Risk assets rise on Fed stimulus vow, Italy debt sale

TOKYO (Reuters) - Asian shares, commodity currencies and oil rose on Thursday as sentiment improved after U.S. Federal Reserve Chairman Ben Bernanke reaffirmed his commitment to strong stimulus measures, while a smooth debt sale calmed nerves jangled by Italy's political deadlock.

European markets are seen extending gains for a second day, with financial spreadbetters predicting London's FTSE 100 <.ftse>, Paris's CAC-40 <.fchi> and Frankfurt's DAX <.gdaxi> would open as much as 0.6 percent higher. <.l><.eu/>

A 0.1 percent rise in U.S. stock futures also hinted at a firm Wall Street start. <.n/>

The MSCI's broadest index of Asia-Pacific shares outside Japan <.miapj0000pus> was up 0.3 percent and was set for a monthly gain of 0.7 percent.

Australian shares <.axjo> soared 1.5 percent, Hong Kong shares <.hsi> added 1.2 percent and Indonesian stocks <.jkse> continued their bull run to hit another historic peak after closing on Wednesday at a record.

Japan's Nikkei stock average <.n225> climbed 1.3 percent as the yen softened. <.t/>

The yen was defensive, with Japanese Prime Minister Shinzo Abe nominating Asian Development Bank President Haruhiko Kuroda as Bank of Japan governor, and academic Kikuo Iwata as one of the two deputy governors. Both are seen by markets to support Abe's call for unconventional reflationary stimulus measures, and that view has underpinned yen selling.

Italy's inconclusive election last weekend raised fears that the euro zone's third-largest economy could abandon its fiscal reforms, but analysts and traders say they expect Rome to pursue a basic austerity path to pare down its huge debt, even if is at a more moderate pace, and that the European Central Bank will stand ready to provide funding support if needed.

The rally in equities and other risk assets showed the dimming appeal of safe-haven investments. A day after slumping nearly 1 percent on Wednesday, spot gold traded little changed around $1,597 an ounce and was headed for its longest run of monthly declines in more than 16 years.

"Gold's sentiment remains fickle, as it lacks a significant catalyst to propel the rally into the 13th year and people are more sensitive to even slightly bearish signs," said Chen Min, an analyst at Jinrui Futures in the southern Chinese city of Shenzhen.

Bernanke, speaking before Congress for a second day, downplayed signs of internal divisions, saying the policy of quantitative easing has the support of a "significant majority" of top central bank policymakers.

Uncertainty over an imminent U.S. fiscal tightening could dampen the positive mood, however, as President Barack Obama and Republican congressional leaders have not reached a deal to avoid the $85-billion in automatic "sequestration" spending cuts, due to start on Friday.

Regional data released on Thursday was mixed.

Australian business investment showed a surprise fall last quarter as firms outside the red-hot mining sector cut back, while estimates of future spending confirmed the long boom in resource investment was likely to end this year.

Japan's industrial output, on the other hand, rose for a second straight month in January, offering some evidence that the export-reliant economy may be emerging from a mild recession, taking strength from a pick-up in global demand and the weaker yen.


Italy's borrowing costs rose to a four-month high on Wednesday at the first bond auction since this week's inconclusive election but solid demand from domestic investors eased fears that the political deadlock could destabilize Europe's second-biggest sovereign debt market.

"Indeed there is room for optimism -- if the Italian risks remain contained -- as signals of stabilization continue to emerge," Barclays Capital said in a note.

The euro inched up 0.1 percent to $1.3143, well above a seven-week low of $1.3018 on Tuesday.

Others were more cautious.

"While confidence is high, there are still risks present. Negative political news from Italy may provide headwinds, while the looming 1 March deadline for the U.S. sequester could trigger $85 billion of across-the-board budget cuts," said Miguel Audencial, a sales trader with Sydney-based CMC Markets.

The yen steadied around 92.24 against the dollar. The yen hit its lowest since May 2010 of 94.77 on Monday before the outcome of the Italian vote rattled financial markets and sent the yen soaring to 90.85 yen.

The yen eased 0.1 percent against the euro to 121.19 after jumping to 118.74 on Monday.

U.S. crude rose 0.3 percent to $93.02 a barrel while Brent rose 0.2 percent to $112.07.

(Additional reporting by Luke Pachymuthu and Rujun Shen in Singapore; Editing by Eric Meijer)

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Election puts Italy on financial high-wire

Prime Minister Silvio Berlusconi delivers a speech during a campaign rally in Rome on January 25, 2013.


  • Brilliant minds are still trying to figure out the financial impact of Italy's election

  • The lack of certainty is seen as a negative for Italy -- and the eurozone

  • Instability could reignite the eurozone crisis

  • But it depends on what deal will be done, and how the markets will respond

Editor's note: Louise Cooper is a financial blogger and commentator who regularly appears on television, radio and in print. She started her career at Goldman Sachs as a European equity institutional sales person and then become a financial and business journalist. She now writes CooperCity.

London (CNN) -- Brilliant minds across the financial world are still trying to work out the implications of the Italian election result.

For the time being, the best answer is that it is probably too soon to tell. After Tuesday's falls, a little stability has returned to markets, possibly because everyone is still trying to work out what to think.

Credit ratings agency Moody's has warned the election result is negative for Italy -- and also negative for other indebted eurozone states. It fears political uncertainty will continue and warns of a "deterioration in the country's economic prospects or difficulties in implementing reform," the agency said.

