Mali secures recaptured towns, donors pledge funds

DOUENTZA/GAO, Mali (Reuters) - French-backed Malian troops searched house-to-house in Gao and Timbuktu on Tuesday, uncovering arms and explosives abandoned by Islamist fighters, and France said it aimed to hand over longer-term security operations in Mali to an African force.

An 18-day offensive in France's former West African colony has pushed the militants out of major towns and into desert and mountain hideouts to head off the risk of Mali being used as a springboard for jihadist attacks in the wider region or Europe.

French and Malian troops retook the two Saharan trading towns of Timbuktu and Gao at the weekend virtually unopposed.

Doubts remain about just how quickly the African intervention force, known as AFISMA and now expected to exceed 8,000 troops, could be fully deployed in Mali to hunt down and eradicate retreating al Qaeda-allied insurgents in the north.

International donors meeting in Addis Ababa pledged just over $455 million for the Mali crisis. But it was not clear whether all of this would go directly to AFISMA, which African leaders have estimated will cost almost $1 billion.

"You will certainly understand that it is not sufficient. But I think it is only the beginning. We hope that it will continue, and that the money we need will come," Malian interim President Dioncounda Traore told reporters in Addis Ababa.

He earlier announced his government would aim to organize "credible" elections for July 31 in response to demands from major Western backers of the anti-rebel action.

Malian soldiers combed through the dusty alleys and mud-brick homes of Gao and Timbuktu. In Gao, they arrested at least five suspected rebels and sympathizers, turned over by local people, and uncovered caches of weapons and counterfeit money.

Fleeing Islamist fighters torched a Timbuktu library holding priceless ancient manuscripts, damaging many.

Residents reported some looting of shops in Timbuktu owned by Arabs and Tuaregs suspected of having helped the Islamists who had occupied the world-famous seat of Islamic learning, a UNESCO World Heritage site, since last year.

Malian troops have also been accused by international human rights groups of carrying out revenge killings of suspected Islamist rebels and sympathizers in retaken areas.

In the face of reports of such reprisals, France called on Tuesday for the swift deployment of international observers in Mali to ensure human rights are not abused.

DESERT HIDEOUTS

Malian army sources told Reuters pockets of armed Islamist fighters, on foot to avoid French air strikes, were still hiding in the savannah and deserts around Gao and Timbuktu and near main roads leading to them, parts of which were still unsafe.

The West African country has been in political limbo since a March 2012 coup triggered the Islamist takeover of the north.

France has sent around 3,000 troops to Mali at the request of its government but is anxious not to get bogged down in a messy counter-insurgency war in their former Sahel colony.

The French have also made clear that while the first phase of liberating the biggest north Mali towns may be over, a more difficult challenge to flush the Islamist desert insurgents from their isolated rural lairs still looms.

"We will stay as long as necessary. We want to make sure there will be a good handover between France and AFISMA. There is no question of us getting stuck in the mud," French Foreign Minister Laurent Fabius said in Addis Ababa.

MORE FUNDS NEEDED

The leading donors pledging funds in Addis Ababa were Japan, the European Union and the United States. But African Union officials could not immediately break down how much was intended for the African intervention force, how much for Mali's army and how much for broader humanitarian purposes.

"The participants are of the view there is a need to continue to work together to mobilize further resources," said AU Peace and Security Commissioner Ramtane Lamamra.

Ivory Coast President Alassane Ouattara, who chairs the West African bloc ECOWAS contributing the most troops for the African Mali force, estimated its cost at more than $950 million.

The United States and European governments are backing the French and African military operation against the Islamist rebels with logistical, airlift and intelligence support, but they are not sending combat troops.

They regard the intervention as vital to root out an al |Qaeda-allied insurgency in West Africa that could threaten African governments and Western interests from Mauritania to oil-producing Nigeria, as well as strike directly in Europe.

The head of the U.N. mission in Libya, Tarek Mitri, told the Security Council the French-led military intervention could worsen a "precarious" security situation inside Libya by pushing fighters and arms across its porous Saharan borders.

U.S. DRONES FOR NIGER

The bulk of the planned African intervention force for Mali is still struggling to get into the country, hampered by shortages of kit and supplies and lack of airlift capacity.

Around 2,000 troops are already on the ground to fight the Islamists, who have retreated to the rugged northeast mountains of the Adrar des Ifoghas range on the border with Algeria.

Burkina Faso, Benin, Nigeria, Senegal, Togo, Niger and Chad are providing soldiers. Burundi and other nations have pledged to contribute. Hundreds of soldiers from Chad and Niger with desert warfare experience have already crossed into Mali.

The commander of Chad's forces in Mali, Abdu Aziz Hassan Adam, told Reuters in Gao his forces were ready to "sweep the terrorists out of the north of Mali. They are a threat for all the countries of the world".

Britain said on Tuesday up to 240 soldiers could take part in missions to train troops in Mali in addition to at least 90 already taking part in logistical operations.

The United States has extended deployment of surveillance drones that could track down rebel bases and columns in the Sahara desert. Mali's neighbor Niger on Tuesday gave permission for U.S. drones to fly from its territory.

The United States has also begun doing aerial refueling for French aircraft in Mali, has been sharing intelligence with France and by January 27 had ferried over 390 tonnes of equipment and supplies and over 500 personnel, the Pentagon said.

"This is a key effort...Terrorist groups have threatened to establish a safe haven in Mali and the French have done absolutely the right thing," said Pentagon spokesman George Little. Washington would consider further aid based on need.

(Additional reporting by Aaron Maasho in Addis Ababa, Laurent Prieur in Nouakchott, Mohammed Abbas in London, Abdoulaye Massalatchi in Niamey, Lucia Mutikani, Anna Yukhananov and David Storey in Washington; Writing by Pascal Fletcher; Editing by Mark Heinrich)

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Sixty-five people executed in Syria's Aleppo: activists

BEIRUT (Reuters) - At least 65 people were found shot dead with their hands bound in the northern Syrian city of Aleppo on Tuesday in a "new massacre" in the near two-year revolt against President Bashar al-Assad, activists said.

Opposition campaigners blamed the government but it was impossible to confirm who was responsible. Assad's forces and rebels have been battling in Syria's commercial hub since July and both have been accused of carrying out summary executions.

U.N.-Arab League mediator Lakhdar Brahimi told the U.N. Security Council "unprecedented levels of horror" had been reached in Syria, and that both the government and rebels had committed atrocious crimes, diplomats said.

He appealed to the 15-nation council to overcome its deadlock and take action to help end the civil war in which Syria is "breaking up before everyone's eyes".

More than 60,000 people are estimated to have been killed in the war, the longest and deadliest of the revolts that began throughout the Arab world two years ago.

The U.N. refugee agency said the fighting had forced more than 700,000 people to flee. World powers fear the conflict could envelop Syria's neighbors including Lebanon, Jordan and Turkey, further destabilizing an already explosive region.

Opposition activists posted a video of at least 51 muddied male bodies alongside what they said was the Queiq River in Aleppo's rebel-held Bustan al-Qasr neighborhood.

The bodies had what looked like bullet wounds in their heads and some of the victims appeared to be young, possibly teenagers, dressed in jeans, shirts and trainers.

Aleppo-based opposition activists who asked not to be named for security reasons blamed pro-Assad militia fighters.

They said the men had been executed and dumped in the river before floating downstream into the rebel area. State media did not mention the incident.

The British-based Syrian Observatory for Human Rights, which says it provides objective information about casualties on both sides of Syria's war from a network of monitors, said the footage was evidence of a new massacre and the death toll could rise as high as 80.

"They were killed only because they are Muslims," said a bearded man in another video said to have been filmed in central Bustan al-Qasr after the bodies were removed from the river. A pickup truck with a pile of corpses was parked behind him.

STALEMATE

It is hard for Reuters to verify such reports from inside Syria because of restrictions on independent media.

Rebels are stuck in a stalemate with government forces in Aleppo - Syria's most populous city which is divided roughly in half between the two sides.

The revolt started as a peaceful protest movement against more than four decades of rule by Assad and his family, but turned into an armed rebellion after a government crackdown.

About 712,000 Syrian refugees have registered in other countries in the region or are awaiting processing as of Tuesday, the U.N. refugee agency said.

"We have seen an unrelenting flow of refugees across all borders. We are running double shifts to register people," Sybella Wilkes, spokeswoman for the U.N. High Commissioner for Refugees (UNHCR), told Reuters in Geneva.

The United Nations said it had received aid promises ahead of a donor conference in Kuwait on Wednesday where it is seeking $1.5 billion for refugees and people inside Syria. Washington announced an additional $155 million that its said brought the total U.S. humanitarian aid to the crisis to some $365 million.

Aid group Médecins Sans Frontières said the bulk of the current aid was going to government-controlled areas in Syria and called on donors to make sure they were even-handed.

MISSILES

In the eastern city of Deir al-Zor, insurgents including al Qaeda-linked Islamists captured a security agency after days of heavy fighting, according to an activist.

Some of the fighters were shown carrying a black flag with the Islamic declaration of faith and the name of the al-Nusra Front, which has ties to al Qaeda in neighboring Iraq.

The war has become heavily sectarian, with rebels who mostly come from the Sunni Muslim majority fighting an army whose top generals are mostly from Assad's Alawite sect, an offshoot of Shi'ite Islam. Assad has framed the revolt as a foreign-backed conspiracy and blames the West and Sunni Gulf states.

Fighting also took place in the northern town of Ras al-Ain, on the border with Turkey, between rebels and Kurdish militants, the Observatory said.

In Turkey, a second pair of Patriot missile batteries being sent by NATO countries are now operational, a German security official said.

The United States, Germany and the Netherlands each committed to sending two batteries and up to 400 soldiers to operate them after Ankara asked for help to bolster its air defenses against possible missile attack from Syria.

(Additional reporting by Sylvia Westall in Kuwait, Sabine Siebold in Berlin and Stephanie Nebehay in Geneva; Editing by Andrew Heavens and Robin Pomeroy)

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Mursi due in Germany on visit shortened by Egypt crisis

CAIRO/BERLIN (Reuters) - President Mohamed Mursi is to leave Egypt's political crisis behind on Wednesday with a short trip to Germany to seek urgently needed foreign investment and convince Europe of his democratic credentials.

But with the Egyptian army chief warning on Tuesday that the state was on the brink of collapse after days of lethal street violence, Mursi cancelled plans to go on to Paris from Berlin and will instead hurry back to Cairo later in the day.

Fifty-two people have been killed in unrest surrounding the two-year anniversary of Egypt's popular revolution, whose values Mursi's critics say he has betrayed.

