SEC widens probe of exchange-traded funds

U.S. securities regulators have widened their inquiry into the trilliondollar market for exchangetraded funds according to a person familiar with the matter.

Prompted by a delay in a big trade at a popular ETF the U.S. Securities and Exchange Commission is taking a closer look at a possible connection between highfrequency traders and hedge funds jumping in and out of ETFs and instances where ETF trades fail to settle on time this person said.

The SEC’s inquiry is part of a wider probe that began last year and focused on complex ETFs that allow investors to magnify returns or bet against stock indexes.

U.S. and UK regulators are concerned that socalled settlement fails when trades are not completed on time could contribute to volatility and systemic risk in financial markets.

The probe’s main focus is on illiquid ETFs but regulators are now also examining popular ETFs and failed trades according to the person.

An SEC spokesman confirmed that the agency is looking into failed trades and ETFs but declined to elaborate.

The SEC’s inquiry comes amid greater scrutiny of the ETF industry which has surged in popularity since the early 1990s. It is still unclear how settlement delays might affect retail investors in ETFs.

ETFs are baskets of securities that like mutual funds give investors exposure to a pool of assets. But unlike mutual funds they trade throughout the day. Early ETFs were created to mirror benchmarks such as the Standard & Poor’s 500 index. ETF assets have doubled since 2007 to about 1.3 trillion according to Deutsche Bank AG. Some of the most popular ETFs are those that use derivatives to give investors exposure to commodities highyield bonds or ETFs that own other ETFs.

‘SHORT’ IMPACT

Hedge funds often short ETFs or make a bet that the price of the ETF will fall. In such a trade the fund sells borrowed ETF shares in hopes of profiting by buying them back later at a lower price. The SPDR S&P Retail ETF for instance has a short interest of nearly 200 percent meaning short investors’ bets amount to three times the total number of shares outstanding for the ETF. That is possible because traders lend ETFs to other investors or traders. These ETFs can be lent again to others and show up on the books of multiple parties.

ETF experts discount criticism of ETFs. In a recent report State Street Corp a Boston asset manager that created the first ETF in 1993 said that short interest theoretically should have no impact on an ETF’s performance.

State Street created the SPDR S&P Retail ETF which is often the mosttraded security on U.S. equity markets outpacing daily volume of largecapitalization stocks like Microsoft Corp and Apple Inc.

State Street said its analysis of SPDR S&P Retail and 19 other mostshorted ETFs including popular names like SPY IWM and QQQ found that high levels of short sales did not affect the ETFs’ ability to track their corresponding index.

However 14 of the 20 mostshorted ETFs on State Street’s list also ranked highest in total value of reported settlement fails across all equity securities for 2011 according to data published by the SEC.

The overlap deserves further exploration said John W. Emerson a statistics professor at Yale University. He said though that some of the reason for the coincidence might be a simple association with volume.

On an average trading day in 2011 failure to deliver shares amounted to 4.3 percent of the total volume of shares traded that day according to a analysis of settlement fail data published by the SEC. The impact of failed settlements on investors remains unknown. ETFs account for about 30 percent of the value of U.S. equities traded daily according to a recent report by Credit Suisse.

ETF industry leaders say the data on ETF trade failures does not account for the fact that marketmakers the firms that do the bulk of ETF trading have seven days to clear trades. The data assumes that all market participants must clear in four days and any trade that settles later is counted as a failed trade by the National Securities Clearing Corp a trade processing subsidiary of the Depository Trust & Clearing Corp.

The main issue is bad vocabulary said Dave Nadig director of research at San Francisco research firm IndexUniverse referring to the fact that any trade that settles between the fourth and sixth day is considered a fail.

Even if ETFs did fail to settle on time investors would not be on the hook because the NSCC which clears all of the trades guarantees the delivery of the shares. There is no possibility for a trade to truly fail Nadig said. That is why the NSCC exists.

