1 of 15. Members of the Free Syrian Army pose with their weapons and a snowman at the Jouret al Shayah area in Homs January 10, 2013. Picture taken January 10, 2013.

BEIRUT/GENEVA | Fri Jan 11, 2013 10:30am EST

BEIRUT/GENEVA (Reuters) - Rebels seized control of one of Syria's largest helicopter bases on Friday, opposition sources said, in their first capture of a military airfield used by President Bashar al-Assad's forces.

Fighting raged across the country as international mediator Lakhdar Brahimi sought a political solution to Syria's civil war, meeting senior U.S. and Russian officials in Geneva.

But the two world powers are still deadlocked over Assad's fate in any transition.

The United States, which backs the 21-month-old revolt, says Assad can play no future role, while Syria's main arms supplier Russia said before the talks that his exit should not be a precondition for negotiations.

Syria is mired in bloodshed that has cost more than 60,000 lives and displaced millions of people. Severe winter weather is compounding their misery. The U.N. children's agency UNICEF says more than 2 million children are struggling to stay warm.

The capture of Taftanaz air base, after months of sporadic fighting, could help rebels solidify their hold on northern Syria, according to Rami Abdelrahman, head of the pro-opposition Syrian Observatory for Human Rights.

TACTICAL, NOT STRATEGIC GAIN

But Yezid Sayigh, at the Carnegie Middle East Centre in Beirut, said it was not a game-changer, noting that it had taken months for the rebels to overrun a base whose usefulness to the military was already compromised by the clashes around it.

"This is a tactical rather than a strategic gain," he said.

In Geneva, U.N.-Arab League envoy Brahimi's closed-door talks began with individual meetings with U.S. Deputy Secretary of State William Burns and Russian Deputy Foreign Minister Mikhail Bogdanov. He later held talks with both sides together.

A U.S. official said negotiations would focus on "creating the conditions to advance a political solution - specifically a transitional governing body".

Six months ago, world powers meeting in Geneva proposed a transitional government but left open Assad's role. Brahimi told Reuters on Wednesday that the Syrian leader could play no part in such a transition and suggested it was time he quit.

Responding a day later, Syria's foreign ministry berated the veteran Algerian diplomat as "flagrantly biased toward those who are conspiring against Syria and its people".

Russia has argued that outside powers should not decide who should take part in any transitional government.

"Only the Syrians themselves can agree on a model or the further development of their country," Foreign Ministry spokesman Alexander Lukashevich said.

REFUGEE MISERY

But Syrians seem too divided for any such agreement.

The umbrella opposition group abroad, the Syrian National Coalition, said on Friday it had proposed a transition plan that would kept government institutions intact at a meeting with diplomats in London this week. But the plan has received no public endorsement from the opposition's foreign backers.

With no end to fighting in sight, the misery of Syrian civilians has rapidly increased, especially with the advent of some of the worst winter conditions in years.

Saudi Arabia said it would send $10 million worth of aid to help Syrian refugees in Jordan, where torrential rain has flooded hundreds of tents in the Zaatari refugee camp.

A fierce storm that swept the region has raised concerns for 600,000 Syrian refugees who have fled to neighboring countries, as well as more than 2.5 million displaced inside Syria, many of whom live in flimsy tents at unofficial border camps.

Opposition activists report dozens of weather-related deaths in Syria in the last four days. UNICEF said refugee children are at risk because conditions have hampered access to services.

Earlier this week, another United Nations agency said around one million Syrians were going hungry. The World Food Programme cited difficulties entering conflict zones and said that the few government-approved aid agencies allowed to distribute aid were stretched to the limit.

The WFP said it supplying rations to about 1.5 million people in Syria each month, far short of the 2.5 million deemed to be in need.

(Additional reporting by Alexander Dzsiadosz in Beirut and Raissa Kasolowsky in Abu Dhabi; Editing by Alistair Lyon)

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A company logo of Dell is seen on the cover of its laptop at a Dell outlet in Hong Kong October October 21, 2009.

NEW YORK | Fri Feb 1, 2013 2:22am EST

NEW YORK (Reuters) - Dell Inc is nearing an agreement to sell itself to a buyout consortium led by its founder and Chief Executive Michael Dell and private equity firm Silver Lake Partners, possibly announcing a deal as soon as Monday, according to two people familiar with the matter.

Michael Dell is expected to take majority ownership of the world's third-largest personal computer maker, which currently has a market value of $23 billion, while Silver Lake and Microsoft Corp would become minority investors, a third person familiar with the matter said.

The final price the group is expected to pay Dell shareholders could not be immediately learned. The deal would mark the largest leveraged buyout since the global financial crisis.

The transaction is set to be finalized over the weekend but the buyout consortium is working on last-minute details and the timetable could still slip, the people cautioned, asking not to be named because the matter is not public.

The investment group, which held negotiations with Dell's camp in New York on Thursday, has secured up to $15 billion of debt financing to take Dell private from four investment banks -- Barclays, Bank of America Merrill Lynch, Credit Suisse and RBC Capital, people familiar with the matter said.

