House set for fresh bail-out vote

President Bush has said the bill is the best chance of rescuing the economy

The US House of Representatives is preparing to vote on a $700bn (£380bn) plan to rescue the US financial sector.

Party leaders are hoping the House, which stunned global markets by rejecting the initial plan, will follow the Senate and back a new version.

The House began debating the deal on Friday morning and is expected to vote later in the day.

The Senate bill added about $100bn in new tax breaks in the hope of gaining more support from House Republicans.

The New York stock exchange opened shortly after the debate began and the Dow Jones Industrial Average jumped more than 100 points in early trading.

But earlier in Japan, shares fell to a three-year low. The Nikkei index closed down more than 1.9%, its lowest level since May 2005.

In Europe, shares were relatively flat. In early afternoon trading the UK’s FTSE 100 was down just 18 points, France’s Cac 40 was down nine and Germany’s Dax up seven.

The financial volatility continued on Friday as US bank Wells Fargo announced it would buy troubled rival Wachovia in a $15.1bn (£8.5bn) deal.

The US also reported its biggest monthly job loss in more than five years.

Bush plea

In Washington, House Speaker Nancy Pelosi, a Democrat, has said no vote will be scheduled until the party feels it will pass.

NEW MEASURES IN BAIL-OUT BILL Increased protection for saving deposits Increased child tax credits More aid for hurricane victims Tax breaks for renewable energy Higher starting limits to alternative minimum tax

“We’re not going to take a bill to the floor that doesn’t have the votes. I’m optimistic that we will take a bill to the floor,” she said.

When the House first rejected the plan on Monday – by 228 votes to 205 – legislators had concerns about both the content of the plan and the speed with which they were being asked to pass it.

President George W Bush has since urged the House to back his revised bill.

The package is aimed at buying up the bad debts of failing institutions on Wall Street.

Both the Democratic and Republican parties are pressing their members in the House to swing behind the revised bill and party leaders expect it to pass.

This thing, this issue, has gone way beyond New York and Wall Street President George W Bush

Some members have called for more amendments, which opens up the prospect of further horse-trading up to the point at which votes are cast.

Pressure will particularly be applied to the 133 House Republicans who went against party affiliation to reject President Bush’s bill, correspondents say.

Tennessee Republican Zach Wamp, one of those who voted against the bill on Monday, said he would now vote in favor of the measure despite ordinary Americans remaining “as mad as heck” at the situation on Wall Street.

“You have got to do what you think is right. I thought the right thing Monday was to vote no. And I think the right thing to do tomorrow is to vote yes.”

The bill successfully passed through the Senate on Wednesday after it was amended to raise the government’s guarantee on savings from $100,000 to $250,000.

It also now includes tax breaks to help small businesses, expand the child tax credit and extend help to victims of recent hurricanes.

Most importantly, it extends the tax break aimed at boosting the provision of alternative energy such as wind farms.

It also includes a number of so-called “pork-barrel” measures including tax cuts for rum manufacturers in Puerto Rico and the owners of racetracks.

The additional cost of these unrelated tax breaks – which could add $100bn to the bill – have worried some fiscally conservative Democrats in the House of Representatives.

US markets wary over rescue deal

The markets remain nervous

US shares have fallen sharply with investors cautious over whether the House of Representatives will back the revised bank rescue plan.

The House is due to discuss the scheme later, with a vote expected on Friday. The bill successfully passed through the US Senate on Wednesday.

On Wall Street, the Dow Jones index was down 263 points or 2.4% at 10,571, a slide dragging European shares lower.

The falls came as France said it would host a summit on the financial crisis.

The UK’s FTSE 100 closed was down 1.8% to 4,870.3 points while Germany’s Dax index shed 2.5% and France’s Cac 40 lost 2.3%.

Sentiment was further hit by glum economic data – showing that the number of people filing for new unemployment benefit claims rose to a seven-year high, while factory orders had seen a steeper-than-expected drop in August.

European talks

The office of French President Nicolas Sarkozy said the special meeting on Saturday would discuss a co-ordinated response to the financial turmoil amongst European members of the G8 ahead of a meeting of world finance leaders in Washington next week.

UK Prime Minister Gordon Brown is due to attend, together with German Chancellor Angela Merkel, Italian Prime Minister Silvio Berlusconi and European Central Bank President Jean-Claude Trichet.

