China raps N. Korea over rocket launch

BEIJING: China on Wednesday rapped North Korea over its long-range rocket launch, demanding North Korea comply with UN resolutions against using ballistic missiles, the official news agency Xinhua said.

"Pyongyang should... abide by relevant UN Security Council resolutions... which demands the DPRK not to conduct 'any launch using ballistic missile technology' and urges it to 'suspend all activities related to its ballistic missile programme'," Xinhua said in a commentary.

China, North Korea's sole major ally and its biggest trading partner and aid provider, is seen as one of the few nations with any influence over the regime in Pyongyang and had previously expressed concerns over the launch.

Over the past decade, Beijing has repeatedly called for calm as North Korea tested nuclear weapons and carried out ballistic missile tests, despite wide condemnation from the international community, including the United States.

Following Wednesday's launch, Xinhua again urged all sides to exercise restraint.

"All parties concerned should stay cool-headed and refrain from stoking the flames so as to prevent the situation from spiralling out of control," Xinhua said.

"In place of bellicose rhetoric and gestures, they need to take concrete actions to foster a conducive milieu for dialogue and return to the negotiating table as soon as possible."

Xinhua also called for the resumption of long-stalled six-party talks over the North's nuclear programme, which are chaired by China and take in both Koreas, the United States, Japan and Russia.

"For years, the situation on the peninsula seems to have entered a reinforcing loop of misunderstanding, mistrust and animosity. The only viable way begins with trust-building," the agency added.

However, it said that the Democratic People's Republic of Korea -- the North's official name -- had "the right to conduct peaceful exploration of the outer space".

North Korea insisted the mission was not a banned intercontinental missile test but was designed to place a scientific satellite in orbit, and said it had achieved all its objectives.

"In international relations, as in life, the best way to make an enemy of a country is to treat it like one," Xinhua said. "This rule of thumb is also true with making friends."

- AFP/ck

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Join BJP-led NDA and you can become PM: Shiv Sena leader to Sharad Pawar

PUNE: Senior Shiv Sena leader Manohar Joshi on Tuesday invited NCP president Sharad Pawar to join NDA, saying "he would be able to end quarrels within the BJP-led alliance and could also become Prime Minister".

Hailing the Maratha strongman's political skills, Joshi, who attended a function organised here on the eve of Pawar's birthday tomorrow, told reporters "Pawar should join NDA to end quarrels within the alliance and bring together all factions. If he joins NDA, he can also become the Prime Minister."

Asked whether other NDA constituents would accept such a proposal, the former Lok Sabha Speaker quipped "Pawar can get it done."

Earlier, the former Maharashtra chief minister, addressing the gathering, showered praise on Pawar and said the NCP leader has the capability to become Prime Minister.

To a question, Joshi maintained the temporary structure built at Mumbai's Shivaji Park, where the last rites of Sena chief Bal Thackeray were performed, was linked with "sentiments" of the party.

There would not be any compromise on the stand taken by the party on keeping the structure intact, he said.

When pointed out that Sena stand could precipitate a showdown with the Congress-NCP government in the state, Joshi said "we will persist with our stand in the matter".

On the talk about constructing Thackeray's memorial in the premises of Mumbai's Kohinoor Mill owned by him, the Sena leader said there was no place there for such a project.

"There are already three buildings standing there and there is no vacant space," he said.

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Surprise: New insurance fee in health overhaul law

WASHINGTON (AP) — Your medical plan is facing an unexpected expense, so you probably are, too. It's a new, $63-per-head fee to cushion the cost of covering people with pre-existing conditions under President Barack Obama's health care overhaul.

The charge, buried in a recent regulation, works out to tens of millions of dollars for the largest companies, employers say. Most of that is likely to be passed on to workers.

Employee benefits lawyer Chantel Sheaks calls it a "sleeper issue" with significant financial consequences, particularly for large employers.

"Especially at a time when we are facing economic uncertainty, (companies will) be hit with a multi-million dollar assessment without getting anything back for it," said Sheaks, a principal at Buck Consultants, a Xerox subsidiary.

Based on figures provided in the regulation, employer and individual health plans covering an estimated 190 million Americans could owe the per-person fee.

