North Korea to target U.S. with nuclear, rocket tests

SEOUL (Reuters) - North Korea said on Thursday it would carry out further rocket launches and a nuclear test that would target the United States, dramatically stepping up its threats against a country it called its "sworn enemy".

The announcement by the country's top military body came a day after the U.N. Security Council agreed to a U.S.-backed resolution to censure and sanction North Korea for a rocket launch in December that breached U.N. rules.

North Korea is not believed to have the technology to deliver a nuclear warhead capable of hitting the continental United States, although its December launch showed it had the capacity to deliver a rocket that could travel 10,000 km (6,200 miles), potentially putting San Francisco in range, according to an intelligence assessment by South Korea.

"We are not disguising the fact that the various satellites and long-range rockets that we will fire and the high-level nuclear test we will carry out are targeted at the United States," North Korea's National Defence Commission said, according to state news agency KCNA.

North Korea is believed by South Korea and other observers to be "technically ready" for a third nuclear test, and the decision to go ahead rests with leader Kim Jong-un, who pressed ahead with the December rocket launch in defiance of the U.N. sanctions.

China, the one major diplomatic ally of the isolated and impoverished North, agreed to the U.S.-backed resolution and it also supported resolutions in 2006 and 2009 after Pyongyang's two earlier nuclear tests.

Thursday's statement by North Korea represents a huge challenge to Beijing as it undergoes a leadership transition, with Xi Jinping due to take office in March.

China's Foreign Ministry called for calm and restraint and a return to six-party talks, but effectively singled out North Korea, urging the "relevant party" not to take any steps that would raise tensions.

"We hope the relevant party can remain calm and act and speak in a cautious and prudent way and not take any steps which may further worsen the situation," ministry spokesman Hong Lei told reporters at a regular press briefing.

North Korea has rejected proposals to restart the talks aimed at reining in its nuclear capacity. The United States, China, Russia, Japan and the two Koreas are the six parties involved.

"After all these years and numerous rounds of six-party talks we can see that China's influence over North Korea is actually very limited. All China can do is try to persuade them not to carry out their threats," said Cai Jian, an expert on Korea at Fudan University in Shanghai.

Analysts said the North could test as early as February as South Korea prepares to install a new, untested president or that it could choose to stage a nuclear explosion to coincide with former ruler Kim Jong-il's Feb 16 birthday.

"North Korea will have felt betrayed by China for agreeing to the latest U.N. resolution and they might be targeting (China) as well (with this statement)," said Lee Seung-yeol, senior research fellow at Ewha Institute of Unification Studies in Seoul.

U.S. URGES NO TEST

Washington urged North Korea not to proceed with a third test just as the North's statement was published on Thursday.

"Whether North Korea tests or not is up to North Korea," Glyn Davies, the top U.S. envoy for North Korean diplomacy, said in the South Korean capital of Seoul.

"We hope they don't do it. We call on them not to do it," Davies said after a meeting with South Korean officials. "This is not a moment to increase tensions on the Korean peninsula."

The North was banned from developing missile and nuclear technology under sanctions dating from its 2006 and 2009 nuclear tests.

A South Korean military official said the concern now is that Pyongyang could undertake a third nuclear test using highly enriched uranium for the first time, opening a second path to a bomb.

North Korea's 2006 nuclear test using plutonium produced a puny yield equivalent to one kiloton of TNT - compared with 13-18 kilotons for the Hiroshima bomb - and U.S. intelligence estimates put the 2009 test's yield at roughly two kilotons

North Korea is estimated to have enough fissile material for about a dozen plutonium warheads, although estimates vary, and intelligence reports suggest that it has been enriching uranium to supplement that stock and give it a second path to the bomb.

According to estimates from the Institute for Science and International Security from late 2012, North Korea could have enough weapons grade uranium for 21-32 nuclear weapons by 2016 if it used one centrifuge at its Yongbyon nuclear plant to enrich uranium to weapons grade.

North Korea has not yet mastered the technology needed to make a nuclear warhead small enough for an intercontinental missile, most observers say, and needs to develop the capacity to shield any warhead from re-entry into the earth's atmosphere.

