With record highs in sight, stocks face roadblocks

NEW YORK (Reuters) - If Wall Street needs to climb a wall of worry, it will have plenty of opportunity next week.

Major U.S. stock indexes will make another attempt at reaching all-time records, but the fitful pace that has dominated trading is likely to continue. Next Friday's unemployment report and the hefty spending cuts that look like they about to take effect will be at the forefront.

The importance of whether equities can reach and sustain those highs is more than Wall Street's usual fixation on numbers with psychological significance. Breaking through to uncharted territory is seen as a test of investors' faith in the rally.

"It's very significant," said Bucky Hellwig, senior vice president at BB&T Wealth Management in Birmingham, Alabama.

"The thinking is, there's just not enough there for an extended bull run," he said. "If we do break through (record highs), then maybe the charts and price action are telling us there's something better ahead."

Flare-ups in the euro zone's sovereign debt crisis and next Friday's report on the U.S. labor market could jostle the market, though U.S. job indicators have generally been trending in a positive direction.

Small- and mid-cap stocks hit lifetime highs in February. Now the Dow Jones industrial average <.dji> and the S&P 500 <.spx> are racing each other to the top. The Dow, made up of 30 stocks, is about 75 points - less than 1 percent - away from its record close of 14,164.53, which it hit on October 9, 2007. The broader S&P is still 3 percent away from its closing high of 1,565.15, also reached on October 9, 2007.

The advantage may be in the Dow's court. So far in 2013, it has gained 7.5 percent, beating the S&P 500 by about 1 percent.

THE RALLY AND THE REALITY CHECK

The Dow's relative strength owes much to its unique make-up and calculation, as well as to investors' recent preference for buying value stocks likely to generate steady reliable gains, rather than growth stocks.

But the more defensive stance illustrates how stock buyers are getting concerned about this year's rally. While investors don't want to miss out on gains, they're picking up companies that are less likely to decline as much as high-flying names - if a market correction comes.

The Russell Value Index <.rav> is up 7.6 percent for the year so far, outpacing the Russell Growth Index's <.rag> 5.7 percent rise. Within the realm of the S&P 500, the consumer staples sector led the market in February, gaining 3.1 percent.

There is some concern that growth-oriented names are being eclipsed by defensive bets, said Ryan Detrick, senior technical strategist at Schaeffer's Investment Research in Cincinnati.

"This isn't a be-all and end-all sell signal by any means, but we would feel much more comfortable if some of the more aggressive areas, like technology and small caps, would start to gain some leadership here," Detrick said.

Signs that investors are becoming concerned about the rally's pace is evident in the options market, where the ratio of put activity to call activity has recently shifted in favor of puts, which represent expectations for a stock to fall.

"We are seeing some put hedging in the financials, building up for the past month," said Henry Schwartz, president of options analytics firm Trade Alert in New York.

The put-to-call ratio representing an aggregate of about 562 financial stocks is 1:1, when normally, calls should be outnumbering puts.

Investors have no shortage of reasons to crave the relative safety of blue chips and defensive stocks. Although markets have mostly looked past uncertainty over Washington's plans to cut the deficit, fiscal policy negotiations still pose a risk to equities.

The $85 billion in spending cuts set to begin on Friday is expected to slow economic growth this year if policymakers do not reach a new deal. Markets so far have held firm despite the wrangling in Washington, but tangible economic effects could pinch stock prices going forward.

The International Monetary Fund warned that full implementation of the cuts would probably take at least 0.5 percentage point off U.S. growth this year.

EASY MONEY AND TEPID HIRING

Investors will also take in a round of economic data at a time when concerns are percolating that the market is being pushed up less by fundamentals and more by loose monetary policy around the world.

The main economic event will be Friday's non-farm payrolls report for February. The U.S. economy is expected to have added 160,000 jobs last month, only a tad higher than in January, in a sign the labor market is healing at a slow pace. The U.S. unemployment rate is forecast to hold steady at 7.9 percent.

While lackluster data has been a catalyst in the past for stock market gains as investors bet it would ensure continued stimulus from the Federal Reserve, that sentiment may be wearing thin.

Markets stumbled last week following worries that the Fed might wind down its quantitative easing program sooner than expected.

"It shows the underpinning of the market is being driven at this point by monetary policy," Hellwig said.

With investors questioning what is behind the rally, it will make a run to record highs even more significant, Hellwig added.

"There's smart people that are in the bull camp and the bear camp and the muddle-through camp," Hellwig said. "The fact that you can statistically, using historical evidence, make a case for going higher, lower, or staying the same makes this number very important this time around."

(Wall St Week Ahead runs every Friday. Comments or questions on this column can be emailed to: leah.schnurr(at)thomsonreuters.com)

(Reporting by Leah Schnurr; Additional reporting by Doris Frankel in Chicago; Editing by Jan Paschal)

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U.S. evolves on same-sex marriage

STORY HIGHLIGHTS

• The president and the nation have shifted perspectives on same-sex marriage


• Supreme Court ruling on California's same-sex marriage ban a critical test


• Growing public support for gay marriage give proponents hope for change

Washington (CNN) -- The nation's growing acceptance of same-sex marriage has happened in slow and painstaking moves, eventually building into a momentum that is sweeping even the most unlikely of converts.

Even though he said in 2008 that he could only support civil unions for same-sex couples, President Barack Obama nonetheless enjoyed strong support among the gay community. He disappointed many with his conspicuously subdued first-term response to the same-sex marriage debate.

Last year, after Vice President Joe Biden announced his support, the president then said his position had evolved and he, too, supported same-sex marriage.

So it was no small matter when on Thursday the Obama administration formally expressed its support of same-sex marriage in a court brief weighing in on California's Proposition 8, which bans same-sex weddings. The administration's effort was matched by at least 100 high-profile Republicans — some of whom in elections past depended on gay marriage as a wedge issue guaranteed to rally the base — who signed onto a brief supporting gay couples to legally wed.

Obama on same-sex marriage: Everyone is equal

Then there are the polls that show that an increasing number of Americans now support same-sex marriage. These polls show that nearly half of the nation's Catholics and white, mainstream Protestants and more than half of the nation's women, liberals and political moderates all support same-sex marriage.