The Obama administration says it is a temporary assessment levied for three years starting in 2014, designed to raise $25 billion. It starts at $63 and then declines.

Most of the money will go into a fund administered by the Health and Human Services Department. It will be used to cushion health insurance companies from the initial hard-to-predict costs of covering uninsured people with medical problems. Under the law, insurers will be forbidden from turning away the sick as of Jan. 1, 2014.

The program "is intended to help millions of Americans purchase affordable health insurance, reduce unreimbursed usage of hospital and other medical facilities by the uninsured and thereby lower medical expenses and premiums for all," the Obama administration says in the regulation. An accompanying media fact sheet issued Nov. 30 referred to "contributions" without detailing the total cost and scope of the program.

Of the total pot, $5 billion will go directly to the U.S. Treasury, apparently to offset the cost of shoring up employer-sponsored coverage for early retirees.

The $25 billion fee is part of a bigger package of taxes and fees to finance Obama's expansion of coverage to the uninsured. It all comes to about $700 billion over 10 years, and includes higher Medicare taxes effective this Jan. 1 on individuals making more than $200,000 per year or couples making more than $250,000. People above those threshold amounts also face an additional 3.8 percent tax on their investment income.

But the insurance fee had been overlooked as employers focused on other costs in the law, including fines for medium and large firms that don't provide coverage.

"This kind of came out of the blue and was a surprisingly large amount," said Gretchen Young, senior vice president for health policy at the ERISA Industry Committee, a group that represents large employers on benefits issues.

Word started getting out in the spring, said Young, but hard cost estimates surfaced only recently with the new regulation. It set the per capita rate at $5.25 per month, which works out to $63 a year.

America's Health Insurance Plans, the major industry trade group for health insurers, says the fund is an important program that will help stabilize the market and mitigate cost increases for consumers as the changes in Obama's law take effect.

But employers already offering coverage to their workers don't see why they have to pony up for the stabilization fund, which mainly helps the individual insurance market. The redistribution puts the biggest companies on the hook for tens of millions of dollars.

"It just adds on to everything else that is expected to increase health care costs," said economist Paul Fronstin of the nonprofit Employee Benefit Research Institute.

The fee will be assessed on all "major medical" insurance plans, including those provided by employers and those purchased individually by consumers. Large employers will owe the fee directly. That's because major companies usually pay upfront for most of the health care costs of their employees. It may not be apparent to workers, but the insurance company they deal with is basically an agent administering the plan for their employer.

The fee will total $12 billion in 2014, $8 billion in 2015 and $5 billion in 2016. That means the per-head assessment would be smaller each year, around $40 in 2015 instead of $63.

It will phase out completely in 2017 — unless Congress, with lawmakers searching everywhere for revenue to reduce federal deficits — decides to extend it.

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Woman Gets Life for Lottery Winner's Murder

DeeDee Moore, the Tampa woman accused of swindling and then killing lottery winner Abraham Shakespeare, was found guilty today of first degree murder and other charges, after she declined to take the stand and the defense rested without calling a single witness.

In addition to the murder charge, Moore was also found guilty of possessing and discharging a firearm resulting in death. Prosecutors did not pursue the death penalty in the case, and Moore was sentenced to life in prison without parole.

"After trial and listening to all of this over two weeks, words that were said cool, calculated, manipulated. Abraham Shakespeare was your prey and victim. Money was the route of evil you brought to Abraham. You are sentenced to life in prison you shall not be elegible for parole," Judge Emmet Battles said.

Jurors deliberated for more than three hours Monday before delivering their verdict.

Prosecutors argued that Moore, 40, befriended Shakespeare before he vanished in April 2009 after he'd won $30 million in the Florida lottery. After Shakespeare had given away most of his money to people who simply asked for it, Moore agreed to manage the little he had left, but instead, prosecutors said, stole his winnings and killed him.

During a dramatic trial Moore has broken down in tears several times, and at one point said that she went into anaphylactic shock while in custody after taking the drug Bactrim when she was having problems with cuts on her ankles from being cuffed every day.