Investors are still concerned about the efficiency of this rescue plan and how it can help the global economy Aric Au, Phillip Securities

But with just two days to go before the talks start, EU members are deeply divided, correspondent said.

France and Holland favor a European response to help banks hit by the credit crisis while Germany and Luxembourg believe a joint rescue plan is not necessary.

European leaders have denied speculation that they wanted to establish a unified 300bn euro ($418.4bn; £236bn) banking rescue deal along the same lines as the US plan.

The rescue idea was said to be being proposed by France, but Mr Sarkozy insisted that there were no such plans.

“I deny both the amount and the principle [of such a plan],” he said.

‘Essential’

In the US, a number of changes had to be made to the $700bn (£380bn) bail-out plan in order to help win approval in the Senate.

These include raising the government’s guarantee on savings from $100,000 to $250,000, tax breaks to help small businesses, expansion of child tax credit, and help for victims of recent hurricanes.

President George W Bush said that the package was “essential to the financial security of every American”.

However, economists said doubts remained about how effective the package would be.

“Investors are still concerned about the efficiency of this rescue plan and how it can help the global economy,” said Aric Au of Phillip Securities in Hong Kong.

McCain and Obama

US presidential hopefuls John McCain and Barack Obama, who both returned from the campaign trail for last night’s Senate debate, voted in favor of the rescue plan.

Senate majority leader Harry Reid, a Democrat, said he was happy with the result and praised both presidential candidates for voting.

“I think it shows that when we work together we can accomplish good things,” he said.

Mitch McConnell, leader of Republican senators, was also in jubilant mood.

“This was a measure that was much needed, to unfreeze the credit markets and get America’s economy working again,” he said.

Senate urged to back crisis bill

Shares remain volatile ahead of Wednesday’s key vote

Democratic and Republican Senate leaders have appealed for a new version of a $700bn (£380bn) Wall Street bail-out to be approved in a key vote.

Republican Mitch McConnell said it would shield Americans from “shockwaves of a problem they didn’t create”.

The plan needs support in the Senate and House of Representatives, which rejected a similar bill on Monday.

Senate Democrat Harry Reid said he hoped a strong show of bipartisanship would “spark the House to do the same”.

President George W Bush has been speaking to senators ahead of the vote. The White House said it hoped to see “strong support for the bill”.

“It’s critically important that we approve legislation this week and limit further damage to our economy,” said spokesman Tony Fratto.

US presidential hopefuls John McCain and Barack Obama are returning from the campaign trail for the vote, which is due to begin late on Wednesday.

Revised proposal

Global shares were mixed in Wednesday trading ahead of the vote.

By early afternoon on Wall Street the Dow Jones was down 0.2% or 30 points.

CHANGES TO BILL Raises government’s guarantee on savings from $100,000 to $250,000 Tax breaks to help small businesses and promote renewable energy Expansion of child tax credit and help for victims of recent hurricanes

But hopes that enough changes had been made to get the bill through saw shares close up strongly in Asia on Wednesday.

In Europe, the UK’s FTSE 100 finished 1.1% higher at 4,959.6 points, France’s key index added 0.6% while German shares fell.

Changes to the rescue plan involve lifting the US government’s guarantee on savings from $100,000 to $250,000 and a package of targeted tax breaks.

They are designed to answer critics who felt the original plan was weighted too much in favour of Wall Street while not enough was being done to help struggling American families.

To get through the Senate, the bill will require backing by 60 of the 100 senators. It would then return to the House of Representatives for a vote on Thursday or Friday.

Some members of Congress continue to press for more fundamental changes to the bill.

President Bush has warned of “painful and lasting” consequences for the US should Congress fail to agree a rescue plan.

The House’s rejection of the earlier version of the plan on Monday led to sharp falls on world stock markets.

In other developments:

• The European Union outlines its own proposals for reforming banking regulation which, if approved, could see dramatic changes to the way in which banks operate
• Russian Prime Minister Vladimir Putin says the “irresponsibility” of the US financial system is to blame for the crisis
• Ireland’s government discusses a move to guarantee all bank deposits with the EU Competition Commissioner

‘Painful recession’

In election campaigning on the eve of the vote, Mr McCain and Mr Obama urged politicians of both parties to work together to pass the emergency legislation.

Speaking in Reno, Nevada, Mr Obama warned that without action by Congress “millions of jobs could be lost, a long and painful recession could follow”.

