Assad's forces fire Scuds in Syria escalation: U.S. official

WASHINGTON/BRUSSELS (Reuters) - Forces loyal to Syrian President Bashar al-Assad have fired Scud missiles at rebels trying to overthrow Syria's government, a senior U.S. official said on Wednesday, a step seen as an escalation in Assad's struggle to retain power.

U.S. officials said they were unaware of any previous instances in which Scuds were used against the rebels since the start of the 20-month-old uprising, which has killed more than 40,000 people.

White House spokesman Jay Carney declined to confirm the reports, saying he was aware of them but could not discuss intelligence matters.

"If true, this would be the latest desperate act from a regime that has shown utter disregard for innocent life," he said. "The idea that the Syrian regime would launch missiles in its borders at its own people is stunning, desperate, a completely disproportionate military escalation."

A senior U.S. official, speaking on condition of anonymity, said Scuds had been used.

In Brussels, a NATO official, who also spoke on condition of anonymity, said a number of "Scud-type" short-range ballistic missiles had been launched inside Syria in recent days.

"Allied intelligence, surveillance and reconnaissance assets have detected the launch of a number of unguided, short-range ballistic missiles inside Syria this week," the official said.

"Trajectory and distance travelled indicate they were Scud-type missiles," the NATO official said.

Thomas Houlahan, a military analyst at the Center for Security and Science, said the weapons were probably North Korean-made Hwasong-6 missiles, an improved variant of the original Soviet Scuds.

"In terms of the short-range battlefield missiles, they produce a pretty good missile and because of North Korea's constant need for hard currency, they sell them pretty cheap. So they have moved a lot of missiles around and Syria has ended up with a lot of them," Houlahan said.

"MORE ACCURATE"

He said the Hwasong-6 was more accurate than the original Scud, could carry a warhead of about 1,800 pounds (820 kg) and had a range of about 450 miles.

But he said the use of the weapon raised questions as to why the Syrians were not using their air force instead, which was a better alternative.

"If I want to dump 1,800 pounds of explosives on somebody with fairly decent accuracy and I have an air force and they don't, why the hell am I not using a plane?" Houlahan said.

"If you see a country or an army that has much better options not using them, you start to ask yourself why," he added. "Is it the old problem where dictators can't always trust their air forces?"

NATO agreed last week to send Patriot anti-missile systems to alliance member Turkey to reinforce its air defenses and calm its fears of coming under missile attack, possibly with chemical weapons, from neighboring Syria.

The NATO official said the Syrian missiles had landed inside Syria and no missiles had hit Turkish territory. He said the Western alliance had no information about what casualties or damage the missiles had caused.

Asked if there was any evidence of Syrian use of chemical weapons, he said: "We have no information concerning the payload."

U.S. President Barack Obama warned Assad last week not to use chemical weapons against Syrian opposition forces, saying there would be unspecified consequences if he did so.

The United States, Germany and Netherlands have all agreed to send Patriot missiles to protect Turkey, but the missile batteries are not expected to arrive for several more weeks.

The New York Times, which initially reported Syria's use of the missiles, quoted one official as saying more than six had been fired at the rebels. Another official said the missiles had been launched from the Damascus area at targets in northern Syria, the Times said.

U.S. officials, speaking on condition of anonymity, told Reuters they would not dispute the Times report.

News of Syria's use of Scud missiles broke as Western and Arab nations sympathetic to the uprising against Assad gave full political recognition to the opposition at a meeting in Morroco.

(Reporting by David Alexander in Washington and Adrian Croft in Brussels; Editing by Michael Roddy and David Brunnstrom)

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Fandango launches Oscar-themed web series with Dave Karger

LOS ANGELES (TheWrap.com) – Fandango is elbowing into the Oscar horse race.

The movie-ticket seller launched its first original digital video series Wednesday, “The Frontrunners,” which will cover the major contenders for the top awards. The show will feature conversations with a star-studded group of Oscar hunters that includes Richard Gere (“Arbitrage”), Amy Adams (“The Master”), Hugh Jackman (“Les Miserables”) and Ben Affleck (“Argo”).

During the broadcasts, actors and directors will deconstruct key scenes from their movies, explaining how they crafted a moment of domestic conflict, in the case of Gere, or decided to intercut between a Hollywood script reading and the Iranian Hostage Crisis, as with Affleck.

