Wed Dec 26, 2012 5:08pm EST

n">(Reuters) - The 2012 holiday season may have been the worst for retailers since the 2008 financial crisis, with sales growth far below expectations, forcing many to offer massive post-Christmas discounts in hopes of shedding excess inventory.

While chains like Wal-Mart Stores Inc and Gap Inc are thought to have done well, analysts expect much less from the likes of book seller Barnes & Noble Inc and department store chain J. C. Penney Co Inc.

Shares of retailers dropped sharply on Wednesday, helping drag broader indexes lower, as investors realized they were likely to be disappointed when companies start to report results in a few weeks' time.

"The broad brush was Christmas wasn't all that merry for retailers, and you have to ask what those margins look like if the top line didn't meet their expectations," said Kim Forrest, senior equity research analyst at Fort Pitt Capital Group.

Growth was always expected to slow this season, though an improving employment picture and rising home values had helped mitigate the worst fears. But then Superstorm Sandy hit the East Coast in late October, mild weather blunted sales of winter clothing and rising concern about the "fiscal cliff" became more of a reality, dragging down already-pessimistic forecasts.

The latest sign of trouble came from MasterCard Advisors Spending Pulse, which reported holiday-related sales rose 0.7 percent from October 28 through December 24, compared with a 2 percent increase last year.

The preliminary estimate from SpendingPulse was in line with other estimates showing weak growth during the holiday season, when retailers can book about 30 percent of annual sales - and in many cases, half of their profit.

"It has been a very uneven industry performance, probably at least for the last year, and that certainly continued into the holiday season," said Michael Niemira, chief economist at the International Council of Shopping Centers, in an interview with Reuters Insider.

The latest holiday season could end up the weakest since 2008, during the last recession, when sales actually declined. The National Retail Federation had previously predicted 4.1 percent sales growth this year, versus a 5.6 percent increase a year earlier.

Markets reacted sharply to the gloomy outlook.

The S&P retail index closed down 1.7 percent, and 14 of the top 20 decliners in the broader S&P 500 were retailers or consumer brands.

INVENTORY CRUSH

To be sure, the actual percentage change in holiday sales can differ substantially, depending on which group is calculating the figure. SpendingPulse and the National Retail Federation, for example, look at different categories, which can cause some variation in their forecasts.

Regardless of how bad the figure is, one concern for retailers is that soft sales will mean an excess of inventory that will force some to slash prices.

The day after Christmas, retailers were using deep discounts to lure shoppers. Among other brands, Barnes & Noble offered 50 percent discounts in stores via email promotions on Wednesday, while Ann Inc had half-off at its Loft stores, and Macy's Inc's Bloomingdale's promoted discounts of up to 75 percent in some cases.

At a Target store in New York City's Harlem neighborhood, most shoppers seemed to be spending more on groceries, toys and small gifts than on gadgets or clothes.

Despite discounts of 50 percent, there were few takers for Jason Wu glass ornaments, Oscar de la Renta canvas totes and other designer goods launched under the mass merchant's tie-up with upscale chain Neiman Marcus.

Even in a good year, retailers would have offered discounts to lure customers, but some suggest a weak year has now forced their hands.

"Retailers are no longer chasing sales, they are chasing inventory management. That means the discounts that they would have liked to be at 50-60 (percent) off have climbed to 75 to even 80 (percent) off," said Marshal Cohen, chief industry analyst at The NPD Group.

This week's cold, snowy weather on the heels of a warm start to December could spur people to use the gift cards they received or their remaining discretionary income to buy everything from jackets to snow blowers, said Evan Gold, senior vice president of client services at Planalytics, which tracks weather for businesses including retailers.

In December, he said, "people are out spending anyway, weather can trigger what you purchase, not if you purchase, but what you purchase."

SANDY AND CLIFF

A variety of factors were thought to be at fault for the weak season, starting with Superstorm Sandy, which depressed sales in the U.S. Northeast in late October and early November.

Sales recovered in the second part of November, with early hours and promotions helping drive traffic during the "Black Friday" weekend after Thanksgiving, analysts said.

