France and Germany exit recession

Consumer spending has risen in both France and Germany

The French and German economies both grew by 0.3% between April and June, bringing to an end year-long recessions in Europe's largest economies.

Stronger exports and consumer spending, as well as government stimulus packages, contributed to the growth.

The data came as a surprise, with few analysts expecting Germany and France to start to recover so soon.

But economic activity in the eurozone fell by 0.1%, showing the region as a whole is still in recession.

It was the fifth consecutive quarter of economic contraction in the eurozone, but was a marked improvement on the 2.5% drop recorded in the first three months of the year.

UK reaction

ANALYSIS Hugh Pym, Chief economics correspondent Germany and France can now say they are technically out of recession, while the UK is still in it. The UK government's claims that it is a global recession maybe rings a little less true in terms of the mood music from each country over the last couple of days. We've had the French finance minister hailing the figures as a sign of recovery and more optimistic noises from the US Federal Reserve. Yet at the same time the governor of the Bank of England has said the recovery in the UK will be slow and protracted. The key question now is whether, over the next year, the UK is going to be helped by Germany and France or held back by things like household debt and the state of our banking system.

Markets reacted positively to the news, with the main German and French markets up more than 1% at midday before later dropping back slightly.

In London, the FTSE 100 index also rose, with traders anticipating a positive effect on the UK economy, which by contrast shrank by 0.8% in the second quarter.

Asked about why the UK seemed to be lagging behind, Business Secretary Lord Mandelson said: "Different economies will show different patterns of behaviour."

"But the key point is all these economies rely on each other; 55 to 56% of our trade is with the rest of Europe. So when [they are] recovering that is good news for our manufacturers and our exports here."

France and Germany may have been less hard hit than the UK by the global economic slowdown because their financial sectors, which were at the heart of the crisis, account for a smaller proportion of their economies.

Export recovery

Germany was thrown into recession earlier in the year because its exports collapsed.

The latest figures showed German exports had grown at their fastest pace for nearly three years at 7%, with particularly strong growth in demand from rapidly-growing economies such as China.

The country's Federal Statistics Office said that household and government expenditure had also boosted growth.

It added that imports had declined "far more sharply than exports, which had a positive effect on GDP growth".

"These [GDP] figures should encourage us," said Germany's Economy Minister Karl-Theodor zu Guttenberg. "They show that the strongest decline in economic performance likely lies behind us."

Reaction among analysts to the signs of Germany's recovery, however, was mixed.

"The recession has ended, and it has ended sooner than we all thought. We expect to see growth of 1% in the third quarter, which is very strong for Germany, and I wouldn't rule out the chance of even better growth," said Andreas Rees at Unicredit.

But there are concerns that the banking system across Europe is still fragile and that the growth is reliant on government stimulus spending that will eventually have to come to an end.

BBC Europe business reporter Mark Sanders said that although the surprise news was highly welcome for those that have been suffering, there were questions about how strong and credible the economic recovery is.

"To draw a medical analogy, we've got the patient waking from a coma and talking to medical staff," he said. "They're not necessarily going to be running any marathons soon."

Consumer spending

In France, economy minister Christine Lagarde said: "The data is very surprising. After four negative quarters France is coming out of the red."

Ms Lagarde said that consumer spending and strong exports had helped to pull France out of recession.

CASE STUDY Plastics manufacturer Wirthwein Nauen, Germany Chief executive Ulf Sauerwald says his business is growing. Orders are rising and it is taking on more staff. "Turnover in the whole group increased from 15 to 20% at the start of the year. We've had major new orders coming in, have developed new products in the car sector and are planning to open a new factory in Spain," he says. But the workers on the factory floor are not seeing a recovery yet. "It is tough right now... we don't get paid overtime and don't buy expensive stuff like cars," says employee Christopher Schmidt.

"What we see is that consumption is holding up," she said.

Official figures showed that household consumption rose by 0.4% in the second quarter.

She said government incentive schemes for trading in old cars, together with falling prices, were helping consumers.

Foreign trade contributed 0.9% to the GDP figure - a "very strong impact", said Ms Lagarde.

"[The figures are] a positive surprise, as many people were expecting slightly negative numbers," said Marie Diron at Oxford Economics.