John McCain said inaction by Congress was putting the US at risk

He added: “There will be a time to punish those who set this fire, but now is the moment for us to come together and put the fire out.”

Mr McCain, who campaigned in Des Moines, Iowa, said inaction by Congress had “put every American and the entire economy at the gravest risk” and that Washington urgently needed to show leadership.

“I am disappointed at the lack of resolve and bipartisan goodwill among members of both parties to fix this problem,” he said.

The vote comes a day before a TV debate between vice-presidential candidates Joe Biden and Sarah Palin.

Mr Biden, Mr Obama’s running mate, is also expected to take part in the Senate vote.

Meanwhile, ex-President Bill Clinton is to hold his first rally for Mr Obama.

Mr Clinton, whose wife Hillary lost to Mr Obama in a fierce primary contest for the Democratic nomination, is due to appear in Florida, where he will encourage people to register as voters before a deadline on Monday.

Livni wins Israel party primary

Critics have accused Tzipi Livni of lacking political experience

Israeli Foreign Minister Tzipi Livni has won the leadership of the governing Kadima party, putting her on track to succeed Ehud Olmert as prime minister.

Ms Livni beat Transport Minister Shaul Mofaz by just 431 votes, or 1.1%, the central electoral commission said.

In a victory speech, Ms Livni announced that she wanted to form a new cabinet “as quickly as possible in the face of the serious threats” facing Israel.

She has 42 days to do so, during which time Mr Olmert remains prime minister.

He announced he would step down in July after facing growing pressure over multiple corruption investigations.

The senior Palestinian Authority negotiator, Saeb Erekat, said he hoped the result would lead to a return to stability.

‘Great reverence’

Correspondent in Jerusalem says that for much of Wednesday night, Ms Livni’s supporters in the Kadima party cheered at what they believed had been an emphatic victory, predicted by a series of exit polls on Israeli TV.

KADIMA PRIMARY RESULTS Tzipi Livni: 43.1% (16,936 votes) Shaul Mofaz: 42% (16,505) Meir Sheetrit: 8.4% (3,327) Avi Dichter: 6.5% (2,563)

Mr Olmert phoned his foreign minister to congratulate her and promise his full co-operation after she appeared on track to win with about 48% of the vote. Then the balloon slowly deflated as the results rolled in, our correspondent says.

According to the final results released by Kadima, Ms Livni won the election with 43.1%, or 16,936 votes. Mr Mofaz, a former defence minister and chief of staff of the Israeli military, came in a close second with 42%, or 16,505 votes.

The two other candidates, cabinet minister Meir Sheetrit and former Shin Bet director Avi Dichter, lagged far behind with 8.4% and 6.5% respectively.

Mr Mofaz’s supporters have warned that they may lodge an appeal against the result. His campaign headquarters has reportedly already demanded the ballot in the southern town of Ashkelon be disqualified.

Supporters of Shaul Mofaz said they might appeal against the result

In a victory speech early on Thursday morning, Ms Livni said that she would seek to form a new coalition government “as quickly as possible” and called for party unity.

“All the people who came to vote today expressed what they wish to happen in this country,” she said. “The national responsibility [bestowed] by the public brings me to approach this job with great reverence.”

If she can form a fresh governing coalition within the next six weeks, Ms Livni will become Israel’s first woman prime minister since Golda Meir stepped down in 1974.

Our correspondent says that will be no easy task, and if it were to end in failure, general elections will follow in a further three months.

‘Mrs Clean’

Ms Livni is seen as less hawkish than Mr Mofaz when it comes to the Palestinians and to dealing with Iran’s nuclear ambitions.

WHAT HAPPENS NEXT Ehud Olmert formally resigns as prime minister and his cabinet resigns with him President consults parties to pick a Knesset member to form a new cabinet – expected to be the Kadima leader The MK has 42 days to form a coalition acceptable to parliament If no coalition is formed, another MK may be asked to try to form a government, or a general election may be called If a general election is called, it must be held within 90 days Mr Olmert remains caretaker prime minister until the Knesset approves a new government

Critics say Ms Livni, a former lawyer and Mossad agent, also lacks political experience.

Her supporters say she represents a break with the past. Ms Livni is untainted by the kind of allegations of corruption and bribery that led to Mr Olmert’s resignation and have damaged the reputation of Israeli politics.

