UKRAINE - Separatist rockets streaked across hills in eastern Ukraine on Monday as rebels pounded the positions of Ukrainian government troops holding a strategic rail town, while both sides prepared to mobilise more forces for combat. Talks between Ukraine, Russia and rebel officials in Minsk, Belarus, had raised hopes of a new ceasefire to stem the violence in a conflict that has claimed more than 5,000 lives. But they broke up without progress with Ukraine and the separatists accusing each other of sabotaging the meeting. The separatist rebellion erupted last April after Russia annexed Ukraine's Crimea in response to the ousting of a Moscow-backed president by street protests in Kiev which ushered in a government committed to integration with Europe.

USA - In an interview with the American TV Network CNN earlier today, US President, Barack Obama, underlined that austerity can no longer be imposed on people. In what is seen as a powerful appeal to European leaders and in direct support of Greece, Mr Obama highlighted that there should be a development strategy, adding that the reforms that must be put in place should not be based on austerity policies. Namely, the US President mentioned tax evasions and referred to the troubling inability to collect taxes. “It is very hard to initiate these changes if people’s standard of living is dropping by 25%. Over time the political system and the society cannot sustain it. My hope is that Greece remains in the Eurozone, and I think that will require compromise on all sides,” he said.

GREECE - The European Commission says the controversial EU-IMF troika supervising Greek finances could be replaced. The troika is a group of auditors representing the Commission, the European Central Bank and IMF. They carry out regular checks to see if Greece is sticking to its commitments under the EU-IMF bailout agreement. Greece's new left-wing government does not accept the troika's agenda. Instead it aims to renegotiate the bailout, to get a huge reduction in Greece's debt. Greece's current programme of loans ends on 28 February. There is no agreement yet on disbursement of the final bailout tranche of €7.2 billion - and Greek Finance Minister Yanis Varoufakis has said Athens does not want it.

AUSTRIA - The anti-Islamisation movement Pegida, which originated in Germany, has held its first march in Austria. But while rallies in Germany have often attracted more than 20,000 people in recent weeks, only a few hundred took part in Monday's rally in Vienna. They found themselves outnumbered by police - and even more so by about 5,000 people who had gathered for a counter-demonstration. Austria is the latest European country to see anti-Islamisation protests. Marches on a smaller scale have since been held in the Czech Republic, Denmark and Norway and sympathiser groups have formed in a number of other European countries including Spain, Sweden and Switzerland.

UK - The BBC risks turning its back on efforts to tackle extremism and intolerance in Britain simply to cut costs, Muslim, Jewish and Christian leaders have warned. In a letter to The Telegraph they urged the corporation to reverse plans to axe its high-profile post of head of religion, currently held by Aaqil Ahmed, the first Muslim in the job, as part of an overhaul of its programme commissioning operations. Religion is to be merged with science, history and business issues under a new head of “factual” programming in a move the BBC claims will provide an “increased focus on leadership and creativity”. But the faith leaders said it “could not have come at a worse time” amid tensions relating to religion brutally demonstrated by the terrorist attacks on Charlie Hebdo magazine and a kosher supermarket in Paris.

ICELAND - Icelanders will soon be able to publicly worship at a shrine to Thor, Odin and Frigg with construction starting this month on the island’s first major temple to the Norse gods since the Viking age. Worship of the gods in Scandinavia gave way to Christianity around 1,000 years ago but a modern version of Norse paganism has been gaining popularity in Iceland. The temple will be circular and will be dug 4 metres (13ft) down into a hill overlooking the Icelandic capital Reykjavik, with a dome on top to let in the sunlight. “The sun changes with the seasons so we are in a way having the sun paint the space for us,” Hilmarsson said. The temple will host ceremonies such as weddings and funerals. The group will also confer names to children and initiate teenagers, similar to other religious communities.

EUROPE - "The creation of the euro was a terrible mistake but breaking it up would be an even bigger mistake. Anything could happen," warns former IMF bail-out chief. The North European power structure has issued stern and inflexible warnings to Greece. Syriza’s triumphant radicals must pay the country’s debts and stick to the letter of the hated ‘Memorandum’ imposed by creditors.

