The German bank "expects to file its claim against UBS in the State of New York by the end of February," a statement said. HSH took exception to investment of 300 million euros (444 million dollars) in collateralised debt bonds which had been structured and managed by UBS. CDOs are a type of asset-backed security comprising a portfolio of fixed-income assets, and are often backed in part by home loans, which in the case of the US subprime market, suffered from widespread defaults last year.

In its statement, HSH Nordbank said it would argue "that UBS's management of the portfolio has been in breach of its contractual obligations and fiduciary duties and that substitutions were made solely for the benefit of UBS." The German bank, formed from a merger of two northern regional German banks, said it would demand "the recovery of its losses which we regard as the responsibility of UBS."

The Swiss banking giant plunged to its first-ever full-year net loss last year after losing 18 billion dollars in the US subprime mortgage crisis. UBS revealed a net loss of 4.4 billion Swiss francs (4.0 billion dollars, 2.7 billion euros) in 2007, compared to a profit of 12.3 billion Swiss francs in 2006.

With the February 12 assassination in Damascus of a senior Hizballah commander continuing to roil the waters of the Middle East, that much-anticipated second round could be drawing nearer. Hizballah has vowed revenge for the car bomb killing of Imad Mughniyah, and Israel is taking the threat seriously.

Israel has placed its army on alert and reinforced its presence along the northern border with Lebanon. Patriot anti-missile batteries have been deployed near Haifa, Israel's second-largest city, 40 kilometers south of the Lebanese border. Hizballah also is on alert. "We are ready for another war and it will come," says a local. The Hizballah commander said that the Shi'ite fighters will be on the offensive in the next war, HINTING AT TAKING THE BATTLE INTO ISRAEL ITSELF. "We weren't expecting the last war and we fought only to defend our land, but NEXT TIME YOU WILL SEE A VERY DIFFERENT KIND OF FIGHTING," he said.

One senior UNIFIL officer said "the situation in the region is so dangerous that the tiniest spark can start a new war."

"We assume that Serbia is a single state whose jurisdiction covers all of its territory," Medvedev said. "We will stick to this position." Medvedev, the Kremlin-backed frontrunner for president, met pro-Western President Boris Tadic and nationalist Prime Minister Vojislav Kostunica, who has long leaned on Moscow for help against the secession of Serbia's southern province. Currently Russia's first deputy prime minister, Medvedev is expected to win a presidential election on Sunday. He was traveling with Foreign Minister Sergei Lavrov, a signal that RUSSIAN SUPPORT FOR BELGRADE WOULD CONTINUE AFTER HIS ELECTION. In a statement on Sunday, the Russian foreign ministry again demanded a "compromise" on Kosovo.

It also recalled that Russia had a peacekeeping contingent in Kosovo from 1999 to 2004 -- POSSIBLY POINTING TO PLANS TO PROPOSE A RETURN OF RUSSIAN TROOPS TO THE TERRITORY, IN ETHNIC SERB AREAS THAT RESIST ALBANIAN RULE. Belgrade has pulled its ambassadors from the countries that have recognized the Albanian-majority province, and counts on Russia as its main ally. "This visit comes at an extremely important moment, it's an opportunity to confirm our common positions CONCERNING THE ILLEGAL SNATCHING OF KOSOVO," Serbian Trade Minister Predrag Bubalo told local media.

Negotiating teams met early on Monday to try to finalize agreement on ending post-election turmoil that has left at least 1,000 dead before an opposition deadline to resume street protests expires on Wednesday.

The government has agreed in principle to create a prime minister's seat demanded by the opposition, but the parties are split on the premier's powers, sharing of ministries and the possibility of a new election if the coalition collapses.

By early afternoon, both sides said they were unable to agree and had to push the decisions up to their bosses through mediator Kofi Annan, the former U.N. secretary general. "On many of the issues that are outstanding, we are unable to agree, so they have been referred to the principals in the hope that they enjoy greater leverage and can be able to thrash out those issues," Ruto told reporters.