North Korea gave no time-frame for the coming test and often employs harsh rhetoric in response to U.N. and U.S. actions that it sees as hostile.

The bellicose statement on Thursday appeared to dent any remaining hopes that Kim Jong-un, believed to be 30 years old, would pursue a different path from his father, Kim Jong-il, who oversaw the country's military and nuclear programs.

The older Kim died in December 2011.

"The UNSC (Security Council) resolution masterminded by the U.S. has brought its hostile policy towards the Democratic Peoples Republic of Korea (North Korea) to its most dangerous stage," the commission was quoted as saying.

(Additional reporting by Christine Kim in SEOUL, Ben Blanchard and Sui-Lee Wee in Beijing; Writing by David Chance; Editing by Raju Gopalakrishnan and Ron Popeski)

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Cameron warns companies must 'pay fair share' of taxes

DAVOS: British Prime Minister David Cameron warned Thursday that corporations must "pay their fair share" of taxes and said he would use Britain's G8 chairmanship to counter tax avoidance.

Speaking at the World Economic Forum in Davos, Cameron said too many global businesses were abusing tax schemes, after Britain last year announced a crackdown on multinationals such as Starbucks, Google and Amazon, claiming they are avoiding huge tax bills.

"When some businesses aren't seen to pay their taxes, that is corrosive to public trust," Cameron said in a speech to the global political and business elite.

"We want to use the G8 to drive a more serious debate on tax evasion and avoidance. This is an issue whose time has come," he said.

He said Britain would use its chairmanship this year of the Group of Eight rich nations to push for cross-border action on tax avoidance.

"Clamp down in one country and the travelling caravan of lawyers, accountants and financial gurus just moves on elsewhere. So we need to act together at the G8," Cameron said.

He insisted such moves were not anti-business.

"I believe in low taxes... I'm a low-tax Conservative. But I'm not a companies-should-pay-no-tax Conservative," Cameron said. "Individuals and businesses must pay their fair share."

Britain last month announced a campaign against "tax dodgers" and "cowboy advisers" to claw back £2 billion a year, after lawmakers alleged that multinationals were involved in "immoral" avoidance of tax.

German Chancellor Angela Merkel stressed that tax evasion and fraud was also an "enormously important issue" for the Group of 20 major economies.

"Every financial instrument, every financial product, every financial market, needs to be placed under regulation," said the chancellor.

"We are very far from that and I can only call on the financial industry to support us on this because another bubble that we create would bring another crisis for the global economy, which would be very difficult to overcome," she added.

Taxand, the world's largest independent global organisation of specialist tax advisors to multinational businesses, hit back saying that harmonisation of rules was not necessarily the best solution to tax fraud.

Multinationals should enter into talks with the relevant tax authorities "to obtain prior agreements for a particular initiative or investment," said Frederic Donnedieu de Vabres, the group's chairman.

"It is this, as opposed to a pursuit of harmonisation, that perhaps poses the best way forward," he added.

- AFP/jc

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Belkin buying Linksys

Previous reports of Cisco looking to sell its home router division have turned out to be true.

Belkin announced this afternoon that it is planning to acquire Cisco's home networking business unit, which includes the Linksys brand.

While Belkin will also be grabbing some other products, resources, and employees from Cisco's home networking group, it maintained that the Linksys name will remain intact.

Belkin also promised to offer support for Linksys products, and guaranteed that it would honor valid warranties for current and future Linksys products.

Linksys will enhance Belkin's capabilities to meet the needs of OEMs, as well as provide access to a large user base. Belkin and Cisco intend to pursue a strategic relationship focused on a variety of initiatives, including retail distribution, strategic marketing, and products for the service provider market.

Cisco originally purchased the home router company for $500 million in 2003.

After selling or killing off a few other consumer-focused units and products (such as the Flip camcorder), San Jose, Calif.-based Cisco appears to be dedicated to only business and enterprise products.

The buyout is also expected to grow Belkin's reach considerably. After the transaction closes, Belkin asserted, it will account for approximately 30 percent of the U.S. retail home and small business networking market.

Financial terms of the deal have not been disclosed, but the merger is expected to be completed by March.

This story originally appeared at ZDNet's Between the Lines under the headline Belkin buying Cisco's home networking business Linksys.