His supporters say protesters want to overthrow Egypt's first democratically elected leader, who hails from the Muslim Brotherhood that was banned under former President Hosni Mubarak but has come to dominate Egypt since his downfall in 2011.

Mursi on Monday declared a month-long state of emergency in three violence-ridden cities on the Suez Canal - Port Said, Ismailia and Suez, imposing a curfew and allowing soldiers to arrest civilians.

The turmoil eased on Tuesday but the instability has stirred unease in the West about the direction of the Arab world's most populous country, where a currency slump has compounded severe economic problems.

Mursi will be keen to allay those fears when he meets German Chancellor Angela Merkel and powerful industry groups in Berlin.

"TURBULENCE"

"President Mursi is very welcome in Germany," Foreign Minister Guido Westerwelle told Reuters in an interview last week.

"He is the first democratically elected president in the history of Egypt. We all know that a revolution means a lot of turbulence ... Of course we are not happy with everything that has been decided in the last few months in Egypt but it is necessary to seek solutions, increase the dialogue."

Germany has praised Mursi's efforts in mediating a ceasefire between Israel and Palestinians in Gaza, but became concerned at Mursi's efforts last year to expand his powers and fast-track a constitution with an Islamist tint, something that his critics say does not reflect Egypt's communal diversity.

Mursi's vitriolic remarks against Jews and Zionists in 2010, when he was a senior Brotherhood official, disturbed many in Germany, whose Nazi past and strong support of Israel make it highly sensitive to anti-Semitism.

Germany industry leaders see potential in Egypt but are concerned about political instability there.

"At the moment many firms are waiting on political developments and are cautious on any big investments," said Hans Heinrich Driftmann, president of Germany's Chamber of Industry and Commerce (DIHK).

DIHK's Africa expert Steffen Behm said no companies were leaving Egypt but none were newly setting up there either.

Outgoing U.S. Secretary of State Hillary Clinton said in an interview with CNN on Tuesday that any collapse in Egypt would send shock waves across the wider region.

"(But) it cannot in any way be overlooked that there is a large number of Egyptians who are not satisfied with the direction of the economy and the political reform," she said.

"This is not an easy task. It's very difficult going from a closed regime and essentially one-man rule to a democracy that is trying to be born and learn to walk," said Clinton.

"You have to represent all of the people and the people have to believe that ... You have to have a constitution that respects and recognizes the rights of all people and doesn't in any way marginalize any group."

(Additional reporting by Gernot Heller in Berlin and Arshad Mohammed in Washington; Editing by Robin Pomeroy)

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Blind dissident urges global pressure on China over rights

WASHINGTON (Reuters) - Blind Chinese activist Chen Guangcheng urged the United States on Tuesday not to let business concerns prevent it from pressing China over human rights, saying America must never "offer the smallest compromise" on its principles.

Chen is a self-taught legal advocate whose escape from house arrest last April and subsequent refuge in the U.S. Embassy embarrassed China and led to a diplomatic tussle that ended with him leaving China to study in New York.

He used a speech at a human rights award ceremony in Washington to call on the world to hold China to account for repression and to urge ordinary Chinese to look to the example of Myanmar as they struggle to win their rights.

"I sincerely hope that everyone - petitioners, human rights workers, civil rights groups, national governments and especially the United States government - will come together to encourage progress in human rights," said Chen.

"There should be no compromise, even if there are large business interests at stake - dignity, freedom and justice are more important," he said in translated remarks read in English by actor and Tibet advocate Richard Gere.

Chen received the 2012 Tom Lantos Human Rights Prize, named after a California congressman who was the only Holocaust survivor to serve in the U.S. Congress. Lantos died in 2008.

The activist, now studying law at New York University, said he felt a "profound resonance in my heart" with Lantos from their shared experience escaping persecution and dictatorship.

"We must not only remember the atrocities of the fascists, but also recognize that today authoritarianism is firmly entrenched, and that the barbarism of the authoritarian system is the greatest threat to civilized societies," said Chen.

Chen endured 19 months of harsh house arrest in his home village in Shandong province before his escape, but said his family members and contacts continued to suffer. Chen's nephew Chen Kegui was jailed for 3 years after using knives to fend off local officials who burst into his home after Chen's escape.

"Recently, many friends and neighbors who I have been in touch with by phone have been taken into custody by the authorities for questioning. They have been threatened and made to describe what our conversations have been about," he said.

CHINESE PEOPLE "MAIN ACTORS"

The United States bore a special responsibility to uphold and promote its basic founding principles, despite economic weakness that has prompted some deference to fast-growing power China over human rights in recent years, he said.

While "it is clearly difficult to shift attention away from issues of finance and the economy, remember that placing undue value on material life will cause a deficit in spiritual life," said Chen.

"You must establish a long-term plan for human rights and not compromise on it, ever," he added.

China rejects outside criticism of its human rights record as unwarranted interference in its internal affairs.

Chen, whose dramatic escape last year won him a wide following on China's social media networks, said ordinary Chinese must be the "main actors" in achieving their rights.

"Democracy, freedom and justice don't just happen. We must strive for them through action," he said.

"Last year, Myanmar lifted the ban on political parties, and last Friday it abolished media censorship. What the people in Myanmar do, we can do, too," said Chen.

The New Hampshire-based Lantos Foundation for Human Rights and Justice has given previous annual awards to the Tibetan spiritual leader the Dalai Lama, Holocaust survivor and activist Elie Wiesel, and Paul Rusesabagina, a Rwandan hotel manager who hid and protected more 1,200 refugees during Rwanda's genocide.

(Editing by Philip Barbara)

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Australian PM surprises with Sept election call

CANBERRA (Reuters) - Australian Prime Minister Julia Gillard stunned voters on Wednesday by setting a national election for September 14, eight months away, in her first major political speech for 2013.

Elections must be held in Australia by the end of the year, but Gillard said she wanted to end political uncertainty by setting the date now.

"It is not right for Australians to be forced into a guessing game, and it's not right for Australians to not face this year with certainty and stability," Gillard said.

"So in the interests of certainty, in the interest of transparency, in the interest of good governance, I have made the date clear today."

Gillard's minority Labor government holds a one seat majority with support from a group of independents and the Greens, and polls suggest the Liberal opposition would easily win office if an election were held now.

The election will decide whether Australia keeps its controversial carbon tax, and a 30 percent tax on coal and iron ore mining profits, which the conservative opposition has promised to scrap it if wins power.

But apart from these two policy differences, the government and opposition differ little on domestic issues, and both firmly support greater involvement with China, the country's biggest trade partner.

Gillard said the governor-general would dissolve the current parliament on August 12, giving the government two more sessions of parliament to pass laws and deliver its May budget.

Gillard used the speech to the National Press Club to lay the groundwork for an election year battle focused on the economy, arguing that a strong economy is necessary to ensure fairness in education and disability services -- two key election policies aimed at Labor heartland voters.

Australia's resource economy is expected to slow this year as a stubbornly high currency crimps export earnings and a boom in mining investment plateaus. Australia's A$1.5 trillion ($1.53 trillion) economy has grown for the past 22 years and has overtaken Spain as the world's 12th largest economy.

"We just don't have the sense that the economy will go into hibernation just because an election is coming in eight months time," said Michael Turner, a strategist at RBC Capital Markets.

There was no discernible reaction in financial markets on Wednesday. The Australian dollar remained firm, hitting its highest level against the Japanese yen in over four years. The share market reached a fresh 21-month high and government bonds were steady.

Though the government has dropped its pledge to reach a budget surplus for 2012/13, any deficit is still likely to be a fraction of the economy's A$1.5 trillion in annual economic output and no worry to investors.

Under Australian laws, governments serve for three-year terms and the prime minister has the right to decide the election date. By calling a September election, Gillard's government will have served a full term.

Gillard said she did not want her announcement to mark the start of an eight-month election campaign.

"I do so not to start the nation's longest election campaign - quite the opposite," she told the National Press Club.

"It should be clear to all which are the days of governing and which are the days of campaigning. Announcing the election date now enables individuals and business, investors and consumers to plan their year."

(Additional reporting by Wayne Cole in Sydney; Editing by Michael Perry)

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Egyptian protesters defy curfew, attack police stations

CAIRO/ISMAILIA, Egypt (Reuters) - Egyptian protesters defied a nighttime curfew in restive towns along the Suez Canal, attacking police stations and ignoring emergency rule imposed by Islamist President Mohamed Mursi to end days of clashes that have killed at least 52 people.

At least two men died in overnight fighting in the canal city of Port Said in the latest outbreak of violence unleashed last week on the eve of the anniversary of the 2011 revolt that brought down autocrat Hosni Mubarak.

Political opponents spurned a call by Mursi for talks on Monday to try to end the violence.

Instead, huge crowds of protesters took to the streets in Cairo, Alexandria and in the three Suez Canal cities - Port Said, Ismailia and Suez - where Mursi imposed emergency rule and a curfew on Sunday.

"Down, down with Mohamed Mursi! Down, down with the state of emergency!" crowds shouted in Ismailia. In Cairo, flames lit up the night sky as protesters set police vehicles ablaze.

In Port Said, men attacked police stations after dark. A security source said some police and troops were injured. A medical source said two men were killed and 12 injured in the clashes, including 10 with gunshot wounds.

"The people want to bring down the regime," crowds chanted in Alexandria. "Leave means go, and don't say no!"

The demonstrators accuse Mubarak's successor Mursi of betraying the two-year-old revolution. Mursi and his supporters accuse the protesters of seeking to overthrow Egypt's first ever democratically elected leader through undemocratic means.

Since Mubarak was toppled, Islamists have won two referendums, two parliamentary elections and a presidential vote. But that legitimacy has been challenged by an opposition that accuses Mursi of imposing a new form of authoritarianism, and punctuated by repeated waves of unrest that have prevented a return to stability in the most populous Arab state.

WEST UNNERVED

The army has already been deployed in Port Said and Suez and the government agreed a measure to let soldiers arrest civilians as part of the state of emergency.

The instability unnerves Western capitals, where officials worry about the direction of powerful regional player that has a peace deal with Israel. The United States condemned the bloodshed and called on Egyptian leaders to make clear violence is not acceptable. ID:nW1E8MD01C].

In Cairo on Monday, police fired volleys of teargas at stone-throwing protesters near Tahrir Square, cauldron of the anti-Mubarak uprising. Demonstrators stormed into the downtown Semiramis Intercontinental hotel and burned two police vehicles.