Barclays is also advising Silver Lake on the transaction, along with Perella Weinberg Partners, said two of the people. JPMorgan Chase & Co is advising Dell.

Representatives for Dell, Microsoft and Barclays declined to comment. Silver Lake and Perella Weinberg could not be immediately reached for comment.

As part of the transaction, Michael Dell will contribute his existing stake of almost 16 percent in the company toward gaining majority ownership, sources close to the matter have said.

Going private would allow Dell, which has been trying to become a one-stop shop for corporate technology needs as the PC market shrinks, to conduct that difficult makeover away from public scrutiny.

Dell has formed a special committee of its independent directors and hired Evercore Partners Inc to assess whether the company is getting the best deal for shareholders and not one that is just in the best interest of Michael Dell, several people familiar with the matter have told Reuters previously.

(Additional reporting by Poornima Gupta in San Francisco and Bill Rigby in Seattle; Editing by Edwina Gibbs)

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Women hold banners urging national talks to end the political paralysis in the south of Mali, in the capital Bamako January 10, 2013. Mali's army clashed with Islamist rebels along the front line in northern Mali on Thursday and said its forces had seized an important town, but the insurgents denied the claim.

PARIS/BAMAKO | Fri Jan 11, 2013 10:03am EST

PARIS/BAMAKO (Reuters) - France would intervene to stop any further drive southward by Islamist rebels in Mali, President Francois Hollande said on Friday, as Malian soldiers launched a counter-offensive to wrest back a key town captured by militants this week.

Western powers are worried the alliance of al Qaeda-linked militants that seized the northern two-thirds of Mali in April will seek to use the vast desert zone as a launchpad for international attacks.

Mali's government appealed for urgent military aid from France on Thursday after Islamist fighters encroached further south, seizing the town of Konna in the center of the country. The rebel advance sparked panic among residents in the nearby towns of Mopti and Sevare, home to a military base and airport.

"We are faced with a blatant aggression that is threatening Mali's very existence. France cannot accept this," Hollande said in a New Year speech to diplomats and journalists. "We will be ready to stop the terrorists' offensive if it continues."

Hollande said that France, alongside African partners, would respond to Mali's request for military aid within the framework of U.N. Security Council resolutions. A French diplomatic source said existing U.N. resolutions would permit a French military intervention in Mali, if needed.

The Security Council in December authorized the deployment of an African-led force supported by European states. However, an operation was not expected before September due to the difficulties of arranging funding, training Malian troops, and deploying during the mid-year rainy season in West Africa.

However, military experts said that escalating military tensions in Mali could force the hand of former colonial power France, the most outspoken advocate of military intervention.

"The French believe that France, and Europe, face a real security threat from what is happening in the Sahel," said Jakkie Cilliers, executive director of the Institute for Security Studies in South Africa.

He noted, however, that any French military intervention could raise hackles among regional government's wary of meddling by Paris. "If the French decide to do this they would want to make it as short, sharp and contained as possible."

REINFORCEMENTS ARRIVE

Mali's interim President Dioncounda Traore, installed after a military coup in March, was due to meet with Hollande in Paris on Wednesday, a French diplomatic source said. Traore will address the Malian nation on Friday evening.

French officials declined to comment on reports that military aircraft carrying Western soldiers landed late on Thursday at an airport at Sevare, some 60 km (36 miles) south of Konna.

Residents in Sevare also reported the arrival of military helicopters and army reinforcements, which took part in the counter-attack to retake Konna overnight on Thursday in a bid to roll back the militant's southward drive.

"Helicopters have bombarded rebel positions. The operation will continue," a senior military source in Bamako said.

A spokesman one of the main groups forming the Islamist rebel alliance said they remained in control of Konna.

Asked whether the rebels intended to press ahead to capture Sevare and Mopti, the Ansar Dine spokesman, Sanda Ould Boumama, said: "We will make that clear in the coming days."

He said any intervention by France would reveal an anti-Islam bias.

"What makes us different for them from the rebel movements in Central African Republic, or Congo. It is that we are Muslim?" he said, referring to insurgencies in other French-speaking African nations.

(Additional reporting by Richard Valdmanis in Dakar, Pascal Fletcher in Johannesburg, Alexandria Sage, John Irish and Elizabeth Pineau in Paris; writing by Daniel Flynn; editing by Philippa Fletcher)

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Samsung Electronics chairman Lee Kun-Hee arrives at Gimpo airport in Seoul after he visited several European countries and Japan, May 24, 2012.

SEOUL | Fri Feb 1, 2013 2:17am EST

SEOUL (Reuters) - Samsung Electronics Co Ltd Chairman Lee Kun-hee fended off a lawsuit by estranged family members demanding he hand over billions of dollars of shares in Samsung companies as a South Korean court ruled in his favor on Friday.

