Italy's Monti: I'm Heading New Electoral Coalition

ROME (AP) — Italian Premier Mario Monti announced Friday he is heading a new campaign coalition made of up centrists, business leaders and pro-Vatican forces who back his "ethical" vision of politics, aiming for a second mandate in office if his fledging reform movement wins big in parliamentary elections.

After a four-hour huddle with his supporters, Monti ended weeks of speculation at home and abroad about whether the internationally respected economist, who was appointed to head a non-elected government a year ago, would seek a new term, this time given to him by the voters.

He told a hastily convened news conference that the Feb. 24-25 ballot list would carry the banner "Monti Agenda for Italy" or a similar slogan, even if the ballot wouldn't list him per se as a candidate. "A new political formation is born," declared Monti, who, as a senator-for-life doesn't have to run for a parliamentary seat.

"Italy must have an evolution in its politics," he said, Instead of the "traditional axis that consists of right and left" Monti contended that the real axis Italy needs is one "directed at Europe and at reforms to transform our country."

Monti was appointed premier 13 months ago after his scandal-plagued predecessor Silvio Berlusconi failed to stop Italy from sliding deeper into the eurozone debt crisis. He quit earlier this month after Berlusconi pulled his party's support from Monti's government, but is now continuing in a caretaker role until the next elections.

For weeks now there has been speculation about whether Monti would run for the job in February, but he has been unwilling to officially campaign as a candidate. But he could take on the premiership if asked to by whatever party or coalition wins — including the grouping he announced Friday.

"I will watch over the creation of (parliamentary) candidate lists, and for now, I agree to carry out the role of coalition head, and I am working for the success of this operation," the 69-year-old said.

Monti along with his government of technocrats have taken credit for shoring up Italy's shaky finances by pushing through a tough austerity agenda of pension reform, new taxes and spending cuts. And Monti said he wants to "prolong and intensify the pace and extend the objectives of" his government.

Critics, however, say his reforms have stymied job creation and left Italy mired in recession.

His range of supporters is impressive. They include the president of Ferrari's Formula One racing team as well as figures in the highest Vatican echelons. Pope Benedict XVI on Christmas Day issued a call for noble values in politics that was read as a virtual endorsement for another Monti term.

But it remains to be seen if Monti's high-minded reformist alliance will garner enough backing to allow him to call the shots after the elections. Recent polls have shown that such a grouping, with Monti at the helm, would garner at most about 15 percent of the vote.

Opinion surveys show that the leading party, with about 30 percent, is the Democratic Left led by Pier Luigi Bersani, who was Monti's biggest backer in Parliament, including supporting him on pension reforms that sorely tested the left's traditional support from labor.

Berlusconi, meanwhile, hasn't said if he is running or not for a fourth term as premier. He faces legal and sexual scandals, yet still commands significant support.

After Monti's news conference, Bersani challenged the premier to clarify the new coalition's relationship with his party, the "first party. Do they see us as alternatives, competitors or are they open to an alliance?" Bersani said in a TV interview.

Reporters asked Monti if he thought he could return to the premier's office if the election results show his coalition ends up second. "Let's wait and see," was his reply.

Monti said that, thanks to his stewardship, "the financial emergency is over" in Italy but acknowledged that youth unemployment and lack of economic growth still plague the country. He said voters would have the chance in February to "legitimize" his economic and moral reform platform.

___

Nicole Winfield in Rome contributed to this report.

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NORAD Santa trackers draw record number of phone calls, social media followers

PETERSON AIR FORCE BASE, Colo. – NORAD says it drew a record number of phone calls and social media followers during its NORAD Tracks Santa operation on Christmas Eve.

The North American Aerospace Defence Command said Friday volunteers answered more than 114,000 calls, up 12,000 from 2011.

NORAD’s Santa Facebook page had more than 1.2 million followers, up from about 1 million last year. More than 129,000 people followed on Twitter, up from 101,000 last year.

NORAD got 11,000 emails, up from 7,700 in 2011.

More than 1,250 volunteers answered phone calls, including first lady Michelle Obama.

