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Tuesday, July 26, 2011

In West Bank city of Nablus, archaeologists uncover biblical ruin

Archaeologists unearthing a biblical ruin inside a Palestinian city in the West Bank are writing the latest chapter in a 100-year-old excavation that has been interrupted by two world wars and numerous rounds of Mideast upheaval.

Working on an urban lot that long served residents of Nablus as an unofficial dump for garbage and old car parts, Dutch and Palestinian archaeologists are learning more about the ancient city of Shekhem, and are preparing to open the site to the public as an archaeological park next year.

The project, carried out under the auspices of the Palestinian Department of Antiquities, also aims to introduce the Palestinians of Nablus, who have been beset for much of the past decade by bloodshed and isolation, to the wealth of antiquities in the middle of their city.

"The local population has started very well to understand the value of the site, not only the

historical value, but also the value for their own identity," said Gerrit van der Kooij of Leiden University in the Netherlands, who co-directs the dig team.

"The local people have to feel responsible for the archaeological heritage in their neighborhood," he said.

The digging season wrapped up this week at the site, known locally as Tel Balata.

The city of Shekhem, positioned in a pass between the mountains of Gerizim and Eibal and controlling the Askar Plains to the east, was an important regional center more than 3,500 years ago. As the existing remains show, it lay within fortifications of massive stones, was entered through monumental gates and centered on a temple with walls five yards (meters) thick.

The king of Shekhem, Labaya, is mentioned in the cuneiform tablets of the Pharaonic archive found at Tel al-Amarna in Egypt, which are dated to the 14th century B.C. The king had rebelled against Egyptian domination, and soldiers were dispatched north to subdue him. They failed.

The city also appears often in the biblical narrative. The patriarch Abraham, for example, was passing near Shekhem when God promised to give the land of Canaan to his descendants in the Book of Genesis. Later, Abraham's grandson Jacob was camped outside the walls when a local Canaanite prince raped his daughter, Dinah. Jacob's sons sacked the city in vengeance. The body of Jacob's son Joseph was brought from Egypt hundreds of years later by the fleeing Israelites and buried at Shekhem.

Two millennia ago, the Romans abandoned the original site and built a new city to the west, calling it Flavius Neapolis. The Greek name Neapolis, or "new city," later became enshrined in Arabic as Nablus. In Hebrew, the city is still called Shekhem.

Nablus has since spread, and ancient Shekhem is now surrounded by Palestinian homes and car garages near the city's eastern outskirts. One morning this week, a garbage container emitted smoke from burning refuse not far from the remains of the northwestern city gate in a curved wall built by skilled engineers around 1600 B.C.

A visitor can walk through the gate, passing through two chambers before emerging inside the city. From there it is a short walk to the remains of the city's temple, with a stone stele on an outdoor platform overlooking the houses below.

The identity of the city's residents at the time remains unclear. One theory posits that they were Hyksos, people who came from northern Syria and were later expelled from Egypt. According to the Bible's account, the city was later Canaanite and still later ruled by Israelites, but archaeology has not corroborated that so far, van der Kooij said.

A German team began excavating at the site in 1913, with Nablus under the control of the Ottoman Turks. The dig was interrupted by World War I but resumed afterward, continuing sporadically into the 1930s under British rule. Much of the German documentation of the dig was lost in the Allied bombings of WWII.

American teams dug at the site in the 1950s and 1960s, under Jordanian rule. Israel conquered Nablus, along with the rest of the West Bank, during the Six Day War in 1967.

Over the years, the site fell into disrepair. The neglect was exacerbated after the first Palestinian uprising in the late 1980s, when Nablus became a center for resistance to Israeli control.

Its condition further deteriorated after a second, more violent, uprising erupted in 2000, drawing Israeli military incursions and the imposition of roadblocks and closures that all but cut the city off from the outside world. In recent years, with the Western-backed Palestinian Authority increasingly asserting security control over the cities of the West Bank, Israel has removed some roadblocks and movement has become more free.

