Missile maker says Russia did not shoot down Malaysian plane over Ukraine

The Russian company that makes the BUK air defense system that was used to shoot down a Malaysian airliner in east Ukraine said on Tuesday the plane was hit by a missile deployed by Ukraine and not widely used by Russia's military.

State-run Almaz-Antey said its own analysis of the wreckage of the Malaysia Airlines plane brought down on July 17 last year, killing 298 people, indicated it was hit by a BUK 9M38M1 surface-to-air missile armed with a 9H314M warhead.

Shrapnel holes in the plane were consistent with that kind of missile and warhead, it said.

Such missiles have not been produced in Russia since 1999 and the last ones were delivered to foreign customers, it said, adding that the Russian armed forces now mainly use a 9M317M warhead with the BUK system.

"Neither the company nor its enterprises could have supplied these rockets in the 21st century," Almaz-Antey's chief executive, Yan Novikov, told a news conference run by the Kremlin press service at which the company used 3D visuals and computer animation.

After a company presentation translated simultaneously into three languages, he said Ukraine's armed forces had still had nearly 1,000 such missiles in its arsenal in 2005, when it held talks with Almaz-Antey on prolonging their lifespan.

Criticizing sanctions imposed on Almaz-Antey by the European Union, he said: "The corporation was not involved in the Malaysian Boeing catastrophe. Correspondingly, the economic sanctions applied to the corporation for that are ... unjust."

When it imposed the sanctions on Almaz-Antey, the EU said the firm produced anti-aircraft weaponry which the Russian authorities have supplied to pro-Russian separatists fighting Kiev's forces in east Ukraine.

Moscow is trying to deflect blame for the shooting down of the airliner and denies sending arms and soldiers to support the rebels, though the West and Kiev say they have overwhelming proof of the latter.

Russian officials initially said flight MH17 was shot down by a Ukrainian fighter jet but that version was widely ridiculed abroad. They now say it was probably hit by a missile fired from the ground by Ukrainian forces.

Ukraine has denied its forces shot the plane down.

Dutch investigators who are leading an international investigation say their "leading scenario" is that it was hit by a Russian-made BUK.

(Editing by Timothy Heritage)

Russia threatens to aim nuclear missiles at Denmark ships if it joins NATO shield

(GNN) - Russia threatened to aim nuclear missiles at Danish warships if Denmark joins NATO's missile defense system, in comments Copenhagen called unacceptable and NATO said would not contribute to peace.

Denmark said in August it would contribute radar capacity on some of its warships to the missile shield, which the Western alliance says is designed to protect members from missile launches from countries like Iran.

Moscow opposes the system, arguing that it could reduce the effectiveness of its own nuclear arsenal, leading to a new Cold War-style arms race.

In an interview in the newspaper Jyllands-Posten, the Russian ambassador to Denmark, Mikhail Vanin, said he did not think Danes fully understood the consequences of joining the program.

"If that happens, Danish warships will be targets for Russian nuclear missiles," Vanin told the newspaper.

Asked to respond, NATO spokeswoman Oana Lungescu said Denmark was a staunch member of the alliance and NATO would defend all allies against any threat.

"We have made clear that NATO's ballistic missile defense is not directed at Russia or any country, but is meant to defend against missile threats. This decision was taken a long time ago, so we are surprised at the timing, tone and content of the statements made by Russia's ambassador to Denmark," she said.

"Such statements do not inspire confidence or contribute to predictability, peace or stability," she added.

Tensions between Moscow and the West have grown since the imposition of economic sanctions on Russia over a pro-Russian rebellion in eastern Ukraine. NATO has recorded increased activity by the Russian navy and air force in the Nordic region.

No missiles are to be placed on Danish soil under the NATO program, but they could be deployed some day in Greenland, a part of the kingdom, according to Jyllands-Posten.

"Denmark will become a part of the threat against Russia. It will be less peaceful, and relations with Russia will be damaged," Vanin said, adding that Russia has missiles which would be able to penetrate the future missile shield.

Denmark's foreign minister Martin Lidegaard said Vanin's comments were unacceptable.

"Russia knows very well that NATO's missile defense is not aimed at them," Lidegaard told Jyllands-Posten.

NATO's top military commander, U.S. Air Force General Philip Breedlove, told a Brussels conference on Sunday that the comments from the Russian ambassador were the "next step" in a campaign against countries that joined the shield.

"Romania came under great pressure when they became a part of the (missile shield). Poland is coming under great pressure and now anyone else who wants to join in to this defensive capability will come under this diplomatic and political pressure," Breedlove said.

(Reuters)(Reporting by Teis Jensen, additional reporting by Adrian Croft in Brussels; Editing by Peter Graff)

Qatar Airways takes $1.7 billion stake in British Airways: owner IAG

(AsiaTimes.ga) - Qatar Airways has bought a stake worth about 1.15 billion pounds ($1.7 billion) in the owner of British Airways and Iberia, aiming to forge closer links to a group with two major European hubs and strong transatlantic networks.

The Gulf airline, which disclosed a 9.99 percent holding on Friday, already partners International Consolidated Airlines Group (IAG) (ICAG.L) in the oneworld alliance and has limited code-sharing deals and a freight partnership with BA.

Buying the stake could deepen the relationship, giving Qatar greater access to destinations served by IAG's London and Madrid hubs, particularly transatlantic, with North America well served by British Airways and South and Central America by Iberia.

On IAG's part, the tie-up will create opportunities in southeast Asia, India and the Middle East, where Qatar has an extensive network, while also giving it a wealthy long-term backer whose support could be useful in funding future growth.

Neither party said whether IAG had been aware Qatar was building the stake and did not say who the shares had been bought from, or when. But IAG Chief Executive Willie Walsh said he was "delighted" to have the airline as a supportive shareholder.

Qatar's national airline, which has more than 130 aircraft and 340 on order, said it may consider increasing its stake over time, although it was not currently intending to increase it from 9.99 percent.

Non-European shareholders of IAG are subject to a cap because of a requirement for EU airlines to be majority controlled by EU shareholders.

Owned by the country's sovereign wealth fund, Qatar Airways has become a major global carrier alongside regional rivals Emirates and Etihad Airways.

All three have used huge capacity at Middle East hubs to challenge European airlines in the long-haul market. Qatar's visibility in Europe has been strengthened by a sponsorship deal with Spanish soccer club Barcelona.

