"Unless the euro zone debt crisis is resolved in a timely and orderly manner, the broad credit outlook for the US banking industry could worsen," the New York-based rating company said yesterday in a statement. Even as US banks have "manageable" exposure to stressed European markets, "further contagion poses a serious risk," Fitch said, without explaining what it meant by contagion. The "exposures" of US lenders to major European banks and the stressed nations of Greece, Ireland, Italy, Portugal and Spain, known as the GIIPS, are smaller than those to some of the continent's larger countries, Fitch said.

The six biggest US banks - JPMorgan Chase & Co (JPM), Bank of America Corp (BAC), Citigroup Inc (C), Wells Fargo & Co (WFC), Goldman Sachs Group Inc and Morgan Stanley (MS) - had $50 billion in risk tied to the GIIPS on September 30, Fitch said. So-called cross-border outstandings to France for all except Wells Fargo were $188 billion, including $114 billion to French banks. Risk to Britain and its banks was $225 billion and $51 billion, respectively.

Europe's debt crisis has toppled four elected governments, with the last two, in Greece and Italy, falling last week. Italian bond yields remained at about 7 percent - the threshold that led Greece, Portugal and Ireland to seek bailouts - and shares of French banks, including BNP Paribas (BNP) SA and Societe Generale (GLE) SA, dropped amid concern they'll need more capital.

"Everything that we have seen and heard suggests that we may have tens of thousands of people tomorrow protesting. The protesters are calling for a massive event aimed at disrupting major parts of the city," Deputy Mayor Howard Wolfson told reporters this afternoon. Wolfson and Deputy Mayor Cas Holloway said all city agencies are on notice and extra cops will be on hand for the massive demonstrations - which could disrupt the morning commute and be among the largest in city history.

Holloway conceded commutes may take longer than usual. Organizers said they were energized by Mayor Bloomberg's decision early to end the two-month-long camp-out at Zuccotti Park. "We will shut down Wall Street," a post on the movement's Facebook page said. "We will ring the People's Bell, and initiate a street carnival in which we rebuild and celebrate the neighborhoods that the Wall Street economy has destroyed." The march on Wall Street is slated to start at 7 am.

Other events scheduled for the day include "Occupy the Subways" in all five boroughs at 3 pm, a takeover of Foley Square at 5 pm and another march across the Brooklyn Bridge.

Environment chiefs last night warned that with mild dry weather set to continue for the next few weeks, the UK could be heading for a winter drought which could have disastrous consequences. Cambridgeshire, South Lincolnshire and Northamptonshire had half the normal rainfall during September and October.

As a result, Anglian Water has applied for a drought permit to drain water from the River Nene to top up reservoirs which are only half full. It has applied to the Environment Agency to drain an extra 17 million litres a day between December and April. Farmers are also irrigating at night to reduce the amount of water evaporating as November temperatures remain above the average for the time of year.

Ciaran Nelson, spokesman for Anglian Water, said: "It may seem strange as you usually think of having to save water when it is hot. "But in fact this is the time of year when we need to save water the most as the reservoirs should be filling up ready for next spring."

European shares and the bonds of weaker euro zone countries recovered initially on the move on the day Italian Prime Minister-designate Mario Monti was to name a national unity government to implement long delayed structural economic reforms. "They're heavily in on Italy and Spain, 2-10 years," one trader said of the central bank intervention. Yields on Italian government bonds fell just below the 7 percent danger level, widely seen as unaffordable in the long term.

But ECB policymakers continue to reject growing international calls to intervene decisively as Europe's lender of last resort, stressing it is up to governments to resolve the debt crisis through austerity measures and reforms. Shares and the euro have tumbled over the last week as bond market contagion spread to AAA-rated France, the euro zone's second economy and a mainstay of the currency bloc's rescue fund. The risk premium investors charge for holding French debt rather than benchmark German 10-year Bunds hit another euro lifetime high above 190 basis points on Tuesday.

President Barack Obama turned up the heat on Europe to act more boldly to extinguish the spreading bushfire. "Until we put in place a concrete plan and structure that sends a clear signal to the markets that Europe is standing behind the euro and will do what it takes, we are going to continue to see the kinds of market turmoil we saw," he said on a visit to Australia.