But she warned that growth was "still very fragile".

"Investment is down, we still have surprisingly low stock levels, and growth is boosted by the fact that imports fell sharply," she added.

Rio shanty town reporter tells her story

Mayra finds damage left by gunfire all around the shanty town

I am 17 years old and live in Vila Cruzeiro, one of the shanty towns or favelas in Rio de Janeiro, Brazil.

In 2008, Desmond Tutu awarded me the International Children's Peace Prize for organising a protest against the frequent shoot-outs between police and drug traffickers in my community.

Vila Cruzeiro is in the north of the city.

Around 120,000 people live here and at times it can be a difficult place because of the violence. It hits us when we least expect it.

We are not able to do anything. We cannot go to school, people cannot go to work and we have to stop our lives.

School life

Violent confrontations often happen next to one of the schools in the middle of Vila Cruzeiro. There are bullet holes in the walls.

There have been times when armoured police cars have stopped beside the school and shooting has broken out from all sides.

A bullet entered through the window of my house and hit my computer Nathan, aged nine

Regina is a teacher who has worked here for 28 years.

She says she loves what she does, but adds: "When the violence happens it is very intense. Teachers feel ill, children feel ill and sometimes faint.

"It interferes with the children's learning.

"Thank God nothing has ever happened to any of the students in the school, but there are bullet holes on the walls."

Zaira Florinda Costa da Cruz has been a teacher in the favela for 10 years.

She says it is very difficult to find teachers to work there because they hear from the media that the place is worse than it is.

"I work in another school and there they ask me how I have the courage to work here in Vila Cruzeiro," she says.

"I tell them I love working in that school, the children respect me."

Children's view

Leone is 10 years old. She says she likes living in the favela but does not like the shootings.

"I saw a friend of mine get shot and then get taken to hospital," says Leone.

Brazil has invested 100bn reais (£30bn) to improve life in the favelas

She says she feels sad when her school has to close because she cannot study.

"There are a lot of people who can't read and write because of the shootings here," she says.

"Nobody can learn anything."

Nathan Bezarra da Costa is nine years old and also lives in Vila Cruzeiro.

He worries about the violence and was once caught up in a street battle between police and drug dealers.

"There was shooting and a bullet entered through the window of my house and hit my computer. I was crying," he says.

He now lives with his grandmother because he says her house is hidden and he feels he will be protected from bullets there.

I believe that society stigmatises us.

Some people think that everyone who lives here is a drug dealer but this is not true.

People here work, they study and they only want a better place to live.

Spring brings changes in New York

If there is one thing that often stands out about people from the United States, it is their optimism.

Even when times are bad they still exude a sense that everything will, in the end, be ok.

The former 'Masters of the Universe' are no exception.

I found some of them in a lecture theatre on Manhattan's East 55th Street.

Ed preferred not to tell me his last name since he is looking for work. He lost his job at the start of the year, after a 20-year career in finance and banking.

"It was a change, but I'm looking forward to new possibilities," he says.

Like the others here, Ed - who looks to be in his 50s - has gone back to school. They all lost a job in finance. Now they are being re-trained.

The idea is simple. Show them how they can put their financial analytical skills to use in emerging start-up firms.

It is a pilot programme set up by the Levin Institute at the State University of New York, and supported by the City of New York.

Re-invention

Each person will spend time with a start-up company, and while a job at the end of it is not guaranteed, it will - according to the co-director of the programme, Tom Moebus - "give them a solid entry" into a new part of the economy.

"New firms will form a little bit in the ashes of the old. Before the resources went to the financial sector," he says. "Now there's an opportunity to take the talent into new sectors. The digital sector, or the green sector for instance."

New York, in other words, is beginning to try to re-invent itself. It is diversifying, as it knows it must.

Financial services have been good for the US's largest city, but it had become over-dependent on Wall Street.

Jobs in finance accounted for about 9% of New York's total. They made up a whopping 34% of its total payroll - according to the city's office of management and budget.

By the end of this year it is estimated that New York will have lost about 65,000 jobs in finance alone - about 18% down from the sector's peak in 2007.

That is a big drop in tax revenue for a city already struggling to balance its budget.

'January panic'

It is also a worry for those who profited from the spending power of Wall Street's employees.