Visitors to Nablus are still rare, but the improvements helped convince the archaeologists that the time had come to resume work.

The new excavations and the establishment of the archaeological park are a joint project of the Palestinian Tourism Ministry, the Dutch government and UNESCO. The project began last year and is scheduled to end with the opening of the park in 2012.

In Israel, archaeology, and especially biblical archaeology, has long been a hallowed national pursuit traditionally focused on uncovering the depth of Jewish roots in the land. For the Palestinians, whose Department of Antiquities was founded only 15 years ago, the dig demonstrates a growing interest in uncovering the ancient past.

The department now has 130 workers and carries out several dozen rescue excavations every year on the sites of planned building projects in areas administered by the Palestinian Authority, said Hamdan Taha, the department's director. Ten ongoing research excavations are being conducted with foreign cooperation.

All of the periods in local history, including that of the biblical Israelites, are part of Palestinian history, Taha said.

Digs like the one in Nablus, he said, "give Palestinians the opportunity to participate in writing or rewriting the history of Palestine from its primary sources."


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An honest look at the debt ceiling debate

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Postal Service aims to shut down 3,600 offices

NEW YORK (CNNMoney) -- The U.S. Postal Service on Tuesday will release a list of 3,653 post offices that could be shut down.

These locations will be studied for possible closure, according to U.S. Postal Service spokeswoman Sue Brennan. Most of the post offices that are on the chopping block have "lower foot traffic and revenue," she said, and the majority of them are in smaller communities.

In its release, the Postal Service will also outline what it calls a replacement strategy that will have local post offices partner with third party businesses in those smaller communities to create alternative options.

Such arrangements will likely be put in place place in "communities that have existing businesses, mom and pop shops -- some type of local business that could also provide postal services," Brennan told CNNMoney.

The announcement comes as no surprise. In an ongoing effort to battle fiscal concerns, the money-losing U.S. Postal Service announced plans in January to shut down thousands of stations and branches.

In fiscal year 2010, the Postal Service suffered a $8.5 billion net loss, compared to a loss of $3.8 billion the prior year. Last quarter, the U.S. Postal Service posted a loss of $2.2 billion. Its fiscal year ends in September.


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U.S. debt default could spark derivatives market confusion

NEW YORK: AU.S. debt default could send the derivatives market designed to protect bond investors into confusion because a missed Treasury payment may have been deemed too unlikely to be fully planned for in the contracts.

If the United States does default, investors that sold protection in the form of credit default swaps would theoretically need to pay out around $4.77 billion to buyers, based on outstanding net volumes from the Depository Trust & Clearing Corp.

With lawmakers are facing an Aug. 2 deadline to raise the $14.3 trillion U.S. debt ceiling and avert default, some in the industry now question what constitutes a default and whether CDS payments would occur immediately, or if the government would have time to make up a default.

A key issue is whether a grace period for the United States to cure the debt is associated with the credit default swaps, as is sometimes the case with similar derivatives contracts.

"There does not appear to be clarity about grace periods on Treasuries and we are currently researching this issue," David Green, general counsel at trade association theInternational Swaps and Derivatives Association, told IFR, a Thomson Reuters service.

Some market participants said that as the Treasuries themselves do not specify a grace period, payments would be triggered as soon as a maturity or interest payment is missed.

Others, however, said that in this case alternative rules giving three days grace should be implemented.

With the issue unsolved, market anxiety may be heightened over the U.S. debt talks.

But even though there is no transparency over who has sold U.S. protection, any losses are likely to be contained as the outstanding CDS volumes are far below the more than $9 trillion in marketable Treasuries outstanding.

In return for paying out the insurance, sellers of protection would receive the value of the contract in Treasuries, which even if valued below par are still likely to be worth at least 90 percent of their value, traders said.


