Wall Street little changed before next "cliff" signal

NEW YORK (Reuters) - Stocks were little changed on Tuesday as the market awaited developments in negotiations in Washington to avert a "fiscal cliff" that could push the U.S. economy into recession.

Republicans in Congress proposed steep spending cuts to bring down the budget deficit on Monday but gave no ground on President Barack Obama's call to raise taxes on the wealthiest Americans, and the proposal was quickly dismissed by the White House.

The market has been subject to swings in reaction to the proposals floated so far by politicians. Still, many investors expect the two sides to come up with a deal before the year-end deadline, which could trigger a rally in equities.

"Investors everywhere are focused on what is happening here related to the fiscal cliff and the risk that nothing will happen," said Gail Dudack, Chief Investment Strategist, Dudack Research Group in New York.

"From what I have seen, there is a consensus that something will happen. Maybe if it is not ideal, something will happen."

Differences within the Republican Party over how to engage with the Democrats came to the fore on Tuesday as one senator opposed to raising taxes lashed out at House Speaker and fellow Republican John Boehner for proposing to increase revenue by closing some tax loopholes.

Despite the sudden moves in the market, a measure of investor anxiety has held surprisingly flat.

The CBOE volatility index <.vix>, a gauge of market anxiety, was at 17 but has not traded above 20 since July following its 2012 high near 28 hit in June. The VIX's 10-day Average True Range, an internal volatility measure, is at its lowest since early 2007.

Obama will meet with U.S. governors at the White House on Tuesday to talk about the fiscal cliff, a $600 billion package of tax hikes and federal spending cuts that would begin January 1.

The president is also expected to talk about the fiscal cliff during an interview scheduled for 12:30 p.m. (1730 GMT) on Bloomberg TV.

Coach became the latest company to advance the date of its next dividend payment. Expectations of higher taxes on dividends kicking in in 2013 have pushed many companies to pay special dividends this year or advance their next pay-back to investors. Shares of the upscale leather-goods maker shed 1.6 percent to $57.25.

The Dow Jones industrial average <.dji> rose 27.92 points, or 0.22 percent, to 12,993.52. The S&P 500 <.spx> edged up 0.44 points, or 0.03 percent, to 1,409.90. The Nasdaq Composite <.ixic> fell 4.44 points, or 0.15 percent, to 2,997.76.

Darden Restaurants Inc plunged 10.1 percent to $47.14 as the worst performer on the S&P 500 after warning its latest quarter would miss expectations after unsuccessful promotions led to a decline in sales at its Olive Garden, Red Lobster and LongHorn Steakhouse chains.

In contrast, Big Lots Inc jumped 8 percent to $30.28 after the close-out retailer posted a smaller-than-expected loss and boosted its full-year adjusted earnings forecast.

Toll Brothers shares advanced 0.3 percent to $32.53 after the largest U.S. luxury homebuilder reported a higher quarterly profit and said new orders rose sharply.

MetroPCS Communications shares dropped 6.5 percent to $10.07 after Sprint Nextel appeared unlikely to make a counter-offer for the wireless service provider.

Shares of Pep Boys-Manny Moe and Jack slumped 12.5 percent at $9.34 a day after the release of the auto parts retailer's results.

(Reporting by Chuck Mikolajczak; Editing by Kenneth Barry)

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NATO warns Syria not to use chemical weapons

BRUSSELS/BEIRUT (Reuters) - NATO told Syrian President Bashar al-Assad on Tuesday that any use of chemical weapons in his fight against encroaching rebel forces would be met by an immediate international response.

The warning from NATO Secretary-General Anders Fogh Rasmussen came as U.S. government sources said Washington had information that Syria was making what could be seen as preparations to use its chemical arsenal.

Syrian forces meanwhile bombarded rebel districts near Damascus in a sustained counter-attack to stem rebel gains around Assad's power base as the insurgency may be entering a decisive phase.

International concern over Syria's intentions has been heightened by reports that its chemical weapons have been moved and could be prepared for use.

"The possible use of chemical weapons would be completely unacceptable for the whole international community and if anybody resorts to these terrible weapons I would expect an immediate reaction from the international community," Rasmussen told reporters at the start of a meeting of alliance foreign ministers in Brussels.