"January was the month where everyone really held their breath," says Daniel Blumberg, a co-owner of several restaurants.

"It was a moment of panic."

For a short time New York lost some of its famed self-confidence. As the crisis deepened towards the end of last year, people stopped spending.

Now, Mr Blumberg says he is starting to see a change.

"People seem to have decided the financial meltdown is what it is. They may not be as lavish as they were, but they've started to come back out."

Recruitment slowdown

There is then a sense that things have stabilised - though that is perhaps the only silver lining.

Universities in the city talk of a slowdown in recruitment.

Cornell University says that businesses have hired fewer full time workers and interns for the coming summer. Cornell's graduate school recruitment is down 18%.

It is not just the financial sector. Across the board college graduates in New York are finding it harder to get jobs.

People like Nick Goddard. He is 26 years old, has a degree in mechanical engineering, and is recently unemployed after losing his job as a computer programmer.

"It has been pretty difficult for people to find jobs lately, especially if trying to get back into the jobs they lost in the first place," he told me, on a wet afternoon in Manhattan.

"It's time for a transition from the shrinking industries into the growing industries - people will have better luck that way."

Changing course

Mr Goddard feels lucky. Losing his job has forced him, he says, to change career direction. He is now looking to work - perhaps even unpaid at first - at a bike-sharing programme.

There are signs that plenty of others are choosing this moment to change course.

Wall Street is no longer the get-rich-quick attraction it once was. Graduates are having to re-think their career plans. That in turn is changing New York.

Volunteer and non-profit organisations in the city are reporting an increase in people looking to work for them.

Of course for many thousands here who have lost their jobs, these are still worrying times. This though feels like a city that is large enough, and packed with enough innovative people, to get back on its feet.

More pain lies ahead, believes the restaurant owner, Daniel Blumberg. "When you lose 100,000-odd Wall Street jobs, there will be a knock-on.

"The next year or two will see an adjustment, but New York always comes out stronger and better."

The Big Apple may have lost some of its swagger, but it is still sounding optimistic.

Councils may recoup Iceland cash

Public bodies placed about a billion pounds in Icelandic banks

Local councils which invested hundreds of millions of pounds in Icelandic banks have been given indications that they may get most of their money back.

Banks in Iceland were taken over by the authorities when the country's financial system collapsed in October.

Administrators for Heritable Bank, the UK arm of Landsbanki, have indicated its creditors could get up to 80% of funds back - equating to about £300m.

It is thought about £1bn in UK public money was deposited in Iceland's banks.

Heritable Bank is a UK bank which was placed into administration after the parent bank, Landsbanki, was nationalised by the Iceland government.

BBC business reporter Ben Shore said local government officials had also indicated that negotiations over deposits at other Icelandic banks were going well.

The Audit Commission, which itself deposited £10m in Icelandic banks, has previously said most councils had "heeded warnings" about the declining credit worthiness of Icelandic banks during 2008 and taken action accordingly.

However, it has said that some did not do this, describing a handful as behaving "negligently".

It reserved particular criticism for institutions which continued to deposit money after 30 September, when the credit ratings of Glitnir and Landsbanki were downgraded to "adequate".

This is below that deemed acceptable under guidance to town halls.

The two Icelandic banks went under just over a week later.

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'Boom year' for hi-tech criminals

Hi-tech criminals took on a new tack in the past year

If 2007 was witness to the rise of the professional hi-tech criminal, then 2008 was the year they got down to work.

The underground economy is flourishing," said Dan Hubbard, chief technology officer at security company Websense.

"They are not just more organised," said Mr Hubbard, "they are co-operating more and showing more business savvy in how they monetise what they do."

Statistics gathered by firms combating the rising tide of computer crime reveal just how busy professional cyber thieves have been over the last twelve months.

Sophos said it was now seeing more than 20,000 new malicious programs every day. 2008 was also the year in which Symantec revealed that its anti-virus software now protected against more than one million viruses.

The vast majority of these malicious programs are aimed at Windows PCs. Viruses made their debut more than 20 years ago but the vast majority of that million plus total have been created in the last two-three years.

Tidal wave

Criminal gangs generate so many viruses for two main reasons. Firstly, many variants of essentially the same malicious program can cause problems for anti-virus software which can only reliably defend against threats it is aware of.