Many analysts believe the only way to stem the contagion for now is for the European Central Bank to buy large amounts of bonds - effectively the sort of quantitative easing undertaken by the US and British central banks. This has been anathema in Germany. But on Tuesday Peter Bofinger, a member of the group of economists that advises the German government, said the ECB should indeed become the euro zone's lender of last resort if the bloc's debt woes risked tearing apart the financial system.

"If politics can't do it, then the ECB must do all it can to bring interest rates down to more reasonable levels," Bofinger said at Euro Finance Week.

The agreement, formally unveiled by Obama during a joint news conference with Australian Prime Minister Julia Gillard, will allow up to 250 US Marines to be stationed in northern Australia beginning next year. Obama insisted that any notion that the United States fears China or wants to exclude the growing power from American economic alliances in the Asia-Pacific region is mistaken. But he said the United States will keep sending a clear message that China needs to accept the responsibilities that come with being a world power. "It's important for them to play by the rules of the road," Obama said.

The US and China's smaller Asian neighbors have grown increasingly concerned about China claiming dominion over vast areas of the Pacific that the US considers international waters, and reigniting old territorial disputes, including confrontations over the South China Sea. China's defense spending has increased threefold since the 1990s to about $160 billion last year, and its military has recently tested a new stealth jet fighter and launched its first aircraft carrier. Obama said the new deployment to Australia was important because it would help partners in Asia feel that "we have the presence that's necessary to maintain the security architecture in the region."

The agreement sets standard rules for commerce. Obama said that while the US is not intentionally excluding China from the agreement, joining the pact will require Beijing "to rethink some of its approaches to trade." The US has accused China of undervaluing its currency to make Chinese exports cheaper and US exports to China more expensive. China had a $273 billion trade surplus with the US last year and US lawmakers say the imbalance hurts American manufacturers while taking away American jobs.

The financial losses for the year ended September 30 came despite deep cuts of more than 130,000 jobs in recent years and the closing of some smaller local post offices. Losses will only accelerate in the coming year, Postmaster General Patrick Donahoe warned, citing faster-than-expected declines in first-class mail. He implored Congress to take swift, wide-ranging action to stabilize the ailing agency's finances as it nears a legal deadline Friday to pay $5.5 billion into the US Treasury for future retiree health benefits.

Congress is expected to grant a reprieve, but that will only delay the day of reckoning for an agency struggling for relevance in an electronic age. Based on current losses, the Postal Service says it will run out of money - or come dangerously close - next September, forcing it to halt service. "We are at a point where we require urgent action," Donahoe said.

In the event of a shutdown, private companies such as FedEx and UPS could handle a small portion of the material the post office moves, but they do not go everywhere. No business has shown interest in delivering letters everywhere in the country for a set rate of 44 cents for a first-class letter. "The Postal Service is in a tailspin," said Art Sackler, coordinator of the Coalition for a 21st Century Postal Service, which represents the private-sector mailing industry. "Without congressional action, there is a strong likelihood the Postal Service will have to shut down sometime next summer, dealing another critical blow to the economy and the 8 million private sector jobs that still depend on the mail."

Global stocks and the euro fell as Italian bond yields climbed back to unsustainable levels on doubts that Italy's Mario Monti and new Greek leader Lucas Papademos, unelected technocrats without a domestic political base, can impose tough austerity measures and economic reform.

European Central Bank President Mario Draghi has predicted the 17-nation currency bloc will be in a mild recession by the end of the year, a view underlined by data showing the economy barely grew in the third quarter and faces a sharp downturn. "The risks of a technical recession have increased and we expect the economy in Germany to shrink at least in one quarter," said Michael Schroeder of the German economic research institute ZEW.

On the markets, Italy's 10-year bond yield rocketed back above 7 percent, pushing its borrowing costs to a level that helped to trigger the fall of Silvio Berlusconi's government last week and is widely seen as unsustainable in the long term. Spain's Treasury paid yields not seen since 1997 to sell 12- and 18-month treasury bills. French banks are among the biggest holders of Italy's 1.8 trillion euro public debt pile.