“[She] is a good choice as far as Israel’s foreign relations are concerned, but there is still the tension with Iran. I am not so sure how much experience she has for such matters and if she will be able to take the right decisions,” said Shmuel Sandler, professor at the Begin-Sadat Centre for Strategic Studies.

“She looks like ‘Mrs Clean’… but she will still have to form a coalition,” he told the Reuters news agency. “It is very difficult to predict whether she will be a strong prime minister.”

Kadima was formed three years ago when former Prime Minister Ariel Sharon split from the centre-right opposition party, Likud, to draw together support from left and right for his policy of unilateral withdrawals from the Gaza Strip and parts of the West Bank.

But its poll ratings fell after a stroke left Mr Sharon in a coma.

His successor, Mr Olmert, faced strong criticism of his handling of the 2006 Israel-Lebanon war and he was investigated in several corruption scandals.

Polls now suggest Likud could win a potential general election, which would take place if a coalition government cannot be formed in the wake of the Kadima leadership vote.

The Kadima election comes as the US government is continuing its push for an Israeli-Palestinian peace deal before President George W Bush leaves office in January.

Mr Olmert and Palestinian Authority President Mahmoud Abbas held talks on Tuesday. An Israeli spokesman said the two would continue to meet until a new government was sworn in.

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‘Catastrophic’ storm hits Texas

Hurricane Ike has made landfall on the Gulf coast of Texas, where it is expected to cause “potentially catastrophic” flooding and damage.

It hit land at Galveston at 0710 GMT, with winds of up to 110 mph (175km/h).

Much of the city, which in 1900 was the scene of the country’s deadliest hurricane, was already under water after a 12ft (3.7m) storm surge.

The eye of the storm, which has since weakened to a Category One, is turning away from Houston, towards Arkansas.

Outside walls and ceilings have collapsed, the glass atrium in the lobby [of our hotel] shattered

Mandatory evacuation orders affected more than one million people, but there are fears for up to 90,000 people across Texas who officials say decided to brave out the storm.

In Galveston, an estimated 23,000 residents stayed behind.

President George W Bush, who earlier declared a federal emergency in Texas, said the federal and state authorities would conduct the recovery effort together, bringing in generators and ensuring water and ice supplies.

US Homeland Security Secretary Michael Chertoff is due to arrive in Texas on Saturday, weather conditions permitting, he added, speaking at the White House.

The US Environmental Protection Agency has waived federal clean air regulations for petrol sold in states affected by the storm, in an effort to reduce fuel disruption.

Ike has halted more than a fifth of US oil production, forcing 17 refineries in the Gulf of Mexico to shut down as a precaution.

Rain and debris

Jessica Willey, a journalist based in Galveston which lies on a small island off the coast of Texas, told it was the worst storm she had ever seen:

See the likely path of Hurricane Ike through the US

“The rain is coming sideways. Debris is flying through the air. Things are getting ripped off buildings every second, and flying through the air.

All emergency workers have been pulled off the streets until daybreak when a curfew will be lifted.

“We hope we will find the people who are left here alive and well,” said Galveston mayor Lynda Ann Thomas.

There is widespread flooding, and a hospital there is under at least 9.8ft (3 meters of water). The city has lost power and a number of houses are reported to be on fire.

Residents of low-lying homes were warned they faced “certain death” if they stayed.

Haitian appeal

At 1300 GMT, Hurricane Ike was about 20 miles (30km) south-southeast of Huntsville, Texas, with top sustained winds of nearly 90mph (145km/h).

It was due to pass through eastern Texas during the day, reaching western Arkansas on Saturday night, according to US National Hurricane Center.

US officials have warned as many as 100,000 homes in Texas could be affected by flooding.

Nearly 4.5 million people in the Houston-Galveston area are without electricity, a spokesman for power company CenterPoint Energy said.

Ferocious winds and rain have been lashing at his hotel for 10 hours.

“We are largely trapped here,” he said. “The power went out five hours ago, the lowest floor is submerged. Outside walls and ceilings have collapsed, the glass atrium in the lobby shattered.

“With the threat of rising seas, hotel guests have been ushered into the concrete stairwell, the sturdiest part of the building, and urged to climb to higher floors.”

The massive system is causing flooding along the Louisiana coast, still recovering from Hurricane Gustav earlier this month.