Secondly, in the past security firms have tended to focus on the big outbreaks. By staging a series of small outbreaks the criminals hope to go unnoticed while their family of viruses racks up victims.

Spammers use tempting subjects to trick people into opening messages

Another statistic from Sophos reveals how the tactics of the online criminal groups are changing.

Before 2008 the preferred method of attack was a booby-trapped attachment circulating by e-mail.

Provocative, pornographic and personal subject lines were used to trick people into opening the attachment. Anyone doing so risked having hi-tech criminals hijack their home computer and turn them to their own nefarious ends.

In 2008, said Graham Cluley from Sophos, the main attack vector started to shift. Increasingly, he said, attackers have tried to subvert webpages by injecting malicious code into them that will compromise the computer of anyone that visits.

By the close of 2008, said Mr Cluley, Sophos was discovering a newly infected webpage roughly every 4 seconds.

The type of page being booby-trapped had also changed, he said. Prior to 2008 gambling, pornographic and pirated software sites were much more likely to be unwitting hosts for the malicious code used to hijack visitors' machines.

In 2008 the criminals turned their attention to mainstream sites that had very large audiences and were vulnerable to the code-injection attack.

Bug report

For Mikko Hypponen, chief research officer at F-Secure, 2008 was the year in which some hi-tech criminals got much more sophisticated.

The best example of this, he said, was the virus known as Mebroot.

"We saw it very early in the year and it continues to be a very complicated case," he said.

One of its most remarkable features is its built-in bug reporting system, said Mr Hypponen. When Mebroot is detected or malfunctions revealing its presence it sends off a report to its creators who then turn out a new version with the bug fixed.

Most attacks are aimed at PCs running the Windows operating system

"It's amazing that the bad guys were capable of pulling this off," said Mr Hypponen.

Dan Hubbard from Websense said 2008 was also notable for some hi-tech criminals turning away from viruses completely and embraced another way to make money.

Many, he said, were turning out bogus security programs that look legitimate but do not work. Once installed they purport to carry out a detailed scan of a machine and always turn up many instances of spyware and other malicious programs.

Cleaning up a machine using one of the bogus security programs always involves a fee, said Mr Hubbard.

"They are testing legal boundaries that are a grey area right now," said Mr Hubbard.

In mid-December 2008 the US Federal Trade Commission won a restraining order to shut down several firms that ran so-called "scareware" scams.

Research by Israeli security company Finjan suggests that up to five million people around the world have fallen victim to such scams.

A US court granted the FTC an injunction which stopped those behind the scareware products advertise their products, from making false claims about their efficacy and froze assets in the hope that duped customers could be refunded.

2008 also saw other big successes against criminals. In mid-November spam volumes around the world plummeted briefly following the closure of US network firm McColo.

Despite this, said Mr Hypponen, 2008 was a good year for the bad guys. The successes, he said, came due to action by ISPs, other net bodies and the media rather than from the action of law enforcement agencies.

This was mainly due, he said, to the trans-national nature of hi-tech crime that made it very difficult to quickly carry out an investigation and make arrests.

"The vast majority of these cases do not seem to go anywhere," he said.

How an old phone can make money

As well as making money people are helping others and the environment

It is unlikely that the global recession has completely dampened people's enthusiasm for new gadgets this Christmas.

But for cash-strapped consumers with a shiny new mobile in their hands, there is a way of making money from their old, unwanted handsets.

According to mobile phone trade-in website FoneBank, only 20% of UK consumers are recycling their mobiles but those that do can recycle their old mobiles for cash.

A survey it conducted to find out what people did with their mobile found that 28% put them away in a drawer while 23% simply threw them away.

"It's crazy that a lot of people out there are still just chucking their phones in the bin when they no longer have any use for them," said Mark Harrison, director of Fonebank.

In November Fonebank recycled 10,000 mobiles

The need to recycle electronic devices such as phones, PDAs and digital music players is more than just a financial one as many contain materials that can be harmful to the environment.

The main problem lies with the batteries used to power the phones, some of which contain toxic substances such as cadmium, which can contaminate the water table.

