The index fell to 38, from November's revised 44.7 figure, though it had been expected to rise. The dismal job market appears to have outweighed falling oil prices in consumers' minds, analysts said. Meanwhile, October house prices in 20 US cities fell by a record yearly rate, according to a key home price survey.

The index shows that the price of homes is continuing to fall across the US with many areas showing record price falls. David Blitzer, of Standard & Poor's said that "home prices are back to their March 2004 levels".

In the UK, house prices in England and Wales fell by a further 1.9% in November as activity in the market dropped again, according to the Land Registry. This pushed the annual drop in property prices to 12.2% - the 15th consecutive monthly decrease, the figures show.

Cardinal Cormac Murphy-O'Connor acknowledged that the Pope's remarks made in an end-of-year address to the Curia, the Vatican's central administration, had been "quite difficult to interpret". But he said the Pope's remarks had not been intended to condemn anyone.

He said the Pope's remarks about "human ecology" were aimed at emphasising the primacy of the family at the heart of society. "He wasn't condemning anyone or any person," he said.

As the army said it was ready to launch a ground incursion and tanks and infantry forces massed on the border, Israeli officials claimed the military "has made preparations for long weeks of action." Ehud Olmert, the Israeli Prime Minister, upped the stakes further today when he said he had informed Shimon Peres, the country's ceremonial president, that the current aerial phase of the operation was the "the first of several stages approved by the security cabinet".

There were signs that Hamas was feeling the strain with claims that its leader-in-exile was ready to renew a ceasefire that expired ten days ago. Rhetoric from Jerusalem has hardened, however, with Meir Sheetrit, the Interior Minister, claiming "there is no room for a ceasefire" with Hamas until the threat of rocket fire had been removed.

Ehud Barak, the Defence Minister, said Israel was in an "all-out war against Hamas", while Brigadier-General Dan Harel, the Israeli deputy chief of staff, said that his forces would erase every trace of Hamas from Gaza's crowded cities. "After this operation there will not be a single Hamas building left standing in Gaza, and we plan to change the rules of the game," the general said. "We are hitting not only terrorists and launchers, but also the whole Hamas Government and all its wings. We are hitting government buildings, production factories, security wings and more."

The Egyptian Foreign Minister launched an attack on Iran, the Shia state known to support and arm Hamas and Hezbollah, in southern Lebanon. In a message aimed at Hezbollah leader Sayyed Hassan Nasrallah on Egyptian television, he said: "You are a man who used to enjoy respect, but you have insulted the Egyptian people." In Iran, a hardline student group started recruiting volunteers to fight Israel after the country's supreme religious leader, Ayatollah Ali Khamenei, said that anyone who died in the defence of Gaza would be deemed a martyr.

In 2008, the world has continued moving toward multi-polarization, resulting in a distinctive shift of international forces. Globalization is developing in depth and regional cooperation is gathering momentum. The world has been confronted with one hotspot issue after another and non-traditional threats are increasing. The world economic growth took a turn for the worse due to the outbreak of the global financial crisis.

In recent years, the international political structure has transformed gradually from "one superpower coexisting with several other powers," formed after the Cold War, to multi-polarization. The transformation picked up speed this year, with significant changes in the balance of international forces. THE UNITED STATES has been acting as the world's only superpower in 2008, but the financial turmoil, which broke out in Wall Street in September, SHOWED ITS VULNERABILITY.

The outgoing 2008 has also seen a large number of developing countries rise with increasing momentum. From a geopolitical perspective, the center of world power is shifting from both sides of the Atlantic to the western Pacific region, as the emerging countries are mostly located in Northeast Asia, Southeast Asia, South Asia and the Middle East. This shows that the existing international system is undergoing readjustment with new reshuffles and restructuring PROFOUNDLY CHANGING THE BALANCE OF POWER IN THE WORLD.

So say some experts looking forward to 2009 and what it will mean for the computer security world. "Crime tends to rise when you have more unemployment," said Mikko Hypponen, chief research officer at F-Secure. "If you look, in general, where the attacks are coming from you can find social reasons behind them. It's not a technical problem, it's social," he said.

Layoffs of many people familiar with net technology may tempt more into crime, he said, simply because their chances of being caught are slim. Equally, he said, the punishments for those that are caught are not harsh. Those that did turn to hi-tech crime would find, he said, an underground service economy that will sell them all the bits they need to get started as a net criminal. This could mean that the intellectual property that a company relies on to keep going, such as its customer database, is copied and walks out of the door when employees pack up and leave.

"The damage that insiders can do should not be underestimated. It can take just a few minutes for an entire database that has taken years to build to be copied to a CD or USB stick," said Adam Bosnian, a spokesman for Cyber-Ark.