A 46-year-old bystander was killed by a gunshot early on Monday, a security source said. It was not clear who fired.

"We want to bring down the regime and end the state that is run by the Muslim Brotherhood," said Ibrahim Eissa, a 26-year-old cook, protecting his face from teargas wafting towards him.

The political unrest in the Suez Canal cities has been exacerbated by street violence linked to death penalties imposed on soccer supporters convicted of involvement in stadium rioting in Port Said a year ago.

Mursi's invitation to opponents to hold a national dialogue with Islamists on Monday was spurned by the main opposition National Salvation Front coalition, which rejected the offer as "cosmetic and not substantive".

The only liberal politician who attended, Ayman Nour, told Egypt's al-Hayat channel after the meeting ended late on Monday that attendees agreed to meet again in a week.

He said Mursi had promised to look at changes to the constitution requested by the opposition but did not consider the opposition's request for a government of national unity.

The president announced the emergency measures on television on Sunday: "The protection of the nation is the responsibility of everyone. We will confront any threat to its security with force and firmness within the remit of the law," Mursi said.

His demeanor in the address infuriated his opponents, not least when he wagged a finger at the camera.

Some activists said Mursi's measures to try to impose control on the turbulent streets could backfire.

"Martial law, state of emergency and army arrests of civilians are not a solution to the crisis," said Ahmed Maher of the April 6 movement that helped galvanize the 2011 uprising. "All this will do is further provoke the youth. The solution has to be a political one that addresses the roots of the problem."

(Additional reporting by Edmund Blair and Yasmine Saleh in Cairo and Abdelrahman Youssef in Alexandria; Writing by Edmund Blair, Yasmine Saleh and Peter Graff)

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Dutch Queen abdicates, Willem-Alexander to succeed

AMSTERDAM (Reuters) - Dutch Queen Beatrix, who turns 75 on Thursday, announced she was abdicating in favor of her son, Prince Willem-Alexander, telling her country it was time to hand the crown to the next generation after more than three decades on the throne.

Willem-Alexander, 45, who will be sworn in as king on April 30, is married to Princess Maxima, who comes from Argentina, and has three young children.

Decades of grooming for the throne involved shaking off his image as a beer-drinking fraternity boy whose blunt comments upset the press and politicians and did not fit the image of the Netherlands' low-key "bicycling monarchy".

Speaking calmly in a television broadcast, Beatrix, who once faced scandal over her father's involvement in a bribery case and whose middle son lies in a coma after a skiing accident, said she was stepping down because she felt Willem-Alexander was now ready to take her place on the throne.

"I am not stepping down because the tasks of the function are too great, but out of the conviction that the responsibilities of our country should be passed on to a new generation," she said.

"It is with the greatest confidence that on April 30 of this year I will pass on the kingship to my son, the Prince of Orange. He and Princess Maxima are entirely ready for their future tasks."

The decision appeared popular with ordinary Dutch people.

"She's been a strong, hard-working woman but it is good that she is now giving room to a younger generation," said Mandy, a 26-year-old who works as a secretary in Amsterdam.

A constitutional monarchy, the Netherlands has reduced the involvement of the Royal House in politics. The queen had taken part in forming government coalitions by appointing a mediator, a role that raised questions about undue influence on the democratic process and which was scrapped last year.

Sources close to the royal family said Beatrix did not want to go until she felt her son was ready and his children were old enough. She also wanted to ensure that anti-immigrant, euroskeptic politician Geert Wilders, of whom she disapproved, was in no danger of assuming real political influence.

She alluded in speeches to the need for tolerance and multi-culturalism, comments that were seen as criticisms of Wilders' anti-Islamic views - while Wilders criticized the queen, who has a penchant for huge hats, when she donned a Muslim headcovering on a trip to the Middle East.

Wilders' poor showing at the last election and loss of influence in politics, could well have contributed to her decision to abdicate.

FIRST KING IN A CENTURY

With Willem-Alexander on the throne, the Netherlands is likely to revive the debate about the role of the monarchy and the high cost of maintaining the royal household, particularly when ordinary Dutch people are having to deal with austerity measures.

"There is an ongoing discussion about the role of the royals in a modern society, and that discussion needs to continue," said Diederik Samsom, leader of the Labour Party, which is part of Prime Minister Mark Rutte's coalition government.

As queen, Beatrix often headed trade missions, most recently in Singapore, and was involved in promoting Dutch defense sales in the Middle East.

Beatrix, whose full name is Beatrix Wilhelmina Armgard, Princess of Oranje-Nassau, Princess of Lippe-Biesterfeld, has been on the throne since 1980, when she took over from Queen Juliana.

Dutch queens have made a tradition of stepping aside for the next generation over the last century. Queen Wilhemina handed over to her daughter in 1948 after half a century on the throne. Queen Juliana was in deteriorating mental health when she made way for the 42-year-old Beatrix in 1980.

Willem-Alexander, who majored in history and has specialized in water management, will become Willem IV -- the first Dutch king in more than a century.

SCANDALS, TRAGEDY

The Dutch royal family is popular with the public, but like the British royals, it has not escaped scandal and controversy.

While she was still Crown Princess, Beatrix married former German diplomat Claus von Amsberg in 1966, and faced street protests over her choice of husband.

Von Amsberg had been a member of the Hitler Youth, albeit involuntarily, and as a teenager served briefly in the army of the country which occupied the Netherlands in World War Two.

Prince Claus later underwent treatment for severe depression between in the 1980s, blaming the difficulty he found in reconciling his private life with his responsibilities as a public figure.

In the 1970s, Beatrix intervened in the most serious crisis to hit the royal family since the war, threatening not to take up the throne should parliament decide to prosecute her father Prince Bernhard for taking bribes in the Lockheed scandal.

The queen was emotionally shaken when a man drove his car into a Queen's Day procession in 2009.

Willem-Alexander, the queen's eldest son, was once the darling of Dutch tabloids because of his love of fast cars, good-looking women, and partying.

He caused a stir when he married a commoner whose father was a civilian minister in Argentina's military dictatorship from 1976-1983. But his bride, Maxima Zorrigueta, quickly won over the public with her easy manner and quick mastery of Dutch, and often seems to be more popular than her husband.

Last year, the family faced tragedy when Willem-Alexander's younger brother, Prince Friso, had a skiing accident in Austria while going off-piste. He is still in a coma.

(Reporting by Sara Webb and Anthony Deutsch; Additional reporting by Gilbert Kreijger; Editing by Robin Pomeroy and Giles Elgood)

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Iran launches monkey into space, showing missile progress

DUBAI (Reuters) - Iran said on Monday it had launched a live monkey into space, seeking to show off missile systems that have alarmed the West because the technology could potentially be used to deliver a nuclear warhead.

The Defense Ministry announced the launch as world powers sought to agree a date and venue with Iran for resuming talks to resolve a standoff with the West over Tehran's contested nuclear program before it degenerates into a new Middle East war.

Efforts to nail down a new meeting have failed repeatedly and the powers fear Iran is exploiting the diplomatic vacuum to hone the means to produce nuclear weapons.

The Islamic Republic denies seeking weapons capability and says it seeks only electricity from its uranium enrichment so it can export more of its considerable oil wealth.

The powers have proposed new talks in February, a spokesman for the European Union's foreign policy chief said on Monday, hours after Russia urged all concerned to "stop behaving like children" and commit to a meeting.

Iran earlier in the day denied media reports of a major explosion at one of its most sensitive, underground enrichment plants, describing them as Western propaganda designed to influence the nuclear talks.

The Defense Ministry said the space launch of the monkey coincided "with the days of" the Prophet Mohammad's birthday, which was last week, but gave no date, according to a statement carried by the official news agency IRNA.

The launch was "another giant step" in space technology and biological research "which is the monopoly of a few countries", the statement said.

The small grey monkey was pictured strapped into a padded seat and being loaded into the Kavoshgar rocket dubbed "Pishgam" (Pioneer) which state media said reached a height of more than 120 km (75 miles).

"This shipment returned safely to Earth with the anticipated speed along with the live organism," Defense Minister Ahmad Vahidi told the semi-official Fars news agency. "The launch of Kavoshgar and its retrieval is the first step towards sending humans into space in the next phase."

There was no independent confirmation of the launch.

SIGNIFICANT FEAT

In Washington, U.S. State Department spokeswoman Victoria Nuland told reporters she could not confirm whether Iran had successfully sent a monkey into space or conducted any launch at all, saying that if it had done so "it's a serious concern."

Nuland said such a launch would violate U.N. Security Council Resolution 1929, whose text bars Iran from "any activity related to ballistic missiles capable of delivering nuclear weapons, including launches using ballistic missile technology."

The West worries that long-range ballistic technology used to propel Iranian satellites into orbit could be put to use dispatching nuclear warheads to a target.

Bruno Gruselle of France's Foundation for Strategic Research said that if the monkey launch report were true it would suggest a "quite significant" engineering feat by Iran.

"If you can show that you are able to protect a vehicle of this sort from re-entry, then you can probably protect a military warhead and make it survive the high temperatures and high pressures of re-entering," Gruselle said.

The monkey launch would be similar to sending up a satellite weighing some 2,000 kg (4,400 pounds), he said. Success would suggest a capacity to deploy a surface-to-surface missile with a range of a few thousand kilometers (miles).

Michael Elleman, a missile expert at the International Institute for Strategic Studies think-tank, said Iran had demonstrated "no new military or strategic capability" with the launch.

"Nonetheless, Iran has an ambitious space exploration program that includes the goal of placing a human in space in the next five or so years and a human-inhabited orbital capsule by the end of the decade," Elleman said. "Today's achievement is one step toward the goal, albeit a small one."

The Islamic Republic announced plans in 2011 to send a monkey into space, but that attempt was reported to have failed.

Nuclear-weapons capability requires three components - enough fissile material such as highly enriched uranium, a reliable weapons device miniaturized to fit into a missile cone, and an effective delivery system, such as a ballistic missile that can grow out of a space launch program.

Iran's efforts to develop and test ballistic missiles and build a space launch capability have contributed to Israeli calls for pre-emptive strikes on Iranian nuclear sites and billions of dollars of U.S. ballistic missile defense spending.

MANOEUVRING OVER NEXT TALKS

A spokesman for EU foreign policy chief Catherine Ashton said the powers had offered a February meeting to Iran, after a proposal to meet at the end of January was refused.

"Iran did not accept our offer to go to Istanbul on January 28 and 29 and so we have offered new dates in February. We have continued to offer dates since December. We are disappointed the Iranians have not yet agreed," Michael Mann reporters.