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Women now equal men in lung cancer deaths

U.S. women who smoke today have a much greater risk of dying from lung cancer than they did decades ago, partly because they are starting younger and smoking more - that is, they are lighting up like men, new research shows.

Men who smoke have long had higher lung cancer death rates, but now women have caught up in their risk of dying from smoking-related illnesses. Lung cancer risk leveled off in the 1980s for men but is still rising for women, the study found.

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"It's a massive failure in prevention," said one study leader, Dr. Michael Thun of the American Cancer Society. And it's likely to repeat itself in places like China and Indonesia where smoking is growing, he said. About 1.3 billion people worldwide smoke.

The research is in Thursday's New England Journal of Medicine. It is one of the most comprehensive looks ever at long-term trends in the effects of smoking and includes the first generation of U.S. women who started early in life and continued for decades, long enough for health effects to show up.

The U.S. has more than 35 million smokers - about 20 percent of men and 18 percent of women. The percentage of people who smoke is far lower than it used to be; rates peaked around 1960 in men and two decades later in women.

In 2009, 205,974 people in the United States were diagnosed with lung cancer, including 110,190 men and 95,784 women, according to the Centers for Disease Control and Prevention. That same year, 87,694 men and 70,387 women passed away from the disease.

Researchers wanted to know if smoking is still as deadly as it was in the 1980s, given that cigarettes have changed (less tar), many smokers have quit, and treatments for many smoking-related diseases have improved.

They also wanted to know more about smoking and women. The famous surgeon general's report in 1964 said smoking could cause lung cancer in men, but evidence was lacking in women at the time since relatively few of them had smoked long enough.

One study, led by Dr. Prabhat Jha of the Center for Global Health Research in Toronto, looked at about 217,000 Americans in federal health surveys between 1997 and 2004.

A second study, led by Thun, tracked smoking-related deaths through three periods - 1959-65, 1982-88 and 2000-10 - using seven large population health surveys covering more than 2.2 million people.

Among the findings:

- The risk of dying of lung cancer was more than 25 times higher for female smokers in recent years than for women who never smoked. In the 1960s, it was only three times higher. One reason: After World War II, women started taking up the habit at a younger age and began smoking more.

-A person who never smoked was about twice as likely as a current smoker to live to age 80. For women, the chances of surviving that long were 70 percent for those who never smoked and 38 percent for smokers. In men, the numbers were 61 percent and 26 percent.

-Smokers in the U.S. are three times more likely to die between ages 25 and 79 than non-smokers are. About 60 percent of those deaths are attributable to smoking.

-Women are far less likely to quit smoking than men are. Among people 65 to 69, the ratio of former to current smokers is 4-to-1 for men and 2-to-1 for women.

-Smoking shaves more than 10 years off the average life span, but quitting at any age buys time. Quitting by age 40 avoids nearly all the excess risk of death from smoking. Men and women who quit when they were 25 to 34 years old gained 10 years; stopping at ages 35 to 44 gained 9 years; at ages 45 to 54, six years; at ages 55 to 64, four years.

-The risk of dying from other lung diseases such as emphysema and chronic bronchitis is rising in men and women, and the rise in men is a surprise because their lung cancer risk leveled off in 1980s.

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Shocking ads: Tips from smokers

Changes in cigarettes since the 1960s are a "plausible explanation" for the rise in non-cancer lung deaths, researchers write. Most smokers switched to cigarettes that were lower in tar and nicotine as measured by tests with machines, "but smokers inhaled more deeply to get the nicotine they were used to," Thun said. Deeper inhalation is consistent with the kind of lung damage seen in the illnesses that are rising, he said.

Scientists have made scant progress against lung cancer compared with other forms of the disease, and it remains the leading cause of cancer deaths worldwide. More than 160,000 people die of it in the U.S. each year.

The federal government, the Canadian Institutes of Health Research, the Bill and Melinda Gates Foundation, the cancer society and several universities paid for the new studies. Thun testified against tobacco companies in class-action lawsuits challenging the supposed benefits of cigarettes with reduced tar and nicotine, but he donated his payment to the cancer society.

