Italy faces stalemate after election shock

ROME (Reuters) - Italy faced political deadlock on Tuesday after a stunning election that saw the anti-establishment 5-Star Movement of comic Beppe Grillo become the strongest party in the country but left no group with a clear majority in parliament.

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

The center-left coalition led by Pier Luigi Bersani won the lower house by around 125,000 votes, where it will have a majority because of a premium given to the largest party or coalition.

Results in the upper house Senate indicated the center-left would end up with about 119 seats, compared with 117 for the center-right. Seats are awarded on a region-by-region basis in the Senate, where a majority of 158 is needed to govern.

Any coalition must have a working majority in both houses in order to pass legislation.

Bersani claimed victory but said it was obvious that Italy was in "a very delicate situation".

Neither Grillo, a comedian-turned-politician who previously ruled out any alliance with another party, nor Silvio Berlusconi's center-right bloc, which threatened to challenge the close tally, showed any immediate willingness to negotiate.

Commentators said all of Grillo's adversaries had underestimated the appeal of a grassroots movement that called itself a "non-party", particularly its allure among young Italians who find themselves without jobs and the prospect of a decent future.

The 5-star Movement's score of 25.5 percent in the lower house was just ahead of the 25.4 percent for Bersani's Democratic Party, which ran in a coalition with the leftist SEL party, and it won almost 8.7 million votes overall - more than any other single party.

FRUSTRATED GENERATION

"The 'non-party' has become the largest party in the country," said Massimo Giannini, commentator for the Rome newspaper La Repubblica.

World financial markets reacted nervously to the prospect of a government stalemate in the euro zone's third-largest economy with memories still fresh of the financial crisis that took the 17-member currency bloc to the brink of collapse in 2011.

The euro skidded to an almost seven-week low against the dollar in Asia on fears about the euro zone's debt crisis. It fell as far as $1.3042, its lowest since January 10.

A first indication of investors' reaction to the results will come later on Tuesday when the Treasury auctions 8.75 billion euros in 6-month bonds.

Italy's borrowing costs have come down in recent months, helped by the promise of European Central Bank support but the election result confirmed fears of many European countries that it would not produce a government strong enough to implement effective reforms.

Grillo's surge in the final weeks of the campaign threw the race open, with hundreds of thousands turning up at his rallies to hear him lay into targets ranging from corrupt politicians and bankers to German Chancellor Angela Merkel.

In just three years, his 5-Star Movement, heavily backed by a frustrated generation of young Italians increasingly shut out from permanent full-time jobs, has grown from a marginal group to one of the most talked about political forces in Europe.

"The 5-Star Movement is the real winner of the election," said SEL leader Nichi Vendola, who said that his coalition would have to deal with Grillo, who mixes fierce attacks on corruption with policies ranging from clean energy to free Internet.

RECESSION

"It's a classic result. Typically Italian," said Roberta Federica, a 36-year-old office worker in Rome. "It means the country is not united. It is an expression of a country that does not work. I knew this would happen."

A long recession and growing disillusionment with mainstream parties fed a bitter public mood that saw more than half of Italian voters back parties that rejected the austerity policies pursued by Prime Minister Mario Monti with the backing of Italy's European partners.

Monti suffered a major setback. His centrist grouping won only 10.6 percent and two of his key centrist allies, Pier Ferdinando Casini and lower house speaker Gianfranco Fini, both of parliamentarians for decades, were booted out.

"It's not that surprising if you consider how much delusion there was with politics in its traditional forms," Monti said.

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.

Stefano Zamagni, an economics professor at Bologna University said the result showed that a significant share of Italians "are fed up with following the austerity line of Germany and its northern allies".

"These people voted to stick one up to Merkel and austerity," he said.

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, whom he replaced as the 2011 financial crisis threatened to spin out of control.

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

(Writing by Philip Pullella; Additional reporting by Barry Moody, Gavin Jones, Catherine Hornby and Naomi O'Leary; Editing by Pravin Char)

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The Bachelor's Sean Lowe Reveals Final Two

TV Watch

The Bachelor

02/25/2013 at 10:30 PM EST

From left: AshLee, Lindsay and Catherine

Kevin Foley/ABC(3)

And then there were two.