Owing to their geographic position, however, the carriers have struggled to make a mark on routes to North America.

GREATER ACCESS

Jonathan Wober, an analyst at CAPA-Centre for Aviation, said Qatar would gain greater access to destinations west of Qatar, particularly across the Atlantic. "For IAG, if the relationship works, then it could give them an advantage over Air-France-KLM (AIRF.PA) and Lufthansa LHAF.DE."

Mark Irvine-Fortescue, an analyst at brokerage Jefferies, said: "This strategy ... should in time improve IAG's structural and competitive positioning."

Shares in IAG, which have risen 44 percent in the last three months, jumped to 590 pence in early trade, their highest since the group was formed four years ago, before giving up those gains to trade down 1.2 percent at 1408 GMT (9:08 a.m ET).

"Qatar has been building up this stake gradually, so it would not be the sort of move to give the stock much further impetus on the back of the massive run-up IAG has had as the oil price has fallen through the floor," said Dafydd Davies, a partner at Charles Hanover Investments.

Before buying the stake, Qatar Airways' growth strategy had centered on building up its fleet and joining oneworld in 2013, becoming the first Gulf carrier to enter a global alliance, which allows airlines to team up via code-sharing agreements to boost the number of flights they offer.

Etihad Airways has bought minority stakes in airlines including Air Berlin, Aer Lingus and Virgin Australia and is buying 49 percent of Alitalia.

Qatar Airways' parent sovereign wealth fund has invested in a range of European assets, including winning a deal to buy the Canary Wharf business district on Friday. It also has a 20 percent holding in Heathrow Airport, BA's London hub.

Heathrow is full to capacity and IAG is trying to buy Ireland's Aer Lingus (AERL.I) for $1.5 billion, a deal that will increase its take-off and landing slots at the airport.

(GA, Reuters, ATimes)(Additional reporting by David French and Sudip Kar-Gupta; Editing by Kate Holton and David Holmes)

Japan's Abe pledges support for Mideast countries battling IS

(AsiaTimes.ga) - Japanese Prime Minister Shinzo Abe warned on Saturday that the world would suffer an "immeasurable loss" if terrorism spreads in the Middle East and pledged about $200 million in non-military assistance for countries battling Islamic State.

The threat of Islamist militancy has come into sharp focus outside the Middle East after gunmen killed 17 people in three days of violence in Paris that began on Jan. 7 with an attack on the offices of a newspaper that had published satirical images of the Prophet Mohammad.

Islamic State controls large parts of OPEC oil producer Iraq and neighboring Syria, has declared a caliphate and wants to redraw the map of a region vital for Japan's energy needs.

"It goes without saying that the stability of the Middle East is the foundation for peace and prosperity for the world, and of course for Japan," Abe said in Cairo in the first leg of a regional tour.

"Should we leave terrorism or weapons of mass destruction to spread in this region, the loss imparted upon the international community would be immeasurable."

Highlighting his concern, Abe told a meeting of the Japan-Egypt Business Committee that Tokyo would provide non-military financial backing for countries fighting the al-Qaeda breakaway group, also known as ISIL.

"I will pledge assistance of a total of about 200 million U.S. dollars for those countries contending with ISIL, to help build their human capacities, infrastructure, and so on," said Abe.

Stability has remained elusive in the Middle East since the Arab Spring uprisings toppled veteran autocrats and raised hopes of democracy and economic prosperity.

"There is no shortcut to nipping violence in the bud. There is no way other than bringing stability to people's livelihoods and fostering a middle class, even if it takes time," Abe said.

'GREAT POSSIBILITIES'
In addition to the $2.2 billion in assistance Japan pledged for the Middle East two years ago, Abe said his government would provide another $2.5 billion in non-military assistance in fields such as humanitarian assistance and infrastructure.

"The Middle East ... that's the region endowed with great possibilities," said Abe, whose tour will also include Jordan, the Palestinian territories, Lebanon and Turkey.

"And yet now it appears to be no exaggeration to say that the region is exposed to a challenge that is among the most serious in its modern history."

The Japanese leader stressed the need for economic growth in the Middle East, where militants often try to exploit frustrations with issues such as unemployment and neglected schools to gain recruits.

Security crackdowns alone have failed to defeat militancy in Egypt, the most populous Arab country, and other states as well.

Japan will provide Egypt with $360 million in loans for projects including an airport and a power grid in a country suffering from an energy crisis, Abe said.

"These are intended to contribute to Egypt's development, and by extension, to widening the foundation for stability across the entire region," he added.

Aside from tackling Islamic State, the region and Western leaders also face the daunting task of securing serious progress on the Israeli and Palestinian front.

"Japan believes that the day will come in the near future when we can recognize Palestine as a state," said Abe.

"In order for that day to arrive sooner, we will appeal to both Israel and Palestine to resume negotiations to advance the so-called two-state solution."

(Writing by Michael Georgy; Editing by Pravin Char)(GA, Reuters, Asia Times)

Search teams battle rough weather in hunt for AirAsia wreck

GNN - Ships and aircraft criss-crossed the seas off Borneo on Friday hunting for the wreck of an Indonesia AirAsia passenger jet, but bad weather again hindered the search for the plane and the black box flight recorders that should reveal why it crashed.

An official said 30 bodies had been recovered, along with pieces of the broken-up plane, in the Indonesian-led search for Flight QZ8501 that is concentrated on 1,575 square nautical miles of the northern Java Sea.

Strong winds and heavy seas have stopped divers from looking for the fuselage of the Airbus A320-200, which plunged into the water on Sunday while en route from Indonesia's second-biggest city Surabaya to Singapore with 162 people on board.

"Waves were between 3 and 4 meters today, making it difficult to load bodies onto ships and between ships," Fransiskus Bambang Soelistyo, head of Indonesia's search and rescue agency, told reporters in Jakarta, adding that some vessels would search through the night.

"Tonight we are sending tug boats which should make the (body) transfers easier."

He said two of the 30 bodies found were strapped to their plane seats.

The multinational search operation based in Pangkalan Bun, the town in southern Borneo closest to the search area, was bolstered on Friday by experts from France's BEA accident investigation agency, which attends all Airbus crashes.