For the rest of the eurozone, the result risks "reigniting the euro debt crisis." Madrid must be looking to Italy with trepidation. If investors decide that Italy is looking risky again and back off from buying its debt, then Spain will be drawn into the firing line too.

Can the anti-Berlusconi save Italy?

Louise Cooper, of Cooper City

Louise Cooper, of Cooper City

Standard & Poor's stated that Italy's rating was not immediately affected by the election but I think the key part of that sentence is "not immediately."

At the same time Herman Van Rompuy's tweets give an indication of the view from Brussels: "We must respect the outcome of democratic elections in Italy," his feed noted.

Really? That's a first. The democratically elected Silvio Berlusconi was forced out when he failed to follow through with austerity after the European Central Bank helped Italy by buying its debt in autumn 2011.

"It is now up to Italian political leaders to assume responsibility, compromise and form a stable government," Van Rompuy tweeted.

Did he see the results? The newcomer and anti-establishment comedian Beppe Grillo refuses to do a deal and yet he is the natural kingmaker, polling at 25%.

"Nor for Italy is there a real alternative to continuing fiscal consolidations and reforms," he continued.

Economically yes, but the Italian electorate disagree. And for the time being, Italy has a democracy (of sorts).

Finally: "I am confident that Italy will remain a stable member of the eurozone."

He hopes...

The key to whether the crisis reignites is whether investors begin to back away from lending to Italy. If so, this will be the big test of the ECB's resolve to save the euro.

Read more: Euro crisis coverage

The key thing to look at is Italian bonds, because if borrowing costs rise from 4.8% for 10-year money currently to nearer 6%, then Italy will start to find it too expensive to borrow.

The trillion euro question is if the ECB will step in to help even if it cannot get the reforms and austerity it demands (because of the political situation). That is the crux of the matter. And there will be many in the city today pondering that question.

Clearly in financial markets, taking on a central bank is a dangerous thing to do. Soros may have broken the Bank of England on Black Wednesday 1992, making billions by forcing sterling out of the EMU, but that was a long time ago.

Italy avoids panic at bond auction

What we have learnt from this crisis is not to "fight the Fed" (or the ECB). Last summer, the ECB's chief Mario Draghi put a line in the sand with his "whatever it takes" (to save the euro) speech.

But as part of that commitment he stressed time and time again that any new help from the ECB comes with conditions attached. And those conditions are what have proven so unpalatable to the Italians -- austerity and reform.

So we have two implacable objects hurtling towards each other. The political mess of Italy and the electorate's dislike of austerity and reform (incumbent technocrat Mario Monti only polled 10%).

So what happens next? The status quo can continue if Italian borrowing costs do not rise from here and therefore Italy does not need ECB help.

If markets continue to believe in Draghi and Brussels that the euro is "irreversible," then investors will continue to lend to Italy. Yes, markets will be jittery and fearful, but Italy will eventually sort itself out politically.

The big advantage for Italy is although it has a lot of debt, it is not creating debt quickly (like Greece, Spain or even the UK). And as I said yesterday on my CooperCity blog, the positive outcome from all this could be that Brussels backs off from austerity, which would be a good thing.

However, the basic rule of finance is that high risk comes with high return. Soros took a huge gamble against the British central bank but it reportedly made him a billionaire overnight.

There must be a few hedge funders looking at the Italian situation with similar greed in their eyes. If he wants to save the euro, it is time for Mario Draghi to put the fear of God back into such hearts.

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Chicago archdiocese to close 5 schools in cost-cutting move

Budget cuts announced Wednesday by the Archdiocese of Chicago signal that the area's Roman Catholics are entering a period of austerity when there will be less money for their parishes and schools.

The cuts, which were officially announced as Cardinal Francis George and other leaders of the church gathered at the Vatican to select a new pope, include closing five schools, eliminating 75 positions at the archdiocese's headquarters and placing a moratorium on loans to parishes from the archdiocese bank for three years. Other changes include creating stricter guidelines for local parishes applying for subsidies and reducing the number of the agencies in the archdiocese.

George, who spoke publicly about the cuts when asked by reporters in Rome, said they are needed to address the archdiocese's chronic financial problems. The archdiocese has run deficits of more than $30 million annually over the last four years, including being $40 million in the red for the fiscal year ending in June 2012.

All told, the measures will save tens of millions of dollars over the next few years, officials said.

“The expenses have gone up, and the income is pretty well flat,” George said after a news conference in Rome about Pope Benedict XVI's last audience Wednesday in St. Peter's Square. “We tried to ride out the recession without making any changes — and we can't do that. We're giving more grants to parishes and schools that need more money. The budget is not balanced. Not just layoffs, but a lot of other things being done, other ways to use the resources we have.”

The archdiocese sold $150 million in bonds in 2012 that helped it get through a cash-flow problem, but ultimately that wasn't enough, George said. He hopes the cuts will enable the archdiocese to balance its budget in two years.

Although the cardinal's announcement made headlines, the archdiocese's financial situation has been no secret to its priests. Several clergymen said they knew the archdiocese had planned to scale back loans to parishes.

“We have already made adjustments,” said the Rev. Dennis Ziomek of St. Barbara Parish in Chicago's Bridgeport neighborhood. “We have to be responsible stewards with the money.”