But there was a deep lull in early December as a winter storm in parts of the United States may have limited sales, said Michael McNamara, vice president of research and analysis at MasterCard SpendingPulse.

On top of that, there were fears that taxes will rise in the new year if Washington cannot negotiate a solution to the end-of-year "fiscal cliff" dilemma.

A recent Ipsos poll for Reuters found that only 17 percent of shoppers were spending less due to cliff fears, though analysts said the damage was still done.

"The government usually does not have a role in holidays but this year they did. They got right in the midst of it, the timing couldn't have been any worse," NPD's Cohen said.

BRIGHT SPOTS

One bright spot has been online sales, which continue to grow at a faster pace.

On Christmas Day, online sales jumped 22.4 percent, outpacing the 16.4 percent increase in 2011, according to IBM Digital Analytics Benchmark, which tracks more than 1 million e-commerce transactions a day from 500 U.S. retailers.

Whether online or off, some of the winning retailers were expected to be Wal-Mart, which attracted shoppers with early deals on the night of Thanksgiving and kept its focus on value, and apparel chains like the Gap, whose bright sweaters were successful, according to analysts.

Toys sold well, and hot items that were harder to find later in the season included certain Mattel Inc Barbie dolls and LeapFrog Enterprises Inc's LeapPad2 tablet computer, according to B. Riley Caris analyst Linda Bolton Weiser.

For retailers that have struggled, analysts said all hope was not lost. Many have fiscal quarters that end in January, so they still have time to benefit from a post-Christmas rebound. Because Christmas fell on a Tuesday, some said they could even see a boost this week from people who have extra time off.

"There's still a little bit more time to go until the holiday season is officially over," Morningstar analyst Peter Wahlstrom said.

Wal-Mart shares ended down 0.8 percent at $67.99 on Wednesday, while Macy's shares were down 1.1 percent at $37.11, Barnes & Noble shares were down 3.5 percent at $14.49, Amazon.com Inc shares ended 3.9 percent lower at $248.63, and Ann Inc shares lost 5.1 percent to close at $32.06.

(Reporting by Brad Dorfman, Nivedita Bhattacharjee and Jessica Wohl in Chicago; additional reporting by Chuck Mikolajczak and Dhanya Skariachan in New York; writing by Ben Berkowitz; editing by Jeffrey Benkoe and Matthew Lewis)

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India's Prime Minister Manmohan Singh attends the plenary session of the ASEAN-India Commemorative Summit in New Delhi December 20, 2012.

NEW DELHI | Thu Dec 27, 2012 12:45am EST

NEW DELHI (Reuters) - Prime Minister Manmohan Singh struck a downbeat note on the challenges facing the Indian economy on Thursday, dubbing a five-year plan for average growth of 8 percent "ambitious".

India's GDP growth has languished below 6 percent for three straight quarters, a far cry from the near-double-digit pace of expansion before the 2008 global financial downturn.

Economic growth for the fiscal year ending in March is expected to be 5.7-5.9 percent, India's slowest since 2002/03.

"I must emphasize, that achieving a target of 8 percent growth, following less than 6 percent in the first year, is still an ambitious target," Singh told a conference of state chief ministers to finalize the government's 2012-2017 economic plan.

The downturn prodded Singh, castigated for years of policy inertia, to launch the most daring initiatives of his tenure in September, including raising subsidized diesel prices and opening the retail and other sectors to foreign players.

However, one of Singh's key policy advisers, Montek Singh Ahluwalia warned at the meeting that growth could get stuck at 5.0-5.5 percent if a policy logjam continues.

"A high growth scenario will not be realized if we follow a business-as-usual policy," Singh said, echoing his adviser.

"Our first priority must be to reverse this slowdown. We cannot change the global economy but we can do something about the domestic constraints which have contributed to the downturn."

Analysts say the government must take more reform steps quickly, including speeding up the process for approval of investment projects, overhauling the tax system and reducing a swollen fiscal deficit by reining in its subsidy bill.

Singh said that subsidies on energy products should be limited, with a phased adjustment of prices.