Officials said the French team's hydrophones - sophisticated underwater acoustic detection devices - and towed sonar equipment brought by other international experts could not be used on Friday because of high waves.

But naval vessels from Indonesia, the United States and Singapore with in-built anti-submarine capabilities were using sonar to sweep the sea floor.

STALL THEORY
The cause of the crash, the first suffered by the AirAsia group since the budget operator began flying in 2002, is unexplained. Investigators are working on a theory that the plane stalled as it climbed steeply to avoid a storm about 40 minutes into a flight that should have lasted two hours.

Officials earlier said it may take up to a week to find the black boxes, which investigators hope will unravel the sequence of events in the cockpit during the doomed jet's final minutes.

"After the black box is found, we are able to issue a preliminary report in one month," said Toos Sanitioso, an investigator with the National Committee for Transportation Safety. "We cannot yet speculate what caused the crash."

Even in bad weather, the search for the AirAsia plane is less technically challenging than the two-year search for an Air France jet that crashed into deep Atlantic waters in 2009, or the fruitless hunt for Malaysia Airlines Flight MH370 that disappeared last year.

Given Flight QZ8501 crashed in shallow seas, experts say finding the boxes should not be difficult if its locator beacons, with a range of 2,000 to 3,000 meters (6,560 to 9,800 ft) and a battery life of about 30 days, are working.

Bodies plucked from the sea are being taken in numbered coffins to Surabaya, where relatives of the victims, most of whom were Indonesian, have gathered. Authorities have been collecting DNA from relatives to help identify the bodies.

The first funeral of one of the crash victims was held on Thursday, and on Friday officials said the remains of three more had been identified, including a flight attendant.

AirAsia boss Tony Fernandes tweeted that he would accompany the body of one victim home from Surabaya.

"I'm arriving in Surabaya to take Nisa home to Palembang," he wrote. "I cannot describe how I feel. There are no words."

"UNBELIEVABLY" STEEP CLIMB
The plane was traveling at 32,000 ft (9,753 meters) and the pilots had asked to climb to 38,000 ft to avoid bad weather just before contact was lost. When air traffic controllers granted permission to fly at 34,000 ft a few minutes later, they got no response.

A source close to the investigation said radar data appeared to show the aircraft made an "unbelievably" steep climb before it crashed, possibly pushing it beyond the A320's limits.

Hadi Mustofa Djuraid, a Transport Ministry official, told reporters that authorities were investigating the possibility that the pilot did not ask for a weather report from the meteorological agency at the time of takeoff.

He added that pilots were required to do so before flying.

Indonesia AirAsia's president director, Sunu Widyatmoko, said in a text message: "We will make a release shortly" on that aspect of the investigation.

The Indonesian captain, a former air force fighter pilot, had 6,100 flying hours on the A320 and the plane last underwent maintenance in mid-November, according to Indonesia AirAsia, 49 percent owned by Malaysia-based AirAsia.

Three airline disasters involving Malaysian-affiliated planes in under a year have spooked travelers.

Malaysia Airlines Flight MH370 disappeared in March en route from Kuala Lumpur to Beijing with 239 passengers and crew and has not been found. On July 17, the same airline's Flight MH17 was shot down over Ukraine, killing all 298 people on board.

On board Flight QZ8501 were 155 Indonesians, three South Koreans, and one person each from Singapore, Malaysia and Britain. The co-pilot was French.

(Additional reporting by Cindy Silviana, Kanupriya Kapoor, Michael Taylor, Adriana Nina Kusuma, Charlotte Greenfield, Nilufar Rizki, Nicholas Owen in JAKARTA, Jane Wardell in SYDNEY and Anshuman Daga in SINGAPORE; Writing by Jane Wardell and Alex Richardson; Editing by Michael Perry, Paul Tait, Robert Birsel, Mike Collett-White)

(Reuters) (GNN-AIP)

China cuts interest rates to spur growth, ease debt pressure

GNN Economic News - China cut interest rates unexpectedly on Friday, stepping up efforts to support the world's second-biggest economy as it heads toward its slowest expansion in nearly a quarter of a century, saddled under a mountain of debt.

But the central bank, keen to show it was not back-tracking on economic reforms, twinned the move with a slight liberalization of the rates banks pay to borrowers in a bid to ensure millions of savers do not see their incomes hit.

Beijing's first rate cut in more than two years comes as factory growth stalls and the property market, long a pillar of growth, is weak, dragging on broader activity and curbing demand for everything from furniture to cement and steel.

Many companies have also been struggling with debt, as slowing sales crimp their ability to pay back loans racked up in a nationwide frenzy of borrowing from 2008-2010 when Beijing used economic stimulus to offset the effects of the global financial crisis.

"It will obviously reduce financing pressures for bank borrowers. Typically those are larger companies, state-owned companies, so they're the main beneficiaries of this," said Mark Williams, chief Asia economist at Capital Economics in London.

The People's Bank of China (PBOC) said it was cutting one-year benchmark lending rates by 40 basis points to 5.6 percent. It lowered one-year benchmark deposit rates by 25 basis points to 2.75 percent. The changes take effect from Saturday.

European shares and other growth-sensitive commodities all leapt as China's move to cut rates gave markets a welcome lift after a week where data has shown its giant economy faltering.

While the move acknowledged the risks to growth and marks a stepped-up effort to ensure the economy stays on track even as it is expected to slow to a 24-year low of 7.4 percent this year, the central bank took pains to signal that it was not simply moving toward a looser monetary stance.

In a break with earlier practice, it issued a long statement accompanying the announcement explaining the rationale for the policy step, which included giving banks more leeway in setting their own interest rates for depositors and borrowers.

"The problem of difficult financing, costly financing remains glaring in the real economy," the PBOC said, adding that it was especially keen to help smaller firms gain access to credit.

For one-year deposits, banks may now pay depositors 1.2 times the benchmark level, up from 1.1 times previously. It also scrapped limits on interest rates for long-term deposits of five years, and simplified its system of benchmark rates for loans.

LIMITING THE IMPACT

"They are cutting rates and liberalizing rates at the same time so that the stimulus won't be so damaging," said Li Huiyong, an economist at Shenyin and Wanguo Securities.

Recent data showed bank lending tumbled in October and money supply growth cooled, raising fears of a sharper economic slowdown and prompting calls for more stimulus measures, including cutting interest rates.