NORAD Tracks Santa began in 1955 when a newspaper listed the wrong number for children to call Santa. They wound up calling the Continental Air Defence Command, NORAD’s predecessor.

The operation is based at Peterson Air Force Base, Colo.

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Emily Maynard's Cat Gets a Haircut - Like a Lion!

People Pets

By Amy Jamieson

12/28/2012 at 04:00 PM EST

Emily Maynard and her cat Safari

Courtesy Emily Maynard; Inset:Craig Sjodin/ABC

Emily Maynard's cat Safari was named for a wilderness expedition – and now the feline looks like he could roam wild in one.

In a Twitter photo Maynard shared Thursday, the cat's fur has been fashioned into a lion's mane.

"Safari has never been happier. Really. I swear. #grumpycat," she Tweeted.

It sounds like both of the single mom's felines are sporting the new do.

"I just dropped Holly and Safari off to get their lion haircuts," she replied on Thursday to her Twitter friend, @BoMartini. "Get ready for your phone to be filled with even more cat pics."

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Kenya hospital imprisons new mothers with no money

NAIROBI, Kenya (AP) — The director of the Pumwani Maternity Hospital, located in a hardscrabble neighborhood of downtown Nairobi, freely acknowledges what he's accused of: detaining mothers who can't pay their bills. Lazarus Omondi says it's the only way he can keep his medical center running.

Two mothers who live in a mud-wall and tin-roof slum a short walk from the maternity hospital, which is affiliated with the Nairobi City Council, told The Associated Press that Pumwani wouldn't let them leave after delivering their babies. The bills the mothers couldn't afford were $60 and $160. Guards would beat mothers with sticks who tried to leave without paying, one of the women said.

Now, a New York-based group has filed a lawsuit on the women's behalf in hopes of forcing Pumwani to stop the practice, a practice Omondi is candid about.

"We hold you and squeeze you until we get what we can get. We must be self-sufficient," Omondi said in an interview in his hospital office. "The hospital must get money to pay electricity, to pay water. We must pay our doctors and our workers."

"They stay there until they pay. They must pay," he said of the 350 mothers who give birth each week on average. "If you don't pay the hospital will collapse."

The Center for Reproductive Rights, which filed the suit this month in the High Court of Kenya, says detaining women for not paying is illegal. Pumwani is associated with the Nairobi City Council, one reason it might be able to get away with such practices, and the patients are among Nairobi's poorest with hardly anyone to stand up for them.

Maimouna Awuor was an impoverished mother of four when she was to give birth to her fifth in October 2010. Like many who live in Nairobi's slums, Awuor performs odd jobs in the hopes of earning enough money to feed her kids that day. Awuor, who is named in the lawsuit, says she had saved $12 and hoped to go to a lower-cost clinic but was turned away and sent to Pumwani. After giving birth, she couldn't pay the $60 bill, and was held with what she believes was about 60 other women and their infants.

"We were sleeping three to a bed, sometimes four," she said. "They abuse you, they call you names," she said of the hospital staff.

She said saw some women tried to flee but they were beaten by the guards and turned back. While her husband worked at a faraway refugee camp, Awuor's 9-year-old daughter took care of her siblings. A friend helped feed them, she said, while the children stayed in the family's 50-square-foot shack, where rent is $18 a month. She says she was released after 20 days after Nairobi's mayor paid her bill. Politicians in Kenya in general are expected to give out money and get a budget to do so.

A second mother named in the lawsuit, Margaret Anyoso, says she was locked up in Pumwani for six days in 2010 because she could not pay her $160 bill. Her pregnancy was complicated by a punctured bladder and heavy bleeding.

"I did not see my child until the sixth day after the surgery. The hospital staff were keeping her away from me and it was only when I caused a scene that they brought her to me," said Anyoso, a vegetable seller and a single mother with five children who makes $5 on a good day.

Anyoso said she didn't have clothes for her child so she wrapped her in a blood-stained blouse. She was released after relatives paid the bill.

One woman says she was detained for nine months and was released only after going on a hunger strike. The Center for Reproductive Rights says other hospitals also detain non-paying patients.