Lee, 71, and Samsung Everland, a de facto holding company for the country's largest conglomerate, were defending against three lawsuits by Lee's relatives seeking nearly $4 billion in assets in Samsung Life Insurance Co Ltd, which sits at the heart of the web of Samsung group shareholdings, and Samsung Electronics, the group's crown jewel.

The lawsuit was unlikely to have deprived Lee of his control over Samsung Electronics, the world's biggest maker of smartphones, TVs and memory chips.

But a ruling against him would have diluted his holdings and could have forced a reshuffling of the intricate shareholdings across the Samsung group if he were to retain his grip.

It also came at a key juncture for the electronics giant's successions plans, just months after Lee's son Jay Y. Lee, 44, was promoted to vice chairman.

Samsung has come to symbolize the success of South Korea's "chaebol" conglomerates on the global stage, where it is battling Apple Inc and its Galaxy smartphone is outselling the iPhone.

A judge at the Seoul Central District Court ruled that Lee could retain more than $1 billion in Samsung Electronics shares and another $1 billion in shares of Samsung Life.

Samsung Everland, a small zoo operator, was also allowed to keep its $1 billion stake in Samsung Life. Lee will remain Samsung Life's biggest shareholder with a 20.76 percent stake.

The lawsuits accused Lee of hiding from his siblings billions of dollars in shareholdings inherited from his father, Samsung's founder, while Lee countered that as his father's chosen successor, he had free rein to transfer group company shares.

HAPPY TOGETHER?

"This is a totally unexpected ruling and we'll decide whether to appeal after discussing with our clients," Cha Dong-eon, a lawyer for the plaintiffs, told reporters.

Lawyers for Lee, who has been travelling abroad since early January, said the ruling was reasonable.

Shares in Samsung Life closed nearly 3 percent higher after the ruling, while Samsung Electronics sagged 0.5 percent. Seoul's benchmark Kospi fell 0.2 percent.

The trial, which exposed family intrigues behind South Korea's powerful chaebol, coincides with rising public resentment towards the conglomerates, stirred by their dominance in the economy and widening wealth gaps in society.

The ruling comes only a day after Chey Tae-won, chairman of South Korean chaebol company SK Holdings Co Ltd, was sent to prison on embezzlement charges, as the country seeks to level out the playing field between big business groups and the "economically weak".

Lee, South Korea's richest man, was worth an estimated $8.3 billion as of March 2012, according to Forbes Magazine.

He owns less than 4 percent of Samsung Electronics, but through family stakes in Samsung Everland and Samsung Life he exercises substantial control over the electronics firm and the other 80 or so Samsung companies, which operate in industries from construction to hotels to fashion.

The ownership of hidden assets came into focus in 2011, after a tax probe into Lee that followed the transfer of shares from nominee accounts to his own name. He was later indicted on tax evasion charges but pardoned by South Korean President Lee Myung-bak.

South Korea is no stranger to the family feuds that have engulfed other Asia dynasties such as India's Ambani family. Hyundai Group, once the biggest of the chaebol, split into two after a row between two brothers, one side becoming Hyundai Motor Co and the other Hyundai Group.

Before delivering his verdict, the judge said he wished for a happy ending to the family dispute.

"Regardless of the truth of what happened or the final outcome of this case, I think it may also have been one of the late founder's wishes that both parties have a happy life together with no quarrels," the judge said.

($1 = 1085.4750 Korean won)

(Writing by Miyoung Kim; Editing by Edmund Klamann)

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n">(Reuters) - Shares of Facebook Inc recovered from an 8 percent slide on Thursday, finishing the regular session down less than 1 percent, as Wall Street's initial alarm over mobile revenue results and spending plans subsided.

Facebook said on Wednesday that fourth-quarter mobile advertising revenue doubled from the third quarter, but the results failed to live up to some investors' high expectations. Chief Executive Mark Zuckerberg's comments about boosting spending in the coming year signaled that profit margins will be under pressure, adding to concerns.

"The initial fast money said earnings are going down, numbers are coming down, the stock is going to get hit," said Macquarie Research analyst Ben Schachter.

"But the more people thought about it throughout the day, the momentum changed and longer-term investors won out, saying these are investments we think they should be making," he said.

Facebook has long established itself as one of the most popular websites with more than a billion users, but investors have worried that until the company's mobile advertising strategy takes off, revenue growth will remain shaky.

Three brokerages downgraded the stock, but most analysts said investor expectations were too high and Facebook's mobile advertising business was a good long-term bet.

Pivotal Research Group analyst Brian Wieser upgraded Facebook to a "buy" rating on Thursday, calling Wall Street's reaction to the results "downright dazed."

The stock market incorrectly interpreted Facebook's "mobile revenue figures as a negative when in fact they are part of a story that we can see as qualitatively more favorable," Wieser said.

Shares of the company finished regular trading on Thursday down 0.8 percent at $30.98 on the Nasdaq. Earlier in the session, the stock fell as low as $28.74. Facebook stock has lost more than a quarter of its value since its botched debut in May.

The company reported a better-than-expected fourth-quarter profit on Wednesday and said mobile advertising revenue doubled to $306 million, suggesting it was making inroads into handheld devices such as smartphones and tablets.