Early today the defense announced it would rest its case without calling any witnesses. Moore did not testify during her trial.

Jay Conner/The Tampa Tribune/AP Photo

Florida Lotto Murder Trial: Bizarre Moments Watch Video

Florida Lottery Murder Trial: Letters to Victim's Family Watch Video

Dee Dee Moore Trial: Woman Accused of Murdering Lottery Winner Watch Video

"There is no witness that can say she ever admitted to doing the killing or participating as a principle in helping anyone else do the killing," Moore's defense attorney Byron Hileman said today.

In the courtroom this morning, Moore's friend, former inmate Rose Condora was accused of threatening witnesses by Tampa Judge Emmett Battles, and was thrown out of the courtroom.

Authorities say Shakespeare, 47, was shot twice in the chest by a .38-caliber pistol sometime in April 2009. He wasn't reported missing until November 2009. His body was found under a slab of cement in a backyard in January 2010.

Polk County authorities claim Moore offered someone a $200,000 house in exchange for reporting a false sighting of Shakespeare. She also allegedly sent the victim's son $5,000 in cash for his birthday, and used the victim's cellphone to send text messages purportedly from him.

Shakespeare's mother, Elizabeth Walker, also testified that Moore tried to hide that her son was missing, and said that he had AIDS.

Sentorria Butler, Shakespeare's ex-girlfriend and the mother of his child, also testified. Butler told the court last week that Moore is a divisive and manipulative woman who told her Shakespeare "ran off with the lady from the bank."

During the trial, jurors also watched a Walmart surveillance video that the prosecution said links Moore to Shakespeare's killing. The footage shows Moore making a $104 cash purchase of gloves, duct tape, plastic sheeting and other items detectives later found close to where Shakespeare's body was buried.

Jurors hearing the case also heard a rambling two-page letter that witness Greg Smith, a police informant who was a former friend of Shakespeare and supposed friend of Moore, says Moore allegedly forged while at a Comfort Inn & Suites in Lakeland, Fla.

The letter was meant to appear to be from Shakespeare, prosecutors said. They say the letter was a ruse to convince Shakespeare's mother that he was still alive. Moore attempted to cover her tracks while it was written, according to prosecutors.

During the trial, jurors had to be accompanied by a security escort into the courtroom after they told the judge Smith and Shakespeare's family and friends were making them feel uncomfortable outside the courthouse. None of the jurors had to be excused by the judge.

The Associated Press contributed to this report.

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Unknown attackers fire at Cairo protesters, nine hurt

CAIRO (Reuters) - Nine people were hurt when unknown attackers fired at protesters camping at Tahrir Square in central Cairo on Tuesday, according to witnesses and Egyptian media, as opponents and supporters of President Mohamed Mursi's plans to vote on a new constitution geared up for a day of street demonstrations.

Police cars surrounded the square, the first time they had appeared in the area since November 23, shortly after a decree by the Islamist president giving himself sweeping temporary powers touched off widespread protests.

The attackers also threw petrol bombs which started a small fire, witnesses said. Many of the protesters, awakened by the noise, chanted: "The people want the downfall of the regime." Recorded recitations of the Koran were played over speakers in the square.

Leftists, liberals and other opposition groups have called for marches to the presidential palace in the afternoon to protest against the hastily arranged referendum on a new constitution planned for Saturday, which they say is polarizing the country.

Islamists, who dominated the body that drew up the constitution, have urged their followers to turn out "in millions" the same day in a show of support for the president and for a referendum they feel sure of winning and that critics say could put Egypt in a religious straitjacket.

Seven people were killed and hundreds wounded last week in clashes between the Islamist Muslim Brotherhood and opponents besieging Mursi's graffiti-daubed presidential palace.

The elite Republican Guard has yet to use force to keep protesters away from the palace, now ringed with tanks, barbed wire and concrete barricades, but a decree issued by Mursi late on Sunday gives the armed forces the power to arrest civilians during the referendum and until the announcement of the results.

OPPOSITION SAYS MURSI DESTROYING CONSENSUS

Leftist politician Hamdeen Sabahy, one of the most prominent members of the National Salvation Front opposition coalition, said Mursi was driving a wedge between Egyptians and destroying prospects for consensus.