In a letter posted on the archdiocese website, the cardinal thanked parishioners for their generosity and asked them to pray for the employees now out of a paycheck.

At the archdiocese's Pastoral Center headquarters on Wednesday, people funneled in and out of the building during their lunch breaks but declined comment on the layoffs. Before the announcement, staffers received memos asking them to report to their desks early Wednesday.

Of the 75 positions, 55 were full-time jobs. Sixty people were let go, while the remaining posts had been vacant. Those cuts are expected to save $11 million to $13 million annually by fiscal 2015, George wrote in his letter.

Employees who received pink slips will get job counseling, extended health benefits and generous severance packages.

“We're keeping up counseling for helping people find jobs, looking for places where they might look for jobs,” George said.

Along with the layoffs, the archdiocese will reduce the number of capital loans and grants it gives parishes, while creating “stricter criteria” for them to qualify for the financial assistance.

A Parish Transformation initiative in the works for at least two years will also try to save money by laying out measures to provide more financial stability, though the letter did not give details.

Those cuts are expected to save an additional $13 million to $15 million annually by fiscal 2015, the letter states.

By next year, the archdiocese will reduce its aid to Catholic schools by $10 million. It plans to give scholarships to children affected by the five school closings so they can attend nearby Catholic schools. Officials said low enrollment was a key factor for closing the schools: St. Gregory the Great High, St. Paul-Our Lady of Vilna Elementary and St. Helena of the Cross Elementary in Chicago, plus St. Bernardine in Forest Park and St. Kieran in Chicago Heights.

Now, Catholic schools will start relying on scholarships for student financial aid instead of grants from the archdiocese to make tuition affordable, Superintendent Sister Mary Paul McCaughey said.

She pointed to a new partnership with the Big Shoulders Fund, a charity supporting urban Catholic schools, that will help families pay for school with scholarships.

McCaughey did not expect tuition at other Catholic schools to immediately rise because grants from the archdiocese have been reduced. About two-thirds of schools already have posted their tuition rates for the upcoming school year, she added.

“Although things are challenged, I think (Chicago) is a Catholic community that's always supported its schools,” McCaughey said. “I think the support will be there.”

Outside of St. Bernardine Elementary in west suburban Forest Park, one of the schools that will close this summer, Maria Maxham said she was devastated when she heard last month that she'd have to send her children, one in second grade and the other in fourth grade, to a different school.

Maxham, who lives in Forest Park, said she is not sure the two will attend another local Catholic school because some lack what she thought was St. Bernardine's strength.

“There is so much diversity at St. Bernardine, and that's part of what makes it so fantastic,” Maxham said. “It was a special place and a second family for us.”

The school, which has been open since 1915, has about 100 students currently enrolled in its preschool-through-eighth-grade classrooms.

Administrators, teachers and parents were notified of the closing in January, when McCaughey led a meeting at the school and explained the large amount of money that the archdiocese needed to reduce from the schools budget, Principal Veronica Skelton Cash said.

One family left the school shortly after hearing the news, she added.

Cash, who joined the school in the fall, said there was much frustration among staff members afterward. Many believed they would have at least a few years to turn things around.

“I could see a lot of things changing for the better at this school,” Cash said. “The culture of the community is changing, and we were getting more and more inquiries about the school. There was momentum going forward.”

Current employees were given guidance on severance and benefits by the archdiocese's human resources officials, Cash said. Teachers without jobs will also be placed on a priority list for future employment with the archdiocese, she said.

“I'm incredibly disheartened,” said Daniel Kwarcinski, who hopes to find a job at another private school after teaching art for seven years at St. Bernardine. “There's a need for a school like this where we are at.”

In Rome, George said the decisions to let people go and reduce aid were not easy. But he reiterated that the archdiocese's financial situation drove the decision.

“We have to balance the budget, especially if it's precarious,” he said. “The growth being very slow means we can no longer ignore the kinds of deficit situations that have been imposed on us. We have to take action.”

Tribune reporter Manya A. Brachear reported from Rome, with Tribune reporters Bridget Doyle and Jennifer Delgado in Chicago.




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Wall Street rebounds on Bernanke comments, data

NEW YORK (Reuters) - U.S. stocks rebounded from their worst decline since November on Tuesday after Federal Reserve Chairman Ben Bernanke defended the Fed's bond-buying stimulus and sales of new homes hit a 4 1/2-year high.

The S&P 500 had climbed 6 percent for the year and came within reach of all-time highs before the minutes from the Fed's January meeting were released last Wednesday. Since then, the benchmark S&P 500 has fallen 1 percent.

Bernanke, in testimony on Tuesday before the Senate Banking Committee, strongly defended the Fed's bond-buying stimulus program and quieted rumblings that the central bank may pull back from its stimulative policy measures, which were sparked by the release of the Fed minutes last week.

Bernanke's comments helped ease investors' concerns about a stalemate in Italy after a general election failed to give any party a parliamentary majority, posing the threat of prolonged instability and financial crisis in Europe, and sending the S&P 500 to its worst decline since November 7 in Monday's session.

Bernanke "certainly said everything the market needed to feel in order to get comfortable again," said Peter Kenny, managing director at Knight Capital in Jersey City, New Jersey.

"The fear is we were going to see a rollover, and the first shot over the bow was what we saw out of Italy yesterday with the elections," Kenny said. "When it came to U.S. markets, we saw some of that bleeding stop because our focus shifted from the Italian political circus to Ben Bernanke."

