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.

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

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Nurse Duped by 'Queen's' Prank Call Found Dead

The hospital receptionist who was hoaxed by a prank call from a DJ claiming to be the queen asking about Kate Middleton has been found dead.

"It is with very deep sadness that we confirm the tragic death of a member of our nursing staff," the hospital said in a statement released today.

The nurse was identified as Jacintha Saldanha. The hospital said that Saldanha worked at the hospital for more than four years. They called her a "first-class nurse" and "a well-respected and popular member of the staff."

"We can confirm that Jacintha was recently the victim of a hoax call to the hospital," the statement said. "The hospital had been supporting her throughout this difficult time."

The hospital extended their "deepest sympathies" to family and friends, saying that "everyone is shocked" at this "tragic event."

"She will be greatly missed," the hospital said.

Earlier this week, the hospital fell for a prank call from an Australian radio show where the hosts pretended to be Queen Elizabeth II and Prince Charles looking to speak to Kate Middleton, who had been admitted to the hospital for her pregnancy. The call was put through to a second nurse who told the royal impersonators that Kate was "quite stable" and hadn't "had any retching."

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Saldanha was the nurse who transferred the impersonators to the second nurse who gave information about Kate's condition.

"The Duke and Duchess of Cambridge are deeply saddened to learn of the death of Jacintha Saldanha," a spokesman from St. James Palace said in a statement.

"Their Royal Highnesses were looked after so wonderfully well at all times by everybody at King Edward VII Hospital, and their thoughts and prayers are with Jacintha Saldanha's family, friends and colleagues at this very sad time," the statement said.

Police were called to an address near the hospital at about 9:35 a.m. GT today to "reports of a woman found unconscious," according to a statement from Scotland Yard.

The woman was pronounced dead at the scene. "Inquiries continue to establish the circumstances of the incident. Next of kin have been informed," the statement said.

Circumstances of the death being investigated, but are not suspicious at this stage, according to police.

The duchess spent three days at the hospital undergoing treatment for hyperemesis gravidarum, severe or debilitating nausea and vomiting. She was released from the hospital on Thursday morning.

The Tuesday morning prank call came from Australian DJ's Mel Greig and Michael Christian. They impersonated the royals, complete with exaggerated accents. They even enlisted two co-workers to bark like the queen's pet corgis.

The Sydney radio station, 2DayFM, could not be immediately reached for comment.

The Twitter accounts of both radio personalities have been deactivated, but it is unknown when the accounts were shut down. The DJ's are being heavily criticized on Twitter, with many people calling for them to resign or be fired.

The queen impersonator asked for her granddaughter and was promptly transferred to another hospital employee.

"I'm just after my granddaughter, Kate. I want to see how her little tummy bug is going," the radio host said, suppressing laughter.

"She's sleeping at the moment, and she has had an uneventful night and sleep is good for her," the nurse said. "She's been getting some fluids to rehydrate her because she was quite dehydrated when she came in, but she's stable at the moment."

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Military halts clashes as political crisis grips Egypt

CAIRO (Reuters) - Egypt's Republican Guard restored order around the presidential palace on Thursday after fierce clashes killed seven people, but passions ran high in a contest over the country's future.

President Mohamed Mursi had been due to address the nation, but a presidential source said the Islamist leader, criticized by his opponents for his silence in the last few days, might speak on Friday instead. He did not explain the possible delay.

Hundreds of Mursi supporters who had camped out near the palace overnight withdrew before a mid-afternoon deadline set by the Republican Guard, an elite unit whose duties include protecting the palace. Scores of opposition protesters remained, but were kept away by a barbed wire barricade guarded by tanks.

The military played a big role in removing President Hosni Mubarak during last year's popular revolt, taking over to manage a transitional period, but had stayed out of the latest crisis.

Mursi's Islamist partisans fought opposition protesters well into the early hours during dueling demonstrations over the president's November 22 decree to expand his powers to help him push through a mostly Islamist-drafted constitution.

Officials said seven people were killed and 350 wounded in the violence, for which each side blamed the other. Six of the dead were Mursi supporters, the Muslim Brotherhood said.