The common currency fell as far as $1.3497 overnight as French bond yield spread over benchmark German bunds hit euro-era highs, and Italian yields shot back above the critical 7 percent level. It last stood at $1.3525, versus $1.3546 late in New York, below the ichimoku cloud base at $1.3568. A break and close below $1.3480 will pave the way for a move back to the October 4 trend low at $1.3145, traders said.

A turnaround on Wall Street, which closed in positive territory on the back of stronger-than-expected US data helped halt the euro's slide. But overall sentiment remained bearish. "While it is clear that the data in the US is improving, European concerns far outweigh at present," said David Scutt, a trader at Arab Bank Australia in Sydney.

"Markets are clearly expecting a circuit breaker to alleviate pressure on periphery bond yields. If no announcement is forthcoming in the days ahead, one suspects that situation could unravel fairly quickly."

- 'Only going after their [Britain's] own benefit, and refusing to contribute, is not the message we're letting the British get away with'

- Tory MP: 'British people will be horrified by what is going on in Europe'

- Gap between French and German government bond yields reaches record levels - revealing fears about Paris's exposure debt

The UK has a duty to help the eurozone despite being outside the single currency, according to one of Angela Merkel's closest allies. Even more provocatively, Volker Kauder warned Britain could not block a financial tax that would cost the City billions.

He insisted it was wrong for London to defend its own interests, adding: 'Only going after their own benefit, and refusing to contribute, is not the message we're letting the British get away with.' He said European nations were speaking German in that they were backing Chancellor Merkel's diktats. The comments will cause fury among senior Conservatives, who say Germany's refusal to prop up the euro threatens to drag the UK economy down as well.

British people will be horrified by what is going on in Europe,' said Philip Hollobone, a Eurosceptic Tory MP. 'Foreign policy going back to the time of Henry VIII has been to try to prevent conglomeration of power on the continent of Europe which would be against British national interests. Here we are in the 21st century with a German attempt to create a single economic and political bloc. This is Britain's golden chance to get out of the European quagmire and set ourselves free.'

Mr Kauder, parliamentary leader of Mrs Merkel's Christian Democratic Union party, insisted EU governments were backing Germany's push for closer integration of their economies in response to the turmoil. He said there was now widespread support for strict limits on debt levels in eurozone economies, with sanctions applied to any that step out of line. 'Now, all of a sudden, Europe is speaking German,' declared Mr Kauder. 'Not as a language, but in its acceptance of the instruments for which Angela Merkel has fought so hard.' He said Britain must be less self-centred in its relationship with Europe.

The Prime Minister used his annual foreign policy speech at the Lord Mayor of London's banquet on Monday night to insist that the crisis in the eurozone provided an opportunity for the EU be refashioned as a looser union.

The United States, European Union and their allies suspect Iran is trying to develop nuclear weapons and, along with the UN Security Council, have imposed sanctions to try to stop it from enriching uranium. But Tehran says its nuclear program is to generate electric power and refuses to halt it. "Iran developed a very sophisticated nuclear science and technological capability, which we are quite ready to share with... neighboring countries and friendly countries in the region," the adviser, Mohammad Javad Larijani, said.

"Turkey is for years trying to have a nuclear power plant but no country in the West is willing to build that for them," Larijani told reporters. "This is true for our Arab (neighbors) in the region. We are ready to cooperate with them in this regard, while within the NPT." He was referring to the 1968 nuclear Non-Proliferation Treaty, which aims to prevent the spread of atomic weapons technology.

"We can produce (nuclear power plants) together, share the electricity," he told Reuters in an interview. "This is also a source of income for us. It is not (just) Westinghouse that can build a nuclear facility, or Canada. Islamic Republic of Iran also is ready to build (a) nuclear facility. Also we can produce fuel," he said. "We think about this commercial value in the future."

Such attacks would present the Obama administration with the option of undertaking a limited war against Iran by striking its warships and shore-based anti-ship missiles to keep the Gulf open for business. Former CIA analyst Larry C Johnson said Iran has enough firepower to effectively close the Gulf and Strait of Hormuz, through which 40 percent of all the world's oil moves.

"One of the things that Iran has exercised, has the capability to do, is shut down the Persian Gulf," Mr. Johnson said. "The best-case scenario is they shut it down for a week. The worst case is they shut it down for three to four months." He said Iran could unleash small boats laden with explosives "that we don't have adequate covers for. Add to that the ability to fire multiple missiles. Our naval force will try to stop it, and that's the hope."

