The report in the conservative Jam-e-Jam newspaper comes after the disclosure of a recent Israeli military exercise over the Mediterranean Sea that was seen as sending a message to Iran to curb its nuclear ambitions. Gen. Mohammad Ali Jafari said there were strong deterrents against striking Iran, including the country's missile power, the vulnerability of Israeli and U.S. forces in the region and the low probability of a successful attack.

Iran has spread its nuclear facilities across the country and has built key portions underground to protect it from airstrikes. But Jafari warned that if attacked, Iran would strike back, INCLUDING CHOKING OFF THE STRATEGIC STRAIT OF HORMUZ, a narrow outlet for oil tankers leaving the Persian Gulf.

"Naturally, any country coming under attack will use all of its capacity and opportunities to confront the enemy. GIVEN THE MAIN ROUTE FOR ENERGY TO EXIT THE REGION, ONE OF IRAN'S STEPS WILL DEFINITELY BE TO EXERCISE CONTROL ON THE PERSIAN GULF AND THE STRAIT OF HORMUZ," Jafari told Jam-e-Jam, which is affiliated with Iran's state-run radio and television network.

On Saturday, President Bush issued an emergency declaration for California and ordered federal agencies to assist in firefighting efforts in many areas. Gov. Arnold Schwarzenegger had made the request on Friday. More than 17,000 firefighters, 1,500 fire engines and bulldozers, and more than 80 helicopters and aircraft were fighting more than 1,000 fires Saturday, said state emergency services spokesman Kelly Huston.

"THE SUMMER HAS JUST BEGUN, AND FIRE CONDITIONS WILL ONLY GET TOUGHER," Ruben Grijalva, director of the California Department of Forestry and Fire Protection, warned in a weekly radio address on behalf of the governor. "Air pollution readings in the region are two to 10 times the federal standard for clean air," said Dimitri Stanich, spokesman for the California Air Resources Board. SOME AREAS ARE EXPERIENCING THE WORST AIR QUALITY ON RECORD, with the smoke hanging down to the ground like a fog.

"OIL PRICES ARE EXPECTED TO REACH $170 as demand for fuel is growing in the U.S. during the summer period and the dollar continues to weaken against the euro," Khelil said today in a telephone interview. The leader of the Organization of Petroleum Exporting Countries also serves as Algeria's oil minister. Political pressure on Iran and the depreciation of the U.S. currency have caused a surge in oil prices, Khelil said. New York- traded crude has more than doubled in a year and touched a record $142.99 a barrel yesterday on the New York Mercantile Exchange.

OPEC ministers generally say that oil output is sufficient, even as Saudi Arabia, the biggest producer, pledged to pump an extra 200,000 barrels a day next month to calm the market. "The market is completely supplied," Venezuelan Oil Minister Rafael Ramirez said yesterday. Libya announced possible production cuts, calling the market oversupplied.

The rising cost of crude is not linked to supply, Khelil said today. "There is more than enough oil in the market to meet the international demand," added the OPEC president, who will take part June 30 in an international energy forum in Madrid.

Lord Carlile, QC, said that senior police officers had "real anxiety" about the possibility of terror "vehicle bombs" to target the public. Such attacks would be "relatively simple" to orchestrate, Lord Carlile said in a report on how Britain is dealing with the terrorism threat. He said that the thousands of small, rented planes capable of travelling at high speed between the Continent and Britain should be subjected to far stricter checks.

The warning, contained in a 60 page report, will prompt fears that Britain has been left open to a terrorist outrage similar to the September 11, 2001 attacks on New York and Washington. Lord Carlile said he had raised concerns with Google over the availability of terrorism-related material on the internet. The European Court of Human Rights announced it would investigate the Government's plans to hold terrorist suspects for up to 42 days. The Government announced it would build a specialist detention centre for suspected terrorists.

There are an estimated 8,500 private aircraft and up to 500 "landing sites" in Britain, ranging from farmers' fields to regional airports. A plane flying from outside the European Union could touch down on an airfield in the EU and be regarded by British authorities as coming from within the EU. "This is self-evidently unsatisfactory," Lord Carlile said.

Such is the extent of the shortage that the city might have to start shutting down industry and moving population out within the next decade. Six weeks before the Olympics, the report said preparations were making matters worse despite claims that they would be the first "Green Olympics".

Water was being diverted to new expanses of greenery and waterways around the city even as rivers across central and northern China were being diverted to the capital to provide basic supplies. The report, Beijing's Water Crisis: 1949-2008 Olympics, said the Games would consume 200 million cubic metres of water, a million people's annual supply at current rates of reserves.

"With each new project to tap water somewhere else, demand for water only increases, and at an ever greater cost to China's environment and economy," the report, by Canada-based Probe International, said. BEIJING HAS NO MAJOR RIVERS AND DRAWS MUCH OF ITS WATER FROM UNDERGROUND, mining deeper every year, and by diverting supplies from rural areas of the surrounding province of Hebei.