LARGE FAILED TRADE SPARKS REVIEW

The SEC’s decision to widen its review came after a sizable trade in a large liquid ETF failed to settle within the four days said the person familiar with the inquiry. The specific ETF is not known.

Regulators want to better understand whether highspeed trading can contribute to settlement fails. They also are studying links between ETF prices and the value of securities underpinning an ETF.

If you can’t figure out what price a stock is at because there are multiple highfrequency traders using ETFs to trade in and out then when a sudden unexpected shock occurs in the market no one is going to know what caused it said Joseph Saluzzi cofounder of Themis Trading a Chatham New Jersey brokerage.

The SEC began looking at ETFs following the 2010 Flash Crash in which the Dow Jones industrial average plunged 1000 points in minutes only to rebound quickly.

The agency again raised concerns about ETFs last October when the U.S. Senate Committee on Banking Housing and Urban Affairs held a hearing on ETFs. An SEC official said a number of the SEC’s divisions including enforcement were charged with oversight of ETFs.

This proliferation of ETFs has been accompanied by product innovation giving rise to new and increasingly complex products said Eileen Rominger director of the Division of Investment Management.

Rominger who joined the agency from Goldman Sachs Group last year added that investors might not understand the risks of complex ETFs such as those that traders are prone to using for short sales.

By Jessica Toonkel Carrick Mollenkamp and Cezary Podkul in New York Editing By Alwyn Scott and Matthew Lewis

Dell has slim prospects for additional margin expansion in the near term Citigroup said and downgraded the stock to neutral from buy.

The company may see more volatility in operating margins and earnings going forward Citigroup said and cut its price target to 19 from 20.

Dell said on Tuesday sales would be down 7 percent this quarter from the previous quarter when it posted revenue of 16 billion.

Citigroup said while Dell was able to offset virtually all HDD cost increases with product price increases it did not consider the impact of HDD supply constraints on its ability to optimize product mix during the quarter.

While the phone writedowns are nonrecurring we do not expect HDD constraints to improve until 2FQ and fear that other components will begin to rise as HDD supply comes back into balance Citigroup analysts wrote in a note.

BMO Capital Markets said margins in the PC business may require the onset of Windows 8 and cut its price target on the stock to 20 from 21.50.

Microsoft’s latest Window’s version due later this year will be offered on Dell’s personal computers laptops and tablets.

RBC Capital and Jefferies see headwinds from the PC business offsetting margins from Dell’s profitable server business.

Jefferies analyst Peter Misek said there is mounting pressure on Dell to do an acquisition in software to salvage its revenues from the sector and sees a deal in the 100 million to 1 billion range with Axway Software as a possible target.

Jefferies raised its price target on Dell stock to 17 from 15 while RBC raised its price target to 18 from 17.

Dell shares which touched a year high of 18.36 on Tuesday fell 7.5 percent to 16.85 before the bell on Wednesday.

Reporting by Sruthi Ramakrishnan in Bangalore Editing by Gopakumar Warrier

U.S. airline shares tumble on oil price rally

Airline shares fell broadly on Tuesday with US Airways Group’s stock leading the decline as the price of oil rallied which directly influences the cost of jet fuel.

US Airways shares plummeted 10.4 percent to 7.97 on the New York Stock Exchange. Shares of United Continental Holdings were down 7.78 percent at 21.55 and Delta Air Lines’ shares fell 6 percent to 10.18 both on the NYSE.

U.S. crude oil futures rose 1.52 to 104.76 after trading beyond 105 for the first time since May 2011. The gains followed news on Monday that Iran halted exports to British and French companies ahead of a European Union embargo.

Jet fuel is one of the highest costs for airlines. US Airways which does not hedge its fuel consumption to offset shocks is more vulnerable than rivals to price spikes said Basili Alukos an airline analyst at Morningstar.

The airline industry has been struggling to maintain stability after a yearslong downturn that was exacerbated by volatile fuel prices.