Iran this year launched an aggressive public relations campaign to convince the West that it has assembled a powerful arsenal of guided anti-ship missiles that can be launched from hard-to-find mobile batteries on shore. In addition, Tehran said in February that it had begun mass production of a ballistic missile with a range of nearly 200 miles. In August, Iranian President Mahmoud Ahmadinejad personally unveiled another anti-ship missile, the Ghader. "The best deterrent is not allowing the enemy to dare to attack the country," he said.

"Such an act I think would be foolish and to undertake it I think would be tragic," Prince Turki al-Faisal said at a Washington DC, appearance. "If anything it will only make the Iranians more determined to produce an atomic bomb. It will rally support for the government among the population, and it will not end the program. It will merely delay it if anything."

Tensions over Iran's nuclear ambitions have increased this month since the International Atomic Energy Agency (IAEA) reported that Tehran appeared to have worked on designing a bomb and may still be conducting secret research to that end.

The United States has advocated increasing pressure on Tehran through additional sanctions. But there has been speculation in the Israeli media that Israel might strike Iran's nuclear sites, and US Republican presidential candidate Mitt Romney declared in a debate on Saturday that he would be willing to go to war to stop Tehran from getting nuclear weapons.

The 12-page report to Congress, mandated by the 2011 Defense Authorization Act, was one of the clearest statements to date of US cybersecurity policy and the role of the military in the event of a computer-borne attack. "When warranted, we will respond to hostile attacks in cyberspace as we would to any other threat to our country," the report said. "We reserve the right to use all necessary means - diplomatic, informational, military and economic - to defend our nation, our allies, our partners and our interests."

Hostile acts, it said, could include "significant cyber attacks directed against the US economy, government or military" and the response could use electronic means or more conventional military options. Cyberspace is a particularly challenging domain for the Pentagon. Defense Department employees operate more than 15,000 computer networks with 7 million computers at hundreds of locations around the world. Their networks are probed millions of times a day and penetrations have caused the loss of thousands of files.

"There is a massive amount of frustration on the part of the private sector," Dmitri Alperovitch, the former vice president of threat research at McAfee, told an event hosted by the George C Marshall Institute. US companies are losing billions of dollars to cyber theft each year, he said.

Pope Benedict said: "In our troubled times, dialogue between different religions is becoming ever more important in the generation of an atmosphere of mutual understanding and respect that can lead to friendship and solid trust in each other. This is pressing for the religious leaders of the Holy Land who, while living in a place full of memories sacred to our traditions, are tested daily by the difficulties of living together in harmony".

"When I visited Jerusalem in May 2009, I stood in front of the Western Wall and, in my written prayer placed between the stones of the Wall, I asked God for peace in the Holy Land. I wrote: 'God of all ages, on my visit to Jerusalem, the City of Peace, spiritual home to Jews, Christians and Muslims alike, I bring before You the joys, the hopes and the inspirations, the trials, the suffering and the pain of all Your people throughout the world. God of Abraham, Isaac and Jacob, hear the cry of the afflicted, the fearful, the bereft; send Your peace upon this Holy Land, upon the Middle East, upon the entire human family; stir the hearts of all who call upon Your name to walk humbly in the path of justice and compassion. The Lord is good to those who wait for Him, to the soul that seeks Him!'

"May the Lord hear my prayer for Jerusalem today and fill your hearts with joy during your visit to Rome. May He hear the prayer of all men and women who ask him for the peace of Jerusalem. Indeed, let us never cease praying for the peace of the Holy Land, with confidence in God Who Himself is our peace and consolation".

According to a brief statement released by the Vatican press office, the Pope and Herman Van Rompuy spoke about THE CONTRIBUTIONS THAT THE CHURCH WANTS TO MAKE TO THE EUROPEAN UNION.

"In the course of the meeting, attention also turned to the promotion of human rights and, in particular, of religious freedom," the communique added. Van Rompuy went on to meet with the Holy Father's secretary of state, Cardinal Tarcisio Bertone, and the secretary for relations with states, Archbishop Dominique Mamberti.