After three incredible dates in Thailand with the remaining women, The Bachelor's Sean Lowe faced a difficult decision at the end of Monday's episode: Would he send home AshLee, Catherine or Lindsay?

Keep reading to find out who got a rose – and who was left heartbroken ...

Sean said goodbye to early favorite AshLee in a surprising elimination that left her virtually speechless.

Visibly upset, AshLee left Sean's side without saying goodbye. She even asked him to not walk her to the waiting car that would take her away.

But Sean did get to explain. "I thought it was you from the very beginning," he said. "This was honestly the hardest decision I've ever had to make ... I think the world of you. I did not want to hurt you."

"This wasn't a silly game for me," AshLee said as the car drove away. "This wasn't about a joy ride. It wasn't about laughing and joking and having fun."

She added: "It's hard to say goodbye to Sean because I let him in ... It's the ultimate [rejection]."

Check back Tuesday morning for Sean Lowe's blog post to read all about his Thailand dates and why he chose to send AshLee home

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Koop, who transformed surgeon general post, dies

With his striking beard and starched uniform, former Surgeon General Dr. C. Everett Koop became one of the most recognizable figures of the Reagan era — and one of the most unexpectedly enduring.

His nomination in 1981 met a wall of opposition from women's groups and liberal politicians, who complained President Ronald Reagan selected Koop, a pediatric surgeon and evangelical Christian from Philadelphia, only because of his conservative views, especially his staunch opposition to abortion.

Soon, though, he was a hero to AIDS activists, who chanted "Koop, Koop" at his appearances but booed other officials. And when he left his post in 1989, he left behind a landscape where AIDS was a top research and educational priority, smoking was considered a public health hazard, and access to abortion remained largely intact.

Koop, who turned his once-obscure post into a bully pulpit for seven years during the Reagan and George H.W. Bush administrations and who surprised both ends of the political spectrum by setting aside his conservative personal views on issues such as homosexuality and abortion to keep his focus sharply medical, died Monday at his home in Hanover, N.H. He was 96.

An assistant at Koop's Dartmouth College institute, Susan Wills, confirmed his death but didn't disclose its cause.

Dr. Richard Carmona, who served as surgeon general a decade ago under President George W. Bush, said Koop was a mentor to him and preached the importance of staying true to the science even if it made politicians uncomfortable.

"He set the bar high for all who followed in his footsteps," Carmona said.

Although the surgeon general has no real authority to set government policy, Koop described himself as "the health conscience of the country" and said modestly just before leaving his post that "my only influence was through moral suasion."

A former pipe smoker, Koop carried out a crusade to end smoking in the United States; his goal had been to do so by 2000. He said cigarettes were as addictive as heroin and cocaine. And he shocked his conservative supporters when he endorsed condoms and sex education to stop the spread of AIDS.

Chris Collins, a vice president of amFAR, the Foundation for AIDS Research, said many people don't realize what an important role Koop played in the beginning of the AIDS epidemic.

"At the time, he really changed the national conversation, and he showed real courage in pursuing the duties of his job," Collins said.

Even after leaving office, Koop continued to promote public health causes, from preventing childhood accidents to better training for doctors.

"I will use the written word, the spoken word and whatever I can in the electronic media to deliver health messages to this country as long as people will listen," he promised.

In 1996, he rapped Republican presidential hopeful Bob Dole for suggesting that tobacco was not invariably addictive, saying Dole's comments "either exposed his abysmal lack of knowledge of nicotine addiction or his blind support of the tobacco industry."

Although Koop eventually won wide respect with his blend of old-fashioned values, pragmatism and empathy, his nomination met staunch opposition.

Foes noted that Koop traveled the country in 1979 and 1980 giving speeches that predicted a progression "from liberalized abortion to infanticide to passive euthanasia to active euthanasia, indeed to the very beginnings of the political climate that led to Auschwitz, Dachau and Belsen."

But Koop, a devout Presbyterian, was confirmed after he told a Senate panel he would not use the surgeon general's post to promote his religious ideology. He kept his word.

In 1986, he issued a frank report on AIDS, urging the use of condoms for "safe sex" and advocating sex education as early as third grade.

