UK - Will British Prime Minister David Cameron veto the EU budget plan? Chancellor Angela Merkel flew to London on Wednesday night in an effort to convince him not to. It appears unlikely that she succeeded, though, setting the stage for a showdown at the EU summit later this month. The 17 "net recipients" - those that receive more money from the budget than they pay in - in addition to the European Commission and the European Parliament all support a budget increase. Mr Cameron said increasing the seven-year budget would be "completely ludicrous," and that he would go to the EU summit with a robust position and readiness to use his veto power if need be.

EUROPE - Brussels bureaucrats wasted billions of pounds through fraud and blunders last year, the EU’s own auditors revealed last night. Official EU spending watchdogs raised questions over a colossal £89 billion of spending during 2011. And for the 18th year in a row, they refused to sign off the EU’s annual accounts. The damning verdict brought new fury at the soaring EU budget and added to the pressure on David Cameron to block a further massive hike.

UK/EUROPE - British opposition to Brussels budget increases hardened on Tuesday after the EU's auditor failed to give a clean bill of health to £89 billion of spending "affected by material error". The European Court of Auditors reported on Tuesday that controls over 86 per cent of the EU budget last year were only "partially effective", a conclusion that has further polarised the battle over European Commission demands for a sharp rise in spending. Despite 18 years of critical reports by the auditors, the Commission and European Parliament have defied calls for austerity measures at the EU level by demanding an 11 per cent increase to long-term Brussels expenditure from 2014 to 2020.

USA - The northeaster taking aim on the Sandy-ravaged coastline will lead to another round of wind damage, spotty power outages, localized flooding and travel delays. This system affected part of the South during Election Day, sparking a round of rain and thunderstorms from Atlanta to Charlotte - North Carolina, Charleston - South Carolina and Orlando - Florida. The storm next took a northerly turn, paralleling the East coast Tuesday night and is now strengthening off the coast of New Jersey. As the storm continues to move northward into progressively colder air, heavy snow will fall in some areas. Coastal flooding is a significant threat from the nor'easter, especially in areas where dunes have been destroyed and sea walls have been damaged by Sandy just over a week ago.

UK - The BBC's Middle East editor Jeremy Bowen writes: In his victory speech President Obama told Americans that 10 years of war were ending. But turbulence in the Middle East means that military action, perhaps even new wars, will push back on to his agenda.

BERLIN, GERMANY - German manufacturing, the locomotive of Europe's largest economy, is running out of steam three years into the euro zone debt crisis, which has clobbered orders and output. Data on Wednesday showed output slid by 1.8 percent on the month in September, more than forecast and the sharpest drop since April. A day earlier, data had shown industrial orders fell 3.3 percent month-on-month in September.

USA - Colorado and Washington became the first US states to legalize the possession and sale of marijuana for recreational use on Tuesday in defiance of federal law, setting the stage for a possible showdown with the Obama administration. “Colorado will no longer have laws that steer people toward using alcohol, and adults will be free to use marijuana instead if that is what they prefer. And we will be better off as a society because of it," said Mason Tvert, co-director of the Colorado pro-legalization campaign.

USA - On 22 January 2009, 48 hours after he was sworn in for his first term as president, Barack Obama laid out his goals in the Middle East. Top of the list was to seek peace "actively and aggressively" between Israel and the Palestinians. No-one, he said, should doubt America's commitment to Israel's security. But it would be "intolerable" for the Palestinians to face a future without hope. Four years later, the US is still committed to Israel's security. But there is no peace. In his victory speech, President Obama told Americans that 10 years of war were ending. But turbulence in the Middle East means that military action, perhaps even new wars, will be pushed back on to his agenda.

FRANCE - France's Socialist government has approved a bill to legalise same-sex marriage and allow gay couples to adopt. The bill, opposed by more than 1,000 mayors and the Catholic Church, will be debated by parliament in January. France already allows civil unions between same-sex couples, but it was a campaign pledge of President Francois Hollande to extend their rights. It is one of the most divisive issues he has faced, correspondents say.

CHINA - Final preparations are under way in the Chinese capital ahead of a Communist Party congress that will see a new set of leaders unveiled. Security is tight across the city, with policemen checking passers-by and transport restrictions in place. Spokesman Cai Mingzhao said the congress "will be one of great importance, when China is in a crucial stage of building a modern and prosperous society in all respects, taking on reform and opening up, and accelerating the transformation of the growth pattern." Analysts say there has also been division at the very top of the leadership, with two rival factions jostling for position and influence.

CHINA - If reports from the Hong Kong press and China's blogosphere are correct, a remarkable upset has occurred on the eve of the ten-year power shift next week - the greatest turn-over of top cadres since Mao's revolution. The South China Morning Post says the new line-up of the Politburo's Standing Committee is "packed with conservatives". The succession deal agreed over the summer has been scuppered. The hardliners seem poised to snatch control of the seven-man Committee, tying the hands of incoming president Xi Xinping and premier Li Keqiang. If confirmed, long-term investors may have to rethink their core assumption about the future course of China.

NEW YORK, USA - Trillions of dollars worth of stock certificates and other paper securities that were stored in a vault in lower Manhattan may have suffered water damage from Superstorm Sandy. The DTCC provides “custody and asset servicing” for more than 3.6 million securities worth an estimated $36.5 trillion, according to its website.

GERMANY - Are Central Banks Overstating their Gold Holdings? Romania has demanded for many years that Russia return its gold. Last year, Venezuela demanded the return of 90 tons of gold from the Bank of England. The German high court recently ruled that Germany must audit its gold reserves held in foreign countries such as the US, England and France. And German inspectors will actually travel to the New York Federal Reserve Bank’s gold depository and the Bank of England to inspect their gold. Germany will also repatriate 150 tons of gold in order to test it for purity.

ISRAEL - Benjamin Netanyahu has vowed that he will not allow Iran to continue its progress towards nuclear armament if he is re-elected in January. "I am of course ready to press the button if necessary," he told Israel's Channel 2 in an investigation aired on Monday evening. "As long as I am prime minister, Iran will not have the atomic bomb. If there's no other way, Israel is ready to act."

USA - The United States is frittering away its role as a model for the rest of the world. The political system is plagued by an absurd level of hatred, the economy is stagnating and the infrastructure is falling into a miserable state of disrepair. On this election eve, many Americans are losing faith in their country's future.