Investors were looking for at least $350 million in mobile advertising revenue, Piper Jaffray analyst Gene Munster said in a note to clients.

"While the trajectory of mobile growth may not be as steep as some investors were hoping, the theme of mobile as the future of Facebook remains intact," Munster said.

BMO Capital Markets analyst Daniel Salmon, however, said Facebook's 2013 stock performance would not be dictated by its ability to generate mobile ad dollars. He downgraded the stock on Thursday to "market perform" from "outperform."

Salmon said new catalysts were necessary to drive Facebook's stock price up.

(Reporting by Neha Alawadhi and Sayantani Ghosh in Bangalore and Alexei Oreskovic in San Francisco; editing by Saumyadeb Chakrabarty and Matthew Lewis)

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Russia's Deputy Foreign Minister Sergei Ryabkov speaks during a news briefing in the main building of Foreign Ministry in Moscow, December 15, 2008.

MOSCOW | Fri Jan 11, 2013 9:15am EST

MOSCOW (Reuters) - Moscow is alarmed that no date or venue has been agreed for a new round of talks between global powers and Iran over Tehran's nuclear programme, Russian Deputy Foreign Minister Sergei Ryabkov said on Friday.

Iran, which denies Western accusations it is seeking to develop a capability to make nuclear weapons, said last week it had agreed to resume talks in January with six powers. But Ryabkov said there was no final agreement on a date or venue.

"This alarms us, because the pause has dragged on," the Interfax news agency quoted Ryabkov, the Russian negotiator, as saying. "As a nation and a member of the 'group of six' we are working actively to find a solution."

There was no breakthrough in three rounds of talks since April 2012 and Israel has stepped up talk of pre-emptive attacks on Iranian nuclear sites, lending urgency to diplomacy.

Western diplomatic sources said on Friday that Iran has yet to respond to a proposal to hold a new round of talks next week with the six nations - the United States, France, Britain, China, Russia and Germany.

Global powers, particularly in the West, want to rein in Iran's uranium enrichment work. Tehran says it is refining uranium for peaceful ends only but enrichment yields material that can be used to make nuclear bombs if processed further.

(Writing by Steve Gutterman; Editing by Mark Heinrich)

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U.S. President Barack Obama delivers remarks next to Vice President Joe Biden (L) after the House of Representatives acted on legislation intended to avoid the ''fiscal cliff,'' at the White House in Washington January 1, 2013.

WASHINGTON | Thu Jan 31, 2013 3:08am EST

WASHINGTON (Reuters) - Big automatic cuts in federal spending are fast approaching again, alarming the defense sector but generating little activity in Congress to avoid them.

The cuts, known as a "sequestration," were postponed for two months as part of the legislation that ended the standoff over the "fiscal cliff" on January 1.

But the sense of crisis that accompanied the thought of across-the-board reductions then has all but vanished, replaced by a widespread sense of inevitability.

"I think we're going to have" the cuts "for some period of time, and I think the squeals from constituents will compel some compromise that will emerge in the second half of March," said Steve Bell, economic policy director at the Bipartisan Policy Center and a former Republican House Budget Committee staff director.

The defense industry's concern stems from the fact that half of the $85 billion in spending reductions will come from the budget of the Department of Defense, with the other half hitting a wide array of other government programs.

Outgoing Defense Secretary Leon Panetta as well as his designated successor, Chuck Hagel, have warned that the cuts will impair military readiness.

Congress' lack of urgency as it hurtles toward the launch of spending reductions on March 1 may be affected by Wednesday's news that the U.S. economy contracted in the fourth quarter.

The GDP report showed government spending tumbled at a 6.6 percent rate, with defense outlays plunging at a 22.2 percent pace, the largest drop since the third quarter of 1972.

But failure to find replacement savings by the March 1 deadline is not expected to spark a financial crisis because the cuts, split evenly between military and domestic programs, would start to bite gradually.

Unlike the "fiscal cliff" cuts, these are not accompanied by the threat of massive tax hikes, ultimately imposed only on the wealthiest taxpayers as a result of the legislation that ended the fiscal cliff standoff.

'DEVASTATING'

Worry runs deep through the defense sector, from weapons maker Northrop Grumman Corp to President Barack Obama's nominee for defense secretary, Hagel. They are calling on lawmakers to find a solution.

Hagel said the cuts would be "devastating" to the Pentagon.

"It would harm military readiness and disrupt each and every investment program," he said in written answers to senators' questions before a confirmation hearing on Thursday. "I urge Congress to eliminate the sequester threat permanently and pass a balanced deficit reduction plan."

While there are no public signs of negotiations between Republicans and Democrats to avert the cuts, the blame game is well under way.

Republican House of Representatives Budget Committee Chairman Paul Ryan said earlier this week he believed the automatic cuts "will probably happen" because Democrats were not willing to accept further cuts to domestic programs to shield military spending.