However, commerce will be mixed in along with the art. Fandango will offer ticketing information along with the digital videos, with the hopes that the clips will inspire users to check out the movie being discussed.

The show, shot at Soho House in Los Angeles, will be hosted by Fandango’s Chief Correspondent Dave Karger, the movie guru the company lured over from Entertainment Weekly in September. It’s part of a bold bet that Fandango is making on original content.

To that in end, the company tapped former Disney digital executive Paul Yanover to serve in the newly created role of president and tasked him with creating a suite of programming for Fandango and its 41 million unique visitors.

“Our goal with Fandango is to make it the definitive movie-going brand across all platforms,” Nick Lehman, the president of digital for NBC Universal Entertainment Networks & Interactive Media, told TheWrap in October. “We want to continue expanding in ways that entertain and inform and video is key to that strategy. Advertisers are clamoring for it because there is a dearth of high quality original video content on the web.”

As TheWrap reported exclusively in October, Karger is also planning programs that will center on box office contenders and one program that will boast both A-List actors and below-the-line talent.

New episodes of “The Frontrunners” will air weekly through the Academy Awards on February 24, 2013. The first three installments will be available Wednesday

Internet News Headlines – Yahoo! News

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Tevin Hunte Is 'So Happy' After His Voice Elimination

TV Watch

The Voice

By Jessica Herndon and Julia Haskins

12/12/2012 at 07:45 PM EST

Team Cee Lo's Trevin Hunte was eliminated on Tuesday's episode of The Voice, but the soulful singer isn't letting the end of this journey hold him back.

"I feel like the best person on the planet Earth. I am so happy and excited to be honest," Hunte told PEOPLE after the show. I feel like a weight has been lifted. Being away from family and friends and what you're used to was definitely a hard thing for me."

Hunte is looking forward to his mom's cooking and seeing his friends back home, and he won't waste a second wondering what if he'd made it further.

"I have no regrets. I am glad that I took a leap of faith and auditioned," he said. "I auditioned for American Idol and told my family I didn't have the strength to do it again. But I am definitely happy and excited that I made it this far."

And he still has a long way to go. "I'm only 18," he said. "I'm just really excited."

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DA investigating Texas' troubled $3B cancer agency

AUSTIN, Texas (AP) — Turmoil surrounding an unprecedented $3 billion cancer-fighting effort in Texas worsened Tuesday when its executive director offered his resignation and the state's chief public corruption prosecutor announced an investigation into the beleaguered agency.

No specific criminal allegations are driving the latest probe into the Cancer Prevention and Research Institute of Texas, said Gregg Cox, director of the Travis County district attorney's public integrity unit. But his influential office opened a case only weeks after the embattled agency disclosed that an $11 million grant to a private company bypassed review.

That award is the latest trouble in a tumultuous year for CPRIT, which controls the nation's second-largest pot of cancer research dollars. Amid the mounting problems, the agency announced Tuesday that Executive Director Bill Gimson had submitted his letter of resignation.

"Unfortunately, I have also been placed in a situation where I feel I can no longer be effective," Gimson wrote in a letter dated Monday.

Gimson said the troubles have resulted in "wasted efforts expended in low value activities" at the agency, instead of a focused fight against cancer. Gimson offered to stay on until January, and the agency's board must still approve his request to step down.

His departure would complete a remarkable house-cleaning at CPRIT in a span of just eight months. It began in May, when Dr. Alfred Gilman resigned as chief science officer in protest over a different grant that the Nobel laureate wanted approved by a panel of scientists. He warned it would be "the bomb that destroys CPRIT."

Gilman was followed by Chief Commercialization Officer Jerry Cobbs, whose resignation in November came after an internal audit showed Cobbs included an $11 million proposal in a funding slate without a required outside review of the project's merits. The lucrative grant was given to Dallas-based Peloton Therapeutics, a biomedical startup.

Gimson chalked up Peloton's award to an honest mistake and has said that, to his knowledge, no one associated with CPRIT stood to benefit financially from the company receiving the taxpayer funds. That hasn't satisfied some members of the agency's governing board, who called last week for more assurances that no one personally profited.

