Wall Street rebounds on HP results, Fed officials' views

NEW YORK (Reuters) - U.S. stocks rose on Friday as Dow component Hewlett-Packard surged on strong results and comments from Fed officials allayed fears that the central bank would curtail its stimulus measures.

Federal Reserve Chairman Ben Bernanke downplayed worries that the Fed has fueled asset bubbles that could hurt the economy in a private meeting with bond dealers and investors earlier this month, Bloomberg reported on Friday.

Bernanke's view helped ease fears that the central bank may end its easy money policies. Minutes from the Federal Reserve's January meeting hit markets on Wednesday as investors interpreted divergent opinions on the benefit of stimulus as a sign the measures may be halted sooner than thought.

"They are in uncharted territory with divergent views," said Jack Ablin, chief investment officer at BMO Private Bank in Chicago. "I could see some pretty heated opinions on what the ultimate outcome is, so I do believe there is dissension."

Hewlett-Packard Co shares jumped more than 12 percent and gave one of the biggest boosts to both the Dow and the S&P 500 after the personal computer maker's quarterly revenue and forecasts beat expectations. Hewlett-Packard's stock rose to $19.20 at the close, up 12.3 percent for the day.

The Dow Jones industrial average <.dji> gained 119.95 points, or 0.86 percent, to 14,000.57 at the close. The Standard & Poor's 500 Index <.spx> rose 13.18 points, or 0.88 percent, to 1,515.60. The Nasdaq Composite Index <.ixic> added 30.33 points, or 0.97 percent, to end at 3,161.82.

With Bernanke's reported comments much on their minds in Friday's session, investors will want the Fed chairman to reiterate his remarks publicly when he speaks before the Senate Banking Committee on Tuesday. That would echo comments made by two top Fed officials on Friday.

Boston Fed President Eric Rosengren and Fed Governor Jerome Powell both defended the U.S. central bank's asset-buying program, arguing that the policy helps the U.S. economy.

The S&P 500 shed 1.9 percent over the previous two sessions, its worst two-day drop since early November, following the release of the Fed's minutes on Wednesday. The selloff marked the end of seven back-to-back weeks of gains for stocks.

For the week, the S&P 500 slipped 0.3 percent and the Nasdaq lost nearly 1 percent. Only the Dow ended the week with a gain - up just 0.1 percent.

HP's results come near the end of a relatively strong earnings season in which 70 percent of S&P 500 companies beat analysts' expectations, compared with a 62 percent average since 1994 and 65 percent over the past four quarters, according to Thomson Reuters data.

"Overall, the earnings supports were better than expected in this cycle," said Peter Jankovskis, co-chief investment officer at OakBrook Investments LLC in Lisle, Illinois. "We may see the market rising during the month of March."

Fourth-quarter earnings for S&P 500 companies are estimated to have risen 6 percent, according to the data, above a 1.9 percent forecast at the start of the earnings season.

But with only a handful of companies left to report earnings, investors are looking ahead to the possibility of hefty automatic budget cuts that could happen on March 1.

A large option investor appeared to be adjusting a bearish view on the SPDR S&P 500 Trust fund while locking in previously established gains, in a possible hedge ahead of the automatic budget cuts that are set to take effect at the beginning of next month. The play involved weekly puts, expiring next Friday.

"An institutional investor appears to be rolling down and increasing in size a defensive hedge timed to match the March 1 deadline for the sequester," said Henry Schwartz, president of options analytics firm Trade Alert.

The trader sold 132,000 $149 to $150 weekly put spreads for 22 cents as shares of the exchange-traded fund had traded near $151.14 on Friday morning. The transaction entailed the sale of $150 weekly puts to buy the $149 weekly puts. In addition, the investor purchased another 42,000 $149 weekly puts, which increases the size of the hedge to 174,000 contracts.

"It is likely this large position protects an existing underlying long position in a portfolio," Schwartz said.

In another political risk factor, Italians go to the polls this weekend in an election that could threaten reforms in the indebted country. Silvio Berlusconi's resurgence has thrown the vote wide open, with deep uncertainty over whether the poll can produce the strong government the country needs.