Councils have been forced to recycle more by facing higher penalties for every tonne of waste that they dump in landfill to help the UK hit new European Union recycling targets. But demand for recycling material has dropped sharply since October as sales of new cars, white goods and new homes - which provide a market for recycled material - have tailed off in the global downturn.

The price of recycled cans has fallen from £200 a tonne to £20 a tonne, while paper and card has also dropped from £60 a tonne to just £10 a tonne. Prices have now fallen so far that the cost of making new plastic is cheaper than reusing the recycled material. The result has been a big increase in stockpiles of recycled rubbish, which contractors are battling to clear.

Neil Rippon, the managing director of Greencycle - which collects waste for councils in the North east of England - said: "The market is the worst that anybody has ever known. People who I know who have been in the business for 30 years have never known anything like it." Mr Rippon estimated as much as 15 per cent of all recycling could be stockpiled temporarily. Last year 800,000 tonnes of recycling was collected from households in England and Wales every month.

Prof Panarin, 50 years old, is not a fringe figure. A former KGB analyst, he is dean of the Russian Foreign Ministry's academy for future diplomats. He is invited to Kremlin receptions, lectures students, publishes books, and appears in the media as an expert on US-Russia relations.

But it's his bleak forecast for the US that is music to the ears of the Kremlin, which in recent years has blamed Washington for everything from instability in the Middle East to the global financial crisis. Mr. Panarin's views also fit neatly with the Kremlin's narrative that Russia is returning to its rightful place on the world stage after the weakness of the 1990s, when many feared that the country would go economically and politically bankrupt and break into separate territories.

"There's a 55-45% chance right now that disintegration will occur," he says. "One could rejoice in that process," he adds, poker-faced. "But if we're talking reasonably, it's not the best scenario - for Russia." Though Russia would become more powerful on the global stage, he says, its economy would suffer because it currently depends heavily on the dollar and on trade with the US

Mr. Panarin posits, in brief, that mass immigration, economic decline, and moral degradation WILL TRIGGER A CIVIL WAR next fall and the collapse of the dollar. Around the end of June 2010, or early July, he says, THE USA WILL BREAK INTO SIX PIECES - with Alaska reverting to Russian control. Americans hope President-elect Barack Obama "can work miracles," he wrote. "But WHEN SPRING COMES, IT WILL BE CLEAR THAT THERE ARE NO MIRACLES."

Talbots Inc and Sears Holdings Corp are among chains shuttering underperforming locations. More than a dozen retailers, including Circuit City Stores Inc, Linens 'n Things Inc, Sharper Image Corp and Steve & Barry's LLC, have sought bankruptcy protection this year as the credit squeeze and recession drained sales. Investors will start seeing a wide variety of chains seeking bankruptcy protection in February when they file financial reports, said Burt Flickinger.

"You'll see department stores, specialty stores, discount stores, grocery stores, drugstores, major chains either multi-regionally or nationally go out," Flickinger, managing director of Strategic Resource Group, a retail-industry consulting firm in New York, said today in a Bloomberg Radio interview. "There are a number that are real causes for concern."

Discounts of 70 percent or more by Macy's, AnnTaylor Stores Inc and other retailers failed to prevent a spending drop of as much as 4 percent during the final two months of the year, according to data from SpendingPulse. Retailers' pricing models are being challenged by consumers, according to Richard Hastings, consumer strategist at Global Hunter Securities LLC of Newport Beach, California.

Although the number of natural disasters was lower than in 2007, the catastrophes that occurred proved to be MORE DESTRUCTIVE IN TERMS OF THE NUMBER OF VICTIMS AND THE FINANCIAL COST of the damage caused, Germany-based Munich Re said in its annual assessment. "This continues the long-term trend we have been observing. Climate change has already started and is very probably contributing to increasingly frequent weather extremes and ensuing natural catastrophes," Munich Re board member Torsten Jeworrek said.

The world needed "effective and binding rules on CO2 emissions, so that climate change is curbed and future generations do not have to live with weather scenarios that are difficult to control," board member Jeworrek said. Last December, the international community agreed in Bali on a two-year roadmap culminating in a new global climate deal to be signed in Copenhagen in December 2009.

Unprecedented in scale and complexity, this accord, due to take effect from 2012, is meant to rein in the greenhouse gases that stoke global warming and throw a lifeline to poor countries exposed to mutated weather patterns.

Britain's currency also dropped versus 14 of its 16 most-traded counterparts, falling for a second day against the Swiss franc and tumbling to a 14-year low against Japan's yen. Property research company Hometrack Ltd said UK house values slid 8.7 percent this year, led by a 10.1 percent drop in London, and that prices will "inevitably" decline in 2009.