He also maneuvered around uncooperative Reagan administration officials in 1988 to send an educational AIDS pamphlet to more than 100 million U.S. households, the largest public health mailing ever.

Koop personally opposed homosexuality and believed sex should be saved for marriage. But he insisted that Americans, especially young people, must not die because they were deprived of explicit information about how HIV was transmitted.

Koop further angered conservatives by refusing to issue a report requested by the Reagan White House, saying he could not find enough scientific evidence to determine whether abortion has harmful psychological effects on women.

Koop maintained his personal opposition to abortion, however. After he left office, he told medical students it violated their Hippocratic oath. In 2009, he wrote to Senate Majority Leader Harry Reid, urging that health care legislation include a provision to ensure doctors and medical students would not be forced to perform abortions. The letter briefly set off a security scare because it was hand delivered.

Koop served as chairman of the National Safe Kids Campaign and as an adviser to President Bill Clinton's health care reform plan.

At a congressional hearing in 2007, Koop spoke about political pressure on the surgeon general post. He said Reagan was pressed to fire him every day, but Reagan would not interfere.

Koop, worried that medicine had lost old-fashioned caring and personal relationships between doctors and patients, opened his institute at Dartmouth to teach medical students basic values and ethics. He also was a part-owner of a short-lived venture, drkoop.com, to provide consumer health care information via the Internet.

Koop was born in the New York City borough of Brooklyn, the only son of a Manhattan banker and the nephew of a doctor. He said by age 5 he knew he wanted to be a surgeon and at age 13 he practiced his skills on neighborhood cats.

He attended Dartmouth, where he received the nickname Chick, short for "chicken Koop." It stuck for life.

Koop received his medical degree at Cornell Medical College, choosing pediatric surgery because so few surgeons practiced it.

In 1938, he married Elizabeth Flanagan, the daughter of a Connecticut doctor. They had four children, one of whom died in a mountain climbing accident when he was 20.

Koop was appointed surgeon-in-chief at Children's Hospital in Philadelphia and served as a professor at the University of Pennsylvania School of Medicine.

He pioneered surgery on newborns and successfully separated three sets of conjoined twins. He won national acclaim by reconstructing the chest of a baby born with the heart outside the body.

Although raised as a Baptist, he was drawn to a Presbyterian church near the hospital, where he developed an abiding faith. He began praying at the bedside of his young patients — ignoring the snickers of some of his colleagues.

Koop's wife died in 2007, and he married Cora Hogue in 2010.

He was by far the best-known surgeon general and for decades afterward was still a recognized personality.

"I was walking down the street with him one time" about five years ago, recalled Dr. George Wohlreich, director of the College of Physicians of Philadelphia, a medical society with which Koop had longstanding ties. "People were yelling out, 'There goes Dr. Koop!' You'd have thought he was a rock star."

___

Ring reported from Montpelier, Vt. Cass reported from Washington. AP Medical Writers Lauran Neergaard in Washington and Mike Stobbe in New York contributed to this report.

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Cuban leader Raul Castro says he will retire in 2018

HAVANA (Reuters) - Cuban President Raul Castro announced on Sunday he will step down from power after his second term ends in 2018, and the new parliament named a 52-year-old rising star to become his first vice president and most visible successor.

"This will be my last term," Castro, 81, said shortly after the National Assembly elected him to a second five-year tenure.

In a surprise move, the new parliament also named Miguel Diaz-Canel as first vice president, meaning he would take over if Castro cannot serve his full term.

Diaz-Canel is a member of the political bureau who rose through the Communist Party ranks in the provinces to become the most visible possible successor to Castro.

Raul Castro starts his second term immediately, leaving him free to retire in 2018, aged 86.

Former President Fidel Castro joined the National Assembly meeting on Sunday, in a rare public appearance. Since falling ill in 2006 and ceding the presidency to his brother, the elder Castro, 86, has given up official positions except as a deputy in the National Assembly.

The new government will almost certainly be the last headed up by the Castro brothers and their generation of leaders who have ruled Cuba since they swept down from the mountains in the 1959 revolution.

