China urges restraint on N Korea, cites possible nuke test

BEIJING: China called for restraint on Wednesday after the United Nations tightened sanctions on North Korea as punishment for a rocket launch, citing the possibility of another nuclear test by its wayward ally.

"The DPRK's (North Korea's) satellite launch as well as the possible nuclear test highlight the urgency and importance of settling relevant issues on the Korean peninsula," foreign ministry spokesman Hong Lei told reporters.

"We hope all parties will bear in mind peace and stability of the Korean peninsula, exercise calmness and restraint and avoid actions that might escalate tension."

China backed a Security Council resolution passed on Tuesday in response to last month's long-range rocket launch. The UN expanded the list of North Korean entities on the UN's sanctions list but stopped short of imposing new penalties.

The North reacted defiantly, vowing to strengthen its nuclear and missile capabilities and fuelling speculation about a possible third nuclear test.

China is the North's sole major ally and its leading energy supplier and trade partner. It is seen as one of the few nations able to influence Pyongyang's behaviour.

Communist Party chief Xi Jinping called for dialogue and consultations to achieve the Korean peninsula's denuclearisation and long-term stability.

Speaking with a visiting envoy of South Korean president-elect Park Geun-Hye, Xi said China expects an early resumption of long-suspended six-nation talks on the peninsula's denuclearisation, the official Xinhua news agency said.

State media in China also called for talks to resolve tensions, even after the North rejected dialogue on its atomic programme following the UN move.

"The ultimate way to restore lasting peace and stability on the Korean peninsula is to build trust among key parties through dialogue and consultation," Xinhua said in a commentary.

The agency described the UN move as "a clear response to Pyongyang's violation of Security Council resolutions, which the DPRK as a UN member should abide by".

"It is worth noting that the long-stalled six-party talks remain the most viable platform for dialogue," Xinhua said.

The talks are chaired by China and also involve the two Koreas, the United States, Japan and Russia.

The aim has been to entice Pyongyang to abandon its nuclear programme in exchange for aid and security guarantees, but the process has been moribund since the North abandoned the forum in 2009.

Beijing has long touted the talks as the best way to reduce tensions.

- AFP/xq

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Too early to normalize relations with Pakistan: India

NEW DELHI: India on Wednesday said tensions on the line of control (LoC) have "reduced" after talks between the two DGMOs but there will be no hasty decisions for normalizing relations with Pakistan as it is "too early" to do so.

Talking to reporters, defence minister AK Antony said infiltration attempts are going on even in extreme winters and wondered that "if this is the case now, what will be the position (of infiltration) in summers"?

"After the latest round of talks between the two DGMOs, the tension in the LoC has reduced but I cannot say or set a timeline for normalizing the atmosphere there. It depends on so many factors.

"We have to cross our fingers and after the tragic and inhuman incident, even though Pakistan has assured us certain things, we have to see how this assurance translates into action," Antony said.

He was asked about the situation on the LoC and the threat faced by India from Islamic terrorism.

He said, "It is too early about normalizing the relations. We have to wait and watch and assess the ground situation and other factors. Regarding the future course of action and relations in the future, we will not take a hasty decision."

The situation on the LoC had turned bad after the beheading of two Indian soldiers by Pakistan army troops in the Mendhar sector.

Army chief Gen Bikram Singh had issued a strong warning to the Pakistani army saying his force reserved the retaliate at the time and point of its choosing.

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Foes of NYC soda size limit doubt racial fairness

NEW YORK (AP) — Opponents of the city's limit on the size of sugary drinks are raising questions of racial fairness alongside other complaints as the novel restriction faces a court test.

The NAACP's New York state branch and the Hispanic Federation have joined beverage makers and sellers in trying to stop the rule from taking effect March 12. With a hearing set Wednesday, critics are attacking what they call an inconsistent and undemocratic regulation, while city officials and health experts defend it as a pioneering and proper move to fight obesity.

The issue is complex for the minority advocates, especially given obesity rates that are higher than average among blacks and Hispanics, according to the federal Centers for Disease Control. The groups say in court papers they're concerned about the discrepancy, but the soda rule will unduly harm minority businesses and "freedom of choice in low-income communities."