Reporting By Kyle Peterson Editing by Maureen Bavdek

Apple shareholders to meet as stock at record high

Apple Inc Chief Executive Tim Cook is in an enviable position market leading products a 98 billion warchest and a seemingly gravitydefying stock price.

But as he gears up for the annual facetoface meeting with shareholders a few issues may be causing him angst. Chief among them are in China where poor labor conditions are in the spotlight and Apple’s iPad trademark is under attack.

The meeting this Thursday comes days after Apple touched a new lifetime high of 526.29 before receding slightly. The stock may get a boost next month when Apple is expected to unveil a new version of its bestselling iPad.

Apple shares have seen a blistering rally in the past seven weeks gaining 100 and making Apple the most valuable U.S. company with 468 billion in market capitalization.

But as much as Apple’s shares rally working conditions at the company’s manufacturing contractors in China have also attracted attention this year.

Recently Apple has been trying to redirect the spotlight on its efforts to force its partners to treat their employees better and the iPhone and iPad maker may use Thursday’s meeting to repeat it commitment to improve labor conditions in its supply chain.

The Fair Labor Association and the audit they are doing of all their supply firms is a corporate governance issue that will probably be a reasonably active discussion at the shareholder meeting said Tim Lesko portfolio manager at Granite investment Advisors. Apple share account for about 3 percent of Granite’s equity assets.

The U.S. nonprofit labor group Fair Labor Association has begun a study of the working conditions at Apple’s main contract manufacturers including supplier Foxconn Technology Group’s plants in China which has been in the news for worker suicides a plant explosion and poor working conditions.

Another thorny issue that has now started attracting attention from shareholders is the trademark battle moves in China where troubled technology company Proview is seeking to halt the sale of iPad tablets claiming it owns the iPad trademark in china.

Connor Browne portfolio manger of Thornburg Value Fund another Apple investor wants to see the trademark case settled.

Apple has positioned itself well in China he said. I would hate to slow the momentum there because of court issues.

CASH TO COME UP AGAIN

A perennial issue that shareholders zoom in on is Apple’s enormous cash pile. The company now boasts of over 100 a share in cash and securities.

Cook said earlier this month that the company is in very active discussions at the board level about what to do with its cash asking shareholders to be patient as Apple decides the way forward stoking speculation that Apple may return some of that money to shareholders through dividends or share buybacks even if it is only a onetime deal.

Apple’s cash balance is the largest among U.S. technology companies and many analysts think the company should put at least some of the money to work. The company last bought back shares in 2001 and scrapped its dividend in the mid 1990s.

A dividend could give Apple stock a shortterm boost as institutional investors who typically own only stocks that pay dividends may buy it.

It certainly would increase the potential owners for the stock Lesko said.

Apple’s annual meeting rarely yields any financial forecasts or productrelated news but corporate governance could be part of the discussion.

Last year in a rare show of strength Apple shareholders voted for a nonbinding proposal to require board directors be elected with a majority vote but Calpers which put it forward is reintroducing the measure as Apple has not acted on it.

The largest U.S. pension fund says that policy would better protects investors’ interests but Apple had urged shareholders to vote against the proposal.

The company’s board has long been criticized for its lack of disclosure particularly about leadership succession while Steve Jobs battled illnesses whose details were not made public.

Reporting By Poornima Gupta Editing by Phil Berlowitz

Savings made simple with seven easy tips

My grandmother had a coffee can for spare silver coins. My Dad saved at his local post office in a savings account. Those were a sign of the times the U.S. postal savings system was the first governmentguaranteed savings vehicle but it disappeared in 1967.

Now we face a savings landscape that is so much more complicated than the one my grandmother and father faced. At present there is no universal savings account with one set of rules.

Each year I bemoan the fact that I can’t consolidate the menagerie of retirement accounts I’ve opened and funded over the years. I have Roth individual retirement accounts rollovers and 401k accounts that I’d love to merge but can’t due to varying tax rules.

Even if savings can’t be simple again it should be effortless automatic and instantly rewarding. There are some ways to do that fairly efficiently even now with the myriad pressures and complexities of the current economy.