Smoking needs more attention as a health hazard, Dr. Steven A. Schroeder of the University of California, San Francisco, wrote in a commentary in the journal.

"More women die of lung cancer than of breast cancer. But there is no `race for the cure' for lung cancer, no brown ribbon" or high-profile advocacy groups for lung cancer, he wrote.

Kathy DeJoseph, 62, of suburban Atlanta, finally quit smoking after 40 years - to qualify for lung cancer surgery last year.

"I tried everything that came along, I just never could do it," even while having chemotherapy, she said.

It's a powerful addiction, she said: "I still every day have to resist wanting to go buy a pack."

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Pentagon to Allow Women in Combat

Defense Secretary Leon Panetta will lift a longstanding ban on women serving in combat, according to senior defense officials.

The services have until this May to come up with a plan to implement the change, according to a Defense Department official.

That means the changes could come into effect as early as May. The services will have until January 2016 to complete the implementation of the changes.

The military services will also have until Janurary 2016 to seek waivers for certain jobs -- but those waivers will require a personal approval from the secretary of defense and will have to be based on rationales other than the direct combat exclusion rule.

The move to allow women in combat, first reported by the Associated Press, was not expected this week, although there has been a concerted effort by the Obama administration to further open up the armed forces to women.

The Joint Chiefs of Staff unanimously recommended in January to Secretary Panetta that the direct combat exclusion rule should be lifted.

"I can confirm media reports that the secretary and the chairman are expected to announce the lifting of the direct combat exclusion rule for women in the military," said a senior Defense Department official. "This policy change will initiate a process whereby the services will develop plans to implement this decision, which was made by the secretary of defense upon the recommendation of the Joint Chiefs of Staff."

Chairman of the Joint Chiefs Gen. Martin Dempsey sent Panetta a memo earlier this month entitled, "Women in Service Implementation Plan."

"The time has come to rescind the direct combat exclusion rule for women and to eliminate all unnecessary gender-based barriers to service," the memo read.

Adek Berry/AFP/Getty Images

"To implement these initiatives successfully and without sacrificing our warfighting capability or the trust of the American people, we will need time to get it right," he said in the memo, referring to the 2016 horizon.

Women have been officially prohibited from serving in combat since a 1994 rule that barred them from serving in ground combat units. That does not mean they have been immune from danger or from combat.

As Martha Raddatz reported in 2009, women have served in support positions on and off the frontlines in Iraq and Afghanistan, where war is waged on street corners and in markets, putting them at equal risk. Hundreds of thousands of women deployed with the military to those two war zones over the past decade. Hundreds have died.

READ MORE: Female Warriors Engage in Combat in Iraq, Afghanistan

Woman have been able to fly combat sorties since 1993. In 2010, the Navy allowed them on submarines. But lifting restrictions on service in frontline ground combat units will break a key barrier in the military.

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Panetta's decision will set a January 2016 deadline for the military service branches to argue that there are military roles that should remain closed to women.

In February 2012 the Defense Department opened up 14,500 positions to women that had previously been limited to men and lifted a rule that prohibited women from living with combat units.

Panetta also directed the services to examine ways to open more combat roles to women.

However, the ban on direct combat positions has remained in place.

Advocates for equality in the services will be pleased. On Capitol Hill today, retired Chief Master Sgt. Cindy McNally, a victim of sexual assault in the military, said placing women in combat roles would help equalize the services and actually cut down on sexual assaults, which have emerged as a major problem in the military.

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'Avatar' director Cameron accused over screenplay

LOS ANGELES: A US judge ordered director James Cameron to hand over drafts of the screenplay for "Avatar" Wednesday, to lawyers for a man claiming he wrote the script on which the 3D blockbuster was based.

Eric Ryder is seeking compensation from Cameron and his production company Lightstorm Entertainment, claiming that the 2009 Oscar-nominated film is based on a story he wrote called "K.R.Z. 2068."

He filed a lawsuit in December 2011, saying he spent two years developing the story. On Wednesday Los Angeles Superior Court Judge Alan Rosenfield ordered Cameron's lawyers to turn over screenplay drafts.

"We have to be careful and sensitive about ideas and information," said the judge.