Cox said he has been following the agency's problems and his office received a number of concerned phone calls. His department in Austin is charged with prosecuting crimes related to government officials; his most famous cases include winning a conviction against former U.S. House Majority Leader Tom DeLay in 2010 on money laundering charges.

"We have to gather the facts and figure what, if any, crime occurred so that (the investigation) can be focused more," Cox said.

Gimson's resignation letter was dated the same day the Texas attorney general's office also announced its investigation of the agency. Cox said his department would work cooperatively with state investigators, but he made clear the probes would be separate.

Peloton's award marks the second time this year that a lucrative taxpayer-funded grant authorized by CPRIT instigated backlash and raised questions about oversight. The first involved the $20 million grant to M.D. Anderson Cancer Center in Houston that Gilman described as a thin proposal that should have first been scrutinized by an outside panel of scientific peer-reviewers, even though none was required under the agency's rules.

Dozens of the nation's top scientists agreed. They resigned en masse from the agency's peer-review panels along with Gilman. Some accused the agency of "hucksterism" and charting a politically-driven path that was putting commercial product-development above science.

The latest shake-up at CPRIT caught Gilman's successor off-guard. Dr. Margaret Kripke, who was introduced to reporters Tuesday, acknowledged that she wasn't even sure who she would be answering to now that Gimson was stepping down. She said that although she wasn't with the agency when her predecessor announced his resignation, she was aware of the concerns and allegations.

"I don't think people would resign frivolously, so there must be some substance to those concerns," Kripke said.

Kripke also acknowledged the challenge of restocking the peer-review panels after the agency's credibility was so publicly smeared by some of the country's top scientists. She said she took the job because she felt the agency's mission and potential was too important to lose.

Only the National Institutes of Health doles out more cancer research dollars than CPRIT, which has awarded more than $700 million so far.

Gov. Rick Perry told reporters in Houston on Tuesday that he wasn't previously aware of the resignation but said Gimson's decision to step down was his own.

Joining the mounting criticism of CPRIT is the woman credited with brainstorming the idea for the agency in the first place. Cathy Bonner, who served under former Texas Gov. Ann Richards, teamed with cancer survivor Lance Armstrong in selling Texas voters in 2007 on a constitutional amendment to create an unprecedented state-run effort to finance a war on disease.

Now Bonner says politics have sullied an agency that she said was built to fund research, not subsidize private companies.

"There appears to be a cover-up going on," Bonner said.

Peloton has declined comment about its award and has referred questions to CPRIT. The agency has said the company wasn't aware that its application was never scrutinized by an outside panel, as required under agency rules.

___

Follow Paul J. Weber on Twitter: www.twitter.com/pauljweber

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Asian shares rise, Fed outcome pressures dollar

TOKYO (Reuters) - Asian shares rose on Wednesday buoyed by strength in global equities markets, firmer economic sentiment in Germany and hopes of a deal from U.S. budget talks, while the dollar came under pressure ahead of the Federal Reserve's policy decision.

MSCI's broadest index of Asia-Pacific shares outside Japan <.miapj0000pus> gained 0.5 percent to a 16-month peak. The index has hit successive 16-month highs since December 5.

Australian shares <.axjo> were up 0.4 after touching a nearly 17-month high on the back of Wall Street gains and higher iron ore prices.

"Definitely the momentum is to the upside," said Stan Shamu, a market analyst at IG Markets. "Everyone seems to be pricing in a fairly positive outcome to the fiscal cliff negotiations as well."

South Korean shares <.ks11> inched up 0.2 percent, shrugging off news of North Korea's rocket launch, but profit-taking on large caps limited gains.

"North Korea is no longer an economic match for the South, so, short of a full-scale conflict, the North's actions will have little impact on the KOSPI," Im No-jung, chief economist at IM Investment & Securities, said of the Seoul stock market.

North Korea launched the second rocket this year on Wednesday just before 10 a.m. and may have finally succeeded in putting a satellite into space, the stated aim of what critics say is a disguised ballistic missile test.

Japan's Nikkei share average <.n225> rose 0.5 percent after hitting a 7-1/2-month high earlier, led by gains in tech shares and other exporters on the weak yen. <.t/>

The dollar remained broadly under pressure on expectations the Fed will take further monetary easing step, pushing the currency down to a three-month low against the Australian dollar. The euro popped back above $1.3000, pulling away from a two-week low of $1.2876 plumbed Friday.