1900 GALVESTON HURRICANE Thought to be worst natural disaster in US history 8,000 people killed 130mph (209km/h) winds and 15ft (4.6m) waves swept homes away

Authorities are trying to avoid a repeat of 2005, when some 110 people died in Houston during a chaotic evacuation in the face of Hurricane Rita.

Mr Chertoff said Ike was a “potentially catastrophic hurricane”.

Earlier, it caused devastation in Cuba and Haiti, where hundreds of people have died in several tropical storms over the last month.

The Haitian Prime Minister, Michele Pierre-Louis, believes one million people may be homeless, and has called for international help.

The UN says more than $100m (£55.8m) is needed.

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Bush ‘approved’ Pakistan attacks

The US says militants are hiding out in north-west Pakistan

President George W Bush has authorised US military raids against militants inside Pakistan without prior approval from Islamabad.

An unnamed senior Pentagon official told the classified order had been made within the past two months.

On Wednesday, the US’s top military commander said strategy in Afghanistan was shifting to include raids across the border into Pakistan.

Pakistan has said it will not allow foreign forces onto its territory.

The Pakistani ambassador to the US has disputed the claim, first reported in the New York Times.

“In our bilateral discussions, no such idea has been mooted and will certainly not be accepted by Pakistan,” Husain Haqqani told Reuters.

“Pakistan would not accept foreign troops. This is not the best way to pursue the war against terror,” he said.

Meanwhile, security officials in Pakistan say they have killed up to 100 mostly foreign militants on the Afghan border. There has been no independent confirmation.

Growing frustration

The US say that Pakistan’s north-west tribal areas are being used as “safe havens” by militants preparing attacks on Afghanistan.

But Pakistan’s Chief of Army Staff, Gen Ashfaq Parvez Kayani, said there was “no question of any agreement or understanding with the coalition forces whereby they are allowed to conduct operations on our side of the border”.

He said the sovereignty and integrity of Pakistan would be defended at all cost.

A senior Pentagon official told that Mr Bush gave his approval this summer for cross-border raids into Pakistan.

The order includes the use of conventional ground troops crossing the border into Pakistan to pursue militants there.

An unnamed former intelligence official told the New York Times that the Pakistani government is not told about intended targets because of concerns that its intelligence services are infiltrated by al-Qaeda supporters.

It is a sign of growing US frustration with Islamabad’s lack of assertive action against the militants.

There is also an increasing concern about the threat such militants pose to Nato troops in neighbouring Afghanistan, and potentially to the US, says our correspondent.

The US has been carrying out regular military air strikes on Pakistan from Afghanistan, but ten days ago US troops carried out a ground assault for the first time.

Pakistan said the raid in South Waziristan was a violation of its sovereignty and summoned the US ambassador to hear a “very strong protest”.

Islamabad fears that attacks by US troops could encourage support for the Taleban militants among tribal groups in the border area.

The latest revelation appears to be part of a slow change in US strategy towards Pakistan and will only add to the tensions between the two countries, our correspondent adds.

‘Common insurgency’

Officially, the US has stressed the need for co-operation with Islamabad.

US ‘must target Pakistan havens’

On Thursday, the chairman of the US Joint Chiefs of Staff, Admiral Mike Mullen, told Congress that the US must continue to work closely with Pakistan.

“In my view, these two nations are inextricably linked in a common insurgency that crosses the border between them,” he said.

“We can hunt down and kill extremists as they cross over the border from Pakistan… but until we work more closely with the Pakistani government to eliminate the safe havens from which they operate, the enemy will only keep coming.”

The US move to focus efforts on the Afghan-Pakistan border was welcomed by Afghan President Hamid Karzai.

“Change of strategy is essential,” said Mr Karzai said at a news conference in Kabul on Thursday.

“It means that we go to those areas which are the training bases and havens – we jointly go there and remove and destroy them.”

No victory in Iraq, says Petraeus

The outgoing commander of US troops in Iraq, Gen David Petraeus, has said that he will never declare victory there.

In a BBC interview, Gen Petraeus said that recent security gains were “not irreversible” and that the US still faced a “long struggle”.

When asked if US troops could withdraw from Iraqi cities by the middle of next year, he said that would be “doable”.

In his next job leading the US Central Command, Gen Petraeus will also oversee operations in Afghanistan.