As well as pushing the early referendum, Mursi has angered opponents by taking sweeping temporary powers he said were necessary to secure the country's transition to stability after a popular uprising overthrew autocratic former president Hosni Mubarak 22 months ago.

"The road Mohamed Mursi is taking now does not create the possibility for national consensus," said Sabahy.

If the constitution was passed, he said: "Egypt will continue in this really charged state. It is certain that this constitution is driving us to more political polarization."

The National Salvation Front also includes Nobel Peace Prize laureate Mohamed ElBaradei and former Arab League chief Amr Moussa.

The opposition says the draft constitution fails to embrace the diversity of 83 million Egyptians, a tenth of whom are Christians, and invites Muslim clerics to influence lawmaking.

But debate over the details has largely given way to noisy street protests and megaphone politics, keeping Egypt off balance and ill equipped to deal with a looming economic crisis.

Lamia Kamel, a spokeswoman for Moussa, said the opposition factions were still discussing whether to boycott the referendum or call for a "no" vote.

"Both paths are unwelcome because they really don't want the referendum at all," she said, but predicted a clearer opposition line if the plebiscite went ahead as planned.

Mahmoud Ghozlan, the Muslim Brotherhood's spokesman, said the opposition could stage protests, but should keep the peace.

"They are free to boycott, participate or say no; they can do what they want. The important thing is that it remains in a peaceful context to preserve the country's safety and security."

The army stepped into the conflict on Saturday, telling all sides to resolve their disputes via dialogue and warning that it would not allow Egypt to enter a "dark tunnel".

The continuing disruption is also casting doubts on the government's ability to push through tough economic reforms that form part of a proposed $4.8 billion IMF loan agreement.

(Writing by Edmund Blair; Editing by Will Waterman, Mohammad Zargham and Jim Loney)

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China bank lending rises in November

SHANGHAI: Chinese banks boosted lending in November from October, official figures showed Tuesday, as Beijing seeks to preserve the budding recovery in the world's second largest economy.

Chinese banks extended 522.9 billion yuan ($83.9 billion) in new loans last month, up from 505.2 billion yuan in October, the central bank said in a statement.

But the figure was below market expectations of 550 billion yuan, according to an average forecast of 15 economists polled by Dow Jones Newswires.

China has been encouraging bank lending to bolster economic growth, which has slowed for seven straight quarters and hit a more than three-year low of 7.4 per cent in the third quarter, hurt by weak demand overseas and at home.

Policymakers have cut interest rates twice this year and trimmed the amount of cash banks must place in reserve three times since December 2011 as they try to encourage lending and pump up growth.

The government over the weekend released a series of figures showing continued strength in the domestic economy, but lower-than-expected trade data for November released on Monday underlined the fragility of the recovery.

Economists said the central bank will continue to maintain its relatively loose monetary policy but some ruled out the likelihood of immediate cuts in interest rates and banks' reserve requirements.

"We expect the government to sustain the current policy stance which could be featured as marginally pro-growth without big-bang stimulus," Lu Ting, China economist at Bank of America Merrill Lynch, said in a research note.

- AFP/ck

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All politicians aren't criminals: Sukhbir Badal

AMRITSAR: Completely disowning the leaders of his Shiromani Akali Dal (SAD) found to be involved in recent criminal activities, Punjab deputy chief minister Sukhbir Badal, who on Monday visited the house of ASI Ravinderpal Singh, who was shot dead by an Akali leader, said all politicians are not criminals.

"If some low rung Akali leader or his remote relative was is involved in some criminal case, it doesn't mean that all Akalis are criminals," he said.

"And in these particular cases they were very low level leaders whom we never knew," said Badal adding that wherever required, the party would re-examine its enrolments.

About Sukhdev Singh Namdhari, arrested in the Ponty Chadha murder case, Sukhbir said he had ordered registration of FIR and detailed investigations against him.

Badal also asked the Amritsar deputy commissioner of police to probe about the presence of policemen at the spot when the shooting happened. "Amritsar commissioner of police would finalize this report by 9am tomorrow and erring policemen would be straightway dismissed for running away from their duty," said Sukhbir.