GERMANY - Germany has succumbed to deflation for the first time in more than five years, and may not see inflation again before the year is out. Inflation fell below zero for the first time since October 2009, according to preliminary estimates from statistics agency Destatis, as prices dropped by 0.3 percent in the year to January. Analysts had expected deflation - but not at this pace. A poll suggested that prices would fall by just 0.2 percent in the period. Final results for January will be published on February 12. There are fears that prices may continue to fall for some time. Michala Marcussen, of Societe Generale, said: "German inflation should not turn positive before the final quarter of 2015."

GERMANY - German Chancellor Angela Merkel ruled out any cancellation of Greece's debt and said the country has already received substantial cuts from banks and creditors. The announcement added to tensions between the radical new Greek government and its international creditors. "There has already been voluntary debt forgiveness by private creditors, banks have already slashed billions from Greece's debt," Merkel said in an interview with the Hamburger Abendblatt newspaper. "I do not envisage fresh debt cancellation," she said. Greek Prime Minister Alexis Tsipras will visit Italy and France on Tuesday and Wednesday, but has no immediate plans to visit Germany, Europe's biggest economy and effective paymaster.

UK - A senior Bank of England official has compared banks’ failures to prevent Libor and foreign exchange rigging to a fighter pilot ignoring safety checks, saying it should be in the banks’ own interests to stamp out bad behaviour. Andrew Hauser, the BoE’s director of markets strategy, said ensuring good conduct had become misaligned with profitability at banks, causing systematic failures that led to traders ripping off customers in an attempt to make money. He said that despite an “enormous” focus on improving standards at many banks, promises to reform could become like a quickly-forgotten New Year’s resolution if rules are not put in place to make sure it is in a bank’s best interests to do so.

MALAWI, AFRICA - Homes swept away like matchsticks, vast plains turned to mud, fields of precious crops drowned. Villagers here speak of climbing up anthills or trees and waiting for three days without food or water, drenched in rain and fearing attack by crocodiles. Families describe how they have lost everything. Rescue workers tell of seeing children swept to their deaths and picking up floating backpacks only to discover corpses attached. Nearly three weeks on, the death toll remains unclear and not everyone is accounted for. Estimates of the death toll from the torrential rains vary from 79 to more than 200. At least 174,000 people have been displaced and 638,000 affected, according to the UN, with livestock and possessions swept away, subsistence crops lost and water sources contaminated.

DAVOS, SWITZERLAND - As world events threaten the comfortable lifestyles of the West's super-rich they have begun buying up fabulous 'bolt hole' properties in the far-away safe haven of New Zealand. The world's elite are snapping up properties in the tiny country, which they see as a shelter from the threat of terrorism, civil unrest and instabilities in the financial markets. Interest in pricey land and homes in the North and South Islands has soared in recent years following terrorist strikes and civil disobedience in North America, the UK and Europe. Financial experts attending the recent World Economic Forum in Davos this month revealed many wealthy hedge fund managers have already started planning escapes for themselves and their clients should life in the northern hemisphere descend into chaos.

GREECE - Greek election victor Alexis Tsipras wants an entirely different Europe from the one envisioned by Angela Merkel. His success is likely to stoke anger over Germany's EU dominance. Leaders in France and Italy are also hoping for an end to austerity.

SPAIN - Tens of thousands of people have massed in central Madrid for a rally organised by radical Spanish leftists Podemos. The "March for Change" is one of the party's first outdoor mass rallies, as it looks to build on the recent victory of its close allies Syriza in Greece.

GERMANY - The German government announced a long-term plan for the modernization of its armed forces on Friday. "It isn‘t a sprint in front of us, rather it is a considerable marathon," Defence Minister Ursula von der Leyen said in a presentation to parliament. Von der Leyen, of the ruling centre-right Christian Democrats, said she wanted to make the Germany Army into the most attractive employer in the country. Her proposals include more part-time work, better promotion opportunities and, for the first time, legally-stipulated working hours for soldiers. "We want the best, we need the best, so we have to deliver the best working conditions," she said. Soldiers’ repesentatives described the draft legislation as a "great step."