Inconclusive Greek elections last year sparked a protracted selloff and a period of uncertainty in markets.

In the tech sector, Marvell Technology Group Ltd forecast results this quarter that were largely above analysts' expectations. Marvell gained market share in the hard-disk drive and flash-storage businesses. The stock rose 4.4 percent to $9.89.

Texas Instruments Inc raised its dividend by a third and boosted its stock-buyback program, driving its stock up 5.2 percent to $34.18.

The PHLX semiconductor index <.sox> gained 2.1 percent.

"Dividends growing are another way the market's level is justified, if not especially attractive at these levels," said Rex Macey, chief investment officer of Wilmington Trust in Atlanta, who manages about $20 billion in assets.

On the downside, Abercrombie & Fitch dropped 4.5 percent to $46.86 after the youth-oriented clothing retailer reported a drop in fourth-quarter comparable sales, even as its latest quarterly earnings topped estimates.

Insurer American International Group Inc posted fourth-quarter results that beat analysts' expectations. AIG's stock advanced 3.1 percent to $38.45.

About three stocks rose for every one that fell on both the New York Stock Exchange and Nasdaq.

Around 5.8 billion shares changed hands on the New York Stock Exchange, the Nasdaq and NYSE MKT, below the 20-day moving average of around 6.51 billion shares.

(Additional Reporting by Ryan Vlastelica and Doris Frankel; Editing by Kenneth Barry and Jan Paschal)

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French, Malian forces fight Islamist rebels in Gao

GAO, Mali (Reuters) - French and Malian troops fought Islamists on the streets of Gao and a car bomb exploded in Kidal on Thursday, as fighting showed little sign of abating weeks before France plans to start withdrawing some forces.

Reuters reporters in Gao in the country's desert north said French and Malian forces fired at the mayor's office with heavy machineguns after Islamists were reported to have infiltrated the Niger River town during a night of explosions and gunfire.

French Defense Minister Jean-Yves Le Drian told a news conference in Brussels that Gao was back under control after clashes earlier in the day.

"Malian troops supported by French soldiers killed five jihadists and the situation is back to normal," he said.

In Kidal, a remote far north town where the French are hunting Islamists, residents said a car bomb killed two. A French defense ministry source reported no French casualties.

French troops dispatched to root out rebels with links to al Qaeda swiftly retook northern towns last month. But they now risk being bogged down in a guerrilla conflict as they try to help Mali's weak army counter bombings and raids.

"There was an infiltration by Islamists overnight and there is shooting all over the place," Sadou Harouna Diallo, Gao's mayor, told Reuters by telephone earlier in the day, saying he was not in his office at the time.

Gao is a French hub for operations in the Kidal region, about 300 km (190 miles) northeast, where many Islamist leaders are thought to have retreated and foreign hostages may be held.

"They are black and two were disguised as women," a Malian soldier in Gao who gave his name only as Sergeant Assak told Reuters during a pause in heavy gunfire around Independence Square.

Six Malian military pickups were deployed in the square and opened fire on the mayor's office with the heavy machineguns. Two injured soldiers were taken away in an ambulance.

French troops in armored vehicles later joined the battle as it spilled out into the warren of sandy streets, where, two weeks ago, they also fought for hours against Islamists who had infiltrated the town via the nearby river.

Helicopters clattered over the mayor's office, while a nearby local government office and petrol station was on fire.

A Gao resident said he heard an explosion and then saw a Malian military vehicle on fire in a nearby street.

Paris has said it plans to start withdrawing some of its 4,000 troops from Mali next month. But rebels have fought back against Mali's weak and divided army, and African forces due to take over the French role are not yet in place.

Islamists abandoned the main towns they held but French and Malian forces have said there are pockets of Islamist resistance across the north, which is about the size of France.

CAR BOMB

Residents reported a bomb in the east of Kidal on Thursday.

"It was a car bomb that exploded in a garage," said one resident who went to the scene but asked not to be named.

"The driver and another man were killed. Two other people were injured," he added.

A French defense ministry official confirmed there had been a car bomb but said it did not appear that French troops, based at the town's airport, had been targeted.

