Analysis: Italian election explained

Austerity-hit Italy chooses new leader

Austerity-hit Italy chooses new leader

Austerity-hit Italy chooses new leader

Austerity-hit Italy chooses new leader

STORY HIGHLIGHTS

• Silvio Berlusconi is campaigning to win his old job back for the fourth time


• The eurozone's third largest economy is hurting, with unemployment surpassing 11%


• Pier Luigi Bersani of the center-left Democratic Party is expected to narrowly win


• Italy's political system encourages the forming of alliances

(CNN) -- Little more than a year after he resigned in disgrace as prime minister, Silvio Berlusconi is campaigning to win his old job back -- for the fourth time.

Berlusconi, the septuagenarian playboy billionaire nicknamed "Il Cavaliere," has been trailing in polls behind his center-left rival, Per Luigi Bersani.

But the controversial media tycoon's rise in the polls in recent weeks, combined with widespread public disillusionment and the quirks of Italy's complex electoral system, means that nothing about the race is a foregone conclusion.

Why have the elections been called now?

Italian parliamentarians are elected for five-year terms, with the current one due to end in April. However in December, Berlusconi's People of Freedom Party (PdL) withdrew its support from the reformist government led by Mario Monti, saying it was pursuing policies that "were too German-centric." Monti subsequently resigned and the parliament was dissolved.

Berlusconi -- the country's longest serving post-war leader -- had resigned the prime ministerial office himself amidst a parliamentary revolt in November 2011. He left at a time of personal and national crisis, as Italy grappled with sovereign debt problems and Berlusconi faced criminal charges of tax fraud, for which he was subsequently convicted. He remains free pending an appeal. He was also embroiled in a scandal involving a young nightclub dancer - which led him to be charged with paying for sex with an underage prostitute.

MORE: From Venice to bunga bunga: Italy in coma

He was replaced by Monti, a respected economist and former European Commissioner, who was invited by Italy's President Giorgio Napolitano to lead a cabinet of unelected technocrats. Monti's government implemented a program of tax rises and austerity measures in an attempt to resolve Italy's economic crisis.

Who are the candidates?

The election is a four-horse race between political coalitions led by Bersani, Berlusconi, Monti, and the anti-establishment movement led by ex-comedian Beppe Grillo. Polls are banned within two weeks of election day, but the most recent ones had Bersani holding onto a slender lead over Berlusconi, followed by Grillo in distant third.

READ MORE: Will Monte Paschi banking scandal throw open Italy's election race?

The center-left alliance is dominated by the Democratic Party, led by Bersani. He is a former Minister of Economic Development in Romano Prodi's government from 2006-8 -- and has held a comfortable lead in polls, but that appears to be gradually being eroded by Berlusconi.

Italy's political system encourages the forming of alliances, and the Democratic Party has teamed with the more left-wing Left Ecology Freedom party.

The 61-year-old Bersani comes across as "bluff and homespun, and that's part of his appeal -- or not, depending on your point of view," said political analyst James Walston, department chair of international relations at the American University of Rome.

He described Bersani, a former communist, as a "revised apparatchik," saying the reform-minded socialist was paradoxically "far more of a free marketeer than even people on the right."

Bersani has vowed to continue with Monti's austerity measures and reforms, albeit with some adjustments, if he wins.

At second place in the polls is the center-right alliance led by Berlusconi's PdL, in coalition with the right-wing, anti-immigration Northern League.

Berlusconi has given conflicting signals as to whether he is running for the premiership, indicating that he would seek the job if his coalition won, but contradicting that on other occasions.

In a recent speech, he proposed himself as Economy and Industry Minister, and the PdL Secretary Angelino Alfano as prime minister.

Roberto Maroni, leader of the Northern League, has said the possibility of Berlusconi becoming prime minister is explicitly ruled out by the electoral pact between the parties, but the former premier has repeatedly said he plays to win, and observers believe he is unlikely to pass up the chance to lead the country again if the opportunity presents itself.

Berlusconi has been campaigning as a Milan court weighs his appeal against a tax fraud conviction, for which he was sentenced to four years in jail last year. The verdict will be delivered after the elections; however, under the Italian legal system, he is entitled to a further appeal in a higher court. Because the case dates to July 2006, the statute of limitations will expire this year, meaning there is a good chance none of the defendants will serve any prison time.

He is also facing charges in the prostitution case (and that he tried to pull strings to get her out of jail when she was accused of theft) -- and in a third case stands accused of revealing confidential court information relating to an investigation into a bank scandal in 2005.