"Unfortunately, energy is under-priced in our country. Our coal, petroleum products, and natural gas are priced well below international prices. This also means that electricity is effectively under-priced," he said.

"Immediate adjustment of prices to close the gap is not feasible, I realize this, but some phased price adjustment is necessary."

He added that early implementation of a Goods and Services Tax (GST), a long-delayed plan intended to replace myriad state and central taxes, was critical to raise the tax/GDP ratio.

(Reporting by Rajesh Kumar Singh; Editing by John Chalmers)

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PHNOM PENH | Thu Dec 27, 2012 2:41am EST

PHNOM PENH (Reuters) - A Cambodian court ordered the return to prison on Thursday of two men seen by rights groups as scapegoats for the 2005 murder of a top unionist, the latest controversial ruling in a country chided for its low judicial standards.

The Appeals Court upheld a lower court's handing down of 20-year jail terms for Born Samnang and Sok Sam Oeun for killing Free Trade Union (FTU) leader Chea Vichea, despite weak evidence.

Following a public outcry, the Supreme Court released the two on bail in 2008 after three years in jail to allow further investigation. The Appeals Court on Thursday made no mention of any new evidence against them.

"Please help me, this is very unjust," Born Samnang shouted as he was taken away by police. He wept and said he would seek help from King Norodom Sihamoni to clear his name.

Cambodia's positive image among investors as one of Asia's most promising emerging economies and a cheaper alternative to China is being dented by allegations of rampant rights abuses and political interference in the judiciary to silence dissent or allow well-connected figures to walk free.

Violence against union leaders is not uncommon in Cambodia and activists say scapegoats have been found to ensure those instigating the attacks go unpunished.

As Cambodia's $4.2 billion garment manufacturing sector grows, unions and workers are becoming increasingly emboldened, holding protests and strikes over pay and working conditions.

Rights groups were incensed last week when a local politician connected with the ruling party was cleared by a court of firing bullets into a crowd of striking factory workers earlier this year, wounding three women.

Chea Mony, the current FTU president and brother of the late Chea Vichea, said he was shocked by Thursday's ruling and criticized the authorities for failing to bring the real culprits to justice.

"We have not seen any light of justice at all in this case," Chea Mony told Reuters. "The court is well aware of what's going on and that it lacks its independence."

(Editing by Martin Petty)

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1 of 3. Fatima, 13, holds a picture of her mother Narges Rezaeimomenabad, suspected of killing a U.S. contractor at a police headquarters, at her home in Kabul December 26, 2012.

KABUL | Wed Dec 26, 2012 10:42am EST

KABUL (Reuters) - The Afghan policewoman suspected of killing a U.S. contractor at police headquarters in Kabul suffered from mental illness and was driven to suicidal despair by poverty, her children told Reuters on Wednesday.

The woman was identified by authorities as Narges Rezaeimomenabad, a 40-year-old grandmother and mother of three who moved here from Iran 10 years ago and married an Afghan man.

On Monday morning, she loaded a pistol in a bathroom at the police compound, hid it in her long scarf and shot an American police trainer, apparently becoming the first Afghan woman to carry out such an attack.

Narges also tried to shoot police officials after killing the American. Luckily for them, her pistol jammed. Her husband is also under investigation.

Her son Sayed, 16, and daughter Fatima, 13, described how they tried to call their parents 100 times after news broke of the shooting, then waited in vain for them to come home.

They recalled Narges's severe mood swings, and how at times she beat them and even pulled out a knife. But the children said she was consistent in bemoaning poverty.

"She was usually complaining about poverty. She was complaining to my father about our conditions. She was saying that my father was poor," Sayid said in an interview in their damp, cold two-room cement house.

On the floor beside him were his mother's prescriptions and a thick plastic bag filled with pills she tried to swallow to end the misery about a month ago. On another occasion, she cut her wrist with a razor, Sayed said.

"My father was usually calm and sometimes would say that she was guilty too because it wasn't a forced marriage. They fell in love and got married."

