The proposal was revealed on Monday in the Israeli daily paper Haaretz, though officials from the office of the Palestinian President in Jerusalem said the EU had been in touch with the President's office on the issue for years, and continuously indicated their support for the re-opening of the Palestinian institution.

The Haaretz report said Israeli officials were "deeply concerned" over the proposal's suggestion, and presumed THE IDEA OF REOPENING THE INSTITUTION WOULD CAUSE A "CLASH" BETWEEN THE EU AND "WHATEVER NEW GOVERNMENT ISRAELIS ELECT IN FEBRUARY." In previous years the United States looked for ways to secure the opening of the Orient House offices, but without satisfactory results.

The Orient House has been the center of government and diplomatic activity for Palestinians for over a century, and is recognized internationally as the headquarters of the Palestinian Liberation Organization (PLO) in East Jerusalem. The building was occupied by the Israeli army and shut down in 2001 on order from the Israeli Minister of Security.

Former US-national security advisors Brent Scowcroft and Zbigniew Brzezinski reportedly endorsed the strategy in recent days. Meanwhile, Obama's nominee to head the National Security Council, Gen. James Jones, apparently favors the idea, all according to Newsweek, a weekly American newsmagazine. "A PRINCIPLE THAT APPEARED TO BE OUT OF BOUNDS I THINK IS NOW IN BOUNDS," said Tony Blair, the Middle East envoy from the International Quartet countries.

Israel has long argued that the country cannot deal with Palestine until the Palestinian Authority (PA) manages to control militants. And Palestinians complain that they cannot consciously ask militias to disarm so long as Israel continues to occupy the West Bank and East Jerusalem. But a NATO force, Obama's advisors argue, would bridge the impasse on both sides.

"BUT THEN IT'S NOT CLEAR HOW NATO COULD PREVENT THE ISRAELIS FROM TAKING MATTERS INTO THEIR OWN HANDS," according to the Newsweek report, if Palestinian fighters began "picking off" NATO soldiers. "And should all-out fighting resume - this is, remember, one of the world's most intractable conflicts - NATO could be drawn into the middle," the article goes on to say.

As expected, Mr Paulson urged Beijing not to abandon efforts to let the renminbi appreciate, said US officials, amid fears China might want to let its currency weaken to help local exporters weather the global slowdown. But Mr Paulson also found himself facing calls for the US to address its own economic problems. Wang Qishan, a vice-premier and leader of the Chinese delegation at the two-day talks, called on the US to take swift action to address the crisis.

"We hope the US side will take the necessary measures to stabilise the economy and financial markets as well as guarantee the safety of China's assets and investments in the US," he said. The dialogue was dominated by the global crisis. Zhou Xiaochuan, governor of the Chinese central bank, urged the US to rebalance its economy. "OVER-CONSUMPTION AND A HIGH RELIANCE ON CREDIT IS THE CAUSE OF THE US FINANCIAL CRISIS," he said. "As the largest and most important economy in the world, the US should take the initiative to adjust its policies, raise its savings ratio appropriately and reduce its trade and fiscal deficits."

Although China also faces a rapidly slowing economy and rising unemployment, the tone of the comments reflected an underlying shift in power. Eswar Prasad, a senior fellow at the Brookings Institution, said: "ONE RESULT OF THE CRISIS IS THAT THE US NO LONGER HOLDS THE HIGH GROUND TO LECTURE CHINA ON FINANCIAL OR MACROECONOMIC POLICIES."

GM lost 16 percent after a person familiar with the matter said the largest US automaker is exploring a reorganization with workers, creditors and lenders. Southwestern Energy Co, EOG Resources Inc and Exxon Mobil Corp slumped, sending the Standard & Poor's 500 Energy Index to a 6.2 percent decline. Apple Inc slipped 4.7 percent as Nokia Oyj said the global mobile-phone market will shrink 5 percent or more next year.

The S&P 500 lost 2.9 percent to 845.22. The Dow Jones Industrial Average fell 215.45 points, or 2.5 percent, to 8,376.24. Indexes also dropped after the Labor Department said more Americans are collecting jobless benefits than at any time since 1982. Economists estimate a report tomorrow will show the unemployment rate increased to 6.8 percent, a 15-year high.