Judy Okal, the acting Africa director for the Center for Reproductive Rights, said her group filed the lawsuit so all Kenyan women, regardless of socio-economic status, are able to receive health care without fear of imprisonment. The hospital, the attorney general, the City Council of Nairobi and two government ministries are named in the suit.

___

Associated Press reporter Tom Odula contributed to this report.

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Wall Street ends sour week with 5th straight decline

NEW YORK (Reuters) - Stocks fell for a fifth straight day on Friday, dropping 1 percent and marking the S&P 500's longest losing streak in three months as the federal government edged closer to the "fiscal cliff" with no solution in sight.

President Barack Obama and top congressional leaders met at the White House to work on a solution for the draconian debt-reduction measures set to take effect beginning next week. Stocks, which have been influenced by little else than the flood of fiscal cliff headlines from Washington in recent days, extended losses going into the close with the Dow Jones industrial average and the S&P 500 each losing 1 percent, after reports that Obama would not offer a new plan to Republicans. The Dow closed below 13,000 for the first time since December 4.

"I was stunned Obama didn't have another plan, and that's absolutely why we sold off," said Mike Shea, managing partner at Direct Access Partners LLC in New York. "He's going to force the House to come to him with something different. I think that's a surprise. The entire market is disappointed in a lack of leadership in Washington."

In a sign of investor anxiety, the CBOE Volatility Index <.vix>, known as the VIX, jumped 16.69 percent to 22.72, closing at its highest level since June. Wall Street's favorite fear barometer has risen for five straight weeks, surging more than 40 percent over that time.

The Dow Jones industrial average <.dji> dropped 158.20 points, or 1.21 percent, to 12,938.11 at the close. The Standard & Poor's 500 Index <.spx> lost 15.67 points, or 1.11 percent, to 1,402.43. The Nasdaq Composite Index <.ixic> fell 25.59 points, or 0.86 percent, to end at 2,960.31.

For the week, the Dow fell 1.9 percent. The S&P 500 also lost 1.9 percent for the week, marking its worst weekly performance since mid-November. The Nasdaq finished the week down 2 percent. In contrast, the VIX jumped 22 percent for the week.

Pessimism continued after the market closed, with stock futures indicating even steeper losses. S&P 500 futures dropped 26.7 points, or 1.9 percent, eclipsing the decline seen in the regular session.

All 10 S&P 500 sectors fell during Friday's regular trading, with most posting declines of 1 percent, but energy and material shares were among the weakest of the day, with both groups closely tied to the pace of growth.

An S&P energy sector index <.gspe> slid 1.8 percent, with Exxon Mobil down 2 percent at $85.10, and Chevron Corp off 1.9 percent at $106.45. The S&P material sector index <.gspm> fell 1.3 percent, with U.S. Steel Corp down 2.6 percent at $23.03.

Decliners outnumbered advancers by a ratio of slightly more than 2 to 1 on the New York Stock Exchange, while on the Nasdaq, two stocks fell for every one that rose.

"We've been whipsawing around on low volume and rumors that come out on the cliff," said Eric Green, senior portfolio manager at Penn Capital Management in Philadelphia, who helps oversee $7 billion in assets.

With time running short, lawmakers may opt to allow the higher taxes and across-the-board federal spending cuts to go into effect and attempt to pass a retroactive fix soon after the new year. Standard & Poor's said an impasse on the cliff wouldn't affect the sovereign credit rating of the United States.

"We're not as concerned with January 1 as the market seems to be," said Richard Weiss, senior money manager at American Century Investments, in Mountain View, California. "Things will be resolved, just maybe not on a good timetable, and any deal can easily be retroactive."

Trading volume was light throughout the holiday-shortened week, with just 4.46 billion shares changing hands on the New York Stock Exchange, the Nasdaq and NYSE MKT on Friday, below the daily average so far this year of about 6.48 billion shares. On Monday, the U.S. stock market closed early for Christmas Eve, and the market was shut on Tuesday for Christmas. Many senior traders were absent this week for the holidays.

Highlighting Wall Street's sensitivity to developments in Washington, stocks tumbled more than 1 percent on Thursday after Senate Majority Leader Harry Reid warned that a deal was unlikely before the deadline. But late in the day, stocks nearly bounced back when the House said it would hold an unusual Sunday session to work on a fiscal solution.