Gains in homebuilders and other consumer stocks, following strong economic data, lifted the S&P 500, and a 5.7 percent jump in Home Depot to $67.56 boosted the Dow industrials. The PHLX housing sector index <.hgx> rose 3.2 percent.

Economic reports that showed strength in housing and consumer confidence also supported stocks. U.S. home prices rose more than expected in December, according to the S&P/Case-Shiller index. Consumer confidence rebounded in February, jumping more than expected, and new-home sales rose to their highest in 4-1/2 years in January.

However, the central bank chairman also urged lawmakers to avoid sharp spending cuts set to go into effect on Friday, which he warned could combine with earlier tax increases to create a "significant headwind" for the economic recovery.

The Dow Jones industrial average <.dji> gained 115.96 points, or 0.84 percent, to 13,900.13 at the close. The Standard & Poor's 500 Index <.spx> rose 9.09 points, or 0.61 percent, to 1,496.94. The Nasdaq Composite Index <.ixic> advanced 13.40 points, or 0.43 percent, to close at 3,129.65.

Despite the bounce, the S&P 500 was unable to move back above 1,500, a closely watched level that was technical support until recently, but could now serve as a resistance point.

The CBOE Volatility Index <.vix> or the VIX, a barometer of investor anxiety, dropped 11.2 percent, a day after surging 34 percent, its biggest percentage jump since August 18, 2011.

The uncertainty caused by the Italian elections continued to weigh on stocks in Europe. The FTSEurofirst-300 index of top European shares <.fteu3> closed down 1.4 percent. The benchmark Italian index <.ftmib> tumbled 4.9 percent.

Home Depot gave the biggest boost to the Dow and provided one of the biggest lifts to the S&P 500 after the world's largest home improvement chain reported adjusted earnings and sales that beat expectations.

Macy's shares gained 2.8 percent to $39.59 after the department-store chain stated it expects full-year earnings to be above analysts' forecasts because of strong holiday sales.

Volume was active with about 7.08 billion shares traded on the New York Stock Exchange, NYSE MKT and Nasdaq, above the daily average of 6.48 billion.

Advancing stocks outnumbered declining ones on the NYSE by a ratio of about 2 to 1, while on the Nasdaq, three stocks rose for every two that fell.

(Reporting by Chuck Mikolajczak; Editing by Jan Paschal; Editing by Jan Paschal)

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Mbakwe, Minnesota take down No. 1 Indiana 77-73

MINNEAPOLIS (AP) — Indiana was starting to settle in again at No. 1 after weeks of shuffling at the top of the national rankings in this wildly unpredictable season of college basketball.

Trevor Mbakwe and Minnesota stepped forward, flexed their muscles and did their best to push the Hoosiers out.

Mbakwe had 21 points and 12 rebounds to help the Gophers take down top-ranked Indiana 77-73 on Tuesday night, the seventh time the No. 1 team in The Associated Press' poll has lost a game this season.

"We're trying to do big things so we have to learn from this mistake, but we have to dust it off real fast," Hoosiers star Victor Oladipo said.

Andre Hollins added 16 points for the Gophers (19-9, 7-8 Big Ten), who outrebounded Cody Zeller and the Hoosiers by a whopping 44-30 and solidified their slipping NCAA tournament bid with an emphatic performance against the Big Ten leader. The fans swarmed the court as the last second ticked off, the first time that's happened here in years.

"We weren't physical enough on the glass. That's the bottom line," Indiana coach Tom Crean said.

Zeller was held to nine points with four turnovers for the Hoosiers (24-4, 12-3), who have held the No. 1 ranking for 10 of 17 polls this season including the last four. Oladipo scored 16 points, but 14 of the 17 points by Jordan Hulls came before halftime.

"Cody's certainly capable of a lot," Crean said, "and I think he'll bounce back just fine."

Mbakwe, a sixth-year senior, posted his conference-leading seventh double-double. At 24 years old, he was a man among boys in many ways in this game, dominating both ends of the court when the Gophers needed him most. Minnesota had 23 offensive rebounds.

"We did need to play with a sense of urgency, play with a little edge," Gophers coach Tubby Smith said. "I think Trevor set that tone for us."

Elliott Eliason, who played every bit as well as Zeller, the slender sophomore in the post on the other side, scored seven straight points for Minnesota to tie the game at 46 shortly after Oladipo's reverse layup had given the Hoosiers a 44-36 edge, their biggest of the game.

Hollins, who missed eight of his first nine shots, scraped off a high screen by Eliason to pull up for a 3-pointer and give the Gophers a 51-48 lead. Mbakwe got a rebound to keep a key possession alive then grabbed another board to set up his off-balance bank shot to make it 56-53 in favor of Minnesota.

"I didn't feel I was playing up to my potential lately. I just wanted to come out and be aggressive," Mbakwe said.

Mbakwe was called for a loudly questioned blocking foul, his fourth, with 4:39 remaining on Zeller's fast-break layup and free throw that put the Hoosiers up 59-58. But Austin Hollins answered with a pump-fake layup that drew a foul for a three-point play and a two-point advantage for the Gophers.

The Hoosiers didn't lead again, and Joe Coleman's fast-break dunk with 2:35 left gave Minnesota a 68-61 cushion, enough of one to withstand a couple of 3-pointers by Christian Watford and one by Hulls in the closing minutes.