Christofias, 62, has agreed to meet the leader of the breakaway Turkish Cypriot north. The European Union, the United States and Britain urged him to waste no time to end the division hindering Turkey's European Union accession efforts.

"I believe that soon an exploratory meeting will be arranged," Christofias told journalists on Monday, while Turkish Cypriot leader Mehmet Ali Talat asked for swift talks. "I genuinely congratulate Mr. Christofias and I call on him to cooperate in the process of negotiations which should start as soon as possible," he told a news conference in the divided Cypriot capital of Nicosia.

"I would strongly encourage you to grasp this chance and without delay start negotiations under United Nations auspices with the leader of the Turkish Cypriot community on a comprehensive settlement," European Commission President Jose Manuel Barroso said in a statement to Christofias. The United States and Britain also issued statements saying 2008 offered a window of opportunity and offering support.

While most of the outgoing centre-left coalition supports the abortion law, centre-right politicians are divided, some favoring a more restrictive approach, others an outright ban. Avvenire, the newspaper of the Italian Bishops Conference, said a statement the association issued at a weekend congress, supporting the current abortion law, was invalid and "imaginary" because it had been approved "by acclamation" and not put to an individual vote by delegates.

The clash, which dominated Italian newspapers on Monday, appeared to thwart any attempt by political parties to keep the thorny issue of abortion in the background of the campaign. Pope Benedict repeated the Church's opposition to abortion on Monday, saying life must be respected "from its dawn" and "in every moment of its earthly development" but did not mention the doctors' dispute

Exponential growth in processing power and the shrinking of technology would see the development of microscopic computers, he said. "We will see a billion-fold increase in the price-performance of computers in the next 25 years," he said. "Virtual will compete with reality," he told the Game Developers Conference.

Mr Kurzweil said it was possible to accurately predict the growth and change in computing power by looking at how it had developed over the last 50 years. "There will be a 100,000-fold shrinking of computer technology over the next 25 years," he said. "Today you can put a pea-sized computer inside your brain, if you have Parkinson's disease and want to replace the biological neurons that were destroyed by the disease."

He said a billion-fold increase in computing performance and capability over the next 25 years coupled with the 100,000 fold shrinking, would lead to "blood cell-size devices" that can go inside our bodies and keep us healthy and inside our brain and expand our intelligence". Mr Kurzweil, who invented the flat bed scanner and text-to-speech synthesis, said the virtual world was a misnomer. "In virtual worlds we do real romance, real learning, real business. Virtual reality is real reality."

Politicians had "all gone crazy" over ratifying the Lisbon Treaty, taking attention from THE "BIG QUESTION" ON CONTINUING EU MEMBERSHIP, he added. The Lib Dems are expected to table a House of Commons motion on Tuesday demanding a public vote on whether Britain stays in the EU.

At the last general election in 2005 all three main parties promised a referendum on the planned European Constitution. The Conservatives and the UK Independence Party are calling for a referendum on whether the UK should ratify THE TREATY, ARGUING IT IS LARGELY THE SAME AS THE CONSTITUTION. But Labour argues that the documents are VERY DIFFERENT and that Parliament should decide. MPs are currently engaged in a 12-day debate on ratification

Mr Clegg told the BBC that the planned referendum on the constitution had been "tantamount" to one on whether to continue EU membership. He described the Tory focus on the treaty as a "side-show" and a "distraction". INSTEAD, IT WAS TIME TO DECIDE "ARE WE GOING TO CARRY ON WITH THIS AMBIVALENT ATTITUDE OR WITHDRAW" FROM EUROPE, OR "MAKE A WHOLE-HEARTED LONG-TERM COMMITMENT". All 27 EU member states have to ratify it for it to come into effect.