But many analysts had expected the central bank to hold off on cutting interest rates for now, as authorities have opted instead for measures like more fiscal spending.

The jury is still out on how much the rate cut will actually prompt more lending. The PBOC uses other levers such as reserve requirement ratios to limit the amount of cash banks have on hand to lend out.

However, even simply reducing the debt burden on companies will ease the pressure on many, which could help avert one of the biggest potential risks to the economy - that of bad loans leading to a debt crisis.

While the asymmetrical cut in interest rates - the fall in the lending rate is more than that in the deposit rate - will shave banks' net interest margins, many of the country's lenders appear to be in a position to weather that challenge.

Net interest income after loan-loss provisions at Agricultural Bank of China (601288.SS) (1288.HK), China Construction Bank (601939.SS) (0939.HK) and Industrial and Commercial Bank of China (601398.SS) (1398.HK) grew by 12 percent or more during the first nine months of the year, compared with a year earlier.

China's rate move comes after the Bank of Japan sprang a surprise on Oct. 31 by dramatically increasing the pace of its money creation, while European Central Bank President Mario Draghi shifted gear on Friday and threw the door wide open to quantitative easing in the euro zone.

"There is definitely more concern around about the state of the global economy than there was a few months ago, you see that not just when you talk about Europe," British finance minister George Osborne told an audience of business leaders in London on Friday.

(This version of the story was refiled to fix wording in second paragraph)

(GNN, Reuters, Aip)(Additional reporting by Jake Spring and Matthew Miller; Editing by Jacqueline Wong, Kim Coghill and Mike Collett-White)

Lockheed sees buyer for hybrid cargo airship in 2015

GNN - Lockheed Martin Corp (LMT.N) expects to reach an agreement next year with a launch customer for a giant new hybrid airship that would revolutionize the way oil and mining companies haul equipment to the Arctic and other remote areas without roads.

The initial version of the airship, filled mostly with helium, would carry 20 tons of cargo, but could easily be scaled to roughly the size of a football field with 500 tons of capacity, Robert Boyd, an engineer with Lockheed's Skunk Works R&D house, told Reuters in a rare media visit to the sprawling facility some 60 miles from Los Angeles.

Boyd, who started working on airships in 1991, said he was optimistic about finding an initial customer for the manned prototype airship, also known as P-791, next year, nearly a decade after the airship's first flight in 2006.

"We're months away, not days, not years," Boyd told Reuters. "By 2015, we'll be out there on the development track ... By 2018, we should see these in operation."

Lockheed is the Pentagon's No. 1 supplier, but it is targeting a commercial market for the slow-moving airships that have four hovercraft-like landing pads and can set down on nearly any flat surface, including sand, snow and even water.

"It's not the most sexy of airplanes, but it does its job," Boyd said.

Initial buyers would likely include small airlines or other firms that ship cargo to remote areas for oil, gas or mining companies, he said. He said the aircraft were also very safe because they are filled with helium, which does not burn.

He said climate change might boost demand with warmer conditions cutting the time that ice roads could be used.

The airships could help countries like Indonesia develop remote territories that lack ports, and could prove useful in providing relief supplies during natural disasters.

U.S. military officials had also expressed interest, he said, but would likely contract for cargo transportation services rather than buying the airships themselves.

Eventually, Lockheed could sell hundreds of the smaller airships and thousands of the larger ones, Boyd said.

He said the airships would likely cost tens of millions of dollars, making their cost comparable to what operators now pay to truck cargo via seasonal ice roads, but about five to 10 times cheaper than much cheaper than transport via helicopters.

(GNN, Reuters, Aip)(Reporting by Andrea Shalal; editing by Gunna Dickson)

Airbus set to lose Japanese buyer for A380: sources

#GNN - #European #planemaker #Airbus (AIR.PA) is set to lose its only Japanese customer for the A380 superjumbo as Skymark Airlines (9204.T) prepares to cancel an order for six jets worth more than $2 billion, industry sources said on Monday.

The setback comes after Japan's third largest carrier swung into a loss for its latest financial year and raises new questions over the strength of the backlog for the world's largest airliner, which increasingly depends on one customer, Emirates.

An Airbus spokesman declined to comment on the threat to the Skymark order, which was first reported by Bloomberg News.

The news comes as aerospace sources say several other orders for the huge jetliner are already hanging in the balance, including 10 aircraft earmarked for Hong Kong Airlines.

Reuters reported earlier this month the Hong Kong carrier no longer wanted the jets after an associated leasing company struck an expanded deal to buy 70 smaller A320-family aircraft.

Since March the order has no longer been attributed to Hong Kong Airlines, but to an "undisclosed" customer, raising questions over its status, according to a review of Airbus data.

Airbus officials said at the Farnborough Airshow this month that the Hong Kong order remained on its order book.

Skymark was due to take delivery of its first A380 around the end of this year, but the airline said in June the delivery was pushed back by up to six months because of problems in fitting out the interior of the world's largest jetliner.

Industry sources say Skymark, which has reported its first loss in five years, faces a challenge in taking delivery of the A380s, which were worth around $350 million each at list prices when the carrier placed its firm order in 2011.

Airlines pay most of the cost of buying a jet on delivery.

No one at Skymark Airlines was available for comment.

The A380 has so far attracted little interest from low-cost carriers, which operate with fewer of the partnership agreements and loyalty programmes that help traditional network airlines sell tickets and make the 525-seat jet profitable.

The Centre for Aviation (CAPA), an airlines consultancy, has warned that Skymark could encounter "significant losses" if it put the A380 into service without such agreements, and that the airline would need changes in strategy to make it viable.

Adding a new aircraft type adds cost and complexity in training, maintenance and spare parts. Even large airlines can take years and dedicate large teams to preparing for the huge jet.

Skymark, which mainly flies Boeing 737s, has already tested its flexibility by adding two leased wide-bodied A330s.

A380 BACKLOG
The four-engine, double-decker A380 was launched in 2000 as Europe's solution to congested worldwide airports and the success of Boeing Co's (BA.N) 747.

But growth in demand for large twin-engine jets has weighed down sales, which also suffered because of technical problems and the financial crisis, during which many airlines avoided large-scale bets.

The notable exception is Dubai's Emirates, which has invested in 140 of the aircraft, more than five times the number ordered by the next largest customer, Singapore Airlines Ltd (SIAL.SI).