Mobile phones now come under the WEEE directive, a piece of European legislation which aims to reduce the amount of electronic waste that ends up in landfill sites.

It requires member nations to collect and recycle the equivalent of 4kg of e-waste for every person living in the country.

Manufacturers, importers and retailers of electronic equipment are obliged to put systems in place that allow customers to recycle their obsolete devices free of charge although households are under no obligation.

Fonebank recycled around 10,000 phones in November, the majority of which are earmarked for Africa, Pakistan, India and South East Asia.

"It is a lot more difficult to buy a brand new phone in Africa and they are prohibitively expensive, so a good, second-hand phone is very attractive," said Ollie Tagg, director of Fonebank.

Right thing

During November Fonebank sent out £200,000 worth of cheques, with an average per person of £50, although an iPhone can raise much more.

"One of the most popular ones traded in during October was Nokia's N95 which can raise £102 for the owner," said Mr Tagg.

"People recycling their phones make a bit of money and feel they are doing the right thing. The whole process takes three minutes online and then they just have to stick their phone in a jiffy bag," he added.

This year Fonebank has teamed up with Oxfam to donate a minimum of 10% of the value of the phone to aid the charity's work in the developing world.

Other charities, including Age Concern and the British Red Cross, are also offering people the chance to donate phones.

During December some six million handsets will have been exchanged.

And for those who really can't be bothered to post off their old handset there are other ways of recycling them.

"I have spent literally hundreds over the years on toys for my kids but the thing they've liked the most are old mobiles, particularly ones that flip and flash," one respondent to the FoneBank survey revealed.

Mexican guard 'linked to cartel'

Mr Calderon has deployed thousands of soldiers to fight the drug cartels

Mexican authorities have accused an officer in the presidential guard of being a spy for a drug cartel.

Army Maj Arturo Gonzalez Rodriguez has been placed under house arrest for 40 days while he is investigated.

He is accused of selling information about President Felipe Calderon's movements to the Beltran Leyva cartel for payments of up to $100,000.

Mr Calderon has deployed thousands of troops and police against the cartels in an increasingly bloody war.

An official in Mr Calderon's office said Maj Gonzalez was not part of the elite army detachment providing close protection to the president, Associated Press news agency reported.

Maj Gonzalez was detained as part of "Operation Cleanup", in which more than a dozen high-ranking police and government officials have been arrested on similar charges of collaborating with drug cartels.

Nearly 5,400 people have been murdered in drugs-related violence this year and Mexico's top prosecutor has said that the violence is likely to worsen in 2009 as drug gangs split and fight for turf.

Last week, the decapitated bodies of eight soldiers were found in a town near Acapulco. Their heads were discovered stuffed into plastic bags outside a shopping centre.

Massive Israeli air raids on Gaza

Israeli F-16 bombers have pounded key targets across the Gaza Strip, killing more than 200 people, local medics say.

Most of those killed were policemen in the Hamas militant movement, which controls Gaza, but women and children also died, the Gaza officials said.

About 700 others were wounded, as missiles struck security compounds and militant bases, the officials said.

Israel said it was responding to an escalation in rocket attacks from Gaza and would bomb "as long as necessary".

They were the heaviest Israeli attacks on Gaza for decades. More air raids were launched as night fell.

The operation came days after a truce with Hamas expired.

Israeli Defence Minister Ehud Barak said "it won't be easy and it won't be short".

"There is a time for calm and a time for fighting, and now the time has come to fight," he said.

US Secretary of State Condoleezza Rice accused Hamas of having triggered the new bout of violence.

"The United States strongly condemns the repeated rocket and mortar attacks against Israel and holds Hamas responsible for breaking the ceasefire and for the renewal of violence in Gaza," she said.

"The ceasefire should be restored immediately. The United States calls on all concerned to address the urgent humanitarian needs of the innocent people of Gaza."

UN Secretary-General Ban Ki-moon also urged an immediate halt to the violence, condemning what he called Israel's "excessive use of force leading to the killing and injuring of civilians" and "the ongoing rocket attacks by Palestinian militants".

Calls for a ceasefire also came from Middle East envoy Tony Blair and the French EU presidency.

Palestinian militants frequently fire rockets against Israeli towns from inside the Gaza Strip; large numbers of rocket and mortar shells have been fired at Israel in recent days.