For the second day, the Jerusalem Conference held a discussion on Jerusalem's future. Wednesday's discussion dealt with demographics and the Temple Mount. Jerusalem's Handling by Government Unethical to the Core

"The way Jerusalem is being negotiated personifies the unethical nature of this government," said Danny Dayan, the new head of the Yesha Council of Judea and Samaria communities (formerly Gaza as well). "Even before Annapolis, the Olmert government obviously put Jerusalem on the table, conceding at least the Clinton parameters to the PA [which entail Israel relinquishing many of Jerusalem's Arab neighborhoods -ed.]."

Dayan said the fact that the Olmert government is completely willing to lie to the faces of the populace - knowing that the citizenry knows full well they are being lied to - personifies the unethical nature of the current government. But he pointed the finger at the populace for failing to topple the government. "Everyone knows what is going on and everyone is hiding their heads in the sand," Dayan said. "The press is being complicit and allowing it," he added, echoing Shragai.

Rabbi Yisrael Ariel, the founder of the Temple Institute in Jerusalem said, "There is no Jerusalem without the Holy Temple," he proclaimed. "I have been sitting here for two hours and have heard about housing and demographics and even the Jewish Quarter - but nothing about the Holy Temple, which is inextricably the whole essence of Jerusalem. It is impossible to speak about Jerusalem without mentioning even once the Holy Temple."

They warned that less than 30 per cent of claims for staff allowances are fully backed up, LEAVING THE EXPENSES SYSTEM OPEN TO ABUSE. But Euro-MPs took no action. "Appropriate measures, such as suspension of payments and/or issuing of recovery orders, should be initiated for the sums not justified," said a little-noticed report by the EU Court of Auditors.

THE ALLOWANCES ARE WORTH UP TO £125,000 for each Euro-MP, a total of £98 million, and are meant to pay for assistants and secretarial staff. Under European Parliament rules, THE REPORT CAN ONLY BE READ BY LAWMAKERS IN A SEALED ROOM AND ITS CONTENTS MAY NOT BE REVEALED.

The Sunday Telegraph has been told that Euro-MPs' assistants have been lobbying for reform after finding themselves in a financial "no man's land". Many do not pay tax or national insurance in either their country of origin or Brussels. The damning section of the EU Court of Auditors report last year pointed out that AUDITORS HAD BEEN HIGHLIGHTING "WEAKNESSES" IN THE PARLIAMENT'S EXPENSES' SYSTEM FOR THE PAST DECADE.

1926: Born Fidel Alejandro Castro Ruz on August 13, in Biran, Cuba

1949: Turns down a $5,000 deal to sign with the New York Giants American football team

1950: Graduates from University of Havana with doctorate in law

July 26, 1953: Leads a failed attack on the Moncada military barracks in Santiago de Cuba

1955: Arrives in Mexico City as an exile from Cuba. Here, he is introduced to the young Argentinean doctor Che Guevara

1958: Rebel forces led by Fidel and Raul Castro and Che Guevara sweep across Cuba

January 1959: Performs a coup on Cuban leader Fulgencio Batista. Fidel becomes head of government in Cuba

1961: Botched Bay of Pigs invasion by Cuban exiles

July 2006: Fidel hands the reins of power to his brother, Raul, after undergoing emergency stomach surgery

February 19, 2008: Fidel steps down as leader of Cuba

A report by the Adam Smith Institute claims Fairtrade products do not aid long-term economic development and often fail to help the poorest farm workers. Consumers spent more than £290 million a year on Fairtrade goods in 2006 and sales of products bearing the distinctive black, green and blue logo have continued to soar. They are likely to rise further after the sugar company Tate & Lyle said it would convert its entire operation to Fairtrade-certified farmers. Under the scheme, 40 per cent of the cost of each bag of sugar will now go back to Belize, where it will be shared by farmers, cane mills and community projects.

Tom Clougherty, policy director at the Adam Smith Institute, said: "At best, Fairtrade is a marketing device that does the poor little good. At worst, it may inadvertently be harming some of the planet's most vulnerable people. There is nothing wrong with being concerned about the working conditions, wages and environment of workers, but we don't believe Fairtrade is the most effective model."