"Parity is ever more likely" between the pound and the euro, said Daragh Maher, deputy head of global foreign-exchange strategy in London at Calyon, the investment-banking unit of Credit Agricole SA. "If there's going to be a turnaround in euro-sterling it needs to come from the euro."

The pound depreciated as much as 2 percent to 98 pence per euro, its sixth straight daily drop, and was at 97.47 pence by 5:35 pm in London, from 96.10 pence at the end of last week. IT SANK 25 PERCENT AGAINST THE EUROPEAN COMMON CURRENCY THIS YEAR, the most since the euro was introduced in 1999.

Terrorist chief Hassan Nasrallah issued a statement on Hizbullah's Al-Manar television station Sunday, vowing that "northern Israel will burn as Gaza is burning." Nasrallah rarely appears in person; he speaks via a video hook-up from his hideout due to fears of assassination by Israeli agents, following the 2006 Second Lebanon War.

Prime Minister Ehud Olmert - anticipating such a reaction - warned Hizbullah Saturday night in his speech informing the nation about the military operation in Gaza that any "others who may seek to take advantage of the situation would be wise not to."

Update:- Israeli jets pound the Gaza Strip for a fourth day, with strikes on Hamas government buildings and security installations.

He said: "Labour made a lot of promises, but a lot of them have vanished into thin air. We have not seen a raising of aspirations in the last 13 years, but instead there is A SENSE OF HOPELESSNESS. While the rich have got richer, the poor have got poorer. When a big bank or car company goes bankrupt, it gets bailed out, but no one seems to be bailing out the ordinary people who are losing their jobs and seeing their savings diminished."

The Rt Rev Nigel McCulloch, the Bishop of Manchester, criticised Labour for encouraging people to get further into debt. "The Government has acted scandalously. This is not just an economic issue, but a moral one. It's about what we value," he said. "The Government believes that money can answer all of the problems and has encouraged greed and a love of money that the Bible says is the root of all evil.

"It's morally corrupt because it encourages people to get into a lifestyle of believing they can always get what they want." The Rt Rev Stephen Lowe, the Bishop of Hulme, said: "The Government isn't telling people who are already deep in debt to stop overextending themselves, but instead is urging us to spend more. That is morally suspect and morally feeble."

Some coal power plants have been running at historically high rates that would put them out of action by 2013, provoking concern over an energy "generation gap", according to the Sunday Times. Under EU rules companies operating old coal and oil-fired plants were given the option to upgrade them to comply with stringent emission limits.

Those plants for which it was uneconomic to upgrade were permitted to continue operating until 2016 and given 20,000 hours to run. But the report, based on research from energy consultants Utilyx, said of the nine plants that opted out, five could be decommissioned by spring 2013 if they continue running at current rates.

Kevin Norrish, the bank's commodities strategist, said the average fall in the price of copper, lead, and zinc has been roughly 60pc since the peak in July this year. All three metals were traded on the London Metal Exchange in the inter-war years so it is possible to make a comparison. Prices for the three metals fell 40pc from their highs in 1929 before touching bottom in 1933, with the bulk of the fall in 1930 as the slump spread worldwide. "Lead and zinc have already lost more than they did in the 1930s," he said.

Copper was hit hardest during the Depression, despite the electrification drive in the US and the Soviet Union, falling 70pc at one stage before creeping back in the mid-1930s. The reason was an 85pc fall in US construction, then the biggest user of the metal.

THE CREDIT MARKETS CONTINUED TO EXHIBIT SIGNS OF EXTREME STRESS YESTERDAY. The iTraxx Crossover index measuring default risk on low-grade European bonds punched above 950 for the first time. The investment grade index hit 188. The spreads are now flashing THE SORT OF DANGER SIGNALS SEEN BEFORE THE COLLAPSE OF LEHMAN BROTHERS IN SEPTEMBER. Each episode of the financial crisis over the last eighteen months has been preceded by a big jump in the iTraxx indexes.

The Local Government Association (LGA) has said that at least 15 per cent of those in operational roles should be female. That means they will fill one of the five or six places for crew on each engine. The LGA said an increased number of firewomen is necessary "to meet the needs of local people". But critics warned that political correctness was being put above the ability to save lives.

Susie Squire, of the Taxpayers' Alliance, said: "Introducing this sort of quota to the fire service is a big mistake. If ever there was a job that should be awarded on merit and physical fitness, it is that of a firefighter. This quota system will not only cost taxpayers money by introducing additional and unnecessary administration, but could risk the safety of all of us in the long run." At present fewer than one in ten firefighters are female.