Dempsey, speaking to CNN during a worldwide tour, spoke one day after Secretary of Defense Leon Panetta warned that the American government will not allow Iran to produce a nuclear weapon. He said that if Iran continues to enrich high-grade uranium, it could produce a nuclear weapon within a year, an estimate formerly given by Israeli Defense Minister Ehud Barak.

"My biggest worry is they [Iran] will miscalculate our resolve," Dempsey said in Afghanistan. "Any miscalculation could mean that we are drawn into conflict, and that would be a tragedy for the region and the world." Besides repeating the often-used phrase" all options are on the table," General Dempsey went one step further and declared, "I am satisfied that the options that we are developing are evolving to a point that they would be executable if necessary."

It was the most blatant warning made regarding Iran's growing nuclear threat.

Yields on Spain's three-month notes plummeted to 1.74% on Tuesday from 5.11% last month, leading euphoric moves across the eurozone periphery. Spanish 10-year yields fell below 5% for the first time in two months, with credit rallies in Italy, Belgium, and Ireland. Exuberance lifted Germany's DAX index by 3%, the French CAC by 2.7%, and FTSE 100 by 1%, with ripple effects through commodities and risky assets worldwide.

The buying spree comes as markets wait for the ECB to turn on the monetary spigot. Funds are betting that an offer of unlimited bank credit for three years - long-term repo operations (LTROs) - will transform the underlying dynamic of Europe's debt crisis. Banks will be able to borrow at 1% to buy Spanish and Italian bonds at 5% or 6%. It allows the ECB to prop up sovereign states without violating EU treaty law.

Lenders call it the "Sarko trade" after French leader Nicolas Sarkozy said the liquidity will allow each state to "turn to its banks" for finance. Markets have seized on the idea, hoovering up distressed debt in advance to lock in gains. The ECB move is part of a string of fresh measures by the bank's new president Mario Draghi to head off a dangerous escalation of the crisis. "We are trying to avoid a credit crunch," he told Euro MPs on Monday, warning that EMU banks and states must together to raise 720 billion euros (602 billion pounds) over the first quarter of 2012.

"Draghi's been smart," said Simon Ward, of Henderson Global Investors. "The spread available to banks is going to prove attractive. He has outmanoeuvred the Bundesbank by drawing it in deeper." Yet it is unclear whether liquidity alone can stop investor flight from Club Med. European banks have already cut holdings of EMU bonds by 65 billion euros this year, and are slashing loan books to meet the EU's core Tier 1 capital ratio of 9%. The Basel-based Global Stability Board fears that deleveraging could reach 2.5 trillion euros over coming months, risking a shock to the system.

Although the Obama administration has not publicly threatened to retaliate with military force, the allegations have underscored the real and growing risk that the two sides could go to war sometime soon - particularly over Iran's advancing nuclear program. For several years now, starting long before this episode, American pundits and policymakers have been debating whether the United States should attack Iran and attempt to eliminate its nuclear facilities.

Proponents of a strike have argued that the only thing worse than military action against Iran would be an Iran armed with nuclear weapons. Critics, meanwhile, have warned that such a raid would likely fail and, even if it succeeded, would spark a full-fledged war and a global economic crisis.

But skeptics of military action fail to appreciate the true danger that a nuclear-armed Iran would pose to US interests in the Middle East and beyond. And their grim forecasts assume that the cure would be worse than the disease - that is, that the consequences of a US assault on Iran would be as bad as or worse than those of Iran achieving its nuclear ambitions. But that is a faulty assumption. The truth is that a military strike intended to destroy Iran's nuclear program, if managed carefully, could spare the region and the world a very real threat and dramatically improve the long-term national security of the United States.

The source added that the military, which is trying to develop a nuclear arsenal, has pledged allegiance to the untested Kim Jong-un, who takes over the family dynasty that has ruled North Korea since it was founded after World War Two. The source declined to be identified but has correctly predicted events in the past, telling Reuters about the North's first nuclear test in 2006 before it took place.

The comments are the first signal that North Korea is following a course that many analysts have anticipated - it will be governed by a group of people for the first time since it was founded in 1948. Both Kim Jong-il and his father Kim Il-sung were all-powerful, authoritarian rulers of the isolated state.

The situation in North Korea appeared stable after the military gave its backing to Kim Jong-un, the source said. "It's very unlikely," the source said when asked about the possibility of a military coup. "The military has pledged allegiance to Kim Jong-un." North Korea's collective leadership will include Kim Jong-un, his uncle and the military, the source said.

The break-in at the US Chamber of Commerce is one of the boldest known infiltrations in what has become a regular confrontation between US companies and Chinese hackers. The complex operation, which involved at least 300 internet addresses, was discovered and quietly shut down in May 2010.