Prosecutors investigating the unrest said Brotherhood members had detained 49 wounded protesters and were refusing to release them to the authorities, the state news agency said.

The Brotherhood's spokesman Mahmoud Ghozlan denied this, saying all "thugs" detained by members of the Islamist group had been handed over to the police or the Republican Guard.

The street clashes reflected a deep political divide in the most populous Arab nation, where contrasting visions of Islamists and their liberal rivals have complicated a struggle to embed democracy after Mubarak's 30 years of one-man rule.

MILITARY'S ROLE

The United States, worried about the stability of an Arab partner which has a peace deal with Israel and which receives $1.3 billion a year in U.S. military aid, has urged dialogue.

The commander of the Republican Guard said deployment of tanks and troop carriers around the presidential palace was intended to separate the adversaries, not to repress them.

"The armed forces, and at the forefront of them the Republican Guard, will not be used as a tool to oppress the demonstrators," General Mohamed Zaki told the state news agency.

Hussein Abdel Ghani, spokesman of the opposition National Salvation Front, told Reuters more protests were planned, but not necessarily at the palace. "Our youth are leading us today and we decided to agree to whatever they want to do," he said.

Outside Cairo, supporters and opponents of Mursi clashed in his home town of Zagazig in the Nile Delta, state TV reported.

Egypt plunged into renewed turmoil after Mursi issued his November 22 decree and an Islamist-dominated assembly hastily approved a new constitution to go to a referendum on December 15.

Since then six of the president's advisers have resigned. Essam al-Amir, the director of state television quit on Thursday, as did a Christian official working at the presidency.

The Supreme Guide of the Brotherhood, to which Mursi belonged before he was narrowly elected president in June, appealed for unity. Divisions among Egyptians "only serve the nation's enemies", Mohamed Badie said in a statement.

BLOODY CLASHES

Rival factions used rocks, petrol bombs and guns in the clashes around the presidential palace.

"We came here to support President Mursi and his decisions. He is the elected president of Egypt," said demonstrator Emad Abou Salem, 40. "He has legitimacy and nobody else does."

Opposition protester Ehab Nasser el-Din, 21, his head bandaged after being hit by a rock the day before, decried the Muslim Brotherhood's "grip on the country", which he said would only tighten if the new constitution is passed.

Mursi's opponents accuse him of seeking to create a new "dictatorship". The president says his actions were necessary to prevent courts still full of judges appointed by Mubarak from derailing a constitution vital for Egypt's political transition.

U.N. Human Rights Commissioner Navi Pillay urged the Egyptian authorities to protect peaceful protesters and prosecute anyone inciting violence, including politicians.

"The current government came to power on the back of similar protests and so should be particularly sensitive to the need to protect protesters' rights to freedom of expression and peaceful assembly," Pillay said in Geneva.

Mursi has shown no sign of buckling under pressure from protesters, confident that the Islamists, who have dominated both elections since Mubarak was overthrown, can win the referendum and the parliamentary election to follow.

Mahmoud Hussein, the Brotherhood's secretary-general, said holding the plebiscite was the only way out of the crisis, dismissing the opposition as "remnants of the (Mubarak) regime, thugs and people working for foreign agendas".

As well as relying on his Brotherhood power base, Mursi may also tap into a popular yearning for stability and economic revival after almost two years of political turmoil.

Egypt's pound hit an eight-year low on Thursday, after previously firming on hopes that a $4.8 billion IMF loan would stabilize the economy. The stock market fell 4.6 percent.

Foreign exchange reserves fell by nearly $450 million to $15 billion in November, indicating that the Central Bank was still spending heavily to bolster the pound. The reserves stood at about $36 billion before the anti-Mubarak uprising.

(Additional reporting by Tom Perry, Edmund Blair and Marwa Awad; Writing by Alistair Lyon; Editing by Peter Graff)

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ECB slashes growth forecasts, keeps door open to rate cuts

FRANKFURT: The European Central Bank slashed its eurozone growth forecasts Thursday, keeping the door open to more interest rates cuts, even as it insisted it was up to governments to solve the debt crisis.