To get your savings in motion get a plan. If you make it automatic you’ll save more because then you’ll have fewer opportunities to spend money you should be setting aside.

We know that people save better when they have a savings plan said Ken McDonnell American Savings Education Council program director who is one of the many sponsors of America Saves Week www.americasavesweek.org. Here is my easy sevenstep plan for building savings

Create a liquid cash backup fund. This is money you’ll need for emergencies outofpocket medical bills taxes repairs and basic living expenses in case you’re laid off fall ill or have any other unpleasant financial surprises. Most financial advisers suggest you keep enough cash to cover at least six months of essential living expenses in an insured savings checking or moneymarket account. If you’re selfemployed or in a volatile industry you may need more up to a year’s worth of savings is advisable for these scenarios.

Create your autopilot plan. This is simple. No matter what kinds of savings accounts you use set up automatic contributions. You can do this with all retirement plans by linking payroll to 401ktype programs. With banking products link checking to savings through autodebits. What you don’t touch you don’t spend. You can do this with existing accounts or set up new ones online. Many banks and credit unions make this easy for you and provide cash incentives from time to time.

Save money from cash rewards credit cards. There are many brands here

most of which pay you back an average 1 percent on purchases. Some pay as much as 5 percent on some items. Save your rebates in a savings account. Just watch out for excessive charges and fees the fine print can eat up your savings.

Use credit cards for longterm savings. I use the Upromise Card www.upromise.comwelcome which allows cardholders to channel rebates directly into savings accounts. I put my rebates directly into college savings accounts for my two daughters and have saved several thousand dollars this way. The card’s rebates can also be linked to a highyield savings account. BabyMintwww.babymint.com has a similar and also worthwhile program for college savers.

Cut spending to boost savings. Go through your monthly bills and see where you can trim the fat maybe you can cut your health club membership or cable bill. Even paying off your creditcard bills in full every month will save on finance charges and force you to spend within your means. Keep a diary of your essential and nonessential expenses.

Form an investment club. We had a family stockpurchasing club for almost 10 years. When we needed to cash out we had enough money to pay for emergency medical bills. You probably won’t beat the market we didn’t but it was a lot of fun and forced us to save every month. When we pulled the plug we had enough savings to cover some significant bills without dipping into retirement funds investment club assets are held in taxable accounts and structured like partnerships.

Consider dividend reinvestment plans also known as DRIPs. The best plans allow you to purchase new shares of dividendpaying companies without paying a commission. Your dividend payments are automatically reinvested in new shares www.dripinvestor.comindex.asp.

You can make your savings and reinvestment automatic through these purchase plans.

This is just a sampling of ways to save. As far as the rewards go try running some numbers through online calculators www.choosetosave.org to see how quickly you can reach your goals. Make it a family affair and don’t forget to treat yourself IF you reach your objectives.

John Wasik is a columnist. The opinions expressed are his own. Editing by Linda Stern and Andrea Evans

U.S. government concerned about Anonymous causing blackouts

National Security Agency director General Keith Alexander believes Anonymous could have the power to take town the United States’ electrical grid this year.

The Wall Street Journal’s sources say the director admitted his concern over the hacktivist group at the White House, though he has made no public statement regarding this group in particular. But cyber security is a huge issue for the government as Anonymous continues to “attack for good,” with the expectation of exposing corruption. Anonymous routinely attacks the government on what it calls “F**k FBI Friday,” and recently hacked into a phone call between the FBI and Scotland Yard, where the two agencies were discussing the group itself.

The NSA declined to comment in an e-mail to VentureBeat.

Recently Anonymous’ attacks have seemed to be fairly surface value. Denial of service attacks, which simply attempt to access a website so many times that it overloads, have been behind some of its most high-profile “take-downs” in the last few months. This includes the Department of Justice shortly after the FBI shut down file-sharing company MegaUpload. A similar strategy is currently proposed by the group to shut down the 13 servers that run the Internet.

