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Oct. 13, 2008 at 12:05 PM
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U.S. markets surge ahead Monday

NEW YORK, Oct. 13 (UPI) -- U.S. markets jumped ahead Monday after European leaders announced plans to shore up their financial systems.

The New York Times reported Britain would inject $64 billion into three banks that would end up partially nationalized. The German government proposed setting up a $671 billion financial market stabilization fund, CNNMoney reported. Eurozone leaders were also poised to announce a menu of alternatives for member nations, the Times said.

At noon, the Dow Jones industrial average was up 496.61 or 5.88 percent to 8,947.80. The Standard & Poor's 500 climbed 53.19 or 5.92 percent to 952.41. The Nasdaq composite index gained 104.61 or 6.34 percent to 1,754.12.

The benchmark 10-year U.S. Treasury bond was unchanged, yielding 3.98 percent.

The dollar was mixed. The euro rose to $1.3552, compared to $1.3413 Friday. Against the Japanese yen, the dollar rose to 100.91 yen, up from 100.25 yen.

In Hong Kong, the Hang Seng index gained 10.24 percent to 16,312.16, up 1,515.29. The Tokyo market was closed for a holiday.

Fed increases swap lines with three banks

WASHINGTON, Oct. 13 (UPI) -- The U.S. Federal Reserve said Monday it would increase swap lines with three central banks to allow borrowing to improve short-term liquidity.

The Bank of England, the European Central Bank and the Swiss National Bank will conduct seven-day, 28-day and 84-day tenders of U.S. dollar funding at fixed interest rates, the Fed said.

"Counterparties in these operations will be able to borrow any amount they wish against the appropriate collateral in each jurisdiction," the Fed said in a statement.

"Accordingly, sizes of the reciprocal currency arrangements (swap lines) between the Federal Reserve and the Bank of England, the European Central Bank, and the Swiss National Bank will be increased to accommodate whatever quantity of U.S. dollar funding is demanded," the Fed statement said.

The Bank of Japan announced it was "considering the introduction of similar measures."

Report: Turkey, Iraqi Kurds hold talks

ANKARA, Turkey, Oct. 13 (UPI) -- Turkish officials have held secret talks with leaders of Iraq's semi-autonomous Kurdish zone on dealing with Kurdish separatists in Turkey, sources say.

The talks reportedly took place Oct. 3 and are ongoing between Turkish officials and members of Iraqi Kurdish leader Massoud Barzani's Kurdistan Democratic Party, the Turkish newspaper Today's Zaman reported.

The discussions reportedly are aimed at finding ways to battle the outlawed Kurdistan Workers' Party, or PKK, which both Turkey and Iraq regard as a terrorist organization. The PKK operates along Iraq's mountainous border, from which it launches assaults inside Turkey. Turkish warplanes and artillery Saturday bombed 31 PKK targets inside northern Iraq, military officials said.

Today's Zaman quoted unnamed sources saying there will soon be further meetings with Iraqi Kurds to discuss cooperation against the PKK, possibly in Baghdad or Irbil, the regional capital of Iraq's semi-autonomous Kurdish administration.

Momentum builds for Taliban negotiations

KABUL, Afghanistan, Oct. 13 (UPI) -- Afghan President Hamid Karzai and U.S. and British officials have concluded there can be no military victory over Taliban insurgents, Time Magazine says.

All are privately, and to a greater degree publicly, advocating negotiation of a political deal with the Islamist militants as military force has proved largely ineffective at eliminating their insurgency, the magazine reported Monday.

Karzai last week appealed to Taliban leader Mullah Omar for peace and offered to talk, it said. The overture came after last month's Ramadan meeting of government representatives, former Taliban leaders and Saudi King Abdullah in Mecca.

Brig. Mark Carleton-Smith, Britain's top military officer in Afghanistan, told a British newspaper, "We're not going to win this war," and that at best NATO troops could only hope for is to reduce it "to a manageable level of insurgency that's not a strategic threat." British Ambassador Sir Sherard Cowper-Coles reportedly said in a leaked diplomatic briefing the U.S. strategy in Afghanistan "is doomed to fail."

U.S. Defense Secretary Robert Gates this month said the Bush administration now believes the only way to win the Afghan war is "through political means."

Russian ships leave Libya, head west

TRIPOLI, Libya, Oct. 13 (UPI) -- Russian warships are leaving the Libyan capital after a three-day official visit and are steaming to the Caribbean, military officials say.

The task force from Russia's Northern Fleet is led by the nuclear-powered missile cruiser Pyotr Veliky. The ships left a naval base in northern Russia Sept. 22, arrived in Tripoli Saturday and are now heading to the Caribbean to conduct joint exercises with Venezuela, RIA Novosti reported.

"After training at sea and some more visits to other foreign ports, the Russian Northern Fleet warships will head for the Caribbean to hold exercises in November with Venezuela's navy," a Russian military spokesman said.

One of the ships, the Neustrashimy (Fearless) missile frigate from Russia's Baltic Fleet, will go separately to Somalia. Somali Ambassador to Russia Mohamed Handule said President Abdullahi Yusuf Ahmed has authorized Russia's military to fight pirates both off Somalia's coast and on land, the news agency reported.

Somali pirates have hijacked a Ukrainian ship, the MV Faina, which was carrying dozens of tanks and other heavy weaponry.

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