In a statement, Israel's military said it targeted "Hamas terror operatives" as well as training camps and weapons storage warehouses.

Hamas bases destroyed

A Hamas police spokesman, Islam Shahwan, said one of the raids targeted a police compound in Gaza City where a graduation ceremony for new personnel was taking place.

Hamas will continue the resistance until the last drop of blood Fawzi Barhoum Hamas spokesman

At least a dozen bodies of men in black uniforms were photographed at the Hamas police headquarters in Gaza City.

Israel said operations "will continue, will be expanded, and will deepen if necessary".

It is the worst attack in Gaza since 1967 in terms of the number of Palestinian casualties, a senior analyst told.

Israeli Foreign Minister Tzipi Livni defended the air raids, saying Israel had "no choice". "We're doing what we need to do to defend our citizens," she said in a television broadcast.

Israel hit targets across Gaza, striking in the territory's main population centres, including Gaza City in the north and the southern towns of Khan Younis and Rafah.

Hamas said all of its security compounds in Gaza were destroyed by the air strikes, which Israel said hit some 40 targets.

Mosques issued urgent appeals for people to donate blood and Hamas sources told that hospitals were soon full.

In the West Bank, Palestinian Authority President Mahmoud Abbas - whose Fatah faction was ousted from Gaza by Hamas in 2007 - condemned the attacks and called for restraint.

Civilians were caught up in the air strikes in heavily-populated Gaza

But Hamas quickly vowed to carry out revenge attacks on Israel in response to the air strikes, firing Qassam rockets into Israeli territory as an immediate reply.

One Israeli was killed by a rocket strike on the town of Netivot, 20 kilometres (12 miles) east of Gaza, doctors said.

"Hamas will continue the resistance until the last drop of blood," spokesman Fawzi Barhoum was reported as saying.

The air strikes come amid rumours that an Israeli ground operation is imminent.

Israeli television said on Saturday evening that Israeli troops were massing on the Gaza border "in preparation for a supplementary ground offensive". The report has not been confirmed by independent sources.

Israel's Haaretz newspaper reported that about 60 warplanes took part in the first wave of air strikes.

Most of the dead and injured were said to be in Gaza City, where Hamas's main security compound was destroyed. The head of Gaza's police forces, Tawfik Jaber, was reportedly among those killed.

Residents spoke of children heading to and from school at the time of the attacks.

Egypt opened its border crossing to the Gaza Strip at Rafah to absorb and treat some of those injured in the south of the territory.

Palestinians staged demonstrations in the West Bank cities of Ramallah and Hebron, and there were some scuffles with Israeli troops there.

Although a six-month truce between Hamas and Israel was agreed earlier this year, it was regularly under strain and was allowed to lapse when it expired this month.

Hamas blamed Israel for the end of the ceasefire, saying it had not respected its terms, including the lifting of the blockade under which little more than humanitarian aid has been allowed into Gaza.

Israel said it initially began a staged easing of the blockade, but this was halted when Hamas failed to fulfil what Israel says were agreed conditions, including ending all rocket fire and halting weapons smuggling.

Israel says the blockade - in place since Hamas took control of Gaza in June 2007 - is needed to isolate Hamas and stop it and other militants from firing rockets across the border at Israeli towns.

Pakistani mourners honour Bhutto

Pakistan has marked a year since the assassination of Benazir Bhutto with a two-minute silence, while thousands of mourners visited her mausoleum.

President Asif Ali Zardari, her widower, used the occasion to call for peace and democracy in Pakistan and the resolution of problems through talks.

Analysts say the call was also aimed at India, which blames the recent attack on Mumbai on Pakistani militants.

Mrs Bhutto died in a suicide attack in Rawalpindi after an election rally.

Mourning ceremonies focused on the Bhutto family mausoleum in Garhi Khuda Bakhsh, in the southern province of Sindh.

UN Secretary General Ban Ki-Moon says he expects an independent inquiry into her death to be set up soon.

Tears and flowers

Local police officials in Garhi Khuda Bakhsh told news agencies that about 150,000 people had travelled to the site.