He said Iranian negotiators had imposed new conditions for resuming talks and that EU powers were concerned this might be a stalling tactic. The last in a sporadic series of fruitless talks was held last June.

Iranian officials deny blame for the delays and say Western countries squandered opportunities for meetings by waiting until after the U.S. presidential election in November.

"We have always said that we are ready to negotiate until a result is reached and we have never broken off discussions," IRNA quoted Iranian Foreign Minister Ali Akbar Salehi as saying.

Salehi has suggested holding the next round in Cairo but said the powers wanted another venue. He also said that Sweden, Kazakhstan and Switzerland had offered to host the talks.

In Moscow, Russian Foreign Minister Sergei Lavrov told a news conference: "We are ready to meet at any location as soon as possible. We believe the essence of our talks is far more important (than the site), and we hope that common sense will prevail and we will stop behaving like little children."

Ashton is overseeing diplomatic contacts on behalf of the powers hoping to persuade Tehran to stop higher-grade uranium enrichment and accept stricter U.N. inspections in return for civilian nuclear cooperation and relief from U.N. sanctions.

IRAN DENIES FORDOW BLAST

Reuters has been unable to verify reports since Friday of an explosion early last week at the underground Fordow bunker that some Israeli and Western media said wrought heavy damage.

"The false news of an explosion at Fordow is Western propaganda ahead of nuclear negotiations to influence their process and outcome," IRNA quoted deputy Iranian nuclear energy agency chief Saeed Shamseddin Bar Broudi as saying.

In late 2011 the plant at Fordow began producing uranium enriched to 20 percent fissile purity, well above the 3.5 percent level normally needed for nuclear power stations.

While such higher-grade enrichment remains nominally far below the 90 percent level required for an atomic bomb, nuclear proliferation experts say the 20 percent threshold represents the bulk of the time and effort involved in yielding weapons-grade material - if that were Iran's goal.

Tehran says its enhanced enrichment is to make fuel for a research reactor that produces isotopes for medical care.

Diplomats in Vienna, where the U.N. nuclear watchdog agency is based, said on Monday they had no knowledge of any incident at Fordow but were looking into the reports.

"I have heard and seen various reports but am unable to authenticate them," a senior diplomat in Vienna told Reuters.

The International Atomic Energy Agency, which regularly inspects declared Iranian nuclear sites including Fordow, had no immediate comment on the issue.

Iran has accused Israel and the United States of trying to sabotage its nuclear program with cyber attacks and assassinations of its nuclear scientists. Washington has denied any role in the killings while Israel has declined to comment.

(Additional reporting by William Maclean and Marcus George in Dubai, Justyna Pawlak in Brussels, Fredrik Dahl in Vienna; Writing by Mark Heinrich; Editing by Robin Pomeroy, Jon Hemming and Cynthia Osterman)

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French seal off Mali's Timbuktu, rebels torch library

GAO, Mali (Reuters) - French and Malian troops retook control of Timbuktu, a UNESCO World Heritage site, on Monday after Islamist rebel occupiers fled the ancient Sahara trading town and torched several buildings, including a library holding priceless manuscripts.

The United States and the European Union are backing a French-led intervention in Mali against al Qaeda-allied militants they fear could use the West African state's desert north as a springboard for international attacks.

The recovery of Timbuktu followed the swift capture by French and Malian forces at the weekend of Gao, another major town in Mali's north that had been occupied by the alliance of jihadist groups since last year.

The two-week-old mission by France in its former Sahel colony, at the request of Mali's government, has driven the Islamist rebels northwards out of towns into the desert and mountains.

Without a shot being fired, 1,000 French soldiers and paratroopers and 200 Malian troops seized Timbuktu airport and surrounded the town on the banks of the Niger River, looking to block the escape of insurgents.

In both Timbuktu and Gao, cheering crowds turned out to welcome the French and Malian troops.

A third town in Mali's vast desert north, Kidal, had remained in Islamist militant hands. But Malian Tuareg MNLA rebels, who are seeking autonomy for their northern region, said on Monday they had taken charge in Kidal after Islamist fighters abandoned it.

A diplomat in Bamako confirmed the MNLA takeover of Kidal.

A French military spokesman said the assault forces at Timbuktu were avoiding any fighting inside the city to protect the cultural treasures, mosques and religious shrines in what is considered a seat of Islamic learning.

But Timbuktu Mayor Ousmane Halle told Reuters departing Islamist gunmen had four days earlier set fire to the town's new Ahmed Baba Institute, which contained thousands of manuscripts.

UNESCO spokesman Roni Amelan said the Paris-based U.N. cultural agency was "horrified" by the news of the fire, but was awaiting a full assessment of the damage.

Ali Baba, a worker at the Ahmed Baba Institute, told Sky News in Timbuktu more than 3,000 manuscripts had been destroyed. "They are bandits. They have burned some manuscripts and also stole a lot of manuscripts which they took with them," he said.

Marie Rodet, an African history lecturer at Britain's School of Oriental and African Studies, said Timbuktu held one of the greatest libraries of Islamic manuscripts in the world.

"It's pure retaliation. They (the Islamist militant rebels) knew they were losing the battle and they hit where it really hurts," Rodet told Reuters. "These people are not interested in any intellectual debate. They are anti-intellectual."

ISLAMISTS "ALL FLED"

The Ahmed Baba Institute, one of several libraries and collections in Timbuktu containing fragile documents dating back to the 13th century, is named after a Timbuktu-born contemporary of William Shakespeare and houses more than 20,000 scholarly manuscripts. Some were stored in underground vaults.

The French and Malians have encountered no resistance so far in Timbuktu. But they will now have to comb through a labyrinth of ancient mosques, monuments, mud-brick homes and narrow alleyways to flush out any hiding fighters.

The Islamist forces comprise a loose alliance that groups Al Qaeda in the Islamic Maghreb (AQIM) with Malian Islamist group Ansar Dine and AQIM splinter MUJWA.

They have retreated in the face of relentless French air strikes and superior firepower and are believed to be sheltering in the rugged Adrar des Ifoghas mountain range, north of Kidal.

The MNLA Tuareg rebels who say they now hold Kidal have offered to help the French-led offensive against the al Qaeda-affiliated Islamists. It was not clear, however, whether the French and Malians would steer their offensive further towards Kidal, or hold negotiations with the MNLA.

FRANCE: MALI "BEING LIBERATED"

The world was shocked by Timbuktu's capture in April by Tuareg fighters, whose separatist rebellion was later hijacked by Islamist radicals who imposed severe sharia (Islamic law).

Provoking international outrage, the Muslim militants - who follow a more radical Salafist brand of Islam - destroyed dozens of ancient shrines in Timbuktu sacred to Sufi Muslims, condemning them as idolatrous and un-Islamic.

They also imposed a strict form of Islamic law, or sharia, authorizing the stoning of adulterers and amputations for thieves, while forcing women to go veiled.

On Sunday, many women among the thousands of Gao residents who came out to celebrate the rebels' expulsion made a point of going unveiled. Other residents smoked cigarettes and played music to flout the bans previously imposed by the rebels.

Hundreds of troops from Niger and Chad have been brought to Gao to help secure the town.

"Little by little, Mali is being liberated," French Foreign Minister Laurent Fabius told France 2 television.

Speaking at a news conference in Paris, French President Francois Hollande said French troops would take a step back once the job of retaking key towns was complete, and Malian and other African troops would take over the task of hunting the rebels.

"They are the ones who will go into the northern part, which we know is the most difficult because that's where the terrorists are hiding," Hollande said.

As the French and Malian troops thrust into northern Mali, African troops for a U.N.-backed continental intervention force for Mali, expected to number 7,700, are being flown into the country, despite severe delays and logistical problems.

Outgoing African Union Chairman President Thomas Boni Yayi of Benin scolded AU states at a weekend summit in Addis Ababa for their slow response to assist Mali while former colonial power France took the lead in the military operation.

Burkina Faso, Benin, Nigeria, Senegal, Togo, Niger and Chad are providing soldiers for the AFISMA force. Burundi and other nations have pledged to contribute.

AU Peace and Security Commissioner Ramtane Lamamra said these regional troops could play a useful "clean-up" role once the main military operations against the Islamist rebels end.

Speaking in Addis Ababa on Monday, U.N. Secretary-General Ban Ki-moon said the U.N. was "actively considering" helping the troop-contributing African countries with logistical support.

(Additional reporting by Richard Valdmanis in Sevare, Mali, Bate Felix and David Lewis in Dakar, Maria Golovina in London, Alexandria Sage, Vicky Buffery and Emmanuel Jarry in Paris, Tiemoko Diallo in Bamako, Abdoulaye Massalatchi in Niamey, Richard Lough and Aaron Masho in Addis Ababa; Writing by Pascal Fletcher; Editing by Andrew Heavens)

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Brazil detains band, club owners after deadly nightclub fire

SANTA MARIA, Brazil (Reuters) - Brazilian police investigating a nightclub fire that killed 231 people detained on Monday the owners of the club and two band members whose pyrotechnics show authorities say triggered the blaze.

No charges were filed against the four men, but prosecutors said they could be held for up to five days as police press them for clues as to how the fire early Sunday morning could have caused so many deaths.

Stunned residents in the southern city of Santa Maria attended a marathon of funerals beginning in the pre-dawn hours. After sunset, thousands joined a procession through the streets of the city, dressed in white and wearing black arm bands.

Some mourners demanded answers about the safety measures at the nightclub, where hundreds were trapped after the ceiling became engulfed in flames.

"Why the regulations? Why pay taxes? What is the government doing?" read a banner carried by university students who had lost friends in the fire.

The tragedy comes as Brazil prepares to host the 2014 World Cup soccer tournament and 2016 Olympics, putting its safety standards and emergency response capabilities in the international spotlight.

President Dilma Rousseff, who cut short a visit to Chile to fly to the scene of the disaster on Sunday, called for a minute of silence before addressing a meeting of newly elected mayors in the capital, Brasilia.

"The pain I saw in Santa Maria was indescribable," Rousseff said. "Faced with this tragedy, it is our duty to make sure it never happens again."

Most of the dead were suffocated by toxic fumes that rapidly filled the Kiss nightclub after the band set off a flare at about 2:30 a.m. on Sunday, authorities said.

The club's operating license was under review for renewal after expiring last year. Witnesses said bouncers initially blocked the only functioning exit because they believed fleeing customers were trying to skip out on their bar tabs.

Tarso Genro, governor of the prosperous southern state of Rio Grande do Sul where the disaster occurred, said authorities had shifted their focus from rescue and taking care of the wounded to investigating the scene.

