms program and return to talks. NATO condemned the test as an "irresponsible act" that posed a grave threat to world peace.

The test "was only the first response we took with maximum restraint", an unnamed spokesman for the North Korean Foreign Ministry, which acts as Pyongyang's official voice to the outside world, said in a statement carried by the official KCNA news agency.

"If the United States continues to come out with hostility and complicates the situation, we will be forced to take stronger, second and third responses in consecutive steps."

North Korea often threatens the United States and its "puppet", South Korea, with destruction in colorful terms.

North Korea told the U.N. disarmament forum in Geneva that it would never bow to resolutions on its nuclear program and that prospects were "gloomy" for the denuclearization of the divided Korean peninsula because of a "hostile" U.S. policy.

South Korea, still technically at war with the North after the 1950-53 civil war ended in a mere truce, also denounced the test.

The magnitude was roughly twice as large as that of 2009, Lassina Zerbo, director of the international data centre division of the Vienna-based Comprehensive Nuclear-Test Ban Treaty Organization, said. The U.S. Geological Survey said that a seismic event measuring 5.1 magnitude had occurred.

"It was confirmed that the nuclear test that was carried out at a high level in a safe and perfect manner using a miniaturized and lighter nuclear device with greater explosive force than previously did not pose any negative impact on the surrounding ecological environment," KCNA said.

Despite China's strong response, the test is likely to be a major embarrassment for Beijing, the North's sole major economic and diplomatic ally.

"The test is hugely insulting to China, which now can be expected to follow through with threats to impose sanctions," said Mark Fitzpatrick of the International Institute for Strategic Studies think tank.

North Korea trumpeted the announcement on its state television channel to patriotic music against the backdrop of an image of its national flag.

It linked the test to its technical prowess in launching a long-range rocket in December, a move that triggered the U.N. sanctions, backed by China, that Pyongyang said prompted it to take Tuesday's action.

The North's ultimate aim, Washington believes, is to design an intercontinental ballistic missile capable of carrying a nuclear warhead that could hit the United States. North Korea says the program is aimed merely at putting satellites in space.

North Korea used plutonium in previous nuclear tests and prior to Tuesday there had been speculation it would use highly enriched uranium so as to conserve its plutonium stocks as testing eats into its limited supply of the material that could be used to construct a nuclear bomb.

"VICIOUS CYCLE"

Despite its three nuclear tests and long-range rocket tests, North Korea is not believed to be close to manufacturing a nuclear missile capable of hitting the United States.

South Korea's Yonhap news agency said Pyongyang had informed China and the United States of its plans to test on Monday, although this could not be confirmed.

When North Korean leader Kim, 30, took power after his father's death in December 2011, there were hopes the he would bring reforms and end Kim Jong-il's "military first" policies.

Instead, the North, whose economy is smaller than it was 20 years ago and where a third of children are believed to be malnourished, appears to be trapped in a cycle of sanctions followed by further provocations.

"The more North Korea shoots missiles, launches satellites or conducts nuclear tests, the more the U.N. Security Council will impose new and more severe sanctions," said Shen Dingli, a professor at Shanghai's Fudan University. "It is an endless, vicious cycle."

But options for the international community appear to be in short supply.

Tuesday's action appeared to have been timed for the run-up to February 16 anniversary celebrations of Kim Jong-il's birthday, as well as to achieved maximum international attention.

Significantly, the test comes at a time of political transition in China, Japan and South Korea, and as Obama begins his second term. He will likely have to tweak his State of the Union address due to be given on Tuesday.

Japanese Prime Minister Shinzo Abe is bedding down a new government and South Korea's new president, Park Geun-hye, prepares to take office on February 25.

China too is in the midst of a once-in-a-decade leadership transition to Xi Jinping, who takes office in March. Both Abe and Xi are staunch nationalists.

The longer-term game plan from Pyongyang may be to restart talks aimed at winning food and financial aid. China urged it to return to the stalled "six-party" talks on its nuclear program, hosted by China and including the two Koreas, the United States, Japan and Russia.

Its puny economy and small diplomatic reach mean the North struggles to win attention on the global stage - other than through nuclear tests and attacks on South Korea, last made in 2010.

"Now the next step for North Korea will be to offer talks... - any form to start up discussion again to bring things to their advantage," said Jeung Young-tae, senior research fellow at the Korea Institute for National Unification in Seoul.

The European Union's foreign policy chief, Catherine Ashton, urged North Korea to refrain from further provocation.

EU member Denmark called on China to step up to the plate and use its influence to rein in its ally.

"This deserves only one thing and that is a one-sided condemnation," said Foreign Minister Villy Sovndal. "North Korea is likely the most horrible country on this planet."

(Additional reporting by Jack Kim, Christine Kim and Jumin Park in SEOUL; Linda Sieg in TOKYO; Louis Charbonneau at the UNITED NATIONS; Fredrik Dahl in VIENNA; Michael Martina and Chen Aizhu in BEIJING; Mette Fraende in COPENHAGEN; Adrian Croft, Charlie Dunmore and Justyna Pawlak in BRUSSELS; Editing by Nick Macfie)

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Pope's sudden resignation sends shockwaves through Church

VATICAN CITY (Reuters) - Pope Benedict said in a historic announcement he no longer had the mental and physical strength to run the Roman Catholic Church and would become the first pontiff in more than 700 years to resign, leaving his inner circle "incredulous".

Church officials tried to relay a climate of calm confidence in the running of a 2,000-year-old institution but the decision could lead to one of the most uncertain and unstable periods in centuries for a Church besieged by scandal and defections.

The Church has been rocked during Benedict's nearly eight-year papacy by child sexual abuse crises and Muslim anger after the pope compared Islam to violence. Jews were upset over rehabilitation of a Holocaust denier and there was scandal over the leaking of the pope's private papers by his personal butler.

In the announcement read to cardinals in Latin, the German-born pope, 85, said: "Well aware of the seriousness of this act, with full freedom I declare that I renounce the ministry of Bishop of Rome, Successor of St Peter ...

"As from 28 February 2013, at 20:00 hours (2 p.m. ET) the See of Rome, the See of St. Peter will be vacant and a conclave to elect the new Supreme Pontiff will have to be convoked by those whose competence it is."

The pope, known for his conservative doctrine, did not intend to influence the decision of the cardinals who will enter a secret conclave to elect a successor, Vatican spokesman Father Lombardi Federico said.

Benedict stepped up the Church's opposition to gay marriage, underscored the Church's resistance to a female priesthood and to embryonic stem cell research.

A new leader of the world's 1.2 billion Roman Catholics could be elected as soon as Palm Sunday, on March 24 and be ready to take over by Easter a week later, he said.

EX-POPE AND REIGNING POPE

Lombardi said the pope did not fear a possible "schism" but several popes in the past, including Benedict's predecessor John Paul, refrained from stepping down precisely because of the confusion and division that could be caused by having an "ex-pope" and a reigning pope living at the same time.

This could create a particularly difficult problem if the next pope is a progressive who influences such teachings as the ban on women priests and artificial birth control and its insistence on a celibate priesthood.

"This is disconcerting, he is leaving his flock," said Alessandra Mussolini, a parliamentarian who is granddaughter of Italy's wartime dictator.

"The pope is not any man. He is the vicar of Christ. He should stay on to the end, go ahead and bear his cross to the end. This is a huge sign of world destabilization that will weaken the Church."

The pope's elder brother Georg Ratzinger, a frail 89-year-old priest who shares the pope's passion for music, told reporters in the Bavarian town of Regensburg where he once conducted the cathedral choir that he had been "very surprised" to learn of his brother's resignation.

"He alone can evaluate his physical and emotional strength," said Ratzinger.

Lombardi said Benedict would first go to the papal summer residence south of Rome and then move into a cloistered convent inside the Vatican walls. It was not clear if Benedict would have a public life.

The last Pope to resign willingly was Celestine V in 1294 after reigning for only five months, his resignation was known as "the great refusal" and was condemned by the poet Dante in the "Divine Comedy". Gregory XII reluctantly abdicated in 1415 to end a dispute with a rival claimant to the papacy.