Dialogue is our biggest arsenal Asif Ali Zardari Pakistani president

They came from around the country, by train, plane, car and even on foot, chanting Bhutto slogans, some wailing and beating their chests in an outpouring of emotion, reports.

Mourners kissed her grave and laid flowers at the mausoleum, where official ceremonies were delayed because the site was shrouded in winter mist and fog for much of Saturday morning.

These were her devoted supporters, but many other Pakistanis were also feeling the loss of the charismatic politician, famous abroad and at home, our correspondent says.

Prime Minister Yusuf Raza Gilani paid tribute in a televised address, saying Mrs Bhutto had "worked for poor segments, for poor people and she was the only ray of hope for the people of this country, she was a hope for the region".

Mr Zardari delivered a televised speech from the family home in Naudero, Sindh.

"Dialogue is our biggest arsenal," he said.

"The solution to the problem of the region... is politics, is dialogue and is democracy in Pakistan.

"I want to tell the oldest democracy and the largest democracies of this world: listen to us, learn from us. We have lost our people, we do not talk about war, we do not talk about vengeance."

Thousands of police officers have been deployed in Garhi Khuda Bakhsh, amid fears that Mr Zardari could also be targeted during his visit to the mausoleum.

Multiple crises

Eulogies to Bhutto gloss over her mixed record when in power and her controversial decision to make a deal with Pakistan's military leader, Gen Pervez Musharraf, in order to return from exile, our correspondent adds.

Many Pakistanis say they sorely miss Benazir Bhutto

But her assassination by suspected Islamist militants shook the nation to the core and although Bhutto's Pakistan People's Party and her husband swept to power in the wake of her death, there is still a feeling she left a vacuum that has not been filled, she says.

Pakistanis are missing her political experience and international stature, as they face crises ranging from a raging Islamist insurgency to dangerous tensions with India, our correspondent notes.

Pakistan has redeployed some troops from the north-west to strengthen its border defences, while India has advised its citizens against travelling to Pakistan.

On Friday, the UN secretary general expressed hopes that a UN investigation into Mrs Bhutto's assassination could be set up in the near future and said he was committed to helping Pakistan's search for "truth and justice".

Earlier this year, British detectives investigating the fatal attack in Rawalpindi said Mrs Bhutto had died from the effect of a bomb blast, not gunfire.

Their account matched that of the Pakistani authorities.

But Bhutto's party has insisted she was shot by an assassin and accused the government of a cover-up.

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Serbia arrests 'ex-KLA fighters'

Armed police could be seen escorting the detainees in Belgrade

Police in south Serbia have arrested 10 suspected former Kosovo Liberation Army fighters for war crimes against non-Albanians, including murder and rape.

Serbian Interior Minister Ivica Dacic said the suspects had been arrested in the Serbian town of Presevo, near the border with Kosovo.

The 10 are suspected of being former KLA fighters who killed more than 50 Serbs in Kosovo.

The alleged crimes date back to after the end of the conflict there in 1999.

'New Year's visit'

The Serbian war crimes prosecutor's office said the group had sought to get rid of Serbs and other non-Albanians from Gnjilane (Gjilan in Albanian), 47km (30 miles) south-east of the Kosovan capital, Pristina.

"From June 1999 until October 1999, they were involved in at least 51 murders and 159 abductions in the town," said Bruno Vekaric, a spokesman for Serbia's war crimes prosecutor, Vladimir Vukcevic.

He added that some of those arrested had entered Presevo, a region of Serbia with a large ethnic Albanian community, to celebrate the New Year with relatives.

The Serbian prosecutor's office said the arrests had been made in raids on 17 homes in Presevo after months of preparation because of the "extremely high risk as almost all the suspects were armed".

Nine suspects were transferred to custody in Belgrade while one remained under investigation in southern Serbia, according to a statement from the office reported by the Associated Press.

Belgrade still regards Kosovo, which declared formal independence this year nearly a decade after breaking away from Serbia, as its territory.

Ethnic Albanian militants in Presevo waged an insurgency against Belgrade in 2001 which was ended with the help of Nato and EU diplomacy.

Riza Halimi, an ethnic Albanian political leader from Presevo, accused Serbian police of using excessive force in making the arrests on Friday.

"It certainly does not contribute to the stability in the region," the leader told Serbia's Beta news agency.