Cubans and foreign governments were keenly watching whether any new, younger faces appeared among the Council of State members, in particular its first vice president and five vice presidents.

Their hopes were partially fulfilled with Diaz-Canel's ascension. He replaces former first vice president, Jose Machado Ventura, 82, who will continue as one of five vice presidents.

Commander of the Revolution Ramiro Valdes, 80, and Gladys Bejerano, 66, the comptroller general, were also re-elected as vice presidents.

Two other newcomers, Mercedes Lopez Acea, 48, first secretary of the Havana communist party, and Salvador Valdes Mesa, 64, head of the official labor federation, also earned vice presidential slots.

Esteban Lazo, a 68-year-old former vice president and member of the political bureau of the Communist Party, left his post upon being named president of the National Assembly on Sunday. He replaced Ricardo Alarcon, who served in the job for 20 years.

Six of the Council's top seven members sit on the party's political bureau which is also lead by Castro.

Castro's announcement came as little surprise to Cuban exiles in Miami.

"It's no big news. It would have been big news if he resigned today and called for democratic elections," said Alfredo Duran, a Cuban-American lawyer and moderate exile leader in Miami who supports lifting the U.S. trade embargo against Cuba. "I wasn't worried about him being around after 2018," he added.

The National Assembly meets for just a few weeks each year and delegates its legislative powers between sessions to the 31-member Council of State, which also functions as the executive through the Council of Ministers it appoints.

Eighty percent of the 612 deputies, who were elected in an uncontested vote February 3, were born after the revolution.

EFFORT TO PROMOTE YOUNGER GENERATION

Raul Castro, who officially replaced his ailing brother as president in 2008, has repeatedly said senior leaders should hold office for no more than two five-year terms.

"Although we kept on trying to promote young people to senior positions, life proved that we did not always make the best choice," Castro said at a Communist Party Congress in 2011.

"Today, we are faced with the consequences of not having a reserve of well-trained replacements ... It's really embarrassing that we have not solved this problem in more than half a century."

Speaking on Sunday, Castro hailed the composition of the new Council of State as an example of what he had said needed to be accomplished.

"Of the 31 members, 41.9 percent are women and 38.6 percent are black or of mixed race. The average age is 57 years and 61.3 percent were born after the triumph of the revolution," he said.

The 2011 party summit adopted a more than 300-point plan aimed at updating Cuba's Soviet-style economic system, designed to transform it from one based on collective production and consumption to one where individual effort and reward play a far more important role.

Across-the-board subsidies are being replaced by a comprehensive tax code and targeted welfare.

Raul Castro has encouraged small businesses and cooperatives in retail services, farming, minor manufacturing and retail, and given more autonomy to state companies which still dominate the economy.

The party plan also includes an opening to more foreign investment.

At the same time, Cuba continues to face a U.S. administration bent on restoring democracy and capitalism to the island and questions about the future largess of oil rich Venezuela with strategic ally Hugo Chavez battling cancer.

(Editing by Kieran Murray and Vicki Allen)

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Relive the Best One-Liners and Tweets from the Oscars!

02/25/2013 at 12:00 AM EST

Jennifer Lawrence tumbled – to a standing ovation. Ben Affleck tearfully won Best Picure for Argo. And you all loved – or loved to hate – Oscar host Seth MacFarlane.

Yep, the Oscars are over, but it doesn't mean we're done talking about it! You can relive the best of the night! Check out what celebs, readers (and you!) had to say about the musical numbers, speeches – and a certain reigning Sexiest Man Alive! – on Twitter last night.

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FDA approves new targeted breast cancer drug

WASHINGTON (AP) — The Food and Drug Administration has approved a first-of-a-kind breast cancer medication that targets tumor cells while sparing healthy ones.

The drug Kadcyla from Roche combines the established drug Herceptin with a powerful chemotherapy drug and a third chemical linking the medicines together. The chemical keeps the cocktail intact until it binds to a cancer cell, delivering a potent dose of anti-tumor poison.

Cancer researchers say the drug is an important step forward because it delivers more medication while reducing the unpleasant side effects of chemotherapy.