As widely expected, the ECB's decision-making governing council voted to leave the bank's main refinancing rate at a historic low of 0.75 percent at its last policy meeting this year.

But ECB chief Mario Draghi -- who last month had said further rate cuts were not discussed at all -- revealed there had been "wide discussion" of such a move this time round and the decision was anything but unanimous.

Nevertheless, "in the end the prevailing consensus was to leave the rates unchanged," the Italian central banker said.

The 23-member governing council traditionally likes any decisions to be unanimous or, failing that, by consensus.

And with economic gloom deepening over the 17 countries that share the euro, many ECB watchers believe there is room for additional monetary easing, even if none of them had predicted a cut in the bank's refi rate at this month's meeting.

The bank might be persuaded to act if economic prospects continue to deteriorate, analysts argued.

And the outlook looks gloomy indeed.

In its regular quarterly staff economic projections, the ECB forecast that the eurozone economy will contract both this year and next year and only return to growth in 2014.

According to the updated forecasts, the euro area economy is set to shrink by 0.5 percent in 2012 rather than by 0.4 percent as predicted earlier.

And it would shrink again by 0.3 percent in 2013, instead of growing by 0.5 percent.

Only in 2014 would the economy grow again, by an estimated 1.2 percent, the forecasts said.

The ECB governing council "continues to see downside risks to the economic outlook for the euro area," Draghi said.

"Over the shorter term, weak activity is expected to extend into next year."

Nevertheless, a gradual recovery should start "later" in 2013 as the ECB's low-interest rate policy and rising market confidence fed through into household spending, while a strengthening of foreign demand should support export growth, he argued.

Thus, the ball was very much in the governments' court to solve the two-year-old crisis, Draghi insisted.

By cutting interest rates and launching a raft of anti-crisis measures the ECB had "already done much that is needed," he said, even if he refused to explicitly rule out additional action further down the line.

"In order to sustain confidence, it is essential for governments to reduce further both fiscal and structural imbalances and to proceed with financial sector restructuring," he insisted.

A number of ECB watchers said they still expected the central bank to lower its rates early next year if the economy deteriorated still further.

"The ECB appears to have the door open for an interest rate cut, and we expect it to step through early in 2013," said Howard Archer at IHS Global Insight.

"With the eurozone clearly facing a difficult fourth quarter and beyond after moving into modest recession in the third quarter, and with the underlying inflation situation in the Eurozone looking relatively benign, we believe that the ECB has ample justification and scope to take interest rates down from 0.75 percent to 0.50 percent sooner rather than later," he said.

But others were not so sure.

Draghi "was quite clear that no further monetary policy action is to be expected in the near future," said Marie Diron at Ernst & Young Eurozone Forecast.

Commerzbank chief economist Joerg Kraemer said he "would forecast a lower refi rate if leading economic indicators declined in contrast to our expectations."

ING Belgium economist Carsten Brzeski felt that the fact that the ECB kept rates on hold "even after these strong downward revisions for growth and inflation in our view shows that the ECB prefers to stimulate the economy with non-standard measures and not with additional rate cuts."

A rate cut "might not entirely be off the table but would require an even worse weakening of the economy," Brzeski said.

-AFP/ac

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PMO pushes for hike in rail fares after nine years

NEW DELHI: Get ready to pay more for rail travel by next March as the government is trying to set up of an independent tariff regulator.

PM Manmohan Singh on Thursday stepped in to accelerate the much-awaited reforms in railways, which has been neglected for many years.

The Prime Minister's Office (PMO) has set deadlines for railways' top brass to set up independent tariff regulator and implement pending projects within a timeframe.

Singh has asked an inter-ministerial group (IMG), headed by chairman of Railway Board, to finalize the proposal for setting up a Rail Tariff Authority by December 31.

The regulator will suggest rationalization of passenger fares, which have not been touched for the past nine years, thanks to populist pressures. The PMO has sought to expedite the setting up of the regulator, directing the transporter to move a Cabinet note by January 15, 2013.