Mbakwe, who played for Crean when they were at Marquette in 2007-08, has had some of his better games against the Hoosiers.

This was his best.

He gave the Gophers and their home crowd a double-shot of energy early with 10 points in the first 6½ minutes, plus a jarring block of Zeller's inside shot that knocked the 7-footer to the court.

"He's a high-level, high-energy, tough guy who plays the game at a desperate level," Crean said. "Obviously I'm biased, but there's no shame in that."

Zeller, Indiana's leading scorer and the second-best shooter in the Big Ten behind Oladipo, was 0 for 4 from the field in the first half with two turnovers, two fouls and two points. The Gophers scored only three points in the last 7 minutes of the half, but they trailed only 34-30.

The Hoosiers are still in position for their first outright Big Ten regular season championship since 1993, with a one-game edge in the loss column over Michigan State, Michigan and Wisconsin. With home games against Iowa and Ohio State, Indiana could still clinch the title before the finale at Michigan on March 10.

For now, though, the Hoosiers have to regroup and re-establish their inside game after the trampling in the paint they endured here.

"They were relentless on the glass. We just didn't do a great job of boxing them out," Oladipo said.

The Gophers were back on their uniquely raised home court, trying desperately to boost spirits that have sagged under the weight of eight losses in their previous 11 games. Smith even had the team meet with a sports psychologist. They hadn't topped 58 points in their previous five games. After being ranked in 11 straight polls, the Gophers didn't get one vote this week.

They'll get a few in the next one.

"We've had a lot of people supporting them, encouraging them. I think they knew how important the game was, but I sensed a very calm, matter-of-fact group of guys," Smith said, adding: "They're very confident about who they are."


Follow Dave Campbell on Twitter: http://www.twitter.com/DaveCampbellAP

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Benedict: Pope aware of his flaws?

Pope Benedict XVI delivers his last Angelus Blessing to thousands of pilgrims gathered in Saint Peter's Square on February 24.


  • Sister Mary Ann Walsh: Pope Benedict acknowledged that he made mistakes

  • Walsh: In firestorm over scholarly quotes about Islam, he went to great lengths to atone

  • Walsh: Similarly, he quickly reversed a decision that had angered Jews and repaired ties

  • Even his stepping down is a nod to his humanity and his love of the church, she says

Editor's note: Sister Mary Ann Walsh is director of media relations for the U.S. Conference of Catholic Bishops and a member of the Sisters of Mercy of the Americas Northeast Regional Community. She is a former foreign correspondent at Catholic News Service (CNS) in Rome and the editor of "John Paul II: A Light for the World," "Benedict XVI: Essays and Reflections on his Papacy," and "From Pope John Paul II to Benedict XVI."

(CNN) -- One of the Bible's paradoxical statements comes from St. Paul's Epistle to the Galatians: "Power is made perfect in infirmity."

The poetic statement proclaims that when we are weak, we are strong. Pope Benedict XVI's stepping down from what many consider one of the most powerful positions in the world proves it. In a position associated with infallibility -- though that refers to formal proclamations on faith and morals -- the pope declares his weakness.

Sister Mary Ann Walsh

Sister Mary Ann Walsh

His acceptance of frailty speaks realistically about humanity: We grow old, weaken, and eventually die. A job, even one guided by the Holy Spirit, as we Roman Catholics believe, can become too much for us.

Acceptance of human frailty has marked this papacy. We all make mistakes, but the pope makes them on a huge stage.

He was barely into his papacy, for example, when he visited Regensburg, Germany, where he once taught theology. Like many a professor, he offered a provocative statement to get the conversation going. To introduce the theme of his lecture, the pope quoted from an account of a dialogue between the Byzantine Emperor Manuel II Paleologus and an unnamed Muslim scholar, sometime near the end of the 14th century -- a quote that was misinterpreted by some as a condemnation of Mohammed and Islam.

Opinion: 'Gay lobby' behind pope's resignation? Not likely

Twice, the pope emphasized that he was quoting someone else's words. Unfortunately, the statement about Islam was taken as insult, not a discussion opener, and sparked rage throughout the Muslim world.

The startled pope had to explain himself. He apologized and traveled two months later to Istanbul's Blue Mosque, where he stood shoeless in prayer beside the Grand Mufti of Istanbul. Later he hosted Muslim leaders at the Vatican at the start of a Catholic-Muslim forum for dialogue. It was a human moment -- a mistake, an apology and atonement -- all round.

A similar controversy erupted when he tried to bring the schismatic Society of St. Pius X back into the Roman Catholic fold.

In a grand gesture toward reconciliation, he lifted the excommunication of four of its bishops, unaware that one, Richard Williamson, was a Holocaust denier. This outraged many Jews. Subsequently the Vatican said the bishop had not been vetted, and in a bow to modernity said officials at least should have looked him up on the Internet.

In humble response, Benedict reiterated his condemnation of anti-Semitism and told Williamson that he must recant his Holocaust views to be fully reinstated. Again, his admission of a mistake and an effort to mend fences.

News: Scandal threatens to overshadow pope's final days

Pope Benedict XVI came from a Catholic Bavarian town. Childhood family jaunts included trips to the shrine of the Black Madonna, Our Lady of Altotting. He entered the seminary at the age of 13. He became a priest, scholar and theologian. He lived his life in service to the church. Even in resigning from the papacy, he embraces the monastic life to pray for a church he has ever loved.