The chemical threat made it urgent for the alliance to send Patriot anti-missile missiles to Turkey, Rasmussen said.

The French Foreign Ministry referred to "possible movements on military bases storing chemical weapons in Syria" and said the international community would react if they were used.

Britain has told the Syrian government that any use of chemical weapons would have "serious consequences", Foreign Secretary William Hague said.

U.S. President Barack Obama on Monday told Assad not to use chemical weapons, without saying how the United States might respond. The Foreign Ministry in Damascus said it would never use such weapons against Syrians.

CLASSIFIED INTELLIGENCE

The U.S. has collected what has been described as highly classified intelligence information demonstrating that Syria is making what could be construed as preparations to use elements of its extensive chemical weapons arsenal, two U.S. government sources briefed on the issue said.

One of the sources said that there was no question that the US "Intelligence community" had received information pointing to "preparations" under way in Syria related to chemical weapons. The source declined to specify what kind of preparations had been reported, or how close the intelligence indicated the Syrians were to deploying or even using the weapons.

Western military experts say Syria has four suspected chemical weapons sites, and it can produce chemical weapons agents including mustard gas and sarin, and possibly also VX nerve agent. The CIA has estimated that Syria possesses several hundred liters of chemical weapons and produces hundreds of tonnes of agents annually.

The fighting around Damascus has led foreign airlines to suspend flights and prompted the United Nations and European Union to reduce their presence in the capital, adding to a sense that the fight is closing in.

The army fightback came a day after the Syrian foreign ministry spokesman was reported to have defected in a potentially embarrassing blow to the government.

The Syrian Observatory for Human Rights said 200 people were killed across Syria on Monday, more than 60 of them around Damascus. Assad's forces bombarded districts to the south-east of the capital on Tuesday, near to the international airport, and in the rebel bastion of Daraya to the south-west.

Opposition footage posted on the Internet showed a multiple rocket launcher fire 20 rockets, which activists said was filmed at the Mezze military airport in Damascus.

Reuters could not independently verify the footage due to the government's severe reporting restrictions.

In central Damascus, shielded for many months from the full force of a civil war in which 40,000 people have been killed, one resident reported hearing several loud explosions.

"I have heard four or five thunderous blows. It could be barrel bombs," she said, referring to makeshift bombs which activists say Assad's forces have dropped from helicopters on rebel-dominated areas.

MORTAR ATTACK

The state news agency said that 28 students and a teacher were killed near the capital when rebels fired a mortar bomb on a school. Rebels have targeted government-held residential districts of the capital.

The mainly Sunni Muslim rebel forces have made advances in recent weeks, seizing military bases, including some close to Damascus, from forces loyal to Assad, who is from Syria's Alawite minority linked to Shi'ite Islam.

Faced with creeping rebel gains across the north and east of the country, and the growing challenge around the capital, Assad has increasingly resorted to air strikes against the insurgents.

A diplomat in the Middle East said Syrian Foreign Ministry spokesman Jihad Makdissi had left the country and defected, while the British-based Observatory said it had information that he flew from Beirut on Monday afternoon heading for London.

In Beirut, a diplomat said Lebanese officials had confirmed that Makdissi spent several days in Beirut before leaving on Monday, but could not confirm his destination.

"We're aware of reports that he has defected and may be coming to the UK. We're seeking clarification," a Foreign Office spokeswoman in London said.

Makdissi was the public face to the outside world of Assad's government as it battled the 20-month-old uprising. But he had barely appeared in public for several weeks before Monday's report of his defection.

He had little influence in a system largely run by the security apparatus and the military. But Assad's opponents will see the loss of such a high profile figure, if confirmed, as further evidence of a system crumbling from within.

The United Nations and European Union both said they were reducing their presence in Syria in response to the escalated violence around the capital.

A spokesman for U.N. humanitarian operations said the move would not stop aid deliveries to areas which remained accessible to relief convoys.

"U.N.-funded aid supplies delivered through SARC (Syrian Arab Red Crescent) and other charities are still moving daily where the roads are open," Jens Laerke told Reuters in Geneva.