"This antibody goes seeking out the tumor cells, gets internalized and then explodes them from within. So it's very kind and gentle on the patients — there's no hair loss, no nausea, no vomiting," said Dr. Melody Cobleigh of Rush University Medical Center. "It's a revolutionary way of treating cancer."

Cobleigh helped conduct the key studies of the drug at the Chicago facility.

The FDA approved the new treatment for about 20 percent of breast cancer patients with a form of the disease that is typically more aggressive and less responsive to hormone therapy. These patients have tumors that overproduce a protein known as HER-2. Breast cancer is the second most deadly form of cancer in U.S. women, and is expected to kill more than 39,000 Americans this year, according to the National Cancer Institute.

The approval will help Roche's Genentech unit build on the blockbuster success of Herceptin, which has long dominated the breast cancer marketplace. The drug had sales of roughly $6 billion last year.

Genentech said Friday that Kadcyla will cost $9,800 per month, compared to $4,500 per month for regular Herceptin. The company estimates a full course of Kadcyla, about nine months of medicine, will cost $94,000.

FDA scientists said they approved the drug based on company studies showing Kadcyla delayed the progression of breast cancer by several months. Researchers reported last year that patients treated with the drug lived 9.6 months before death or the spread of their disease, compared with a little more than six months for patients treated with two other standard drugs, Tykerb and Xeloda.

Overall, patients taking Kadcyla lived about 2.6 years, compared with 2 years for patients taking the other drugs.

FDA specifically approved the drug for patients with advanced breast cancer who have already been treated with Herceptin and taxane, a widely used chemotherapy drug. Doctors are not required to follow FDA prescribing guidelines, and cancer researchers say the drug could have great potential in patients with earlier forms of breast cancer

Kadcyla will carry a boxed warning, the most severe type, alerting doctors and patients that the drug can cause liver toxicity, heart problems and potentially death. The drug can also cause severe birth defects and should not be used by pregnant women.

Kadcyla was developed by South San Francisco-based Genentech using drug-binding technology licensed from Waltham, Mass.-based ImmunoGen. The company developed the chemical that keeps the drug cocktail together and is scheduled to receive a $10.5 million payment from Genentech on the FDA decision. The company will also receive additional royalties on the drug's sales.

Shares of ImmunoGen Inc. rose 2 cents to $14.32 in afternoon trading. The stock has ttraded in a 52-wek range of $10.85 to $18.10.

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Asian shares edge higher, yen falls on Bank of Japan report

TOKYO (Reuters) - Asian shares edged higher on Monday but prices were capped by uncertainty facing the global economy after a private survey showed Chinese manufacturing activity retreated from two-year highs this month.

China's HSBC flash purchasing managers' index (PMI) for February slipped to a four-month low of 50.4 and down from January's final reading of 52.3, which had been the best performance since January 2011. But the PMI on Monday showed a fourth consecutive month of expansion, confirming that the world's No. 2 economy is recovering, albeit slowly.

Investors remain wary of fragility in the global economic recovery, having pushed markets broadly higher over the past few months on receding pessimism over the euro zone's debt crisis and U.S. budget woes.

Markets are also pondering whether Italy's weekend elections will produce a stable government, and the implications of that for euro zone cohesion, while Moody's credit downgrade on Britain weighed on confidence in the pound.

Investors await testimony on Tuesday from Fed Chairman Ben Bernanke for further clues of when the Fed may slow or stop buying bonds. Financial markets were rattled last week after minutes of the Fed's January meeting suggested some Fed officials were mulling scaling back its strong monetary stimulus earlier than expected.

The MSCI's broadest index of Asia-Pacific shares outside Japan <.miapj0000pus> was up 0.1 percent, pulled higher by Australian shares <.axjo> which gained 0.6 percent on strong financials.

South Korean shares <.ks11> were nearly flat as the nation's first female president, who has shown willingness to talk down the won, was being inaugurated.

Korean carmakers came under pressure on news that an advocate of aggressive monetary easing was poised to head the Bank of Japan.

The Nikkei newspaper reported the Japanese government is likely to nominate Asian Development Bank President Haruhiko Kuroda and Kikuo Iwata, both vocal advocates of aggressive monetary expansion, as BOJ governor and deputy governor.

