A Hewlett-Packard logo is seen at the company's Executive Briefing Center in Palo Alto, California January 16, 2013.

NEW YORK | Fri Jan 18, 2013 4:10pm EST

NEW YORK (Reuters) - A U.S. investor activist group affiliated with large labor unions is asking Hewlett-Packard Co to replace its auditor, Ernst & Young, over the technology giant's troubled acquisition of UK software company Autonomy.

Change to Win Investment Group (CtW), based in Washington, D.C., also is seeking a revamp of HP's audit committee, which is responsible for overseeing Ernst & Young's long-standing relationship as the auditor that reviews HP's books.

Spokesmen for HP and Ernst & Young declined to comment.

Labor union pension funds own large stakes in many U.S. companies and often use them as platforms to push for changes in how those corporations are managed. Union pension funds tied to CtW invest more than $200 billion in stocks, including shares in HP, said CtW in a letter to an HP board member on Thursday.

CtW questioned why Ernst & Young did not spot problems at Autonomy. "HP is clearly a company facing serious challenges," CtW said in its letter. "Unfortunately, the highly conflicted, decade-long relationship between Ernst & Young and HP cannot provide shareholders with the reassurance they need."

Auditors are outside accounting firms retained by corporations to vet their books regularly and offer an opinion on the validity of financial results. The four firms that dominate auditing worldwide - Ernst & Young, KPMG, Deloitte and PricewaterhouseCoopers - are faced with ever-rising scrutiny of their role in investor losses and accounting lapses.

The CtW letter was addressed to Rajiv Gupta, chairman of the corporate governance committee of HP's board. It was signed by William Patterson, executive director of CtW Investment Group.

Gupta could not be reached for comment.

HP, AUTONOMY CLASH

HP said in November that it overpaid for Autonomy in 2011. HP accused Autonomy of serious accounting improprieties. Autonomy has rejected the allegations and said HP was looking for "scapegoats."

CtW urged HP to name an independent special master to investigate and report to shareholders on the Autonomy deal, as well as on an earlier acquisition of Electronic Data Systems Corp (EDS), which CtW said was "equally disastrous."

HP has said it is deferring to U.S. and UK regulators to investigate the allegations it has made against Autonomy.

HP in August swung to an $8.9 billion quarterly loss as it swallowed a write-down linked to its $13.9 billion purchase of EDS. That was followed in November by an $8.8 billion writedown on Autonomy's value, which HP blamed largely on improper accounting at the software company.

Ernst & Young was not Autonomy's auditor. But according to CtW, the accounting firm had an opportunity to spot Autonomy's problems when it reviewed the goodwill, or intangible value, that HP recorded for its acquisition of Autonomy.

However, one risk expert said CtW was putting the blame in the wrong place. A separate due diligence team, not the auditor, was responsible for determining the value of Autonomy, said Peter Bible, chief risk officer at EisnerAmper, an accounting and consulting firm.

"The auditors didn't buy the company, HP did. And the people inside HP ought to be the ones held accountable for the purchase price that was paid," Bible said.

CtW questioned whether Ernst & Young was independent enough to audit HP because of the large amount of non-audit services Ernst provided to HP, including tax consulting and lobbying.

Washington Council, a tax lobbying firm acquired by Ernst in 2000, lobbied for HP from 2000 to 2004, CtW said.

AUDITING, LOBBYING EYED

Government lobbying records and U.S. Securities and Exchange Commission filings show that Ernst & Young was HP's auditor while Washington Council was registered as a lobbyist for HP.

Reuters reported last week that the SEC was investigating whether Ernst violated auditor rules by letting its lobbying unit perform work for some major audit clients.

Ernst has said all of its services for audit clients undergo considerable scrutiny to be sure they are within the rules.

U.S. independence rules bar auditors from serving in an "advocacy role" for audit clients. The goal of this rule is to ensure that auditors are objective regarding companies they audit so that they can serve as watchdogs for investors.

It is not clear what type of lobbying activities would be barred under the prohibition against advocacy.

The 2002 Sarbanes-Oxley Act restricted the type of non-audit services that audit firms can provide, but broad exceptions were granted for tax consulting services.

CtW said that HP was out of step with its peers in using Ernst for significant services other than audit work. The other fees paid to Ernst are much higher than those paid by Dell Inc and Apple Inc to their audit firms, CtW said.