Despite all this, he retains strong political support from his base.

"Italy is a very forgiving society, it's partly to do with Roman Catholicism," said Walston. "There's sort of a 'live and let live' idea."

Monti, the country's 69-year-old technocrat prime minister, who had never been a politician before he was appointed to lead the government, has entered the fray to lead a centrist coalition committed to continuing his reforms. The alliance includes Monti's Civic Choice for Monti, the Christian Democrats and a smaller centre-right party, Future and Freedom for Italy.

As a "senator for life," Monti is guaranteed a seat in the senate and does not need to run for election himself, but he is hitting the hustings on behalf of his party.

In a climate of widespread public disillusionment with politics, comedian and blogger Beppe Grillo is also making gains by capturing the protest vote with his Five Star Movement. Grillo has railed against big business and the corruption of Italy's political establishment, and holds broadly euro-skeptical and pro-environmental positions.

How will the election be conducted?

Italy has a bicameral legislature and a voting system which even many Italians say they find confusing.

Voters will be electing 315 members of the Senate, and 630 members of the Chamber of Deputies. Both houses hold the same powers, although the Senate is referred to as the upper house.

Under the country's closed-list proportional representation system, each party submits ranked lists of its candidates, and is awarded seats according to the proportion of votes won -- provided it passes a minimum threshold of support.

Seats in the Chamber of Deputies are on a national basis, while seats in the senate are allocated on a regional one.

The party with the most votes are awarded a premium of bonus seats to give them a working majority.

The prime minister needs the support of both houses to govern.

Who is likely to be the next prime minister?

On current polling, Bersani's bloc looks the likely victor in the Chamber of Deputies. But even if he maintains his lead in polls, he could fall short of winning the Senate, because of the rules distributing seats in that house on a regional basis.

Crucial to victory in the Senate is winning the region of Lombardy, the industrial powerhouse of the north of Italy which generates a fifth of the country's wealth and is a traditional support base for Berlusconi. Often compared to the U.S. state of Ohio for the "kingmaker" role it plays in elections, Lombardy has more Senate seats than any other region.

If no bloc succeeds in controlling both houses, the horse-trading begins in search of a broader coalition.

Walston said that a coalition government between the blocs led by Bersani and Monti seemed "almost inevitable," barring something "peculiar" happening in the final stages of the election campaign.

Berlusconi, he predicted, would "get enough votes to cause trouble."

What are the main issues?

There's only really one issue on the agenda at this election.

The eurozone's third largest economy is hurting, with unemployment surpassing 11% -- and hitting 37% for young people.

Voters are weighing the question of whether to continue taking Monti's bitter medicine of higher taxation and austerity measures, while a contentious property tax is also proving a subject of vexed debate.

Walston said the dilemma facing Italians was deciding between "who's going to look after the country better, or who's going to look after my pocket better."

He said it appeared voters held far greater confidence in the ability of Monti and Bersani to fix the economy, while those swayed by appeals to their own finances may be more likely to support Berlusconi.

But he said it appeared that few undecided voters had any faith in Berlusconi's ability to follow through on his pledges, including a recent promise to reverse the property tax.

What are the ramifications of the election for Europe and the wider world?

Improving the fortunes of the world's eighth largest economy is in the interests of Europe, and in turn the global economy.

Italy's woes have alarmed foreign investors. However, financial commentator Nicholas Spiro, managing director of consultancy Spiro Sovereign Strategy, says the European Central Bank's bond-buying program has gone a long way to mitigating investors' concerns about the instability of Italian politics.

Why is political instability so endemic to Italy?

Italy has had more than 60 governments since World War II -- in large part as a by-product of a system designed to prevent the rise of another dictator.

Parties can be formed and make their way on to the political main stage with relative ease -- as witnessed by the rise of Grillo's Five Star Movement, the protest party which was formed in 2009 but in local and regional elections has even outshone Berlusoni's party at times.

Others point to enduringly strong regional identities as part of the recipe for the country's political fluidity.

READ MORE: Italian Elections 2013: Fame di sapere (hunger for knowledge)

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Charges filed in slaying of Clemente High School student

Authorities filed charges against a 34-year-old man in connection with the shooting death of an 18-year-old Clemente High School student killed on the West Side last week.

Larry Luellen Jr., 34, was charged with first degree murder in the death of Frances Colon. Luellen was ordered held with no bond in court today.

Luellen lives in the 3900 block of West Division Street in West Humboldt Park, around the corner from where Colon was shot. Police don't believe she was the target.