Earlier this week, a French soldier was killed in heavy fighting north of Kidal, where French and Chadian troops are hunting Islamists in the Adrar des Ifoghas mountains, which border Algeria.

Operations there are further complicated by the presence of separatist Tuareg rebels, whose rebellion triggered the fighting in northern Mali last year but were sidelined by the better-armed Islamists.

Having dispatched its forces to prevent an Islamist advance south in January, Paris is eager not to become bogged down in a long-term conflict in Mali. But their Malian and African allies have urged French troops not to pull out too soon.

(Additional reporting by Emanuel Braun in Gao, Adama Diarra in Bamako, David Lewis and John Irish in Dakar and Adrian Croft in Brussels; Writing by David Lewis; Editing by Jason Webb and Roger Atwood)

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Cressida 'Cress' Bonas: 5 Things About Prince Harry's New Squeeze

By Simon Perry

02/21/2013 at 07:50 PM EST

Prince Harry and Cressida Bonas

Bauer-Griffin; Splash News Online

It's love on the slopes for Prince Harry – who has been spending some of his downtime since returning from Afghanistan rekindling his relationship with society gal Cressida Bonas.

With breathy excitement, tabloids have splashed pictures of the couple embracing in Verbier, where they have been vacationing this week. As a friend tells London's Evening Standard, "It's early days, but they are having fun together and enjoying spending time together.”

Here's five more things to know about her:

1. Knows How to Move
Just like Harry's last longstanding girlfriend, Chelsy Davy, she went to Leeds University, where she got a 2:1 (just under a first-place ranking) in dance.

2. Sister's Royal Connection
The daughter of an "It Girl" of the '60s, Lady Mary-Gaye Curzon, Bonas has a half-sister, Isabella Anstruther Gough-Calthorpe – who was once linked to Harry's brother, Prince William.

3. Family Name Games
Her other siblings have deliciously aristocratic and colorful names: Pandora Cooper-Key, Georgiana and Jacobi Anstruther-Gough-Calthorpe. And they have wonderfully eccentric nicknames, to boot: Cressida is "Small" or "Smally"; Isabella is "Bellie"; Jacobi is "Cozy"; and Pandora is "Baba," it's been reported.

4. Oh, Yes, She Matters
With her well-connected family, and links to the most eligible bachelor in the world, she was recently ranked by the society glossy magazine Tatler as 27th among those people who "really matter."

5. Funky Style
She is said to like music festivals, hippy-style clothes, favors sneakers over heels and is now taking a dance class in Greenwich, southeast London.

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APNewsBreak: Govs to hear Oregon health care plan

SALEM, Ore. (AP) — Oregon Gov. John Kitzhaber will brief other state leaders this weekend on his plan to lower Medicaid costs, touting an overhaul that President Barack Obama highlighted in his State of the Union address for its potential to lower the deficit even as health care expenses climb.

The Oregon Democrat leaves for Washington, D.C., on Friday to pitch his plan that changes the way doctors and hospitals are paid and improves health care coordination for low income residents so that treatable medical problems don't grow in severity or expense.

Kitzhaber says his goal is to win over a handful of other governors from each party.

"I think the politics have been dialed down a couple of notches, and now people are willing to sit down and talk about how we can solve the problem" of rising health care costs, Kitzhaber told The Associated Press in a recent interview.

Kitzhaber introduced the plan in 2011 in the face of a severe state budget deficit, and he's been talking for two years about expanding the initiative beyond his state. Now, it seems he's found people ready to listen.

Hospital executives from Alabama visited Oregon last month to learn about the effort. And the U.S. Department of Health and Human Services announced Thursday that it's giving Oregon a $45 million grant to help spread the changes beyond the Medicaid population and share information with other states, making it one of only six states to earn a State Innovation Model grant.

Kitzhaber will address his counterparts at a meeting of the National Governors Association. His talk isn't scheduled on the official agenda, but a spokeswoman confirmed that Kitzhaber is expected to present.

"The governors love what they call stealing from one another — taking the good ideas and the successes of their colleagues and trying to figure out how to apply that in their home state," said Matt Salo, director of the National Association of Medicaid Directors.

