"We must pursue our efforts with determination... so that the crisis does not lead to a disorderly and catastrophic collapse. So that we can keep the euro," he said. Papademos - who took the helm of a unity government in November to implement EU and IMF imposed austerity measures to try to save the indebted nation from bankruptcy, said the first quarter will be particularly crucial.

"We are living through the worst post-war national and international crisis. We will get through it but there is no magic bullet." Papademos called on the country's political forces on the left, right and far-right that back his government to show "responsibility and work together". The parties in the coalition disagree over when early elections should be held, with the Socialist Pasok party preferring the end of April while some conservatives want a vote by mid-April.

The conservative New Democracy has made clear that it is aiming for early polls, most likely in February, but far-right Laos leader George Karatzaferis has suggested the coalition should remain in power longer. The Pasok party wants the government to last as long as it takes to get a second debt bailout programme passed in parliament but sources have said that this may take some time to complete, pushing back the polls.

"France's destiny could once again be tipped" in 2012, Sarkozy said in a televised New Year's address.

"Emerging from the crisis, building a new model for growth, giving birth to a new Europe - these are some of the challenges that await us."

"This crisis... probably the most serious since World War II, this crisis is not over," Sarkozy said.

"Yet there are reasons for hope... We must, we can keep confidence in the future," he said.

Sarkozy is facing a tough battle for re-election against Socialist frontrunner Francois Hollande, with the economy expected to take centre stage. Opinion polls have consistently shown Hollande leading over Sarkozy in the race. France will vote in the first round of the presidential election in April and potentially a second round in May, followed by parliamentary elections in June.

The eurozone's third largest economy, Italy sparked fears in 2011 that its toxic mix of low growth, high debt and spiralling borrowing costs could force it to seek a bailout like fellow eurozone members Greece, Ireland and Portugal. "No-one, no social group, can today avoid the commitment to contribute to the clean up of public finances in order to prevent the financial collapse of Italy," he said. "The sacrifices will not be in vain," he added, "especially if the economy begins to grow again."

But there is still concern over the plan's impact on an economy that is moving into recession after shrinking by 0.2 percent in the third quarter. And Italy's ability to borrow on the debt markets is being closely watched as a bellwether of current confidence in the eurozone.

The bill, passed on a party-line vote, adds lesbian, gay, bisexual and transgender people as well as people with disabilities to the list of groups that schools must include in the lessons. It also would prohibit material that reflects adversely on gays. Democratic Assemblyman Tom Ammiano of San Francisco says SB48 is crucial because of the bullying that happens to gay students. Republicans called it a well-intentioned but ill-conceived bill and raised concerns that it would indoctrinate children to accept homosexuality.

"This bill will require California schools to present a more accurate and nuanced view of American history in our social science curriculum by recognizing the accomplishments of groups that are not often recognized," said Assembly Speaker John Perez, the first openly gay speaker of the California Assembly. The bill now goes to Governor Brown, a Democrat, who has not said whether he would sign it. Former Governor Arnold Schwarzenegger vetoed a similar bill in 2006. Assemblyman Tim Donnelly, a Republican from Twin Peaks, said he was offended as a Christian that the bill was being used to promote a "homosexual agenda" in public schools. "I think it's one thing to say that we should be tolerant," Donnelly said. "It is something else altogether to say that my children are going to be taught that this lifestyle is good."

California law already requires schools to teach about women, African Americans, Mexican Americans, entrepreneurs, Asian Americans, European Americans, American Indians and labour. The Legislature over the years also has prescribed specific lessons about the Irish potato famine and the Holocaust, among other topics. SB48 would require, as soon as the 2013-2014 school year, the California Board of Education and local school districts to adopt textbooks and other teaching materials that cover the contributions and roles of sexual minorities. The legislation leaves it to local school boards to decide how to implement the requirement. It does not specify a grade level for the instruction to begin. Opponents argued that such instruction would further burden an already crowded curriculum and expose students to a subject that some parents find objectionable. Assemblyman Chris Norby said the bill micromanages the classroom.

"Our founding fathers are turning over in their graves," Donnelly said. The bill's author, Senator Mark Leno, Democrat for San Francisco, said he hopes Brown will sign his bill. He dismissed arguments that the bill promotes certain sexual behaviours and said it removes censorship in textbooks. "Bottom line, it's only beneficial to share with students the broad diversity of the human experience and that our democracy protects everyone," he said. Some churches and conservative family groups warned the bill will drive more parents to take their children out of public schools."This sexual brainwashing bill would mandate that children as young as 6 years old be told falsehoods - that homosexuality is biological, when it isn't, or healthy, when it's not," said Randy Thomasson, president of SaveCalifornia.com.