Soon after taking charge, railway minister Pawan Kumar Bansal has hinted at accelerating the proposal as the state-run transporter is cash-strapped due to the current practice of cross-subsidizing passenger fare with freight earning.

The regulator is expected to examine the operational expenditure, including diesel and power cost for running trains, and suggest passenger fare hike to absorb the escalated cost.

Faced with acute funds crunch, the government is aware that there is no other way than revising passenger fare to implement its safety and modernization efforts.

Worried over the political fallout, the ministry, under regional leaders for several years, could not rationalize passenger fares for long.

The setting up of a regulator will be a big step forward towards de-politicization of fare hike, which has not been rationalized since 2002-03, leading to a loss of around 24,000 crore annually .

The PMO has also directed railways to expedite setting up of long-pending Madhepura and Marhowra loco factories under the PPP mode. Railways has been instructed to invite bids for the Madhepura project by the end of this month, and award the project before the rail budget in March, 2013. "Timelines for the Marhowra project will be announced by December 15," it said.

To accelerate elevated rail corridor project in Mumbai, the PMO directed to sign the state support agreement with Maharashtra government within the next 15 days. Railways will finalize important milestones with timelines by December 31, 2012, and bids for the project will be invited before the upcoming rail budget.

UPA's ambitious project dedicated freight corridor was applauded as it is shaping up much better than other large ventures.

Railways was asked to submit revised estimates with details on source of funding for the dedicated freight corridor project by December 15. It will also provide timelines for Sonnagar-Dankuni project on the eastern corridor.

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Celebrations planned as Wash. legalizes marijuana

SEATTLE (AP) — Legal marijuana possession becomes a reality under Washington state law on Thursday, and some people planned to celebrate the new law by breaking it.

Voters in Washington and Colorado last month made those the first states to decriminalize and regulate the recreational use of marijuana. Washington's law takes effect Thursday and allows adults to have up to an ounce of pot — but it bans public use of marijuana, which is punishable by a fine, just like drinking in public.

Nevertheless, some people planned to gather at 12:01 a.m. PST Thursday to smoke in public beneath Seattle's Space Needle. Others planned a midnight party outside the Seattle headquarters of Hempfest, the 21-year-old festival that attracts tens of thousands of pot fans every summer.

"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."

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.

That law also takes effect Thursday, when gay and lesbian couples can start picking up their wedding certificates and licenses at county auditors' offices. Those offices in King County, the state's largest and home to Seattle, and Thurston County, home to the state capital of Olympia, planned to open the earliest, at 12:01 a.m. Thursday, to start issuing marriage licenses. Because the state has a three-day waiting period, the earliest that weddings can take place is Sunday.

The Seattle Police Department provided this public marijuana use enforcement guidance to its officers via email Wednesday night: "Until further notice, officers shall not take any enforcement action — other than to issue a verbal warning — for a violation of Initiative 502."

Thanks to a 2003 law, marijuana enforcement remains the department's lowest priority. Even before I-502 passed on Nov. 6, police rarely busted people at Hempfest, despite widespread pot use, and the city attorney here doesn't prosecute people for having small amounts of marijuana.

Officers will be advising people to take their weed inside, 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."

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" — a non-issue, since the measures passed in Washington and Colorado don't "nullify" federal law, which federal agents remain free to enforce.

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.

Colorado's measure, as far as decriminalizing possession goes, is set to take effect by Jan. 5. That state's regulatory scheme is due to be up and running by October 2013.

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

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Winter Chill Descends on Frozen Fiscal Cliff Talks

A chill has descended on Washington just in time for tonight's lighting of the National Christmas Tree.

President Obama will preside over an evening festival of star-studded carols and sparkling displays of holiday cheer on the White House Ellipse.

But don't expect any of the holiday good will to warm the political frost over the fiscal cliff talks.

The White House is mandating that tax hikes for the wealthiest Americans must be part of any deficit-reduction deal with congressional Republicans, who stand equally opposed. Negotiations have ground to a standstill.