Iran Warns Turkey to Butt Out of Syria

Despite the brutal crackdown by the Assad government, the ongoing protests in Syria have the Iranian leadership worried. The survival of the Syrian dictator, Bashar al-Assad, is essential to the dictatorial Islamic regime in Tehran because Syria provides the very gateway to Iran’s expansion of power in the Middle East and its extremist policies against Israeland the United States.

For the past four months, Syrian authorities have killed more than 1,500 people during widespread protests demanding the overthrow of the Assad regime. Neighboring Turkey has denounced the Syrian slaughter. Thousands of fearful residents from the northern regions of Syria have taken refuge in Turkey.

A recent article published in the weekly magazine Sobh’eh Sadegh, one of the Iranian Revolutionary Guards’ media outlets, sternly warned Turkey against its stance on Syria, emphasizing that Iran stands squarely with the Assad regime.

The article, entitled “Iran’s Serious Stance in the Face of Syrian Events,” warned that “Should Turkish officials insist on their contradictory behavior and if they continue on their present path, serious issues are sure to follow. We will be put in the position of having to choose between Turkey and Syria. Syria’s justification in defending herself along with mirroring ideological perceptions would sway Iran toward choosing Syria.”

The article, sanctioned by the Iranian government, made these points:

♦Turkey is gravely mistaken if it believes Syria is on a “one-way path to destruction” and that any dreams it may have to take advantage of the fall of Assad will not happen. “From Iran’s standpoint, the Syrian leadership is in the midst of resolving its problems, and as soon as foreign meddling stops, the Syrians will be able to revert back to ‘normal.’”

♦Turkey can only realize its “ambitions” through an “alliance (with Syria and Iran that) can take over a more extensive part of the region.”

Read more: http://www.foxnews.com/opinion/2011/07/25/iran-warns-turkey-to-butt-out-syria/#ixzz1TDlrmgqr

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Euro crisis spreads – and Italy could be next

Whether you are on a Greek island, the Spanish coast, the Algarve or even driving through France, you will see the effects that bailing out over-borrowed governments is having; buildings half-built, people out of work, rising prices and the odd riot. But for the best, and perhaps most dangerous view of Europe's future, the place to be is in Italy.

Here the crisis is deepening, and unless the contagion is halted, economists warn the single currency could crumble. "The dominos are falling one after another," says Jacques Cailloux, an economist at Royal Bank of Scotland. Spain risks following Portugal, Ireland and Greece, whose government debts have been downgraded to junk level, he warns.

"The correlation of Italy to Spain has picked up recently. There are also some emerging signs that France could be affected. We expect the crisis to continue deteriorating and threaten the entire euro area."

So far only Europe's peripheral countries have faced difficulties refinancing their debt. But Italy is a core nation – the third biggest economy in the eurozone, in the world's top 10 economies and has similar population size to Britain and France. To bail out a country that large would require huge contributions from the dwindling list of governments still able to afford payments. James Carrick, an economist at Legal & General, says: "While it is common to split the euro area into two camps – core vs periphery – one large core member appears fragile. Like Spain, Italy is vulnerable to a vicious circle of cost cuts."

The EU, IMF and European Central Bank, together with governments and national banks, are seeking ways to arrest the crisis before it engulfs Italy and extends northwards. But despite Rome's parliament agreeing a ¤40bn austerity package on Friday, Cailloux says rows between the different factions are making a bad situation worse.

The IMF last week publicly criticised the ECB for its lateness in lending more to Greece. The two bodies disagree on whether private lenders should accept losses and on whether Greek bonds are acceptable collateral. Germany's Bundesbank is critical of the IMF's policy and some EU governments are reluctant to boost the bailout fund. A planned weekend meeting of eurozone ministers was cancelled because of lack of agreement.

The Italian finance minister Giulio Tremonti is in open war with his Prime Minister, Silvio Berlusconi. After returning early from Brussels to handle last week's crisis, Tremonti declared: "If I fall, so falls Italy. If Italy falls, so does the euro."

