1 of 3. U.S. Secretary of Defense Chuck Hagel speaks at his news conference at the Pentagon in Washington March 15, 2013.

WASHINGTON | Fri Mar 15, 2013 8:10pm EDT

WASHINGTON (Reuters) - Defense Secretary Chuck Hagel announced plans on Friday to bolster missile defenses in response to "irresponsible and reckless provocations" by North Korea, which threatened a preventative nuclear strike against the United States last week.

Hagel said the Pentagon would add 14 new anti-missile interceptors at Fort Greely in Alaska - an effective reversal of an early Obama administration decision - and move ahead with the deployment of a second missile-defense radar in Japan.

The Pentagon also left open the possibility of creating a site on the East Coast where the Pentagon could field more interceptors capable of striking down an incoming missile. The 14 additional interceptor deployments would cost nearly $1 billion and must be approved by Congress.

"By taking the steps I outlined today we will strengthen our homeland defense, maintain our commitments to our allies and partners, and make clear to the world that the United States stands firm against aggression," Hagel told a news conference.

North Korea issued its threat last week to stage a preemptive nuclear attack against the United States as the United Nations readied new sanctions against Pyongyang in response to its February 12 nuclear test.

Experts say North Korea is years away from being able to hit the continental United States with a nuclear weapon, despite having worked for decades to achieve a nuclear capability.

But Hagel said the moves announced by the Pentagon were justified to stay ahead of the threat, underscored by the nuclear test and a December rocket launch that analysts believe was aimed at developing technology for an intercontinental ballistic missile (ICBM).

Hagel also cited North Korea's display last April of what appeared to be a road-mobile ICBM.

The Pentagon said the United States had informed China, North Korea's neighbor and closest ally, of its decision to add more interceptors but declined to characterize Beijing's reaction.

U.S. SAYS SYSTEMS NOT AIMED AT CHINA OR RUSSIA

Officials say its missile defense systems are not designed to counter the large number of ICBMs in arsenals in China or Russia and are focused instead on the threat from North Korea or, potentially, Iran.

Friday's announcement came with a key caveat - the Pentagon said it would only purchase the extra interceptors if they perform appropriately in tests. The interceptors in question have not hit a target since 2008, a defense official said.

Boeing Co. is the prime contractor of the system. Key Boeing subcontractors include Raytheon Co., which makes the kill vehicle, and Orbital Sciences Corp, which makes the rocket booster.

Admiral James Winnefeld, vice chairman of the U.S. military's Joint Chiefs of Staff, expressed confidence in the missiles and said he believed the steps taken by the United States would make North Korea's young leader, Kim Jung-un, think twice before acting on bellicose rhetoric.

"We not only intend to put the mechanics in place to deny any potential North Korean objective to launch a missile to the United States, but also to impose costs on them if they do," he told reporters.

"And we believe that this young lad ought to be deterred by that. And if he's not, we'll be ready."

The addition of another 14 interceptors amounts to a reversal of an Obama administration decision in 2010 to stop expansion of the missile interceptor system at 30 interceptors. The Bush administration had planned to deploy a total of 44.

The United States currently has 26 interceptors deployed at Fort Greely and four at Vandenberg Air Force Base in California.

Congressman Mike Turner, chairman of the House Armed Services Subcommittee on Tactical Air and Land Forces, said the Obama administration had began "to realize the shortcomings of its missile defense strategy."

"Now that the administration has decided to see clearly, America can get back on the right course," Howard McKeon, chairman of the House Armed Services Committee, said in a statement, lamenting lost time and resources.

In a sign of fiscal pressures facing the Pentagon, U.S. officials acknowledged they were also forgoing development of a new anti-missile interceptor that would have been deployed in Europe. They said European defense would be unaffected.

Officials said the United States would move forward with congressionally mandated environmental impact studies for alternative sites in the United States for deploying additional ground-based interceptors, if needed.

Winnefeld said locations on the East Coast were being considered but declined to offer details.

"We're still looking at sites," he said.

(Reporting by Phil Stewart; Editing by Mohammad Zargham and David Brunnstrom)

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Speaker of the House John Boehner (R-OH) (front, in green tie) walks with Congressman Dave Camp (R-MI) (R) after a meeting with House Republicans about a ''fiscal cliff'' deal on Capitol Hill in Washington January 1, 2013.