In its December bulletin the bank said: "After the stagnation the Spanish economy showed in the third quarter, the available economic information, still incomplete, indicates activity contracted in the final months of the year." Mr Rajoy, who was elected in a landslide election victory in November, has said he will today unveil economic measures that will last until a full budget can be presented to parliament in the first quarter of the year.

Spain, which has the eurozone's third-biggest budget deficit, is already struggling under tough austerity measures and the highest unemployment rate for 15 years. Spain's new financial minister Luis de Guindos has already warned the economy would "surely see a downturn" in the final quarter of this year. He said the first quarter of 2012 would also be tough, leading to fears of another recession - defined as two successive quarterly contractions - in Spain.

The Bank of Spain said its indicators showed a "marked weakening" of household consumption and investment in the last quarter. The construction industry, which has been at the forefront of the downturn after Spain's property bubble burst, is still on a "path of contraction", the Bank added. Exports had slowed to almost half the pace registered in the third quarter, and tourist numbers also fell.

"The consensus is that the Christian community nationwide will be left with no other option than to respond appropriately if there are any further attacks on our members, churches and property," Oritsejafor said ahead of a meeting with President Goodluck Jonathan on Wednesday. Oritsejafor, whose Christian Association of Nigeria, or CAN, represents various denominations in the country's predominantly Muslim north, also criticised President Jonathan's government for failing to make any "high profile arrest" despite claims that it has knowledge about the perpetrators.

The government's response is not commensurate, the reverend argued, with what he deemed, "a declaration of war on Christians and Nigeria." Amid mounting criticism of the government's ability to combat Boko Haram, President Jonathan called together his national security advisors for talks on stemming violence blamed on Islamists that has led to concerns of reprisals from Christians. The approaching anniversary of last year's New Year's Eve attack on a beer garden sparked fears that revelers this year could be targeted.

President Jonathan, a Christian from the south who won a re-election bid last April, has come under intense scrutiny for his government's handling of the bombings and for his ability to assuage fears that Boko Haram may be plotting additional attacks. Nigeria, a country of 167 million, has endured bouts of religious conflict since independence from Britain in 1960, with its population roughly split between Muslim and Christian. Analysts fear Boko Haram, which claims ties to Al Qaeda, is seeking to exploit those existing tensions to spark widespread sectarian war.

Although Italy's borrowing rate is lower than the 7.56 per cent it paid in a similar sale last month, anything from seven per cent upwards is widely considered unsustainable. It raises fresh concerns that Italy will require a bailout, as Greece, Ireland and Portugal were all forced into requesting one after their ten-year bond yields climbed above seven per cent.

Concerns over Italy's massive debts prompted Silvio Berlusconi's resignation last month. Italy - the eurozone's third-largest economy - is now in around 1.9 trillion euros of debt, and it has 330 billion euros of debt to refinance next year alone. The news comes at a time when the UK's ten-year bonds are at a record low of 1.99 per cent.

Iran responded with threats to block the Strait of Hormuz, the gateway for the Gulf countries' crude exports to the rest of the world. With the two countries now showing off their naval capacities on either side of the strait, investigative writer Edwin Black tells RT that in embargos and sanctions Washington is seeking an alternative to a military strike. America is indeed concerned that Iran may be on the fast track of developing nuclear weapons. But, Black says, the US government is unprepared for this conflict as this would mean Gulf oil supplies would be choked off.

"They do not have a plan for an oil interruption. There is a 57-day supply of unrefined oil that can be stretched to about a hundred days," he told RT. Iran would not limit itself to merely blocking the Strait of Hormuz, remarks Black. In the event of an all-out conflict, Tehran could target Saudi Arabia's oil facilities, such as the desulphurization plant at Ab Tak, which processes 70 per cent of Saudi oil, and the Ras Tanura terminal, a major oil port and oil operations center for Saudi Aramco, the world's largest oil company.

"If that is done, the world will be crippled," he pointed out.

Saudi Arabia, which has declared it will increase oil exports if Iran shuts the Strait of Hormuz, would not fill in the black hole of the world's oil demands, observes Edwin Black. The main oil transport routes include the same strait, which would cease to be available. Other transport options do not have enough capacity.