The Dubai airline has said the A380 has unbeatable economics when configured correctly, and has asked Airbus to come up with a more efficient version with new engines from end-decade.

But the remaining backlog of 135 aircraft, of a net total of 324 ordered so far, includes several smaller orders that analysts say look increasingly unlikely to be delivered - at least to the airlines that originally purchased them.

Besides the aircraft originally earmarked for Hong Kong Airlines, these include a remaining eight for cash-strapped Qantas Airways Ltd (QAN.AX), six that Virgin Atlantic has said it may further delay, two for Reunion-based Air Austral, and one originally sold as a flying palace to a Saudi prince.

Despite the setbacks, leasing company Amedeo has ordered 20 superjumbos in the belief there is an untapped market for A380s in a denser and more efficient cabin layout.

While Airbus tries to steady the backlog for its largest jetliner, it faces continued technical headaches from the complex aircraft such as a recent problem with leaking or noisy doors.

Airbus said at this month's UK air show that it was testing a solution after a recent diversion and several incidents involving noise onboard and expected it to be ready this year.

But influential customer Qatar Airways has raised concerns about the doors at the same time as refusing to take the first three aircraft because of what it describes as problems with the cabin, two people familiar with the matter said.

Airbus has said it is confident of reaching its target of 30 A380 deliveries this year, including the aircraft for Qatar.

(Reorders words in paragraph 16 to make plain A380 designed for congested airports worldwide)

(GNN,Reuters,AIP)(Reporting by Tim Hepher; Editing by Greg Mahlich and Andre Grenon)

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#Fighting complicates Ukraine crash probe, U.S., EU prepare #Russia sanctions

#GNN - Fierce fighting in eastern Ukraine where a Malaysian airliner was downed further complicated an investigation on Sunday as Europe and the United States prepared economic sanctions on Russia over the conflict.

At least 13 people were killed in clashes between Ukrainian troops and pro-Russian rebels that raged in five areas around the wider region.

International monitors said they had abandoned plans to visit the crash site because of fears it was not safe, even though Malaysia said earlier that rebels had agreed to provide access.

Ukraine said it was trying to dislodge the rebels, but denied it was fighting near the crash site, saying the separatists had put the monitors off by falsely claiming that the army was operating nearby.

Russia dismissed U.S. allegations it was about to hand over more missiles to the separatists, who Western leaders say almost certainly shot the airliner down by mistake with a Russian-supplied surface-to-air missile.

The separatists deny any involvement and Moscow says it has not supplied them, suggesting Ukrainian forces were to blame.

"Kiev is trying to destroy the evidence of a crime by its army," separatist leader Aleksander Borodai said, referring to a Ukrainian army offensive some distance from the site on Sunday.

With European states trying to minimize the impact of any future sanctions against Russia on their own economies, the U.S. State Department sought to bolster the case for robust action by releasing images it said showed Russian forces had fired across the border at the Ukrainian military in the last week.

The images, which show marks on the ground at what the State Department said were launch sites and impact craters around Ukrainian military locations, indicated fire from multiple rocket launchers, the department said.

It also said the images offered evidence that Russia-backed separatists inside Ukraine had fired on Ukrainian forces using heavy artillery supplied by Russia.

The Russian Foreign Ministry said Foreign Minister Sergei Lavrov and U.S. Secretary of State John Kerry had agreed on the need to ensure a swift ceasefire in what it described as an "internal conflict".

But the State Department said Kerry did not accept Lavrov's denial that heavy weapons from Russia were contributing to the conflict and urged him "to stop the flow of heavy weapons and rocket and artillery fire from Russia into Ukraine, and to begin to contribute to deescalating the conflict."

Kerry also underlined U.S. support for a mutual cease-fire verified by the Organization for Security and Cooperation in Europe and reaffirmed Washington's "strong support for the international investigation" into the downed airliner, the State Department statement added.

MORE MISSILES?
Washington said on Friday another transfer from Russia to Ukrainian separatists, this time of heavy-caliber multiple-launch rocket systems, appeared to be imminent and that Russian forces were slowly building up along the Ukrainian border.

Russia said recent international inspections had revealed no evidence of Russian military violations, without giving details.

Members of the European Union, spurred into action by the deaths of 298 people in the airliner, were expected to try to reach a final deal on Tuesday on measures including closing the bloc's capital markets to Russian state banks, an embargo on arms sales and restrictions on dual-use and energy technologies.

The EU added new names on Friday to its list of individuals and companies facing travel bans and asset freezes over their alleged involvement in Ukraine and could agree to extend the list further as early as Monday.

Washington, which has taken the lead in imposing individual and corporate penalties on Russia, said on Friday it was likely to follow up on any new EU move with more sanctions of its own.

The Ukrainian government said its forces were advancing towards the crash site to try to free it from the rebels, who have impeded the work of international monitors and whom Kiev accuses of tampering with evidence pointing to who shot it down.

Only a few international experts have so far been able to get to the site, access to which is negotiated with the rebels.

"All our troops are aiming to get there and liberate this territory so that we can guarantee that international experts can carry out a 100-percent investigation of the site and get all proof needed to deduce the real reason for this tragedy," said Andriy Lysenko, a spokesman for Ukraine's Security Council.

International monitors said the fighting itself could affect the crash site, underlining the growing complexity of trying to establish who shot down Malaysia Airlines flight MH17.

In Donetsk, Alexander Hug, deputy head for the OSCE monitoring mission in Ukraine, said monitors would not visit the site on Sunday.

"The situation on the ground appears to be unsafe ... we therefore decided to deploy tomorrow morning," Hug, flanked by Dutch and Australian experts, told reporters. "Fighting in the area will most likely affect (the) crash site," Hug said.

An OSCE spokesman said the group would try again on Monday.

The separatists are still in control of the area where the plane was shot down earlier this month but fighting in the wider eastern regions of Donetsk and Luhansk has been heavy as Ukrainian government forces try to drive them out.

It was raging in at least five places on Sunday and Donetsk region health officials said 13 people were killed in fighting in the town of Horlivka, known as Gorlovka in Russian.

Lysenko said troops were advancing east from the town of Makievka towards Shakhtarsk, around 25 km (16 miles) from the crash site. Shakhtarsk residents said air strikes hit the town.

