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Holiday sales short of expectations

NEW YORK, Dec. 26 (UPI) -- U.S. retailers are hoping for a "Boxing Day" bonus Wednesday as shoppers hunt down discounts on left over Christmas holiday merchandise.

The day after Christmas traditionally is one of the busiest for U.S. retailers as consumers return unwanted items and redeem an estimated $26 billion in gift cards to buy products still on the shelves. Total sales from "Black Friday" -- the day after Thanksgiving -- until midnight Monday were up 3.6 percent over the previous year, MasterCard SpendingPlus, a unit of MasterCard Advisors said. But retail sales, up 2.4 percent, appeared weaker-than-expected despite big markdowns just before the holiday, The Wall Street Journal reported.

Retail sales rose a strong 18.7 percent in the final weekend before Christmas compared to the final weekend last year, ShopperTrak RCT Corp. said. Sales were up a seasonally adjusted 2.8 percent in the week ending Dec. 22, the International Council of Shopping Centers/UBS Retail Chain Store sales Index, showed.

Economists had projected sales would increase 3.5 percent to 4.5 percent over last year but that didn't materialize despite strong sales at the start and finish of the Christmas buying season.

"If we didn't have those surges, it would have been a negative," Michael McNamara, vice president of research and analysis for MasterCard Advisors, told the Journal.

Bush signs omnibus spending bill

WACO, Texas, Dec. 26 (UPI) -- U.S. President George W. Bush Wednesday signed the omnibus spending bill, but chastised Congress for including $10 billion in earmarks in the measure.

In a statement issued after Bush arrived in Texas, where he will spend the remainder of the year, the president said he was "disappointed" Congress had abandoned "the goal I set early this year to reduce the number and cost of earmarks by half."

The bill contains 9,800 earmarks totaling $10 billion, Bush said.

"These projects are not funded through a merit-based process and provide a vehicle for wasteful government spending," he said.

The spending bill was one of more than a dozen Bush signed as he headed from the Camp David presidential retreat to his ranch in Crawford, Texas.

White House spokesman Scott Stanzel told reporters aboard Air Force One the president and Budget Director Jim Nussle are looking for ways to deal with the earmarks.

Raytheon: Army knew of Patriot missile bug

WALTHAM, Mass., Dec. 26 (UPI) -- A Raytheon Co. executive has alleged U.S. Army officials knew that one of the company's Patriot missile designs had a flaw in its targeting capabilities.

As part of a lawsuit by the family of a Navy pilot accidentally shot down by one of the missiles while serving in Iraq, Raytheon executive Daniel Roy Kirby alleged in a legal filing that army officials knew the flaw existed at the time of the accident, The Boston Globe said Wednesday.

Kirby alleged that before Navy pilot Nathan D. White's plane was accidentally shot down by the Patriot System in 2003, Army officials knew the system struggled to differentiate between friendly and enemy aircraft.

"Prior to April 2, 2003, the Army was aware that there had been documented instances in which the Patriot System in training, test, and/or combat failed to perform to operational requirements, including specifically its misidentification of friendly vehicles as enemy targets," Kirby alleged.

The Globe said that since White's family filed a $20 million lawsuit against Raytheon, the company has attempted to refocus the blame for the incident on the military.

British agents met with Taliban

LONDON, Dec. 26 (UPI) -- British intelligence agents have met secretly with leaders of the Taliban, despite Prime Minister Gordon Brown's promise there would be no such negotiations.

Officers from the M16 Secret Intelligence Service met with militant leaders in Afghanistan several times during the summer, The Daily Telegraph reported Wednesday.

"The SIS officers were understood to have sought peace directly with the Taliban with them coming across as some sort of armed militia," an intelligence source told The Daily Telegraph. "The British would also provide 'mentoring' for the Taliban."

News of the meetings comes two weeks after Brown's pledge to Parliament that Britain wouldn't negotiate with insurgents. Opposition leaders said Brown has "some explaining to do," the newspaper reported.

Afghanistan, Pakistan targeting militants

ISLAMABAD, Afghanistan, Dec. 26 (UPI) -- The leaders of Afghanistan and Pakistan agreed Wednesday to share more intelligence about militants and tighten border security.

Afghan President Hamid Karzai and Pakistani President Pervez Musharraf agreed to tighten border controls and direct their intelligence agencies to share information on regional militant activities, Voice of America reported.

Musharraf said that by freely sharing intelligence, the two countries could help limit the spread of terrorism.

"People of both the countries are suffering at the hands of these extremists terrorists," he said. "To meet this challenge and threat we discussed how we could cooperate on the intelligence side. The two intelligence agencies on both sides must cooperate more strongly if we are to deal with terrorists and extremists more effectively. That is the key."

Karzai said that the two countries would focus on the roots of the militant problem and the sources used by militant groups throughout the region.

"We have recognized that there is a problem that we are both facing -- what are the roots of these problems what are the sources and backups of these militant groups in both the countries," the Pakistani leader said.