According to Pew Research Center polling, 48% of Americans support same-sex marriage with 43% opposed. Back in 2001, 57% opposed same-sex marriage while 35% supported it.

In last year's presidential election, same-sex marriage scarcely raised a ripple. That sea change is not lost on the president.

"The same evolution I've gone through is the same evolution the country as a whole has gone through," Obama told reporters on Friday.

Craig Rimmerman, professor of public policy and political science at Hobart and William Smith colleges says there is history at work here and the administration is wise to get on the right side.

"There is no doubt that President Obama's shifting position on Proposition 8 and same-sex marriage more broadly is due to his desire to situate himself on the right side of history with respect to the fight over same-sex marriage," said Rimmerman, author of "From Identity to Politics: The Lesbian and Gay Movements in the United States."

"I also think that broader changes in public opinion showing greater support for same-sex marriage, especially among young people, but in the country at large as well, has created a cultural context for Obama to alter his views."

For years, Obama had frustrated many in the gay community by not offering full-throated support of same-sex marriage. However, the president's revelation last year that conversations with his daughters and friends led him to change his mind gave many in that community hope.

Last year, the Obama administration criticized a measure in North Carolina that banned same-sex marriage and made civil unions illegal. The president took the same position on a similar Minnesota proposal.

Obama administration officials point to what they see as the administration's biggest accomplishment in the gay rights cause: repealing "don't ask, don't tell," the military's ban on openly gay and lesbian members serving in the forces.

Then there was the president's inaugural address which placed the gay community's struggle for equality alongside similar civil rights fights by women and African-Americans.

"Our journey is not complete until our gay brothers and sisters are treated like anyone else under the law, for if we are truly created equal, then surely the love we commit to one another must be equal, as well," Obama said in his address after being sworn in.

In offering its support and asserting in the brief that "prejudice may not be the basis for differential treatment under the law," the Obama administration is setting up a high stakes political and constitutional showdown at the U.S. Supreme Court over a fast-evolving and contentious issue.

The justices will hear California's Proposition 8 case in March. That case and another appeal over the federal Defense of Marriage Act will produce blockbuster rulings from the justices in coming months.

Beyond the legal wranglings there is a strong social and historic component, one that has helped open the way for the administration to push what could prove to be a social issue that defines Obama's second term legacy, Rimmerman said.

The nation is redefining itself on this issue, as well.

Pew survey: Changing attitudes on gay marriage

The changes are due, in part, to generational shifts. Younger people show a higher level of support than their older peers, according to Pew polling "Millennials are almost twice as likely as the Silent Generation to support same-sex marriage."

"As people have grown up with people having the right to marry the generational momentum has been very, very strong," said Evan Wolfson, president of Freedom to Marry, a gay rights organization.

That is not to say that there isn't still opposition.

Pew polling found that most Republicans and conservatives remain opposed to same-sex marriage. In 2001, 21% of Republicans were supportive; in 2012 that number nudged slightly to 25%.

Conservative groups expressed dismay at the administration's same-sex marriage support.

"President Obama, who was against same-sex 'marriage' before he was for it, and his administration, which said the Defense of Marriage Act was constitutional before they said it was unconstitutional, has now flip-flopped again on the issue of same-sex 'marriage,' putting allegiance to extreme liberal social policies ahead of constitutional principle," Family Research Council President Tony Perkins said in a statement.

But there are signs of movement even among some high profile Republican leaders

Top Republicans sign brief supporting same-sex marriage

The Republican-penned friend of the court brief, which is designed to influence conservative justices on the high court, includes a number of top officials from the George W. Bush administration, Mitt Romney's former campaign manager and former GOP presidential candidate Jon Huntsman.

It is also at odds with the Republican Party's platform, which opposes same-sex marriage and defines marriage as a union between a man and a woman.

Still, with White House and high-profile Republican support, legal and legislative victories in a number of states and polls that show an increasing number of Americans support same sex-marriage, proponents feel that the winds of history are with them.

"What we've seen is accelerating and irrefutable momentum as Americans have come to understand who gay people are and why marriage matters," Wolfson said. "We now have a solid national majority and growing support across every demographic. We have leaders across the spectrum, including Republicans, all saying it's time to end marriage discrimination."

CNN's Peter Hamby, Ashley Killough and Bill Mears contributed to this report.

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Officials: Florida sinkhole still growing; man missing

A central Florida man was still missing and feared dead early today after a sinkhole opened under his home Thursday night, swallowing him in his bed.

As hours passed overnight and rescuers and family lost hope of seeing 36-year-old Jeff Bush pulled from the ground alive, the sinkhole continued to grow, officials said.

“The hole has gotten deeper,” geotechnical engineer Larry Madrid said at a news conference Friday evening. “We can’t get into the building because of the potential for sudden collapse.”

The continued instability of the ground slowed engineers and kept evacuees in the Tampa-area neighborhood from returning to their homes.

“We’re really handicapped and paralyzed, and we really can’t do a whole lot more than wait,” Madrid said.

“I know in my heart he's dead,” Bush’s brother Jeremy told reporters Friday.

Authorities condemned the concrete-block home, determining the ground was unstable. Surrounding homes were evacuated, but the hole is isolated to the house, authorities said.

Hillsborough Fire Rescue officials lowered a camera and listening device into the 20-foot-deep hole to try to find Jeffrey Bush. But the ground kept moving and they lost the equipment.

"He's down there, but we can't hear here anything and we can't see anything," said Ronnie Rivera, a Hillsborough County Fire Rescue spokesman. "We just can't do anything."

Structural engineers brought in equipment to determine if rescuers can enter the house. But with each hour that passed, the hope for rescue faded and despair set in.

Late Thursday night, Jeremy Bush heard something that sounded like a car crash, then heard a scream. He ran to his brother’s room, but all he could see was a mattress. He tried to save him and ended up getting stuck himself.

When Hillsborough County sheriff’s deputy Douglas Duvall arrived at the home, he yanked Jeremy Bush from the hole and the two were able to escape.

At the news conference Friday evening, Duvall said he couldn’t sleep Thursday night, thinking about the what he’d seen and about Bush's family.