But the group certainly isn’t limited to DDoS knowledge, and has performed much more intricate attacks in the past. These include the hack on security firm Stratfor where credit card information was compromised. E-mails regarding the Haditha Massacre were leaked from the law firm representing the Marine accused of spearheading the civilian-casualty-riddled mission. Not to mention the slew of website defaces that have hit law enforcement agencies across the country.

An attack on the electrical grid, however, would more likely be blamed on a country with which the U.S. has tensions. China has already been caught hacking into U.S. Department of Defense key cards to gain access information, though it is unknown if the attack was associated with the Chinese government.

Those in charge of the electrical grid, however, told the Journal that they are prepared for attacks, have backup to restore power quickly should an attack occur, and already face regular attacks which they are able to deflect.

But Alexander isn’t concerned about tensioned governments acting on their own behalf, so much as “leaking” knowledge to local cyber criminal groups.

“A near-peer competitor [country] could give cyber malware capability to some fringe group,” Alexander said, according to the Journal. “Some hacker, next thing you know, could be into our electrical grid. We have to get after this.”

We have reached out to the NSA and will update the post upon hearing back.

Electrical grid image via Shutterstock

Assad forces try to bomb Homs into submission

Syrian President Bashar alAssad’s forces rained rockets and bombs down on oppositionheld neighborhoods of the city of Homs on Wednesday reducing buildings to rubble and killing more than 80 people including two Western journalists.

The barrages marked an intensification of a nearly threeweek offensive to crush resistance in Homs one of the focal points of a nationwide uprising against Assad’s 11year rule and prompted further international condemnation.

More than 60 bodies both rebel fighters and civilians were recovered from one area of Homs’ Babo Amro neighborhood after an afternoon bombardment adding to 21 killed earlier in the day activists said.

Helicopters flew reconnaissance overhead then the bombardment started Homs activist Abu Abei told .

Videos uploaded by opposition activists showed smashed buildings deserted streets and doctors treating wounded civilians in primitive conditions in Baba Amro the main target of Assad’s wrath.

President Assad wants to finish the Homs situation by Sunday to prepare for the constitutional referendum. Then he will turn to Idlib a Lebanese official who is close to the Syrian government told in Beirut.

The devastation has caused outcry but Wednesday’s carnage only showed how helpless Western powers are in their efforts to stop the bloodshed.

The United States which so far has been against military intervention in Syria hinted however that if a political solution to the crisis was impossible it might have to consider other options.

The worsening humanitarian situation in Homs and other embattled towns is bound to dominate Friends of Syria talks in Tunis on Friday involving the United States European and Arab countries Syria’s neighbor Turkey and other nations clamoring for Assad to halt the bloodshed and relinquish power.

In an effort to bring relief to starving and bloodied civilians in Homs the International Committee of the Red Cross was in talks with the Syrian government on Wednesday to arrange a pause in the fighting.

Russia Assad’s main arms supplier and seen as retaining some leverage over him said it was seeking safe passage of aid convoys to civilians trapped in the violence. France also appealed to Assad to halt the onslaught to allow safe passage for aid.

U.N. humanitarian chief Valerie Amos will head to Syria soon in an attempt to secure access for aid workers seeking to deliver emergency relief to people trapped in the country’s conflict zones the United Nations said on Wednesday.

THAT’S ENOUGH

French President Nicolas Sarkozy called the deaths of the two journalists French photographer Remi Ochlik and American Marie Colvin of Britain’s Sunday Times an assassination and said the Assad era had to end.

That’s enough now Sarkozy said. This regime must go and there is no reason that Syrians don’t have the right to live their lives and choose their destiny freely. If journalists were not there the massacres would be a lot worse.

The two foreign journalists were killed when the house in which they were staying after sneaking over the Lebanese border into Homs was hit by rockets.