There's been "huge interest" among other states in Oregon's health overhaul, Salo said, not because the concepts are brand new, but because the state managed to avoid pitfalls that often block health system changes.

Kitzhaber persuaded state lawmakers to redesign the system of delivering and paying for health care under Medicaid, creating incentives for providers to coordinate patient care and prevent avoidable emergency room visits. He has long complained that the current financial incentives encourage volume over quality, driving costs up without making people healthier.

Obama, in his State of the Union address this month, suggested that changes such as Oregon's could be part of a long-term strategy to lower the federal debt by reigning in the growing cost of federally funded health care.

"We'll bring down costs by changing the way our government pays for Medicare, because our medical bills shouldn't be based on the number of tests ordered or days spent in the hospital — they should be based on the quality of care that our seniors receive," Obama said.

The Obama administration has invested in the program, putting up $1.9 billion to keep Oregon's Medicaid program afloat over the next five years while providers make the transition to new business models and incorporate new staff and technology.

In exchange, though, the state has agreed to lower per-capita health care cost inflation by 2 percentage points without affecting quality.

The Medicaid system is unique in each state, and Kitzhaber isn't suggesting that other states should adopt Oregon's specific approach, said Mike Bonetto, Kitzhaber's health care policy adviser. Rather, he wants governors to buy into the broad concept that the delivery system and payment models need to change.

That's not a new theory. But Oregon has shown that under the right circumstances massive changes to deeply entrenched business models can gain wide support.

What Oregon can't yet show is proof the idea is working — that it's lowering costs without squeezing on the quality or availability of care. The state is just finishing compiling baseline data that will be used as a basis of comparison.

One factor driving the Obama administration's interest in Oregon's success is the president's health care overhaul. Under the Affordable Care Act, millions more Americans will join the Medicaid rolls after Jan. 1, and the health care system will have to be able to absorb the influx of patients in a logistically and financially sustainable way.

The federal government will pay 100 percent of the costs for those additional patients in the first three years, and 90 percent thereafter.

"There are a lot of governors who are facing the same challenges we're facing in Oregon," Kitzhaber said. "They recognize that the cost of health care is something they're going to have to get their arms around."

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Wall Street ends lower on growth worries

NEW YORK (Reuters) - U.S. stocks fell for a second straight day on Thursday and the S&P 500 posted its worst two-day loss since November after reports cast doubt over the health of the U.S. and euro-zone economies.

But a late-day rally helped stocks erase some of their losses with most of the pullback concentrated in the technology- heavy Nasdaq. The move suggested investors were still willing to buy on dips even after the sharp losses in the last session.

In Europe, business activity indexes dealt a blow to hopes that the euro zone might emerge from recession soon, showing the downturn across the region's businesses unexpectedly grew worse this month.

"The PMI numbers out of Europe were really a blow to the market," said Jack De Gan, chief investment officer at Harbor Advisory in Portsmouth, New Hampshire. "The market was expecting signs that recovery is still there, but the numbers just highlighted that the euro-zone problem is still persistent."

U.S. initial claims for unemployment benefits rose more than expected last week while the Federal Reserve Bank of Philadelphia said its index of business conditions in the U.S. mid-Atlantic region fell in February to the lowest in eight months.

Gains in Wal-Mart Stores Inc shares helped cushion the Dow. The shares gained 1.5 percent to $70.26 after the world's largest retailer reported earnings that beat expectations, though early February sales were sluggish.

The Dow Jones industrial average <.dji> fell 46.92 points, or 0.34 percent, to 13,880.62 at the close. The Standard & Poor's 500 Index <.spx> lost 9.53 points, or 0.63 percent, to 1,502.42. The Nasdaq Composite Index <.ixic> dropped 32.92 points, or 1.04 percent, to close at 3,131.49.

The two-day decline marked the U.S. stock market's first sustained pullback this year. The Standard & Poor's 500 has fallen 1.8 percent over the period and just managed to hold the 1,500 level on Thursday. Still, the index is up 5.3 percent so far this year.