The Nikkei <.n225> jumped 2 percent to a 53-month high on Monday as the yen fell to fresh lows since May 2010 against the dollar.

Prime Minister Shinzo Abe on Friday vowed to get the world's third biggest economy growing again as he met with President Barack Obama. The United States and Japan also agreed on language during Abe's visit that could set the stage for Tokyo to soon join negotiations on a U.S.-led regional free trade agreement - the Trans-Pacific Partnership.

"The news of Kuroda (as BOJ nominee) appears to be taken positively by the market, but I think signs of progress towards TPP are vital as it shows Abe is taking leadership in pushing structural reforms, with the TPP being a vital tool to boosting growth," said Tetsuro Ii, the chief executive of Commons Asset Management.

Abe has called on a mix of strong reflationary policies: aggressive monetary easing, huge fiscal spending and pro-growth strategies. Investors have cheered the mix, dubbed "Abenomics," pushing the Nikkei up some 30 percent and the yen down 20 percent against the dollar over the past three months.

Early on Monday, the yen touched a low of 94.77 against the dollar, while the euro rose to a high of 124.83 yen, still off its 34-month peak of 127.71 set early this month.

The dollar fell sharply to below 93 yen last week on media reports that Toshiro Muto, a former financial bureaucrat perceived as less willing to take unconventional steps, was the frontrunner candidate for the top BOJ job.

"The dollar's move this morning is merely a rebound from disappointment on Muto last week. I don't think this topic will be enough to hoist the dollar above 95 yen," said Hiroshi Maeba, head of FX trading Japan at UBS in Tokyo. "No matter who is elected at the BOJ, it will not affect the longer-term trend of a weak yen," he said.

Speculation over the BOJ has been a key factor driving the yen lower recently due to anticipation of strong reflationary measures, but other fundamental factors such as Japan's deteriorating trade balances and signs of firmer U.S. growth also supported a weakening yen trend.

In the U.S., with five days left before $85 billion is slashed from U.S. government budgets, the White House issued more dire warnings about the harm the cuts will do to Americans, breaking down the loss of jobs and services to each of the states.

Wall Street ended up on Friday on strong earnings from Dow component Hewlett-Packard , but the benchmark Standard & Poor's Index <.spx> posted its first weekly decline of the year.

The euro steadied around $1.3190, off Friday's six-week low of $1.31445.

Sterling fell to a 31-month low of $1.5073 early on Monday and a record low against the New Zealand dollar at NZ$1.8025 following Friday's one-notch downgrade of Britain's prized triple-A sovereign rating by Moody's.

Hedge funds and other big speculators cut their bullish bets on U.S. commodities by the most in about 10 months in the week to February 19, just before oil and metals prices tumbled on rumors a commodities fund was dumping positions, data showed on Friday.

U.S. crude was down 0.1 percent to $93.07 a barrel and Brent fell 0.2 percent to $113.92.

(Editing by Eric Meijer)

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Italians head to polls in crucial vote for euro zone

ROME (Reuters) - Italians began voting on Sunday in one of the most closely watched elections in years, with markets nervous about whether it will produce a strong government to pull Italy out of recession and help resolve the euro zone debt crisis.

A huge final rally by anti-establishment-comedian-turned-politician Beppe Grillo on Friday before a campaigning ban kicked in has highlighted public anger at traditional parties and added to uncertainty about the election outcome.

Voters started casting their ballots at 0700 GMT. Polling booths will remain open until 2100 GMT on Sunday and between 0600-1400 GMT on Monday. Exit polls will come out soon after voting ends and official results are expected by early Tuesday.

The election is being followed closely by financial markets with memories still fresh of the potentially catastrophic debt crisis that brought technocrat Prime Minister Mario Monti to power more than a year ago.

Italy, the euro zone's third-largest economy, is stuck in deep recession, struggling under a public debt burden second only to Greece's in the 17-member currency bloc and with a public weary of more than a year of harsh austerity policies.

Final polls published two weeks ago showed center-left leader Pier Luigi Bersani with a 5-point lead, but analysts disagree about whether he will be able to form a stable majority that can push though the economic reforms Italy needs.