CtW also questioned the HP audit committee's willingness to allow Ernst to perform "multiple and conflicting roles" for HP.

Board audit committees hire and oversee outside auditors, while also governing non-audit services.

(Additional reporting by Sarah Lynch and David Ingram in Washington; Editing by Kevin Drawbaugh)

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An illustration picture shows a Google logo with two one Euro coins, taken in Munich January 15, 2013.

SAN FRANCISCO | Fri Jan 18, 2013 3:46pm EST

SAN FRANCISCO (Reuters) - Google Inc issued a rare advisory to Wall Street on Friday that analyst estimates for its fourth quarter financial results are flawed.

The world's No.1 search engine, which reports its quarterly results on Tuesday, said most analysts have not adjusted their estimates to reflect the pending $2.35 billion sale of the Motorola Home business.

The business must be presented separately from the results of Google's continuing operations under U.S. accounting rules, Google Treasurer Brent Callinicos wrote in a post on Google's investor relations Web page on Friday.

"As of this writing, a majority of Wall Street analysts who cover Google have not reflected the Home business as discontinued operations in their estimates," Callinicos wrote.

The discrepancy means the fourth-quarter net revenue that Google reports on Tuesday could appear to be less than the $12.34 billion average that analysts polled by Thomson Reuters I/B/E/S are expecting.

Raymond James analyst Aaron Kessler says his fourth-quarter net revenue estimate includes nearly $900 million from the Motorola Home business.

"They're saying that the headline number is going to be less than what most analysts have for Q4," said Kessler.

The advisory is a rare move for Google, which does not provide financial forecasts and typically has limited interactions with analysts. The company has in the past provided accounting advisories to analysts about the Motorola Mobility business, which Google acquired for $12.5 billion in May.

Google bought Motorola Mobility primarily for its large portfolio of communications patents and its mobile phone business.

In December, Google agreed to sell the Motorola Home television set-top box business to Arris Group Inc for $2.35 billion in cash and stock.

Analysts expect Google to report adjusted earnings of $10.56 per share for the fourth quarter.

"It's a little surprising that they're doing this the Friday before the report," said Kessler. "They should have put it out a week ago if they wanted analysts to change their numbers."

(Reporting By Alexei Oreskovic. Editing by Andre Grenon)

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A Samsung Galaxy Note II phone-cum-tablet is displayed during the first day of the Consumer Electronics Show (CES) in Las Vegas January 8, 2013.

HELSINKI | Fri Jan 18, 2013 3:45pm EST

HELSINKI (Reuters) - Samsung and Apple pulled ahead in the global smartphone race last quarter, according to forecasts by analysts in a Reuters poll, while Nokia and others are expected to have fallen further behind.

Overall shipments of handsets are expected to have risen in the fourth quarter, with most of that growth dominated by Samsung. Analysts forecast the South Korean company shipped 61 million smart devices, up 71 percent from a year earlier.

Samsung forecast earlier this month that it expected to earn a quarterly profit of $8.3 billion on strong sales of its Galaxy handsets as well as solid demand for flat screens used in mobile devices. Samsung's full results are due by Jan 25.

While some are wary that Samsung's momentum may slow in coming quarters owing to market saturation, it is still expected to outpace Apple as sales of the new iPhone 5 appear slightly weaker than originally forecast.

Apple is forecast to have shipped 46 million iPhones in the quarter, up 25 percent from a year earlier, according to the poll.

Shares in Apple dipped below $500 earlier this week for the first time in almost a year after reports it was slashing orders for screens and other components as intensifying competition eroded demand for the new iPhone.

The poll showed analysts expect Apple's full-year shipments to grow to 167 million this year from 134 million in 2012, while Samsung's shipments are expected to grow to 283 million smartphones in 2013 compared to 210 million in 2012.

NOKIA, RIM AIM TO CATCH UP

Nokia, once the world's biggest handset maker, is expected to have lost more market share. It is now pinning its recovery hopes on Lumia smartphones, which use Microsoft's Windows Phone software.

Analysts forecast Nokia's fourth-quarter shipments of mobile phones fell 15 percent to 80 million units while those of smartphones, including Lumias, fell 65 percent to 7 million units.

Nokia last week said it sold around 4.4 million Lumia handsets in the fourth quarter. Full results are due on Jan 24, and analysts are anxious to hear whether Nokia is confident that Lumia sales will continue to grow in coming quarters.