"Our military is advancing, fighting goes on every day, every night, they have already liberated two-thirds of the territory," Lysenko told a news conference in Kiev.

But Ukrainian Foreign Minister Pvalo Klimkin said the Ukrainian army was respecting a no-fight zone within 20 kilometers from the site.

AGREEMENT
Earlier, Malaysian Prime Minister Najib Razak said an agreement reached with separatist leader Borodai would "provide protection for international crash investigators" to recover human remains and ascertain the cause of the crash.

The OSCE has provided a team to monitor the site in advance of an investigation, but Najib said a full team of investigators was needed to ensure any human remains left there were removed.

"We also need a full deployment of investigators to have unfettered access to the crash site so we can understand precisely what happened to MH17. I hope that this agreement with Mr Borodai will ensure security on the ground, so the international investigators can conduct their work," he said.

"Three grieving nations", Malaysia, Australia and the Netherlands, had formed a police group to secure the site, he said in a statement issued by his office. The Netherlands and Australia said the mission would not be armed.

Among the 298 people who died aboard the Boeing 777 on its flight from Amsterdam to Kuala Lumpur on July 17 were 193 Dutch nationals, 43 Malaysians and 28 Australians.

Malaysian experts have said they believe at least 30 investigators will be required to cover the full site of the crash, in addition to Dutch investigators and an expert from the United Nations' civil aviation body, the ICAO.

In the Australian capital, Canberra, Prime Minister Tony Abbott said an unarmed police mission led by the Netherlands and made up of about 49 officers would travel to the site. Officials said a total of 170 Australian police were deployed in Ukraine.

Abbott, who has played a leading role in pressing for an investigation, told reporters the force would probably stay no longer than three weeks. "Our objective is to get in, to get cracking and to get out," he said.

(GNN,Reuters,AIP)(Additional reporting by Natalia Zinets, Lina Kushch, Gabriela Baczynska and Elizabeth Piper in Kiev, Emily Stephenson and Steve Holland in Washington, Yantoultra Ngui in Kuala Lumpur and Morag Mackinnon in Perth; Writing by Philippa Fletcher; Editing by Anna Willard, Peter Cooney and Sandra Maler)

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Fighting in Gaza abates, but truce hopes look fragile

#GNN - #Fighting subsided in #Gaza on Sunday after #Hamas #Islamist #militants said they backed a 24-hour humanitarian truce and U.S. President Barack Obama called for a ceasefire but there was no sign of any comprehensive deal to end fighting with Israel.

Hamas said it had endorsed a call by the United Nations for a pause in the fighting in light of the upcoming Muslim holiday of Eid al-Fitr, which begins on Monday.

Some firing of rockets continued after the time that Hamas had announced it would put its guns aside and Israeli Prime Minister Benjamin Netanyahu questioned the validity of the truce.

Obama spoke by phone on Sunday with Israeli Prime Minister Benjamin Netanyahu and stressed the need for an immediate, unconditional humanitarian ceasefire in Gaza, the White House said.

Urging a permanent end to hostilities on the basis of the 2012 ceasefire agreement, Obama added that "ultimately, any lasting solution to the Israeli-Palestinian conflict must ensure the disarmament of terrorist groups and the demilitarization of Gaza."

Israeli artillery guns also fired barrages into the Gaza Strip, Israeli media reported, although the objects of the fire was initially unclear.

"Hamas doesn't even accept its own ceasefire, it's continuing to fire at us as we speak," Netanyahu said in an interview with CNN, adding that Israel would "take whatever action is necessary to protect our people".

Nonetheless, Gaza Strip residents and Reuters witnesses said Israeli shelling and Hamas missile launches had slowly subsided through the afternoon, suggesting a de facto truce might be taking shape as international efforts to broker a permanent ceasefire appeared to flounder.

However, Israel's military has said it will need more time to destroy a warren of tunnels criss-crossing the Gaza border that it says is one of its main objectives.

Egypt had also destroyed 13 tunnels which crossed into its territory, an Egyptian general said on his Facebook page. It was "a continuation of the efforts by the armed forces in protecting the borders of the state from smugglers and terrorists," Brigadier General Mohamed Samir Abdulaziz Ghoneim said.

Israel and the Hamas Islamists who control Gaza had agreed to a 12-hour ceasefire on Saturday to allow Palestinians to stock up on supplies and retrieve bodies from under the rubble.

Netanyahu's cabinet voted to extend the truce until midnight on Sunday at the request of the United Nations, but called it off when Hamas launched rockets into Israel during the morning.

Palestinian medics said at least 10 people had died in the wave of subsequent strikes that swept Gaza.

Some 1,031 Palestinians, mainly civilians and including many children, have been killed in the 20-day conflict. A Gaza health ministry official issued revised figures, saying that 30 fewer people than thought had died in the conflict.

Israel says 43 of its soldiers have died, along with three civilians killed by rocket and mortar fire out of the Mediterranean enclave.

The military said an investigation into an attack last Thursday on a U.N.-run school in which 15 people were killed showed that a single errant mortar shell landed in an empty courtyard, denying it was responsible for the deaths.

DIPLOMATIC BLOCK
Israel launched its Gaza offensive on July 8, saying its aim was to halt rocket attacks by Hamas and its allies.

After aerial and naval bombardment failed to quell the outgunned guerrillas, Israel poured ground forces into the Gaza Strip 10 days later, looking to knock out Hamas's rocket stores and destroy the vast network of tunnels.

The army says its drive to find and eliminate tunnels would continue through any temporary truce.

A poll published by Israel's Channel 10 television said some 87 percent of respondents wanted Israel to continue the operation until Hamas was toppled.

Diplomatic efforts led by U.S. Secretary of State John Kerry to end the conflict have shown little sign of progress. Israel and Hamas have set conditions that appear irreconcilable.

Hamas wants an end to the Israeli-Egyptian economic blockade of Gaza before agreeing to halt hostilities. Israel has signaled it could make concessions toward that end, but only if Gaza's militant groups are stripped of their weapons.

"Hamas must be permanently stripped of its missiles and tunnels in a supervised manner," Economy Minister Naftali Bennett said, "In return we will agree to a host of economic alleviations," the security cabinet member said on Facebook.