He issued these instructions after meeting the family members of slain Ravinderpal Singh at their residence at Rampura village. He said the commissioner of police has also been asked to probe the conspiracy angle in the killing of ASI as the victim girl complained she was deliberately targeted by accused Ranjit Singh Rana, as she was daughter of ASI.

She complained to Sukhbir that when her scooter was hit by them on the first instance they had uttered that she was a daughter of thanedar and on second occasion also they pointed out that she was the same girl, daughter of thanedar.

"Commissioner of Police would examine the fact that whether there was a conspiracy to eliminate ASI," Sukhbir said. He also issued instructions to the district president of SAD to probe that who recommended the induction of Rana in the SAD fold and strict action would be taken against that person. He said the state government had already decided to enlist Robinjit Kaur, the daughter of the deceased, as sub-inspector in Punjab Police keeping in view the exemplary bravery shown by her.

He said he had already issued orders to provide two security guards permanently to the family.

Was Rana high on drugs?

Was Ranjit Singh Rana, the main accused in the killing of Assistant Sub-Inspector Ravinderpal Singh, under the influence of drugs when he confronted Singh and his daughter on December 5 near Chheharata? Rana had also ignored the advice of his co-accused to not harass policeman's daughter but he didn't listen to them. According to sources, Rana who allegedly used to sell and consume heroin was under the influence of the drugs.

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Smokers celebrate as Wash. legalizes marijuana

SEATTLE (AP) — The crowds of happy people lighting joints under Seattle's Space Needle early Thursday morning with nary a police officer in sight bespoke the new reality: Marijuana is legal under Washington state law.

Hundreds gathered at Seattle Center for a New Year's Eve-style countdown to 12 a.m., when the legalization measure passed by voters last month took effect. When the clock struck, they cheered and sparked up in unison.

A few dozen people gathered on a sidewalk outside the north Seattle headquarters of the annual Hempfest celebration and did the same, offering joints to reporters and blowing smoke into television news cameras.

"I feel like a kid in a candy store!" shouted Hempfest volunteer Darby Hageman. "It's all becoming real now!"

Washington and Colorado became the first states to vote to decriminalize and regulate the possession of an ounce or less of marijuana by adults over 21. Both measures call for setting up state licensing schemes for pot growers, processors and retail stores. Colorado's law is set to take effect by Jan. 5.

Technically, Washington's new marijuana law still forbids smoking pot in public, which remains punishable by a fine, like drinking in public. But pot fans wanted a party, and Seattle police weren't about to write them any tickets.

In another sweeping change for Washington, Gov. Chris Gregoire on Wednesday signed into law a measure that legalizes same-sex marriage. The state joins several others that allow gay and lesbian couples to wed.

The mood was festive in Seattle as dozens of gay and lesbian couples got in line to pick up marriage licenses at the King County auditor's office early Thursday.

King County and Thurston County announced they would open their auditors' offices shortly after midnight Wednesday to accommodate those who wanted to be among the first to get their licenses.

Kelly Middleton and her partner Amanda Dollente got in line at 4 p.m. Wednesday.

Hours later, as the line grew, volunteers distributed roses and a group of men and women serenaded the waiting line to the tune of "Chapel of Love."

Because the state has a three-day waiting period, the earliest that weddings can take place is Sunday.

In dealing with marijuana, the Seattle Police Department told its 1,300 officers on Wednesday, just before legalization took hold, that until further notice they shall not issue citations for public marijuana use.

Officers will be advising people not to smoke in public, police spokesman Jonah Spangenthal-Lee wrote on the SPD Blotter. "The police department believes that, under state law, you may responsibly get baked, order some pizzas and enjoy a 'Lord of the Rings' marathon in the privacy of your own home, if you want to."

He offered a catchy new directive referring to the film "The Big Lebowski," popular with many marijuana fans: "The Dude abides, and says 'take it inside!'"

"This is a big day because all our lives we've been living under the iron curtain of prohibition," said Hempfest director Vivian McPeak. "The whole world sees that prohibition just took a body blow."