There was no sign in their neighborhood of the billions of dollars of Western aid that have poured into Afghanistan since the ouster of the Taliban in 2001, or of government investment.

RAW SEWAGE, STAGNANT WATER, DIRT ROADS

The lane outside their home stank of raw sewage.

Dirty, stagnant water filled holes in dirt roads nearby, where children in tattered clothes played and butchers stood by cow's hooves in shops choked by dust.

Afghanistan is one of the world's poorest nations, with a third of its 30 million residents living under the poverty line.

The sole distractions from the daily grind appeared to be a deck of playing cards and a compact disc with songs from Iranian pop singers, scattered on the floor of a room where Narges would lock herself in and weep, or sit in silence.

At times, Narges would try to focus on building her children's confidence, telling them to be guided by the Muslim holy book, the Koran, to tackle life's problems.

Sayed and Fatima said she never spoke badly of the U.S. presence in Afghanistan or of President Hamid Karzai's government.

Neighbor Mohammad Ismail Kohistani was dumbfounded to hear on the radio that Afghan officials were combing Narges' phone records to try to determine whether al Qaeda or the Taliban could have brainwashed her into carrying out a mission.

But he was acutely aware of her mental problems and often heard her scream at her husband, whose low-level job in the crime investigation unit of the police brought home little cash.

Kohistani, who operates a small sewing shop with battered machines, never imagined his neighbor could be accused of a high-profile attack that raised new questions about the direction of an unpopular war.

"I became very depressed and sad," said Kohistani, sitting on the floor few feet from a tiny wood-burning stove in Narges's home, alongside family photographs and a police training manual.

Fatima would often seek refuge in Kohistani's house when her mother's behavior became unbearable. "She did not hate us, but usually she was angry and would not talk to us," said Fatima, her eyes moist with tears.

Nevertheless, she missed her mother. The children were staying with a cousin.

"I ask the government to free my mother, otherwise our future will be destroyed," said Fatima.

Officials described it as another "insider shooting", in which Afghan forces turn on Westerners they are meant to be working with to stabilize the country. There have been over 52 such attacks so far this year.

The shooting at the police headquarters may have alarmed Afghanistan's Western allies. But some Afghans have grown numb to the violence.

Kohistani's 70-year-old father Omara Khan, who sports a white beard, sat twirling prayer beads beneath a photograph of Narges in a black veil beside one of her husband.

Asked what he thought of the attack, he laughed.

"This is common in Afghanistan," said Khan, who lived through decades of upheaval, including the 10-year Soviet occupation and a civil war that destroyed half of Kabul and killed some 50,000 civilians.

"People are killed every day."

(Editing by Ron Popeski)

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The San Cristobal volcano spews up large clouds of gas and ash near Chinandegga City, some 150 km (93 miles) north of the capital Managua December 26, 2012.

MANAGUA | Wed Dec 26, 2012 5:29pm EST

MANAGUA (Reuters) - Nicaragua's tallest volcano has belched an ash cloud hundreds of meters (feet) into the sky in the latest bout of sporadic activity, prompting the evacuation of nearby residents, the government said on Wednesday.

The 5,725-foot (1,745-meter) San Cristobal volcano, which sits around 85 miles north of the capital Managua in the country's northwest, has been active in recent years, and went through a similar episode in September.

The latest activity began late on Tuesday.

Government spokeswoman Rosario Murillo called on residents who live within a 1.9-mile (3-km) radius of the volcano to leave the area. Around 300 families live near the volcano.

"We have some families who have self-evacuated. ... We ask (the people) to go to a safe place, it's just for a few days during this emergency," she said, adding it was a precautionary measure.

A billowing grayish cloud could be seen drifting sideways from the volcano's peak.

The volcano also stirred in mid-2008, when it expelled gas and rumbled with a series of small eruptions.

(Reporting by Mexico City bureau; editing by Todd Eastham)

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Orphan children play in their bedroom at an orphanage in the southern Russian city of Rostov-on-Don, December 19, 2012.