"We have not suspended our operation, we are reducing the non-essential international staff."

Three remaining international staff at the European Union delegation, who stayed on in Damascus after the departure of most Western envoys, crossed the border into Lebanon on Tuesday after pulling out of the Syrian capital.

(Additional reporting by David Brunnstrom in Brussels, Khaled Yacoub Oweis in Cairo, Erika Solomon, Oliver Holmes and Ayat Basma in Beirut, Mark Hosenball, Mohammed Abbas and David Cutler in London, and Stephanie Nebehay in Geneva; Editing by Giles Elgood)

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Prince William and Kate: What Will They Name the Baby?

By Anya Leon

12/04/2012 at 11:30 AM EST

Kate and Prince William

Pascal Le Segretain/Getty

The much-awaited news may be confirmed, but there's still plenty to buzz about when it comes to Prince William and wife Kate's baby announcement. Namely, well, the name.

With much speculation that the baby's moniker will honor William's late mother Diana, Europe's largest betting company is putting all their cards on the table for a spot in the name game.

According to Paddy Power, the odds that the royal couple will call their firstborn Mary, Victoria or John are 8-1; the popular choices of Diana and Frances stand at 9-1; while Charles, Philip, Anne and George round out the top picks at 10-1.

Will a little princess be named after her paternal grandmother? Or her paternal great-grandmother, Elizabeth? (Not likely with odds at 16-1). Or will the new parents choose to pay homage to William's grandfather and decide on Prince Philip?

No matter how the chips fall, don't expect to hear any crazy Hollywood baby names – the couple will more than likely keep their choice classic.

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Tapping citizen-scientists for a novel gut check

WASHINGTON (AP) — The bacterial zoo inside your gut could look very different if you're a vegetarian or an Atkins dieter, a couch potato or an athlete, fat or thin.

Now for a fee — $69 and up — and a stool sample, the curious can find out just what's living in their intestines and take part in one of the hottest new fields in science.

Wait a minute: How many average Joes really want to pay for the privilege of mailing such, er, intimate samples to scientists?

A lot, hope the researchers running two novel citizen-science projects.

One, the American Gut Project, aims to enroll 10,000 people — and a bunch of their dogs and cats too — from around the country. The other, uBiome, separately aims to enroll nearly 2,000 people from anywhere in the world.

"We're finally enabling people to realize the power and value of bacteria in our lives," said microbiologist Jack Gilbert of the University of Chicago and Argonne National Laboratory. He's one of a team of well-known scientists involved with the American Gut Project.

Don't be squeamish: Yes, we share our bodies with trillions of microbes, living communities called microbiomes. Many of the bugs, especially those in the intestinal tract, play indispensable roles in keeping us healthy, from good digestion to a robust immune system.

But which combinations of bacteria seem to keep us healthy? Which ones might encourage problems like obesity, diabetes or irritable bowel syndrome?

And do diet and lifestyle affect those microbes in ways that we might control someday?

Answering those questions will require studying vast numbers of people. Getting started with a grassroots movement makes sense, said National Institutes of Health microbiologist Lita Proctor, who isn't involved with the new projects but is watching closely.

After all, there was much interest in the taxpayer-funded Human Microbiome Project, which last summer provided the first glimpse of what makes up a healthy bacterial community in a few hundred volunteers.

Proctor, who coordinated that project, had worried "there would be a real ick factor. That has not been the case," she said. Many people "want to engage in improving their health."

Scott Jackisch, a computer consultant in Oakland, Calif., ran across American Gut while exploring the science behind different diets, and signed up last week. He's read with fascination earlier microbiome research: "Most of the genetic matter in what we consider ourselves is not human, and that's crazy. I wanted to learn about that."

Testing a single stool sample costs $99 in that project, but he picked a three-sample deal for $260 to compare his own bacterial makeup after eating various foods.

"I want to be extra, extra well," said Jackisch, 42. Differing gut microbes may be the reason "there's no one magic bullet of diet that people can eat and be healthy."

It's clear that people's gut bacteria can change over time. What this new research could accomplish is a first look at how different diets may play a role, said American Gut lead researcher Rob Knight of the University of Colorado, Boulder.