Cailloux warns: "Policymakers show no sign of catching up with reality. A euro-wide policy response is required to address the powerful contagion channels that are threatening the stability of the whole region. There are solutions available but the cost is rising with mishandling."

Euro group ministers last week agreed to make the planned ¤440bn bailout fund more flexible but Cailloux says the cost of rescue will actually be ¤2,000bn. That would mean increasing the guarantees from governments to between ¤3,000bn and ¤3,450bn – far more than the annual gross domestic product of even the euro's strongest member, Germany.

The cost of such a fund would be put both political and financial strains on Europe's richer countries, but it would also mean seeking impossible contributions from countries such as Spain that are seen as recipients of funds rather than donors.

The European Financial Stability Fund has already committed ¤17.7bn to Ireland and ¤26bn to Portugal, but Cailloux estimates further bailouts to those countries and Greece could cost another ¤60bn. And, he warns: "Spain, in our view, is a ¤350bn affair while Italy could be as much as ¤600bn. It is pretty clear in our view that neither the size of the EFSF nor that of the European Stability Mechanism seems adequate for the current situation.

"These institutions' lending capacity needs to grow rapidly and substantially. It is necessary that the size is scaled up to allow a lending capacity of around ¤2trn to deal once and for all with the uncertainty surrounding the capacity of Europe to support its member countries. It is unlikely that the IMF financial contribution could be scaled up on the same terms as was initially agreed as this would be too onerous. Europe would likely need to go it alone on this."

The enlarged rescue fund could cost Germany an extra ¤727bn – more than a quarter of its annual domestic product – on top of its existing ¤212bn of guarantees. A country that entered the financial crisis in surplus would thus have debt of 110 per cent of its GDP, making it as bad as Italy. France could see its maximum liability soar from ¤159bn to ¤705bn, giving it a 112 per cent debt/GDP ratio.

Such contributions would threaten the credit ratings of not only France but Germany and the Netherlands too. "This eventuality makes all Euro group bonds, except Germany, speculative investments," says Cailloux

The Independent


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Boehner: Obama created the "crisis" atmosphere

Boehner debt ceiling speech

House Speaker John Boehner accused President Obama Monday night of creating a "crisis atmosphere" in negotiations over increasing the debt limit, saying that if the president will simply sign House legislation to increase the debt limit that atmosphere "will simply disappear."

Boehner made his remarks following a prime time address by Mr. Obama, who he suggested "wanted a blank check six months ago, and he wants a blank check today."
"That is just not going to happen," Boehner said.


New-Home Sales Unexpectedly Fell for 2nd Month

Sales of new U.S. homes unexpectedly declined for a second month in June, indicating housing is still languishing two years into the economic recovery.

Purchases dropped 1 percent to a 312,000 annual pace, a three-month low, figures from the Commerce Department showed today in Washington. The median estimate in a Bloomberg News survey of economists called for a 320,000 rate. The median selling price of a new home rose from a year earlier, while inventories fell to the lowest on record.

Builders have little incentive to start projects as the prospect of more distressed properties entering the foreclosure pipeline depresses home values. The figures underscore Federal Reserve Chairman Ben S. Bernanke’s comments that demand for homes has been held back by slow job growth and restrained consumer optimism.

“You’re still dealing with a supply-demand imbalance that suggests home prices will remain under pressure,” Tom Porcelli, chief U.S. economist at RBC Capital Markets Corp. in New York, who forecast June sales at a 310,000 pace. “As unemployment stays high, it will be difficult to generate meaningful gains in home sales.”

Confidence among U.S. consumers unexpectedly rose in July from an eight-month low, led by a rebound in the outlook for jobs over the next six months. The Conference Board’s index climbed to 59.5 from a revised 57.6 reading in June.

Stocks held earlier losses after the reports, with the Standard & Poor’s 500 Index falling 0.4 percent to 1,332.78 at 10:16 a.m. in New York. Treasuries rose, pushing down the yield on the benchmark 10-year note to 2.98 percent from 3 percent late yesterday.
Economists’ Projections

Estimates of the 72 economists surveyed by Bloomberg ranged from annual rates of 300,000 to 342,000. Sales in May were revised down from a previously estimated 319,000 pace. Some 323,000 new dwellings were sold in 2010, the fewest on record.