The risk of sinkholes is common in Florida due to the state's porous geological bedrock, according to the Florida Department of Environmental Protection. As rainwater filters down into the ground, it dissolves the rock causing erosion that can lead to underground caverns, which cause sinkholes when they collapse.

Florida suffered one of its worst sinkhole accidents in 1994 when a 15-story-deep chasm opened up east of Tampa at a phosphate mine. It created a hole 185 feet deep and as much as 160 feet wide. Locals dubbed it Disney World's newest attraction - 'Journey to the Center of the Earth.'

In 1981 in Winter Park near Orlando, a sinkhole was measured as 320 feet wide and 90 feet deep, swallowing a two-story house, part of a Porsche dealership, and an Olympic-size swimming pool. The site is now an artificial lake in the city.

From the Los Angeles Times, Reuters and the Orlando Sentinel

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Syria war is everybody's problem

Syrians search for survivors and bodies after the Syrian regime attacked the city of Aleppo with missiles on February 23.

STORY HIGHLIGHTS

• Frida Ghitis: We are standing by as Syria rips itself apart, thinking it's not our problem


• Beyond the tragedy in human terms, she says, the war damages global stability


• Ghitis: Syria getting more and more radical, jeopardizing forces of democracy


• Ghitis: Peace counts on moderates, whom we must back with diplomacy, training arms

Editor's note: Frida Ghitis is a world affairs columnist for The Miami Herald and World Politics Review. A former CNN producer and correspondent, she is the author of "The End of Revolution: A Changing World in the Age of Live Television." Follow her on Twitter: @FridaGColumns

(CNN) -- Last week, a huge explosion rocked the Syrian capital of Damascus, killing more than 50 people and injuring hundreds. The victims of the blast in a busy downtown street were mostly civilians, including schoolchildren. Each side in the Syrian civil war blamed the other.

In the northern city of Aleppo, about 58 people -- 36 of them children -- died in a missile attack last week. Washington condemned the regime of Bashar al-Assad; the world looked at the awful images and moved on.

Syria is ripping itself to pieces. The extent of human suffering is beyond comprehension. That alone should be reason enough to encourage a determined effort to bring this conflict to a quick resolution. But if humanitarian reasons were not enough, the international community -- including the U.S. and its allies -- should weigh the potential implications of allowing this calamity to continue.

Frida Ghitis

We've all heard the argument: It's not our problem. We're not the world's policeman. We would only make it worse.

This is not a plea to send American or European troops to fight in this conflict. Nobody wants that.

But before we allow this mostly hands-off approach to continue, we would do well to consider the potential toll of continuing with a failed policy, one that has focused in vain over the past two years searching for a diplomatic solution.

U. S. Secretary of State John Kerry has just announced that the U.S. will provide an additional $60 million in non-lethal assistance to the opposition. He has hinted that President Obama, after rejecting suggestions from the CIA and previous Secretary of State Hillary Clinton to arm Syrian rebels, might be ready to change course. And not a day too soon.

The war is taking longer than anyone expected. The longer it lasts, the more Syria is radicalized and the region is destabilized.

If you think the Syrian war is the concern of Syrians alone, think about other countries that have torn themselves apart over a long time. Consider Lebanon, Afghanistan or Somalia; each with unique circumstances, but with one thing in common: Their wars created enormous suffering at home, and the destructiveness eventually spilled beyond their borders. All of those wars triggered lengthy, costly refugee crises. They all spawned international terrorism and eventually direct international -- including U.S. -- intervention.

The uprising against al-Assad started two years ago in the spirit of what was then referred to -- without a hint of irony -- as the Arab Spring. Young Syrians marched, chanting for freedom and democracy. The ideals of equality, rule of law and human rights wafted in the air.

Al-Assad responded to peaceful protests with gunfire. Syrians started dying by the hundreds each day. Gradually the nonviolent protesters started fighting back. Members of the Syrian army started defecting.

The opposition's Free Syrian Army came together. Factions within the Syrian opposition took up arms and the political contest became a brutal civil war. The death toll has climbed to as many as 90,000, according to Kerry. About 2 million people have left their homes, and the killing continues with no end in sight.

In fairness to Washington, Europe and the rest of the international community, there were never easy choices in this war. Opposition leaders bickered, and their clashing views scared away would-be supporters. Western nations rejected the idea of arming the opposition, saying Syria already has too many weapons. They were also concerned about who would control the weaponry, including an existing arsenal of chemical and biological weapons, after al-Assad's fall.

These are all legitimate concerns. But inaction is producing the worst possible outcome.

The moderates, whose views most closely align with the West, are losing out to the better-armed Islamists and, especially, to the extremists. Moderates are losing the ideological debate and the battle for the future character of a Syria after al-Assad.

Radical Islamist groups have taken the lead. Young people are losing faith in moderation, lured by disciplined, devout extremists. Reporters on the ground have seen young democracy advocates turn into fervent supporters of dangerous groups such as the Nusra Front, which has scored impressive victories.

The U.S. State Department recently listed the Nusra Front, which has close ties to al Qaeda in Iraq and a strong anti-Western ideology, as a terrorist organization.

Meantime, countries bordering Syria are experiencing repercussions. And these are likely to become more dangerous.

Jordan, an important American ally, is struggling with a flood of refugees, as many as 10,000 each week since the start of the year. The government estimates 380,000 Syrians are in Jordan, a country whose government is under pressure from its own restive population and still dealing with huge refugee populations from other wars.

Turkey is also burdened with hundreds of thousands of refugees and occasional Syrian fire. Israel has warned about chemical weapons transfers from al-Assad to Hezbollah in Lebanon and may have already fired on a Syrian convoy attempting the move.

Lebanon, always perched precariously on the edge of crisis, lives with growing fears that Syria's war will enter its borders. Despite denials, there is evidence that Lebanon's Hezbollah, a close ally of al-Assad and of Iran, has joined the fighting on the side of the Syrian president. The Free Syrian Army has threatened to attack Hezbollah in Lebanon if it doesn't leave Syria.

The possible outcomes in Syria include the emergence of a failed state, stirring unrest throughout the region. If al-Assad wins, Syria will become an even more repressive country.

Al-Assad's survival would fortify Iran and Hezbollah and other anti-Western forces. If the extremists inside the opposition win, Syria could see factional fighting for many years, followed by anti-democratic, anti-Western policies.