The Fed is expected to announce it will buy $45 billion per month of longer-dated Treasuries beginning in January on top of the $40 billion in mortgage-backed security purchases it announced in September. The new buying will replace the Fed's current program, Operation Twist, which expires at the end of December.

"Although the view that the Fed will shift to outright Treasury purchases is now very widely shared by market participants, we do not believe it has been fully reflected into markets or in positioning," said Vassili Serebriakov, a strategist at BNP Paribas.

"Accordingly, dollar weakness is highly likely should the Fed shift to outright U.S. Treasury purchases."

Against the yen, the dollar steadied at 82.54 yen. The Japanese currency has also been pressured by expectations for more easing from the Bank of Japan, which meets next week.

Data on Wednesday showed Japan's core machinery orders rose 2.6 percent in October from the previous month, up for the first time in three months but below a 3 percent rise forecast, highlighting how uncertainty over the global outlook continued to weigh on business investment and the broader economy.

Investors also closely followed developments in U.S. budget talks to avert the "fiscal cliff," some $600 billion of tax hikes and spending cuts scheduled to start in January, which economists have warned could send the U.S. economy into recession and drag down the fragile global economy.

Negotiations to avert the "fiscal cliff" ahead of a year-end deadline intensified as President Barack Obama and U.S. House of Representatives Speaker John Boehner spoke by phone on Tuesday after exchanging new proposals, in a possible sign of progress ahead of the end-of-year deadline.

A group of high-profile chief executives urged President Barack Obama and Republican congressional leaders on Tuesday to strike a deal, reflecting mounting urgency to resolve the issue with time running out.

U.S. crude futures inched up 0.2 percent to $85.96 a barrel and Brent rose 0.3 percent to $108.37.

(Additional reporting by Maggie Lu Yueyang in Canberra, Somang Yang and Joyce Lee in Seoul and Ian Chua in Sydney; Editing by Jacqueline Wong)

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North Korea's new leader burnishes credentials with rocket

SEOUL/TOKYO (Reuters) - North Korea successfully launched a rocket on Wednesday, boosting the credentials of its new leader and stepping up the threat the isolated and impoverished state poses to its opponents.

The rocket, which North Korea says put a weather satellite into orbit, has been labeled by the United States, South Korea and Japan as a test of technology that could one day deliver a nuclear warhead capable of hitting targets as far as the continental United States.

"The satellite has entered the planned orbit," a North Korean television news-reader clad in traditional Korean garb triumphantly announced, after which the station played patriotic songs with the lyrics "Chosun (Korea) does what it says".

The rocket was launched just before 10 a.m. Korea time (9 p.m. ET on Tuesday), according to defense officials in South Korea and Japan, and easily surpassed a failed April launch that flew for less than two minutes.

The North American Aerospace Defense Command (NORAD) said that it "deployed an object that appeared to achieve orbit", the first time an independent body has verified North Korean claims.

North Korea followed what it said was a similar successful launch in 2009 with a nuclear test that prompted the United Nations Security Council to stiffen sanctions that it originally imposed in 2006 after the North's first nuclear test.

The state is banned from developing nuclear and missile-related technology under U.N. resolutions, although Kim Jong-un, the youthful head of state who took power a year ago, is believed to have continued the state's "military first" programs put into place by his deceased father Kim Jong-il.

Washington condemned Wednesday's launch as a "provocative action" and breach of U.N. rules, while Japan's U.N. envoy called for a Security Council meeting. However, diplomats say further tough sanctions are unlikely to be agreed at the body as China, the North's only major ally, will oppose them.

"The international community must work in a concerted fashion to send North Korea a clear message that its violations of United Nations Security Council resolutions have consequences," the White House said in a statement.

Japan's likely next prime minister, Shinzo Abe, who is leading in opinion polls ahead of an election on December 16 and who is known as a North Korea hawk, called on the United Nations to adopt a resolution "strongly criticizing" Pyongyang.

There was no immediate official reaction from the Chinese government, which is North Korea's only major ally.

China had expressed "deep concern" over the launch which was announced a day after a top politburo member, representing new Chinese leader Xi Xinping, met Kim Jong-un in Pyongyang.