"There's no prospect for an agreement that doesn't involve those rates going up on the top 2 percent of the wealthiest," Treasury Secretary Timothy Geithner said Wednesday.

He also said the administration is "absolutely" willing to allow the package of deep automatic spending cuts and across-the-board tax hikes to take effect Jan. 1 if they don't get some increase in those tax rates.

Toby Jorrin/AFP/Getty Images

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Obama spoke by phone with House Speaker John Boehner on Wednesday, the first time both men had been in contact in one week. On Monday, Boehner attended a White House holiday party but did not greet Obama.

Republicans say Obama has fixated on tax hikes for the rich at the exclusion of entitlement program reforms to curb spending, which they are seeking as part of a "balanced" deal.

"The president talks about a balanced approach, but he's rejected spending cuts that he has supported previously and refuses to identify serious spending cuts he is willing to make today," Boehner said Wednesday. "This is preventing us from reaching an agreement."

As the showdown continues, Obama will take his tax argument on the road to Virginia, visiting the home of a middle class family to highlight the importance of lawmakers extending current, lower tax rates for 98 percent of U.S. earners.

Both parties agree they should be extended before they expire at the end of the year. But they remain tangled in the broader debate over spending cuts and upper-income tax rates.

The average American family of four would pay an estimated $2,200 more in taxes next year if the rates for middle-income earners are not extended.

Economists say a failure to resolve the standoff before Dec. 31 could thrust the U.S. economy back into a recession, a prospect many Americans are also worried about, according to a new poll.

Fifty-three percent of voters say lawmakers' failure to avoid the "cliff" would be "bad for their personal financial situation," compared to just 13 percent who said it wouldn't, according to the Quinnipiac University Polling Institute.

The same poll found a majority – 53 percent – trusting Obama and Democrats more than Republicans to work out a deal in the deficit negotiations.

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Egypt clashes erupt despite proposal to end crisis

CAIRO (Reuters) - Islamists fought protesters outside the Egyptian president's palace on Wednesday, while inside the building his deputy proposed a way to end a crisis over a draft constitution that has split the most populous Arab nation.

Stones and petrol bombs flew between opposition protesters and supporters of President Mohamed Mursi who had flocked to the palace in response to a call from the Muslim Brotherhood.

Two Islamists were hit in the legs by what their friends said were bullets fired during the clashes in streets around the compound in northern Cairo. One of them was bleeding heavily.

A leftist group said Islamists had cut the ear off one of its members, inflicting serious head wounds on him.

Riot police began to deploy between the two sides to try to end the violence which flared after dark despite an attempt by Vice President Mahmoud Mekky to calm the political crisis.

He said amendments to disputed articles in the draft constitution could be agreed with the opposition. A written agreement could then be submitted to the next parliament, to be elected after a referendum on the constitution on December 15.

"There must be consensus," he told a news conference, saying opposition demands must be respected to overcome the crisis.

Opposition leader Amr Moussa, a former foreign minister and secretary-general of the Arab League, said Mursi should make a formal offer for dialogue if his opponents were to consider seriously Mekky's ideas for a way out of the political impasse.

"We are ready when there is something formal, something expressed in definite terms, we will not ignore it," Moussa told Reuters during talks with other opposition figures.

Opposition leaders have previously urged Mursi to retract a decree widening his powers, defer the plebiscite and agree to revise the constitution, but have not echoed calls from street protesters for his overthrow and the "downfall of the regime".

UNDER SIEGE

Mursi had returned to work at his compound a day after it came under siege from protesters furious at his assumption of extraordinary powers via an edict on November 22.

The president, narrowly elected by popular vote in June, said he acted to stop courts still full of judges appointed by ousted strongman Hosni Mubarak from derailing a constitution meant to complete a political transition in Egypt, long an ally of Washington and signatory to a 1979 peace deal with Israel.

Rival groups skirmished earlier outside the presidential palace on Wednesday. Islamist supporters of Mursi tore down tents erected by leftist foes, who had begun a sit-in there.

"They hit us and destroyed our tents. Are you happy, Mursi? Aren't we Egyptians too?" asked protester Haitham Ahmed.