Washington's new law decriminalizes possession of up to an ounce for those over 21, but for now selling marijuana remains illegal. I-502 gives the state a year to come up with a system of state-licensed growers, processors and retail stores, with the marijuana taxed 25 percent at each stage. Analysts have estimated that a legal pot market could bring Washington hundreds of millions of dollars a year in new tax revenue for schools, health care and basic government functions.

But marijuana remains illegal under federal law. That means federal agents can still arrest people for it, and it's banned from federal properties, including military bases and national parks.

The Justice Department has not said whether it will sue to try to block the regulatory schemes in Washington and Colorado from taking effect.

"The department's responsibility to enforce the Controlled Substances Act remains unchanged," said a statement issued Wednesday by the Seattle U.S. attorney's office. "Neither states nor the executive branch can nullify a statute passed by Congress."

The legal question is whether the establishment of a regulated marijuana market would "frustrate the purpose" of the federal pot prohibition, and many constitutional law scholars say it very likely would.

That leaves the political question of whether the administration wants to try to block the regulatory system, even though it would remain legal to possess up to an ounce of marijuana.

Alison Holcomb is the drug policy director of the American Civil Liberties Union of Washington and served as the campaign manager for New Approach Washington, which led the legalization drive. She said the voters clearly showed they're done with marijuana prohibition.

"New Approach Washington sponsors and the ACLU look forward to working with state and federal officials and to ensure the law is fully and fairly implemented," she said.

___

Johnson can be reached at https://twitter.com/GeneAPseattle

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Fiscal Cliff Talks: Boehner, Obama Meet Face-to-Face

For the first time in more than three weeks, President Obama and House Speaker John Boehner met face-to-face today at the White House to talk about avoiding the fiscal cliff.

White House Principal Deputy Press Secretary Josh Earnest would offer no details saying only, "The lines of communication remain open."

Erskine Bowles, the co-creator of a debt reducing plan, who was pessimistic a couple weeks ago, said he likes what he's hearing.

"Any time you have two guys in there tangoing, you have a chance to get it done," Bowles said on CBS's "Face the Nation."

The White House afternoon talks, conducted without cameras or any announcement until they were over, came as some Republicans were showing more flexibility about approving higher tax rates for the wealthy, one of the president's demands to keep the country from the so-called fiscal cliff -- a mixture of across-the-board tax increases and spending cuts that many economists say would send the country back into recession.

Carolyn Kaster/AP Photo; Pablo Martinez Monsivais/AP Photo

Fiscal Cliff Battle: President Obama vs. Speaker John Boehner Watch Video

"Let's face it. He does have the upper hand on taxes. You have to pass something to keep it from happening," Sen. Bob Corker of Tennessee said on "FOX News Sunday."

This comes after the White House moderated one of its demands about tax rate increases for the wealthy.

The administration was demanding the rate return to its former level of 39.6 percent on income above $250,000. The so-called Bush tax cut set that rate at 35 percent. But Friday, Vice President Joe Biden signaled that rate could be negotiable, somewhere between the two.

"So will I accept a tax increase as a part of a deal to actually solve our problems? Yes," said Oklahoma Republican Tom Coburn on ABC's "This Week."

The problems the senator was referring to are the country's entitlement programs. And there was some progress on that front, too.

A leading Democrat said means testing for Medicare recipients could be a way to cut costs to the government health insurance program. Those who make more money would be required to pay more for Medicare.

"I do believe there should be means testing, and those of us with higher income and retirement should pay more. That could be part of the solution," Sen. Dick Durbin of Illinois said on NBC's "Meet the Press."

But Durbin said he would not favor raising the eligibility age from 65 years old to 67 years old, as many Republicans have suggested.

The White House and the speaker's office released the exact same statement about the negotiating session. Some will see that as a sign of progress, that neither side is talking about what was said behind closed doors.

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Egypt's opposition rejects constitutional referendum

CAIRO (Reuters) - Egypt's main opposition coalition rejected on Sunday Islamist President Mohamed Mursi's plan for a constitutional referendum this week, saying it risked dragging the country into "violent confrontation".