The abrupt reversal in markets, which started on Wednesday after minutes from the Federal Reserve's January meeting suggested stimulus measures may end earlier than thought, looks set to halt a seven-week winning streak for stocks that had lifted the Dow and the S&P 500 close to all-time highs.

Wall Street will soon face another test with the upcoming debate in Washington over the automatic across-the-board spending cuts put in place as part of a larger congressional budget fight. Those cuts, set to kick in on March 1 unless lawmakers agree on an alternative, could depress the economy.

Semiconductor stocks ranked among the weakest of the day, pressuring the Nasdaq as the Philadelphia Semiconductor Index <.sox> fell 1.8 percent. Intel Corp fell 2.3 percent to $20.25 while Advanced Micro Devices lost 3.7 percent to $2.60 as the S&P 500's biggest percentage decliner.

The Dow also got a helping hand from personal computer maker Hewlett-Packard Co , which rose 2.3 percent to end the regular session at $17.10. The company was scheduled due to report first-quarter results after the closing bell.

Shares of Boeing Co rose 1.6 percent to $76.01 as a senior executive was set to meet with the head of the U.S. Federal Aviation Administration on Friday and present a series of measures to prevent battery failures that grounded its 787 Dreamliner fleet, according to a source familiar with the plans.

In other company news, shares of supermarket operator Safeway Inc jumped 14.1 percent to $22.97 after the company reported earnings that beat expectations.

Shares of VeriFone Systems Inc tumbled nearly 43 percent to $18.24 after the credit-card swipe machine maker forecast first- and second-quarter profits well below expectations.

Of the 427 companies in the S&P 500 that have reported results so far, 69.3 percent have exceeded analysts' expectations, compared with a 62 percent average since 1994 and 65 percent over the past four quarters, according to Thomson Reuters data through Thursday morning.

Fourth-quarter earnings for S&P 500 companies are estimated to have risen 5.9 percent, according to the data, above a 1.9 percent forecast at the start of the earnings season.

Berry Petroleum Co jumped 19.3 percent to $46.02 after oil and gas producer Linn Energy LLC said it would buy the company in an all-stock deal valued at $4.3 billion, including debt. Linn Energy shares advanced 2.8 percent to $37.68.

About two stocks fell for everyone that rose on the New York Stock Exchange and Nasdaq. About 7.64 billion shares changed hands on the New York Stock Exchange, the Nasdaq and NYSE MKT, well above the 20-day moving average of around 6.6 billion shares.

(Editing by Jan Paschal)

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French general urges EU to equip "impoverished" Mali army

BAMAKO, Mali (Reuters) - The European Union should complement a mission to train Mali's army, routed by rebels last year, by providing equipment from uniforms to vehicles and communications technology, a French general said on Wednesday.

General Francois Lecointre, appointed to head the EU training mission to Mali (EUTM) that was formally launched this week, said in Bamako equipping the "very impoverished" and disorganized Malian army was as important as training it.

Europe, along with the United States, has backed the French-led military intervention in Mali which since January 11 has driven al Qaeda-allied Islamist insurgents out of the main northern towns into remote mountains near Algeria's border.

European governments have ruled out sending combat troops to join French and African soldiers pursuing the Islamist rebels.

But the EU is providing a 500-strong multinational training force that will give military instruction to Malian soldiers for an initial period of 15 months at an estimated cost of 12.3 million euros ($16.45 million).

While hailing what he called the EU's "courageous, novel, historic" decision to support Mali, Lecointre told a news conference the Malian army's lack of equipment was a problem.

"I know the Malian state is poor, but the Malian army is more than poor," the French general told a news conference, adding that it urgently needed everything from uniforms and weapons to vehicles and communications equipment.

Last year, when Tuareg separatist forces swelled by weapons and fighters from the Libyan conflict swept out of the northern deserts, a demoralized and poorly-led Malian army collapsed and fled before them, abandoning arms and vehicles.

Mali's military was further shaken by a March 22 coup by junior officers who toppled President Amadou Toumani Toure, sowing division among rival army factions. Islamist radicals allied to al Qaeda later hijacked the victorious Tuareg rebellion to occupy the northern half of the country.