This is not the sort of struggle where you take a hill, plant the flag and go home to a victory parade… it’s not war with a simple slogan Gen David Petraeus

He said “the trends in Afghanistan have not gone in the right direction… and that has to be addressed”.

Afghanistan remained a “hugely important endeavor”, he said.

Earlier this week, President George W Bush announced a cut of 8,000 US troops in Iraq by February – with some 4,500 being sent to Afghanistan.

‘Hard but hopeful’

Gen Petraeus took up his role in Iraq in February 2007, as President Bush announced his “surge” plan.

He has overseen its implementation, including the deployment of nearly 30,000 additional troops to trouble spots in Iraq.

In an interview with the BBC’s Newsnight programme, Gen Petraeus said that when he took charge in Iraq “the violence was horrific and the fabric of society was being torn apart”.

Gen Petraeus said the Iraqis were standing up as US forces stood down

Leaving his post, he said there were “many storm clouds on the horizon which could develop into real problems”.Overall he summed up the situation as “still hard but hopeful”, saying that progress in Iraq was “a bit more durable” but that the situation there remained fragile.

He said he did not know that he would ever use the word “victory”: “This is not the sort of struggle where you take a hill, plant the flag and go home to a victory parade… it’s not war with a simple slogan.”

He said al-Qaeda’s efforts to portray its jihad in Iraq as going well were “disingenuous”. It was, in fact “going poorly”, he said.

Of his strategy of establishing joint security stations in key locations, Gen Petraeus said that “you can’t secure the people if you don’t live with them”.

He said it was now fair to say that the Iraqis were standing up as US forces stood down. The confidence and capability of Iraqi forces had increased substantially, he said.

Gen Petraeus did not confirm reports in the media that the US was preparing to withdraw all troops from Baghdad by next summer, but he did say that consideration was being given to removing US forces from a number of cities, including the capital.

US marks seventh 9/11 anniversary

New York has paused to remember the times two planes struck the World Trade Center on 11 September 2001 – an attack that killed nearly 3,000 people.

Four moments of silence are being held to mark the times when four hijacked passenger planes hit the Twin Towers, the Pentagon and a Pennsylvania field.

Presidential candidates Barack Obama and John McCain are attending a ceremony at Ground Zero in New York.

President Bush dedicated a new memorial at the Pentagon, where 184 died.

New York City Mayor Michael Bloomberg opened Thursday’s memorial event at Ground Zero, where families of the victims read out a roll call of those who died.

The attacks, which triggered the US-led invasions of Afghanistan and Iraq and the Bush administration’s war on terror, are regarded as the defining moment of President George W Bush’s time in office.

At the Pentagon, he paid tribute to the acts of courage shown by Americans seven years ago, saying: “The worst day in America’s history saw some of the bravest acts in America’s history.”

A flag was raised over the Washington memorial, which was built at a cost of $22m (£12.6m) on a 1.9-acre (0.77-hectare) parcel of land within view of the crash site.

The president was joined in the US capital by Defense Secretary Robert Gates and his predecessor, Donald Rumsfeld.

Mr Bush had stood earlier for a moment of silence with First Lady Laura Bush on the White House lawn at the time the first plane hit the World Trade Center.

It is the last time Mr Bush marks the anniversary as president.

“The president thinks about 9/11 every single day when he wakes up and before he goes to bed,” White House press secretary Dana Perino said on the eve of the anniversary.

‘Put aside politics’

Senators Obama and McCain, the Democratic and Republican nominees in November’s election, will appear together at Ground Zero in the afternoon to lay wreathes in honour of the victims.

11 September 2001 is a day many around the world will never forget

In a joint statement from the campaigns announcing their decision to visit Ground Zero together, the two men vowed to come together “as Americans” and suspend their political campaigns for 24 hours.

“We will put aside politics and come together to renew that unity, to honour the memory of each and every American who died, and to grieve with the families and friends who lost loved ones,” the statement said.

Their appearance is to be followed by another in the evening at a Columbia University forum to discuss their views on public service.

The ceremony in downtown Manhattan is marking the times when the planes hit the Twin Towers, and when each tower fell – pausing for silence at 0846, 0903, 0959 and 1029.

Family members and students representing the 90 countries that lost people in the attacks also read out the names of all the 2,973 dead.

Seven years after the attacks which shocked the world, Ground Zero is a construction site.