MOSCOW | Wed Dec 26, 2012 9:06pm EST

MOSCOW (Reuters) - Family Christmas cards and smiling snapshots of children sent by their adoptive American parents fill Galina Sigayeva's office in Russia's second city St Petersburg.

Many of them were crippled by illness and in desperate need of medical care before her agency helped organise their adoption into U.S. families, she recalls.

Children's rights campaigners say children like these will suffer most if President Vladimir Putin approves a law barring American adoptions that has been rubber-stamped by Russian lawmakers. The act retaliates against a new U.S. law that will punish Russians accused of human rights violations.

Critics of the bill say Russian orphanages are woefully overcrowded and the fate of vulnerable children should not be used as a bargaining chip in a bilateral feud.

"These children are not even offered to foreigners until they get a certain number of (adoption) refusals from Russians," said Sigayeva, a neatly styled brunette who heads the New Hope Christian Services Adoption Agency.

"These are children with complicated diagnoses, really complicated. They are very ill children."

She smiled as she flipped through photos of children embraced by their adoptive parents, playing with family pets and enjoying presents and other trappings of holiday cheer.

"What surprises me is that here they all look so healthy, so fantastic, but you should see what they look like when they are taken from here," Sigayeva said.

"Some had to be carried to the border. We had a girl with hepatitis whom we helped from the emergency room."

Both sides in the heated debate surrounding the bill agree Russia's orphanage system is overwhelmed, riddled with corruption and most failing to place children in families.

More than 650,000 children are considered orphans in Russia - though some were rejected by their parents or taken from dysfunctional homes. Of that total, 110,000 lived in state institutions in 2011, according to the Ministry of Science and Education.

By contrast, in the United States - which has more than twice Russia's population - about 58,280 children were living in group homes and institutions last year, according to the U.S. Department of Health and Human Services.

Adoptions by Russian families remain modest, with some 7,400 adoptions in 2011 compared with 3,400 adoptions of Russian children by families abroad.

Russian politicians say it is an embarrassment that the country cannot care for its own, and supporters of the measure argue it will help stimulate reform and domestic adoptions.

"Foreign adoption is a result of the state and society's lack of attention to orphans ... It is, if you will, a result of our indifference," Prime Minister Dmitry Medvedev told officials at a ruling party congress last week.

American families adopt more Russian children - 956 last year - than those of any other country. Of the children adopted by Americans in 2011, 9 percent - or 89 - were disabled, according to official Russian figures.

Opponents of the legislation, who include senior officials such as Foreign Minister Sergei Lavrov, say politicking should not deprive orphans of this chance at better life.

"Russia is not able to provide for all its orphans," Boris Altshuler, director of the Moscow-based Rights of the Child advocacy group, said. "Although 1,000 is a small fraction - it was a help."

Deputy Prime Minister Olga Golodets has said the ban would violate international treaties on child rights, and the Kremlin's own human rights council called it unconstitutional.

"AMERICAN ROULETTE"

The ban responds to a U.S. law known as the Magnitsky Act, which punishes Russians suspected of being involved in the death in custody of anti-graft lawyer Sergei Magnitsky in 2009, and of other human rights violations, by barring them from entering the United States.

In a pointed echo of the Magnitsky Act, Russia's legislation is named the Dima Yakovlev law, after a Russian-born toddler who died of heat stroke after his American adoptive father left him locked in a sweltering car.

His death and that of 19 other Russian-born children in the hands of U.S. citizens in the last decade has helped drive support for the bill and for tougher adoption rules in a deal with the United States in June.

"It's American roulette," said Pavel Astakhov, Russia's Children's Rights Commissioner and a supporter of the ban.

"One handicapped girl from Russia got lucky. She was Jessica Long - a Paralympic champion. Another did not. She was Masha Allen ... who was raped by her paedophile adoptive father."

DISABLED CHILDREN

If Putin signs it into law, the ban will come into force on January 1, most immediately affecting the fate of children whose adoption is in the works.

The placement of 46 children with American families will be cancelled, Astakhov told the Interfax news agency on Wednesday.