Positive economic data failed to alter the market's mood.

The National Association of Realtors said contracts to buy previously owned U.S. homes rose in November to their highest level in 2-1/2 years, while a report from the Institute for Supply Management-Chicago showed business activity in the U.S. Midwest expanded in December.

"Economic reports have been very favorable, and once Congress comes to a resolution, the market should resume an upward trend, based on the data," said Weiss, who helps oversee about $125 billion in assets. "All else being equal, we see any further decline as a buying opportunity."

Barnes & Noble Inc rose 4.3 percent to $14.97 after the top U.S. bookstore chain said British publisher Pearson Plc had agreed to make a strategic investment in its Nook Media subsidiary. But Barnes & Noble also said its Nook business will not meet its previous projection for fiscal year 2013.

Shares of magicJack VocalTec Ltd jumped 10.3 percent to $17.95 after the company gave a strong fourth-quarter outlook and named Gerald Vento president and chief executive, effective January 1.

The U.S.-listed shares of Canadian drugmaker Aeterna Zentaris Inc surged 13.8 percent to $2.47 after the company said it had reached an agreement with the U.S. Food and Drug Administration on a special protocol assessment by the FDA for a Phase 3 registration trial in endometrial cancer with AEZS-108 treatment.

(Reporting by Ryan Vlastelica; Editing by Jan Paschal)

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Afghan Police, Betrayed in Sleep, Suffer Losses

KABUL, Afghanistan — A wave of betrayal has left at least 17 Afghan policemen dead in the past 10 days — all killed in their sleep, at the hands of those close to them.

Early Thursday morning, an Afghan policeman unlocked the door of the check post where he was stationed in Oruzgan Province and let in his friends from the Taliban, who helped him attack his sleeping colleagues with knives and guns, eventually killing four and wounding eight.

On Sunday, a local police commander in a remote northern province, Jawzjan, shot to death, in their beds, five men under his command and fled to join the Taliban.

And on Dec. 18, a teenager apparently being kept for sexual purposes by an Afghan border police commander in southern Kandahar Province drugged the commander and the other 10 policemen at the post to put them to sleep, and then shot them all; eight died.

In the crisis that has risen in the past year over insider killings, in which Afghan security forces turn on their allies, the toll has been even heavier for the Afghans themselves — at least 86 in a count by The New York Times this year, and the full toll is likely to be higher — than it has been for American and other NATO forces, which have lost at least 62 so far, the latest in Kabul on Monday.

Unlike most insider attacks against foreign forces, known as “green-on-blue” killings, most of the attacks between Afghans, “green on green,” have been clear cases of either infiltration by Taliban insurgents or turncoat attacks. As with the three recent attacks, they have fallen most heavily on police units, and they have followed a familiar pattern: the Taliban either infiltrate someone into a unit, or win over someone already in a unit, who then kills his comrades in their sleep. Frequently, the victims are first poisoned or drugged at dinner.

“I tell my cook not to allow any police officer in the kitchen,” said Taaj Mohammad, a commander of a border police check post near the one in Kandahar that was attacked on Dec. 18. “This kind of incident really creates mistrust among comrades, which is not good. Now we don’t trust anyone, even those who spent years in the post.”

The most recent of the green-on-green betrayals took place on Thursday about 3 a.m., in the town of Tarin Kowt, the capital of Oruzgan Province in southern Afghanistan. According to Fareed Ayal, a spokesman for the provincial police chief, a police officer named Hayat Khan, who had been in regular touch with the Taliban for religious guidance, waited until the other officers at his check post fell asleep and then called Taliban fighters by cellphone and let them in. First the attackers stabbed the one officer who was on watch, but he raised the alarm in time to awaken some of the police officers.

In the ensuing firefight, four policemen were killed and eight wounded, while Mr. Khan and his Taliban confederates managed to escape, according to Mr. Ayal’s account.