"There is a backdoor pipeline in Yanbo which has a capacity of about 1-5 million barrels per day, but this cannot make up for the 70 million barrels a day. And the Yanbo pipeline can be bombed as easily as Ras Tanura," says Black. "The outlook is indeed grim," he concludes. Most of the world is petrol addicted with maybe Brazil only enjoying the option of using alternative sources of energy. But with the US determination not to let Iran have nuclear weapons, some kind of military conflict looks inevitable.

Iran's navy chief earlier claimed that closing the strait would be an easy job for the Iranian forces. In response the US said that interference with the transit or passage of vessels through the route would not be tolerated. Investigative writer Edwin Black told RT that full military conflict would cripple the oil-dependent US - as well as the rest of the world.

However Stephen Schork, the editor of the energy trading newsletter The Schork Report, argues that Iran is bluffing as it "simply cannot afford not to sell its oil to the world market. If Iran cannot get its oil to the world market, it cannot get petrodollars," he told RT. Moreover, Schork adds that Iran lacks refining capacity. "If Iran continues on this path, they will isolate themselves, they will not have access to foreign capital and they will not have access to enough refined product."

He asks what Iran is trying to get as a reward for this possible move. "Apparently they want to build a nuclear weapon. The reward of a nuclear program does not justify the immense risk the leaders in Iran are playing out right now," he concludes.

Tehran's threat to block traffic through the crucial passage for Middle Eastern crude suppliers followed the European Union's decision to tighten sanctions on Iran over its nuclear program, as well as accompanying moves by the United States to tighten unilateral sanctions. Iran's English-language Press TV quoted Hossein Salami as saying: "Any threat will be responded by threat... We will not relinquish our strategic moves if Iran's vital interests are undermined by any means."

Separately, Salami was quoted as saying by the official IRNA news agency: "Americans are not in a position whether to allow Iran to close off the Strait of Hormuz." The US Fifth Fleet said on Wednesday it would not allow any disruption to shipping in the Strait of Hormuz, a strip of water separating Oman and Iran. At loggerheads with the West over its nuclear program, Iran said earlier it would stop the flow of oil through the strait if sanctions were imposed on its crude exports.

Analysts say that Iran could potentially cause havoc in the Strait of Hormuz which connects the biggest Gulf oil producers, including Saudi Arabia, with the Gulf of Oman and the Arabian Sea. At its narrowest point, it is 21 miles across. But its navy would be no match for the firepower of the Fifth Fleet which consists of 20-plus ships supported by combat aircraft, with 15,000 people afloat and another 1,000 ashore. Neither the United States nor Israel have ruled out military action if diplomacy fails to resolve a long-running dispute over Tehran's nuclear ambitions.

"Satellite data indicate that this is a single explosion event," the survey and Alaska Volcano Observatory said in its notice, but "more sudden explosions producing ash could occur with plumes exceeding 20,000 feet above sea level," A similar alert had been issued in early September, amid concerns that the volcano could be leaking from its flanks if the lava inside continued to build up. The volcano's lava dome was 262 feet in diameter on August 30, but by then it had expanded to 394 feet.

Situated 45 miles west of Nikolski by the Bering Sea, the Cleveland volcano makes up the western half of uninhabited Chuginadak Island. Its last, most significant eruption came in February 2001, when three explosions created ash clouds that soared as high as 39,000 feet and spurred a hot avalanche that reached the water. Smaller ash emissions were detected in January, and before that in June 2009, the observatory said.

Cleveland is one of over 130 volcanoes and volcanic fields that have been discovered in Alaska. About 90 of these have been active over the past 10,000 years, including more than 50 since the mid-18th century, according to the observatory. Roughly three-quarters of all active US volcanoes to erupt in the past two centuries have been in Alaska.

The move appeared to be part of a strategy to intimidate international organizations. The ruling military council has repeatedly blamed "foreign hands" for exploiting Egypt's political and economic turmoil. But activists said the army was using the ruse of foreign intervention to stoke nationalism and deflect criticism of abuses.

The military's actions angered Washington at a time the White House is pressuring Egypt to respect civil liberties. But the Egyptian military has been increasingly agitated by democracy advocates and protests that have gripped the nation. Clashes last week between demonstrators and soldiers ended in the deaths of at least 15 people.