STUMBLING BLOCK

On Wednesday, China's state news agency Xinhua said North Korea had the "right to conduct peaceful exploration of outer space" but also called on it to abide by U.N. resolutions.

"China has been the stumbling block to firmer U.N. action and we'll have to see if the new leadership is any different than its predecessors," Bruce Klingner, a Korea expert at the Heritage Foundation, a U.S. thinktank told a conference call.

A senior adviser to South Korea's president said last week it was unlikely there would be action from the U.N. and that Seoul would expect its allies to tighten sanctions unilaterally.

Kim Jong-un, believed to be 29 years old, took office after his father died on December 17 last year and experts believe that Wednesday's launch was intended to commemorate the first anniversary of the death.

The April launch was timed for the centennial of the birth of Kim Il Sung, the founder of North Korea and the grandfather of its current ruler.

Wednesday's success puts the North ahead of the South which has not managed to get a rocket off the ground.

"This is a considerable boost in establishing the rule of Kim Jong-un," said Cho Min, an expert at the Korea Institute of National Unification.

There have been few indications the secretive and impoverished state, where the United Nations estimates a third of the population is malnourished, has made any advances in opening up economically over the past year.

North Korea remains reliant on minerals exports to China and remittances from tens of thousands of its people working on labor projects overseas.

The 22 million population often needs handouts from defectors who have escaped to South Korea in order to afford basic medicines.

Given the puny size of its economy - per capita income is less than $2,000 a year - one of the few ways the North can attract world attention is by emphasizing its military threat.

Pyongyang wants the United States to resume aid and to recognize it diplomatically, although the April launch scuppered a planned food deal.

It is believed to be some years away from developing a functioning nuclear warhead although it may have enough plutonium for around half a dozen nuclear bombs, according to nuclear experts.

The North has also been enriching uranium which would give it a second path to nuclear weapons as it sits on vast natural uranium reserves.

"A successful launch puts North Korea closer to the capability to deploy a weaponized missile," said Denny Roy a senior fellow at the East-West Center in Hawaii.

"But this would still require fitting a weapon to the missile and ensuring a reasonable degree of accuracy. The North Koreans probably do not yet have a nuclear weapon small enough for a missile to carry."

Pyongyang says that its development is part of a civil nuclear program, but has also boasted of it being a "nuclear weapons power".

(Additional reporting by Jumin Park and Yoo Choonsik in SEOUL; David Alexander, Matt Spetalnick and Paul Eckert in WASHINGTON; Linda Sieg in TOKYO; Sui-Lee Wee in BEIJING; Rosmarie Francisco in MANILA; Writing by David Chance; Editing by Raju Gopalakrishnan)

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Panasonic may sell Sanyo digital camera business: source

TOKYO (Reuters) – Panasonic Corp may sell its Sanyo digital camera business to Japanese private equity fund Advantage Partners by the end of March, a source familiar with the plan said.

A final decision on the sale will be made by the end of the year, the source said on condition he was not identified.

Advantage Partners will pay several hundreds of millions of yen for the business, which makes digital cameras for other companies, including Olympus Corp, the Nikkei business daily reported earlier.

Panasonic declined to comment saying it had not announced the plan.

The Japanese company aims to sell 110 billion yen ($ 1.34 billion) of assets, including buildings and land by the end of March to boost free cashflow to 200 billion yen for the business year. The company expects an annual net loss of close to $ 10 billion as it writes off billions in deferred tax assets and goodwill.

Panasonic acquired rival Sanyo, a leading maker of lithium ion batteries and solar panels, in 2010. Sales of compact digital cameras are under pressure from increasingly powerful smartphones.

Panasonic’s shares gained as much as 4 percent in early trading in Tokyo, compared with a 0.5 percent rise in the benchmark Nikkei 225 index. ($ 1 = 82.3900 Japanese yen)

(Reporting by Reiji Murai; Writing by Tim Kelly; Editing by Jeremy Laurence)

Gadgets News Headlines – Yahoo! News

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Hugh Hefner's Engagement Ring to Crystal Harris Revealed

By Mike Fleeman

12/11/2012 at 07:00 PM EST

The wedding's back on – though it may be a good idea to save that gift receipt.

Hugh Hefner, 86, officially confirms that he is once again engaged to Crystal Harris, 26, telling his Twitter followers, "I've given Crystal Harris a ring. I love the girl."