NEW YORK | Wed Jan 2, 2013 12:16am EST

NEW YORK (Reuters) - U.S. stocks are poised for gains to begin the year after the late passage of a bill to avoid harsh tax hikes that would have hit most Americans and crimped economic growth.

However, harsh reality awaits any euphoria that comes from avoiding the "fiscal cliff". In two months, battles over further spending cuts and, in particular, the U.S. federal debt limit will come to a head.

The House of Representatives voted for a bill passed on Monday by the Senate that will raise taxes on wealthy individuals and families and preserve certain other benefits that will, together, soften some of the blow that would have been sustained without an agreement to avoid the fiscal cliff.

That puts Wall Street in prime position to begin 2013 with a rally, even if thorny issues remain to be addressed in the coming months in Washington.

Asian markets extended gains modestly, with the MSCI Asia Pacific ex-Japan index of stocks up 1.7 percent. U.S. markets will not have a chance to react until 6 a.m. ET, when futures trading begins after the New Year's Day holiday.

"When you separate the fundamentals of the economy from the headlines, the fundamentals really suggest we can support higher prices in the new year," said Bill Vaughn, equity portfolio manager at Evercore Wealth Management in San Francisco.

The Standard & Poor's 500 stock index ended the year up 13 percent, its best gain since 2009, mostly shrugging off the debt-related worries that dominated headlines during the year.

Equity markets held up in the last two months of the year as well, expecting a resolution to head off $600 billion in spending cuts and tax hikes that could push the economy into recession if they stay in effect for long. While the deadline to avert the cliff was December 31, legislation can be formulated to retroactively prevent going over.

The back-and-forth in recent weeks has primarily been of concern to businesses, where confidence has eroded. Some slowing in economic growth due to the impasse is expected, but that may play into the hands of value investors if the market corrects in coming months.

"It appears as though politics will dominate for some time," said Richard Bernstein, chief executive of Richard Bernstein Advisors in New York. "That being said, equity market valuations already reflect this ... the stock market is attractive from my perspective."

Stock markets around the world were closed Tuesday because of New Year's Day. Some Republicans in the House had expressed concern on Tuesday afternoon that a bill would not be finished before U.S. markets open.

Many traders will still be away from their desks because of the holiday, indicating trading volume will stay near its recent low levels. The anemic action, coupled with uncertainty over the cliff, resulted in a spike of volatility in December, with the CBOE Volatility index jumping 13.5 percent in the month.

DEBT CEILING BATTLE REMAINS

The bill that passed does not contain the kind of spending cuts that many conservative Republicans favor in order to bring down the high U.S. federal debt.

Even as this battle recedes, markets will look ahead to another fight in the next few months, this time over whether Congress will approve an increase in the U.S. debt ceiling.

The White House has said it will not negotiate the debt ceiling as in 2011, when the fight over what was once a procedural matter preceded the first-ever downgrade of the U.S. credit rating. But it may be forced into such a battle again. A repeat of that war is most worrisome for markets.

"The spending side fight looms and it will be tougher," said David Kotok, chairman and chief investment officer at Cumberland Advisors in Sarasota, Florida. "The Republican caucus is tighter on that side."

Markets posted several days of sharp losses in the period surrounding the fight in 2011. Even after a bill to increase the ceiling passed, stocks plunged in what was seen as a vote of "no confidence" in Washington's ability to function, considering how close lawmakers came to a default.

Economists at Goldman Sachs, in a note Tuesday, said the coming fight to raise the debt ceiling -- where Republicans are likely to demand spending cuts while President Obama pushes for more taxes -- "is likely to be at least as politically difficult as the last increase was in the summer of 2011."

During this fight, the markets have been less volatile, largely because the effects of the spending cuts and tax hikes will be gradual, and there was an ongoing expectation that a retroactive fix was in the offing.

(Additional reporting by David Gaffen, David Randall, Chuck Mikolajczak and Richard Leong; Editing by Neil Fullick and Paul Tait)

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1 of 10. Visitors look at Raphael's ''Auxiliary cartoon for the Head of a Young Apostle from 1519-1520 which has an estimated value of £10 to £15 million (US$16 - $24 million) at Sotheby's London October 8, 2012.