The last dispatch from Colvin a veteran war reporter who wore a trademark black eyepatch since being wounded in Sri Lanka in 2001 described the misery inside Babo Amro.

Women and children were crammed together into a basement huddled in fear and a twoyearold child had died in front of her she reported on British radio.

The Syrian Network for Human Rights said government forces killed a total of more than 80 civilians in Homs on Wednesday mostly in bombardments on Baba Amro a Sunni Muslim district opposed to Syria’s Alawite ruling class.

Several hundred people have been killed in the daily bombardments by the besieging forces using artillery rockets sniper fire and Sovietbuilt T72 tanks.

Residents fear Assad will subject the city to the same treatment as his late father Hafez inflicted on the rebellious town of Hama 30 years ago when 10000 were killed.

Ground forces have held off from entering opposition areas as fighters allied to the opposition are ready to take them on.

The army is preventing medical supplies from going in and electricity is cut off 15 hours a day activists say. Hospitals schools and most workplace and shops are shut and government offices have also closed.

As the Lebanese official explained it Assad wants to batter Homs into submission before a referendum this Sunday on a new constitution leading to multiparty elections as a way to resolve the crisis.

His plan has the support of his allies Russia and China but Western powers have dismissed it as a joke under the present circumstances and the Syrian opposition has called for a boycott.

RED CROSS APPEAL

The ICRC issued a public appeal on Tuesday to Syrian authorities and rebels to agree on a twohour truce each day to allow lifesaving supplies to reach civilians and to evacuate the growing number of wounded from Homs and elsewhere.

ICRC spokeswoman Carla Hadda said she was unable to say if and when a deal might be clinched.

The situation is difficult and we are worried it is deteriorating she told on Wednesday. Everybody is focused on Homs but we shouldn’t turn a blind eye to what is happening in other areas.

Army bombardments on the town of Khan Sheikhoun north of Homs on the DamascusAleppo highway in Idlib province killed two people on Wednesday the Londonbased Syrian Network said.

Elsewhere in Idlib seven people including a fiveyearold boy were killed by gunfire during security force raids into villages of the northwestern province of Idlib according to the Syrian Observatory for Human Rights.

A senior official of the opposition Syrian National Council said it wanted a minimum of three entry points for aid to enter Syria from Lebanon into Homs from Jordan into Deraa and Turkey into Idlib.

Basma Kodmani speaking to reporters in Geneva after talks with the ICRC said Russia should put pressure on Assad to agree.

In Moscow Russia said it was working on ensuring the secure

transit of humanitarian aid but safe corridors themselves were not a good idea because they might lead to further violence.

It’s logical to consider that if something goes wrong the use of force would be permitted Deputy Foreign Minister Gennady Gatilov told reporters in Moscow.

This would only aggravate the conflict.

In Washington officials stressed the Obama administration was still seeking a negotiated solution but also hinted it could reconsider its stance on not arming Syria’s opposition.

We don’t want to take actions that would contribute to the further militarization of Syria because that could take the country down a dangerous path. But we don’t rule out additional measures White House spokesman Jay Carney said on Tuesday.

Analysts says Assad sees himself as in a fight for survival. Although some say the support around him is crumbling and the military is tiring others say he could hang on for many months more before he joins Libya’s Muammar Gaddafi Egypt’s Hosni Mubarak and Tunisia’s Zine alAbidine Ben Ali on the list of deposed Arab leaders if he does at all.

There are also fears the revolt could flare into a religionbased civil war and spread across the volatile Middle East considerations that make arming the rebels a tricky proposition.

In a chilling example of the repression activists also said troops and militia loyal to Assad summarily executed 27 young men on Tuesday in northern villages.

Several YouTube videos taken by local activists in the northern Idlib area which could not be independently confirmed showed the bodies with bullet wounds to the head or chest and hands tied lying dead in streets.