The latest in a line of healthy-eating initiatives during Mayor Michael Bloomberg's administration, the beverage rule bars restaurants and many other eateries from selling high-sugar drinks in cups or containers bigger than 16 ounces. Violations could bring $200 fines; the city doesn't plan to start imposing those until June.

The city Board of Health OK'd the measure in September. Officials cited the city's rising obesity rate — about 24 percent of adults, up from 18 percent in 2002 — and pointed to studies linking sugary drinks to weight gain. Care for obesity-related illnesses costs more than $4.7 billion a year citywide, with government programs paying about 60 percent of that, according to city Health Commissioner Dr. Thomas Farley.

"It would be irresponsible for (the health board) not to act in the face of an epidemic of this proportion," the city says in court papers. The National Association of Local Boards of Health and several public health scholars have backed the city's position in filings of their own.

Opponents portray the regulation as government nagging that turns sugary drinks into a scapegoat when many factors are at play in the nation's growing girth.

The American Beverage Association and other groups, including movie theater owners and Korean grocers, sued. They argue that the first-of-its-kind restriction should have gone before the elected City Council instead of being approved by the Bloomberg-appointed health board.

Five City Council members echo that view in a court filing, saying the Council is "the proper forum for balancing the city's myriad interests in matters of public health." The Bloomberg administration counters that the health board, made up of doctors and other health professionals, has the "specialized expertise" needed to make the call on limiting cola sizes.

The suit also argues the rule is too narrow to be fair. Alcohol, unsweetened juice and milk-based drinks are excluded, as are supermarkets and many convenience stores — including 7-Eleven, home of the Big Gulp — that aren't subject to city health regulations.

The NAACP and the Hispanic Federation, a network of 100 northeastern groups, say minority-owned delis and corner stores will end up at a disadvantage compared to grocery chains.

"This sweeping regulation will no doubt burden and disproportionally impact minority-owned businesses at a time when these businesses can least afford it," they said in court papers. They say the city should focus instead on increasing physical education in schools.

During Bloomberg's 11-year tenure, the city also has made chain restaurants post calorie counts on their menus and barred artificial trans fats in french fries and other restaurant food.

In general, state and local governments have considerable authority to enact laws intended to protect people's health and safety, but it remains to be seen how a court will view a portion-size restriction, said Neal Fortin, director, Institute for Food Laws and Regulations at Michigan State University.

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Obama's Inauguration: A Night to Remember

President Barack Obama dances with first lady Michelle Obama at the Commander-in-Chief Ball, Jan. 21, 2013, in Washington, DC. Pres. Obama was sworn-in for his second term as president during a public ceremonial inauguration earlier in the day. (Justin Sullivan/Getty Images)

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Israel goes to polls, set to re-elect Netanyahu

JERUSALEM (Reuters) - Israelis voted on Tuesday in an election that is expected to hand hawkish Prime Minister Benjamin Netanyahu a third term, opening the way for a showdown with Iran and bolstering opponents of Palestinian statehood.

However, Netanyahu's own Likud party, running alongside the ultra-nationalist Yisrael Beitenu group, looks set to have fewer seats than in the previous parliament, with opinion polls showing a surge in support for the far-right Jewish Home party.

Political sources said Netanyahu, concerned by his apparent fall in popularity, might approach center-left parties after the ballot in an effort to broaden his coalition and present a more moderate face to Washington and other concerned allies.

"We want Israel to succeed, we vote Likud-Beitenu ... The bigger it is, the more Israel will succeed," Netanyahu said after voting alongside his wife and two sons.

Some 5.66 million Israelis are eligible to cast a ballot, with polling stations closing at 10 p.m.. Full results are due by Wednesday morning, opening the way for coalition talks that could take several weeks.

By 2 p.m., the Israeli election committee said turnout was 38.3 percent, up from 34 percent at the same time in 2009 and the highest level since 1999. Ahead of the ballot, analysts had speculated that high turnout would benefit center-left parties that have sometimes struggled to motivate their voter base.

The lackluster election campaign failed to focus on any single issue and with a Netanyahu victory predicted by every opinion poll, the two main political blocs seemed to spend more time on internal feuding than confronting each other.