"There is terrible irony in the fact that America's decision to speak out against human rights violations may cause the Russian government to deny many thousands of Russian orphans the possibility to grow up in loving, adoptive families," said Chuck Johnson, president of National Council For Adoption, a non-profit advocacy group based in Alexandria, Virginia.

Sigayeva, of the New Hope Christian Services Adoption Agency, said a six-month halt on American adoptions until a new bilateral deal entered force in November showed how it would aggravate problems in Russia's strained child-protection system.

"Hospitals were overwhelmed. There was no room in orphanages or hospitals for children whom their parents had rejected. So what's next then?" said Sigayeva, whose agency has helped place some 200 children in American families since 1992.

Advocates who work with disabled children say a reform proposal drafted by Astakhov ignores their plight. They say it calls for a reduction in the number of institutions caring for children with disabilities without explaining how they will find foster homes and medical care.

"No concrete measures are being suggested. Nothing exists but a lot of children's pain, which will only increase now," said Sergei Koloskov, a campaigner for children with Down's Syndrome.

"They are being left parentless in addition to being ill."

(Additional reporting by Alexander Chizhenok in St. Petersburg and Corrie MacLaggan in Austin, Texas; Writing by Alissa de Carbonnel; Editing by Douglas Busvine and Peter Graff)

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Sudanese President Omar Hassan al-Bashir gives a speech as he tours the White Nile Sugar Co sugar plant during its opening in Al-Diwaim July 11, 2012.

KHARTOUM | Wed Dec 26, 2012 4:01pm EST

KHARTOUM (Reuters) - Sudan's President Omar Hassan al-Bashir said on Wednesday he was ready to meet his South Sudanese counterpart Salva Kiir to try to move forward with setting up a demilitarized border zone and restart oil flows.

His comments raise the prospect that the two could set aside their differences after signing agreements in September meant to secure their disputed border and to allow the South to resume oil exports after the two came close to war in April in the worst violence since Juba seceded last year.

However, neither country has yet withdrawn its army from either side of their shared border, a precondition to resume oil flows from the landlocked south through the north, a lifeline for both economies.

South Sudan had initially planned to resume exports by year-end after shutting down its output of 350,000 barrels a day in January after failing to agree an export fee with Sudan.

Two weeks ago, the African Union, backed by Western powers, urged Bashir and Kiir to meet as soon as possible to resolve all their disputes. Delegations from both countries are scheduled to resume talks in Ethiopia in mid-January.

"I am ready to meet Salva Kiir to speed up implementing all agreements at the same time," Bashir said, after meeting Ethiopian Prime Minister Hailemariam Desalegn who is trying to mediate in the row.

"I am ready to meet Kiir at any place," Bashir said.

Desalegn said he would fly to Juba on Thursday to meet Kiir. "I will be having the same discussion with President Salva Kiir to help us implement the already signed agreements," he said.

South Sudan seceded from Sudan under a 2005 peace agreement which ended decades of civil war. But both countries have yet to demarcate their disputed border which straddles oil production facilities.

The two rivals are also at odds over Abyei, a contested area between Sudan and South Sudan prized for its fertile grazing land.

(Reporting by El-Tayeb Siddig and Khalid Abdelaziz; Writing by Ulf Laessing; Editing by Andrew Osborn)

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1 of 9. Syria's President Bashar al-Assad (R) meets International peace envoy for Syria Lakhdar Brahimi in Damascus December 24, 2012 in this handout photograph released by Syria's national news agency SANA.

BEIRUT | Thu Dec 27, 2012 2:52am EST

BEIRUT (Reuters) - Syrian President Bashar al-Assad sent a senior diplomat to Moscow on Wednesday to discuss proposals to end the conflict convulsing his country made by international envoy Lakhdar Brahimi, Syrian and Lebanese sources said.

Brahimi, who saw Assad on Monday and is planning to hold a series of meetings with Syrian officials and dissidents in Damascus this week, is trying to broker a peaceful transfer of power, but has disclosed little about how this might be done.

More than 44,000 Syrians have been killed in a revolt against four decades of Assad family rule, a conflict that began with peaceful protests but which has descended into civil war.