In the attack on Sunday, in Jawzjan Province, the victims were all part of an Afghan Local Police unit whose commander had previous connections with the Taliban. Such local police units, strongly supported as part of American policy in Afghanistan, undergo training, and community leaders and elders offer guarantees that the units have no further insurgent ties.

Gen. Abdul Aziz Ghairat of the Jawzjan Provincial Police said that the commander who had killed the men in their sleep, Dur Mohammad, had fled but that his relatives and a community elder who vouched for him had been detained and were being interrogated.

In some green-on-green cases, personal grievances may drive the attackers to throw in their lot with the Taliban.

That is apparently what happened in the case of Noor Agha, a young man who the police say killed eight border security police officers in their check post on the border near Spinbaldak, the major crossing point between Kandahar and Pakistan, on Dec. 18.

The police said that Mr. Agha, whose age was unclear but whom police sources described as “still beardless,” had been the involuntary companion of the border police commander at that check post, Agha Amire, for several years. Other police commanders who knew both said there was clearly an “improper relationship” between the two.

While not saying so explicitly, they were suggesting that Mr. Amire was using Mr. Agha in the commonplace practice known as bacha baazi, in which powerful Afghan commanders frequently keep young boys as personal servants, dancers and sex slaves.

The practice was outlawed during Taliban times but has never gone away, and even some provincial governors and other top officials openly keep bacha baazi harems. The practice was noted in the latest United States State Department’s annual human rights report, but the report said “credible statistics were difficult to acquire as the subject was a source of shame.”

The night of the attack, Mr. Agha offered to make a special dinner for the police at the check post and invited two friends to attend. He and his friends put drugs in the food and then shot everyone there, including Mr. Amire, and the three attackers escaped across the border to join Taliban insurgents in Pakistan, according to a police official. Mr. Agha’s family, who lived in Arghandab District, a former Taliban stronghold near Kandahar city, fled their home, leaving behind livestock and personal possessions, according to police officials and relatives of the commander.

Although a police official who spoke on the condition of anonymity put the toll at eight dead and three wounded in that episode, officially, the Kandahar Province police chief, Gen. Abdul Raziq, said only four had been killed and three wounded. General Raziq also denied that there had been a young boy involved in drugging the food.

The wave of killings over the past year has police officers all over Afghanistan watching what they eat, and sleeping uneasily.

“We make sure that nobody gets the chance to poison the food,” said Sharif Agha, 26, a police sergeant who commands a small outpost in Khost city, in eastern Afghanistan. The ten officers there take turns helping the cook and make sure at least two people are in the kitchen at all times. At night, a third guard is assigned to watch the two guards normally on duty.

“I don’t know about the rest of the guys,” Sergeant Agha said, “but I have not slept properly over the past few months.”

Reporting was contributed by Taimoor Shah from Kandahar, Afghanistan; Habib Zahori and Jawad Sukhanyar from Kabul; and Enayat Najafizada from Mazar-i-Sharif.

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iOS apps see Christmas sales spike shrink in 2012

Distimo just released its statistics on Christmas Day app downloads and revenue growth… and the download spike is far smaller than it was last year. Back in 2011, Christmas Day iOS app download volume spiked 230% above the December average. This year, the increase was just 87% — far below industry expectations. The revenue spike came in at 70%.

[More from BGR: Google names 12 best Android apps of 2012]

Interestingly, iPad downloads increased by 140% this Christmas, implying that the iPhone download bounce was really modest.

[More from BGR: New purported BlackBerry Z10 specs emerge: 1.5GHz processor, 2GB RAM, 8MP camera]

A few weeks ago, AppAnnie released statistics showing that iOS app revenue growth had stalled over the summer of 2012, whereas Android app revenue growth was relatively strong at 48% over a five month period. Both Distimo and Appannie are respected companies and their analytics are closely followed by app industry professionals. Could it be that the pace of iPhone app revenue growth has slowed down sharply from 2011 levels, even if Distimo and AppAnnie numbers aren’t entirely accurate?

This article was originally published by BGR

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Jessica Simpson Posts Revealing Twitpic

By Marla Lehner

12/27/2012 at 04:55 PM EST

Jessica Simpson is pregnant and proud to show it.