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Schiff responds to Timothy Geithnner

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Terrorist proclaimed himself 'Darwinian,' not 'Christian'

WASHINGTON – A review of Anders Behring Breivik's 1,500-page manifesto shows the media's quick characterization of the Norwegian terrorist as a "Christian" may be as incorrect as it was to call Oklahoma City bomber Timothy McVeigh one.

Breivik was arrested over the weekend, charged with a pair of brutal attacks in and near Oslo, Norway, including a bombing in the capital city that killed 7 and a shooting spree at a youth political retreat on the island of Utoya that killed more than 80 victims.

Piecing together Breivik's various posts on the Internet, many media reports have characterized the terrorist – who says he was upset over the multiculturalist policies stemming from Norway's Labour Party – as a "right-wing, Christian fundamentalist."

Yet, while McVeigh rejected God altogether, Breivik writes in his manifesto that he is not religious, has doubts about God's existence, does not pray, but does assert the primacy of Europe's "Christian culture" as well as his own pagan Nordic culture.

Breivik instead hails Charles Darwin, whose evolutionary theories stand in contrast to the claims of the Bible, and affirms: "As for the Church and science, it is essential that science takes an undisputed precedence over biblical teachings. Europe has always been the cradle of science, and it must always continue to be that way. Regarding my personal relationship with God, I guess I'm not an excessively religious man. I am first and foremost a man of logic. However, I am a supporter of a monocultural Christian Europe."

The terrorist also candidly admits he finds no support within either the Catholic or Protestant churches for his violent ideas.

"I trust that the future leadership of a European cultural conservative hegemony in Europe will ensure that the current Church leadership are replaced and the systems somewhat reformed," he writes. "We must have a Church leadership who supports a future Crusade with the intention of liberating the Balkans, Anatolia and creating three Christian states in the Middle East. Efforts should be made to facilitate the de-construction of the Protestant Church whose members should convert back to Catholicism. The Protestant Church had an important role once, but its original goals have been accomplished and have contributed to reform the Catholic Church as well. Europe should have a united Church lead [sic] by a just and non-suicidal pope who is willing to fight for the security of his subjects, especially in regards to Islamic atrocities."

While Breivik says he considers himself "100-percent Christian," he also expresses pride in his genealogical roots.

"I am very proud of my Viking heritage," he writes. "My name, Breivik, is a location name from northern Norway, and can be dated back to even before the Viking era. Behring is a pre-Christian Germanic name, which is derived from Behr, the Germanic word for Bear (or 'those who are protected by the bear')."

And while characterizing himself as "Christian" and "Protestant," Breivik says he supports "a reformation of Protestantism leading to it being absorbed by Catholisism." [sic]

Likewise, media reports frequently characterized McVeigh as a "Christian," though he adamantly denied any religious beliefs or convictions – placing his faith in science.

Breivik adds, "I went from moderately agnostic to moderately religious."

In a question-and-answer section of his manifesto, Breivik asks himself, "What should be our civilisational [sic] objectives, how do you envision a perfect Europe?"

His answer is hardly the response of a "Christian utopian": "'Logic' and rationalist thought (a certain degree of national Darwinism) should be the fundament [sic] of our societies. I support the propagation of collective rational thought but not necessarily on a personal level."

Religious worship and study is never noted in the manifesto as part of Breivik's routine in preparing for his mission of mass murder. In discussing his preparation for the attack, he writes: "It has been a long-term process since I first decided I wanted to contribute. But it's not like I have been isolated for years. I have almost lived a normal life up until now. I still have a close relationship with my friends and family, just not as tight as it used to be. As for my current situation, I have been working on this book now for almost two years. It's essential that you reward yourself and enjoy life in this period. You can do things you normally wouldn't have done. You can basically live a normal life if you chose to; you just have to be extra careful. I have been practising [sic] certain rituals and meditation to strengthen my beliefs and convictions. For me, the most common ritual is taking a long walk listening to my favourite [sic] music on my iPod."