The only good outcome is victory for the opposition's moderate forces. They may not be easy to identify with complete certainty. But to the extent that it is possible, these forces need Western support.

They need training, funding, careful arming and strong political and diplomatic backing. The people of Syria should know that support for human rights, democracy and pluralism will lead toward a peaceful, prosperous future.

Democratic nations should not avert their eyes from the killings in Syria which are, after all, a warning to the world.

Follow us on Twitter @CNNOpinion.

Join us on Facebook/CNNOpinion.

The opinions expressed in this commentary are solely those of Frida Ghitis.

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Chicago State board meets to decide: Who's in charge?

Chicago State University's board of trustees is meeting this morning to settle the question of who is president at the South Side campus, capping a tumultuous week.

On Monday, the board announced that Wayne Watson, president since 2009, would take a yearlong sabbatical and then was expected to retire. It also said that provost Sandra Westbrooks would be the acting president.

But Watson stayed in his office this week and has maintained that he is still the president. Watson’s attorney said he viewed the sabbatical as equivalent to a vacation, not an end to his presidency. Watson’s contract goes until 2014.

The sabbatical arrangement, which Watson requested, was intended to allow him to exit without drama after the trustees decided they wanted new leadership. He was to be paid his $250,000 salary during the sabbatical, during which time he said he planned to care for his elderly father and conduct research on effective leadership at minority-serving institutions.

The board called the meeting to order shortly after 8 a.m. this morning and then recessed into a closed executive session to discuss what was described on the published agenda as employment matters, legal matters and approval of legal and consultant services. It is then expected to reconvene in an open session.

Before the meeting began, Chicago leaders well known in the African-American community crowded into the library waiting area, including former Sen. Emil Jones and Jonathan Jackson from Rainbow Push Coalition.

Jones, who walked the room with Watson, said: “He should be president, no question about that, because of his interest in the education of the students who go here.”

The mood among the crowd was pleasant despite the differences in opinion on how the university should be lead.

"We're on the good side," said Victor P. Henderson, Watson's attorney.

Watson said: "I'm standing for the right thing."

Board Chairman Gary Rozier told the Tribune earlier this week that trustees had decided it was “time to look for new leadership.” They were disappointed with the decline in enrollment and the faculty’s no-confidence vote on Watson.

Henderson has defended Watson’s tenure.

“I have not seen one iota of information which would justify changing the president’s status at the university,” Henderson said earlier this week.

As the board met in private, members of the audience milled around the room, some complaining out loud about the credentials of the board members and saying that they lacked qualifications to select a leader for the institution. Some whispered about rumors and gossip that has spread across the campus and distracted the faculty, staff and students.

Martin L. King, chairman of the Rainbow Push Coalition board, said he and Rev. Jesse Jackson tried to mediate an agreement between Watson and the board but failed.

"That agreement would have ended the need to have this meeting," he said.

Chicago State has long been an source of pride in the middle-class African-American community it sits in. The student body is made up mainly of local black students, who otherwise might not have a chance to earn a college degree.

Friday's meeting drew residents who had graduated from the institution and many that work there.

"Chicago State University is an anchor for Chatham, Auburn Gresham and the Southland," King said. "It's an economic anchor, the home of historic documents. This university is a place where we all come together."

King said he believes it is in the best interest of the students and community that Watson be retained and the board work with him.

"The president has been very instrumental in making sure the university moved forward," King said. "Our (PUSH) ultimate goal is fairness."

On campus, the drama between Watson and the board has seeped into the classroom, said adjunct professor of political science Gideon Charles.

"We're demoralized. We don't know who is the President and who to report to," he said.

Charles said he believes it's time for Watson to be replaced.

"The school has declined under his leadership and enrollment is down," he said. "The faculty don't hold him in high regard. When he was brought in in 2009, the students didn't take a liking to him — and they still don't."

History professor Bob Bionaz also said he believes Watson should be replaced.  "He is a failure" he said, citing a decline in student enrollment and other factors.

Earlier this week, Watson sent a letter to trustees alleging that some board members are retaliating against him because he won’t accede to their pressures to hire and reward their friends.

In a four-page letter dated Feb. 26 and obtained by the Tribune, Watson told trustees that the “real motivation” behind the board’s efforts to replace him was his refusal “to capitulate to the incessant requests” from Rozier and Vice Chairman Z. Scott to “either hire, promote or give salary increases to their friends and associates.”

Langdon Neal, the board’s attorney, replied: “We are going to rise above this and deal with the matters that affect the students of the university and the university itself. We are not going to comment on the personal accusations.”

In the letter to trustees, Watson also wrote that there are now no financial improprieties at an institution that was plagued by fiscal mismanagement for years.

jscohen@tribune.com

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Kerry to chide Turkish PM over Zionism comments

ANKARA (Reuters) - Secretary of State John Kerry is expected to take Turkey's prime minister to task for describing Zionism as a crime against humanity, an attack on a key U.S. ally that has overshadowed their talks on the crisis in neighboring Syria.

Kerry, on his first trip to a Muslim nation since taking office, is meeting Turkish leaders for talks meant to focus on Syria's civil war and bilateral interests from energy security to counter-terrorism.

But comment by Turkish Prime Minister Tayyip Erdogan at a U.N. meeting in Vienna this week, condemned by his Israeli counterpart, the White House and U.N. Secretary-General Ban Ki-moon, has clouded his trip.

"This was particularly offensive, frankly, to call Zionism a crime against humanity ... It does have a corrosive effect (on relations)," a senior U.S. official told reporters as Kerry flew to Ankara.

"I am sure the secretary will be very clear about how dismayed we were to hear it," the official, who spoke on condition of anonymity, said.

"To state the obvious, it complicates our ability to do all of the things that we want to do together when we have such a profound disagreement about such an important thing."

Washington needs all the allies it can get as it navigates the political currents of the Middle East, and sees Turkey as the key player in supporting Syria's opposition and planning for the era after President Bashar al-Assad.

But the collapse of Ankara's ties with Israel have undermined U.S. hopes that Turkey could play a role as a broker in the broader region.

"The Turkey-Israel relationship is frozen," the U.S. official said. "We want to see a normalization ... not just for the sake of the two countries but for the sake of the region and, frankly, for the symbolism," he said.