A CT scan packs A MEGA-DOSE OF RADIATION - AS MUCH AS 500 TIMES THAT OF A CONVENTIONAL X-RAY. If your doctor orders a CT scan for you or your child, should you think twice?

Absolutely, say researchers behind two recent studies that sound the alarm about the increased cancer risk associated with multiple CT scans. In the first study of its kind, physicians at hospitals in Florida and Washington, D.C., evaluated the medical-imaging records of 1,243 randomly selected patients to calculate just how much radiation each patient had sustained in the past five years. The authors take issue with the "perhaps 20 million adults and, crucially, more than 1 million children per year in the United States [who] are being irradiated unnecessarily."

Researchers found a population of 25,000 JAPANESE POST-ATOMIC-BOMB SURVIVORS WHO WERE EXPOSED TO ROUGHLY THE SAME AMOUNT OF RADIATION AS TWO CT SCANS. Based in part on those studies, the Food and Drug Administration estimates that an adult's lifetime risk of developing radiation-induced cancer from a CT scan is roughly 1 in 2,000. A child's risk of developing a fatal cancer from one CT scan is as high as 1 in 500.

Three decades of economic reform means CHINA CAN TURN ITS ATTENTION TO ADVANCED SCIENCE AND EXPENSIVE RESEARCH, considered a luxury in the days when the country worried about simply feeding and clothing 1.3 billion people. On Friday, Peking University opened the Kavli Institute for Astronomy and Astrophysics in a Chinese-style building overlooking the Yuan Ming Yuan summer palace. The ruins of that palace, which was burnt down to the ground by Western forces in the 19th century, have long symbolized China's weakness and humiliation.

But times have changed. While the Kavli Foundation, founded by Norwegian entrepreneur Fred Kavli to support research in basic sciences, contributed $3 million, the elite university kicked in at least $14 million for the building and plans to hire over a dozen professors.

China's spending on research and development hit a record high of 300 billion yuan ($43.73 billion) last year, Zhang said. About one third came from the government, and the remainder from corporations. R&D spending has risen to 1.49 percent of GDP, compared with over 2 percent of GDP for the United States.

THE DOWNSIZING OF THE U.S. AIRLINE INDUSTRY IS UNLIKELY TO BE REVERSED ANYTIME SOON, and whether it will spread beyond the United States is still uncertain. U.S. carriers are selling off hundreds of older, less-efficient planes, so the industry is unlikely to grow sharply again, even if oil prices - which climbed Friday briefly to another record above $142 a barrel - were to drop and the economy were to rebound.

Passengers flying within the United States need to begin preparing for some significant cuts to airline fleets and schedules that will begin taking effect within a few months. U.S. airports of every size - from LaGuardia in New York to Oakland in California - will also be affected as airlines reduce flights and eliminate services altogether.

AT LEAST ONE MAJOR CARRIER COULD LIQUIDATE, ATA HAS WARNED, on top of eight small airlines that have gone out of business or filed for bankruptcy protection this year. "IT'S A BAD SITUATION THAT'S GETTING WORSE," said David Castelveter, a spokesman for the trade group. As the cost of jet fuel rises, more price hikes are announced. "The question is how high they'll go," the expert says.

A HIGH OF $142.99 A BARREL FOR OIL SPARKED A TUMBLE IN ASIAN MARKETS AND SELLING IN EUROPE AND NEW YORK. The Dow Jones Industrial Average on Friday closed just shy of 20 per cent below its record high set in October and is on the cusp of entering an official bear market.

Fears of inflation and slower growth caused by higher energy costs are weighing on equities. Yet as stocks suffer, the surge in oil and other commodities during 2008 has the Reuters-Jefferies CRB spot index on track for its largest gain in 35 years. The index has risen 30.1 per cent since January, the largest increase since the 30.2 per cent gain in the first half of 1973. Evidence of renewed financial stress as banks prepare to close out the second quarter and report earnings next month is also fanning fears.

Worries about the health of the US economy, a vital market for many of Asia's export-led economies hammered regional equity markets on Friday.

The media watch group, which specializes in tracking Arabic language websites, said that postings on websites the past two years reflect A MOVE TOWARD WAGING AN ECONOMIC WAR AGAINST THE UNITED STATES. Mujahideen terrorist groups that operate in Afghanistan, Pakistan and other countries "have come to the conclusion that it is financial, rather than military, losses that will prompt the U.S. to change its policies in the Middle East and elsewhere," according to MEMRI.

Another recent posting stated, "The dollar can expect two additional blows that will break its back... namely the announcement of the return of the religious rule of the Caliphate..." AND THE REINSTATEMENT OF THE GOLD STANDARD IN INTERNATIONAL MONETARY TRADE. It urged Mujahideen "to get rid of American dollars" before an "imminent" terrorist attack that "will put an end to the so-called United States of America and DESTROY ITS ECONOMY COMPLETELY."