BlackBerry-maker RIM, another handset maker struggling to claw back market share, is expected to report a 30 percent fall in fourth-quarter shipments to 7 million units, the poll showed.

RIM is to launch new BlackBerry 10 smartphones later this month. The poll showed, however, that analysts expect its full-year sales to fall to around 30 million in 2013 from 33 million in 2012.

(Reporting by Ritsuko Ando; Editing by Sophie Walker)

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People walk past a Sprint store in New York December 17, 2012.

NEW YORK | Fri Jan 18, 2013 4:17pm EST

NEW YORK (Reuters) - Investors holding 29 percent of the outstanding minority shares of Clearwire Corp (CLWR.O) are unhappy with Sprint's $2.2 billion bid for the wireless service provider and are pushing for a higher offer.

Sprint, the No. 3 U.S. mobile service provider, announced on December 17 an agreement to acquire the outstanding shares of Clearwire it doesn't already own for $2.97 per share. While Sprint holds a more than 50 percent stake in Clearwire, the deal requires approval from holders of just over 50 percent of Clearwire's minority shares.

Securing that approval is looking increasingly tenuous, however.

Investors collectively owning almost 211 million shares of Clearwire - roughly 29 percent of its minority shares - told Reuters they do not think Sprint's bid is high enough and that they would not be happy casting their votes for the deal.

Crest Financial, which owns about 8 percent of Clearwire's minority shares, immediately sued to block the deal, for example. Crest's argument, echoed by other investors, is that Clearwire is worth a lot more than $2.97 per share as it has valuable wireless spectrum that would be crucial for Sprint.

While the 29 percent alone would not be enough to vote down the deal, its underscores the growing disenchantment Clearwire's minority shareholders have with Sprint's offer. Reuters was not able to reach all Clearwire shareholders.

For the deal to go through, Sprint needs approval from investors holding more than 362 million shares out of the roughly 725.89 million total minority shares outstanding. Share figures are based on the latest publicly available information.

Sprint said in December that it had support from three strategic investors - Comcast Corp (CMCSA.O), Intel Corp (INTC.O), and Bright House Networks LLC - who collectively own about 125.4 million Clearwire shares.

Excluding the almost 211 million votes from the investors Reuters spoke to and the 125.4 million shares supporting the deal, investors with about 389.8 million outstanding Clearwire shares have not disclosed if they will approve the deal or force Sprint to revise its offer.

HIGHER DISH OFFER

Dish Network (DISH.O), controlled by mercurial billionaire Charlie Ergen, made a $3.30 per share counter-offer for Clearwire on January 8, putting further pressure on Sprint to raise its bid. Clearwire's board is reviewing the Dish bid but said that the proposed deal may not be permitted because of Clearwire's existing legal obligations to Sprint.

However, the Dish bid has convinced many of Clearwire's minority shareholders that enough discontent exists to potentially block Sprint's bid.

"Sprint can't get 50 percent of those shares. They've no way to get them," said Chris Gleason, a managing partner at Taran Asset Management, which owns about 3 million Clearwire shares.

Mount Kellett, an investment firm with about 7.3 percent of Clearwire's minority shares, said Dish's offer is proof Sprint's bid is "grossly inadequate." Mount Kellett also said it is likely to be voted down and accused Clearwire's board of breaching its fiduciary duties for accepting the bid.

Another investment manager whose firm's holdings include Clearwire shares said the Dish offer was a turning point.

"If somebody was on the fence about saying no to Sprint, they're not on the fence any more," said the investment manager who asked not to be named due to their firm's policy on media comments.

"Anybody who thinks $2.97 is a full and fair value has already exited," said the person, referring to the fact that Clearwire shares have traded well above Sprint's offer price since Dish announced its bid. Clearwire shares were up 6 percent above Sprint's offer price at $3.16 on Friday.

This person described the $2.97 offer as "dead on arrival."

Sprint, which has agreed to sell a 70 percent of its own shares to Japan's Softbank Corp (9984.T), has said that it believes its Clearwire bid is superior to Dish's offer.

Sprint argues that the Dish deal is not viable because it comes with conditions Clearwire could not accept.

While Sprint said in December that it had commitments from Intel, Comcast, and Bright House, it is worth noting that those companies have not updated their position since the Dish offer and declined to comment for this story.

(Reporting By Sinead Carew; Editing by Peter Lauria, Bernard Orr)

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An artist's rendering of Bigelow Aerospace's balloon-like module attached to the International Space Station is shown in this undated handout supplied by Bigelow Aerospace on January 16, 2013.