Colon is the third student at Roberto Clemente to be killed this school year, according to the school's principal Marcey Sorensen.

Rey Dorantes, 14, of the 2400 block of West Augusta Boulevard, was shot and killed on Jan. 11. His death came about a month after another Clemente student, 16-year-old Jeffrey Stewart, of the 5200 block of West Race Avenue, was shot and killed on Dec. 9.

Colon was a senior who was preparing to attend college. Hours before the shooting, she had watched President Barack Obama speak at Hyde Park Academy on the South Side about gun violence, according to her father.

Naomi Nix contributed.

pnickeas@tribune.com
Twitter: @peternickeas

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HP lifts Wall Street, S&P on pace for first weekly loss of year

NEW YORK (Reuters) - Stocks rose on Friday, rebounding off two days of losses as Dow component Hewlett-Packard surged on strong results, but the S&P 500 was on track to end a seven-week-long streak of gains.

The S&P shed 1.9 percent over the previous two sessions, its worst two-day drop since early November, putting the index on pace for its first weekly decline of the year. The retreat was triggered when the Federal Reserve's meeting minutes for January suggested stimulus measures may be halted sooner than thought.

Still, the index is up nearly 6 percent for the year and held the 1,500 support level despite the recent declines, a sign of a positive bias in the market.

"The market is addicted to Fed stimulus and gets withdrawal shakes every time that's threatened, but now we're resuming our course and remain much more attractively valued than other asset classes," said Rex Macey, chief investment officer at Wilmington Trust in Atlanta, Georgia.

Hewlett-Packard Co jumped 9.6 percent to $18.74 as the top boost on both the Dow and S&P 500 after the PC maker's quarterly revenue and forecasts beat expectations. The company cut costs under Chief Executive Meg Whitman's turnaround plan. The S&P technology sector <.splrct> was up 0.8 percent.

The Dow Jones industrial average <.dji> was up 69.41 points, or 0.50 percent, at 13,950.03. The Standard & Poor's 500 Index <.spx> was up 7.74 points, or 0.52 percent, at 1,510.16. The Nasdaq Composite Index <.ixic> was up 18.26 points, or 0.58 percent, at 3,149.75.

For the week, the Dow is off 0.2 percent in its third straight week of slight losses, the S&P is off 0.6 percent and the Nasdaq is off 1.3 percent.

Also buoying tech stocks were gains in semiconductor companies after Marvell Technology Group Ltd forecast results this quarter that were largely above analysts' expectations. Marvell gained market share in the hard-disk drive and flash-storage businesses. The stock rose 2.5 percent to $9.71.

In addition, Texas Instruments Inc raised its dividend by a third and boosted its stock buyback program, lifting shares 5.1 percent to $34.16 while the PHLX semiconductor index <.sox> gained 1.8 percent.

"Dividends growing are another way the market's level is justified, if not especially attractive at these levels," said Macey, who manages about $20 billion in assets.

On the downside, Abercrombie & Fitch dropped 7.6 percent to $45.34 after the clothing retailer reported a drop in fourth-quarter comparable sales, even as its latest quarterly earnings topped estimates.

Insurer American International Group Inc posted fourth-quarter results that beat analysts' expectations. Shares advanced 3 percent to $38.43.

According to Thomson Reuters data through Friday morning, of 439 companies in the S&P 500 that have reported results, 70 percent have exceeded analysts' expectations, compared with a 62 percent average since 1994 and 65 percent over the past four quarters.

Fourth-quarter earnings for S&P 500 companies are estimated to have risen 6 percent, according to the data, above a 1.9 percent forecast at the start of the earnings season.

(Editing by Kenneth Barry)

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Pistorius granted bail pending murder trial

PRETORIA, South Africa (AP) — A South African magistrate allowed Oscar Pistorius to go free on bail Friday, capping hearings that foreshadow a dramatic trial in the Valentine's Day killing of the star athlete's girlfriend.

Pistorius' family members and supporters shouted "Yes!" when Chief Magistrate Desmond Nair made his decision after a more than 1 hour and 45 minute explanation of his ruling to a packed courtroom.

Radio stations and a TV news network in South Africa broadcast the audio of the decision live, and even international channels like the BBC and CNN went live with it, underscoring the huge global interest in the case.

Nair set the bail at 1 million rand ($113,000), with $11,300 in cash up front and proof that the rest is available. The magistrate said Pistorius must hand over his passports and also turn in any other guns that he owns. Pistorius also cannot leave the district of Pretoria, South Africa's capital, without the permission of his probation officer, Nair said, nor can he take drugs or drink alcohol.