"AS BAD AS YOU THINK IT IS, IT'S WORSE," said Diane Garnick, who helps oversee about $500 billion as an investment strategist at Invesco Ltd in New York. "The chances of the economy turning around in the first half of 2009 are declining rapidly because unemployed people can't spur economic growth. Businesses are battening down the hatches," Stuart Hoffman, chief economist at PNC Financial Services Group Inc in Pittsburgh, said in a Bloomberg Television interview. "JOB LOSSES ARE GOING TO CONTINUE TO ACCELERATE."

Prime Minister Gordon Brown has urged lenders to pass on the cut to homeowners and business. So far, only a handful of lenders have said they will pass on the cut in full to standard variable rate mortgages. There has been no news yet for savers, with banks and building societies saying their savings rates are "under review".

"If the banks pass the interest rate reduction on, and I hope and believe that they should do so, then it's of benefit to homeowners and businesses right across the country," Gordon Brown told BBC Radio 5 Live. HSBC, Bristol & West, and Lloyds TSB, which also owns Cheltenham and Gloucester, have said their standard variable rate (SVR) mortgages would be cut by the full one percentage point cut. Earlier, there was further evidence of the rapidly slowing economy in the UK:

• House prices fell 2.6% between October and November - their sharpest monthly drop since the housing market crash of the 1990s - according to the Halifax.

• New car sales in November fell 36.8% on the year before - the steepest decline in nearly three decades according to the Society of Motor Manufacturers and Traders.

Honda, which spent more than £300m a year on F1, said it would no longer supply the sport with engines. "Honda Motor Co. has come to the conclusion that we will withdraw from all Formula One activities, making 2008 the last season for participation," said Honda president Takeo Fukui at an emotional press conference.

"This difficult decision has been made in light of the quickly deteriorating operating environment facing the global auto industry... and THE SUDDEN CONTRACTION OF THE WORLD ECONOMIES," he added. Honda were the lowest-placed of the points-scoring teams in 2008 "Honda must protect its core business activities and secure the long term as widespread uncertainties in the economics around the globe continue to mount."

Max Mosley, president of world motorsport governing body the FIA, recently urged teams to find ways to reduce costs. "Formula One is becoming unsustainable," said Mosley in July. "The MAJOR MANUFACTURERS ARE CURRENTLY EMPLOYING UP TO 1,000 PEOPLE TO PUT TWO CARS ON THE GRID. This is clearly unacceptable at a time when all these companies are facing tough market conditions."

John Fox, an Asia expert at the European Council on Foreign Relations, writes that the snub is a brutal, and unprecedented warning of how little Europe means to China. We certainly mean less than the US, to whom this action was also in part meant as a warning shot. And, depressingly, we mean less to China as a Union than punishing France, a single member state, for transgressions with the Dalai Lama.

Europe is supposed to have a "comprehensive strategic partnership" with China. But this move shows that we have nothing of the sort, certainly in China's eyes. China would never behave this way with the US, or Russia. Japan regularly gets the melodramatic treatment, but China would never cancel an East Asia Summit meeting or an ASEAN+3 meeting, because its neighbourhood matters to it.

With a new administration about to take office in Washington, there is plenty of manoeuvring over international relationships at the moment. This seems a good time for Europe to take stock of its ties to China and, if they are indeed found lacking, figure out how to become more relevant. The question is how to best do so.

While its preference is to coordinate with the US, defense officials have said Israel is preparing a wide range of options for such an operation. "It is always better to coordinate," one top Defense Ministry official explained last week. "BUT WE ARE ALSO PREPARING OPTIONS THAT DO NOT INCLUDE COORDINATION." The IAF was preparing for a wide range of options, OC Air Force Maj.-Gen. Ido Nehushtan recently said, adding that all it would take to launch an operation was a decision by the political echelon. "The air force is a very robust and flexible force," he told Der Spiegel. "We are ready to do whatever is demanded of us."

Several news reports have claimed recently that US President George W. Bush has refused to give Israel a green light for an attack on Iranian facilities. One such report, published in September in Britain's Guardian newspaper, claimed that Prime Minister Ehud Olmert requested a green light to attack Iran in May but was refused by Bush.

On Monday, TEHERAN DISMISSED THE POSSIBILITY OF AN ISRAELI STRIKE, saying it didn't take Israel seriously. "We think that regional and international developments and the complicated situation faced by Israel itself will not allow it to launch military strikes against other countries," Iranian Foreign Ministry spokesman Hassan Qashqavi told reporters in Teheran, according to the Press TV Web site. "ISRAEL MAKES THREATS TO PROMOTE ITS PSYCHOLOGICAL AND MEDIA WARFARE," HE SAID.

The new legislation would deny MPs a full vote on such data-sharing. Instead, MINISTERS COULD AUTHORISE THE SWAPPING OF INFORMATION between councils, the police, NHS trusts, the Inland Revenue, education authorities, the Driver and Vehicle Licensing Authority, the Department for Work and Pensions and other ministries. Opponents of the move accused the Government of bringing in by stealth a data-sharing programme that exposed everyone to the dangers of a Big Brother state and one of the most intrusive personal databases in the world. THE NEW LAW WOULD REMOVE THE RIGHT TO PROTECTION AGAINST MISUSE OF INFORMATION BY THOUSANDS OF UNACCOUNTABLE CIVIL SERVANTS, they added.

Thomas Hammarberg, the Council of Europe's commissioner for human rights, said he believed BRITAIN HAD GONE TOO FAR IN HELPING TO BRING ABOUT A "SURVEILLANCE SOCIETY". In a report drawing on personal data infringements across Europe but "inspired" by Britain's plan for a new internet, email and telephone database, he added: "General surveillance raises serious democratic problems which are not answered by the repeated assertion that those who have nothing to hide have nothing to fear. This puts the onus in the wrong place: it should be for states to justify the interferences they seek to make on privacy rights."

More than half a century ago an African was arrested by Kenya's colonial police; he was imprisoned, tortured, and finally released two years later, a broken man. Such episodes were grimly common during the Mau Mau rebellion against British rule in Kenya, yet this sharp little shard of history has now poked above the surface again, as the story of BARACK OBAMA'S GRANDFATHER.

This is more than simply another fascinating element in Mr Obama's already colourful story. No president of modern times is so steeped in history, both America's history and his own family narrative. The past, and where he came from - Hawaii, Indonesia, Kenya, Chicago - is how Mr Obama has chosen to define himself to the American electorate.

The experience of a grandfather he never knew, long before he was born, will not provoke some knee-jerk anti-British attitude on the part of the new president. Mr Obama is too supple a politician for that. Yet international relationships are based on emotions as well as politics, and the set of preconceptions about Britain that Mr Obama brings to the White House will be far removed from those we have become used to over the Past half-century. Mr Obama describes how travelling in Europe makes him feel "edgy, defensive, hesitant". "It wasn't that Europe wasn't beautiful," he writes. "It just wasn't mine." SO FAR FROM COMING HOME TO BRITAIN, LIKE REAGAN, MR OBAMA HAS DESCRIBED JUST HOW FAR FROM HOME HE FEELS HERE.

But with the Christmas season upon us, there is growing proof that the 82-year-old Pope is also quite willing to play the part of Scrooge TO DEFEND HIS OFTEN RIGID VIEW OF CHURCH. Benedict has said repeatedly that the Church is forced to speak out against the tide of secularization, especially in Catholicism's home turf in Europe. His kindly manner notwithstanding, Benedict does not seem to hesitate doing or saying what he deems necessary TO KEEP CATHOLICISM FROM STRAYING TOO FAR FROM ITS DOCTRINAL TRADITION.

Britain's Telegraph newspaper suggests that they did, citing unidentified officials claiming physical evidence shows the assailants used cocaine and other stimulants to sustain their violent frenzy.

And if the notion of self-anointed holy warriors on a coke binge sounds incongruous, the report also maintains that the killers imbibed the psychedelic drug LSD while fighting advancing security forces. "WE FOUND INJECTIONS CONTAINING TRACES OF COCAINE AND LSD LEFT BEHIND BY THE TERRORISTS, AND LATER FOUND DRUGS IN THEIR BLOOD," the Telegraph was told by one official, whose nationality and relation to the investigation were not specified. "THIS EXPLAINS WHY THEY MANAGED TO BATTLE THE COMMANDOS FOR OVER 50 HOURS WITH NO FOOD OR SLEEP."

The hallucinogenic and sensory-distorting effects of LSD make it an unlikely combat drug, even for kamikaze assailants who were, after all, seeking to kill as many people as possible before their own inevitable death. But the suggestion that the Mumbai jihadists may have amped themselves up on stimulants typically forbidden by their strict Salafist brand of Islam strikes some experts as plausible, particularly within the twisted jihadist logic in which holy ends justify impious means.

The number of people using food stamps in September surpassed the previous peak of 29.85 million seen in November 2005 when victims of hurricanes Katrina, Rita and Wilma received emergency benefits, said Jean Daniel of the USDA's Food and Nutrition Service.

September's tally - the latest month available - was also boosted by hurricane and flood aid, Daniel said on Wednesday. But anti-hunger groups said the economic downturn is the main reason behind the higher figures. "It's a disturbing trend," said Ellen Vollinger, legal director with the Food Research and Action Center. She said she expects more people will turn to food stamps as unemployment figures rise and the economy remains weak.

ONE IN 10 AMERICANS WERE PARTICIPATING IN THE FOOD STAMP PROGRAM as of September, said Dottie Rosenbaum, analyst with Center on Budget and Policy Priorities, a think tank. That's approaching the all-time high of 10.5 percent of the population that used the program in 1994, and is similar to levels seen in the early 1980s, she said.

U.S. officials say Treasury Secretary Henry Paulson will press Beijing to let its yuan rise against the dollar to ease trade tensions at the two-day Strategic Economic Dialogue. American companies contend that China keeps the yuan undervalued, giving its exporters an unfair advantage and adding to its swollen trade surplus. But with China's exporters suffering, the yuan plunged Monday in government-controlled trading—a possible message to Washington to go easy on the issue.

"The signal China sent on Monday is: We also have our own political problems and issues in a slowing economic environment," Frank F.X. Gong, chief Asia economist for JPMorgan Securities Ltd., said in a report to clients. State media said Thursday a rapid rise of the Chinese currency would harm the global economy further as it would hurt Chinese exports and increase unemployment. "China's foreign exchange policy should be aimed at helping domestic economic growth, for which the yuan should not rise too fast against the U.S. dollar now when the global financial market is in turmoil," said a report Thursday in the China Daily, an English-language newspaper aimed at foreign readers.

The U.S. is China's second-largest export market after Europe. CHINA, WITH THE WORLD'S LARGEST CURRENCY RESERVES - POISED TO TOP $2 TRILLION - surpassed Japan in September to become the biggest foreign holder of U.S. Treasuries.

AMERICAN ATHEISTS INC. sued in state court over a 2002 law that stresses God's role in Kentucky's homeland security alongside the military, police agencies and health departments. Of particular concern is a 2006 clause requiring the Office of Homeland Security to post a plaque that says the safety and security of the state "cannot be achieved apart from reliance upon almighty God" and to stress that fact through training and educational materials.

The plaque, posted at the Kentucky Emergency Operations Center in Frankfort, includes the Bible verse: "Except the Lord keep the city, the watchman waketh but in vain." Democratic state Rep. Tom Riner, a Baptist minister from Louisville, said he considers it vitally important to acknowledge God's role in protecting Kentucky and the nation.

"NO GOVERNMENT BY ITSELF CAN GUARANTEE PERFECT SECURITY," Riner said. "There will always be this opposition to the acknowledgment of divine providence, but this is a foundational understanding of what America is." Kentucky isn't the only state dealing with religious issues, but Ed Buckner, president of American Atheists, said it's alone in officially enlisting God in homeland security.

"I'm not aware of any other state or commonwealth that is attempting to dump their clear responsibility for protecting their citizens onto GOD OR ANY OTHER MYTHOLOGICAL CREATURE," Buckner said.