9/11 MEMORAIL TIMETABLE 1340BST: New York World Trade Center ceremony begins 1346: Moment of silence (time first plane hit North Tower) 1346: President Bush has moment of silence at White House 1403: Moment of silence (time second plane struck South Tower) 1430: Mr Bush in Washington for 9/11 Pentagon Memorial dedication 1459: Moment of silence (time South Tower fell) 1529: Moment of silence (time North Tower fell) 1545: Members of Congress gather on the West Steps to honor those killed and injured on 9/11

After years of delays and disagreements over how to commemorate the dead, work has finally begun on a memorial and a new skyscraper – the Freedom Tower – which is due to be completed by 2012.

On Wednesday, Mr Bloomberg called for the abolition of the WTC planning agency, saying the reconstruction was “frustratingly slow”.

“Most important, the memorial must be completed by the 10th anniversary. No more excuses, no more delays,” he added.

On the eve of the anniversary, a top US military commander warned new tactics were needed to win the conflict in Afghanistan, which the US and its allies invaded three months after 9/11.

They aimed to topple the Taleban and hunt down Osama Bin Laden, who the US believes masterminded the attacks.

Admiral Mike Mullen believes insurgents are launching attacks from neighboring Pakistan, and US-led forces must target their “safe havens” in that country.

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Bush to announce troop reshuffle

The bulk of the 146,000 US troops deployed in Iraq will remain behind

US President George W Bush is set to announce plans to withdraw about 8,000 troops from Iraq by February and to send additional forces to Afghanistan.

Mr Bush will say in a speech on Tuesday that the improving security situation in Iraq will allow a “quiet surge” of troops in Afghanistan in coming months.

A Marine battalion due to go to Iraq in November will be sent to Afghanistan, followed by an Army combat brigade.

There are currently 146,000 US troops in Iraq and 33,000 in Afghanistan.

Any long-term decision about their future deployment will be left to Mr Bush’s successor, who will take office in January.

‘Degree of durability’

The continued decline in violence in Iraq since last year’s US troop “surge” has given President Bush a chance to ease the growing strain on his country’s military.

If the progress in Iraq continues to hold, Gen Petraeus and our military leaders believe additional reductions will be possible in the first half of 2009 President George W Bush

Acting on the advice of his generals, Mr Bush will announce on Tuesday that a Marine battalion, comprising about 1,000 troops, scheduled to leave Anbar province in November will return home as planned without being replaced.

An army brigade of between 3,500 and 4,000 troops will also leave in February, accompanied by about 3,400 support forces, he will say.

“While the progress in Iraq is still fragile and reversible, Gen [David] Petraeus and Ambassador [Ryan] Crocker report that there now appears to be a ‘degree of durability’ to the gains we have made,” Mr Bush will say in a speech at the National Defense University, according to the White House.

“And if the progress in Iraq continues to hold, Gen Petraeus and our military leaders believe additional reductions will be possible in the first half of 2009.”

Our correspondent says the withdrawals announced on Tuesday will mark the start of a slow and limited draw-down based on what Mr Bush calls “return on success”. However, it will still leave the bulk of US forces behind in Iraq.

Last month, Iraqi Prime Minister Nouri Maliki said that although a timetable for the withdrawal of the remaining troops did not exist, he had tentatively agreed with the US military to end the presence of foreign combat troops by 2011.

The Iraqi government is currently negotiating a security agreement on the future of US forces in Iraq before a UN mandate expires.

Afghanistan ‘fragile’

In his speech on Tuesday, Mr Bush will also signal that the US will make modest increases in the strength of its forces in Afghanistan to combat the growing threat posed by the Taleban.

Aid agencies point to a 50% increase in insurgent attacks in Afghanistan

“For all the good work we have done in that country, it is clear we must do even more,” he will say.

“Unlike Iraq, it has few natural resources and has an underdeveloped infrastructure. Its democratic institutions are fragile.”

“And its enemies are some of the most hardened terrorists and extremists in the world. With their brutal attacks, the Taleban and the terrorists have made some progress in shaking the confidence of the Afghan people.”

In November, a Marine battalion that was scheduled to deploy to Iraq will instead go to Afghanistan. It will be followed in January by an army combat brigade.

The Agency Coordinating Body for Afghan Relief said last month that violence in Afghanistan had reached its worst level since 2001, when US-led forces overthrew the Taleban, with more than 260 civilians killed in July.