The double-amputee Olympian's next court appearance was set for June 4. He left the courthouse in a silver Land Rover, sitting in the rear, just over an hour after the magistrate imposed the bail conditions. The vehicle, tailed by a motorcycle with a TV cameraman aboard, later pulled into the home of Pistorius' uncle.

The magistrate ruled that Pistorius could not return to his upscale home in a gated community in the eastern suburbs of Pretoria, where the killing of Reeva Steenkamp took place.

Pistorius' uncle, Arnold Pistorius said: "We are relieved at the fact that Oscar got bail today but at the same time we are in mourning for the death of Reeva with her family. As a family, we know Oscar's version of what happened on that tragic night and we know that that is the truth and that will prevail in the coming court case."

Nair made the ruling after four days of arguments from prosecution and defense in Pistorius' bail hearing. During Friday's long session in Pretoria Magistrate's Court, Pistorius alternately wept and appeared solemn and more composed, especially toward the end as Nair criticized police procedures in the case and as a judgment in Pistorius' favor appeared imminent.

Nair had banned cameras from Friday's dramatic bail hearing and complained about cameras constantly "flashing" in Pistorius' face the previous three days of hearings, saying the spectacle made the athlete look like "some kind of species the world has never seen before."

Nair said Pistorius' sworn statement, in which he gave his version of the events of the shooting during the predawn hours of Feb. 14 in a sworn statement, had helped his application for bail.

"I come to the conclusion that the accused has made a case to be released on bail," Nair said.

Pistorius said in the sworn statement that he shot his girlfriend — a model and budding reality TV contestant — accidentally, believing she was an intruder in his house.

Prosecutors say he intended to kill Steenkamp and charged him with premeditated murder, saying the shooting followed a loud argument between the two.

Sharon Steenkamp, Reeva's cousin, had said earlier that the family wouldn't be watching the bail decision and hadn't been following the hearing in Pretoria.

"It doesn't make any difference to the fact that we are without Reeva," she told The Associated Press.

Despite the bail decision, prosecution spokesman Medupe Simasiku said: "We're still confident in our case," outside court.

Pistorius faced the sternest bail requirements in South Africa because of the seriousness of the charge, and his defense lawyers had to prove that he would not flee the country, would not interfere with witnesses or the case, and his release would not cause public unrest.

Nair questioned whether Pistorius would be a flight risk and be prepared to go "ducking and diving" around the world when he stood to lose a fortune in cash, cars, property and other assets. Nair also said that while it had been shown that Pistorius had aggressive tendencies, he did not have a prior record of offenses for violent acts.

He criticized Hilton Botha, the previous lead investigator in the case, for not doing more to uncover evidence that the Olympian had violent tendencies.

"There is ample room and ample time to do that by looking at the background of the accused," he said.

But while Nair leveled harsh criticism at former lead investigator Botha for "errors" and "blunders," he said one man does not represent the state's case and that the state could not be expected to put all the pieces of its puzzle together in such a short time.

Anticipating the shape of the state's case at trial, he said he had serious questions about Pistorius' account: Why he didn't try to locate his girlfriend on fearing an intruder was in the house, why he didn't try to determine who was in the toilet and why he would venture into perceived "danger" - the bathroom area - when he could have taken other steps to ensure his safety.

"There are improbabilities which need to be explored," Nair said, adding that Pistorius could clarify these matters by testifying under oath at trial.

___

AP Sports Writer Gerald Imray and AP writer Carley Petesch contributed to this report from Johannesburg.

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Can Bersani-Monti work for Italy?

Austerity-hit Italy chooses new leader

Austerity-hit Italy chooses new leader

Austerity-hit Italy chooses new leader

Austerity-hit Italy chooses new leader

STORY HIGHLIGHTS

• Bersani wins he may be forced to form a coalition with incumbent PM Mario Monti


• Center-left leader Bersani says he plans to make the property tax "more progressive"


• Berlusconi is using his showman charm to mount a comeback for his PDL party

London (CNN) -- Italy's electoral run-off between an ex-communist and a former cruise ship singer threatens to throw the country back into the spotlight of the European debt crisis.

The enigmatic leader of the center-left Democratic Party, Pier Luigi Bersani, goes head-to-head with scandal-laden former Prime Minister Silvio Berlusconi -- back from the political grave following his resignation in November 2011.

Incumbent technocrat premier and eurozone darling Mario Monti, meanwhile, is lagging behind in the polls.