LAS VEGAS | Wed Jan 16, 2013 7:06pm EST

LAS VEGAS (Reuters) - A low-cost space dwelling that inflates like a balloon in orbit will be tested aboard the International Space Station, opening the door for commercial leases of future free-flying outposts and deep-space astronaut habitats for NASA.

The Bigelow Expandable Activity Module, nicknamed BEAM, will be the third orbital prototype developed and flown by privately owned Bigelow Aerospace.

The Las Vegas-based company, founded in 1999 by Budget Suites of America hotel chain owner Robert Bigelow, currently operates two small unmanned experimental habitats called Genesis 1, launched in 2006, and Genesis 2, which followed a year later.

BEAM, about 13 feet long and 10.5 feet in diameter when inflated, is scheduled for launch in mid-2015 aboard a Space Exploration Technologies' Dragon cargo ship, said Mike Gold, director of operations for Bigelow Aerospace.

"It will be the first expandable habitat module ever constructed for human occupancy," Gold said.

A successful test flight on the space station would be a stepping stone for planned Bigelow-staffed orbiting outposts that the company plans to lease to research organizations, businesses and wealthy individuals wishing to vacation in orbit.

Bigelow has invested about $250 million in inflatable habitation modules so far. It has preliminary agreements with seven non-U.S. space and research agencies in the United Kingdom, the Netherlands, Australia, Singapore, Japan, Sweden and the United Arab Emirates.

"The value to me personally and to our company is doing a project with NASA," Robert Bigelow said. "This is our first opportunity to do that. We do have other ambitions."

NASA, which will pay Bigelow Aerospace $17.8 million for the BEAM habitat, also is interested in the technology to house crew during future expeditions beyond the space station, a $100 billion research complex that flies about 250 miles above Earth.

"Whether you're going to the surface of the moon or even Mars, the benefits of expandable habitats are critical for any exploration mission," Gold said.

The lightweight, soft-skinned inflatable, made of materials similar to Kevlar, has several advantages over traditional metallic space dwellings. BEAM, for example, weighs about 3,000 pounds (1,361 kg), less than a third of traditional, similarly sized space modules, so it can be launched for a fraction of the cost.

RADIATION EVENTS

It also offers a potentially safer radiation environment than metal structures, which can produce body-piercing secondary heavy particles during solar storms and other cosmic radiation events.

The U.S. space agency studied inflatable space habitats for humans in the 1990s under a NASA program called TransHab. The tests included blasting a model structure with bullet-like projectiles to see how well it would withstand micro meteoroid and orbital debris hits. The material proved space-worthy, though budget and political issues prompted the project's cancellation in 2000.

Bigelow later licensed the technology from NASA and spent millions of dollars more to develop it.

"It's one of our classical roles to advance technology so the private sector can utilize it. In this case, we're going to be able to benefit from it again," said NASA deputy administrator Lori Garver.

BEAM will be attached to the station's Tranquility connecting node and inflated with pressurized air to form a rigid, cylinder-shaped, balloon-like dwelling.

Garver said there are no firm plans for what the station's six live-aboard crew members will do with their spare room.

Initially, NASA and Bigelow are interested in getting information about how the structure withstands radiation and maintains a stable temperature in orbit, and also whether the fabric mildews or becomes a place where contaminants in the station's air collects.

Beyond the test flight, Bigelow's commercial business is dependent on the development of space taxis to fly company personnel and guests into orbit. NASA likewise is looking to the private sector to fly its astronauts to and from the space station, a service now solely provided by Russia at a cost of more than $60 million per person.

NASA is investing in three companies - Boeing Co, Space Exploration Technologies, also known as SpaceX, and Sierra Nevada Corp - in hopes of having at least one space transportation system ready to fly before the end of 2017. The space station, a project of 15 nations, currently is funded through 2020.

Bigelow has agreements with Boeing and SpaceX for launch services, if and when they become available. SpaceX plans a test launch with company astronauts before the end of 2015, and Boeing's first piloted flight is pegged for 2016.

(Editing by Tom Brown, Dan Grebler, Kevin Gray and David Gregorio)

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1 of 8. Scientists work in a laboratory at the Complutense Medicine University in Madrid December 4, 2012.