With hindsight, his visit to the tomb of 13th century Pope Celestine V, a Benedictine monk who resigned from the papacy eight centuries before, becomes poignant.

In 2009, on a visit to Aquila, Italy, Benedict left at Celestine's tomb the pallium, a stole-like vestment that signifies episcopal authority, that Benedict had worn for his installation as pope. The gesture takes on more meaning as the monkish Benedict steps down.

We expect the pope to be perfect. Catholics hold him to be the vicar of Christ on earth. He stands as a spiritual leader for much of the world. Statesmen visit him from around the globe. He lives among splendid architecture, in the shadow of the domed St. Peter's Basilica. All testify to an almost surreal omnipotence.

Complete coverage of the pope's resignation

In this world, however, walked a vulnerable, human person. And in a paradox of life, his most human moment -- giving up the power of office -- may prove to be his most potent, delivering a message that, as St. Paul noted many centuries ago, "Power is made perfect in infirmity."

Follow @CNNOpinion on Twitter.

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The opinions expressed in this commentary are solely those of Mary Ann Walsh.

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Kelly easily wins Democratic race to replace Jackson Jr.

Former state Rep. Robin Kelly easily won the special Democratic primary Tuesday night in the race to replace the disgraced Jesse Jackson Jr. in Congress, helped by millions of dollars in pro-gun control ads from New York Mayor Michael Bloomberg's political fund.

A snowstorm and lack of voter interest kept turnout low as Kelly had 52 percent to 25 percent for former U.S. Rep. Debbie Halvorson and 11 percent for Chicago 9th Ward Ald. Anthony Beale with 99 percent of precincts counted.

Kelly will formally take on the winner of the Republican primary in an April 9 special general election in the heavily Democratic district. In the GOP contest, less than 25 votes separated convicted felon Paul McKinley and businessman Eric Wallace.

Kelly framed her win as a victory for gun control forces.

"You sent a message that was heard around our state and across the nation," Kelly told supporters in a Matteson hotel ballroom. "A message that tells the NRA that their days of holding our country hostage are coming to an end.

"To every leader in the fight for gun control ready to work with President (Barack) Obama and Mayor (Rahm) Emanuel to stop this senseless violence, thank you for your leadership and thank you for your courage," she said.

Halvorson told supporters to rally around Kelly as the Democratic nominee. But Halvorson also made it clear she believed her biggest opponent was the mayor of New York, whose anti-gun super political action committee spent more than $2.2 million attacking her previous support from the National Rifle Association while backing Kelly.

"We all know how rough it was for me to have to run an election against someone who spent ($2.2) million against me," Halvorson said at Homewood restaurant. "Every 71/2 minutes there was a commercial."

Bloomberg's Independence USA PAC was the largest campaign interest in the race and dominated the Chicago broadcast TV airwaves compared to a marginal buy by one minor candidate.

Beale also called Bloomberg's influence "the biggest disservice in this race."

"If this is the future of the Democratic Party, then we are all in big trouble," Beale said.

Bloomberg, an Emanuel ally in the fight for tougher gun restrictions, called Kelly's win "an important victory for common sense leadership on gun violence" as well as sign that voters "are demanding change" in a Congress that has refused to enact tougher gun restrictions, fearing the influence of the NRA.

But as much as Bloomberg sought to portray the Kelly win as a victory over the influential NRA, the national organization stayed out of the contest completely while the state rifle association sent out one late mailer for Halvorson.

Be it the TV ads or a late consolidation toward Kelly in the campaign, the former Matteson lawmaker made an impressive showing with Democratic voters in suburban Cook County, where the bulk of the district's vote was located, as well as on the South Side.

Despite the size of the field, Kelly got more than half of the votes cast in the two most populated areas of the district. Halvorson won by large percentages over Kelly in Kankakee County and the district's portion of Will County, but those two areas have very few votes.

The special primary election, by its nature, already had been expected to be a low-turnout affair — an expedited contest with little time for contenders to raise money or mount a traditional campaign.

Adding to the lack of interest was the fact that there were no other contests on the ballot in Chicago and most of the suburban Cook County portion of the district. Few contests were being held in Kankakee County and the portion of Will County within the 2nd District.

Turnout was reported to be around 15 percent in the city and suburban Cook. More than 98 percent of the primary votes cast in Chicago were Democratic, as were 97 percent of those cast in suburban Cook.

On the Republican side, the unofficial vote leader was McKinley, 54, who was arrested 11 times from 2003 to 2007, mostly for protesting, with almost all of the charges dropped. In the 1970s and '80s, McKinley was convicted of six felony counts, serving nearly 20 years in prison for burglaries, armed robberies and aggravated battery. He previously declined to discuss the circumstances of those crimes but has dubbed himself the "ex-offender preventing the next offender" in his campaign.

Records show McKinley also owes $14,147 in federal taxes, which might explain his answer at a forum when asked if he would cut any federal programs. "Certainly," he said. "The IRS."

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Asian shares slip, EU bourses set to slide on Italy vote

TOKYO (Reuters) - Asian shares declined on Tuesday and the euro hit its lowest in nearly seven weeks against the dollar as an apparently deadlocked election in Italy raised the specter of a resurgent euro zone debt crisis.