The cigar-chomping Bersani is favorite for Italy's top job and proposes to steer the country's battered economy through a debt crisis that is still plaguing the eurozone three years on.

Following six consecutive quarters of recession and with unemployment at 11.2%, Bersani is pursuing the euro area's latest fad to revive Italy's ailing economy; a pro-growth agenda.

Read more: Can the anti-Berlusconi pull Italy out of the mire?

Such policies are a stark contrast to Monti's cocktail of cuts and taxes served up to woo policymakers in Brussels and Frankfurt.

Read more: Berlusconi renaissance would be 'disaster' for Italian economy

Growth will be the "golden rule" to attract foreign investment, according to Democratic Party number two Enrico Letta. A similar sentiment was key in sweeping socialist French President Francois Hollande into the Elysee Palace in 2012.

But Letta stresses that Bersani will not follow Hollande's lead by proposing a 75% income tax for the country's wealthiest residents.

Read more: Beppe Grillo: Clown prince of Italian politics

Speaking to CNN, Letta said: "It will be different, we already have a very high level of taxation...the main point is not to increase taxes."

Bersani -- who promises to stick to the outgoing government's plans for pension and labor market reform -- will also keep Monti's reviled property tax, known as IMU. It's a policy that Berlusconi pledges to scrap if elected.

In an interview with CNN, Bersani says he plans to make the tax "more progressive" and focus on the owners of large properties if his party wins.

But for all Bersani's talk of change, bond strategist Nicholas Spiro dismisses the 71-year-old as no reformer and says he is "not up to the task" of hauling the Italian economy out of a "knee deep" recession.

Spiro, managing director of Spiro Sovereign Strategy, says "Bersani could very well go for taxes on the rich, but Italy has a massive tax evasion and compliance problem, that could be difficult."

Can a political marriage survive?

Politics in Italy is complicated and outright victory for any party is unlikely. If Bersani wins he may be forced to form a coalition.

An alliance with the flamboyant center-right leader Silvio Berlusconi is unthinkable -- which leaves Monti the most likely candidate to support a Bersani-lead government.

But Monti is viewed with suspicion Bersani's far-left partners, Left Ecology Freedom, who believe the technocrat would pull a left government too far to the economic right.

If the parties can strike a deal Monti would be offered "an important role" to be discussed "Monday afternoon," Letta told CNN. He refused to say if the technocrat would be appointed finance minister.

Monti, a former European Commissioner in financial services, wields the power to reassure European leaders that Italy is on the right track and can act as a counterbalance to a leftist government.

Bersani, by contrast, is a mystery on the international stage, according to Paola Subacchi, an economist at London-based think tank Chatham House.

"He is not known abroad and he doesn't speak English... But his whole agenda is pro-Europe and pro-euro."

A Bersani-Monti marriage is unlikely to be smooth. The two could clash over unpopular austerity measures implemented by Monti as part of a European agreement.

Filippo Cavazzuti, former Italian senator and economist at the University of Bologna, believes Bersani will be forced to maintain Monti's policies under the European fiscal compact.

He said: "Otherwise Monti leaves [the coalition], the spread [on bond yields] rises and the credibility with the eurozone will immediately disappear."

A coalition agreement is crucial to stifling a power-grab by Italy's political bad boy, Berlusconi, is gaining on Bersani's seemingly unassailable lead in the polls.

Berlusconi is using his showman charm to mount a comeback for his People of Freedom party and holds key regions in Veneto and Lombardy that could prove crucial, particularly in the battle for the Senate.

The election will hand down a "damning verdict" to the policymakers of northern Europe that Italians are fed up with austerity, according to Spiro.

The electoral campaign, Spiro added, has been: "Very ugly, devoid of substance and purely based on personalities."

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Court to Madigan: No rehearing on concealed-carry guns ruling

SPRINGFIELD — A divided federal appeals court today rejected Illinois Attorney General Lisa Madigan’s request for a rehearing on the case where the state has been ordered to allow citizens to carry guns in public.

Madigan made the request following the U.S. Seventh Circuit Court of Appeals decision in December that gave Illinois 180 days to put together a law that would allow concealed weapons in Illinois.

There has been no word yet from Madigan’s office on her next move. She could choose to appeal to the U.S. Supreme Court or decide to let the ruling stand.

The appeals court action officially rejected Madigan’s request for a rehearing by the full court, but the denial came with a stinging dissent from four of the nine members of the appeals court who reviewed the matter. The original order came down from a three-member panel that also had a split vote.

The arguments made in the dissent, written by Judge David Hamilton, could bolster Madigan’s cause if she appeals to the nation’s high court.