And to prove it, Harris posted photos of the big diamond sparkler, calling it "my beautiful ring."

Neither announced a wedding date, though sources tell PEOPLE they're planning to tie the knot at the Playboy Mansion in Los Angeles on New Year's Eve.

Whether that still happens remains to be seen.

This is the plan they had in 2011 – a wedding at the mansion – except that Harris called it off just days before the nuptials were scheduled to happen in front of 300 invited guests.

Hugh Hefner and Crystal Harris

David Livingston / Getty

The onetime Playmate of the Month then ripped Hef's bedroom skills, calling him a two-second man, to which Hefner replied, "I missed a bullet" by not marrying her.

A year later, Hefner's "runaway bunny" bounded back to him.

• Reporting by JENNIFER GARCIA

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Surprise: New insurance fee in health overhaul law

WASHINGTON (AP) — Your medical plan is facing an unexpected expense, so you probably are, too. It's a new, $63-per-head fee to cushion the cost of covering people with pre-existing conditions under President Barack Obama's health care overhaul.

The charge, buried in a recent regulation, works out to tens of millions of dollars for the largest companies, employers say. Most of that is likely to be passed on to workers.

Employee benefits lawyer Chantel Sheaks calls it a "sleeper issue" with significant financial consequences, particularly for large employers.

"Especially at a time when we are facing economic uncertainty, (companies will) be hit with a multi-million dollar assessment without getting anything back for it," said Sheaks, a principal at Buck Consultants, a Xerox subsidiary.

Based on figures provided in the regulation, employer and individual health plans covering an estimated 190 million Americans could owe the per-person fee.

The Obama administration says it is a temporary assessment levied for three years starting in 2014, designed to raise $25 billion. It starts at $63 and then declines.

Most of the money will go into a fund administered by the Health and Human Services Department. It will be used to cushion health insurance companies from the initial hard-to-predict costs of covering uninsured people with medical problems. Under the law, insurers will be forbidden from turning away the sick as of Jan. 1, 2014.

The program "is intended to help millions of Americans purchase affordable health insurance, reduce unreimbursed usage of hospital and other medical facilities by the uninsured and thereby lower medical expenses and premiums for all," the Obama administration says in the regulation. An accompanying media fact sheet issued Nov. 30 referred to "contributions" without detailing the total cost and scope of the program.

Of the total pot, $5 billion will go directly to the U.S. Treasury, apparently to offset the cost of shoring up employer-sponsored coverage for early retirees.

The $25 billion fee is part of a bigger package of taxes and fees to finance Obama's expansion of coverage to the uninsured. It all comes to about $700 billion over 10 years, and includes higher Medicare taxes effective this Jan. 1 on individuals making more than $200,000 per year or couples making more than $250,000. People above those threshold amounts also face an additional 3.8 percent tax on their investment income.

But the insurance fee had been overlooked as employers focused on other costs in the law, including fines for medium and large firms that don't provide coverage.

"This kind of came out of the blue and was a surprisingly large amount," said Gretchen Young, senior vice president for health policy at the ERISA Industry Committee, a group that represents large employers on benefits issues.

Word started getting out in the spring, said Young, but hard cost estimates surfaced only recently with the new regulation. It set the per capita rate at $5.25 per month, which works out to $63 a year.

America's Health Insurance Plans, the major industry trade group for health insurers, says the fund is an important program that will help stabilize the market and mitigate cost increases for consumers as the changes in Obama's law take effect.

But employers already offering coverage to their workers don't see why they have to pony up for the stabilization fund, which mainly helps the individual insurance market. The redistribution puts the biggest companies on the hook for tens of millions of dollars.

"It just adds on to everything else that is expected to increase health care costs," said economist Paul Fronstin of the nonprofit Employee Benefit Research Institute.

The fee will be assessed on all "major medical" insurance plans, including those provided by employers and those purchased individually by consumers. Large employers will owe the fee directly. That's because major companies usually pay upfront for most of the health care costs of their employees. It may not be apparent to workers, but the insurance company they deal with is basically an agent administering the plan for their employer.

The fee will total $12 billion in 2014, $8 billion in 2015 and $5 billion in 2016. That means the per-head assessment would be smaller each year, around $40 in 2015 instead of $63.