The expectant star – who is vacationing in Hawaii with her fiancé Eric Johnson, their 7-month-old daughter Maxwell Drew and other family members – posted a revealing photo of herself smiling and clearly enjoying the laid back lifestyle of the islands on Thursday.

"Fun in the sun," Simpson, 32, wrote to accompany the Twitpic, which shows the star wearing her sun-kissed blonde hair loose and dressed in a red beach frock and a cowboy hat.

Simpson hasn't been shy about sharing her happiness on Twitter over the holidays. On Christmas Day, she revealed the news of her pregnancy by sharing a picture of her daughter with the words "Big Sis" written in the sand in front of her. And on Wednesday, Simpson posted a shot of herself grinning with Johnson on the beach.

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Kenya hospital imprisons new mothers with no money

NAIROBI, Kenya (AP) — The director of the Pumwani Maternity Hospital, located in a hardscrabble neighborhood of downtown Nairobi, freely acknowledges what he's accused of: detaining mothers who can't pay their bills. Lazarus Omondi says it's the only way he can keep his medical center running.

Two mothers who live in a mud-wall and tin-roof slum a short walk from the maternity hospital, which is affiliated with the Nairobi City Council, told The Associated Press that Pumwani wouldn't let them leave after delivering their babies. The bills the mothers couldn't afford were $60 and $160. Guards would beat mothers with sticks who tried to leave without paying, one of the women said.

Now, a New York-based group has filed a lawsuit on the women's behalf in hopes of forcing Pumwani to stop the practice, a practice Omondi is candid about.

"We hold you and squeeze you until we get what we can get. We must be self-sufficient," Omondi said in an interview in his hospital office. "The hospital must get money to pay electricity, to pay water. We must pay our doctors and our workers."

"They stay there until they pay. They must pay," he said of the 350 mothers who give birth each week on average. "If you don't pay the hospital will collapse."

The Center for Reproductive Rights, which filed the suit this month in the High Court of Kenya, says detaining women for not paying is illegal. Pumwani is associated with the Nairobi City Council, one reason it might be able to get away with such practices, and the patients are among Nairobi's poorest with hardly anyone to stand up for them.

Maimouna Awuor was an impoverished mother of four when she was to give birth to her fifth in October 2010. Like many who live in Nairobi's slums, Awuor performs odd jobs in the hopes of earning enough money to feed her kids that day. Awuor, who is named in the lawsuit, says she had saved $12 and hoped to go to a lower-cost clinic but was turned away and sent to Pumwani. After giving birth, she couldn't pay the $60 bill, and was held with what she believes was about 60 other women and their infants.

"We were sleeping three to a bed, sometimes four," she said. "They abuse you, they call you names," she said of the hospital staff.

She said saw some women tried to flee but they were beaten by the guards and turned back. While her husband worked at a faraway refugee camp, Awuor's 9-year-old daughter took care of her siblings. A friend helped feed them, she said, while the children stayed in the family's 50-square-foot shack, where rent is $18 a month. She says she was released after 20 days after Nairobi's mayor paid her bill. Politicians in Kenya in general are expected to give out money and get a budget to do so.

A second mother named in the lawsuit, Margaret Anyoso, says she was locked up in Pumwani for six days in 2010 because she could not pay her $160 bill. Her pregnancy was complicated by a punctured bladder and heavy bleeding.

"I did not see my child until the sixth day after the surgery. The hospital staff were keeping her away from me and it was only when I caused a scene that they brought her to me," said Anyoso, a vegetable seller and a single mother with five children who makes $5 on a good day.

Anyoso said she didn't have clothes for her child so she wrapped her in a blood-stained blouse. She was released after relatives paid the bill.

One woman says she was detained for nine months and was released only after going on a hunger strike. The Center for Reproductive Rights says other hospitals also detain non-paying patients.

Judy Okal, the acting Africa director for the Center for Reproductive Rights, said her group filed the lawsuit so all Kenyan women, regardless of socio-economic status, are able to receive health care without fear of imprisonment. The hospital, the attorney general, the City Council of Nairobi and two government ministries are named in the suit.

___

Associated Press reporter Tom Odula contributed to this report.