“The Supreme Court has not yet decided whether .. the individual right to keep and bear arms at home under the Second Amendment extends beyond the home,” Hamilton wrote.

Illinois is the only state in the nation that does not allow citizens to carry weapons in public in some form.

Hamilton’s dissent also noted the ruling that called for Illinois to allow concealed carry is the “first decision by a federal court of appeals striking down legislation restricting the carrying of arms in public.”

He wrote that three major points are worthy of consideration by the full appellate court rather than simply the three-member panel:

*Whether to extend the right to bear arms outside the home and into the public sphere, a matter that “presents issues very different from those involved in the home itself, which is all the Supreme Court decided” in a case currently viewed as the law of the land.

*How to handle what the panel did not decide. The three-member panel left Illinois a “good deal of constitutional room for reasonable public safety measures concerning public carrying of firearms.”

*How to proceed in future decisions about laws that are more narrowly tailored and any state interests that justify some restrictions on rights.

“Where the law is genuinely in doubt, as it is likely to remain for some time under the Second Amendment, a trial court can do a great service by ensuring the development of a thorough and complete record that provides a reliable, accurate factual foundation for constitutional adjudication,” Hamilton wrote. “The federal courts are likely to do a better job of constitutional adjudication if our considerations are based on reliable facts rather than hypothesized and assumed facts.”

You can read the opinion HERE.

rlong@tribune.com

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South Africa's Pistorius goes free on $113,000 bail

PRETORIA (Reuters) - A South African court granted bail on Friday to Oscar Pistorius, charged with the murder of his girlfriend on Valentine's Day, after his lawyers successfully argued the "Blade Runner" was too famous to flee justice.

The decision by Magistrate Desmond Nair drew cheers from the Paralympics star's family and supporters. Pistorius himself was unmoved, in marked contrast to the week-long hearing, when he repeatedly broke down in tears.

Nair set bail at 1 million rand ($113,000) and postponed the case until June 4. Pistorius would be released only when the court received 100,000 rand in cash, he added.

Less than an hour later, a silver Land Rover left the court compound, Pistorius visible through the tinted windows sitting in the back seat in the dark suit and tie he wore in court.

The car then sped off through the streets of the capital, pursued by members of the media on motorcycles, before it entered his uncle Arnold's home in the plush Pretoria suburb of Waterkloof.

At least five private security guards stood outside the concrete walls, keeping reporters at bay.

Under the terms of his bail, Pistorius, 26, was also ordered to hand over firearms and his two South African passports, avoid his home and all witnesses, report to a police station twice a week and abstain from drinking alcohol.

The decision followed a week of dramatic testimony about how the athlete shot dead model and law graduate Reeva Steenkamp at his luxury home near Pretoria in the early hours of February 14.

Prosecutors said Pistorius committed premeditated murder when he fired four shots into a locked toilet door, hitting his girlfriend cowering on the other side. Steenkamp, 29, suffered gunshot wounds to her head, hip and arm.

Pistorius said the killing was a tragic mistake, saying he had mistaken Steenkamp for an intruder - a possibility in crime-ridden South Africa - and opened fire in a blind panic.

However, in delivering his nearly two-hour bail ruling, Nair said there were a number of "improbabilities" in Pistorius's version of events, read out to the court in an affidavit by his lawyer, Barry Roux.

"I have difficulty in appreciating why the accused would not seek to ascertain who exactly was in the toilet," Nair said. "I also have difficulty in appreciating why the deceased would not have screamed back from the toilet."

By local standards, the bail conditions are onerous but it remains to be seen if they appease opposition to the decision from groups campaigning against the violence against women that is endemic in South Africa.

"We are saddened because women are being killed in this country," said Jacqui Mofokeng, a spokeswoman for the ruling African National Congress' Women's League, whose members stood outside the court this week with banners saying "Rot in jail".

TOO FAMOUS TO RUN

However, Nair said he made his decision in the "interests of justice" and argued that the prosecution, who suffered a setback when the lead investigator withered under cross-examination by Roux, failed to show Pistorius was either a flight risk or a threat to the public.

Roux stressed the Olympic and Paralympics runner's global fame made it impossible for him to evade justice by skipping bail and leaving the country.

"He can never go anywhere unnoticed," Roux told the court.

Pistorius, whose lower legs were amputated in infancy forcing him to race on carbon fiber "blades", faces life in prison if convicted of premeditated murder.

Prosecutors had portrayed him as a cold-blooded killer and said they were confident that their case, which will have to rely heavily on forensics and witnesses who said they heard shouting before the shots, would stand up to scrutiny at trial.