Past peace efforts have floundered, with world powers divided over what has become an increasingly sectarian struggle between mostly Sunni Muslim rebels and Assad's security forces, drawn primarily from his Shi'ite-rooted Alawite minority.

Deputy Foreign Minister Faisal Makdad flew to Moscow to discuss the details of the talks with Brahimi, said a Syrian security source, who would not say if a deal was in the works.

However, a Lebanese official close to Damascus said Makdad had been sent to seek Russian advice on a possible agreement.

He said Syrian officials were upbeat after talks with Brahimi, the U.N.-Arab League envoy, who met Foreign Minister Walid Moualem on Tuesday a day after his session with Assad, but who has not outlined his ideas in public.

"There is a new mood now and something good is happening," the official said, asking not to be named. He gave no details.

Russia, which has given Assad diplomatic and military aid to help him weather the 21-month-old uprising, has said it is not protecting him, but has fiercely criticized any foreign backing for rebels and, with China, has blocked U.N. Security Council action on Syria.

"ASSAD CANNOT STAY"

A Russian Foreign Ministry source said Makdad and an aide would meet Foreign Minister Sergei Lavrov and Mikhail Bogdanov, the Kremlin's special envoy for Middle East affairs, on Thursday, but did not disclose the nature of the talks.

On Saturday, Lavrov said Syria's civil war had reached a stalemate, saying international efforts to get Assad to quit would fail. Bogdanov had earlier acknowledged that Syrian rebels were gaining ground and might win.

Given the scale of the bloodshed and destruction, Assad's opponents insist the Syrian president must go.

Moaz Alkhatib, head of the internationally-recognized Syrian National Coalition opposition, has criticized any notion of a transitional government in which Assad would stay on as a figurehead president stripped of real powers.

Comments on Alkhatib's Facebook page on Monday suggested that the opposition believed this was one of Brahimi's ideas.

"The government and its president cannot stay in power, with or without their powers," Alkhatib wrote, saying his Coalition had told Brahimi it rejected any such solution.

While Brahimi was working to bridge the vast gaps between Assad and his foes, fighting raged across the country and a senior Syrian military officer defected to the rebels.

Syrian army shelling killed about 20 people, at least eight of them children, in the northern province of Raqqa, a video posted by opposition campaigners showed.

The video, published by the Syrian Observatory for Human Rights, showed rows of blood-stained bodies laid out on blankets. The sound of crying relatives could be heard in the background.

The shelling hit the province's al-Qahtania village, but it was unclear when the attack had occurred.

STRATEGIC BASE

Rebels relaunched their assault on the Wadi Deif military base in the northwestern province of Idlib, in a battle for a major army compound and fuel storage and distribution point.

Activist Ahmed Kaddour said rebels were firing mortars and had attacked the base with a vehicle rigged with explosives.

The British-based Observatory, which uses a network of contacts in Syria to monitor the conflict, said a rebel commander was among several people killed in Wednesday's fighting, which it said was among the heaviest for months.

The military used artillery and air strikes to try to hold back rebels assaulting Wadi Deif and the town of Morek in Hama province further south. In one air raid, several rockets fell near a field hospital in the town of Saraqeb, in Idlib province, wounding several people, the Observatory said.

As violence has intensified in recent weeks, daily death tolls have climbed. The Observatory reported at least 190 had been killed across the country on Tuesday alone.

The head of Syria's military police changed sides and declared allegiance to the anti-Assad revolt.

"I am General Abdelaziz Jassim al-Shalal, head of the military police. I have defected because of the deviation of the army from its primary duty of protecting the country and its transformation into gangs of killing and destruction," the officer said in a video published on YouTube.

A Syrian security source confirmed the defection, but said Shalal was near retirement and had only defected to "play hero".

Syrian Interior Minister Mohammed Ibrahim al-Shaar left Lebanon for Damascus after being treated in Beirut for wounds sustained in a rebel bomb attack this month.