MADRID | Wed Jan 16, 2013 10:45am EST

MADRID (Reuters) - Amanda Bolanos, a young Spanish scientist, knows she will not be coming home.

"Exiled in Cambodia" read the banner the molecular biologist carried at a protest in Madrid against government cutbacks. Back on leave from Phnom Penh, the 30-year-old researcher plans to head for Latin America if her present contract in Cambodia is not renewed. She sees little chance of finding work in Spain.

Bolanos and other scientists say sharp cuts in Spanish state spending on research and development, part of efforts to lower the national debt, leave them little choice but to go abroad. And they worry the cuts put Spain's competitive future at risk.

"There are two problems," said another demonstrator, Amaya Moro-Martin, 38, an astrophysicist with a prestigious Ramon y Cajal fellowship. "One is that there isn't enough investment. The other is that the investment there is isn't efficient."

She returned to Spain after 11 years in the United States but Moro-Martin, who carried her infant daughter on the march, said there was no chance her contract in Spain would be renewed at the end of this year and she will probably go abroad again.

Spain's modest place in the world of scientific research is far from new. Moro-Martin's fellowship is named after one of just two Spaniards ever to win a Nobel science prize.

And while state spending on R&D, even since the financial crisis hit, is comparable to that of wealthier EU governments such as Germany, private research by Spanish firms trails their northern rivals: current total national R&D spending is only about 1.4 percent of Spain's GDP, half the level in Germany.

But what particularly worries Spanish scientists who fret for their jobs, and economists who see research spending as an engine of growth, is that far from redoubling efforts to catch up, Spain now risks falling even further behind its competitors.

The government chopped fully 25 percent off its research and development budget last year and will trim a further 7 percent in 2013, leaving it at under 6 billion euros ($8 billion). The German government, by contrast, is increasing spending on R&D by over 6 percent this year to close to 14 billion euros.

With an economy just over 40 percent the size of Germany's, Madrid is still spending a comparable amount to Berlin, but the government's critics fear it is not doing enough to make up for a historic lag in investment, especially by private firms.

An official at the Economy Ministry, which swallowed up the science ministry after conservative Prime Minister Mariano Rajoy took power a year ago, insisted the government was doing what it could: "In the current circumstances we are keeping the system going and preparing for the future, to guarantee that every euro spent is well invested," the official said. "We have to create the best conditions possible so our scientists come back."

Spain is not alone. As France, Britain, Germany and others in the north fund more research to fend off competition from Asia, Italy has also scaled back its government R&D budget, prompting Roberto Natalini, a mathematician at Italy's National Research Council (CNR) to warn: "We will pay for this in the medium term, not immediately. We will lose our competitiveness."

TWO-SPEED EUROPE

Without more private R&D spending, Spain, Italy and others in the south may continue to lag. But critics of government cuts say these risk creating a vicious circle, discouraging business:

"Public money attracts private sector money," said biologist Antonio Baraber from Spain's National Oncology Centre. "You can't just hope people will invest if there's no base."

In 2010, OECD figures show, only 242 international patents were filed from Spain, compared to over 5,600 from Germany. Where the private sector accounts for over two thirds of total German R&D spending, in Spain it provides less than half.

All the more reason, Spain's researchers say, for their government not to be cutting while competitors invest more:

"There's a crisis everywhere but other countries aren't cutting off the lifeline," said Ester Artells, a 36-year-old Spanish biologist based at Marseille University in France.

The German government has raised its R&D budget by 6.3 percent this year and France is finding 1.2 percent more. After cutting back, Britain too is adding investment in science.

Venture capitalist Francisco Marin, whose Ambar fund invests in Spanish technology firms, said Madrid's failure to catch up in generating ideas to drive new businesses was a big risk for a country where one worker in four is already out of a job:

"Employment and wealth come from the creation of new companies," he said. "Existing companies don't create employment, they keep it at the same level."

Carlos Andradas, the mathematician who is president of the Spanish Confederation of Scientific Societies (COSCE), says it will take years, if not decades, to bridge the widening gap Spain has allowed to open up with its northern competitors.

"When you fall behind in a race, catching up is very hard," Andradas said. "It will take a long time for Spain to catch up, starting from a position of insufficient development."

Protesting astrophysicist Moyo-Martin believed her country had begun to improve its international performance in research in recent years, half a century after New York-based Severo Ochoa became the last Spaniard to win a Nobel science prize.

Now, however, it was back in a "very precarious position", she said: "The problem is, what's happening now isn't reform - it's just cuts."