"We are going to make sure that we get enough evidence to get through this case during trial time," a spokesman for the National Prosecuting Authority told reporters.

In court, lead prosecutor Gerrie Nel was scornful of Pistorius's inability to contain his emotions. "I shoot and I think my career is over and I cry. I come to court and I cry because I feel sorry for myself," Nel said.

"DEEPLY IN LOVE"

In his affidavit, Pistorius said he was "deeply in love" with Steenkamp, leading Roux to stress his client had no motive for the killing.

Pistorius contends he reached for a 9-mm pistol under his bed because he felt particularly vulnerable without his prosthetic limbs.

According to police, witnesses heard shouting, gunshots and screams from the athlete's home, which sits in the heart of a gated community surrounded by 3-m- (yard-) high stone walls topped with an electric fence.

In a magazine interview a week before her death, published on Friday, Steenkamp spoke about her three-month relationship with the runner, who won global fame last year when he reached the semi-final of the 400 meters in the London Olympics despite having no lower legs.

"I absolutely adore Oscar. I respect and admire him so much," she told celebrity gossip magazine Heat. "I don't want anything to come in the way of his career."

Police pulled their lead detective off the case on Thursday after it was revealed he himself faces attempted murder charges for shooting at a minibus. He has been replaced by South Africa's top detective.

Pistorius's arrest stunned the millions around the world who saw him as an inspiring example of triumph over adversity.

But the impact was greatest in South Africa, where he was seen as a rare hero for both blacks and whites, transcending the racial divides that persist 19 years after the end of apartheid.

(Writing by Ed Cropley; Editing by Michael Roddy)

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Wall Street drops again, data raises growth concerns

NEW YORK (Reuters) - U.S. stocks fell on Thursday and were on track for their biggest two-day decline since November as weak data suggested expectations for economic growth were overly optimistic.

The two-day decline marked the U.S. stock market's first sustained pullback this year. The Standard & Poor's 500 is up 5.2 percent so far this year. The benchmark index has climbed for seven straight weeks, putting it near five-year highs.

In the latest economic data, initial claims for unemployment benefits rose more than expected last week while the Federal Reserve Bank of Philadelphia said its index of business conditions in the U.S. mid-Atlantic region fell in February to minus 12.5, the lowest in eight months.

"The Philly Fed report was troublingly weak, and adds to concerns about whether growth will remain up," said Brad Sorensen, director of market and sector analysis at Charles Schwab in Denver. "The only growth we're seeing is sluggish."

On Wednesday, the S&P 500 and the Nasdaq posted their worst daily declines of the year after the minutes from the Federal Reserve's most recent meeting sparked concerns that the central bank may rein in its economic stimulus measures.

"The upside momentum in markets appears to be coming to an end as we consolidate recent gains," said Adam Sarhan, chief executive at Sarhan Capital in New York. "If the S&P breaks under its 50-day moving average, something more serious could be in store."

The S&P 500 would need to fall 1.9 percent to reach that level of 1,473.58.

Other reports showed consumer prices were flat in January while existing-home sales edged higher and left the inventory of homes at the lowest level in 13 years.

Wal-Mart Stores Inc shares gained 2.5 percent to $70.94 and helped curb the Dow's decline after the world's largest retailer reported earnings that beat expectations, though early February sales were sluggish.

The Dow Jones industrial average <.dji> was down 70.03 points, or 0.50 percent, at 13,857.51. The Standard & Poor's 500 Index <.spx> was down 11.23 points, or 0.74 percent, at 1,500.72. The Nasdaq Composite Index <.ixic> was down 36.50 points, or 1.15 percent, at 3,127.92.

The benchmark S&P 500 index has dropped 1.9 percent over the past two sessions, the biggest two-day decline since November.

Wall Street will soon face another test with the upcoming debate in Washington over the automatic across-the-board spending cuts put in place as part of a larger congressional budget fight. Those cuts, set to kick in on March 1 unless lawmakers agree on an alternative, are expected to depress economic growth.

Semiconductor stocks ranked among the weakest of the day, pressuring the Nasdaq as the Philadelphia Semiconductor index <.sox> fell 1.8 percent. Intel Corp fell 2.2 percent to $20.27 while Advanced Micro Devices lost 4.8 percent to $2.57 as the S&P's biggest percentage decliner.

The semiconductor sector has performed well so far in 2013, rising 8.4 percent.