"There is a king sitting on the throne in Israel and I wanted to dethrone him, but it looks like that won't happen," said Yehudit Shimshi, a retired teacher voting in central Israel in balmy winter weather that drew out the electorate.

No Israeli party has ever secured an absolute majority, meaning that Netanyahu, who says that dealing with Iran's nuclear ambitions is his top priority, will have to bring various allies on board to control the 120-seat Knesset.

The former commando has traditionally looked to religious, conservative parties for backing and is widely expected to seek out the surprise star of the campaign, self-made millionaire Naftali Bennett, who heads the Jewish Home party.

Bennett has ruled out any peace pact with the Palestinians and calls for the annexation of much of the occupied West Bank.

His youthful dynamism has struck a chord amongst Israelis, disillusioned after years of failed peace initiatives, and has eroded Netanyahu's support base.

The Likud has also shifted further right in recent months, with hardline candidates who reject the so-called two-state solution dominating the top of the party list.

"TRENDY PARTIES"

Surveys suggest Bennett may take up to 14 seats, many at the expense of Likud-Beitenu, which was projected to win 32 in the last round of opinion polls published on Friday - 10 less than the two parties won in 2009 when they ran separate lists.

Acknowledging the threat, Netanyahu's son Yair urged young Israelis not to abandon the old, established Likud.

"Even if there are more trendy parties, there is one party that has a proven record," he said on Tuesday.

Amongst the new parties standing for the first time in an election were Yesh Atid (There is a Future), a centrist group led by former television host Yair Lapid, seen winning 13 seats.

"All our lives we voted Likud, but today we voted for Lapid because we want a different coalition," said Ahuva Heled, 55, a retired teacher voting with her husband north of Tel Aviv.

Lapid has not ruled out joining a Netanyahu cabinet, but is pushing hard for ultra-Orthodox Jews to do military service - a demand fiercely rejected by some allies of the prime minister.

Israel's main opposition party, Labour, which is seen capturing up to 17 seats, has already ruled out a repeat of 2009, when it initially hooked up with Netanyahu, promising to promote peace negotiations with the Palestinians.

U.S.-brokered talks collapsed just a month after they started in 2010 following a row over settlement building, and have lain in ruins ever since. Netanyahu blamed the Palestinians for the failure and says his door remains open to discussions.

Palestinian President Mahmoud Abbas says he won't return to the table unless there is a halt to settlement construction.

That looks unlikely, with Netanyahu approving some 11,000 settler homes in December alone, causing further strains to his already notoriously difficult relations with U.S. President Barack Obama, who was sworn in for a second term on Monday.

IRAN THREAT

Tuesday's vote is the first in Israel since Arab uprisings swept the region two years ago, reshaping the Middle East.

Netanyahu has said the turbulence - which has brought Islamist governments to power in several countries long ruled by secularist autocrats, including neighboring Egypt - shows the importance of strengthening national security.

If he wins on Tuesday, he will seek to put Iran back to the top of the global agenda. Netanyahu has said he will not let Tehran enrich enough uranium to make a single nuclear bomb - a threshold Israeli experts say could arrive as early as mid-2013.

Iran denies it is planning to build the bomb, and says Israel, widely believed to have the only nuclear arsenal in the Middle East, is the biggest threat to the region.

The issue has barely registered during the election campaign, with a poll in Haaretz newspaper on Friday saying 47 percent of Israelis thought social and economic issues were the most pressing concern, against just 10 percent who cited Iran.

One of the first problems to face the next government, which is unlikely to take power before the middle of next month at the earliest, is the stuttering economy.

Data last week showed the budget deficit rose to 4.2 percent of gross domestic product in 2012, double the original estimate, meaning spending cuts and tax hikes look certain.

(Additional reporting by Ori Lewis, Jeffrey Heller and Tova Cohen; Editing by Alistair Lyon)

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Chinese film fans decry censors' cuts in 'Skyfall'

BEIJING: Chinese cinema fans were up in arms Tuesday over cuts made to "Skyfall", complaining that the censors had ruined the latest film in the James Bond franchise, which hit screens this week.