In a fast-charging military campaign led by Paris, French and African troops have driven the jihadists out of principal northern towns like Gao and Timbuktu, and are fighting the rebels in the Adrar des Ifoghas mountains.

HUMAN RIGHTS INSTRUCTION

Flanked by Mali's armed forces chief, General Ibrahima Dembele, Lecointre said he was disappointed that a meeting of international donors last month pledged funds for an African military force, known as AFISMA, being deployed in Mali, but included "very few" contributions for the Malian army itself.

"The European Union needs to invest today in the equipping of the Malian army and not just in its training," the general said, adding he would make this point strongly in a report to EU member state representatives early next month.

Asked how much re-equipping the army would cost, he said it would be "much more" than the 12 million euros of EU financing for the training mission, but could not give a precise estimate.

Starting early in April, the EU mission will start instructing Malian soldiers with a plan to train four new battalions of 600-700 members each, formed from existing enlisted men and new recruits.

Lecointre said the EU training would include instruction in human rights. Demands for this increased after allegations by Malian civilians and international human rights groups that Malian soldiers were executing Tuaregs and Arabs accused of collaborating with Islamist rebels.

The European training contingent is drawn from a range of European countries, but the main contributors would be France, Germany, Italy, Spain and Britain, EUTM officers said.

Mali's army has received foreign training before - several battalions that fled before the rebels last year were trained by the U.S. military and the leader of the March 22 coup, Captain Amadou Sanogo, attended training courses in the United States.

Dembele said U.S. training failed to forge cohesion among Malian units and he hoped the EU training would achieve this.

The United States, which halted direct support for the Malian military after last year's coup, could eventually resume aid if planned national elections in July fully restore democracy to the West African country.

Washington is providing airlift, refuelling and intelligence support to the French-led military intervention in Mali. ($1 = 0.7479 euros)

(Reporting by Pascal Fletcher; Editing by Jason Webb)

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Oscar Preview: Les Mis, Chicago Casts to Sing & Dance

By Stephen M. Silverman

02/20/2013 at 07:00 PM EST

From left: Hugh Jackman and Anne Hathaway, in Les Misérables, and Catherine Zeta Jones, in Chicago

Universal (2); Miramax

Strike up the band, for Sunday night's Oscars promise to be very musical.

In the most detailed preview yet of what is to be expected – and what isn't – the 85th annual Academy Awards producers Craig Zadan and Neil Meron tell Deadline.com that their special tribute to the resurgence of movie musicals in the past decade will star Les Misérables nominees Hugh Jackman and Anne Hathaway with costars Russell Crowe, Eddie Redmayne, Aaron Tevit, Samantha Barks, and Helena Bonham Carter; Dreamgirls Oscar winner Jennifer Hudson; and Chicago winner Catherine Zeta-Jones.

"What we don't want to do is play it safe," says Zadan about the show in general, admitting – repeatedly – that the job of producing it is "enormous."

So is the Oscar night orchestra: 60 pieces. Accompanying all those instruments will be:

• The previously announced Justin Timberlake, as well as Barbra Streisand, who's only sung on the show once before in her 5½-decade career (and that was 36 years ago)

• Golden Globe song winner Adele ("Skyfall" is up for Best Song) and "Goldfinger" diva Shirley Bassey, an Oscar newbie, who'll appear as part of the James Bond 50th anniversary tribute

• And the evening's host, Seth MacFarlane, who's been known to break into song on more than one occasion – such as when he hosted SNL.

Other reveals:

• "It's not going to be three hours but we will try to get it close to that," says Zadan. (There are 24 categories to recognize.)

• Six college filmmaking students will serve as Oscar presenters after winning a contest to be on the show.

• The 007 tribute will not feature a reunion of Sean Connery, George Lazenby, Roger Moore, Timothy Dalton, Pierce Brosnan and Daniel Craig.

• MacFarlane's opening monologue is "clever and sort of unique … like a throwback to the days of Bob Hope and Johnny Carson," says Zadan.

• Streisand's number is being kept a secret, "but we love the speculation," says Meron.