It will phase out completely in 2017 — unless Congress, with lawmakers searching everywhere for revenue to reduce federal deficits — decides to extend it.

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Asian shares edge up; Fed move, fiscal cliff in focus

TOKYO (Reuters) - Asian shares edged higher while the euro steadied on Tuesday, but prices were capped as investors waited for the U.S. Federal Reserve's policy decision later this week and any progress in U.S. budget talks.

MSCI's broadest index of Asia-Pacific shares outside Japan <.miapj0000pus> nudged up 0.2 percent. The index has hit successive 16-month highs for the past four sessions.

Australian shares <.axjo> gained 0.4 percent to their highest in nearly two months on a strong resources sector, which was supported by a rise in metals and oil prices and hopes for the Fed to further ease monetary policy.

Hong Kong shares <.hsi> rose 0.4 percent to a 16-month high but Shanghai shares <.ssec> fell 0.5 percent.

"The market continues to trade sideways in an environment where headlines seem to have lost bite. Poor liquidity conditions as we approach the end of the year seem to keep portfolios on a tight leash around their benchmarks," said Barclays Capital analysts in a research note.

Japan's Nikkei share average <.n225> was the region's other laggard, slipping 0.3 percent to around 9,506 as investors became cautious over signs that the market is overbought after a 10 percent rally in the past month and took profit on export-focused firms. <.t/>

"The 9,500-level is still an important psychological line for both support and resistance purposes," said Yutaka Miura, a senior technical analyst at Mizuho Securities.

U.S. Treasury prices edged higher on Monday on worries about U.S. budget wrangling, Italy's political rumbling and expectations of further monetary easing by the Fed.

At the end of the two-day meeting which begins on Tuesday, the Fed is expected to announce it will buy $45 billion per month of longer-dated Treasuries beginning in January to replace the current Operation Twist program, which expires at the end of December.

Under the program, it sells shorter-dated U.S. government debt and buys longer-dated Treasuries to extend the duration of its balance sheet.

Such views weighed on the dollar and helped to underpin the euro, which traded at $1.2937, off Monday's low of $1.2880.

The dollar firmed 0.1 percent to 82.40 yen as the yen has also been pressured by expectations for more easing from the Bank of Japan, which meets next week.

The euro was also supported as Italian Prime Minister Mario Monti played down market fears over his decision to resign, saying there was no danger of a vacuum ahead of an election in the spring.

"I think people at this point are not sure whether there really will be the risk of Italy not pursuing its fiscal reforms pursued under Monti. So it's hard to really price that news in yet," said Takao Hattori, senior investment strategist at Mitsubishi UFJ Morgan Stanley Securities in Tokyo.

FISCAL WORRIES

European partners urged the next Italian government on Monday to stick to Monti's reform agenda, after his decision to resign early and Silvio Berlusconi's return to frontline politics rattled financial markets.

Monti had earned market confidence over the past year in indebted Italy, as he spearheaded a reform agenda to rescue the euro zone's third-largest economy from the threat of a Greek-style collapse.

His earlier-than-expected departure raised concerns about the prospects for Italy's fiscal reforms, lifting Italy's benchmark 10-year bond yield up to 4.83 percent, the highest in more than three weeks, while driving Italian shares <.ftmib> down more than 2 percent.

Investors also worry about the impact on neighboring Spain, which is struggling with high debt and studying the need for outside help.

Fiscal worries in the United States have also weighed on investor sentiment, limiting their activity as trading winds down towards the year-end holiday season.

Economists have warned that a failure by Congress to avert the "fiscal cliff," some $600 billion of tax hikes and spending cuts scheduled to start in January, could send the U.S. economy back into recession, further weighing on the fragile global economy.

The White House and House of Representatives Speaker John Boehner's office held more negotiations on Monday on ways to break the budget stalemate, but neither side showed any public signs that they were ready to give ground. The talks picked up pace after Boehner met with President Barack Obama on Sunday, raising hopes of progress.

U.S. crude futures were little changed at $85.56 a barrel and Brent eased 0.1 percent to $107.28.

Trading was subdued in Asian credit markets, with the slight rise in stocks helping to narrow the spreads on the iTraxx Asia ex-Japan investment-grade index marginally by 1 basis point.

(Additional reporting by Ayai Tomisawa in Tokyo; Editing by Jacqueline Wong)

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