Top Senate Democrats have put the onus on House Republicans, saying they are unwilling to accept higher tax revenues as part of a balanced approach to replacing the cuts.

Another factor is at work in the House - the increasing influence of deficit hawks who believe the military should shoulder more of the deficit reduction burden. Traditionally, Republicans, including Ryan, last year's Republican vice presidential nominee, have tried to protect military programs.

"The momentum has shifted to those in the caucus who believe that the only savings we're ever going to get are going to be the sequester savings," said Bell.

Those fiscal conservatives believe Obama will not negotiate with them or agree to any significant cuts in social programs.

He added that it was possible that in the absence of a deal, Congress could provide some legislative language that gives domestic agencies and others some flexibility in making their cuts, rather than accept them in their current, across-the-board form.

Some Democrats are voicing concern the cuts could do serious economic damage.

"I think there should be a sense of urgency, because ... we're looking at an economy struggling to recover and the number of people who we want to have jobs who are still unemployed," said Democratic Senator Jean Shaheen of New Hampshire.

"A failure to take action on what we know is going to have a significant impact on that is simply unacceptable," said Shaheen, a member of the Senate Armed Services and Appropriations committees.

Northrop Grumman, which builds electronics and unmanned surveillance planes, warned that profits this year would fall sharply due to the increasing pressure on the defense budget.

"Our nation needs a balanced, strategic approach to our fiscal challenges ... not blind, indiscriminate budget cutting" Northrop Grumman Chief Executive Wes Bush told an earnings conference call.

LAYOFFS DETAILED

The Pentagon has begun to detail its cost-cutting plans in workforce and regional terms. It has enacted a freeze in civilian hiring, a move that hits employment for veterans since 44 percent of civilian defense employees are vets.

The military services also are planning to lay off temporary or contract employees, which could affect up to 46,000 workers. They will also delay routine maintenance of ships and aircraft that had been planned for the third and fourth quarters, officials said.

The Navy estimates its planned cuts will reduce spending by $1.4 billion along the East Coast, including canceling $271 million in maintenance at shipyards in the Norfolk, Virginia, area and $81 million in aircraft maintenance at Cherry Point, North Carolina.

The Navy also is planning to cancel $681 million in spending in California, $339 million in the Pacific Northwest, $299 million in Florida, $197 million in the U.S. Northeast and $110 million in Hawaii, officials said.

If automatic spending cuts under sequestration go into effect on March 1, the Navy would have to cut a further $4.08 billion in spending through the end of the current fiscal year, over and above the $6.3 billion it is trying to reduce now.

Those cuts would require further delays in repairs and a reduction in the number of steaming and flying days, the Navy said. The Navy might also have to reduce the number of carrier strike groups in the Middle East, it said.

The Army and Air Force also are expected to implement spending reductions before March 1 and are due to submit their plans to Deputy Secretary of Defense Ashton Carter later this week.

(Additional reporting by David Alexander, Patricia Zengerle, Phil Stewart and Andrea Shalal-Esa; Editing by Fred Barbash, Mary Milliken and Peter Cooney)

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U.S. President Barack Obama shakes hands with Louisiana Governor Bobby Jindal after arriving at Louis Armstrong International Airport in New Orleans September 3, 2012.

NEW ORLEANS | Thu Jan 10, 2013 8:51pm EST

NEW ORLEANS (Reuters) - Republican Governor Bobby Jindal said on Thursday he wants to eliminate all Louisiana personal and corporate income taxes to simplify the state's tax code and make it more friendly to business.

The governor did not release details of his proposal, but his office released a statement confirming that the taxes are targets of a broader tax reform plan.

"Our goal is to eliminate all personal income tax and all corporate income tax in a revenue neutral manner," Jindal said in the statement.

He did not confirm reports that he will seek an increase in sales taxes in order to offset lost income tax revenue, but said: "We want to keep the sales tax as low and flat as possible."

Political analyst John Maginnis, who on Thursday reported in his email newsletter LaPolitics Weekly that Jindal will propose balancing the tax loss by raising the sales tax, now at 4 percent, said the strategy fits with the governor's interest in keeping a high national profile.

"Just proposing a plan on the scale being discussed would win Jindal acclaim among fiscal conservatives here and nationwide," Maginnis told Reuters.

Jindal is often mentioned for national office including the U.S. Senate and as a possible presidential candidate.

Louisiana's neighbor Texas has had no income tax for years, relying on a windfall from its rich energy resources and other forms of taxation. Other states in the region governed by Republicans are trying to copy Texas, including Oklahoma and Kansas, which have both considered lowering taxes.

But political analyst Maginnis questioned whether the Republican-majority Louisiana legislature would endorse Jindal's ambitious plan.

"Any tax increase (such as sales tax) or elimination of exemptions would require a two-thirds vote, a form of legislative approval that would require (Republican) solidarity and significant Democratic support," Maginnis said.

Jindal said his team will meet with lawmakers soon to discuss details of his tax reform plan.