But he denied a request by Ryder's lawyers to grant access to the personal calendars of Cameron and Jon Landau, the chief operating officer of Cameron's Lightstorm Entertainment Inc.

Ryder's lawyer K. Andrew Kent said his legal team will also get access to backup tapes from computers used by Cameron.

"Avatar," about a paraplegic US marine with split loyalties after being sent to a distant world wanted for its mining potential, was seen as a breakthrough in the use of 3D technology, and has grossed more than US$2.7 billion worldwide.

- AFP/jc

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'Dell dude': I can save Dell, dude

He was a wonder in his day.

(Credit:
TelevisionArchives/YouTube Screenshot by Chris Matyszczyk/CNET)

I already know what you're thinking. I'm like that sometimes.

You're thinking: "What is he, high?"

You're thinking that because Ben Curtis, he who once used to invade your home through your TV and say, "You're getting a Dell, dude," believes he can make a comeback and resurrect the brand.

You're also thinking that because Curtis was once arrested for trying to buy marijuana in New York.

On the other hand, it's clear that Dell isn't in quite the shape that it used to be, and vultures -- I mean, admirers -- are circling to lend a hand.

Perhaps this is why it took just one e-mail from Bloomberg to Curtis in order to learn of his master plan.

"I think they're making a huge mistake and simply need to bring back the Dell Dude!," he wrote. "That's it. That's all they need to do. If they brought me back, their sales, stock and media presence would skyrocket. That is by FAR the smartest move they could make."

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Curtis knows smart. When he was ludicrously arrested in the pot bust, he did happen to be wearing a kilt.

It would be fair, too, to ask what the word "Dell" has conjured in people's minds since the company chose to release Curtis because of that arrest.

In my mind, the name is associated most strongly with "The Rich Kids of Instagram" and Padma Lakshmi's baby.

Why wouldn't a return of the Dude, deftly conceived, at least create a little renewed affection for the brand?

Perhaps it could start with him living in Colorado, creating a brand-new (and very legal) pot-growing business and running the whole thing on Dell machinery.

In successive episodes, he rises in the business world, all the time making the Dell product more aspirational. One day, he is asked to become CEO of Dell.

The tagline? "Dell Will Get You Higher," of course.

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Evidence shows bold L.A. priest abuse cover-up

(CBS News) LOS ANGELES - There is new evidence that leaders of the Catholic Church in Los Angeles maneuvered secretly to shield priests accused of sexually abusing children.

Documents just released indicate they never told parishioners -- or the police -- what they knew.

"What we're seeing in these files is but a glimpse into a very, very dark, and endless tunnel of secrecy, of abuse, of silence," said Raymond Boucher, a former altar boy and current lead attorney, representing some 500 victims of sex abuse by priests in the archdiocese of Los Angeles.

Files show L.A. archdiocese manipulation in abuse cases

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Raymond Boucher

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CBS News

The documents offer the strongest evidence yet of a cover-up that reached to the very top of Los Angeles clergy: Then-archbishop, now-retired Cardinal Roger Mahony.

"That has always been paramount for the church for decades: Protect itself from scandal," Boucher said.

Many of the documents are correspondence between Mahony and Monsignor Thomas Curry, his chief adviser on sex abuse. One concerns whether to allow Monsignor Peter Garcia to return to his duties in L.A. He had secretly been sent away for treatment in New Mexico for sexually abusing as many as 17 youngsters.

No one in the church hierarchy alerted authorities.

Mahony wrote on July 22, 1986: "I believe if Monsignor Garcia were to reappear here within the archdiocese we might very well have some type of legal action filed in both the criminal and civil sectors. Signed, sincerely yours in Christ, most reverend Roger Mahony."

Monsignor Curry concurred: "There are numerous - maybe 20 - adolescents or young adults that Peter Garcia was involved with in a first degree felony manner. The possibility of one of these seeing him is simply too great."

Cardinal Mahony issued this statement Tuesday to the victims: "I pray for them every single day."

It ends simply: "I'm sorry."

Victims held a press conference Tuesday. Manny Vega says was abused from age 10 to 15.

"Conscious, clear decisions were made to hide these priests and move them around and never, never did they consider the well-being of the children that they destroyed and left behind," Vega said.