"This action is inconsistent with the bilateral cooperation we have had over many years," State Department spokeswoman Victoria Nuland said at a news briefing after the raids. "We call on the Egyptian government to immediately end the harassment of NGO staff, return all property and resolve this issue immediately." Egyptian soldiers and black-clad police officers swept into offices, interrogated workers and seized computers across the country.

Those targeted included US groups the National Democratic Institute, the International Republican Institute and Freedom House, which are funded by Congress to monitor elections and promote democracy overseas.

Hillary Clinton, US secretary of state, wrote this week to Viktor Orban, prime minister, expressing concerns. As well as the central bank law and a new flat tax rate that have been sharply criticised by the EU and the International Monetary Fund, other measures include reforms that critics warn will subject the judiciary to political interference and electoral changes that opponents say would entrench Mr Orban's power for years to come.

"A number of constituencies have been reduced and redrawn in a way that, based on past voting patterns, clearly favours [Mr Orban's centre-right party] Fidesz in future elections," said Robert Laszlo, election specialist at Political Capital, a Budapest think-tank. Fidesz already enjoys a two-thirds majority in parliament. "Mr Orban is trying to build up a new system completely in line with his power interests. It will be extremely difficult to change these laws," said Andras Biro Nagy of Policy Solutions, a Budapest consultancy.

The slew of legislation has provoked modest protests in Budapest, including one last week where Ferenc Gyurcsany, former prime minister, was briefly arrested. According to local media reports, Mrs Clinton has also criticised use of a new media law to prevent broadcasts by Klubradio, a popular talk-radio station that is frequently critical of the government. Hungary's media council, which took the decision, said the Klubradio affair had become "a consciously planned, premeditated, sheer political provocation" supported by prominent leftwing and liberal public figures, along with "members of foreign diplomatic corps".

But western countries and international bodies have become concerned over moves by his government seen as removing democratic checks and balances. "It now seems all too clear that Viktor Orban's government is determined to take the country in a direction that is far from the core values on which the European Union is built," said Daniel Cohn-Bendit and other leaders of a Green-liberal bloc in the European parliament in a letter to Jose Barroso, European Commission president, last week. Much recent legislation has consisted of so-called "basic" laws designed to support the constitution steamrollered through parliament this year, and which will therefore require a two-thirds majority for any amendment. The constitution comes into effect on January 1.

The poll also found that most economists expect UK interest rates to remain at 0.5% throughout next year. It was conducted among 34 UK and European economists who regularly advise the Bank of England. Of the 27 who responded, 25 forecast recession for Europe next year. Growth in Europe has slowed in recent months as the eurozone debt crisis has forced governments to rein in spending and has undermined confidence in global financial markets.

The eurozone economy grew by 0.2% between July and September, while the 27 economies of the European Union grew collectively by 0.3%. Politicians have attempted to resolve the crisis, including an agreement to forge closer ties between EU members, but markets have yet to be convinced the measures they have taken are sufficient. The longer the debt crisis rumbles on, the more likely Europe will return to recession, economists believe.

In the long term, China is working towards building a space station and putting a person on the moon. The white paper also summarised China's space activities since 2006 and spelt out policies for international co-operation, in a move that appeared aimed at allaying concern over its space ambitions. ''China will work together with the international community to maintain a peaceful and clean outer space and endeavour to make new contributions to the lofty cause of promoting world peace and development,'' said the report.

It lists collaborations with countries such as Russia, Brazil, France and Britain. China will also ''continue to make dialogue regarding the space field'' with the US, following a NASA delegation visit in October. China views its space programme as a key part of its national development and international growth. According to the white paper, the Shenzhou-9 and Shenzhou-10 spaceships will be launched to dock with the Tiangong-1 space lab module.

Tiangong-1, which means ''heavenly palace'', was launched aboard a Long March 2F rocket in September. It is the first part of China's space station. Last month the Shenzhou-8 spent just under 17 days in orbit - the longest Shenzhou mission to date - and rendezvoused with the space lab. Officials have indicated that at least one of the two next Shenzhou missions would be manned and that 2012 might even see the country's first female astronaut.

The white paper also said China would improve its Long March launch vehicles, building next-generation rockets that used ''non-toxic and pollutant-free propellant''. It plans to upgrade launch sites and finish a new launch base in Hainan. China will also launch orbiters to survey the moon, land on it and obtain samples that can be studied. Ultimately, it wants to put a person on the moon. In the next five years, the report said, China will ''conduct studies on the preliminary plan for a human lunar landing''.