(Additional reporting by Naomi O'Leary in Rome and Gareth Jones and Michelle Martin in Berlin; Editing by Chris Wickham, Fiona Ortiz and Alastair Macdonald)

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The Luna-Glob in an undated illustration.

MOSCOW | Tue Jan 15, 2013 2:56pm EST

MOSCOW (Reuters) - Russia will resume a long-dormant quest to explore the moon by sending an unmanned probe there in 2015, the head of the space agency was quoted as saying on Tuesday.

The craft, called Luna-Glob, or Moon-Globe, will be carried by the first rocket to blast off from a new facility that Russia is building in its far eastern Amur region, Roskosmos director Vladimir Popovkin said, according to the Interfax news agency.

"We will begin our exploration of the moon from there," he said of the new space centre that will decrease Russia's reliance of the Baikonur Cosmodrome in the ex-Soviet nation Kazakhstan, which it leases.

Russian space officials have said Luna-Glob would consist of an orbital module and a probe that would land on the moon and beam back information about samples it takes from the surface.

The Soviet Union got a jump on the United States in the Cold War space race, sending a probe to the moon in 1959 and putting the first person into space in 1961. But the United States first put a man on the moon in 1969 and Russia has not done so.

The last successful Soviet launch of a unmanned probe to the moon was in the 1970s, and Russia has suffered setbacks in its space program in recent years, including bungled satellite launches and the failure of a Mars probe in 2011.

A successful rocket launch on Tuesday put three military satellites in orbit, the Defense Ministry said.

Prime Minister Dmitry Medvedev approved a plan last month to spend 2.1 trillion roubles ($70 billion) on space industry development in 2013-2020, to pursue projects to explore the moon and Mars, among other things.

(Writing by Steve Gutterman; Editing by Robin Pomeroy)

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n">(Reuters) - Astronomers have discovered the largest known structure in the universe - a group of quasars so large it would take 4 billion years to cross it while traveling at speed of light.

The immense scale also challenges Albert Einstein's Cosmological Principle, the assumption that the universe looks the same from every point of view, researchers said.

The findings by academics from Britain's University of Central Lancashire were published in the journal Monthly Notices of the Royal Astronomical Society and reported on the society's website on Friday.

Quasars are believed to be the brightest objects in the universe, with light emanating from the nuclei of galaxies from the early days of the universe and visible billions of light-years away.

"Since 1982 it has been known that quasars tend to group together in clumps or 'structures' of surprisingly large sizes, forming large quasar groups or LQGs," the society said.

This newly discovered large quasar group has a dimension of 500 megaparsecs, each megaparsec measuring 3.3 million light-years.

Because the LQG is elongated, its longest dimension is 1,200 megaparsecs, or 4 billion light-years, the society said.

That size is 1,600 times larger than the distance from Earth's Milky Way to the nearest galaxy, the Andromeda.

"While it is difficult to fathom the scale of this LQG, we can say quite definitely it is the largest structure ever seen in the entire universe," Roger Clowes, leader of the research team, said in a statement. "This is hugely exciting - not least because it runs counter to our current understanding of the scale of the universe."

Clowes said the team would continue to investigate the phenomenon with particular interest in the challenge to the Cosmological Principle, which has been widely accepted since Einstein, whose work still forms the basis for much of modern cosmology.

(Reporting by Daniel Trotta; Editing by Gary Hill)

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CHICAGO | Fri Jan 18, 2013 8:48am EST

CHICAGO (Reuters) - Dry weather should continue through at least the end of January in the drought-stricken U.S. Plains and a blast of Arctic cold air in the Midwest early next week poses a threat to unprotected livestock and possibly some wheat, an agricultural meteorologist said on Friday.

"The hard red winter wheat belt in the Plains looks quiet, dry and cooler next week, but there shouldn't be a cold air threat in the Plains," said John Dee, meteorologist for Global Weather Monitoring.

Dee said temperatures would fall to zero (degrees Fahrenheit) or below early next week in the northern Midwest, roughly north of Interstate 80. Coldest readings will be in the northern states of North and South Dakota, Minnesota, Wisconsin, northern Iowa, Illinois and Michigan.

"There's not a lot of snow cover so there is the potential for some damage. Zero readings could reach as far west as Nebraska," he said.

Commodity Weather Group (CWG) on Friday said most of the United States remained dry near the end of the week and showers next week would be limited to the eastern Midwest.