It isn't clear how much of the compromised data was viewed by the hackers. Chamber officials say internal investigators found evidence that hackers had focused on four Chamber employees who worked on Asia policy, and that six weeks of their email had been stolen. It is possible the hackers had access to the network for more than a year before the breach was uncovered, according to two people familiar with the Chamber's internal investigation.

One of these people said the group behind the break-in is one that US officials suspect of having ties to the Chinese government. The Chamber learned of the break-in when the FBI told the group that servers in China were stealing its information, this person said. The FBI declined to comment on the matter.

"It is very clear that the Chinese leaders recognize that military force will play a bigger role to safeguard China's overseas interests," Jonathan Holslag, of the Brussels Institute of Chinese Contemporary Studies told AFP. "There is a willingness, and even a consensus, in China, that this process will take place." The Indian Ocean is strategic, Holslag said, noting that 85 percent of China's oil imports and 60 percent of its exports are routed via the Gulf of Aden.

Beijing does not so far have any military base in the region: its military presence consists of three vessels in the Gulf of Aden to fight Somali pirates. But the deployment of those ships in 2009, the first of its kind for the Chinese navy, was already highly symbolic. For the moment, cooperation between China and the islands of the Indian Ocean is still limited to "low profile military-to-military exchanges, but it is getting broader and more structured," Holslag told AFP.

"The mere fact that China has a multi-year naval presence in the Gulf of Aden has great symbolic and diplomatic significance," said Frans-Paul van der Putten, senior research fellow at the Netherlands Institute of International Relations Clingendael. "Symbolic because it shows other countries that China is an emerging naval power in the region, and diplomatic because China uses its navy ships for occasional visits to ports along the Indian Ocean rim, which helps it strengthen its diplomatic ties with countries in the region," he added.

Secretary Panetta spoke with us at the end of an overseas trip during which he reviewed strategy in Afghanistan and formally ended the war in Iraq. CBS News anchor Scott Pelley caught up with Secretary Panetta on his tour last week of Iraq, Afghanistan and Libya. On the way home, he boarded the jet nicknamed "The Doomsday Plane." This is the command post where he and the president would direct a nuclear war. In an interview for "60 Minutes," we sat down in the compartment where he would execute the commander-in-chief's orders. Panetta told CBS News that Iran needs only one year to build a nuclear weapon.

The report blames official bodies, including the military and the Interior Ministry, for "serious lapses" in wartime readiness. It says some government bodies are shirking their responsibilities and not investing needed funds in preparedness plans. The report says there are not enough bomb shelters in schools and public places, leaving hundreds of thousands of Israelis unprotected in case of attack.

Ratings agencies have warned that France is exposed to the sovereign debt crisis gripping southern Europe and have threatened to downgrade its hitherto perfect rating. The government has protested that it has embarked on an austerity programme backed by a pact with fellow eurozone members to guarantee deficit reduction. "I find it wholly regrettable that we are accepting the loss of our triple-A with a kind of fatalism. This loss is not banal, because it will have an effect on the interest rates the state pays," he said.

He also warned that if France was downgraded it would weaken the status of the European Financial Stability Facility and the European Stability Mechanism, two instruments set up by eurozone leaders to confront the crisis. Any suggestion that France's debt of 1.7 trillion euros ($2.2 trillion) is becoming unmanageable could send the interest rate it pays on bonds soaring. Earlier, the French treasury announced that it would need to raise 178 billion euros ($232 billion) in medium and long-term bonds next year.

The Fitch credit rating agency also warned on Tuesday that the eurozone's new bail-out fund could lose its triple-A debt status. "Fitch Ratings says the 'AAA' rating on debt issues of the European Financial Stability Facility largely depends on France and Germany retaining their 'AAA' status," the company said in a statement. "The revision of the rating outlook on France to 'negative' last Friday implies that the risk of a downgrade of EFSF debt has increased," it said.

Worldwide, investors have yanked $34 billion out of equity funds this year and put $75 billion into bonds. In the US, stock funds, including both exchange-traded funds and mutual funds, squeaked out a miniscule $4 billion net inflow this year, while fixed income-focused managers collected a monster $86 billion, according to EPFR. Burned by two bubbles in the last decade and facing the second global financial crisis in three years, investors simply don't have the risk appetite for stocks.

Investors tried to embrace equities in the first part of the year, but began to pull money out during the summer as the debt ceiling debate domestically flared up and fears of a Greek bailout grew. Ironically, a huge rally on Wall Street Tuesday erased all of last week's loss in a single day as strong housing data rallied financial stocks. It also snapped back above the 50-day moving average. If the rally holds, it would mean investors pulled the most money out of stocks since August at exactly the wrong time.