Additional reporting by Erika Solomon and Mariam Karouny in Beirut John Irish in Paris Steve Gutterman in Moscow Stephanie Nebehay in Geneva Editing by Peter Millership

Karzai urges calm as six die in Afghan Koran protests

Afghan President Hamid Karzai appealed for calm Wednesday after officials said six people were shot dead and dozens wounded in protests over the burning of copies of the Koran Islam’s holy book at NATO’s main base in the country.

The U.S. embassy said its staff were in lockdown and travel had been suspended as thousands of people expressed fury over the burning in protests that flared for a second day in several cities.

It was a public relations disaster for U.S.led NATO forces fighting Taliban militants ahead of the withdrawal of foreign combat troops by the end of 2014.

The U.S. government and the American commander of NATOled forces in Afghanistan apologized after Afghan laborers found charred copies of the Koran while collecting rubbish at the sprawling Bagram Airbase about an hour’s drive north of Kabul.

The apologies failed to contain the anger. Afghans took to the streets again chanting antiAmerican slogans and some raising white Taliban flags in the capital.

Karzai urged security forces to try to protect civilian lives and property.

Protests are the right of people but I ask my countrymen to avoid violence he said in a statement urging people to wait for the outcome of investigations into the burnings.

Winning the hearts and minds of Afghans is critical to efforts to defeat the Taliban. Similar incidents in the past have caused deep divisions and resentment among Afghans toward the tens of thousands of foreign troops in their country.

Seven foreign UN workers were killed during protests that raged across Afghanistan for three days in April 2011 after a U.S. pastor burned a Koran in Florida.

A senior Afghan security official citing reports from police told that Western security contractors working at a U.S. military camp in Kabul opened fire on protesters and wounded several.

Witness Rahimullah 17 said his brother Ghafar 23 was shot by one of the contractors in the right leg when he was throwing stones during the demonstration.

The Afghan Interior Ministry said it had ordered an investigation into the shooting.

As a result of shooting at protesters by foreign guards at Camp Phoenix one person was killed and 10 others were wounded the ministry said in an emailed statement.

Later wounded protesters along the busy Jalalabad road on the fringe of Kabul said Afghan police had fired on them.

CULTURAL SENSITIVITIES

Twentyone people including 11 policemen were wounded in the capital said Mohammad Zahir head of Kabul police’s crimes unit. They included the city police chief Ayoub Salangi who was hit in the ankle by a stone.

In Parwan province home to Bagram four people were shot dead by Afghan police and 10 were wounded while attacking offices provincial officials and the interior ministry said.

A protester was shot dead by police in Logar province east of the capital the governor’s spokesman said. Hundreds protested in front of the governor’s office. Some threw stones.

Critics say Western troops often fail to grasp the country’s religious and cultural sensitivities. Muslims consider the Koran the literal word of God and treat each book with deep reverence.

Demonstrations by as many as 2000 people broke out as word of the Bagram find spread.

Police said most injuries were caused by flying stones and sticks hurled by protesters. Demonstrators had charged police lines and nearby military bases at a protest on the edge of Kabul burning tires and smashing vehicles and building windows.

Protesters shouted Death to America! and Death to Karzai as black smoke rose over a large demonstration on the outskirts of the snowy Afghan capital.

When the Americans insult us to this degree we will join the insurgents said Ajmal an 18yearold protester in Kabul.

Demonstrators set fire to part of a housing compound used by foreign contract workers. A witness said the fire damaged part of a guesthouse at the Green Village complex where 1500 mostly foreign contractors live and work.

Outrage also spilled over in the Afghan parliament where several members shouted Death to America inside the legislative chamber.

The protests spread to several cities.

In Jalalabad to the east some protesters burned U.S. flags and also shouted Death to America. Others set ablaze fuel tankers near the city’s airport.

Demonstrators praised the leader of the Afghan Taliban the secretive Mullah Mohammad Omar screaming Long live Mullah Omar! witnesses said. Five people were wounded the governor’s spokesman said.

In neighboring Pakistan’s largest city Karachi around 100 Islamic seminary students protested against the Koran burnings.