Mursi's decision on Saturday to retract a decree awarding himself wide powers failed to placate opponents who accused him of plunging Egypt deeper into crisis by refusing to postpone the vote on a constitution shaped by Islamists.

"We are against this process from start to finish," Hussein Abdel Ghani, spokesman of the National Salvation Front, told a news conference, calling for more street protests on Tuesday.

The Front's main leaders - Nobel peace laureate Mohamed ElBaradei, former Foreign Minister Amr Moussa and leftist Hamdeen Sabahy - did not attend the event.

Hundreds of protesters milled around Mursi's palace, despite tanks, barbed wire and other barriers installed last week after clashes between Islamists and their rivals killed seven people.

"Holding a referendum now in the absence of security reflects haste and an absence of a sense of responsibility on the part of the regime, which risks pushing the country towards violent confrontation," a statement from the Front said.

The Muslim Brotherhood, which propelled Mursi from obscurity to power, urged the opposition to accept the referendum's verdict.

Islamists say the vote will seal a democratic transition that began when a popular uprising toppled Hosni Mubarak 22 months ago after three decades of military-backed one-man rule.

Their liberal, leftist and Christian adversaries say the document being fast-tracked through could threaten freedoms and fails to embrace the diversity of Egypt's 83 million people.

"ACT OF WAR"

Mursi had given some ground on Saturday when he annulled the fiercely contested decree issued on November 22 that gave him extra powers and shielded his decisions from judicial review.

But some measures taken under the decree remain in force and the president has insisted the referendum go ahead on December 15.

Liberal opposition leader Ahmed Said earlier described the race to a referendum as an "act of war" against Egyptians.

Egypt is torn between Islamists, who were suppressed for decades, and their rivals, who fear religious conservatives want to squeeze out other voices and restrict social freedoms. Many Egyptians just crave stability and economic recovery.

Brotherhood spokesman Mahmoud Ghozlan said the scrapping of Mursi's decree had removed any reason for controversy.

"We ask others to announce their acceptance of the referendum result," he said on the group's Facebook page, asking whether the opposition would accept "the basics of democracy".

The cancellation of Mursi's decree, announced after a "national dialogue" on Saturday boycotted by almost all the president's critics, has not bridged a deep political divide.

Prime Minister Hisham Kandil, a technocrat with Islamist leanings, said the referendum was the best test of opinion.

"The people are the makers of the future as long as they have the freedom to resort to the ballot box in a democratic, free and fair vote," he said in a cabinet statement.

But opposition factions, uncertain of their ability to vote down the constitution against the Islamists' organizational muscle, want the document redrafted before any vote.

"A constitution without consensus can't go to a referendum," said Hermes Fawzi, 28, a protester outside the palace. "It's not logical that just one part of society makes the constitution."

DIALOGUE

Egypt tipped into turmoil after Mursi grabbed powers to stop any court action aimed at hindering the transition. An assembly led by the Brotherhood and other Islamists then swiftly approved the constitution it had spent six months drafting.

Opponents, including minority Christians, had already quit the assembly in dismay, saying their voices were being ignored.

After the dialogue hosted by Mursi, a spokesman announced that the president had issued a new decree whose first article "cancels the constitutional declaration" of November 22. He said the referendum could not be delayed for legal reasons.

The decree ignited more than two weeks of sometimes violent protests and counter-rallies in Egypt. Mursi's foes have chanted for his downfall. Islamists fear a plot to oust the most populous Arab nation's first freely-elected leader.

Islamists reckon they can win the referendum and, once the new constitution is in place, a parliamentary election about two months later. The Islamist-led lower house elected this year was dissolved after a few months by a court order.

Investors appeared relieved after Mursi rescinded his decree, sending Egyptian stocks 4.4 percent higher on Sunday. Markets are awaiting approval of a $4.8 billion IMF loan later this month designed to support the budget and economic reforms.

The military, which led Egypt's transition for 16 turbulent months after Mubarak fell, told feuding factions on Saturday that only dialogue could avert "catastrophe". But a military source said these remarks did not herald an army takeover.

(Additional reporting by Edmund Blair and Yasmine Saleh; editing by David Stamp)

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