Monsignor Garcia has passed away, and Monsignor Curry did not respond to requests for comment from CBS News.

As many as 30,000 more documents from the archdiocese sex abuse settlement are to be released in the coming weeks.

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Left Turn? Obama Speech Invigorates Progressives

A presidential campaign that was largely about jobs and the economy gave way during Monday's inaugural ceremonies to a sweeping affirmation of progressivism and call for "collective action."

Now, liberal allies of President Obama say they're closely watching to see whether the second-term president follows through on issues with which he has struggled before.

Obama's groundbreaking references to climate change and gay rights in his second inaugural address particularly surprised many progressive interest groups, which said their first-term frustrations have been replaced by a new sense of optimism.

"We are hopeful that the president's progressive speech signals a major strategy shift for the Obama administration," said Adam Green, co-founder of the Progressive Change Campaign Committee.

Green's group and other liberal Democrats have openly expressed disappointment in Obama since 2009, saying his agenda has fallen short. Many have cited his failure to advance an assault-weapons ban, as promised, enact climate change legislation or overhaul the nation's immigration system.

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Other progressives have chafed at Obama's extension of the Bush-era tax cuts for the wealthy in 2010 and move last month to make some of the cuts permanent, while putting changes to Social Security and Medicare on the table as part of a deficit-reduction deal.

During the election campaign, Obama ran no paid TV advertising that mentioned gays or gay rights, or the term "climate change," for example. Only four of his ads mentioned environmental issues, and two explicitly portrayed Obama as a defender of the coal industry, something anathema to many environmentalists.

"If the president's inaugural words and action on guns are the template for his governing strategy in a second term, that will allow the president to win big victories and secure a legacy of bold progressive change," Green said, responding to Obama's inaugural address.

In interviews with ABC News, advocates stressed that success on many liberal priorities remains a big "if," with a politically divided Congress and a record of failure by the White House to bridge the divide.

On the environment, activists say they are most closely watching the president's upcoming decision on the proposed Keystone XL Pipeline project, which would carry oil from the tar sands of Alberta to the U.S. Gulf Coast.

Obama delayed a decision on the project in January 2012, ordering a new environmental-impact study. But with that study nearing completion, he will be forced to weigh in on an issue that has pitted a need for jobs and cheaper energy with environmental and health concerns.

"The decision on the Keystone XL pipeline will be the first indicator about how seriously he's taking climate change over the next four years," said Erich Pica, president of Friends of the Earth, an environmental advocacy group opposed to the pipeline. "We'll know in the next month and a half to two months whether he does."

Bill McKibben, an author and leading environmentalist, said in a blog post that he is not holding his breath. "With words like that, it's easy to let ourselves dream that something major might be about to happen to fix the biggest problem the world has ever faced," he wrote.
"And given the record of the last four years, we know that too often rhetoric has yielded little in the way of results."

McKibben is organizing a major environmental rally in Washington on Feb. 17.

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Netanyahu claims election win despite losses

JERUSALEM (Reuters) - Hawkish Prime Minister Benjamin Netanyahu emerged the bruised winner of Israel's election on Tuesday, claiming victory despite unexpected losses to resurgent center-left challengers.

Exit polls showed the Israeli leader's Likud party, yoked with the ultra-nationalist Yisrael Beitenu group, would still be the biggest bloc in the 120-member assembly with 31 seats, 11 fewer than the 42 they held in the previous parliament.

If the exit polls compiled by three local broadcasters prove correct - and they normally do in Israel - Netanyahu would be on course for a third term in office, perhaps leading a hardline coalition that would promote Jewish settlement on occupied land.

But his weakened showing in an election he himself called earlier than necessary could complicate the struggle to forge an alliance with a stable majority in parliament.

The 63-year-old Israeli leader promised during his election campaign to focus on tackling Iran's nuclear ambitions if he won, shunting Palestinian peacemaking well down the agenda despite Western concern to keep the quest for a solution alive.

The projections showed right-wing parties with a combined strength of 61-62 seats against 58-59 for the center-left.

"According to the exit poll results, it is clear that Israel's citizens have decided that they want me to continue in the job of prime minister of Israel and to form as broad a government as possible," Netanyahu wrote on his Facebook page.