Fairtrade is one of the fastest-growing retail sectors in Britain, with sales soaring by 46 per cent between 2005 and 2006. More than 3,000 products are Fairtrade-certified including coffee, tea, chocolate, fruit, vegetables and cotton. The Fairtrade Foundation, which will launch its Fairtrade Fortnight promotion this week, claims more than seven million people in 58 countries benefit from the system. The organisation said: "This is a cynical attempt to undermine our pragmatic approach to trade. Fairtrade products cost the consumer no more than ordinary products in many cases, yet we ensure farmers receive a higher price. We also work with other ethical brands such as those in the organic movement."

Ceri Dingle, director of educational charity WorldWrite, said: "Fairtrade is much more about satisfying the Western consumer's guilt. No country has ever become a successful economy by being a farm - they need to industrialise."

Little Brandon Kramer was diagnosed with rhomboencephalosynapsis - a condition so rare it affects fewer than one in a million people worldwide - while he was still in the womb. Doctors warned his mother and father that Brandon would be born deaf and blind and would probably survive only for a couple of hours. It is believed to be the first time in Britain that the condition has been diagnosed during pregnancy - and Becky Weatherall and her partner Kriss Kramer were offered a termination up to just weeks before the birth. But the couple defied doctors' advice and their son was born healthy on October 1 last year.

Now Brandon is teething and attempting to talk, and Kriss, 24, from Pembroke Dock, South Wales, said: "The fact that he is here now, alive and kicking, truly is a miracle. The doctors say that he has defied all the odds but it's really more than that because he wasn't given any odds at all. He was written off completely and we believed he was 100 per cent certain to be handicapped."

Brandon was born naturally in October and, despite being whisked to intensive care by a team of specialists, was quickly given the all-clear. An urgent review into the case has been ordered by hospital chiefs because it is unclear if Brandon had the condition and recovered from it - or if the data was misinterpreted by hospital staff.
The couple do not want to claim compensation and just want to highlight their case as a warning to other parents. Becky said: "Perhaps doctors shouldn't put so much confidence in scans."

The move is the latest expansion of surveillance powers which, until recently, were only available to the police and intelligence services. Revenue officers used to work to a set of strict rules that even banned them from looking in cupboards at a home or business during a visit without express permission. But now officials investigating allegations of tax evasion can pry into every aspect of a suspect's life in the hunt for evidence.

Senior revenue officials have been given the power to sanction the use of surveillance techniques under the same rules that govern the work of MI5, GCHQ and the police. Customs officers who are fighting gun-runners, drug-smugglers and people-traffickers have also had similar surveillance approval.

The new powers are opposed by professional bodies, including the Institute of Chartered Accountants. Harry Travers, of the Institute's Tax Investigations Practitioners Group, said: "There is no evidence that bugging is needed in relation to tax fraud. Inspectors already have wide-ranging powers to obtain search warrants, raid people's property, seize documents and computers. They don't need to be able to bug people as well. There is real risk of breaching human rights."

Yesterday, the Government said that a universal base was "impractical." But demands from police and judges are fuelling civil liberties groups' fears that Ministers will eventually impose compulsory screening. The national DNA database, the biggest in the world, already files the genetic records of more than 4.5million people - including 560,000 never convicted of any offence.

But Home Office Minister Tony McNulty said a national database was not a 'silver bullet' and that it would raise practical as well as civil liberties issues. "How to maintain the security of a database with 4.5million people on it is one thing," he said. "Doing that for 60million people is another." Civil liberties groups warn such a register would be open to abuse.

"Taking the DNA of every man, woman and child is as expensive and impractical as it is dangerous. It ignores the extremely intimate nature of DNA and the massive scope for error and abuse." Roger Smith, director of the law and human rights group Justice, added: "A broader police power to compel samples without the requirement of reasonable suspicion is a substantial and unwarranted intrusion on the rights of personal privacy. You either go forward to a universal database, which I think would be wrong, or you go back. I want a return to the 1995 position where samples could be kept on the convicted only."