Bersani is now thought to be just a few points ahead of center-right rival Silvio Berlusconi, the four-times prime minister who has promised tax refunds and staged a media blitz in an attempt to win back voters.

BERLUSCONI CRITICISM

Berlusconi hogged the headlines on Sunday after he broke the campaign silence the previous evening attack magistrates, saying they were "more dangerous than the Sicilian mafia" and had invented allegations he held sex parties to discredit him.

The 76-year-old billionaire, who faces several trials on charges ranging from fraud to sex with an underage prostitute, was criticized by his election rivals for making the comments after the campaigning ban had come into force.

While the center left is still expected to gain control of the lower house, thanks to rules that guarantee a strong majority to whichever party wins the most votes nationally, a much closer battle will be fought in the Senate, which any government also needs to control to be able to pass laws.

Seats in the upper house are awarded on a region-by-region basis, meaning that support in key regions can decisively influence the overall result.

Pollsters still believe the most likely outcome is a center-left government headed by Bersani and possibly backed by Monti, who is leading a centrist coalition.

But strong campaigning by Berlusconi and the fiery Grillo, who has drawn tens of thousands to his election rallies, have thrown the election wide open, causing concern that there may be no clear winner.

Surveys have shown up to 5 million voters are expected to make up their minds at the last minute, adding to uncertainty.

Italy's Interior Ministry urged some 47 million eligible voters to not let bad weather forecasts put them off, and said it was prepared to handle snowy conditions in some northern regions to ensure everyone had a chance to vote.

STAGNANT ECONOMY

Whatever government emerges from the vote will have the task of pulling Italy out of its longest recession for 20 years and reviving an economy largely stagnant for two decades.

The main danger for Italy and the euro zone is a weak government incapable of taking firm action, which would rattle investors and could ignite a new debt crisis.

Monti replaced Berlusconi in November 2011 after Italy came close to Greek-style financial meltdown while the center-right government was embroiled in scandals.

The former European Commissioner launched a tough program of spending cuts, tax hikes and pension reforms which won widespread international backing and helped restore Italy's credibility abroad after the scandals of the Berlusconi era.

Italy's borrowing costs have since fallen sharply after the European Central Bank pledged it was prepared to support countries undertaking reforms by buying unlimited quantities of their bonds on the markets.

But economic austerity has fuelled anger among Italians grappling with rising unemployment and shrinking disposable incomes, encouraging many to turn to Grillo, who has tapped into a national mood of disenchantment.

(Editing by Alison Williams)

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Breaking Dawn - Part 2 Sweeps the Razzies

By Stephen M. Silverman

02/23/2013 at 10:00 PM EST

Taylor Lautner and Mackenzie Foy, in Breaking Dawn – Part 2

Andrew Cooper, SMPSP/Summit

Who's misérable now?

The Twilight Saga: Breaking Dawn – Part 2, Adam Sandler and Rihanna are among the "winners" of the 33rd annual Golden Raspberry Awards – the Razzies – which are not so much handed out as they are thrown at those who are voted as perpetrating Hollywood's worst achievements of the year.

Breaking Dawn – Part 2, the fifth and final installment in Stephenie Meyer's vampire saga, was recognized in seven categories, including worst picture.

The flick's Kristen Stewart was also cited as worst actress; Taylor Lautner, worst supporting actor; Lautner and 12-year-old Mackenzie Foy, worst screen couple; the entire cast, including Robert Pattinson, worst screen ensemble, and Bill Condon, worst director.

In addition, the film, which since opening last November has taken in more than $828 million at the box office, was named worst sequel.

Sandler, who last year monopolized the Razzies – and set a record by winning in 10 categories with the "comedy" Jack & Jill – this year got only two awards: for worst actor of the year and worst screenplay, both for That's My Boy.

Unlike the Oscars, which keep voting tallies a secret and will be handed out Sunday night during a very glamorous event, founder and Head RAZZberry John Wilson announced Razzie recipients Saturday night in the utilitarian Continental Breakfast Room of the Holiday Inn Express Hollywood Walk of Fame hotel, near (and yet so far from) the Dolby Theatre, home of the Academy Awards.