"Not that long ago (you) had these two countries demonstrating that a majority Muslim country could have very positive and strong relations with the Jewish state and that was a sign for the region (of what was) possible."

Erdogan told the U.N. Alliance of Civilizations meeting in Vienna on Wednesday: "Just as with Zionism, anti-Semitism and fascism, it has become necessary to view Islamophobia as a crime against humanity."

Erdogan's caustic rhetoric on Israel has won applause from conservative supporters at home but raised increasing concern among Western allies.

"Erdogan's comments about Israel have become progressively more worrying," said Moshe Kantor, President of the European Jewish Congress. "This type of rhetoric is pushing Turkey further away from the West and Europe and closer to Iran."

Ties between Israel and mostly Muslim Turkey have been frosty since 2010, when Israeli marines killed nine Turks in fighting aboard a Palestinian aid ship that tried to breach Israel's blockade of the Gaza Strip.

In recent weeks, there has been a run of reports in the Turkish and Israeli media about efforts to repair relations, including a senior diplomatic meeting last month in Rome and military equipment transfers.

The reports have not been confirmed by either government.

SUPPORT FOR SYRIAN OPPOSITION

Turkey's relations with the United States have always been prickly, driven more by a mutual need for intelligence than any deep cultural affinity. And Erdogan's populist rhetoric, sometimes at apparent odds with U.S. interests, is aimed partly at a domestic audience wary of Washington's influence.

But the two have strong common interests. Officials said Syria would top the agenda in Kerry's meetings with Erdogan and President Abdullah Gul, building on the discussions in Rome between 11 mostly European and Arab nations within the "Friends of Syria" group.

After the Rome meeting, Kerry said on Thursday the United States would for the first time give non-lethal aid to the rebels and more than double support to the civilian opposition, although Western powers stopped short of pledging arms.

"We need to continue the discussion which took place in Rome ... in terms of the main goals there is no daylight between us and the Americans," a senior Turkish official said.

"A broad agreement was reached on supporting the opposition. Now our sides need to sit down and really flesh out what we can do to support them in order to change the balance on the ground," he said.

Turkey has been one of Assad's fiercest critics, hosting a NATO Patriot missile defense system, including two U.S. batteries, to protect against a spillover of violence and leading calls for international intervention.

It has spent more than $600 million sheltering refugees from the conflict that began almost two years ago, housing some 180,000 in camps near the border and tens of thousands more who are staying with relatives or in private accommodation.

Washington has given $385 million in humanitarian aid for Syria but U.S. President Barack Obama has so far refused to give arms, arguing it is difficult to prevent them from falling into the hands of militants who could use them on Western targets.

Turkey, too, has been reluctant to provide weapons, fearing direct intervention could cause the conflict to spill across its borders.

(Writing by Nick Tattersall; Editing by Jon Boyle)

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Syria war is everybody's problem

STORY HIGHLIGHTS

• NEW: United States will give food and medical aid to rebel fighters for the first time


• NEW: It's not clear how much that aid is worth, but $60 million will go to opposition council


• NEW: "Behave as a human being," opposition leader urges Syrian president


• U.S. officials are considering more nonlethal military aid

Rome (CNN) -- The United States stepped further into Syria's civil war Thursday, promising rebel fighters food and medical supplies -- but not weapons -- for the first time in the nearly two-year conflict that has claimed more than 60,000 lives and laid waste to large portions of the country.

Secretary of State John Kerry said the aid would help fighters in the high-stakes effort to topple Syrian President Bashar al-Assad, a conflict that has already spawned an enormous humanitarian crisis as refugees flee the fighting.

The ongoing fighting also poses the persistent threat of widening into a destabilizing regional crisis.

"The United States' decision to take further steps now is the result of the continued brutality of a superior armed force propped up by foreign fighters from Iran and Hezbollah, all of which threatens to destroy Syria," Kerry said after meeting opposition leaders in Rome.

Kerry didn't say how much that aid would be worth, but did announce that the United States would separately give $60 million to local groups working with the Syrian National Council to provide political administration and basic services in rebel-controlled areas of Syria.

READ: U.S. weighing nonlethal aid to Syrian opposition

That's on top of $50 million in similar aid the United States has previously pledged to the council, as well as $385 million in humanitarian assistance, Kerry said.

"This funding will allow the opposition to reach out and help the local councils to be able to rebuild in their liberated areas of Syria so that they can provide basic services to people who so often lack access today to medical care, to food, to sanitation," he said.

Islamist Influence

That aid is partly an effort to hem in radical Islamist groups vying for influence in Syria after the fall of al-Assad, a senior State Department official told CNN.

"If the Syrian opposition coalition can't touch, improve and heal the lives of Syrians in those places that have been freed, then extremists will step in and do it," the official said.

Sheikh Ahmed Moaz al-Khatib, president of the Syrian National Council, said concerns about Islamist influence had been overstated.

"We stand against every radical belief that aims to target Syria's diverse social and religious fabric," he said.

READ: Inside Syria: Exclusive look at pro-Assad Christian militia

U.S. officials hope the aid will help the coalition show what it can do and encourage al-Assad supporters to "peel away from him" and help end the fighting, the official said.

The opposition council will decide where the money goes, Kerry said.

But the United States will send technical advisers through its partners to the group's Cairo headquarters to make sure it's being used properly, the senior State Department official said.

Additional aid possible

In addition to the decision to give rebel fighters food and medical supplies, President Barack Obama is thinking about training rebels and equipping them with defensive gear such as night vision goggles, body armor and military vehicles, according to sources familiar with the discussions.

The training would help rebels decide how to use their resources, strategize and maybe train a police force to take over after al-Assad's fall, one of the sources said.

READ: Syrian army in Homs is showing strains of war

Kerry did not announce that sort of aid Thursday, but said the United States and other countries backing the rebels would "continue to consult with each other on an urgent basis."

An official who briefed reporters said the opposition has raised a lot of needs in the Rome meetings and the administration will continue to "keep those under review."

"We will do this with vetted individuals, vetted units, so it has to be done carefully and appropriately," the official said.