The 85th annual Academy Awards will air live on Sunday, Feb. 24, on ABC from the Dolby Theatre in Hollywood.

Justin Timberlake and Barbra Streisand

Justin Lane / Landov; Walter McBride / Retna

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Agency checks water after body found in hotel tank

LOS ANGELES (AP) — British tourist Michael Baugh and his wife said water had only dribbled out of the taps at the downtown Cecil Hotel for days.

On Tuesday, after showering, brushing their teeth and drinking some of the tap water, they headed down to the lobby and found out why.

The body of a Canadian woman had been discovered at the bottom of one of four cisterns on the roof of the historic hotel near Skid Row. The tanks provide water for hotel taps and would have been used by guests for washing and drinking.

"The moment we found out, we felt a bit sick to the stomach, quite literally, especially having drank the water, we're not well mentally," Michael Baugh, 27, said.

Los Angeles County Department of Public Health officials issued a do-not-drink order Tuesday while its lab analyzes the water, said Terrance Powell, a director coordinating the department's response. The disclosure contradicts a previous police statement that the water had been deemed safe. Results of the testing were expected by Thursday.

Powell said the water was also used for cooking in the hotel; a coffee shop in the hotel would remain closed and has been instructed to sanitize its food equipment before reopening.

"Our biggest concern is going to be fecal contamination because of the body in the water," Powell said. He said the likelihood of contamination is "minimal" given the large amount of water the body was found in, but the department is being extra cautious.

Powell said the hotel hired a water treatment specialist after the department required it to do so to disinfect its plumbing lines.

A call to the hotel was not returned.

The remains of Elisa Lam, 21, were found by a maintenance worker at the 600-room hotel that charges $65 a night after guests complained about the low water pressure.

Police detectives were working to determine if her death was the result of foul play or an accident.

LAPD Sgt. Rudy Lopez called it suspicious and said a coroner's investigation will determine Lam's cause of death.

Before she died, hotel surveillance footage showed Lam inside an elevator pushing buttons and sticking her head out the doors, looking in both directions. She was later found in the water tank.

Lam, of Vancouver, British Columbia, traveled alone to Los Angeles on Jan. 26 and was last seen five days later by workers at the hotel.

Lopez said the hotel has four cisterns on its roof that are each about 10 feet tall, 4.5 feet wide and hold at least 1,000 gallons of water pumped up from city pipes.

Lam's body was found Tuesday morning at the bottom of one cistern that was about three-quarters full of water, Lopez said.

The opening at the top of the cistern is too small to accommodate firefighters and equipment, so they had to cut a hole in the storage tank to recover Lam's body.

The cisterns are on a platform at least 10 feet above the roof.

To get to the tanks, someone would have to go to the top floor then take a staircase with a locked door and emergency alarm preventing roof access.

Another ladder would have to be taken to the platform and a person would have to climb the side of the tank.

Lopez said there are no security cameras on the roof.

Lam intended to travel to Santa Cruz, about 350 miles north of Los Angeles. Officials said she tended to use public transportation and had been in touch with her family daily until she disappeared.

The Cecil Hotel was built in the 1920s and refurbished several years ago. The hotel is on Main Street in a part of downtown where efforts at gentrification often conflicts with homelessness and crime. It had once been the occasional home of infamous serial killers such as Richard Ramirez, known as the Night Stalker, and Austrian prison author Jack Unterweger, who was convicted of murdering nine prostitutes in Europe and the U.S., the Los Angeles Times reported.

By noon Wednesday, the Cecil Hotel had relocated 27 rooms used by guests to another hotel, but 11 rooms remained filled, Powell said. Those who chose to remain in the hotel were required to sign a waiver in which they acknowledged being informed of the health risks and were being provided bottled water, Powell said.

Baugh and his wife, who were on their first trip to the U.S., had planned to go to SeaWorld on Wednesday. Instead, they were trying to find a new hotel. Their tour agency placed them in another downtown hotel with a less than sterling reputation, from what they heard.

"We're just going from one dodgy place to another," Baugh said, resigned, "but at least there's water."