Pakistan’s government should summon the American ambassador and demand an apology. And if he doesn’t apologize he should be kicked out of the country said Abdul Basit a protest leader.

Others took a harder line.

No forgiveness for the desecrators of the Koran a section of the crowd shouted. Only death.

Additional reporting by Amie FerrisRotman in KABUL and Imtiaz Shah in KARACHI Writing by Rob Taylor Editing by Michael Georgy and Ron Popeski

Chris Brown earns musical redemption from Rihanna

R&B singer Chris Brown has earned a measure of musical redemption and forgiveness from exgirlfriend Rihanna by collaborating on new music together three years after Brown pleaded guilty to assaulting the pop star.

Brown 22 and Rihanna 24 were openly tweeting each other and promoting their collaboration on each others’ singles over the weekend as the Barbadian We Found Love singer celebrated her 24th birthday.

@chrisbrown Turn up the music remix #RihannaNavy #Teambreezy enjoy!!! the birthday girl tweeted on Sunday with a link to her collaboration on Brown’s single Turn Up the Music before posting another tweet with a link to her duet with Brown on a remix of her single Birthday Cake.

Rihanna provided vocals on a remix of Brown’s new uptempo dance song Turn Up The Music while Brown lent his voice to Rihanna’s sexuallycharged song Birthday Cake.

Their reconciliation which has been the topic of much speculation in the media after the two were spotted together numerous times comes after Brown made his official return to the Grammys on February 12 and won one award prompting him to lash out at critics saying HATE ALL U WANT BECUZ I GOT A GRAMMY Now! on his Twitter.

The singer almost derailed his career three years ago on the night before the Grammys after he was arrested for beating up his thengirlfriend Rihanna and since then Brown has been working to rehabilitate himself in the eyes of fans.

His musical reunion with Rihanna had social networks abuzz through the weekend and into Tuesday as critics and fans were split on the newly released duets with some making cynical puns others calling it a publicity stunt and the rest embracing the new songs.

#Rihanna and Chris Brown are recording a song together I guess she was concerned about being a one hit wonder said user @GreenRoomShow on Twitter while another user @ElsaBreezy posted I Respect Rihanna And Chris Brown For Collaborating Despite Knowing There Will Be A Lot Of Negativity From The Losers Who Are Stuck In 2009.

Brown’s Turn Up The Music is currently at No. 8 on the iTunes singles chart while Rihanna and Brown’s duet on Birthday Cake is circulating the Internet after being offered as a free download by the singer over the weekend.

Reporting By Piya SinhaRoy Editing by Bob Tourtellotte

Obama sings the blues with Jagger, B.B King

Bill Clinton had his saxophone but President Barack Obama can sing the blues.

Obama lent his voice to a White House jam featuring Mick Jagger B.B. King Jeff Beck and Buddy Guy on Tuesday during a celebration of blues and its influence on modern pop culture.

After wowing crowds in January by singing a line from Al Green’s classic hit Let’s Stay Together at a Harlem fundraiser the President sang a verse of Sweet Home Chicago in the allstar finale of a TV special taped at the White House.

We were trying to get you to help us sing. I heard you singing Al Green blues guitar legend Guy hollered to Obama on Tuesday. So you started something. You got to keep it up now. You can do it.

Taking a microphone handed to him by Rolling Stones frontman Jagger a smiling Obama sang a solo verse of Sweet Home Chicago before handing back to the band.

The performance was part of a PBS television special marking

Black History month that will be broadcast on February 27 as In Performance at the White House Red White and Blues the public broadcaster said.

Obama’s blues solo recalled Clinton’s saxophone playing appearance in 1992 on the The Arsenio Hall Show which was credited with boosting his presidential campaign.

Obama’s brief rendition of Let’s Stay Together in January helped increase sales of the 1971 Al Green classic by 490 percent in the following week according to Billboard magazine and the YouTube video has been viewed more than 7 million times.

Reporting By Jill Serjeant Editing by Bob Tourtellotte