Breivik also points out that his association with Christian cultural values is one of political expedience rather than religious commitment or faith

"My choice has nothing to do with the fact that I am not proud of my own traditions and heritage," he explains. "My choice was based purely pragmatism. All Europeans are in this boat together, so we must choose a more moderate platform that can appeal to a great number of Europeans – preferably up to 50 percent (realistically up to 35 percent)."

Breivik also claims membership in the Freemasons, which many Christians consider to be a cultic organization.

More specifically, he calls himself a Justiciar Knight and explains what that means insofar as belief in Christianity:

"As this is a cultural war, our definition of being a Christian does not necessarily constitute that you are required to have a personal relationship with God or Jesus," he writes. "Being a Christian can mean many things; That you believe in and want to protect Europe's Christian cultural heritage. The European cultural heritage, our norms (moral codes and social structures included), our traditions and our modern political systems are based on Christianity – Protestantism, Catholicism, Orthodox Christianity and the legacy of the European enlightenment (reason is the primary source and legitimacy for authority). It is not required that you have a personal relationship with God or Jesus in order to fight for our Christian cultural heritage and the European way. In many ways, our modern societies and European secularism is a result of European Christendom and the enlightenment. It is therefore essential to understand the difference between a 'Christian fundamentalist theocracy' (everything we do not want) and a secular European society based on our Christian cultural heritage (what we do want). So no, you don't need to have a personal relationship with God or Jesus to fight for our Christian cultural heritage. It is enough that you are a Christian-agnostic or a Christian atheist (an atheist who wants to preserve at least the basics of the European Christian cultural legacy (Christian holidays, Christmas and Easter)). The PCCTS, Knights Templar is therefore not a religious organisation [sic] but rather a Christian 'culturalist' military order."

Over and over again, Breivik goes out of his way to make clear to readers of his manifesto that he is not motivated by Christian faith.

"I'm not going to pretend I'm a very religious person, as that would be a lie," he says. "I've always been very pragmatic and influenced by my secular surroundings and environment. In the past, I remember I used to think: 'Religion is a crutch for weak people. What is the point in believing in a higher power if you have confidence in yourself!? Pathetic.' Perhaps this is true for many cases. Religion is a crutch for many weak people, and many embrace religion for self-serving reasons as a source for drawing mental strength (to feed their weak emotional state [for] example during illness, death, poverty etc.). Since I am not a hypocrite, I'll say directly that this is my agenda as well. However, I have not yet felt the need to ask God for strength, yet."

Read more:Terrorist proclaimed himself 'Darwinian,' not 'Christian'http://www.wnd.com/?pageId=325765#ixzz1TBGvnr5l

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Who owns America? Hint: It's not China

China yuan dollar 2011 04 27
Many people — politicians and pundits alike — prattle on that China and, to a lesser extent Japan, own most of America's $14.3 trillion in government debt.

But there's one little problem with that conventional wisdom: it's just not true. While the Chinese, Japanese and plenty of other foreigners own substantial amounts, it's really Americans who hold most of America's debt.

Here's a quick and fascinating breakdown by total amount held and percentage of total U.S. debt, according to Business Insider:

Hong Kong: $121.9 billion (0.9 percent)
Caribbean banking centers: $148.3 (1 percent)
Taiwan: $153.4 billion (1.1 percent)
Brazil: $211.4 billion (1.5 percent)
Oil exporting countries: $229.8 billion (1.6 percent)
Mutual funds: $300.5 billion (2 percent)
Commercial banks: $301.8 billion (2.1 percent)
State, local and federal retirement funds: $320.9 billion (2.2 percent)
Money market mutual funds: $337.7 billion (2.4 percent)
United Kingdom: $346.5 billion (2.4 percent)
Private pension funds: $504.7 billion (3.5 percent)
State and local governments: $506.1 billion (3.5 percent)
Japan: $912.4 billion (6.4 percent)
U.S. households: $959.4 billion (6.6 percent)
China: $1.16 trillion (8 percent)
The U.S. Treasury: $1.63 trillion (11.3 percent)
Social Security trust fund: $2.67 trillion (19 percent)