"We're going to find out who was responsible," he vowed.

The death toll was revised down to 231 from 233 as officials said some names had been counted twice. By Monday night, 129 people were still hospitalized, 76 of them in serious condition, according to state health services.

Mourning throughout Brazil was mixed with frustration at a culture of lax regulation blamed for putting lives at risk.

"So many young ones with all of their lives ahead of them," Brazilian soccer legend Pele wrote on Twitter. "The government has to make a priority of event security in this country!"

SAFETY ENFORCEMENT UNEVEN

Relatives and friends of the dead demanded accountability, signaling the start of a wave of police probes, lawsuits and recriminations that could drag on for months or even years.

Based on testimony from more than 20 witnesses, investigators are now certain that the band's pyrotechnics show triggered the blaze, police official Sandro Meinerz said.

"I really didn't like those fireworks. The smell made me nauseous," the band's guitarist, Rodrigo Lemos Martins, told television network Globo in a joint interview with the drummer. "But we were just hired by the band, so it was the owners who were in charge."

The band's accordion player, Danilo Jaques, 30, was among those killed, but the other five members survived. The band's vocalist and production engineer were detained by police investigating who was responsible for firing the flare, according to Brazilian media.

It seems certain others will share the blame for Brazil's second-deadliest fire ever. The use of a flare inside the club was a clear breach of safety regulations, fire officials said.

Some details may never be known. Meinerz said the club owner told authorities that the club's internal video surveillance system had stopped working three months ago.

Clubs and restaurants in Brazil are generally subject to a web of overlapping safety regulations, but enforcement is uneven and owners sometimes pay bribes to continue operating.

The investigation of the Kiss fire could drag on for years. After a similar fire at an Argentine nightclub in 2004 killed 194 people, more than six years passed before a court found members of a band criminally responsible for starting the blaze and causing the deaths.

That tragedy also provoked a massive backlash against politicians and led to the removal of the mayor of Buenos Aires.

Civil lawsuits stemming from the Brazil fire are likely to be directed at the government because the owners of the nightclub probably don't have much money, said Claudio Castello de Campos, a Brazilian lawyer who has handled big cases including the crash of a TAM Airlines jet in Sao Paulo in 2007.

Castello de Campos disputed some statements by local officials that the Kiss nightclub could have continued operating legally while it waited for its license to be renewed. "If the license was expired, that's an irregular situation," he said.

Valdeci Oliveira, a legislator in Rio Grande do Sul state, said he and his colleagues would seek to ban pyrotechnics displays in closed spaces such as nightclubs.

"It won't bring anybody back, but we're going to introduce the bill," Oliveira said on his Twitter feed.

The Brazil fire is the worst to hit an entertainment venue since a fire on Christmas Day in 2000 engulfed a mall in Luoyang, China, killing 309 people.

(Additional reporting by Eduardo Simões in Sao Paulo and Anthony Boadle in Brasilia; Writing by Brian Winter and Brad Haynes; Editing by Todd Benson, Kieran Murray and Eric Beech)

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Malians celebrate, French-led forces clear Timbuktu

GAO/SEVARE, Mali (Reuters) - Residents of Mali's northern town of Gao, captured from sharia-observing Islamist rebels by French and Malian troops, danced in the streets to drums and music on Sunday as the French-led offensive also drove the rebels from Timbuktu.

The weekend gains made at Gao and Timbuktu by the French and Malian troops capped a two-week whirlwind intervention by France in its former Sahel colony, which has driven al Qaeda-allied militant fighters northwards into the desert and mountains.

In Gao, the largest town in the north where the Islamist insurgents had banned music and smoking, cut off the hands of thieves and ordered women to wear veils, thousands cheered the liberating troops with shouts of "Mali, Mali, France, France".

French special forces backed by Rafale fighter jets and Tiger helicopters had helped capture the town early on Saturday.

Among the celebrating Gao crowds, many smoked cigarettes, women went unveiled and some men wore shorts to flout the severe sharia Islamic law the rebels had imposed for months. Youths on motorcycles flew the flags of Mali, France and Niger, whose troops also helped secure the ancient town on the Niger River.

"Now we can breathe freely," said Hawa Toure, 25, wearing a colorful traditional African robe banned under sharia for being too revealing. "We are as free as the wind today. We thank all of our friends around the world who helped us," she said.

French and Malian troops also arrived at the weekend at the fabled Saharan trading town of Timbuktu, more than 300 km (190 miles) to the west of Gao, and were working to restore government control over the UNESCO World Heritage Site.

A Malian military source said the French and Malian troops had met no resistance up to the gates of Timbuktu and controlled the airport. They were working on flushing out any Islamist rebel fighters still hiding in the city, a labyrinth of ancient mosques and monuments and mud-brick homes between alleys.

"Timbuktu is delicate, you can't just go in like that," the source, who asked not to be named, said.

A third northern town, the Tuareg seat of Kidal, in Mali's rugged and remote northeast, remains in rebel hands.

The United States and Europe are backing the U.N.-mandated Mali operation as a counterstrike against the threat of radical Islamist jihadists using the West African state's inhospitable Sahara desert as a launch pad for international attacks.

FEARS OF GUERRILLA WAR

Fighters from the Islamist alliance in north Mali, which groups AQIM with Malian Islamist group Ansar Dine and AQIM splinter MUJWA, had destroyed ancient shrines sacred to moderate Sufi Moslems in Timbuktu, provoking international outrage.

They had also applied amputations for thieves and stoning of adulterers under sharia law.

As the French and Malian troops push into northern Mali, African troops from a continental intervention force expected to number 7,700 are being flown into the country, despite delays due to logistical problems and the lack of airlift capacity.

France sent warplanes and 2,500 troops to Mali after its government appealed to Paris for help when Islamist rebels launched an offensive south towards the capital Bamako early in January. They seized several towns, since retaken by the French.

In the face of the two-week-old French-Malian counter offensive, the rebels seemed to be pulling back north into the trackless desert wastes and mountain fastnesses of the Sahara.

Military experts fear they could carry on a grueling hit-and-run guerrilla war against the government from there.

A leader of Mali's main Tuareg insurgent movement, MNLA, whose initial separatist rebellion in the north was hijacked by al Qaeda and its local Malian allies, offered help from his group's desert fighters to the French-led offensive.

Speaking at Ouagadougou in Burkina Faso, Ibrahim Ag Mohamed Assaleh said the MNLA was preparing to attack the withdrawing al Qaeda-allied Islamist forces and its leaders, whom he said were hiding in the Tidmane and Tigharghar mountains in Kidal region.

At Konna, 500 km (312 miles) southeast of Gao and recently recaptured from the rebels, some people were still afraid.

"No-one believes the rebels will give up without resisting. They may be regrouping for an attack, there is fear of a guerrilla war," said Salou Toure, a middle-aged resident of Timbuktu who had fled that town three months ago.

"WE CUT HIS THROAT"

In Gao, the atmosphere was jubilant. Malian army Colonel Didier Dacko declared the town "liberated"."I thank France and all friendly nations for helping Mali," he told the crowds.

Gao Mayor Sadou Diallo, who had taken refuge in Bamako during the Islamist occupation, was triumphantly reinstalled.

Around a dozen "terrorists" were killed in the taking of Gao, while French forces suffered no losses or injuries, France's defense ministry said.

Youths in the city said there were still some rebels and rebel sympathizers around, but they were being found. "Yesterday, even, we found one hiding in a house. We cut his throat," one man said, asking not to be named. "Today we found another and we brought him to the army."

Human rights groups have expressed fears of violent reprisals being taken against lighter-skinned Malians suspected of sympathizing with the Islamist rebels, who have many Tuaregs and Arabs in their ranks.

At an African Union summit in Addis Ababa, outgoing AU chairman Thomas Boni Yayi, president of Benin, criticized Africa's slow response to the Islamist insurgency in Mali.

"How could it be that when faced with a danger that threatens its very foundations, Africa, although it had the means to defend itself, continued to wait," Yayi said.

OFFERS OF FUNDS, HELP

Around 1,900 African troops, including Chadian, have been deployed to Mali so far as part of the planned U.N.-backed African intervention force, known as AFISMA. Burkina Faso, Benin, Nigeria, Senegal, Togo, Niger and Chad are providing troops. Burundi and other nations have pledged to contribute.

The United States and Europe, while providing airlift and intelligence support to the anti-militant offensive in Mali, are not planning to send in any combat troops. Washington agreed to fly tankers to refuel French warplanes.

The AU is expected to seek hundreds of millions of dollars in logistical support and funding for the African Mali force at a conference of donors to be held in Addis Ababa on January 29.

European Commissioner for Development Andris Piebalgs told Reuters in Addis Ababa he believed enough funds would be offered to sustain the African troop intervention for a year.

Piebalgs added the latest estimated cost of the operation he had seen was 430 million euros ($579.42 million).

(Additional reporting by Cheikh Diouara in Gao, Tiemoko Diallo in Bamako, Richard Valdmanis in Sevare, Mali, Nathalie Prevost in Ouagadougou, Joe Bavier in Abidjan, Richard Lough and Aaron Maasho in Addis Ababa; Writing by Pascal Fletcher; editing by Philippa Fletcher)

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Nightclub fire kills 233 in Brazil

SANTA MARIA, Brazil (Reuters) - A nightclub fire killed at least 233 people in southern Brazil on Sunday when a band's pyrotechnics show set the building ablaze and fleeing partygoers stampeded toward blocked exits in the ensuing panic.

Most of those who died were suffocated by toxic fumes that rapidly filled the crowded club after sparks from pyrotechnics used by the band for visual effects set fire to soundproofing on the ceiling, local fire officials said.

"Smoke filled the place instantly, the heat became unbearable," survivor Murilo Tiescher, a medical student, told GloboNews TV. "People could not find the only exit. They went to the toilet thinking it was the exit and many died there."

Firemen said one exit was locked and that club bouncers, who at first thought those fleeing were trying to skip out on bar tabs, initially blocked patrons from leaving. The security staff relented only when they saw flames engulfing the ceiling.

The tragedy in the university town of Santa Maria in one of Brazil's most prosperous states comes as the country scrambles to improve safety, security and logistical shortfalls before the 2014 World Cup soccer tournament and the 2016 Olympics, both intended to showcase the economic advances and first-world ambitions of Latin America's largest nation.

In Santa Maria, a city of more than 275,000 people, rescue workers and weary officials wept alongside family and friends of the victims at a gymnasium being used as a makeshift morgue.