___

Tami Abdollah can be reached at http://www.twitter.com/latams. Shaya Tayefe Mohajer contributed to this report.

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Wall Street ends down sharply after Fed minutes

DEAR ABBY: My boyfriend, "Doug" (24), and I (22) have been in a long-distance relationship for a year, but we were friends for a couple of years before that. I had never had a serious relationship before and lacked experience. Doug has not only been in two other long-term relationships, but has had sex with more than 15 women. One of them is an amateur porn actress.I knew about this, but it didn't bother me until recently. Doug had a party, and while he was drunk he told one of his buddies -- in front of me -- that he should watch a certain porn film starring his ex-girlfriend. ...

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Syria "Scud-type" missile said to kill 20 in Aleppo

AMMAN (Reuters) - A Syrian missile killed at least 20 people in a rebel-held district of Aleppo on Tuesday, opposition activists said, as the army turns to longer-range weapons after losing bases in the country's second-largest city.

The use of what opposition activists said was a large missile of the same type as Russian-made Scuds against an Aleppo residential district came after rebels overran army bases over the past two months from which troops had fired artillery.

As the uprising against President Bashar al-Assad, now a civil war, nears its two-year mark, rebels also landed three mortar bombs in the rarely-used presidential palace compound in the capital Damascus, opposition activists said on Tuesday.

The United Nations estimates 70,000 people have been killed in the conflict between largely Sunni Muslim rebels and Assad's supporters among his minority Alawite sect. An international diplomatic deadlock has prevented intervention, as the war worsens sectarian tensions throughout the Middle East.

A Russian official said on Tuesday that Moscow, which is a long-time ally of Damascus, would not immediately back U.N. investigators' calls for some Syrian leaders to face the International Criminal Court for war crimes.

Moscow has blocked three U.N. Security Council resolutions that would have increased pressure on Assad.

Casualties are not only being caused directly by fighting, but also by disruption to infrastructure and Syria's economy.

An estimated 2,500 people in a rebel-held area of northeastern Deir al-Zor province have been infected with typhoid, which causes diarrhea and can be fatal, due to drinking contaminated water from the Euphrates River, the World Health Organization (WHO) said on Tuesday.

"There is not enough fuel or electricity to run the pumps so people drink water from the Euphrates which is contaminated, probably with sewage," the WHO representative in Syria, Elisabeth Hoff, told Reuters by telephone.

The WHO had no confirmed reports of deaths so far.

BURIED UNDER RUBBLE

In northern Aleppo, opposition activists said 25 people were missing under rubble of three buildings hit by a several-meter-long missile. They said remains of the weapon showed it to be a Scud-type missile of the type government forces increasingly use in Aleppo and in Deir a-Zor.

NATO said in December Assad's forces fired Scud-type missiles. It did not specify where they landed but said their deployment was an act of desperation.

Bodies were being gradually dug up, Mohammad Nour, an activist, said by phone from Aleppo.

"Some, including children, have died in hospitals," he said.

Video footage showed dozens of people scouring for victims and inspecting damage. A body was pulled from under collapsed concrete. At a nearby hospital, a baby said to have been dug out from wreckage was shown dying in the hands of doctors.

Reuters could not independently verify the reports.

Opposition activists also reported fighting near the town of Nabak on the Damascus-Homs highway, another route vital for supplying forces in the capital loyal to Assad, whose family has ruled Syria since the 1960s.

Rebels moved anti-aircraft guns into the eastern Damascus district of Jobar, adjacent to the city centre, as they seek to secure recent gains, an activist said.

"The rebels moved truck-mounted anti-aircraft guns to Jobar and are now firing at warplanes rocketing the district," said Damascus activist Moaz al-Shami.

Russian Deputy Foreign Minister Gennady Gatilov told a news conference a U.N. war crimes report, which accuses military leaders and rebels of terrorizing civilians, was "not the path we should follow ... at this stage it would be untimely and unconstructive."

Syria is not party to the Rome Statute that established the ICC and the only way the court can investigate the situation is if it receives a referral from the Security Council, where Moscow is a permanent member.

(Writing by Oliver Holmes; Editing by Jason Webb)

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