Some scenes from the movie, parts of which were filmed in Shanghai starring Daniel Craig in his third appearance as the British secret agent, were clearly too sensitive for the censors, especially scenes referring to China.

"It's annoying! Every time it's the same!" wrote one user named Niccilee in a post on one popular microblog. "We've been waiting for this for so long and then they cut it and re-cut it!"

The 23rd official film in the highly lucrative series came out late last year in most markets but Chinese authorities put off the release date until this week under its usual practice of favouring domestic productions.

When it did hit the screen on Monday, it was with several cuts.

Among the scenes to have ended up on the cutting room floor was one where a hitman played by Ola Rapace takes out a Chinese security guard in a Shanghai sky-scraper.

"Are they afraid of copy-cat killings by other criminals?" asked Leslie Zhuang, one disappointed viewer in an online posting. "If scenes like this are cut, you may as well not import the film!"

A scene depicting prostitution in Macau -- a special administrative region of China -- had also been taken out, as was a line from Bond's nemesis, played by Javier Bardem, in which he mentions having suffered torture at the hands of Chinese security agents.

"I'd rather watch the pirated DVD," said Li Xiaotian, another Internet user, referring to the illegal copies of films that are easy to come by in China.

The official Xinhua news agency said the cuts had prompted calls for reform in the way films are censored, although there was no criticism of the "Skyfall" cuts in the state media.

Rules governing censorship in China are opaque and reasons are never given for why cuts are made. Few films escape the censors unscathed, unless they offer a particularly flattering depiction of the Chinese people.

Regardless of the censors, the cuts did not seem to have dented box office sales at one Beijing cinema, Megabox, which reported that most tickets had been sold for screenings on Tuesday.

China imposes strict rules over what films are allowed to be seen by the public, banning what it considers any negative portrayal of contemporary politics or issues it says might lead to social unrest.

After years of pressure, China last year agreed to increase the number of imported films allowed in annually from 20 to 34, in a year when 893 films were produced domestically.

- AFP/ir

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High drama in BJP on eve of presidential election

NEW DELHI: High drama unfolded in the BJP today on the eve of election of a new party president with Yashwant Sinha procuring a nomination form and Mahesh Jethmalani complaining he is being denied one even as Nitin Gadkari appeared set to get a second term.

Gadkari, who shared the stage at a party programme in Utan in Maharashtra with senior leader L K Advani, will reach the capital tonight. He will file his nomination papers tomorrow and is likely to be declared elected unopposed, party sources said.

Gadkari and Advani were not seen exchanging any word at the programme and the apparent cold vibes reflected the rift within the party on the incumbent getting a second term. However, with the RSS still firmly backing Gadkari, he is likely to get another three years at the helm.

Sinha created a flutter this evening when he procured a nomination form and voters' list from chief electoral officer, Thawar Chand Gehlot. Advani declined to answer newsmen's questions as to whether Sinha, a former Union minister, is in the race.

Confirming this, Gehlot said Sinha is the only person to have taken the form from him till now. However, he hastened to add that the forms are easily available on the party website and state headquarters of the BJP.

Earlier in the day, Mahesh Jethmalani said he is being denied a nomination form to prevent him from contesting.

Party veterans point out that despite all the pretence of an election of the BJP president, the stringent provisions of the party Constitution will make it difficult for the forms of Sinha and Jethmalani to be accepted.

A candidate for the BJP presidential poll should have been an active member of the party for 12 consecutive years and an ordinary member for 15 years. He would also need atleast 20 proposers each from five different state units, which adds upto 100.

While Mahesh Jethmalani fails to qualify, Sinha is unlikely to get 100 proposers from five states.

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Flu season fuels debate over paid sick time laws

NEW YORK (AP) — Sniffling, groggy and afraid she had caught the flu, Diana Zavala dragged herself in to work anyway for a day she felt she couldn't afford to miss.

A school speech therapist who works as an independent contractor, she doesn't have paid sick days. So the mother of two reported to work and hoped for the best — and was aching, shivering and coughing by the end of the day. She stayed home the next day, then loaded up on medicine and returned to work.