"It's the saddest, saddest day of my life," said Neusa Soares, the mother of one of those killed, 22-year-old Viviane Tolio Soares. "I never thought I would have to live to see my girl go away."

President Dilma Rousseff cut short an official visit to Chile and flew to Santa Maria, where she wept as she spoke to relatives of the victims, most of whom were university students.

"All I can say at the moment is that my feelings are of deep sorrow," said Rousseff, who began her political career in Rio Grande do Sul, the state where the fire occurred.

It was the deadliest nightclub fire since 309 people died in a discotheque blaze in China in 2000 and Brazil's worst fire at an entertainment venue since a disgruntled employee set fire to a circus in 1961, killing well over 300 people.

'BARRIER OF THE DEAD'

Local authorities said 120 men and 113 women died in the fire, and 92 people are still being treated in hospitals.

News of the fire broke on Sunday morning, when local news broadcast images of shocked people outside the nightclub called Boate Kiss. Gradually, grisly details emerged.

"We ran into a barrier of the dead at the exit," Colonel Guido Pedroso de Melo, commander of the fire brigade in Rio Grande do Sul, said of the scene that firefighters found on arrival. "We had to clear a path to get to the rest of those that were inside."

Pedroso de Melo said the popular nightclub was overcrowded with 1,500 people packed inside and they could not exit fast.

"Security guards blocked their exit and did not allow them to leave quickly. That caused panic," he said.

The fire chief said the club was authorized to be open, though its permit was in the process of being renewed. But he pointed to several egregious safety violations - from the flare that went off during the show to the locked door that kept people from getting out.

"The problem was the use of pyrotechnics, which is not permitted," Pedroso de Melo said.

The club's management said in a statement that its staff was trained and prepared to deal with any emergency. It said it would help authorities with their investigation.

One of the club's owners has surrendered to police for questioning, GloboNews TV reported.

When the fire began at about 2:30 a.m., many revelers were unable to find their way out in the chaos.

"It all happened so fast," survivor Taynne Vendrusculo told GloboNews TV. "Both the panic and the fire spread rapidly, in seconds."

Once security guards realized the building was on fire, they tried in vain to control the blaze with a fire extinguisher, according to a televised interview with one of the guards, Rodrigo Moura. He said patrons were trampled as they rushed for the doors, describing it as "a horror film."

Band member Rodrigo Martins said the fire started after the fourth or fifth song and the extinguisher did not work.

"It could have been a short circuit, there were many cables there," Martins told Porto Alegre's Radio Gaucha station. He said there was only one door and it was locked. A band member died in the fire.

CELL PHONES STILL RINGING

TV footage showed people sobbing outside the club before dawn, while shirtless firefighters used sledge hammers and axes to knock down an exterior wall to open up an exit.

Rescue officials moved the bodies to the local gym and separated them by gender. Male victims were easier to identify because most had identification on them, unlike the women, whose purses were left scattered in the devastated nightclub.

Piles of shoes remained in the burnt-out club, along with tufts of hair pulled out by people fleeing desperately. Firemen who removed bodies said victims' cell phones were still ringing.

The disaster recalls other incidents including a 2003 fire at a nightclub in West Warwick, Rhode Island, that killed 100 people, and a Buenos Aires nightclub blaze in 2004 that killed nearly 200. In both incidents, a band or members of the audience ignited fires that set the establishment ablaze.

The Rhode Island fire shocked local and federal officials because of the rarity of such incidents in the United States, where enforcement of safety codes is considered relatively strict. After the Buenos Aires blaze, Argentine officials closed many nightclubs and other venues and ultimately forced the city's mayor from office because of poor oversight of municipal codes.

The fire early on Sunday occurred in one of the wealthiest, most industrious and culturally distinct regions of Brazil. Santa Maria is about 186 miles west of Porto Alegre, the capital of a state settled by Germans and other immigrants from northern Europe.

Local clichés paint the region as stricter and more organized than the rest of Brazil, where most residents are a mix descended from native tribes, Portuguese colonists, African slaves, and later influxes of immigrants from southern Europe.

Rio Grande do Sul state's health secretary, Ciro Simoni, said emergency medical supplies from all over the state were being sent to the scene. States from all over Brazil offered support, and messages of sympathy poured in from foreign leaders.

(Additional reporting by Guillermo Parra-Bernal, Gustavo Bonato, Jeferson Ribeiro, Eduardo Simões, Brian Winter and Guido Nejamkis.; Writing by Paulo Prada and Anthony Boadle; Editing by Todd Benson, Kieran Murray and Christopher Wilson)

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Obama says struggling over whether to intervene in Syria

WASHINGTON (Reuters) - President Barack Obama said he has been wrestling with the question whether a U.S. military intervention in Syria's 22-month-old civil war would help resolve the bloody conflict or make things worse.

In a pair of interviews, Obama responded to critics who say the United States has not been involved enough in Syria, where thousands of people have been killed and millions displaced according to U.N. officials. Transcripts of both interviews were released on Sunday.

The United States has called on Syrian President Bashar al-Assad to step down, and has recognized an opposition coalition - but has stopped short of authorizing U.S. arming of rebels to overthrow Assad.

"In a situation like Syria, I have to ask: can we make a difference in that situation?" Obama said in an interview with The New Republic published on the magazine's website.

Obama said he has to weigh the benefit of a military intervention with the ability of the Pentagon to support troops still in Afghanistan, where the United States is withdrawing combat forces after a dozen years of war.

"Could it trigger even worse violence or the use of chemical weapons? What offers the best prospect of a stable post-Assad regime?

"And how do I weigh tens of thousands who've been killed in Syria versus the tens of thousands who are currently being killed in the Congo?" he said.

Obama's comments come as world leaders gathered in Davos, Switzerland, said they wished the United States were more engaged in geopolitical issues such as the conflicts in Syria and Mali, where France is attacking al Qaeda-affiliated militants.

Defense Secretary Leon Panetta said on Saturday that the United States will fly tankers to refuel French jet fighters, expanding U.S. involvement, which had been limited to sharing intelligence and providing airlift support.

In an interview with CBS television program "60 Minutes," Obama bristled when asked to respond to criticism that the United States has been reluctant to engage in foreign policy issues like the Syrian crisis.

Obama said his administration put U.S. warplanes into the international effort to oust Muammar Gaddafi in Libya, and led a push to force Egyptian President Hosni Mubarak from office.

But in Syria, his administration wants to make sure U.S. action would not backfire, he said.

"We do nobody a service when we leap before we look, where we ... take on things without having thought through all the consequences of it," Obama told CBS.

"We are not going to be able to control every aspect of every transition and transformation" in conflicts around the world, he said. "Sometimes they're going to go sideways."

(Editing by Mohammad Zargham)

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Egypt's leader declares emergency after clashes kill dozens

CAIRO (Reuters) - Egyptian President Mohamed Mursi declared a month-long state of emergency in three cities along the Suez Canal where dozens of people have been killed over the past four days in protests that his allies say are designed to overthrow him.

Seven people were shot dead and hundreds were injured in Port Said on Sunday during the funerals of 33 people killed there when locals angered by a court decision went on the rampage as anti-government protests spread around the country.

A total of 49 people have been killed since Thursday and Mursi's opponents, who accuse his Islamist Muslim Brotherhood of betraying the revolution that ousted long-time ruler Hosni Mubarak, have called for more demonstrations on Monday.

"Down, down Mursi, down down the regime that killed and tortured us!" people in Port Said chanted as the coffins of those killed on Saturday were carried through the streets.

Mursi, who was elected in June, is trying to fix a beleaguered economy and cool tempers before a parliamentary poll in the next few months which is supposed to cement Egypt's transition to democracy. Repeated eruptions of violence have weighed heavily on the Egyptian pound.

In a televised address, he said a nightly curfew would be introduced in Port Said, Ismailia and Suez, starting Monday.

Several hundred people protested in Ismailia, Suez and Port Said after the announcement, in which Mursi also called for a dialogue with top politicians. Activists in the three cities vowed to defy the curfew in protest at the decision.

"The protection of the nation is the responsibility of everyone. We will confront any threat to its security with force and firmness within the remit of the law," he said, offering condolences to families of the victims.

In Cairo the newly appointed Interior Minister Mohamed Ibrahim was ejected from the funeral of one of the police officers who died during Saturday's clashes in Port Said, according to witnesses and police sources.

A police officer at the funeral said many of his colleagues blame the interior minister for the deaths of at least two policemen during Saturday's clashes as he did not allow the police there to carry weapons and were only given teargas bombs.

SECURITY MEASURES

The violence has exposed a deep rift in the nation. Liberals and other opponents accuse Mursi of failing to deliver on economic promises and say he has not lived up to pledges to represent all Egyptians. His backers say the opposition is seeking to topple Egypt's first freely elected leader.

Distancing itself from the latest flare-ups, the opposition National Salvation Front said Mursi should have acted far sooner to impose extra security measures that would end the violence.

"Of course we feel the president is missing the real problem on the ground which is his own polices," spokesman Khaled Dawoud told Reuters. "His call to implement emergency law was an expected move given what is going on, namely thuggery and criminal actions."

The Front, formed late last year when Mursi provoked protests and violence by expanding his powers and driving through an Islamist-tinged constitution, has threatened to boycott the parliamentary poll and call for more protests if its demands are not met, including for an early presidential vote

Mursi had invited 11 political parties, including Islamist, liberal and leftist groups, along with four top politicians to a meeting on Monday at 6 p.m. local time (1600 GMT)to work out a basis for a fruitful dialogue that would resolve the political crisis, according to a statement from his office.

The Front said it will meet earlier on Monday to discuss the invitation.

But some of the Front's top leaders had already announced their position. Hamdeen Sabahy, a leftist politician and former presidential candidate who was one of the four invited by Mursi, said he would not attend Monday's meeting "unless the bloodshed stops and the people's demands are met."

Sabahy's Popular Current movement said in a statement the protests are due to economic and political problems that need to be addressed by policies and not through "security solutions".

Front leader Mohamed ElBaradie described the dialogue "a waste of time" on his Twitter account.

State television said seven people died from gunshot wounds in Port Said on Sunday. Port Said's head of hospitals, Abdel Rahman Farag, told Reuters more than 400 people had suffered from teargas inhalation, while 38 were wounded by gunshots.

Gunshots had killed many of the 33 who died on Saturday when residents rioted after a court sentenced 21 people, mostly from the Mediterranean port, to death for their role in deadly soccer violence at a stadium there last year.

A military source said many people in Port Said, which lies next to the increasingly lawless Sinai Peninsula, possess guns because they do not trust the authorities to protect them. However it was not clear who was behind the deaths and injuries.