Wilson revealed to the press that although Rihanna, as worst supporting actress in the movie Battleship, won her Razzie by a landslide, worst screenwriter Sandler only beat the authors of Breaking Dawn by a single vote.

It's close shaves like that that really make or break the Razzies.

Adam Sandler, in That's My Boy, and Rihanna, in Battleship

Columbia; Universal

The 85th annual Academy Awards will air live on ABC starting at 7 p.m. ET/4 p.m. PT on Sunday, Feb. 24, from the Dolby Theatre in Hollywood.

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Investors face another Washington deadline

NEW YORK (Reuters) - Investors face another Washington-imposed deadline on government spending cuts next week, but it's not generating the same level of fear as two months ago when the "fiscal cliff" loomed large.

Investors in sectors most likely to be affected by the cuts, like defense, seem untroubled that the budget talks could send stocks tumbling.

Talks on the U.S. budget crisis began again this week leading up to the March 1 deadline for the so-called sequestration when $85 billion in automatic federal spending cuts are scheduled to take effect.

"It's at this point a political hot button in Washington but a very low level investor concern," said Fred Dickson, chief market strategist at D.A. Davidson & Co. in Lake Oswego, Oregon. The fight pits President Barack Obama and fellow Democrats against congressional Republicans.

Stocks rallied in early January after a compromise temporarily avoided the fiscal cliff, and the Standard & Poor's 500 index <.spx> has risen 6.3 percent since the start of the year.

But the benchmark index lost steam this week, posting its first week of losses since the start of the year. Minutes on Wednesday from the last Federal Reserve meeting, which suggested the central bank may slow or stop its stimulus policy sooner than expected, provided the catalyst.

National elections in Italy on Sunday and Monday could also add to investor concern. Most investors expect a government headed by Pier Luigi Bersani to win and continue with reforms to tackle Italy's debt problems. However, a resurgence by former leader Silvio Berlusconi has raised doubts.

"Europe has been in the last six months less of a topic for the stock market, but the problems haven't gone away. This may bring back investor attention to that," said Kim Forrest, senior equity research analyst at Fort Pitt Capital Group in Pittsburgh.

OPTIONS BULLS TARGET GAINS

The spending cuts, if they go ahead, could hit the defense industry particularly hard.

Yet in the options market, bulls were targeting gains in Lockheed Martin Corp , the Pentagon's biggest supplier.

Calls on the stock far outpaced puts, suggesting that many investors anticipate the stock to move higher. Overall options volume on the stock was 2.8 times the daily average with 17,000 calls and 3,360 puts traded, according to options analytics firm Trade Alert.

"The upside call buying in Lockheed solidifies the idea that option investors are not pricing in a lot of downside risk in most defense stocks from the likely impact of sequestration," said Jared Woodard, a founder of research and advisory firm condoroptions.com in Forest, Virginia.

The stock ended up 0.6 percent at $88.12 on Friday.

If lawmakers fail to reach an agreement on reducing the U.S. budget deficit in the next few days, a sequester would include significant cuts in defense spending. Companies such as General Dynamics Corp and Smith & Wesson Holding Corp could be affected.

General Dynamics Corp shares rose 1.2 percent to $67.32 and Smith & Wesson added 4.6 percent to $9.18 on Friday.

EYES ON GDP DATA, APPLE

The latest data on fourth-quarter U.S. gross domestic product is expected on Thursday, and some analysts predict an upward revision following trade data that showed America's deficit shrank in December to its narrowest in nearly three years.

U.S. GDP unexpectedly contracted in the fourth quarter, according to an earlier government estimate, but analysts said there was no reason for panic, given that consumer spending and business investment picked up.

Investors will be looking for any hints of changes in the Fed's policy of monetary easing when Fed Chairman Ben Bernake speaks before congressional committees on Tuesday and Wednesday.

Shares of Apple will be watched closely next week when the company's annual stockholders' meeting is held.

On Friday, a U.S. judge handed outspoken hedge fund manager David Einhorn a victory in his battle with the iPhone maker, blocking the company from moving forward with a shareholder vote on a controversial proposal to limit the company's ability to issue preferred stock.

(Additional reporting by Doris Frankel; Editing by Kenneth Barry)

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