Kerry flew back to Washington overnight after spending most of the week in Egypt trying to bridge the divide, putting forward some written proposals to Israel on Friday.

Speaking off the record, cabinet ministers described his plan as "a disaster", saying it met all Hamas demands, such as lifting the Israeli-Egyptian blockade completely and ignored Israeli terms, such as stripping Hamas of its rockets.

There was no immediate comment from U.S. officials.

The obvious rancour added yet another difficult chapter to the already strained relations between Netanyahu and Kerry, whose energetic drive to broker a definitive peace deal between Israel and the Palestinians ended in acrimony in April.

DESTRUCTION
The main U.N. agency in Gaza, UNRWA, said 167,269 displaced Palestinians have taken shelter in its schools and buildings, following repeated calls by Israel for civilians to evacuate whole neighborhoods ahead of military operations.

But in southern Gaza, residents of villages near the town of Khan Younis attacked the offices of the International Committee of the Red Cross, torching furniture and causing damage, saying the organization had not done enough to help them.

During the lull in fighting inside Gaza on Saturday, residents flooded into the streets to discover scenes of massive destruction in some areas, including Beit Hanoun in the north and Shejaia in the east.

An Israeli official said the army hoped the widespread desolation would persuade Gazans to put pressure on Hamas to stop the fighting for fear of yet more devastation.

The Israeli military says its forces have uncovered more than 30 tunnels in Gaza, with some of the burrows reaching into Israeli territory and designed to launch surprise attacks on Jewish communities along the border.

The military said on Sunday it found a tunnel that led directly into the dining room of an Israeli kibbutz.

Other underground passages, the military says, serve as weapons caches and Hamas bunkers. One official said troops had found it easier to operate during the truce as the immediate threat to their safety was diminished.

The Gaza turmoil has stoked tensions amongst Palestinians in mainly Arab East Jerusalem and the occupied West Bank.

Medics said eight Palestinians were killed on Friday in incidents near the West Bank cities of Nablus and Hebron - the sort of death toll reminiscent of previous uprisings against Israel's prolonged military rule there.

The violence has sparked protests outside the region.

Demonstrators in London marched from the Israeli embassy to the Houses of Parliament and Whitehall, blocking traffic throughout the West End. French police clashed with pro-Palestinian protesters who defied a ban by authorities to march in central Paris.

(GNN,Reuters,AIP)(Additional reporting by Maayan Lubell and Ari Rabinovitch in Jerusalem, Noah Browning in Gaza, Ali Sawafta in Ramallah and Jim Loney and Steve Holland in Washington; Writing by Mayaan Lubell and Crispian Balmer; Editing by Raissa Kasolowsky, Stephen Powell and Eric Walsh)

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U.S. diplomats' return to Libya could be more hazardous than exit

#GNN - If evacuating U.S. #embassy staff from #Libya was perilous - three F-16 fighters and Marines in Osprey aircraft flew overhead a road convoy from Tripoli to Tunisia - sending them back in could be politically hazardous for President Barack Obama.

U.S. diplomats work in dangerous places such as Baghdad and Kabul, but the ghosts of Benghazi hang over the U.S. presence in Libya after an attack on a U.S. mission in the eastern Libyan city in 2012 that killed Ambassador Chris Stevens and three other Americans.

Republicans, preparing to battle Obama's Democrats in mid-term elections in November, have been quick to characterize the chaos in Libya as further evidence of the administration's weak foreign policy.

The eight or so U.S. diplomats who had been in Libya and a security staff numbering 200 or more drove out of the country on Saturday under a heavy escort, amid the worst violence in the capital and in Benghazi since Washington and its NATO allies helped topple Muammar Gaddafi in 2011.

The State Department said embassy staff would return to Tripoli once it was deemed safe.

But analysts said that would be a difficult decision to make given raw memories of the Benghazi attack, which sparked sustained Republican criticism of Obama and his then secretary of state, Hillary Clinton - who is widely expected to run for the White House in 2016.

Republicans charged that the administration did not provide sufficient security for the mission, did not respond quickly enough and then tried to cover up its shortcomings. Harm to another diplomat in Libya would be disastrous for Obama.

Jon Alterman, head of Middle East program at the Center for Strategic and International Studies think tank in Washington, said the United States could not afford to think of the symbolical impact of withdrawing its diplomats when lives were at risk.

“The job of an embassy is to talk to a government. If it’s unclear who you can talk to and who can help provide security then that shifts the equation," Alterman said.

"Embassies rely a lot on local governments to both secure them and also to provide intelligence that helps us secure them. And if that isn’t working then you have to look quite closely at you security plan and whether you can actually protect the facility.”

But he added he did not expect the embassy closure to be long-term, like that in Somalia after anti-U.S. violence in the 1990s, and noted that Tripoli embassy had been evacuated during the fall of Gaddafi and then re-staffed.

LOOKS COUNT
Some of the impact of evacuating an embassy is appearance.

“Of course it looks bad – countries normally try to keep their embassies open as long as they can," said Francois Heisbourg, a security expert at the Foundation for Strategic Research think tank in Paris.

“What would be a problem would be if the Americans stayed out for long period. The decision to close may have come quite naturally, but it’s going to be a very difficult responsibility to reopen the embassy. That is one where the ghosts of Benghazi are going to come back again.”

The State Department sought to play down suggestions that the evacuation would further hamper efforts to stabilize Libya.

“Although embassy personnel are no longer in Libya, we continue to engage the Libyan government on a wide range of issues,” department spokeswoman Jen Psaki said on Saturday.

The surging violence in Libya prompted fresh criticism of Obama from Republicans keen to portray the administration as weak on all fronts.

"The administration sort of took its focus off of Libya and things have been getting worse for quite some considerable time now," Ed Royce, chairman of the U.S. House foreign relations committee, told CNN on Saturday after news of the U.S. diplomats' departure.

Robin Wright of Washington's Wilson Center think tank, who was a close friend of Ambassador Stevens, said all NATO countries, not just the United States, had "increasingly abandoned Libya over the past three years."

"Now the central government has crumbled to the point that it doesn’t even control Tripoli Airport, much less large swaths of the country," she said. "The long-term danger to the region is that Libya itself crumbles - either into a failed state, or unruly fragments that, in turn, have rippling impact on Africa and the Arab world."