In company news, shares of supermarket operator Safeway Inc jumped 13.4 percent to $22.83 and ranked as the S&P 500's top percentage gainer after the company reported earnings that beat expectations.

In contrast, shares of VeriFone Systems Inc tumbled nearly 40 percent to $19.28 after the credit-card swipe machine maker forecast first- and second-quarter profits well below expectations.

Of the 427 companies in the S&P 500 that have reported results so far, 69.3 percent have exceeded analysts' expectations, compared with a 62 percent average since 1994 and 65 percent over the past four quarters, according to Thomson Reuters data through Thursday morning.

Fourth-quarter earnings for S&P 500 companies are estimated to have risen 5.9 percent, according to the data, above a 1.9 percent forecast at the start of the earnings season.

Berry Petroleum Co jumped 17.3 percent to $45.25 after oil and gas producer Linn Energy LLC said it would buy the company in an all-stock deal valued at $4.3 billion, including debt. Linn Energy shares advanced 1.9 percent to $37.33.

(Editing by Kenneth Barry and Jan Paschal)

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Top detective appointed new Pistorius investigator

PRETORIA, South Africa (AP) — South Africa's top detective was appointed lead investigator in the Oscar Pistorius case Thursday, replacing a veteran policeman who was charged with attempted murder in the latest shock development to hit a case being watched closely by the nation.

National Police Commissioner Riah Phiyega promised that a team of "highly skilled and experienced" officers would investigate the killing of Pistorius' 29-year-old girlfriend. Pistorius, 26, has been charged with premeditated murder in the case.

The decision to put police Lt. Gen. Vinesh Moonoo in charge came soon after word emerged that the initial chief investigator, Hilton Botha, is facing attempted murder charges, and a day after he offered testimony damaging to the prosecution in Pistorius' bail hearing.

Pistorius, an Olympic runner whose lower legs were amputated when he was less than a year old, killed his girlfriend Reeva Steenkamp in the predawn hours of Valentine's Day. He claims he mistook her for an intruder when he shot her through a locked door in a bathroom in his home. Prosecutors say the shooting happened after the couple got into an argument and allege the killing was deliberate, carried out with no mercy.

Botha acknowledged Wednesday in court that nothing in Pistorius' version of the fatal shooting of Steenkamp contradicted what police had discovered, even though there have been some discrepancies. Botha also said that police had left a 9 mm slug in the toilet and had lost track of allegedly illegal ammunition found in Pistorius' home.

"This matter shall receive attention at the national level," Phiyega told reporters soon after the end of proceedings in the third day of Pistorius' bail hearing. The case has riveted South Africa and much of the world and has placed the country's judicial system under close scrutiny.

Bulewa Makeke, spokeswoman for South Africa's National Prosecuting Authority, said the attempted murder charges had been reinstated against Botha on Feb. 4. Police say they found out about it after Botha testified in Pistorius' bail hearing Wednesday.

Botha and two other police officers had seven counts of attempted murder reinstated against them in relation to a 2011 shooting incident. Botha and his two colleagues allegedly fired shots at a minibus they were trying to stop.

Asked about Botha's court performance and handling of the investigation, Phiyega said South Africa's police force "can stand on its own" compared to others around the world.

Makeke, the spokeswoman for the national prosecution office, had said before Botha was dismissed from the Pistorius case that he should be taken off, but added that it was up to the police force to make that decision.

Makeke indicated the charges were reinstated against Botha because more evidence had been gathered. She said the charge against Botha was initially dropped "because there was not enough evidence at the time."

Pistorius' main sponsor Nike, meanwhile, suspended its contract with the multiple Paralympic champion, following eyewear manufacturer Oakley's decision to suspend its sponsorship. Nike said in a brief statement on its website: "We believe Oscar Pistorius should be afforded due process and we will continue to monitor the situation closely."

The judge is still trying to decide whether to grant Pistorius bail, and under what conditions.

During Thursday's bail hearing, Chief Magistrate Desmond Nair asked the defense of Pistorius' bail application: "Do you think there will be some level of shock if the accused is released?"

Defense lawyer Barry Roux responded: "I think there will be a level of shock in this country if he is not released."

Opposing bail, prosecutor Gerrie Nel painted a picture of a man "willing and ready to fire and kill," and said signs of remorse from Pistorius do not mean that the athlete didn't intend to kill his girlfriend.

"Even if you plan a murder, you plan a murder and shoot. If you fire the shot, you have remorse. Remorse might kick in immediately," Nel said.

As Nel summed up the prosecution's case opposing bail, Pistorius began to weep in the crowded courtroom, leading his brother, