Today's News Update 9 October 2008

Update as of 0800 Eastern Time:

Bottom Line Up Front:
1. World Economy
2. North Korea
3. Ukraine
4. Pakistan Perspective

From CNN (Economy):

European markets opened higher Thursday after a bruising start to the week and an infusion of cash by central banks.

In the first hours, Europe's major stock exchanges -- in London, Paris and Frankfurt -- were all trading up, in a narrow 1%-to-3%range

Meanwhile, Iceland's banking system took another hit Thursday as the Icelandic Financial Supervisory Authority nationalized a third bank in as many days, taking control of Kaupthing.

The bank will continue operating, and all domestic deposits will be fully guaranteed, the authority announced Thursday. Two other banks, Landsbanki and Glitnir, were also taken into receivership this week.

Asia. Asian and Pacific markets posted mixed results Thursday, but were relatively stable. South Korea's central bank -- the Bank of Korea -- gave markets a potential boost when it followed the lead of other central banks and slashed its key interest rate by a quarter percent, the Yonhap news agency reported.

The KOSPI index in Seoul closed up 0.6% on the day. In another move to support markets, the Bank of Japan injected ¥2 trillion ($20 billion) into money markets.

The Nikkei average in Tokyo closed down half a percent Thursday, after declining 9.4% a day earlier. Wednesday's losses represented a new five-year low and the third largest single-day decline ever.

The Hong Kong Monetary Authority also did its part to back markets, cutting its key interest rate by half a percent -- its second such recent move. Over the last two days, the monetary authority has slashed rates 1.5%.

From Fox News (North Korea):

North Korea is preparing to conduct more missile tests soon, a South Korean newspaper reported Thursday, citing intelligence obtained by South Korean and U.S. authorities.

A U.S. spy satellite detected signs that the North had deployed about 10 missiles on a small islet north of Korea's disputed western sea border and other adjacent areas, the Chosun Ilbo newspaper said, quoting an unidentified government official.

North Korea reportedly fired two short-range missiles into waters off the west coast on Tuesday, but South Korean and U.S. officials said they could not confirm the reports.

South Korean intelligence officials believe the North could fire more than five more missiles — KN-01 land-to-ship and Styx ship-to-ship missiles, Chosun Ilbo said.

North Korea already has issued a no-sail warning banning ships from the area until next Wednesday.

The developments come amid heightened tensions on the Korean peninsula, with North Korea showing signs of reassembling its nuclear program in defiance of a six-nation accord and concerns about the health of the communist nation's authoritarian leader, Kim Jong Il.

From NY Times (Ukraine):

President Viktor A. Yushchenko of Ukraine signed an order Thursday to dissolve Parliament and hold snap elections, after efforts to resuscitate a long-ailing pro-West coalition collapsed and sent the country deeper into political turmoil.

The vote will be on Dec. 7, a spokeswoman for the president said. It will be the third parliamentary election since Mr. Yushchenko came to power after the 2004 Orange Revolution, which promised a break from the former Soviet republic’s corrupt, authoritarian past, but instead left Ukraine mired in political stagnation.

Mr. Yushchenko’s decision followed weeks of raucous political infighting with his one-time Orange coalition ally, Prime Minister Yulia V. Tymoshenko, whom the president has accused of orchestrating a power grab at the expense of Ukraine’s national interests.

“I am convinced, deeply convinced, that the democratic coalition was destroyed by one thing — the ambition of one person,” Mr. Yushchenko said in a television address broadcast on Wednesday during which he announced the dissolution of Parliament. “The Yulia Tymoshenko bloc has become the hostage of its leaders, who are willing sacrifice everything: our language, security and our European prospects.”

Ms. Tymoshenko, who recently sided with Ukraine’s opposition to pass measures limiting the president’s powers, is considering whether to contest Mr. Yushchenko’s decision in Ukraine’s Constitutional Court, a spokeswoman for the prime minister said. Her supporters have called for mass protests.

Ms. Tymoshenko has increasingly presented herself as a centrist politician able to bridge the stark divide between pro-Western forces and those who want to maintain close ties to Russia.

She recently traveled to Moscow for talks with Russian Prime Minister Vladimir Putin on energy cooperation, a meeting that was almost thwarted when Mr. Yushchenko requisitioned the prime minister’s plane after his allegedly suffered a technical malfunction.

Ms. Tymoshenko’s overtures to Russia have prompted criticism from Mr. Yushchenko’s supporters that she has been co-opted by the Kremlin.

From Pakistan Internet Newspaper "Dawn":

Pakistan overshadowed both Iraq and Afghanistan as an area of concern in the second US presidential debate, requiring both Barack Obama and John McCain to spend a lot of time explaining how they would deal with this country when one of them is elected president on Nov 4.

Senator Obama reiterated his controversial vow to send US troops into Pakistan to catch Osama bin Laden and other key Al Qaeda leaders if Islamabad fails to do the job.

“And if we have Osama bin Laden in our sights and the Pakistani government is unable or unwilling to take them out, then I think that we have to act and we will take them out,” he declared.

“We will kill Bin Laden; we will crush Al Qaeda. That has to be our biggest national security priority.”

Senator McCain did not rule out the possibility of using force, if necessary, to uproot Al Qaeda safe havens in the tribal areas but promised to do so with Pakistan’s coordination.“And by working and coordinating our efforts together, not threatening to attack them, but working with them, and where necessary use force, but talk softly, but carry a big stick,” he said.

The two statements made it clear that if Mr Obama is elected, the new Democratic government in Washington will turn up the head on Pakistan, asking it to catch Al Qaeda leaders or let US forces do the job.

If Mr McCain is elected, the new Republican White House will continue the Bush administration’s policy of working with Pakistan to counter the militants and use force when necessary.

Both candidates were responding to the question: “Should the United States respect Pakistani sovereignty and not pursue Al Qaeda terrorists who maintain bases there, or should we ignore their borders and pursue our enemies like we did in Cambodia during the Vietnam War?”

“We have a difficult situation in Pakistan,” said Mr Obama. “I believe that part of the reason we have a difficult situation is because we made a bad judgment going into Iraq in the first place when we hadn’t finished the job of hunting down Bin Laden and crushing Al Qaeda.”

He explained that diverting of US resources to Iraq allowed Bin Laden to escape and set up base camps in Fata and use them for raiding US troops in Afghanistan.

“They’re stronger now than at any time since 2001. And that’s why I think it’s so important for us to reverse course, because that’s the central front on terrorism.”

Senator Obama insisted on withdrawing US troops from Iraq as soon as possible and redeploying them in Afghanistan because “the war against terror began in that region and that’s where it will end.”

More to follow:

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