(GNN,Reuters,AIP)(Reporting and writing by David Brunnstrom; Additional reporting by Missy Ryan, Mark Hosenball, Phil Stewart, Emily Stephenson and Arshad Mohammed; Editing by Frances Kerry)

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Grieving Dutch minister made Europe re-think #Russia sanctions

#GNN - When #Dutch Foreign #Minister Frans Timmermans spoke to his #European Union peers of his grief and anger over the downing of a Malaysia Airlines airliner over eastern Ukraine, it was a turning point in Europe's approach to Russia.

Several ministers had tears in their eyes when Timmermans said he had known personally some of the 194 Dutch passengers among the 298 people who died on the plane, which Washington believes pro-Russian separatists shot down in error.

"To my dying day I will not understand that it took so much time for the rescue workers to be allowed to do their difficult job, and that human remains should be used in a political game," Timmermans told the U.N. Security Council hours earlier, before flying overnight to Brussels for the crucial EU session.

Until that meeting on Tuesday, Europe had trailed the United States in imposing economic sanctions to pressure Moscow into working to defuse the eight-month crisis in Ukraine in which hundreds of people have been killed.

Many governments were reluctant to antagonize a major energy supplier. Concern over the cost to Europe's convalescent economy of fraying the vast network of industrial and business links with Russia also weighed heavily.

Intense lobbying by Washington, including a warning by President Barack Obama that the plane downing should be "a wake up call for Europe", had done little to change that mentality.

But like a supportive family, EU partners rallied around the bereaved Dutch, putting national economic interests aside and for the first time going beyond asset freezes and visa bans on individuals to envisage curbs on entire sectors of the Russian economy that could turn the screw on President Vladimir Putin.

Gruesome images of bodies strewn across fields after the downing of flight MH17 appear to have persuaded some of the opponents of sanctions to take a more decisive, if painful, stand against Russian detribalization of Ukraine.

Within days of Timmermans' address, senior EU diplomats had agreed the broad outlines of potential sanctions on Russian access to EU capital markets, defense and energy technology.

Final decisions await more deliberations next week - but diplomats said on Friday an initial package was now virtually a done deal.

"It is fair to say we are heading in the direction," one EU diplomat told Reuters.

In the run up to Friday's discussions, Dutch Prime Minister Mark Rutte had a series of phone calls with his EU counterparts, near daily calls with Obama and six conversations with Putin.

"We want, as a country that has acquired a certain moral obligation as a result of this tragedy, to promote Europe taking a common line on this," Rutte told parliament in The Hague.

The Dutch are a trading nation with outsized commercial ties to Russia and are often reluctant to let politics get in the way of a good deal. But an opinion poll this week found 78 percent back economic sanctions even if it hurts their own economy.

LAST STRAW
Poland's Foreign Minister Radoslaw Sikorski, long an advocate of harsher sanctions, said the plane crash was the "last straw that broke the camel's back".

"The behavior of the separatists ... the scandalous plundering of the luggage and the bodies themselves - all this made an enormous impression on the Netherlands ... and on all of us," he told reporters after Tuesday's meeting.

The EU turnaround became possible when key players shifted their positions. Timmermans' impassioned speech, several diplomats said, made it difficult for others to hold a firm line against sanctions at Tuesday's meeting.

"The Dutch minister gave a very effective, emotional lead... saying we have got to move on beyond just naming individuals. No one found it possible to speak against that," one senior European diplomat said.

German Chancellor Angela Merkel, who felt personally misled by Putin after months of intense dialogue, joined the drive for broader measures against Moscow even before the plane crash. Berlin has by far the biggest trade with Russia.

After the downing of the airliner, Britain too agreed to restrictions on Russian access to capital markets largely based in its City of London financial center which it had previously resisted.

German government sources said Berlin, which had been hesitant on sanctions for months, demanded that senior EU diplomats meet as soon as last Monday to work out a more effective sanctions package. To their annoyance, a holiday at EU headquarters for Belgium's national day got in the way.

EU leaders had agreed at a July 16 summit that more Russian people and companies should be targeted with asset freezes by the end of the month but that was suddenly not enough.

"It is true that the European Council had set a deadline of the end of the month, but after the plane crash everybody should have understood the situation was far more urgent", one Berlin source said. "We were losing time when time was precious."

ITALY CHANGES TONE
Another notable change of tone came from Italy, which along with Germany is the biggest consumer of Russian gas in Europe.

Foreign Minister Federica Mogherini, who had drawn criticism for making her first visit in the EU's rotating president to Moscow at the start of July, now said repeatedly she wanted to see additional sanctions imposed on Russia.

"The Malaysian air disaster weighed heavily on everyone," an Italian source said. "Timmermans spoke for half an hour. It was a very emotional speech where he described the pain and anger of the Dutch. An airplane with 300 people in it was shot down and that changed everything."

Some diplomats suggested Mogherini's change of tone might have more to do with her push to become the next EU foreign policy chief after Catherine Ashton's mandate ends in October. Several central European leaders expressed opposition to her at the summit because of her emollience towards Russia.

Lithuanian President Dalia Grybauskaite summed up their mood by saying she would not back a "pro-Kremlin" candidate.

The final shape of the sanctions package may hinge on a tug of war between Britain and France over who bears the brunt of economic pain of such decisions.

Diplomats said the French dug their heels in after British Prime Minister David Cameron publicly criticized Paris' decision to deliver the first of two Mistral helicopter carriers it is building for Moscow under a 2011 contract.

"The estimates are that in the current package the pain for the UK would probably be greater than for anyone else," said one senior diplomat, referring to the potential damage to London's City banks if financial restrictions are imposed.

Recognizing the shift, the U.S. ambassador to the European Union, Anthony Gardner, said his impression was the mood towards Russia had changed this week.

"Our impression is that several countries now believe that the choice that they thought was on the table of taking the bitter medicine today and not taking the bitter medicine tomorrow was a false choice," he told reporters.

"That choice never existed. Now the choice is either taking the bitter medicine today or taking an even more bitter medicine tomorrow."

(GNN - AIP)(Reuters)(Additional reporting by Paul Taylor in Paris, Adrian Croft, Jan Strupczewski and Martin Santa in Brussels, Thomas Escritt in Amsterdam, Andreas Rinke in Berlin and Steven Scherer in Rome; Editing by Paul Taylor)

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