"Eliminating personal income taxes will put more money back into the pockets of Louisiana families and will change a complex tax code into a more simple system that will make Louisiana more attractive to companies who want to invest here and create jobs," he said.

(Reporting by Greg McCune; Editing by Lisa Shumaker)

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1 of 2. U.S. President Barack Obama announces his nomination of White House chief of staff and budget expert Jack Lew (R) as his next treasury secretary, in the East Room of the White House in Washington, January 10, 2013.

WASHINGTON | Thu Jan 10, 2013 7:06pm EST

WASHINGTON (Reuters) - President Barack Obama on Thursday nominated his chief of staff, Jack Lew, as the next Treasury secretary, praising him as a expert on the pressing national issues of U.S. government spending cuts and deficit reduction.

If confirmed by the Senate as expected, Lew would succeed Timothy Geithner and take the lead on difficult negotiations with Congress on how to cut the nation's massive debt and rein in spending - a central challenge for Obama's second term.

Lew, a 57-year-old New Yorker who has previously served as White House budget chief, is likely to face tough questions from Republicans in his Senate Finance Committee confirmation hearing after the bruising year-end battle over tax increases on the wealthy.

Obama described Lew as "a low-key guy who prefers to surround himself with policy experts rather than television cameras," and said the son of a Polish immigrant had a deep belief in public service.

"Over the years, he's built a reputation as a master of policy who can work with members of both parties and forge principled compromises," Obama said.

Since the Treasury secretary signs U.S. currency, Obama teased Lew for his unusually loopy signature and joked that the nominee had promised "to make at least one letter legible in order not to debase our currency."

Denis McDonough, Obama's deputy national security adviser, is considered the leading candidate to replace Lew as White House chief of staff.

Lew has experience in tough financial negotiations, having led talks with Congress in 2011 that brought a deal to avert a U.S. debt default. A similar battle looms now.

As budget director for former President Bill Clinton, he presided over a string of budget surpluses between 1998 and 2000. "For all the talk out there about deficit reduction, making sure our books are balanced, this is the guy who did it, three times," Obama said.

NEXT STEP: THE SENATE

Lew's nomination now will be vetted by the Senate, where Senate Finance Chairman Max Baucus, a Democrat, promised a "speedy but thorough" hearing. No date has yet been set.

Senator Orrin Hatch, the top Republican on the panel, said he plans to ask Lew about the administration's strategy for spending cuts, something Republicans have insisted needs to be made clear before they will agree to raise the debt ceiling.

Obama has vowed not to negotiate over the debt ceiling, which could be reached as early as mid-February.

"It's imperative that Mr. Lew outline the administration's plans on tackling our unsustainable debt, what areas of federal spending should be cut, and what kind of reforms - from our tax code to our entitlement programs - are needed to get our fiscal house in order," Hatch said in a statement.

Senator Bernie Sanders of Vermont, an independent who caucuses with Democrats, said he would not vote for Lew because he did not think he would "stand up" to Wall Street and lobbyists. Sanders said Lew likely would win enough votes for confirmation.

Republican Senator Jeff Sessions of Alabama said he thinks Lew "needs to be held accountable" for Obama's economic policies.

"We need somebody with international credibility, a heavyweight financial person to help get this country's growth path moving," Sessions told Reuters.

LEW A 'TOUGH DUDE'

At the White House announcement, Geithner earned sustained applause for his work helping the administration navigate the financial crisis that put banks at risk and cratered the housing market early in Obama's first term.

At least two former White House budget directors were in the audience for the Lew announcement, including Alice Rivlin, who headed the budget office in the early 1990s, later became a vice chair of the Federal Reserve, and who remains a fixture in fiscal policy debate.

Also attending was Franklin Raines, who led the budget office from 1996 to 1998. He was ousted as chief executive of mortgage finance giant Fannie Mae after an accounting scandal.

Some analysts have questioned whether Lew has enough experience working on international financial issues and on banking regulations.

But the White House has highlighted international experience Lew gained during a stint at the State Department, and his "strong relationships in the business community," having worked as a managing director at Citigroup.

Thomas Donohue, president of the U.S. Chamber of Commerce, said that all Treasury secretaries have to "compensate for the areas where they don't have experience" with strong deputies.

Donohue, whose business lobby has often butted heads with the Obama administration, told reporters he thought Lew was a "skilled operative" and a "tough dude."

"I think Jack Lew will do fine," Donohue said.

(Additional reporting by David Lawder, Mark Felsenthal, Steve Holland, Jeff Mason, Richard Cowan, Rachelle Younglai and Roberta Rampton; Editing by Will Dunham)

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Former Sen. Chuck Hagel (R-NE) (L), sits down before giving testimony to the Senate Armed Services Committee to be Defense Secretary, on Capitol Hill in Washington, January 31, 2013. Hagel, 66, is a decorated Vietnam War veteran and a former two-term Republican senator.

WASHINGTON | Thu Jan 31, 2013 1:06pm EST

WASHINGTON (Reuters) - From his lonely position as an early Republican critic of the Iraq war, former Nebraska Senator Chuck Hagel sometimes lectured his more timid Senate colleagues. "If you wanted a safe job, go sell shoes," he told them.