In Cairo, police fired teargas at dozens at protesters throwing stones and petrol bombs in a fourth day of clashes over what demonstrators there and in other cities say is a power grab by Islamists two years after Mubarak was overthrown.

In Ismailia city, which lies on the Suez Canal between the cities of Suez and Port Said, police also fired teargas at protesters attacking a police station with petrol bombs and stones, according to witnesses and a security source there.

'KNEE-JERK REACTION'

Most of the deaths since Thursday were in Port Said and Suez, both cities where the army has now been deployed.

Heba Morayef of Human Rights Watch in Cairo said a state of emergency reintroduced laws that gave police sweeping powers of arrest "purely because (people) look suspicious".

"It is a classic knee-jerk reaction to think the emergency law will help bring security," she said. "It gives so much discretion to the Ministry of Interior that it ends up causing more abuse which in turn causes more anger."

The opposition Popular Current and other groups have called for more protests on Monday to mark what was one of the bloodiest days of the 2011 uprising.

Anti-Mursi protesters who have been camped out in Tahrir Square for weeks also demonstrated against Mursi's move to impose a state of emergency, reviving memories of Mubarak's era when emergency codes were in place for three decades and used to crush dissent and detain people without charge.

Protesters say Mursi has betrayed the revolution's aims.

"None of the revolution's goals have been realised," said Mohamed Sami, a protester in Cairo's Tahrir Square, the cauldron of the uprising that erupted on January 25, 2011 and toppled Mubarak 18 days later.

"Prices are going up. The blood of Egyptians is being spilt in the streets because of neglect and corruption and because the Muslim Brotherhood is ruling Egypt for their own interests."

Clashes also erupted in other streets near the square. The U.S. and British embassies, both close to Tahrir, said they were closed for public business on Sunday, normally a working day.

The army, Egypt's interim ruler until Mursi's election, was sent back onto the streets to restore order in Port Said and Suez, which both lie on the Suez canal. In Suez, at least eight people were killed in clashes with police.

Many ordinary Egyptians are frustrated by the violence that have hurt the economy and their livelihoods.

"They are not revolutionaries protesting," said taxi driver Kamal Hassan, 30, referring to those gathered in Tahrir. "They are thugs destroying the country."

(Additional reporting by Shaimaa Fayed in Cairo and Yusri Mohamed in Ismailia; editing by Philippa Fletcher and Christopher Wilson)

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Trial of China's Bo not being held Monday - court official

GUIYANG, China (Reuters) - The trial of disgraced senior Chinese leader Bo Xilai, the central figure in the country's biggest political scandal in decades, will not be held on Monday as some media had reported, a court official in the southern Chinese city of Guiyang said.

"To date, the People's Intermediate Court of Guiyang has received no information whatsoever about the trial of Bo Xilai taking place in Guiyang," said Jiang Hao, a court official in the city, the capital of Guizhou province.

"If the next step is to hold the Bo Xilai trial in Guiyang's court, then, as according to rules, we will inform our media friends promptly," Jiang told reporters at the court.

A report last week by Hong Kong's Ta Kung Pao newspaper said Bo, the charismatic former Communist Party chief of the southwestern city of Chongqing, would be tried in Guiyang from Monday. The Beijing-backed newspaper has accurately reported issues close to the Chinese leadership in the past.

Asked if prosecutors had sent the case to the court, Jiang said: "According to information I have received, they have not."

It is still not clear where Bo's trial will take place. He has not been formally charged although he was expelled from the Communist Party in September and made the subject of a list of sordid allegations: bending the law to hush up a murder, taking huge bribes, and engaging in "improper sexual relations with multiple women".

Once a contender for China's top leadership, Bo, 63, was ousted from his post as Chongqing party chief last year following the murder of British businessman Neil Heywood, for which his wife Gu Kailai has been convicted.

Bo was widely tipped to be promoted to the party's elite inner core before his career unravelled. The downfall came after his former police chief, Wang Lijun, fled briefly to a U.S. consulate in February 2012 and alleged that Gu had poisoned Heywood. Wang and Gu are both serving prison sentences over the scandal.

The Bo issue is the most sensational case of domestic political turmoil in China since the fall of the "Gang of Four" after Mao Zedong's death in 1976, and is being closely watched for signs of openness in China's new leadership and how much of the party's inner workings they will allow to be revealed.

The trial will likely not be held until after China's national parliament holds its annual session in March, according to a report on Monday on the website of the Global Times, an influential tabloid published by the Communist Party's official People's Daily.

"The information in terms of the date and location for the trial will certainly be made public in advance, and it's unnecessary to make speculations", the paper quoted a source close to China's top judicial body as saying.

The paper did not further identify the source.

(Reporting by John Ruwitch in Guiyang and Beijing newsroom; Writing by Terril Yue Jones; Editing by Raju Gopalakrishnan)

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Syrian militias target civilians in Homs, opposition says

AMMAN (Reuters) - More than 20 people were killed in the Syrian city of Homs on Saturday, a doctor said, as fighting raged around a road junction on a supply line to government forces in the interior of the country.

The opposition accuses shabbiha militia loyal to President Bashar al-Assad of killing some 200 Sunni Muslim civilians in Homs in massacres over the last two weeks, but a Syrian ban on most independent media makes such reports difficult to verify.

In a video statement from a makeshift hospital in the city, Mohammad Mohammad, a doctor who has been treating the wounded underground for months, displayed the bodies of five people whose remains had been charred to unrecognizable bits.

"They are the Uzam family. The father, mother and three children - the shabbiha burnt them completely, as part of the annihilation the regime is bringing on the area of Jobar-Kfar Aaya," Mohammad said, referring to districts of Homs.

"We are here surrounded. We have more than 20 dead today. They have been documented by name." He said the victims had died in fighting, bombardment and summary executions.

At least 60,000 people have been killed in Syria's civil war. Mostly Sunni Homs, a commercial and agricultural hub 140 km (90 miles) north of Damascus, has been at the heart of the 22-month uprising against Assad.

Syrian authorities have not commented on the latest fighting in the city. In the past, official media have described army operations as designed to 'cleanse' Homs from what they described as terrorists.

'ETHNIC CLEANSING'

Speaking from Istanbul after visiting Homs, Mohammad Mroueh, a member of the Higher Leadership Council of the Syrian Revolution, told Reuters: "The rebels are holding their ground but the shabbiha are getting to the civilians.

"It's hard to describe what's happening in terms other than ethnic cleansing of Sunni districts in the way of Alawite supply lines," said Mroueh, who was in Homs earlier this week.

The Alawites, who follow an offshoot of Shi'ite Islam and comprise about 10 percent of the population, have dominated Syria's power structure and its security apparatus since the 1960s. Assad and most of the ruling elite are Alawites.

A highway that passes near Homs has been used to supply Alawite forces deployed on hilltops in Damascus from bases in the coastal cities of Tartous and Latakia, which have a sizeable Alawite population, according to opposition sources.

Sunnis fear that the city could become part of an Alawite enclave stretching to the coast, where major military bases are located, if Assad was forced to leave Damascus.

"The massacres are increasing and Bashar al-Assad has began to draw borders of this mini-state and associate the Alawites more with blood so that they have no other option but to join him," wrote opposition campaigner Fawaz Tello in an article published on All4Syria news website.

Syria's conflict has grown more sectarian, deepening the Sunni-Shi'ite divide in the Middle East which burst into the open when Shi'ites gained political ascendancy in Iraq following the 2003 U.S. led invasion that deposed Sunni dictator Saddam Hussein.

A statement by an insurgent group, the Syrian Revolution against Bashar al-Assad, said neighborhoods of southern and western Homs were being hit with battlefield artillery and barrages from rocket launchers.

Activists in Homs said at least 120 civilians and 40 opposition fighters had been killed in the past week and that rebels from the nearby town of Qusair on the border with Lebanon were trying to relieve pressure on the western neighborhoods.

The armed opposition has been weakened in the city after a drop in ammunition supplies in recent weeks and after Assad's forces tightened a siege on western areas, according to opposition sources.

A counter-offensive by rebels two days ago in the western sector pushed back Assad's forces slightly, but they continued to pound the area with artillery and from the air, the sources said.

(Editing by Mark Trevelyan)

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Iraqi Sunnis mourn protesters shot dead by troops

FALLUJA, Iraq (Reuters) - Thousands of mourners rallied on Saturday at funerals for Sunni Muslims shot by troops in demonstrations against Iraq's Shi'ite Prime Minister Nuri al-Maliki.

Troops on Friday shot dead five people in Falluja, in the Sunni-dominated western province of Anbar.

Sunnis have taken to the streets since December to protest what they call mistreatment of their minority sect, heightening fears Iraq may return to the Shi'ite-Sunni bloodletting that killed tens of thousands in 2006-2007.

The Sunni protests have been accompanied by an increase in attacks by Islamist insurgents and the Iraqi wing of al Qaeda. Four suicide bombers have struck over the last week, including one who killed a Sunni lawmaker in Falluja.

Falluja's streets filled with thousands, many taking turns to carry the coffins of slain protesters. Others waved portraits of victims or the national flag used in Saddam Hussein's era, before the U.S.-led invasion ousted the Sunni strongman.

The funerals took place as the country's parliament passed a law imposing term limits on the prime minister's post in an attempt to block Maliki's re-election, although the legislation faces legal challenges in a top court.

Iraqi authorities have tried to calm anger over the shootings by withdrawing soldiers from the city and replacing them with federal police, but protesters want more concessions.

"Withdrawing the army from the city is not enough, I do not know how this will benefit me and it won't get my brother back," said Mustafa Jamal, a relative of a slain protester.

Maliki has also tried to appease Sunni protesters by releasing more than 1,000 detainees and appointing a senior Shi'ite figure to negotiate over Sunni demands. Anbar clerics and hardline tribal sheikhs say that is not enough either.

Anbar province stretches across a third of Iraq's territory and was once al-Qaeda's base to battle against American troops.

Sunni tribes in cities like Falluja and Ramadi then turned against al Qaeda to help U.S. forces, but tribal sheikhs complain the Baghdad government has failed to provide jobs for their fighters who helped turn the tide of the war.

In a sign of Falluja's fragile security, insurgents kidnapped three off-duty Iraqi soldiers and killed their driver on the city's outskirts, security officials said.

Many Sunnis want reforms to anti-terrorism laws they feel unfairly target them and more control over a campaign against former members of Saddam's outlawed Baath party. But Sunni ranks are split with more hardliners calling for Maliki's ouster.