Afghanistan’s government said the bloodshed was connected to peace deals Pakistan’s government had sought with Islamist militants in the north-western tribal areas along the border.

Protests greet Turkish president’s ‘football diplomacy’

YEREVAN, Armenia (AP) — Thousands of Armenians lined the streets of the capital Yerevan Saturday, protesting the Turkish president who drove past in the first ever visit by a Turkish leader. Many held placards demanding justice for massacres that took place nearly 100 years ago.

Turkish President Abdullah Gul boards a plane at Ankara before departing on an historic visit to Armenia.

Abdullah Gul arrived in Armenia to watch a Turkey vs. Armenia football World Cup qualifier game with President Serge Sarkisian that many hope will help the two countries overcome decades of antagonism rooted in Ottoman-era massacres of Armenians.

Gul is the first Turkish leader to set foot in Armenia since the ex-Soviet nation declared independence in 1991. The two neighbors have no diplomatic ties and their border has been closed since 1993.

Historians estimate up to 1.5 million Armenians were killed by Ottoman Turks around the time of World War I, an event widely viewed by genocide scholars as the first genocide of the 20th century. Turkey, however, denies the deaths constituted genocide, saying the toll has been inflated and those killed were victims of civil war and unrest.

Ties have also suffered from Turkey’s opposition to Armenia‘s occupation of the Nagorno-Karabakh region of Azerbaijan, a close Turkish ally.

As Gul left the airport, the presidential motorcade drove along streets lined with thousands of people holding up placards, mostly in English and Armenian, that read: “We want justice,” “Turk admit your guilt,” and “1915 never again.”

Others held up names of places in Turkey from which their ancestors were forced to leave as the Ottoman Empire uprooted Armenian communities between 1915 and 1922.

Little progress is expected on the genocide issue or on Nagorno-Karabakh when Gul meets Sarkisian for talks just before the game — which Turkey is favored to win.

Still, the visit is a sign of a diplomatic thaw.

“I hope that (the visit) will help lift the obstacles that stand in the way of rapprochement between the two peoples and contribute to regional friendship and peace,” Gul said before his departure.

Gul’s decision to accept Armenia’s invitation to the match is linked to Turkey’s desire to carve out a regional peacemaker role amid tensions sparked by Russia’s invasion of neighboring Georgia.

Turkey, a NATO member, has cause for alarm about how Russia’s recognition of the Georgian breakaway regions of South Ossetia and Abkhazia might inspire its own separatist Kurds, or provoke Armenia to boost support for separatists in Nagorno-Karabakh.

In the wake of the Georgia conflict, Turkey proposed a regional grouping for stability in the Caucasus that would include Russia, Georgia, Azerbaijan and Armenia.

“About a month ago, we all saw how conflicts that have remained unresolved threatened regional stability and peace in the Caucasus,” Gul said in reference to the Georgia crisis.

Armenia is the last of Turkey‘s neighbors with whom Ankara has failed to mend ties since the end of the Cold War. Turkey has gradually improved relations with old foes such as Greece, Bulgaria and Syria.

Improved ties with Armenia are likely to help lift strains on Turkey’s relations with other countries that have or plan to formally recognize the massacres as genocide.

In October, a measure that would have declared the Armenian deaths as genocide in the U.S. Congress was stopped after President George W. Bush’s administration warned relations with strategic ally Turkey would be damaged.

On the plane, Gul paid tribute to the Armenian president.

“President Sarkisian was brave in taking the opportunity of inviting me to this game,” he said.

Turkey closed its border with Armenia in 1993 during a war between Armenia and Azerbaijan, a Muslim ally of Ankara, in order to pressure Yerevan into ending the conflict. he move has hurt the economy of tiny, landlocked Armenia.

Armenia’s bitter ties with Azerbaijan and Turkey have resulted in the tiny country being excluded from strategic energy pipelines that connect Azerbaijan to Turkey via Georgia.

Armenians, supported by numerous scholars, claim an organized genocide was carried out in the waning years of the Ottoman Empire and are pushing for the killings to be recognized as among history’s worst atrocities.

Turkey contends the 1.5 million death toll is wildly inflated. It also says the Armenians were killed or displaced in civil unrest during the chaos that surrounded the empire’s collapse.

Turkey has called for the establishment of a committee of scholars to study the WWI events in a bid to improve ties, but Armenia has declined to consider this until relations are forged.