President Barack Obama's nominee for defense secretary began a Senate confirmation process on Thursday that revived the contentious relations the fiercely independent Vietnam war veteran had with fellow Republicans over his political career.

"I'm proud of my record," Hagel declared before the Armed Services Committee. "I'm on the record on many issues. But no one individual vote, no one individual quote, no one individual statement defines me, my beliefs or my record."

A social conservative and strong internationalist who co-chaired John McCain's failed Republican presidential campaign in 2000, Hagel might have seemed an unlikely pick for Obama were it not for his opposition to the Iraq war launched in 2003 by former President George W. Bush, a Republican.

Opposing that war was the issue on which Democrat Obama also rose to national prominence and he has said that Iraq was not the only matter where he held similar views with Hagel, who was also once touted as presidential material.

"He's a staunch Republican, but Chuck and I agree almost on every item of foreign policy," Obama said in August 2008, a month after joining Hagel on a tour of Iraq.

Hagel's detractors noted he had voted at times against U.S. sanctions on Iran, and said he had made disparaging remarks about the influence of what he called a "Jewish lobby" in Washington.

Hagel rejects the allegations, saying that he had always supported Israel, and if confirmed he would ensure America's military is prepared to strike Iran if necessary.

Hagel has also been critical of the size of the American military, saying in an interview in 2011 that the Defense Department was "bloated" and needed "to be pared down."

Hagel served two terms in the Senate, representing the state of Nebraska, and left in 2008. He is now a professor at Georgetown University in Washington D.C.. He also serves as co-chairman of the President's Intelligence Advisory Board and is a member of the Secretary of Defense's Policy Board.

Since he left the Senate, Hagel has been a big critic of his own party. He told the Financial Times in 2011 that he was "disgusted" by the "irresponsible actions" of Republicans during a fractious debate over raising the U.S. debt-ceiling in 2011.

Last year he endorsed a Democratic candidate for Senate from Nebraska - former Senator Bob Kerrey - instead of Republican Deb Fischer, who won.

Hagel would not be the first Republican to serve Obama as Pentagon chief. Bob Gates, Obama's first defense secretary, was a holdover from his predecessor George Bush.

CLASHES WITH FELLOW REPUBLICANS

While he was in the Senate as a member of the Foreign Relations, Banking, and Intelligence Committees, Hagel often clashed with his party's leaders on foreign and defense policy.

He co-sponsored legislation to ease U.S. trade restrictions with Cuba, and at times voted against trade sanctions on Iran and Libya.

In 2002 Hagel said the U.S. should try to improve relations with the countries Bush had branded an "axis of evil" - Iraq, Iran, and North Korea.

The same year, when Hagel expressed doubts about the Bush administration's buildup to war in Iraq, the conservative Weekly Standard magazine branded him part of an "axis of appeasement." But Hagel did vote to give the president the authority to carry out the March 2003 invasion.

Later Hagel said he regretted that vote and became a persistent critic of the conflict. In January 2007, he was the only Republican on the Senate Foreign Relations Committee to support a non-binding measure that criticized Bush's decision to send more troops to Iraq.

Hagel told senators they must take a stand on "the most divisive issue in the country since Vietnam," a war in which he had fought, but later decided was wrong. His stance put him at odds with McCain, who also has a reputation as a maverick, and Hagel was pilloried by other Republicans.

Bush's vice president Dick Cheney reflected the view of many in his party when he told Newsweek: "I believe firmly in Ronald Reagan's 11th Commandment: thou shalt not speak ill of a fellow Republican. But it's very hard sometimes to adhere to that where Chuck Hagel is involved."

Hagel did not make a public endorsement in the 2008 presidential race, but his wife Lilibet endorsed Obama and sat with Obama's wife Michelle during a presidential debate with McCain.

Hagel skipped the 2008 Republican convention, an important pre-election event, and further irked his party by telling the Omaha World-Herald newspaper that it was a "stretch" to say McCain's running mate Sarah Palin would be qualified to be president.

He had once been considered a contender for the 2008 presidency himself. Instead he said in September 2007 that he was dropping out of politics and retiring from the Senate when his term ended the following year.

Born in 1946, Hagel grew up in Nebraska as the oldest of four boys, and made a fortune by launching a cellphone company in the 1980s. His father was also a military man, a World War II veteran who died of a heart attack when Chuck was 16.

Hagel and his younger brother Tom volunteered for Vietnam, and Hagel saved Tom's life there by pulling him out of a burning vehicle.

In the early 1980s, when Ronald Reagan was president, Hagel served as deputy administrator of the Veterans Administration. (Reporting By Susan Cornwell; Editing by David Storey)

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U.S. President Barack Obama's nominee for Secretary of Defense, former Senator Chuck Hagel (L), stands next to counterterrorism adviser John Brennan (R), the nominee for CIA Director, at the White House in Washington January 7, 2013.