Italy's main FTSE MIB <.ftmib>stock market index is expected to open down 2.5 percent, while other European markets are also seen slumping with financial spreadbetters predicting London's FTSE 100 <.ftse>, Paris's CAC-40 <.fchi> and Frankfurt's DAX <.gdaxi> would open down as much as 2.6 percent. U.S. stock futures were flat to suggest a cautious Wall Street start. <.l><.eu><.n/>

"There's a possibility that the Italians might be heading back to the polls. In the short term, investors and traders don't like the uncertainty," said Ben Le Brun, market analyst at OptionsXpress in Sydney.

Italy's centre-left coalition will win a majority in the lower house of parliament but the upper house will be deadlocked, the Interior Ministry said on Tuesday after almost all votes were counted. No party or coalition won a majority of seats in the Senate, which a government would need to pass legislation.

A split parliament in the euro zone's third-largest economy is seen as likely to paralyze any new government and potentially reignite the euro-zone debt crisis.

"Financial markets will now have to take at face value the idea that the protest vote can actually attain an overall majority in some parts of Europe's legislatures. This is indeed a worrying development and one that should rattle financial markets for some time to come," Westpac said in a note.

The yen and the euro stabilized and Asia's overall equities losses were less severe than U.S. benchmark Standard & Poor's 500 Index <.spx> which suffered its worst one-day percentage decline since November 7 with a 1.8 percent tumble on Monday.

The MSCI's broadest index of Asia-Pacific shares outside Japan <.miapj0000pus> skidded 0.9 percent. Australian shares <.axjo> slipped 1 percent, South Korean shares <.ks11> eased 0.4 percent while Hong Kong <.hsi> shed 0.8 percent to test a new 2012 low. Shanghai shares <.ssec> outperformed Asian peers after official media dispelled monetary tightening fears.

Southeast Asian shares, which have hit record highs recently, posted a larger drop, with the Philippines <.psi> plunging 1.2 percent after a record finish on Monday and Indonesian stocks tumbling 0.9 percent after also closing at a record on Monday.

U.S. crude slid 0.8 percent to $92.34 a barrel and Brent fell 0.7 percent to $113.61.

Spot gold inched down 0.2 percent to $1,591.01 an ounce, but London copper edged up 0.3 percent to $7,862 a metric ton.

"Volatile overnight markets discouraged those who had not been able to buy at the dips, while a lack of clear direction as well as growing risks have also reduced incentives for investors to venture out into the markets," said Tetsu Emori, a commodities fund manager at Astmax Investments in Tokyo.


The yen resumed its retreat after firming sharply on Monday when nervousness about Italy exposed the yen to sharp reversals from its recent steep losses on bets of aggressive reflationary monetary policy in Japan.

The yen traded down 0.2 percent against the dollar at 91.93 after gaining 2 percent to 90.85 on Monday from its intraday low of 94.77 touched earlier in the day, its lowest since May 2010. The yen was also down 0.3 percent against the euro to 119.99 after jumping more than 3 percent to 118.74 on Monday from its day's low of 125.36.

The yen's overnight appreciation hit Japan's Nikkei stock average, with the index <.n225> tumbling 2.3 percent after closing at a 53-month high the day before. <.t/>

Traders said the plunge in the dollar and the euro against the Japanese currency has provided fresh opportunities to buy these currencies against the yen, with many market players still seeing a weak yen trend continuing.

But the euro fell to its lowest in nearly seven weeks at $1.3042 on jitters that political gridlock in Italy will hamper the country's efforts to reform and slash its debts.

"Uncertainty over the Italian election outcome and its impact will certainty keep the euro under strong pressure for some time," said Yuji Saito, director of foreign exchange at Credit Agricole in Tokyo.

"A safety net has been provided over the past year in the euro zone and given the size of Italy's economy, I doubt that the situation will turn into a disaster, but we need to carefully monitor developments. It revives memories of risks in the euro zone," Saito added.

The focus will now be on an Italian treasury bill auction on Tuesday when borrowing costs could rise, given the Senate election result.

Investors also await testimony later in the day from Federal Reserve Chairman Ben Bernanke for further clues to when the Fed intends to slow down or stop its bond-buying program.

Financial markets were rattled last week by minutes of the Fed's January meeting showing some Fed officials were mulling scaling back its strong monetary stimulus earlier than expected.

Dennis Lockhart, president of the Federal Reserve Bank of Atlanta, said on Monday that U.S. economic growth could surpass expectations this year, but an anemic labor market requires ongoing support from monetary policy.

The United States also faces downside risks to its economy if $85 billion in government-wide "sequestration" spending cuts go ahead on March 1.

(Additional reporting by Manolo SerapiThuy Ong in Sydney; Editing by Eric Meijer)

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Vatican 'Gay lobby'? Probably not


  • Benedict XVI not stepping down under pressure from 'gay lobby,' Allen says

  • Allen: Benedict is a man who prefers the life of the mind to the nuts and bolts of government

  • However, he says, much of the pope's time has been spent putting out fires

Editor's note: John L. Allen Jr. is CNN's senior Vatican analyst and senior correspondent for the National Catholic Reporter.

(CNN) -- Suffice it to say that of all possible storylines to emerge, heading into the election of a new pope, sensational charges of a shadowy "gay lobby" (possibly linked to blackmail), whose occult influence may have been behind the resignation of Benedict XVI, would be right at the bottom of the Vatican's wish list.