Humanitarian crisis

The conflict began with demands for political reform after the Arab Spring movement that swept the Middle East and Africa, but descended into a brutal civil war when the al-Assad regime began a brutal crackdown on demonstrators.

At least 60,000 people have died since the fighting began in March 2011, the United Nations High Commissioner for Human Rights said in early January.

Another 940,000 had fled the country as of Tuesday, while more than one in 10 of Syria's 20 million residents have been forced to move elsewhere inside the country because of the fighting, the United Nations High Commissioner for Refugees said.

The situation is nearing crisis proportions, with the dramatic influx of refugees threatening to break the ability of host nations to provide for their needs, Assistant High Commissioner Erika Feller told the U.N. Human Rights Council on Tuesday

"The host states, including Jordan, Lebanon, Turkey, Iraq, Egypt and the North African countries, have been exemplary in their different ways, but we fear the pressure will start to overwhelm their capacities," she told the council, according to a text of her remarks posted on the United Nations website.

Al-Khatib said it's time for the fighting to stop.

"I ask Bashar al-Assad for once, just once, to behave as a human being," he said. "Enough massacres, enough killings. Enough of your bloodshed and enough torture. I urge you to make a rational decision once in your life and end the killings."

READ: Syrian war is everybody's problem

Jill Dougherty reported from Rome, and Michael Pearson reported and wrote from Atlanta. CNN's Elise Labott also contributed to this report.

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Journalist Woodward said he received White House warning

WASHINGTON—

A prominent Washington journalist said in interviews on Wednesday a senior White House official warned him he would "regret" publishing a story challenging the White House's account of how the idea for automatic spending cuts originated.

Bob Woodward said in interviews with Politico and CNN that when he informed the White House he was writing a story critical of the White House's handling of a debate over the origin of the cuts, known as sequestration, the official reacted angrily.

The aide "yelled at me for about a half hour," Woodward told Politico, and then followed up the tirade with an email.

"I apologize for raising my voice in our conversation today," the official wrote Woodward. "You're focusing on a few specific trees that give a very wrong impression of the forest. But perhaps we will just not see eye to eye here. ... I think you will regret staking out that claim."

Politico reported that Woodward saw the statement as a veiled threat.

"I've tangled with lots of these people," said the journalist, who established his reputation by breaking the story of the Watergate break-in under President Richard Nixon and has written a series of best selling books about Washington politics.

"But suppose there's a young reporter who's only had a couple of years — or 10 years' — experience and the White House is sending him an email saying, ‘You're going to regret this,'" Woodward said. "You know, tremble, tremble. I don't think it's the way to operate."

Some $85 billion in spending cuts are due to go into effect Friday unless Congress acts, and with the deadline approaching there is practically no movement toward preventing them. President Barack Obama has scheduled a meeting with congressional leaders on Friday, but little is expected of the encounter.

The president has crisscrossed the country in recent weeks to draw attention to the inconveniences and problems from the cuts, which economists say could shave 0.6 percentage points off of already anemic U.S. growth.

While the president has been conducting that campaign, the spat over what Woodward calls the "paternity" of the sequester has proven a distracting sideshow to the fiscal battle.

The administration has sought to counter charges by Republicans that the sequestration cuts were proposed by Obama administration officials.

Woodward's book "The Price of Politics" is a fly-on-the-wall account of the negotiations in 2011 that ended with a deal to raise the nation's debt limit. As part of the deal, both sides agreed to make additional efforts to reduce the national budget deficit, and proposed the sequester as an alternative so unappealing that it would force the administration and congressional Republicans to find common ground.

That deal proved elusive and both sides are currently trading blame for the sequestration cuts.

TWITTER FUN

Woodward said in an article in the Washington Post on Friday that the president and his chief of staff at the time, current Treasury Secretary Jack Lew, were wrong in initially claiming last year that the sequester was the Republicans' idea.

"Obama personally approved of the plan for Lew and (Rob)Nabors to propose the sequester to Senate Majority Leader Harry Reid," Woodward said. "They did so at 2:30 p.m. July 27, 2011, according to interviews with two senior White House aides who were directly involved." Nabors was then the White House's chief liaison to Congress and is now deputy chief of staff.

The administration has argued that both sides agreed to the terms of the sequester and has pointed to comments at the time from House of Representatives Speaker John Boehner, a Republican, that he was for the most part satisfied with the deal that spawned the arrangement.

Woodward's account of his recent testy exchange with the White House points to continued sensitivity over the issue of whose idea the sequester was.

A White House official said in an emailed response to Reuters that no threat was intended by the comment.

"The email from the aide was sent to apologize for voices being raised in their previous conversation," the aide said. "The note suggested that Mr. Woodward would regret the observation he made regarding the sequester because that observation was inaccurate, nothing more."

The BuzzFeed news website identified the official who tangled with Woodward as Gene Sperling, head of the National Economic Council. The White House did not respond to a request to confirm the identity of the official.

News of the exchange drew instant reaction from Washington insiders on Twitter, much of poking fun at the war of words.

"My amateur advice: stop cooperating with Woodward in the first place," wrote Neera Tanden, the president of the liberal-leaning Center for American Progress think tank and a former Obama campaign advisor.

"Hey, guess what? All of you will talk to Woodward for his next book, too," wrote Tony Fratto of Hamilton Place Strategies and a former White House official under President George W. Bush.

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U.S. to give Syrian rebels medical, food aid, not arms

ROME (Reuters) - The United States will send non-lethal aid directly to Syrian rebels for the first time, Secretary of State John Kerry said on Thursday, disappointing opponents of President Bashar al-Assad who are clamoring for Western weapons.

But in a change of emphasis, the mainly Western and Arab "Friends of Syria" group meeting in Rome "underlined the need to change the balance of power on the ground".

A final communique said participants would "coordinate their efforts closely so as to best empower the Syrian people and support the Supreme Military Command of the (rebel) Free Syrian Army in its efforts to help them exercise self-defense".

More than 70,000 Syrians have been killed in a fierce conflict that began with peaceful anti-Assad protests nearly two years ago. Some 860,000 have fled abroad and several million are displaced within the country or need humanitarian assistance.

Kerry, after the talks in Rome, said Washington would more than double its aid to the Syrian civilian opposition, giving it an extra $60 million to help provide food, sanitation and medical care to devastated communities.