WASHINGTON | Thu Jan 10, 2013 7:52pm EST

WASHINGTON (Reuters) - Chuck Hagel, President Barack Obama's pick to become the next U.S. defense secretary, has begun calling critics in the Senate in an attempt to clarify his views about how to deal with Iran, Hezbollah and Hamas before his upcoming nomination hearing.

The decorated Vietnam veteran's Republican credentials have done little to rally support with his party, which he publicly split with as a senator by opposing the Iraq war during the Bush administration.

Hagel's private calls to lawmakers and efforts by supporters to defend him publicly are part of what is likely to be a hard-fought battle over his nomination. Opponents tried for weeks to dissuade Obama from choosing the former Nebraska senator.

One prominent senator, Republican Lindsey Graham of South Carolina, predicted even before his nomination that Hagel, if confirmed, would be "the most antagonistic secretary of defense towards the State of Israel in our nation's history."

U.S. officials who have spoken with Hagel since he was nominated on Monday say he has been calling senators before confirmation hearings begin in the coming weeks. Current and former U.S. officials say he is particularly concerned with portrayals of his record on Iran. Critics accuse him of opposing sanctions and being satisfied with containing Tehran, as opposed to preventing it from obtaining a nuclear weapon.

Iran says its nuclear ambitions are peaceful.

"He feels that who he is, what he stands for and what his attitudes are have been misrepresented and distorted," said Dennis Ross, a former top Obama Middle East adviser.

"What he said to me very clearly was that ... he deeply believes that Iran does need to be prevented from having the bomb and that he doesn't believe in containment."

By tradition, Cabinet nominees are expected to avoid public comment until their confirmation hearings.

Republican Senator John Cornyn of Texas, in an opinion piece entitled "Why I Can't Support Hagel," accused Hagel of failing to understand the threat from Iran and groups like Hamas.

One U.S. official who is familiar with the information Hagel is providing to members of the Senate defended Hagel's approach to the militant groups Hezbollah and Hamas. As a senator, Hagel decided not to join 88 other senators in a 2006 letter calling on the European Union to designate Lebanon-based Hezbollah a terrorist organization.

The official, speaking on condition of anonymity, said Hagel believes it is not appropriate for members of Congress to write foreign leaders and that they should write the president, instead. More important, the official said, was Hagel's voting record.

"There were a number of pieces of legislation that actually called on Hezbollah to be a terrorist organization that he supported and voted for," the official said.

On Hamas, the Palestinian group that controls the Gaza Strip, the official said Hagel also felt his position was being misrepresented. Despite claims to the contrary by critics, Hagel does not support direct, unconditional engagement with Hamas and agrees it must first renounce violence, he said.

The officials declined to say which lawmakers Hagel has spoken with but said they included members of both parties. Republican Senator John McCain of Arizona has spoken with him and the two agreed to meet, McCain's spokesman said.

Outgoing Defense Secretary Leon Panetta, following two meetings with Hagel this week, on Thursday predicted that Hagel would ultimately be confirmed as his successor.

"In these confirmation battles, there are a lot of charges that will be out there," Panetta said. "But ultimately, the truth prevails. And I think the truth in this case will mean that he'll be confirmed."

(Editing by Warren Strobel and Doina Chiacu)

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A visitor walks past Sony's booth at the Camera and Photo Imaging Show 2013 in Yokohama, south of Tokyo January 31, 2013.

TOKYO | Fri Feb 1, 2013 12:02am EST

TOKYO (Reuters) - Sony Corp will this month host its first major Playstation meeting in two years, sparking a flare-up in online speculation the Japanese consumer electronics giant is preparing to unveil the successor to its 70 million-selling PS3 games console.

Sony declined to say whether it would release a new product at the meeting in New York on February 20. "We will be talking about the Playstation business," spokesman Masaki Tsukakoshi said on Friday. A Google search for "Sony Feb 20 Playstation" returned more than 7 million hits.

The last time Sony held a Playstation event, in January 2011, it presented a protoype of its handheld Vita console. Before that, it convened a gathering in 2005 two months after it first demonstrated the PS3 concept. A meeting in 1999 revealed designs for the PS2.

It has been more than six years since Sony launched the PS3 home console, a longer gap than between it and its PS2 predecessor, adding to the anticipation that it will soon disclose its next gaming concept.

Since Sony's last home console launch, the games market has been transformed by the boom in smartphones and tablet computers that have wooed players with free or cheap games.

Sony and other console makers Nintendo Co Ltd and Microsoft Corp now have to contend with competition from hand-held devices made by Apple Inc, Samsung Electronics and others.

Analysts expect that tablets and other mobile devices will match the power and graphics of today's games consoles within a few years.

Struggling under competitive pressure, Nintendo on Wednesday cut its sales target for the Wii U, successor to its 100 million-selling Wii, to 4 million machines by the end of March from its launch in November, compared with an earlier forecast for 5.5 million.

(Reporting by Tim Kelly; Editing by Daniel Magnowski)

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