Mohamed Mohy, a pro-Mursi demonstrator who was filming the scene, said: "We are here to support our president and his decisions and save our country from traitors and agents."

Facing the gravest crisis of his six-month-old tenure, Mursi has shown no sign of buckling, confident that Islamists can win the referendum and a parliamentary election to follow.

Many Egyptians yearn for an end to political upheaval that has scared off investors and tourists, damaging the economy.

Mekky said street mobilization by both sides posed a "real danger" to Egypt. "If we do not put a stop to this phenomenon right away ... where are we headed? We must calm down."

U.S. Secretary of State Hillary Clinton weighed into Egypt's political debate, saying dialogue was urgently needed on the new constitution, which should "respect the rights of all citizens".

Clinton and Mursi worked together last month to broker a truce between Israel and Hamas Islamists in the Gaza Strip.

"It needs to be a two-way dialogue ... among Egyptians themselves about the constitutional process and the substance of the constitution," Clinton told a news conference in Brussels.

Washington is worried about rising Islamist power in Egypt, a staunch U.S. security partner under Mubarak.

"LAST WARNING"

The Muslim Brotherhood had summoned supporters to an open-ended demonstration at the presidential palace, a day after about 10,000 opposition protesters had encircled it for what organizers dubbed a "last warning" to Mursi.

"The people want the downfall of the regime," they chanted, roaring the signature slogan of last year's anti-Mubarak revolt.

Officials said 35 protesters and 40 police were wounded.

The "last warning" may turn out to be one of the last gasps for a disparate opposition that has little chance of scuttling next week's vote on a constitution drawn up over six months and swiftly approved by an Islamist-dominated assembly.

State institutions, with the partial exception of the judiciary, have mostly fallen in behind Mursi.

The army, the muscle behind all previous Egyptian presidents in the republic's six-decade history, has gone back to barracks, having apparently lost its appetite to intervene in politics.

In a bold move, Mursi sacked Mohamed Hussein Tantawi, the Mubarak-era army commander and defense minister, in August and removed the sweeping powers that the military council, which took over after Mubarak fell, had grabbed two months earlier.

The liberals, leftists, Christians, ex-Mubarak followers and others opposed to Mursi have yet to generate a mass movement or a grassroots political base to challenge the Brotherhood.

Investors have seized on hopes that Egypt's turbulent transition, which has buffeted the economy for two years, may soon head for calmer waters, sending stocks 1.6 percent higher after a 3.5 percent rally on Tuesday.

Egypt has turned to the IMF for a $4.8 billion loan to help it out of a crisis that has depleted its foreign currency reserves. The government said on Wednesday the process was on track and its request would go to the IMF board as expected.

The board is due to review the facility on December 19.

(Additional reporting by Tom Perry, Tamim Elyan and Edmund Blair; Writing by Alistair Lyon; Editing by Jon Hemming)

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Britain faces more austerity pain

LONDON: Finance minister George Osborne on Wednesday warned Britons that they faced an extra year of austerity measures and insisted that reversing his belt-tightening measures now would be a "disaster".

Chancellor of the Exchequer Osborne said Britain would face spending cuts and tax hikes until 2018 -- after the coalition government led by Prime Minister David Cameron had already previously extended the programme by two years to 2017.

The bleak announcement in a budget update, coming alongside news that the government is slashing its outlook for economic growth, is likely to heap further pressure on the administration mid-way through a five-year term in power.

Addressing parliament on Wednesday, Osborne also admitted that the government would fail to meet its official target for reducing public debt as a proportion of British economic output by 2015-16.

"It is taking time but the British economy is healing after the biggest financial crash in our lifetime," Osborne insisted in his Autumn Statement.

Confirming that he was prolonging the government's austerity programme to 2017-18 -- beyond Britain's next general election due in 2015 -- Osborne said: "We are making progress. It's a hard road, but we are getting there. Britain is on the right track and turning back now would be a disaster."

Explaining why he was extending cuts in public spending and hiking taxes again, Osborne said the British economy faced "deep-seated problems at home and abroad."