"It's a balancing act" between physical health and financial well-being, she said.

An unusually early and vigorous flu season is drawing attention to a cause that has scored victories but also hit roadblocks in recent years: mandatory paid sick leave for a third of civilian workers — more than 40 million people — who don't have it.

Supporters and opponents are particularly watching New York City, where lawmakers are weighing a sick leave proposal amid a competitive mayoral race.

Pointing to a flu outbreak that the governor has called a public health emergency, dozens of doctors, nurses, lawmakers and activists — some in surgical masks — rallied Friday on the City Hall steps to call for passage of the measure, which has awaited a City Council vote for nearly three years. Two likely mayoral contenders have also pressed the point.

The flu spike is making people more aware of the argument for sick pay, said Ellen Bravo, executive director of Family Values at Work, which promotes paid sick time initiatives around the country. "There's people who say, 'OK, I get it — you don't want your server coughing on your food,'" she said.

Advocates have cast paid sick time as both a workforce issue akin to parental leave and "living wage" laws, and a public health priority.

But to some business owners, paid sick leave is an impractical and unfair burden for small operations. Critics also say the timing is bad, given the choppy economy and the hardships inflicted by Superstorm Sandy.

Michael Sinensky, an owner of seven bars and restaurants around the city, was against the sick time proposal before Sandy. And after the storm shut down four of his restaurants for days or weeks, costing hundreds of thousands of dollars that his insurers have yet to pay, "we're in survival mode."

"We're at the point, right now, where we cannot afford additional social initiatives," said Sinensky, whose roughly 500 employees switch shifts if they can't work, an arrangement that some restaurateurs say benefits workers because paid sick time wouldn't include tips.

Employees without sick days are more likely to go to work with a contagious illness, send an ill child to school or day care and use hospital emergency rooms for care, according to a 2010 survey by the University of Chicago's National Opinion Research Center. A 2011 study in the American Journal of Public Health estimated that a lack of sick time helped spread 5 million cases of flu-like illness during the 2009 swine flu outbreak.

To be sure, many employees entitled to sick time go to work ill anyway, out of dedication or at least a desire to project it. But the work-through-it ethic is shifting somewhat amid growing awareness about spreading sickness.

"Right now, where companies' incentives lie is butting right up against this concern over people coming into the workplace, infecting others and bringing productivity of a whole company down," said John A. Challenger, CEO of employer consulting firm Challenger, Gray & Christmas.

Paid sick day requirements are often popular in polls, but only four places have them: San Francisco, Seattle, Washington, D.C., and the state of Connecticut. The specific provisions vary.

Milwaukee voters approved a sick time requirement in 2008, but the state Legislature passed a law blocking it. Philadelphia's mayor vetoed a sick leave measure in 2011; lawmakers have since instituted a sick time requirement for businesses with city contracts. Voters rejected a paid sick day measure in Denver in 2011.

In New York, City Councilwoman Gale Brewer's proposal would require up to five paid sick days a year at businesses with at least five employees. It wouldn't include independent contractors, such as Zavala, who supports the idea nonetheless.

The idea boasts such supporters as feminist Gloria Steinem and "Sex and the City" actress Cynthia Nixon, as well as a majority of City Council members and a coalition of unions, women's groups and public health advocates. But it also faces influential opponents, including business groups, Mayor Michael Bloomberg and City Council Speaker Christine Quinn, who has virtually complete control over what matters come to a vote.

Quinn, who is expected to run for mayor, said she considers paid sick leave a worthy goal but doesn't think it would be wise to implement it in a sluggish economy. Two of her likely opponents, Public Advocate Bill de Blasio and Comptroller John Liu, have reiterated calls for paid sick leave in light of the flu season.

While the debate plays out, Emilio Palaguachi is recovering from the flu and looking for a job. The father of four was abruptly fired without explanation earlier this month from his job at a deli after taking a day off to go to a doctor, he said. His former employer couldn't be reached by telephone.

"I needed work," Palaguachi said after Friday's City Hall rally, but "I needed to see the doctor because I'm sick."

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Associated Press writer Susan Haigh in Hartford, Conn., contributed to this report.