"Drought relief will be limited," said Joel Widenor, CWG meteorologist.

Cold air will push into the U.S. early next week and again late in January but the cold snaps do not appear to be strong enough to damage either U.S. wheat or Florida citrus, according to CWG's Friday report.

A series of rain showers helped ease drought conditions in parts of the United States over the last week, but drought expanded slightly in parts of the U.S. Plains, according to a report issued on Thursday.

Officials in north-central Oklahoma declared a state of emergency due to record-low reservoir conditions. Public and private interests throughout the central United States hardest hit by drought were examining measures to try to cope with ongoing drought.

The government declared much of the central and southern U.S. Wheat Belt a natural disaster area on Wednesday last week due to persistent drought threatening the winter wheat harvest.

In its first disaster declaration of the new year, the Agriculture Department made growers in large portions of four major wheat-growing states - Kansas, Colorado, Oklahoma and Texas - eligible for low-interest emergency loans.

(Additional reporting by Carey Gillam in Kansas City; Editing by Dale Hudson)

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WASHINGTON | Fri Jan 18, 2013 3:43pm EST

WASHINGTON (Reuters) - Reeling from an historic drought, the hottest year on record and more frequent wild weather, mayors from a number of U.S. cities urged the White House this week to take the lead on setting an agenda to address climate change.

City leaders said that only the federal government has the tools and clout to address greenhouse gases often blamed for warming the planet, while mayors focus on issues of "local warming" such as providing a reliable water supply or protecting citizens during dangerous weather events such as the 1995 Chicago heat wave that was blamed for over 700 deaths.

"We are fixing pot holes, dealing with transit issues," Seattle mayor Michael McGinn said while attending the U.S. Conference of Mayors' winter meeting. "But this can be a top tier issue for the president."

On the night of his reelection, Obama said fighting climate change would be a priority in his second term. He has since repeated the point, but without giving policy specifics.

And for now officials are doing their work quietly.

The White House asked that a discussion about climate change at the mayors' meeting on Thursday take place behind closed doors, frustrating some participants, even as hot button topics from immigration to gun control got public airings.

"This should be discussed openly," said Jim Brainard, the Republican mayor of Carmel, Indiana, who co-chaired the climate panel.

White House liaison for climate change Heather Zichal led the discussion, but declined to comment on why the meeting was closed.

"At the end of the day, it was a productive conversation," she said, noting that the White House was eager to hear from cities on reducing emissions of greenhouse gas.

Los Angeles, for example, plans to slash carbon emissions from government sources 35 percent below 1990 levels by 2030, a more ambitious target than even the state has set.

Among other measures, Chicago is spending billions of dollars to boost public transit and help public buildings save energy.

Mayors say they are proud of such steps and understand Obama's reluctance to take on a politically charged issue, but only Washington can achieve the overall greenhouse gas cuts that many say are needed.

"We are looking for leadership from the president in detailing to the American people the magnitude of this issue," McGinn said after the meeting with about two dozen peers.

DASHED CLIMATE HOPES

The Obama administration pinned its hopes on Congress to enact a comprehensive energy and climate bill that would have set a national price on carbon dioxide emissions during the president's first term.

That effort failed in bitter partisan wrangling, forcing the administration to rethink its strategy and reach for existing regulations as a way to mitigate climate warming emissions.

"I absolutely would anticipate that we will continue to use existing authority to make progress in this area," Zichal said after her meeting with mayors.

But efforts by states and cities will also be crucial to "move the needle" on reducing emissions, she said, noting that she heard new ideas about city climate initiatives that create jobs and reduce pollution.

Mayors contend that those efforts often need federal funding. They are counting on help from Washington to upgrade storm water systems, for example, and otherwise brace for the practical fallout from more extreme weather.

Although Greg Fischer, mayor of Louisville, Kentucky, said not all his constituents embrace the idea of man-made climate change, more frequent severe weather is "a far-reaching issue that touches almost every area of the city."

Scientists caution that no single weather event can be blamed on climate change. But the force of Hurricane Sandy, which devastated parts of New York and New Jersey in October, and a withering drought in the Midwest, are seen as harbingers.

"There is a lot of call for the president to use his 'bully pulpit' and explain the consequences here," said Brainard.

(Reporting By Patrick Rucker and Valerie Volcovici, editing by Ros Krasny and Andre Grenon)

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