Britain's Conservative-Liberal Democrat coalition government, which came to power in 2010, has imposed a series of painful austerity measures to slash a record deficit that was inherited from the previous Labour administration.

Cameron and Osborne have overseen the loss of tens of thousands of public-sector jobs, slashing workforces in the military, health service and various state departments.

The government has also faced huge demonstrations from disgruntled workers ans students in response to the cuts.

The main opposition Labour party said Osborne's economic plans were "in tatters".

The party's finance spokesman Ed Balls said: "Today, after two and a half years, we can see, people can feel in the country, the true scale of this government's economic failure.

"Our economy this year is contracting, (and) the chancellor has confirmed government borrowing is revised up this year, next year and every year."

Britain meanwhile slashed its economic outlook, forecasting the economy would shrink by 0.1 percent this year and then return to growth in 2013, according to figures published alongside the budget update.

The new forecast, issued by the Office for Budget Responsibility (OBR) fiscal watchdog, showed a sharp drop on the previous 2012 growth estimate of 0.8 percent that was given in Osborne's annual budget in March.

The OBR added that British gross domestic product was forecast to grow by 1.2 percent in 2013. That compared with previous guidance for greater expansion of 2.0 percent.

Osborne also revealed that debt as a proportion of gross domestic product (GDP) was now expected to fall in 2016-17 -- a year later than the government's previous forecast.

Recent official data showed that Britain had escaped from recession in the third quarter of this year, with its economy growing by a robust 1.0 percent.

However the return to growth was owing to one-off factors such as the London Olympics and rebounding activity after public holidays in the second quarter.

"The message... is that we are making progress," Osborne said.

Osborne had some positive news for motorists and businesses, postponing a hike in fuel tax due to have come into force in January and saying he would cut corporation tax by one percentage point to 21 percent in 2014.

The coalition has blamed the recession largely on the debt crisis in the neighbouring eurozone, but the main opposition Labour party claims that the downturn was mainly owing to the hefty cuts in state spending.

On the eve of the budget update, Osborne pledged to invest £5.0 billion (6 billion euros, $8 billion) in schools, transport and science over the next two fiscal years, with the cash sourced from a new raft of spending cuts across most civil service departments.

And on Monday, Osborne launched a campaign against "tax dodgers" and "cowboy advisers" to claw back £2.0 billion a year, as lawmakers alleged that multinationals such as Starbucks and Google are avoiding huge tax bills.

-AFP/ac

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Deoband fatwa describes perfume with alcohol, tattoo and women receptionists as un-Islamic

LUCKNOW: Two fatwas issued by leading Islamic seminary Darul Uloom Deoband in Muzaffarnagar in Uttar Pradesh in last two days have left many in Muslim community perplexed in the state. While a fatwa as described working of women as receptionists against sharia law, another termed tattoo and use of perfume with alcohol content as un-Islamic.

A Pakistan-based company had asked whether it could appoint a Muslim woman as a receptionist. In reply, the seminary said that Muslim women working in offices as receptionist is un-Islamic because Muslim women are not allowed to appear before men without veil. Mufti Zulfikar Ali, Muslim cleric and president of UP Imam organisation, also said that the Muslim women can work in institutions after wearing the veil but the work of a receptionist is to constantly interact with people, which should not be practised.

In the second case a youth in his query had asked that is tattoo valid in shaira law?. He said that one of his friends who has a tattoo on his arm and it would cost him a huge sum if he goes for a surgery to remove it. In such a condition what should be done, he said in his query. The seminary, in its reply, said that prayers of those, who have tattoo on their bodies or have sprayed perfume with alcohol in it is not valid. Another Islamic seminary, Bareli Markaz has backed the Deoband's decree saying that the tattoo on body is against the tenets of Islam.

Earlier, Darul Uloom Deoband had issued a fatwa against manufacturing and selling of firecrackers. It stated that manufacturing and selling of firecrackers is against Sharia law and bursting of crackers is misuse of money, hence it should be avoided. Another fatwa recently had described donation of blood and body parts was against the tenets of Islam.

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