The centrist Yesh Atid (There is a Future) party, led by former television talk show host Yair Lapid, came second with 18 or 19 seats, exit polls showed - a stunning result for a newcomer to politics in a field of 32 contending parties.

Lapid won support amongst middle-class, secular voters by promising to resolve a growing housing shortage, abolish military draft exemptions for Jewish seminary students and seek an overhaul of the failing education system.

The once dominant Labour party led by Shelly Yachimovich was projected to take third place with 17 seats.

"YESH ATID SWEEP"

The mood was subdued at Netanyahu's Likud party election headquarters after the polls closed, with only a few hundred supporters in a venue that could house thousands.

"We anticipated we would lose some votes to Lapid, but not to this extent. This was a Yesh Atid sweep," Likud campaign adviser Ronen Moshe told Reuters.

A prominent Likud lawmaker, Danny Danon, told CNN: "We will reach out to everybody who is willing to join our government, mainly the center party of Yair Lapid."

If the prime minister can tempt Lapid to join a coalition, the ultra-Orthodox religious parties who often hold the balance of power in parliament might lose some of their leverage.

After a lacklustre campaign, Israelis voted in droves on a sunny winter day, registering a turnout of 66.6 percent, the highest since 2003. That buoyed center-left parties which had pinned their hopes on energizing an army of undecided voters against Netanyahu and his nationalist-religious allies.

Opinion polls before the election had predicted an easy win for Netanyahu, although the last ones suggested he would lose some votes to the Jewish Home party, which opposes a Palestinian state and advocates annexing chunks of the occupied West Bank.

The exit polls projected 12 seats for Jewish Home.

Full election results are due by Wednesday morning and official ones will be announced on January 30. After that, President Shimon Peres is likely to ask Netanyahu, as leader of the biggest bloc in parliament, to try to form a government.

The former commando has traditionally looked to religious, conservative parties for backing and is widely expected to seek out self-made millionaire Naftali Bennett, who heads the Jewish Home party and stole much of the limelight during the campaign.

But Netanyahu might, as Danon suggested, try to include more moderate parties to assuage Western concerns about Israel's increasingly hardline approach to the Palestinians.

WESTERN ANXIETY

British Foreign Secretary William Hague warned Israel on Tuesday it was losing international support, saying prospects for a two-state solution to the Israeli-Palestinian conflict were almost dead because of expanding Jewish settlements.

U.S.-brokered peace talks broke down in 2010 amid mutual acrimony. Since then Israel has accelerated construction in the West Bank and east Jerusalem - land the Palestinians want for their future state - much to the anger of Western partners.

Netanyahu's relations with U.S. President Barack Obama have been notably tense and Martin Indyk, a former U.S. ambassador to Israel, told the BBC the election was unlikely to change that.

"President Obama doesn't have high expectations that there's going to be a government in Israel committed to making peace and is capable of the kind of very difficult and painful concessions that would be needed to achieve a two-state solution," he said.

Tuesday's vote is the first in Israel since Arab uprisings swept the region two years ago, reshaping the Middle East.

Netanyahu, who had a first term as premier in the late 1990s, has said the turbulence, which has brought Islamist governments to power in several countries long ruled by secularist autocrats, including neighboring Egypt, shows the importance of strengthening national security.

He views Iran's nuclear program as a mortal threat to the Jewish state and has vowed not to let Tehran enrich enough uranium to make a single nuclear bomb - a threshold Israeli experts say could arrive as early as mid-2013.

Iran denies it is planning to build the bomb, and says Israel, widely believed to have the only nuclear arsenal in the Middle East, is the biggest threat to the region.

The issue barely registered during the election campaign, with a poll in Haaretz newspaper on Friday saying 47 percent of Israelis thought social and economic issues were the most pressing concern, against just 10 percent who cited Iran.

One of the first problems to face the next government, which is unlikely to take power before the middle of next month at the earliest, is the stuttering economy.

Data last week showed the budget deficit rose to 4.2 percent of gross domestic product in 2012, double the original estimate, meaning spending cuts and tax hikes look certain.

(Reporting by Jerusalem bureau; Editing by Alastair Macdonald)

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