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Obama Second Inaugural: A Déjà Vu Moment

At the height of the "fiscal cliff" showdown, the final political battle of his first term, President Barack Obama lamented the bitter persistence of Washington partisanship as "déjà vu all over again."

Today, as Obama delivers his second inaugural address on the west front of the Capitol, he could say the same thing about the looming political battles of his new term.

Four years ago, Obama took office amidst what he then described as "gathering clouds and raging storms," an economic crisis that resulted from "our collective failure to make hard choices and prepare the nation for a new age."

The nation was in the throes of a financial collapse, decades in the making, whose breadth and depth were only starting to be known. It would become a devastating recession, the worst since the Great Depression.

Now, even as the economy continues a gradual climb back from the brink, many of those "hard choices" still remain, with climbing deficits and debt and a yawning partisan gap over how to deal with them.

On the horizon is a cascade of fresh fiscal crises, these politically self-imposed, over the nation's debt ceiling, spending cuts and a federal budget, all of which economists say threaten another recession and could further downgrade of the nation's credit rating.

Obama Sworn In for Second Term, Kicks off Inaugural Festivities Watch Video

Getting the Parties Started: Memorable Inaugural Balls Watch Video

Obama will use the first major speech of his second term to try to reset the tone of debate and turn the page on the political battles of the past, hoping for something of a fresh start.

He will "talk about the challenges that face us and what unites us as Americans," Obama campaign manager Jim Messina told ABC News.

"Monday is an American moment: the swearing-in of the President of the United States -- everyone's president," Messina said. "You're going to see a president who wants to work across party lines to get things done, that's what the country wants."

He will acknowledge that we won't "settle every debate or resolve every difference" but that we "have an obligation to work together," said a senior administration official, who asked to remain anonymous in order to speak freely about the speech.

Obama will not discuss specific policy prescriptions in his address, though he may broadly allude to issues of war, immigration, climate change and environment, and gun control, officials said. The details will be saved for the State of the Union address on Feb. 12.

But the president will make clear that his re-election -- the first Democrat to win two elections with more than 50 percent of the vote since FDR -- reflects momentum for his agenda, said top White House aides.

"He's going to find every way he can to compromise. But he's going to be pretty clear, and we're also going to bring the American people more into the debate than we did in the first term," senior Obama adviser David Plouffe said on ABC's "This Week."

Polls show Obama begins his second term with soaring popularity -- the highest job approval rating in years -- and strong backing on some of his top legislative priorities.

Fifty-five percent of Americans in the latest ABC News/Washington Post poll approve of Obama's job performance overall, the most since November 2009, with a small exception for the 56 percent spike shortly after the death of Osama bin Laden in 2011.

That rating compares with 19 percent approval for Congress -- matching its lowest at or near the start of a new session in polls by ABC News and the Washington Post since 1975.

Majorities in the survey also broadly favor Obama's position on the debt ceiling, gun control measures, and reforms for the immigration system.

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Algeria finds dead Canadian militants as siege toll rises

ALGIERS (Reuters) - Algerian forces have found the bodies of two Canadian Islamist fighters after a bloody siege at a desert gas plant, a security source said on Monday, as the death toll reached at least 80 after troops stormed the complex to end the hostage crisis.

Algerian Prime Minister Abdelmalek Sellal is expected to give details on Monday about the siege near the town of In Amenas, which left American, British, French, Japanese, Norwegian, Filipino and Romanian workers dead or missing.

Much remains unclear about events after the jihadists staged the attack last Wednesday. However, an Algerian newspaper said they had arrived in cars painted in the colors of state energy company Sonatrach but registered in neighboring Libya, a country awash with arms since Muammar Gaddafi's fall in 2011.

The Algerian security source told Reuters that documents found on the bodies of the two militants had identified them as Canadians, as special forces scoured the plant following Saturday's bloody end to the crisis.

Veteran Islamist fighter Mokhtar Belmokhtar claimed responsibility for the attack on behalf of al Qaeda, and an official Algerian source has said the militants included people from outside the African continent, as well as Arabs and Africans.

A security source said on Sunday that Algerian troops had found the bodies of 25 hostages, raising the number of hostages killed to 48 and the total number of deaths to at least 80. He said six militants were captured alive and troops were still searching for others.