Proof of the Vatican's irritation came with a blistering statement Saturday complaining of "unverified, unverifiable or completely false news stories," even suggesting the media is trying to influence the papal election.

Two basic questions have to be asked about all this. First, is there really a secret dossier about a network of people inside the Vatican who are linked by their sexual orientation, as Italian newspaper reports have alleged? Second, is this really why Benedict XVI quit?

John L. Allen Jr.

John L. Allen Jr.

The best answers, respectively, are "maybe" and "probably not."

It's a matter of record that at the peak of last year's massive Vatican leaks crisis, Benedict XVI created a commission of three cardinals to investigate the leaks. They submitted an eyes-only report to the pope in mid-December, which has not been made public.

It's impossible to confirm whether that report looked into the possibility that people protecting secrets about their sex lives were involved with the leaks, but frankly, it would be surprising if it didn't.

There are certainly compelling reasons to consider the hypothesis. In 2007, a Vatican official was caught by an Italian TV network on hidden camera arranging a date through a gay-oriented chat room, and then taking the young man back to his Vatican apartment. In 2010, a papal ceremonial officer was caught on a wiretap arranging liaisons through a Nigerian member of a Vatican choir. Both episodes played out in full public view, and gave the Vatican a black eye.

Pope Benedict XVI


























In that context, it would be a little odd if the cardinals didn't at least consider the possibility that insiders leading a double life might be vulnerable to pressure to betray the pope's confidence. That would apply not just to sex, but also potential conflicts of other sorts too, such as financial interests.

Vatican officials have said Benedict may authorize giving the report to the 116 cardinals who will elect his successor, so they can factor it into their deliberations. The most immediate fallout is that the affair is likely to strengthen the conviction among many cardinals that the next pope has to lead a serious house-cleaning inside the Vatican's bureaucracy.

It seems a stretch, however, to suggest this is the real reason Benedict is leaving. For the most part, one should probably take the pope at his word, that old age and fatigue are the motives for his decision.

That said, it's hard not to suspect that the meltdowns and controversies that have dogged Benedict XVI for the last eight years are in the background of why he's so tired. In 2009, at the height of another frenzy surrounding the lifting of the excommunication of a Holocaust-denying traditionalist bishop, Benedict dispatched a plaintive letter to the bishops of the world, voicing hurt for the way he'd been attacked and apologizing for the Vatican's mishandling of the situation.

Even if Benedict didn't resign because of any specific crisis, including this latest one, such anguish must have taken its toll. Benedict is a teaching pope, a man who prefers the life of the mind to the nuts and bolts of government, yet an enormous share of his time and energy has been consumed trying to put out internal fires.

It's hard to know why Benedict XVI is stepping off the stage, but I doubt it is because of a "gay lobby."

Follow us on Twitter @CNNOpinion.

Join us on Facebook/CNNOpinion.

The opinions expressed in this commentary are solely those of John L. Allen Jr.

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Blackhawks win in overtime, extend streak to 19

Nikolai Khabibulin stumbled coming out of the tunnel from the Oilers' dressing room to start the second period before steadying himself on the bench and taking the ice.

Then the Oilers goaltender was tripped up by the hottest team in hockey as the Blackhawks made sure the longest streak in NHL history to start a season without a regulation loss lives on at 19.

Marian Hossa scored the winner in overtime to lift the Hawks to a 3-2 victory over the Oilers on Monday night at the United Center. Patrick Kane and Viktor Stalberg each had a goal in regulation and Ray Emery earned the win in goal as the Hawks' improved to 16-0-3. Dating to last season, they have gone 25 consecutive games with at least one point.

"It's a great feeling," said Hossa, who sent the crowd of 21,127 home happy when he batted in a rebound of a Patrick Sharp attempt from in front 1 minute, 44 seconds into overtime. "We try to enjoy the streak, keep playing a simple game and try to have fun. We know we'll find a way to win the hockey games."

For just the third time this season, the Hawks found themselves trailing entering the third period after Jeff Petry and Nail Yakupov had scored for the Oilers.

"After the second period, guys weren't very happy we were down a goal and we knew we wanted to come back and change that right away," Kane said.

Stalberg did just that when he stuffed a shot under Khabibulin's pad after taking a pass from Michal Rozsival. Regulation ended that way and the Hawks had extended their streak but still had work to do. Sharp did the bulk of it, taking the puck hard to the net and creating the opportunity for Hossa.

"That was great work by Patrick Sharp," Hossa said. "He was hanging on to the puck, I tried to get open in the slot and he cut right in through the defense and tried to shoot. I saw the rebound and (Khabibulin) made a great save and I just kept battling and tried to put it in and it worked out."

Emery improved to 8-0-0 and helped lead the Hawks to their sixth consecutive victory. They finished their season-long seven-game homestand 6-0-1.

"Without sounding arrogant, it's kind of just business as usual," Sharp said. "We have an attitude in here that we can win every night. We're healthy right now, we're a confident group and we want to keep getting better."

The Oilers kicked off a 17-day, nine-game trip by gaining a point and a lot of respect for the Hawks.

"Big picture, it's an excellent point against the strongest team in the National Hockey League right now," Oilers coach Ralph Krueger said. "Of course you feel pain, having the lead going into the third period. It's definitely something you dream and believe you can close it, but they really are an amazingly powerful team."


Twitter @ChrisKuc

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