LONDON | Tue Oct 9, 2012 10:02am EDT

LONDON (Reuters) - The most surprising thing about this year's Frieze art week, which puts London at the cutting edge of the contemporary art world every October, is that there is so much old art around.

The annual Frieze Art Fair will go ahead as usual in a giant marquee in Regent's Park, a grid of 175 galleries teeming with potential buyers and thousands of contemporary art lovers keen to keep up with the latest trends in a fast-moving world.

And there are the spin-off events across the capital designed to lure the world's wealthiest buyers - auctions, rival fairs, parties, gallery openings, exhibitions and discreet viewings far from the hullabaloo.

But unlike previous editions, the October 11-14 fair this year comes with a separate Frieze Masters event featuring 96 galleries offering works from across the last 4,000 years.

The reasons for the shift are both commercial and cultural.

Organizers and exhibiting galleries are hoping for more crossover business between contemporary art collectors and those more interested in older works.

They also want to explore art's relationship with the past, representing an acceptance that what came before should be appreciated as well as challenged by iconoclastic young artists.

"I suppose what makes it interesting is what's come out of conversations with contemporary artists," said Victoria Siddall, director of the new fair. "It becomes apparent that a lot of them are looking at works that were made a long time ago.

"All galleries are interested in meeting new clients," she told Reuters. "There are old master and contemporary galleries, and I hope there will be a crossover. It would be great to broaden people's horizons in terms of what they collect."

"MEDICI" BUYERS

That crossover is already happening.

Among the most coveted clients for auction houses and galleries are so-called "Medici"-style buyers who acquire art across different periods and genres.

Sotheby's said 30 percent of buyers at its old master drawing sales had also bought art at its contemporary auctions, compared with seven percent in 2007.

It is no coincidence that it is displaying Raphael's 1519 "Head of an Apostle", which is worth up to $24 million, alongside Jackson Pollock, Francis Bacon and Gerhard Richter at its London headquarters this week.

Artists are also embracing Frieze's shift to the past.

The fair has organized a series of conversations bringing together leading contemporary artists with major curators.

On Thursday, London-born contemporary painter Cecily Brown talks with National Gallery director Nicholas Penny who is more used to talking about Raphael than Richter.

For Matthew Slotover, who with Amanda Sharp started Frieze Art Fair in 2003 and launched a New York edition this year, the new-look format was a way of keeping the event fresh.

"We think it's always good to innovate and try new things, as it keeps people interested and excited and us interested and excited too," he told Reuters.

"What we thought we could do with (Frieze Masters) was to animate all of this art that was radical when it was made."

RIVAL FAIRS

Rival fairs like PAD London, held in the exclusive Berkeley Square from October 10-14 and best known for showcasing 20th century art and design, will also delve into the past.

Galerie Mermoz, based in Paris, will present tribal art including a ceremonial head of Hacha representing the god Xipe Totec, dated 450-750 AD, from Mexico.

Modern PAD highlights include Alexander Calder's 1943 "Constellation with Red Knife" valued at $3.5 million.

Sotheby's offers Richter's "Abstraktes Bild (809-4)" for $14-19 million at its contemporary auction on October 12.

The painting has the added buzz of belonging to guitarist Eric Clapton who bought it and two other works by the German artist for $3.4 million in 2001.

That kind of price rise underlines how the top end of the art market has largely defied broader economic gloom.

Auction records have tumbled as buyers from the Middle East, Russia and China snap up top lots for private collections, long-term investments or to fill new museums and galleries.

"There's a lot of confidence in London at the moment," Slotover said of the art market. "London is a brilliant gateway to the rest of the world."

Not everyone is celebrating the boom.

Benedict Silverman, whose $160 million collection of works from early 20th century Germany and Austria is being sold for charity, blamed "speculators" for driving prices higher and making life difficult for collectors like himself.

"The prices paid these days are for trophies, not for art," he said.

"I think there is a bubble and I can't wait for it to break as real collectors are interested in the art, not the price."

(Reporting by Mike Collett-White, editing by Paul Casciato)

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