One challenge is making sure participants don't expect that a map of their gut bacteria can predict their future health, or suggest lifestyle changes, anytime soon.

"I understand I'm not going to be able to say, 'Oh, my gosh, I'll be susceptible to this,'" said Bradley Heinz, 26, a financial consultant in San Francisco. He is paying uBiome $119 to analyze both his gut and mouth microbiomes; just the gut is $69.

"The more people that participate, the more information comes out and the more that everybody benefits," he added.

Participants can sign up for either project via the social fundraising site Indiegogo.com over the next month. They also can send scrapings from the skin, mouth and other sites, to analyze that bacteria. Sign up enough family members or body sites, or be tracked over time, and the price can rise into the thousands. American Gut researchers plan some free testing for those who can't afford the fees, to try to increase the experiment's diversity.

Don't forget the pets: "We sleep with them, play with them, they often eat our food," said American Gut co-founder Jeff Leach, an anthropologist. What bacteria we have in common is the next logical question.

Already, American Gut researchers are preparing to compare what they find in the typical U.S. gut with a few hundred people in rural Namibia, who eat what's described as hunter-gatherer fare. Also, Leach will spend three months living in Namibia next year, and is storing his own stool samples for before-and-after comparison.

But diet isn't the only factor. Your bacterial makeup starts at birth: Babies absorb different microbes when they're born vaginally than when they're born by C-section, a possible explanation for why cesareans raise the risk for certain infections. Taking antibiotics, especially in early childhood, can alter this teeming inner world, and it's not clear if there are lasting consequences.

Then there's your environment, such as the infections spread in hospitals. In February, a new University of Chicago hospital building opens and Gilbert will test the surfaces, the patients and their health workers to see how quickly bad bugs can move in and identify which bacteria are protective.

Whatever the findings, all the research marks "a huge teachable moment" about how we interact with microbes, Leach said.

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EDITOR'S NOTE — Lauran Neergaard covers health and medical issues for The Associated Press in Washington.

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Online:

www.indiegogo.com/americangut

www.indiegogo.com/ubiome

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Wall Street turns flat as U.S. factory data offsets China

NEW YORK (Reuters) - Stocks barely budged on Monday, with the S&P 500 and Nasdaq trimming early gains as disappointing U.S. factory numbers dented optimism spurred by positive data on China's economy.

Output by China's factories grew in November for the first time in more than a year, data showed. But that encouraging signal about the health of the world's second-largest economy was offset by a surprising contraction in U.S. manufacturing, which fell in November to its lowest level in more than three years, according to the Institute for Supply Management.

The market's reaction to the ISM data was somewhat muted, however, as concerns about budget dealings in Washington on the "fiscal cliff" remain the primary focus of investors. Political haggling continues over how to deal with large automatic spending cuts and tax hikes scheduled to kick in next year that could tip the U.S. economy back into recession.

"At this point, all you can say about the data is they are discounting it," said Paul Mendelsohn, chief investment strategist at Windham Financial Services in Charlotte, Vermont.

"So barring some catastrophe here in terms of the fiscal cliff, we look pretty stable."

Among other factors serving to offset the ISM report were two developments in the euro zone: Spain formally requested the disbursement of more than $50 billion of European funds to recapitalize its crippled banking sector, while Greece said it would spend 10 billion euros ($13 billion) to buy back bonds in a bid to reduce its ballooning debt.

The PHLX Europe sector index <.xex> advanced 0.6 percent.

"The general feeling underneath here is things are improving - Europe appears to be improving, at least politically getting their act together," Mendelsohn said.

The Dow Jones industrial average <.dji> shed 10.45 points, or 0.08 percent, to 13,015.13. The Standard & Poor's 500 Index <.spx> inched up just 0.62 of a point, or 0.04 pct to 1,417.80. The Nasdaq Composite Index <.ixic> added 3.68 points, or 0.12 percent, to 3,013.92.

The S&P 500 briefly moved above its 50-day moving average at about 1,420, a level that the index has been below since October 22, and now serving as a key resistance point for equities.

U.S. Treasury Secretary Timothy Geithner pushed Republicans on Sunday to offer specific ideas to cut the deficit and predicted that they would agree to raise tax rates on the rich to obtain a year-end deal to avoid the fiscal cliff.

Dell shares rose 5.8 percent to $10.19 as one of the biggest percentage gainers in both the S&P 500 and Nasdaq 100 <.ndx> after Goldman Sachs upgraded its view on the stock to "buy" from "sell."

Singapore Airlines said it was in talks with interested parties to sell its 49 percent stake in British carrier Virgin Atlantic, with sources saying that Delta Air Lines was among the potential suitors. Delta shares fell 1.8 percent to $9.82.

(Reporting by Chuck Mikolajczak; Editing by Kenneth Barry and Jan Paschal)

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Israel says will stick with settlement plan despite European pressure

JERUSALEM (Reuters) - Israel rejected concerted criticism from Europe on Monday over Prime Minister Benjamin Netanyahu's decision to expand settlement building after the United Nations' de facto recognition of Palestinian statehood.

Britain, France, Spain, Sweden and Denmark summoned the Israeli ambassadors in their capitals to hear appeals for Netanyahu to reverse course and deep disapproval of the plan to erect 3,000 more homes in the occupied West Bank and East Jerusalem.

An official in Netanyahu's office said Israel would not bend. "Israel will continue to stand by its vital interests, even in the face of international pressure, and there will be no change in the decision that was made," the official said.

Angered by the U.N. General Assembly's upgrading on Thursday of the Palestinians' status in the world body from "observer entity" to "non-member state", Israel said the next day it would build the new dwellings for settlers.

Such projects, on land Israel captured in a 1967 war, have routinely drawn world condemnation. Approximately 500,000 Israelis and 2.5 million Palestinians live in the two areas.

In a shift that raised the alarm among Palestinians and in world capitals, Netanyahu's pro-settler government also ordered "preliminary zoning and planning work" for thousands of housing units in areas including the "E1" zone east of Jerusalem.

Such construction in the barren hills of E1 has never been put into motion in the face of opposition from Israel's main ally, the United States. Building in the area could bisect the West Bank, cut off Palestinians from Jerusalem and further dim their hopes for a contiguous state.

The settlement plan, U.N. Secretary-General Ban Ki-moon said, would deal "an almost fatal blow" to a two-state solution to the Israeli-Palestinian conflict.

"We don't want to shift into sanctions mode," French President Francois Hollande told a news conference with Italian Prime Minister Mario Monti. "We are more focused on persuading."

Britain made clear it would not back such Israeli retaliation over the U.N. vote, which Palestinians sought after peace talks collapsed in 2010 over settlement building.

"We deplore the recent Israeli decision to build 3,000 new housing units and unfreeze development in the E1 block," a Foreign Office spokesman said. "We have called on the Israeli government to reverse the decision."

But a spokesman for British Prime Minister David Cameron played down what diplomatic sources said was the possibility of recalling Britain's ambassador in Tel Aviv, saying: "We are not proposing to do anything further at this stage".

France expressed "serious concerns" to the Israeli ambassador, reminding him that settlement building in occupied territories was illegal and an "obstacle" to reviving peace talks with the Palestinians.

A French Foreign Ministry official, responding to reports Paris might bring its Tel Aviv envoy home, said: "There are other ways in which we can express our disapproval."

Ahead of a Netanyahu visit this week, Germany, considered Israel's closest ally in Europe, urged it to refrain from expanding settlements, and Russia said it viewed the Israeli moves with serious concern.

RETALIATION

Israeli Finance Minister Yuval Steinitz said Israel could not have remained indifferent to the Palestinians' unilateral move at the United Nations.

"I want to tell you that those same Europeans and Americans who are now telling us 'naughty, naughty' over our response, understand full-well that we have to respond, and they themselves warned the Palestinian Authority," he said.

Palestinian chief negotiator Saeb Erekat said building in E1 "destroys the two-state solution, (establishing) East Jerusalem as the capital of Palestine and practically ends the peace process and any opportunity to talk about negotiations in the future".

The United States, one of the eight countries to vote alongside Israel against the Palestinian resolution at the General Assembly, has said the settlement plan was counterproductive to the resumption of direct peace talks.

Washington used the same argument in opposing the Palestinian initiative at the United Nations.

In Europe, only the Czech Republic voted against the status upgrade while many countries, including France, backed it. Netanyahu plans to visit Prague this week to express his thanks.

In the Gaza Strip, Sami Abu Zuhri, spokesman for the governing Hamas Islamist movement, called Israeli settlement "an insult to the international community, which should bear responsibility for Israeli violations and attacks on Palestinians".

In another blow to the Palestinian Authority, which exercises limited self-rule in the West Bank, Israel announced on Sunday it was withholding Palestinian tax revenues this month worth about $100 million, arguing the Palestinians owed $200 million to Israeli companies.

"These are not steps towards peace, these are steps towards the extension of the conflict," Spanish Foreign Minister Jose Manuel Garcia-Margallo said.

Only three weeks ago, Netanyahu won strong European and U.S. support for a Gaza offensive that Israel said was aimed at curbing persistent cross-border rocket fire.

Favored by opinion polls to win a January 22 national election, he brushed off the condemnation and complaints at home that he is deepening Israel's diplomatic isolation.

Netanyahu told his cabinet on Sunday that his government "will carry on building in Jerusalem and in all the places on the map of Israel's strategic interests".

But while his housing minister has said the government would soon invite bids from contractors to build 1,000 homes for Israelis in East Jerusalem and more than 1,000 in West Bank settlement blocs, the E1 plan is still in its planning stages.

"No one will build until it is clear what will be done there," the minister, Ariel Attias, said on Sunday.

Israel froze much of its activities in E1 under pressure from former U.S. President George W. Bush, and the area has been under the scrutiny of his successor, Barack Obama.

Most world powers consider Israel's settlements to be illegal. Israel cites historical and Biblical links to the West Bank and Jerusalem and regards all of the holy city as its capital, a claim that is not recognized internationally.

(Additional reporting by Crispian Balmer, Dan Williams, Nidal al-Mughrabi in Gaza, Jihan Abdalla in Ramallah, Steve Gutterman in Moscow, Gareth Jones in Berlin, John Irish and Elizabeth Pineau in Paris and Tim Castle in London; writing by Jeffrey Heller; editing by Philippa Fletcher)

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Nokia debunks rumor that it may be considering shift to Android

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Kate's Morning Sickness Is 'Acute'

By Simon Perry

12/03/2012 at 11:50 AM EST

Kate is still in the early stages of her pregnancy – less than 12 weeks – and already the next royal is making his or her presence dramatically known.

The Palace has described the Duchess of Cambridge's morning sickness as "acute" and she is at King Edward VII Hospital in Central London, joined by her husband, Prince William. According to a source at St James's Palace, Kate arrived at the hospital from her parents' new home in Bucklebury.

The source adds that the couple decided to "be open" about Kate's pregnancy because she was admitted to the hospital. But, since it's so early, "we aren't going into detail about the pregnancy itself," the source says.

Kate, 30, also has canceled her next three official engagements.

According to the Palace, Kate is suffering from hyperemesis gravidarum, characterized by severe and persistent nausea and vomiting during pregnancy. If untreated, the patient can suffer dehydration and dangerous weight loss.

This is the first child for the royal couple, who wed in April 2011.

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Asperger's dropped from revised diagnosis manual

CHICAGO (AP) — The now familiar term "Asperger's disorder" is being dropped. And abnormally bad and frequent temper tantrums will be given a scientific-sounding diagnosis called DMDD. But "dyslexia" and other learning disorders remain.

The revisions come in the first major rewrite in nearly 20 years of the diagnostic guide used by the nation's psychiatrists. Changes were approved Saturday.

Full details of all the revisions will come next May when the American Psychiatric Association's new diagnostic manual is published, but the impact will be huge, affecting millions of children and adults worldwide. The manual also is important for the insurance industry in deciding what treatment to pay for, and it helps schools decide how to allot special education.

This diagnostic guide "defines what constellations of symptoms" doctors recognize as mental disorders, said Dr. Mark Olfson, a Columbia University psychiatry professor. More important, he said, it "shapes who will receive what treatment. Even seemingly subtle changes to the criteria can have substantial effects on patterns of care."

Olfson was not involved in the revision process. The changes were approved Saturday in suburban Washington, D.C., by the psychiatric association's board of trustees.

The aim is not to expand the number of people diagnosed with mental illness, but to ensure that affected children and adults are more accurately diagnosed so they can get the most appropriate treatment, said Dr. David Kupfer. He chaired the task force in charge of revising the manual and is a psychiatry professor at the University of Pittsburgh.

One of the most hotly argued changes was how to define the various ranges of autism. Some advocates opposed the idea of dropping the specific diagnosis for Asperger's disorder. People with that disorder often have high intelligence and vast knowledge on narrow subjects but lack social skills. Some who have the condition embrace their quirkiness and vow to continue to use the label.

And some Asperger's families opposed any change, fearing their kids would lose a diagnosis and no longer be eligible for special services.

But the revision will not affect their education services, experts say.

The new manual adds the term "autism spectrum disorder," which already is used by many experts in the field. Asperger's disorder will be dropped and incorporated under that umbrella diagnosis. The new category will include kids with severe autism, who often don't talk or interact, as well as those with milder forms.

Kelli Gibson of Battle Creek, Mich., who has four sons with various forms of autism, said Saturday she welcomes the change. Her boys all had different labels in the old diagnostic manual, including a 14-year-old with Asperger's.

"To give it separate names never made sense to me," Gibson said. "To me, my children all had autism."

Three of her boys receive special education services in public school; the fourth is enrolled in a school for disabled children. The new autism diagnosis won't affect those services, Gibson said. She also has a 3-year-old daughter without autism.

People with dyslexia also were closely watching for the new updated doctors' guide. Many with the reading disorder did not want their diagnosis to be dropped. And it won't be. Instead, the new manual will have a broader learning disorder category to cover several conditions including dyslexia, which causes difficulty understanding letters and recognizing written words.

The trustees on Saturday made the final decision on what proposals made the cut; recommendations came from experts in several work groups assigned to evaluate different mental illnesses.

The revised guidebook "represents a significant step forward for the field. It will improve our ability to accurately diagnose psychiatric disorders," Dr. David Fassler, the group's treasurer and a University of Vermont psychiatry professor, said after the vote.

The shorthand name for the new edition, the organization's fifth revision of the Diagnostic and Statistical Manual, is DSM-5. Group leaders said specifics won't be disclosed until the manual is published but they confirmed some changes. A 2000 edition of the manual made minor changes but the last major edition was published in 1994.

Olfson said the manual "seeks to capture the current state of knowledge of psychiatric disorders. Since 2000 ... there have been important advances in our understanding of the nature of psychiatric disorders."

Catherine Lord, an autism expert at Weill Cornell Medical College in New York who was on the psychiatric group's autism task force, said anyone who met criteria for Asperger's in the old manual would be included in the new diagnosis.

One reason for the change is that some states and school systems don't provide services for children and adults with Asperger's, or provide fewer services than those given an autism diagnosis, she said.

Autism researcher Geraldine Dawson, chief science officer for the advocacy group Autism Speaks, said small studies have suggested the new criteria will be effective. But she said it will be crucial to monitor so that children don't lose services.

Other changes include:

—A new diagnosis for severe recurrent temper tantrums — disruptive mood dysregulation disorder. Critics say it will medicalize kids' who have normal tantrums. Supporters say it will address concerns about too many kids being misdiagnosed with bipolar disorder and treated with powerful psychiatric drugs. Bipolar disorder involves sharp mood swings and affected children are sometimes very irritable or have explosive tantrums.

—Eliminating the term "gender identity disorder." It has been used for children or adults who strongly believe that they were born the wrong gender. But many activists believe the condition isn't a disorder and say calling it one is stigmatizing. The term would be replaced with "gender dysphoria," which means emotional distress over one's gender. Supporters equated the change with removing homosexuality as a mental illness in the diagnostic manual, which happened decades ago.

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AP Medical Writer Lindsey Tanner can be reached at http://www.twitter.com/LindseyTanner .

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Cliff fight may knock out December rally

NEW YORK (Reuters) - In normal times, next week's slew of U.S. economic data could be a springboard for a December rally in the stock market.

December is historically a strong month for markets. The S&P 500 has risen 16 times in the past 20 years during the month.

But the market hasn't been operating under normal circumstances since November 7 when a day after the U.S. election, investors' focus shifted squarely to the looming "fiscal cliff."

Investors are increasingly nervous about the ability of lawmakers to undo the $600 billion in tax increases and spending cuts that are set to begin in January; those changes, if they go into effect, could send the U.S. economy into a recession.

A string of economic indicators next week, which includes a key reading of the manufacturing sector on Monday, culminates with the November jobs report on Friday.

But the impact of those economic reports could be muted. Distortions in the data caused by Superstorm Sandy are discounted.

The spotlight will be more firmly on signs from Washington that politicians can settle their differences on how to avoid the fiscal cliff.

"We have a week with a lot of economic data, and obviously most of the economic data is going to reflect the effects of Sandy, and that might be a little bit negative for the market next week, but most of that is already expected - the main focus remains the fiscal cliff," said Peter Cardillo, chief market economist at Rockwell Global Capital in New York.

Concerns about the cliff sent the S&P 500 <.spx> into a two-week decline after the elections, dropping as much as 5.3 percent, only to rally back nearly 4 percent as the initial tone of talks offered hope that a compromise could be reached and investors snapped up stocks that were viewed as undervalued.

On Wednesday, the S&P 500 gained more than 20 points from its intraday low after House Speaker John Boehner said he was optimistic that a budget deal to avoid big spending cuts and tax hikes could be worked out. The next day, more pessimistic comments from Boehner, an Ohio Republican, briefly wiped out the day's gains in stocks.

On Friday, the sharp divide between the Democrats and the Republicans on taxes and spending was evident in comments from President Barack Obama, who favors raising taxes on the wealthy, and Boehner, the top Republican in Congress, who said Obama's plan was the wrong approach and declared that the talks had reached a stalemate.

"It's unusual to end up with one variable in this industry, it's unusual to have a single bullet that is the causal factor effect, and you are sitting here for the next maybe two weeks or more, on that kind of condition," said Sandy Lincoln, chief market strategist at BMO Asset Management U.S. in Chicago.

"And that is what is grabbing the markets."

BE CONTRARY AND MAKE MERRY

But investor attitudes and seasonality could also help spur a rally for the final month of the year.

The most recent survey by the American Association of Individual Investors reflected investor caution about the cliff. Although bullish sentiment rose above 40 percent for the first time since August 23, bearish sentiment remained above its historical average of 30.5 percent for the 14th straight week.

December is a critical month for retailers such as Target Corp and Macy's Inc . They saw monthly retail sales results dented by Sandy, although the start of the holiday shopping season fared better.

With consumer spending making up roughly 70 percent of the U.S. economy, a solid showing for retailers during the holiday season could help fuel any gains.

Ryan Detrick, senior technical strategist at Schaeffer's Investment Research in Cincinnati, believes the recent drop after the election could be a market bottom, with sentiment leaving stocks poised for a December rally.

"The concerns on the fiscal cliff - as valid as they might be - could be overblown. When you look at a lot of the overriding sentiment, that has gotten extremely negative," said Detrick.

"From that contrarian point of view with the historically bullish time frame of December, we once again could be setting ourselves up for a pretty nice end-of-year rally, based on lowered expectations."

SOME FEEL THE BIG CHILL

Others view the fiscal cliff as such an unusual event that any historical comparisons should be thrown out the window, with a rally unlikely because of a lack of confidence in Washington to reach an agreement and the economic hit caused by Sandy.

"History doesn't matter. You're dealing with an extraordinary set of circumstances that could very well end up in the U.S. economy going into a recession," said Phil Orlando, chief equity market strategist at Federated Investors in New York.

"And the likelihood of that is exclusively in the hands of our elected officials in Washington. They could absolutely drag us into a completely voluntary recession."

(Wall St Week Ahead runs every Friday. Questions or comments on this column can be emailed to: charles.mikolajczak(at)thomsonreuters.com )

(Reporting by Chuck Mikolajczak; Editing by Jan Paschal)

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