MEMRI concluded, "Given that it is highly atypical for Al-Qaeda to give prior warning of its attacks, the message is probably AN ATTEMPT TO PRESSURE MUSLIMS TO SELL DOLLARS, in order to generate pessimism in the dollar market and thus accelerate the drop in its value."

Barclays Capital has advised clients to batten down the hatches FOR A WORLDWIDE FINANCIAL STORM, warning that the US Federal Reserve has allowed the inflation genie out of the bottle and let its credibility fall "below zero".

"We're in a nasty environment," said Tim Bond, the bank's chief equity strategist. "THERE IS AN INFLATION SHOCK UNDERWAY. This is going to be very negative for financial assets. WE ARE GOING INTO TORTOISE MOOD AND ARE RETREATING INTO OUR SHELL. Investors will do well if they can preserve their wealth." The grim verdict on Ben Bernanke's Fed was underscored by the markets yesterday as the dollar fell against the euro following the bank's dovish policy statement on Wednesday.

Traders said the Fed seemed to be rowing back from rate rises. The effect was to propel oil to $138 a barrel, confirming its role as a sort of "anti-dollar" and as a market reproach to Washington's easy-money policies. The Fed's stimulus is being transmitted to the 45-odd countries linked to the dollar around world. THE RESULT IS SURGING COMMODITY PRICES. Global inflation has jumped from 3.2pc to 5pc over the last year.

The United States Federal Reserve Bank, or Fed, seems as much a part of America as Coca-Cola or Pizza Hut. But at least one difference has become apparent in recent days. While the pizza chain and soft-drink maker are likely to expand their scope of influence in the age of globalization, THE US CENTRAL BANK IS FINDING THAT ITS POWER IS SHRINKING.

Under its bylaws, the IMF is charged with the supervision of the international monetary system. Roughly two-thirds of IMF members - but never the United States - have already endured this painful procedure. FOR SEVEN YEARS, US PRESIDENT GEORGE W. BUSH REFUSED TO ALLOW THE IMF TO CONDUCT ITS ASSESSMENT. Even now, he has only given the IMF board his consent under one important condition. The review can begin in Bush's last year in office, but it may not be completed until he has left the White House. This is bad news for the Fed chairman.

When the final report on the risks of the US financial system is released in 2010 - and it is likely to cause a stir internationally - only one of the people in positions of responsibility today will still be in office: Ben Bernanke.

In a historic ruling, the US Supreme Court on Thursday declared 5 to 4 that the Second Amendment's GUARANTEE OF A RIGHT TO "KEEP AND BEAR ARMS" means that the government cannot enact an outright ban on certain commonly held weapons or otherwise prevent citizens from having a gun at home for personal protection or other lawful uses.

The landmark constitutional pronouncement came as the nation's highest court struck down a 32-year ban on private possession of handguns in Washington, D.C. The court also invalidated two other strict gun-control measures in the district that required that rifles and shotguns at all times be kept disassembled or secured with a trigger lock. The case is District of Columbia v. Heller.

"We hold that the District's ban on handgun possession in the home violates the Second Amendment, as does its prohibition against rendering any lawful firearm in the home operable for the purpose of immediate self-defense," Justice Antonin Scalia wrote in the majority opinion. The majority justices said the District's strict gun regulations violated "the right of law-abiding responsible citizens to use arms in defense of hearth and home."

Worries about inflation grew after crude oil futures jumped above $140 Thursday after OPEC's president said prices could go past $150 a barrel this year and Libya said it may cut oil production. "WE'VE STILL GOT BAD NEWS ON THE CREDIT CRUNCH, WE'VE GOT BAD NEWS ABOUT CONSUMERS," said Garry Evans, pan-Asian equity strategist with HSBC in Hong Kong. "The macro environment is not a good one and people are very risk averse."

World stocks fell to a three-month low as a fast deteriorating global inflation picture intensified concerns over the outlook for corporate profits, HASTENING THE RUSH OF INVESTORS' FUNDS INTO COMMODITIES. "It has a lot to do with asset allocations. The equity markets are under serious pressure, breaking support levels. When equities are going nowhere, the money is parked into commodities," said Olivier Jakob at Petromatrix.

The MSCI main world equity index fell more than 0.6 percent to its lowest since March, with the index on track for the worst monthly performance in percentage terms since September 2002, according to Reuters data. By contrast, commodities were strong, with gold near a one-month record high while U.S. corn futures jumped to a fresh record high.

GOLD RALLIED to its highest level in a month as oil's rise, A WEAK DOLLAR and TUMBLING WORLD STOCK MARKETS boosted the metal's safe haven appeal.