A Japanese government source said the Algerian government had informed Tokyo that nine Japanese had been killed, the biggest toll so far among foreigners at the plant. Six Filipinos died and four were wounded, a government spokesman in Manila said.

The raid has exposed the vulnerability of multinational-run oil and gas installations in an important producing region and pushed the growing threat from Islamist militant groups in the Sahara to a prominent position in the West's security agenda.

Algerian President Abdelaziz Bouteflika has ordered an investigation into how security forces failed to prevent the attack, the daily El Khabar said. The militants had used nine cars in Sonatrach colors and all with Libyan registration plates, it quoted unnamed security sources as saying.

Algerian Tahar Ben Cheneb - leader of a group called the Movement of Islamic Youth in the South who was killed on the first day of the assault - had been based in Libya where he married a local woman two months ago, it said.

ONE-EYED JIHADIST

Belmokhtar - a one-eyed jihadist who fought in Afghanistan and Algeria's civil war of the 1990s when the secular government fought Islamists - tied the desert attack to France's intervention across the Sahara against Islamist rebels in Mali.

"We in al Qaeda announce this blessed operation," he said in a video, according to Sahara Media, a regional website. About 40 attackers participated in the raid, he said, roughly matching the government's figures for fighters killed and captured.

Belmokhtar demanded an end to French air strikes against Islamist fighters in neighboring Mali. These began five days before the fighters swooped before dawn and seized a plant that produces 10 percent of Algeria's natural gas exports.

U.S. and European officials doubt such a complex raid could have been organized quickly enough to have been conceived as a direct response to the French military intervention. However, the French action could have triggered an operation that had already been planned.

The group behind the raid, the Mulathameen Brigade, also threatened to carry out more such attacks if Western powers did not end what it called an assault on Muslims in Mali, according to the SITE service, which monitors militant statements.

In a statement published by the Mauritania-based Nouakchott News Agency, the hostage takers said they had offered talks about freeing the captives, but the Algerian authorities had been determined to use military force.

"We opened the door for negotiations with the Westerners and the Algerians, and granted them safety from the beginning of the operation, but one of the senior (Algerian) intelligence officials confirmed to us in a phone call that they will destroy the place with everyone in it," SITE quoted the statement as saying.

BLOODY SIEGE

The siege turned bloody on Thursday when the Algerian army opened fire, saying fighters were trying to escape with their prisoners. Survivors said Algerian forces blasted several trucks in a convoy carrying both hostages and their captors.

Nearly 700 Algerian workers and more than 100 foreigners escaped, mainly on Thursday when the fighters were driven from the residential barracks. Some captors remained holed up in the industrial complex until Saturday when they were overrun.

The bloodshed has strained Algeria's relations with its Western allies, some of which have complained about being left in the dark while the decision to storm the compound was being taken.

Nevertheless, Britain and France both defended the military action by Algeria, the strongest military power in the Sahara and an ally the West needs in combating the militants.

Among other foreigners confirmed dead by their home countries were three Britons, one American and two Romanians. The missing include five Norwegians, three Britons and a British resident. An Algerian security source said at least one Frenchman was also among the dead.

The raid on the plant, which was home to expatriate workers from Britain's BP, Norway's Statoil, Japanese engineering firm BGC Corp and others, exposed the vulnerability of multinational oil operations in the Sahara.

However, Algeria is determined to press on with its energy industry. Oil Minister Youcef Yousfi visited the site and said physical damage was minor, state news service APSE reported. The plant would start up again in two days, he said.

Algeria, scarred by the civil war with Islamist insurgents in the 1990s which claimed 200,000 lives, insisted from the start of the crisis there would be no negotiation in the face of terrorism. France especially needs close cooperation from Algeria to crush Islamist rebels in northern Mali.

(Additional reporting by Anton Slodkowski in Tokyo, Balazs Koranyi in Oslo, William Maclean in Dubai, Estelle Shirbon and David Alexander in London, Brian Love in Paris and Daniel Flynn in Dakar; Writing by David Stamp; Editing by Giles Elgood)

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