(Additional reporting by Laila Bassam; Writing by Alistair Lyon; Editing by Andrew Osborn)

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Former South African president Nelson Mandela looks on as he celebrates his birthday at his house in Qunu, Eastern Cape July 18, 2012.

JOHANNESBURG | Thu Dec 27, 2012 1:31am EST

JOHANNESBURG (Reuters) - Former South African President Nelson Mandela is doing well after being discharged from hospital, although he is still not fully recovered, a government spokesman said on Thursday.

"He is not yet fully recovered, but he has sufficiently moved forward so that he can be discharged," Mac Maharaj told local broadcaster eNCA.

"He is sufficiently well to be home."

The 94-year-old anti-apartheid leader and Nobel Peace Prize laureate was discharged from the hospital on Wednesday, ending a nearly three-week stay during which he was treated for a lung infection and had surgery to remove gallstones.

Mandela, who has been in frail health for several years, is now receiving care at his suburban Johannesburg home.

Mandela has a history of lung problems dating back to when he contracted tuberculosis while in jail as a political prisoner. He spent 27 years in prison, including 18 years on the windswept Robben Island off Cape Town.

The former president was admitted to a Pretoria hospital on December 8 and this was his longest stay in a hospital since he was released from prison in 1990.

Current President Jacob Zuma visited Mandela on Christmas Day and said the former South African leader was doing much better, making progress and in good spirits.

Mandela was also admitted to a hospital in February because of abdominal pain but released the following day after a keyhole examination showed there was nothing seriously wrong with him.

He has spent most of his time since then in another home in Qunu, his ancestral village in the impoverished Eastern Cape province.

(Reporting by David Dolan; editing by Todd Eastham)

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1 of 3. Protesters take part in a demonstration in Ramadi, 100 km (62 miles) west of Baghdad, December 26, 2012.

ANBAR, Iraq | Wed Dec 26, 2012 11:46am EST

ANBAR, Iraq (Reuters) - Tens of thousands of Sunni Muslims blocked Iraq's main trade route to neighboring Syria and Jordan in a fourth day of demonstrations on Wednesday against Shi'ite Prime Minister Nuri al-Maliki.

The massive show of force marks an escalation in protests that erupted last week after troops detained the bodyguards of Sunni Finance Minister Rafaie Esawi, threatening to plunge Iraq deeper into political turmoil.

"The people want to bring down the regime," chanted thousands of protesters in the Sunni stronghold of Anbar, echoing the slogan used in popular revolts that ended in the toppling of the leaders of Tunisia, Egypt, Libya and Yemen.

Waving the old flag of Iraq that was changed after Sunni dictator Saddam Hussein was overthrown by the U.S.-led invasion of 2003, protesters sat in the road, choking off the main trade route between Iraq, Jordan and Syria.

Another smaller protest was held in the city of Samarra in the predominantly Sunni province of Salahuddin, next to Anbar.

The move against Esawi's guards came hours after President Jalal Talabani, a Kurd who has mediated among Sunni, Shi'ite and Kurdish factions, left for Germany for treatment for a stroke that could end his steadying influence over Iraqi politics.

The arrest was reminiscent of Maliki's move to arrest Sunni Vice President Tareq al-Hashemi, who he accused of running death squads, just as U.S. troops withdrew in December 2011.

Iraq's fragile power-sharing government has since lurched from crisis to crisis and the conflict in Syria risks reigniting sectarian tensions that brought the country to the brink of all-out civil war in 2005-2007.

Addressing the protesters, Esawi said the detention of his guards was politically motivated and that Maliki was deliberately provoking strife.

"It is enough! The country should not be run by such a mentality," he said, to cries of "God is greatest".

Maliki has sought to play his rivals off against one another to strengthen his alliances in Iraq's complex political landscape before provincial elections next year and a parliamentary vote in 2014.

Shi'ite cleric Moqtada al-Sadr, another rival of Maliki, offered his support to the protests in a statement, rejecting what he described as Maliki's sectarian policies.

(Additional reporting by Ahmed Rasheed in Baghdad; Writing by Isabel Coles; Editing by Jon Hemming)

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