In another challenge to Maliki, lawmakers on Saturday passed a law limiting the prime minister to two terms. But that measure appeared a symbolic victory as it needs the president's approval and faces challenges in court.

PARLIAMENTARY BATTLE

Since the fall of Saddam in 2003, many Iraqi Sunnis feel they have been sidelined by the Shi'ite leadership and believe Maliki is amassing power at their community's expense.

After the last American troops left Iraq a year ago, the country's Shi'ite, Sunni Muslim and ethnic Kurdish parties became locked in a power-sharing stalemate that has left key oil and investment laws paralyzed in parliament.

But lawmakers from Sunni, Kurdish and Shi'ite parties voted to pass the term limits law on Saturday.

It would restrict the prime minister, parliament's speaker and president to two four-year terms. First elected in 2005, Maliki was re-elected in 2010 in an indecisive ballot that led to the power-sharing deal.

"This means Maliki cannot be prime minister any more. This will stop people consolidating power in their hands," Sunni lawmaker Jaber al-Jaberi said.

Kurdish parties, the Sunni-backed Iraqiya bloc and even some rivals in Maliki's own Shi'ite coalition tried unsuccessfully last year to trigger a vote of no confidence in the prime minister.

"This is an illegal law passed by Maliki's opponents who fear facing him at ballot boxes", said Ali al-Shallah, a lawmaker with Maliki's alliance.

(Additional reporting by Suadad al-Salhy and Ahmed Rasheed; Editing by Patrick Markey, Andrew Roche and Jason Webb)

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Venezuela's Chavez overcomes infection, still having treatment

SANTIAGO/CARACAS (Reuters) - Venezuelan President Hugo Chavez has overcome a respiratory infection, but is still being treated for breathing problems after cancer surgery in Cuba last month, a government minister said on Saturday.

Official statements have sounded upbeat about the socialist president's condition in recent weeks, following rumors he was gravely ill in a hospital in Havana and might be unable to keep governing after being re-elected in October to a third term.

"(Chavez) has overcome the respiratory infection, although he still has a certain degree of respiratory insufficiency," Information Minister Ernesto Villegas told reporters in Chile, where Latin American and European leaders are meeting.

"Vice President (Nicolas) Maduro has estimated that Chavez could come back in weeks, but we haven't wanted to put a time frame on the president's recovery," Villegas added.

Earlier on Saturday, Maduro said Chavez, 58, was in his "best moment" since his operation 45 days ago.

"What we can share with you is that the commander is in his best moment that we have seen in all of these days of struggle," Maduro said in televised comments before dawn on Saturday, after returning from Cuba to meet with the president.

Chavez has not been seen in public since undergoing his fourth and most complex surgery to treat an illness that might jeopardize the future of his self-styled revolution.

He has never said exactly what type of cancer he has, only that the initial tumor found in mid-2011 was in his pelvic area and was the size of a baseball.

In contrast to Chavez's previous visits to Havana for treatment, officials have not published any evidence of his condition. In 2011, with great fanfare, they broadcast videos of him reading a newspaper, walking in a garden and chatting with his daughter.

In the absence of such proof this time, many Venezuelans are questioning the terse official bulletins that provide few details about his condition or treatment.

ECONOMIC POLICY

Maduro said earlier on Saturday that Chavez had ordered a series of economic decisions that would help boost Venezuelan exports, comments that came amid speculation the government was preparing a devaluation of the bolivar currency.

"He gave a series of orders that the economic team will share in the coming hours with the people of Venezuela, which are focused on building Venezuela's export capacity," he said.

He did not elaborate.

A Finance Ministry source who asked not to be identified said on Saturday the ministry was not planning on making any announcements right now.

Devaluation would make exports more competitive by lowering local production costs and spur domestic industries by making imports less competitive with locally produced goods.

It would also improve state finances by providing more bolivars per dollar of oil exports, following heavy spending in 2012 on homes for the poor and pensions for the elderly that helped Chavez win re-election.

But it would also push up consumer prices in a country that already has one of the highest inflation rates in the region.

A lack of dollars in recent weeks has left many businesses struggling to import the products they need. Some goods such as wheat flour and sugar have disappeared from supermarket shelves, partly because of import bottlenecks.

Business leaders insist a devaluation would help address the problem.

(Additional reporting by Antonio De La Jara and Alexandra Ulmer in Santiago, and Eyanir Chinea in Caracas; Editing by Helen Popper and Peter Cooney)

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French, Malian forces capture Gao rebel stronghold

KONNA, Mali/PARIS (Reuters) - French and Malian forces fighting Islamist rebels took control on Saturday of the rebel bastion of Gao, the biggest military success so far in an offensive against al Qaeda-allied insurgents occupying the country's north.

The United States and Europe back the U.N.-mandated Mali operation as a counterstrike against the threat of Islamist jihadists using the West African state's inhospitable Sahara desert as a launching pad for international attacks.

In an overnight assault on Gao backed by French warplanes and helicopters, French special forces seized the town's airport and a key bridge over the River Niger, killing an estimated dozen Islamist fighters without suffering any losses or injuries, the French army said.

"The Malian army and the French control Gao today," Malian army spokesman Lieutenant Diaran Kone told Reuters.

The speed of the French action in a two-week-old campaign suggested French and Malian government troops intended to drive aggressively into the north of Mali in the next few days against other Islamist rebel strongholds, such as Timbuktu and Kidal.

There have been 30 French air strikes on militant targets around Gao and Timbuktu in the past 36 hours.

News that the French and Malian troops were at Gao, the largest northern town held by the Islamists, came as African states struggled to deploy their intervention force in Mali, known as AFISMA, under a U.N. mandate.

Regional army chiefs said on Saturday that a total of 7,700 African soldiers would be dispatched, up from 5,700.

Liberia, Guinea-Bissau, Burundi, Guinea and Uganda are due to join the mission, but it was not clear if progress had been made at meetings in Abidjan or Addis Ababa to overcome gaps in transport, equipment and financing.

French army spokesman Colonel Thierry Burkhard said French forces had come under fire from rebel fighters inside Gao, but that both the bridge and airport runway were undamaged.

In Paris, the French Defense Ministry said Malian and French troop reinforcements were brought in and that soldiers from Chad and Niger, who have experience in desert warfare, were also flown in.

Those Malian and regional troops would have the task of securing Gao and its surrounding area, the ministry said.

To the west, French forces recaptured Lere, on the road to Timbuktu, and were advancing, a Malian military source said, asking not be named.

For two weeks, French jets and helicopter gunships have been harrying the retreating Islamists, attacking their vehicles, command posts and weapons depots. The French action had stymied a sudden Islamist offensive launched in early January that had threatened Bamako, Mali's capital in the south of the country.

Reacting to the French-led offensive, one of the leaders of the alliance of Islamist groups occupying Mali's north promised resistance to what he called the "new Crusader aggression", in comments published by Al Jazeera's Arabic website.

Yahya Abu Al-Hamman, leader in the Sahel of al Qaeda's North African wing AQIM, which along with Malian militant group Ansar Dine and AQIM splinter MUJWA occupies Mali's north, said a "Jihadist Islamist emirate" would be created in the territory.

Washington and European governments, while providing airlift and intelligence support to the anti-militant offensive in Mali, are not planning to send in any combat troops.

U.S. Defense Secretary Leon Panetta in a call on Saturday with his French counterpart, Jean-Yves Le Drian, commended France's "strong leadership" in the effort and said the U.S. Africa Command would support the French military by conducting aerial refueling missions.

They also discussed plans for the United States to transport troops from African nations, including Chad and Togo, to support the international effort in Mali, Pentagon spokesman George Little said.

FRANCE TAKING THE LEAD

At an African Union summit in Addis Ababa, AU leaders called on the United Nations to provide emergency logistics and funding to allow the African force for Mali to deploy.

AU officials say AFISMA is severely hampered by logistical shortages and needs airlift support, ammunition, telecoms equipment, field hospitals, food and water.

There appeared to be some embarrassment among African ministers and leaders that the continent was having to rely on a former colonial power, France, much criticized for past meddling in Africa, to take the lead in the military campaign in Mali.

Rwandan Foreign Minister Louise Mushikiwabo said France's intervention was "justified".

"If Africa can't do it, somebody else should do it," Mushikiwabo told reporters on the sidelines of the summit.

France, which dispatched its military to Mali at the Bamako government's request, already has 2,500 soldiers on the ground in its former colony.

About 1,900 African troops, including Chadians, have been deployed to Mali so far. Burkina Faso, Benin, Nigeria, Senegal, Togo, Niger and Chad are providing troops while Burundi and other African nations have pledged to contribute.

While the French and Malians thrust northeast in a two-pronged offensive towards Gao and Timbuktu, Chadian and local forces in neighboring Niger are preparing a flanking thrust coming up from the south.

FRANCE: 'LOT OF WORK' AHEAD

Malian army officers said the Islamist insurgents had pulled back to avoid deadly French air strikes.

"They are all hiding. They are leaving on foot and on motorcycles," Malian Army Captain Faran Keita told Reuters at Konna, about 500 km (310 miles) southeast of Gao.

Konna's capture by the Islamist insurgents on January 10 triggered the sudden French military intervention. Reporters there saw charred rebel pickup trucks that had been blasted by French air strikes. Munitions lay scattered about.

The question remained whether the Islamists would fight to hold Gao and Timbuktu or withdraw farther north into the trackless desert wastes and mountain fastnesses of the Sahara.

"France can expel rebels from certain of the key towns, but it cannot occupy and control the entire north Mali. North Mali is the size of France," Jakkie Cilliers, executive director of the Pretoria-based Institute for Security Studies, told Reuters.

On a visit to Chile, French Prime Minister Jean-Marc Ayrault admitted French forces in Mali still faced "a lot of work".

On Friday, the Islamists blew up a road bridge on the main road south from Gao to Niger, but military officials from Niger said the Chadian and Nigerien forces could still reach Gao by other routes when they advanced.

The AU is expected to seek hundreds of millions of dollars in logistical support and funding at a conference of donors for the Mali operation to be held in Addis Ababa on January 29.

(Additional reporting by James Regan in Paris, Tiemoko Diallo in Bamako, Richard Lough and Aaron Maasho in Addis Ababa, Ange Aboa in Abidjan, Alexandra Ulmer in Santiago, Sami Aboudi in Dubai, David Lewis and Pascal Fletcher in Dakar, and David Alexander in Washington; Writing by Pascal Fletcher; Editing by David Lewis, Jason Webb and Peter Cooney)

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