The United States would now "extend food and medical supplies to the opposition, including to the Syrian opposition's Supreme Military (Council)", Kerry said.

In their communique, the "Friends of Syria" pledged more political and material support to the Syrian National Coalition, a fractious Cairo-based group that has struggled to gain traction inside Syria, especially among disparate rebel forces.

Riad Seif, a coalition leader, said before the Rome meeting that the opposition would demand "qualitative military support".

Another coalition official welcomed the result of the talks. "We move forward with a great deal of cautious optimism. We heard today a different kind of discourse," Yasser Tabbara said.

But the continued U.S. refusal to send weapons may compound the frustration that prompted the coalition to say last week it would shun the Rome talks. It attended only under U.S. pressure.

Many in the coalition say Western reluctance to arm rebels only plays into the hands of Islamist militants now widely seen as the most effective forces in the struggle to topple Assad.

However, a European diplomat held out the possibility of Western military support, saying the coalition and its Western and Arab backers would meet in Istanbul next week to discuss military and humanitarian support to the insurgents.

MEALS READY TO EAT

Kerry's offer of medical aid and Meals Ready to Eat (MREs), the U.S. army's basic ration, fell far short of rebel demands for sophisticated anti-tank and anti-aircraft weapons to help turn the tables against Assad's mostly Russian-supplied forces.

It also stopped short of providing other forms of non-lethal assistance such as bullet-proof vests, armored personnel vehicles and military training to the insurgents.

Last week the European Union opened the way for direct aid to Syrian rebels, but did not lift an arms embargo on Syria.

The Rome talks again signaled the lack of appetite among the United States and its allies for direct military intervention in Syria, after the withdrawal of U.S.-led troops from Iraq and the drawdown under way in Afghanistan.

The communique called for an immediate halt to "unabated" arms supplies to Damascus by third countries, referring mostly to Assad's allies Russia and Iran.

It also said Syria must immediately stop indiscriminate bombardment of populated areas, which it described as crimes against humanity. NATO officials say Assad's military has fired ballistic missiles within Syria, which the government denies.

Human Rights Watch has reported that at least 171 civilians were killed in four Scud missile strikes last week.

The "Friends of Syria" pledged "more political and material support to the coalition as the sole legitimate representative of the Syrian people and to get more concrete assistance inside Syria", but gave no details on exactly what would be provided.

Kerry said earlier this week he would not leave the Syrian opposition "dangling in the wind", unsure of getting support.

But the White House continues to resist providing weaponry to the rebel forces, arguing there is no way to guarantee the arms might not fall into the hands of Islamist militants who might eventually use them against Western or Israeli targets.

"HUGE DEBATE"

U.S. officials have said that the U.S. Defense and State departments, under former Secretary of Defense Leon Panetta and former Secretary of State Hillary Clinton, privately recommended that the White House arm the rebels, but were overruled.

"It's a huge debate inside the administration between those that have to deal with Syria on an everyday basis, the State Department and DoD (Defense) particularly, and the White House, which ... until now has vetoed any kind of outreach to the armed groups," said Andrew Tabler, senior fellow at the Washington Institute for Near East Policy, a think-tank.

The United States says it has already provided more than $50 million in non-lethal assistance such as communications gear and governance training to Syria's civilian opposition.

A source in the Syrian coalition, however, said even the extra $60 million promised by Washington was a pittance compared to what he said was the $40 million a day in humanitarian aid needed for Syrian refugees and internally displaced persons.

The United States has provided some $365 million in humanitarian aid for Syrian refugees in countries such as Turkey, Jordan and Lebanon and for internally displaced people, channeling this money through non-governmental organizations.

More than 40,000 people a week are fleeing Syria and the total number of refugees will likely pass 1 million in less than a month, far sooner than the United Nations had forecast, a senior U.N. official told the Security Council on Wednesday.

U.N. High Commissioner for Refugees António Guterres said his agency had registered 936,000 Syrians across the Middle East and North Africa, nearly 30 times as many as in April last year.

"We expected to have 1.1 million Syrian refugees by June. If things continue to accelerate like this, it will take less than a month to reach that number," he told the 15-member council.

(Writing by Alistair Lyon; Editing by Mark Heinrich)

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Wall Street inches up after data

MADRID, Feb 27 (Reuters) - Lionel Messi has rarely been accused of failing to deliver in big games, having scored in two European Cup finals, but after subdued performances against AC Milan and Real Madrid, questions are being asked. The four-times World Player of the Year and leading scorer in one of the greatest club teams of all time, was a shadow of his usual self at the San Siro in a Champions League last-16 first leg last week, when Barcelona slumped to a 2-0 defeat. ...

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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.

STORY HIGHLIGHTS

• 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

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.

Join us at Facebook/CNNOpinion.

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

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Obama to meet with congressional leaders to discuss budget cuts

Speaker of the House John Boehner tells Scott Pelley in a "CBS Evening News" interview that a budget deal is now out of his hands.

Tribune staff and wire report

9:38 a.m. CST, February 27, 2013

WASHINGTON -- President Barack Obama will meet with top congressional leaders on Friday to discuss the deep, automatic government spending cuts slated to go into effect that day, congressional aides said

Known as the sequester or sequestration, the cuts amount indiscriminate across-the-board reductions in federal spending totalling $85 billion.

Obama is set to meet with Republican Speaker of the House of Representatives John Boehner, Senate Republican Leader Mitch McConnell, Democratic Senate Majority leader Harry Reid and Nancy Pelosi, the House Democratic leader.

"The meeting Friday is an opportunity for us to visit with the president about how we can all keep our commitment to reduce Washington spending," McConnell said in a statement.

"We can either secure those reductions more intelligently, or we can do it the president's way with across-the board cuts. But one thing Americans simply will not accept is another tax increase to replace spending reductions we already agreed to," he said.

Republicans on Capitol Hill immediately questioned Obama's intent.

"If the president is serious about stopping the sequester, why did he schedule a meeting on Tuesday for Friday when the sequester hits at midnight on Thursday?” asked a Republican congressional aide who was not authorized to talk about the private meeting. "Either someone needs to buy the White House a calendar, or this is just a belated farce.  They ought to at least pretend to try."