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Wall Street rebounds on House session, but off for 4th day

NEW YORK (Reuters) - Stocks fell for a fourth day on Thursday, but recovered most of their losses after the House of Representatives, in the barest sign of progress, said it would come back to work on avoiding the "fiscal cliff" this weekend.

It was a jittery session for stocks, with shares falling more than 1 percent after Senate Majority Harry Reid warned a deal was unlikely before the deadline, only to rebound merely on the news that the House would reconvene Sunday, a day before the December 31 "cliff" deadline.

"There's no conviction in the move or the overall market, based on the across-the-board reduction we've seen in volume ... but there will be continued weakness until there's sustained positive direction coming from our leaders," said Joseph Cangemi, managing director at ConvergEx Group, in New York.

The market has been prone to quick reactions to headlines and those moves have sometimes seemed more dramatic because of reduced trading volume. About 5.12 billion shares changed hands on the New York Stock Exchange, the Nasdaq and the NYSE MKT, well below the daily average so far this year of about 6.48 billion shares.

Investors are looking for any hint that lawmakers will avert the $600 billion in tax hikes and spending cuts that will start to take effect next week and could push the U.S. economy into recession.

"Markets turned around in a heartbeat, as the House session is the first announcement of anything getting done," said Randy Bateman, chief investment officer of Huntington Asset Management, in Columbus, Ohio, which oversees $14.5 billion in assets. "I'm not convinced it will result in a deal, but you could get enough concessions by both parties to at least avoid the immediacy of going over the cliff."

In a sign of the anxiety, the CBOE Volatility Index <.vix>, or VIX, rose above 20 for the first time since July, suggesting rising worries, but ended up finishing the day down 0.4 percent as the stock market rebounded.

Stocks in the materials and the financial sectors, which are more vulnerable to the economy's performance, bore the brunt of the selling before recovering. Shares of Bank of America fell 0.6 percent to $11.47 while Freeport-McMoRan Copper & Gold fell 0.7 percent to $33.68.

Some of 2012's biggest gainers bucked the broader trend and rallied, a sign of year-end "window dressing." Expedia Inc was the S&P 500's top percentage gainer, climbing 4.1 percent to $60.30. The price of the online travel agency's stock has doubled this year.

The Dow Jones industrial average <.dji> slipped 18.28 points, or 0.14 percent, to 13,096.31 at the close. The Standard & Poor's 500 Index <.spx> declined 1.74 points, or 0.12 percent, to 1,418.09. The Nasdaq Composite Index <.ixic> dropped 4.25 points, or 0.14 percent, to close at 2,985.91.

Marvell Technology Group fell 3.5 percent to $7.14 after it said it would seek to overturn a jury's finding of patent infringement. The stock had fallen more than 10 percent in the previous session after a jury found the company infringed on patents held by Carnegie Mellon University and ordered the chipmaker to pay $1.17 billion in damages.

The four-day decline marked the S&P 500's longest losing streak in three months. The index has lost 1.8 percent over the period as investors grapple with the possibility that a deal may not be reached until next year.

President Barack Obama arrived back in Washington from Hawaii to restart stalled negotiations with Congress. House Speaker John Boehner and other Republican leaders were to hold a conference call with Republican lawmakers. The expectation was that lawmakers would be told to get back to Washington quickly if the Senate passed a bill.

Treasury Secretary Timothy Geithner announced the first of a series of measures that should push back the date when the U.S. government will hit its legal borrowing authority - a limit known as the debt ceiling - by about two months.

Economic data seemed to confirm worries about the impact of the fiscal cliff on the economy.

The Conference Board, an industry group, said its index of consumer confidence in December fell to 65.1 as the budget crisis dented growing optimism about the economy. The gauge fell more than expected from 71.5 in November.

However, the job market continues to mend. Initial claims for unemployment benefits dropped 12,000 to a seasonally adjusted 350,000 last week and the four-week moving average fell to the lowest since March 2008.

Decliners outnumbered advancers on the New York Stock Exchange by a ratio of about 8 to 7, while on the Nasdaq, about 14 stocks fell for every 11 that rose.

(Editing by Jan Paschal)

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