NO SPECIFIC ILLNESS, NO DEPRESSION

Lombardi said Benedict's decision showed "great courage". He ruled out any specific illness or depression and said the decision was made in the last few months "without outside pressure".

While the pope had slowed down recently - he started using a cane and a wheeled platform to take him up the long aisle in St Peter's Square - he had given no hint recently that he was mulling such a dramatic decision.

"I am really surprised," said Ricardo Rodriguez, a Portuguese tourist in St Peter's Square. "I hope the next pope can be better than this one doing the best for the world and Catholics," he said.

Elected in 2005 to succeed the enormously popular John Paul, Benedict never appeared to feel comfortable in a job he said he never wanted. He had wanted to retire to his native Germany to pursue his theological writings, something which he will now do from a convent inside the Vatican.

The resignation means that cardinals from around the world will begin arriving in Rome in March and after preliminary meetings, lock themselves in a secret conclave.

There has been growing pressure on the Church for the cardinals to shun European contenders and choose a pope from the developing world in order to better reflect parts of the globe where most Catholics live and where the Church is growing.

"MIND AND BODY"

The pope told the cardinals that in order to govern "...both strength of mind and body are necessary, strength which in the last few months, has deteriorated in me to the extent that I have had to recognize my incapacity to adequately fulfill the ministry entrusted to me."

He referred to "today's world, subject to so many rapid changes and shaken by questions of deep relevance for the life of faith".

Before he was elected pope, the former Cardinal Joseph Ratzinger, was known by such critical epithets as "God's rottweiler" because of his stern stand on theological issues.

After a few months, he showed his mild side but he never drew the kind of adulation that had marked the 27-year papacy of his predecessor John Paul.

The Archbishop of Canterbury, leader of the worldwide Anglican communion at odds with the Vatican over women priests, said he had learned of the pope's decision with a heavy heart but complete understanding.

German Chancellor Angela Merkel said the pope's decision must be respected if he feels he is too weak to carry out his duties. British Prime Minister David Cameron said: "He will be missed as a spiritual leader to millions."

Elected to the papacy on April 19, 2005 when he was 78 - 20 years older than John Paul was when he was elected - Benedict ruled over a slower-paced, more cerebral and less impulsive Vatican.

CHEERS AND SCANDAL

But while conservatives cheered him for trying to reaffirm traditional Catholic identity, his critics accused him of turning back the clock on reforms by nearly half a century and hurting dialogue with Muslims, Jews and other Christians.

Under the German's meek demeanor lay a steely intellect ready to dissect theological works for their dogmatic purity and debate fiercely against dissenters.

After appearing uncomfortable in the limelight at the start, he began feeling at home with his new job and showed that he intended to be pope in his way.

Despite great reverence for his charismatic, globe-trotting predecessor -- whom he put on the fast track to sainthood and whom he beatified in 2011 -- aides said he was determined not to change his quiet manner to imitate John Paul's style.

A quiet, professorial type who relaxed by playing the piano, he managed to show the world the gentle side of the man who was the Vatican's chief doctrinal enforcer for nearly a quarter of a century.

The first German pope for some 1,000 years and the second non-Italian in a row, he travelled regularly, making about four foreign trips a year, but never managed to draw the oceanic crowds of his predecessor.

The child abuse scandals hounded most of his papacy. He ordered an official inquiry into abuse in Ireland, which led to the resignation of several bishops.

Scandal from a source much closer to home hit in 2012 when the pontiff's butler, responsible for dressing him and bringing him meals, was found to be the source of leaked documents alleging corruption in the Vatican's business dealings, causing an international furor.

Benedict confronted his own country's past when he visited the Nazi death camp at Auschwitz.

Calling himself "a son of Germany", he prayed and asked why God was silent when 1.5 million victims, most of them Jews, died there during World War Two.

Ratzinger served in the Hitler Youth during World War Two when membership was compulsory. He was never a member of the Nazi party and his family opposed Adolf Hitler's regime.

(Philip Pullella; editing by Peter Millership, Ralph Boulton, Janet McBride)

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