"Currently the world economy stands at a very dangerous juncture," Lagarde told a roundtable on Africa's economic future in the Nigerian city of Lagos. She said the IMF's revised global growth forecast expected in January looked to be lower than the previous one in September, which was four percent, already down from June's outlook.

"And what's more, there are downside risks on the horizon that are really threatening the recovery process that had started" after the 2008-09 global financial crisis, she said. The IMF has said Europe's worsening economy and financial market turmoil meant it will revise downwards its predictions for global growth contained in its World Economic Outlook report published three months ago.

Early this month, the UN cut its 2012 world growth forecast to 2.6 percent from 3.6 percent, warning that the global economy is "teetering on the brink of a major downturn". Lagarde said on Monday during meetings with Nigerian officials that the European debt crisis posed a risk for "all economies of the world".

Nigeria has long been held back by corruption and mismanagement despite its vast oil wealth. Most of its population lives on less than $2 per day and electricity blackouts occur daily, while the country's mainly Muslim north has been hit by scores of deadly attacks attributed to Islamist group Boko Haram.

The UN said earlier this month that more than 5,000 people had been killed across Syria since protests against President Bashar al-Assad erupted in March. Damascus says it is fighting "armed terrorist gangs", who want to destabilise the country. In violence on Monday, activists said as many as 110 people may have died in fighting across the country - including 60-70 army deserters apparently gunned down by machine-gun fire close to a village called Kafr Oued in Idlib province.

Activist groups reported fresh violence in this town on Tuesday, with the Local Co-ordination Committees saying 25 people had died there by heavy machine-gun fire and shelling. Another 34 people died in Idlib province, 14 in Homs, four in Zabadani and Jebeh close to Damascus, three in Hama and two each in Deraa and Aleppo, the group said - bringing the total toll to 84. Another activist group reported the same toll.

Meanwhile, Syria's air and naval forces conducted live-fire manoeuvres aimed at testing their readiness to repulse "any aggression against the homeland," the official Sana news agency reported. Syrian opposition sources said the army was intensifying its campaign in Idlib ahead of the expected deployment of observers who will monitor the Syrian government's implementation of an Arab League peace initiative.

Editors at the journals Science and Nature say they will not agree to the redactions until they are assured the data will be accessible to researchers. A spokesman for US health authorities said such a system was being prepared. At least one set of scientists have already rewritten their paper in light of the recommendation, Science reports. Albert Osterhaus told Science his team "completely disagreed" with the recommendation of the panel, the National Science Advisory Board for Biosecurity (NSABB).

But Mr Osterhaus, who believes the information should be made widely available, said an editorial explaining his team's "genuflection" to the panel is a condition of the paper's publication in Science. A second research team at the University of Wisconsin, Madison is also reluctantly submitting a revised paper to Nature, a university spokesman confirmed to Science.

While bird flu is deadly, its reach has been limited because it is not transmissible between humans. However, the flu virus was altered in the new studies to be passed easily between ferrets. This problem was recognised in the early days of atomic physics, with scientists well aware that research into nuclear fission could be used for "good or ill"

But Uruguayan President Jose Mujica also stated his country would never impose a maritime blockade of the British overseas territory. The UK has asked Uruguay, which proposed the move, to explain itself. The Mercosur decision is the latest in a series by Latin American regional bodies designed to show solidarity with Argentina, which has long claimed sovereignty over the Falkland Islands, which it calls Las Malvinas.

Britain has held them since the 1830s and says their future is not negotiable. The two countries fought a brief but bloody war over the islands in 1982. The Falklands flag is flown by 25 boats, mostly fishing vessels. Mr Mujica said: "We hold nothing against the UK. But we have a lot in favour of Argentina."

However, the president of the Falklands Chamber of Commerce, Roger Spink, told the BBC that they were a small community, and felt increasingly under blockade. "If we were Palestine, the European Union would be up in arms," he said. Last week the Foreign Office called on Uruguay's ambassador in London to explain the move.

The English Channel has suddenly become wider, deeper and foggier once again. The London-based Daily Telegraph newspaper has warned its readers against what it calls Berlin's blatant effort to dominate Europe and already sees "a new era of Anglo-German antagonism" on the horizon - again characterized by two leaders who are bound together in their sincere dislike for each other, like past leaders of the two countries: Helmut Kohl and Margaret Thatcher, or Gerhard Schroder and Tony Blair.

Reverend Peter Mullen, the Anglican chaplain to the London Stock Exchange, where he is not popular for his crude views, goes even further. According to Mullen, Germans tried to achieve hegemony in Europe by military force in 1870, 1914 and 1939, and now Merkel is trying to do the same with the weapons of the financial system.