Reuters and Lisa Mascaro, the Los Angeles Times

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Iran upbeat on nuclear talks, West wary

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

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

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

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

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

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

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

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

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

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

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

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

UNDERGROUND NUCLEAR SITE

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

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

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

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

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

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

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

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

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

MOOD "MORE OPTIMISTIC"

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

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

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

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

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

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

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

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Wall Street rebounds from Italy drop, Bernanke defends policy

NEW YORK (Reuters) - U.S. stocks advanced on Tuesday, rebounding from a steep decline a day earlier after an inconclusive Italian election and on Federal Reserve Chairman Ben Bernanke's testimony defending the central bank's bond-buying program.

Major indexes had fallen more than 1 percent on Monday, with the S&P 500 dropping the most since November on voting in Italy where groups opposed to austerity posted a strong showing. But no faction secured a clear majority in parliament, renewing fears about a new euro zone debt crisis.

"There's an increased willingness to buy equities, and every decline is met with a new round of buying, but there's a question as to whether that can be sustained," said Bruce McCain, chief investment strategist at Key Private Bank in Cleveland, Ohio.

European equities <.fteu3>, which closed before the results on Monday, fell 1.1 percent, even as U.S. shares rose.

"It's a little surprising that we're not taking Europe more seriously now," he added. "It will be hard for us to avoid the weight of Europe's decline, and the question is whether our early strength will hold throughout the day."

In testimony before the Senate Banking Committee, Bernanke strongly defended the Fed's bond-buying stimulus program, or quantitative easing. Equities have benefited from the Fed's easy monetary policy, designed to boost the economy and employment.

"If Bernanke were to give any nugget of information about when QE might end, that would move markets, but we haven't seen anything like that," said Mike Shea, a trader at Direct Access Partners in New York.

Last week, concerns the Fed might curtail or end its stimulus efforts earlier than expected prompted a sharp decline by stocks, though they recovered most of the lost ground by the end of the week.

The Dow Jones industrial average <.dji> was up 88.66 points, or 0.64 percent, at 13,872.83. The Standard & Poor's 500 Index <.spx> was up 6.09 points, or 0.41 percent, at 1,493.94. The Nasdaq Composite Index <.ixic> was up 7.82 points, or 0.25 percent, at 3,124.07.

Dow component Home Depot Inc was the top gainer on both the Dow and S&P 500 after reporting adjusted earnings and sales that beat expectations, sending shares up 5.6 percent to $67.52.

Macy's Inc rose 3.3 percent to $39.80 after stating it expects full-year earnings to be above analysts' forecasts because of strong sales in the holiday period.

Economic reports that showed strength in housing and consumer confidence also supported stocks.

Home prices rose more than expected in December, according to the Standard & Poor's/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.

For the benchmark S&P 500 index, 1,500 will be watched as a key level after the index closed below it on Monday for the first time since February 4, with selling accelerating after falling below it. An inability to break back above it could portend further losses.

(Editing by Chizu Nomiyama and Kenneth Barry)

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SAfrica: judge in Pistorius case suffers loss

JOHANNESBURG (AP) — Last week, the judge who granted bail to Oscar Pistorius was in the international spotlight, presiding over dramatic hearings in a courtroom as the Olympic athlete sat in the dock charged with murdering his girlfriend. This week, the judge is in private mourning.

Desmond Nair, chief magistrate of the Pretoria Magistrate's Court, confirmed Tuesday that he is related to a woman suspected of killing her two children and committing suicide on the weekend.

The revelation was the latest twist in the saga of Pistorius and prominent figures linked to the case against the double-amputee athlete, who faces a charge of premeditated murder in the Feb. 14 shooting death of Reeva Steenkamp, a 29-year-old model who appeared in a television reality show.

The bodies of a woman and her two sons were found Sunday evening at their Johannesburg home by her ex-husband, police Warrant Officer Balan Muthan said. Authorities suspect the woman administered a substance that killed her children, and took her own life by ingesting it as well.

"I can confirm the deceased is my first cousin," Nair told The Associated Press in a telephone interview.

The woman's brother, Vishal Maharaj, identified her as Anusha Maharaj. Police said Maharaj was her family name before she married. South African media identified her as Anusha Mooljee.

Muthan said police suspect "she took her own life by ingesting a substance that killed her," and that she "most probably" gave the same substance to her children. Autopsies were conducted Monday and toxicologists were analyzing the substance believed to have killed the three family members.

Suicide notes were found and a murder investigation was underway, Muthan said. He said copies of the notes were admitted as evidence in the probe and declined to comment on the contents.

Eyewitness News, a South African media outlet, said the boys who died were 12 and 17 years old and cited neighbor Claire Osment as saying she rushed outside after hearing screams coming from the townhouse where they lived.

"We asked what happened. The dad just said, 'She has killed my boys.' He was just crying," Eyewitness News quoted her as saying. "He couldn't believe it, he couldn't believe that his sons are gone."

Nair, 44, has presided over a number of high-profile cases, including the 2008 conviction on fraud charges of Sydney Maree, a South African who took American citizenship and became a track star in the United States; a 2011 plea agreement in which rugby player Bees Roux received a five-year suspended prison sentence for the beating death of a policeman; and inquiries into alleged misconduct by magistrates around South Africa.

On Friday, Nair delivered a lengthy discourse on why he was granting bail to Pistorius, including an assertion that prosecutors had not argued persuasively that the Paralympian was a flight risk. Nair criticized shortcomings in the state's investigation, but he also said aspects of Pistorius' account of what happened were not convincing.

Pistorius says he killed Steenkamp accidentally, opening fire after mistaking her for an intruder in his home. Prosecutors alleged he intentionally shot her after the couple had an argument.

Last week, the chief investigator in the case against Pistorius, Hilton Botha, was removed from the inquiry after it was revealed that attempted murder charges against him had been reinstated in early February. The charges relate to a 2011 incident in which Botha and two other police officers allegedly fired on a minibus.

In another surprise, a lawyer for the Pistorius family said Sunday that Oscar's brother, Carl, faces a charge of unlawful, negligent killing for a 2008 road death. That charge had also been dropped and later reinstated.

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Vatican 'Gay lobby'? Probably not

STORY HIGHLIGHTS

• 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.

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

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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."

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

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