So America owes foreigners about $4.5 trillion in debt. But America owes America $9.8 trillion.
For a smart take on how President Obama and House Republicans should end gridlock over debt and deficits,see our new GlobalPost series The Negotiator, which features Wharton's negotiation guru Stuart Diamond.

And to bone up on China's debt — another potentially big global economic headache — check out this interviewwith brainy-yet-coherent Northwestern University economist Victor Shih, who spoke with GlobalPost's David Case.

Global Post

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Here is your dose of debt

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World stocks fall as US debt deadlock continues

BEIJING (AP) - World stock markets were lower Monday after U.S. political leaders failed to reach a deal to raise Washington's debt limit and avoid a default.

Oil prices fell to near $99 a barrel in Asia amid investor concern the lack of a debt agreement might damage the world's biggest economy and reduce demand for crude.

Investors were not reassured by Secretary of State Hillary Rodham Clinton's assertion that America's economy is sound despite its current woes and the deadlock over the national debt.

Speaking in Hong Kong, Clinton predicted a debt deal would be reached before the Aug. 2 deadline to avoid an unprecedented default. She said the partisan debate over the debt ceiling was a fact of life in American politics.

In Europe, France's CAC-40 was down 0.3 percent at 3,380.76 and Germany's DAX was off 0.1 percent at 7,321.78. London's FTSE was little changed at 5,934.15.

Futures augured losses on Wall Street. S&P 500 futures dropped 0.7 percent to 1,331.40 and Dow futures fell 0.7 percent to 12,532.

Japan's Nikkei 225 closed down 0.8 percent at 10,050.01. China's Shanghai Composite Index slid 3 percent to 2,688.75 after a weekend bullet train collision killed 38 people. Hong Kong's Hang Seng Index lost 0.7 percent to 22,293.29.

Elsewhere, South Korea's Kospi shed 1 percent to 2,150.48 and Australia's S&P/ASX 200 dropped 1.6 percent to 4,530.40. Markets in Singapore, Taiwan and Indonesia also fell while India and Thailand gained.

"The only thing you can be assured of over the coming hours and days is volatility as the political posturing continues in the U.S.," said Ben Potter, market strategist for IG Markets, in a report.

U.S. leaders had hoped to strike a deal Sunday to reassure investors. President Barack Obama has insisted on raising revenues, mainly through letting tax cuts for wealthier Americans expire, but Republicans want more spending cuts and have rejected higher taxes.

A default would mean the U.S. government could not pay all its bills starting next month, including interest and principal on Treasury bonds. That would cause shockwaves through the global economy and financial markets.

Many analysts expect U.S. leaders to reach a last-minute deal to raise the government's $14.3 trillion borrowing limit before the Aug. 2 deadline. But markets are watching anxiously for what tax or spending changes might be part of the settlement.

Chinese shares suffered their biggest one-day loss in six months as railway-related shares plunged after this weekend's deadly bullet train crash that raised doubts about rapid expansion of the high-speed rail network. Producers of cement and water conservation technology also suffered.

China South Locomotive and Rolling Stock Corp. declined 8.9 percent and Gem Year Industrial Co. Ltd., a maker of fasteners used by the railway industry, fell by the daily 10 percent limit.

"Investors might be affected by the accident and prefer to watch the market. Also, many people are wondering whether such quick economic development is correct," said Yang Yining, an analyst at Capital-Edge Investment & Management Co. in Shanghai.

The dollar fell to 78.18 from 78.43 late Friday in New York. The euro was little changed at $1.4374


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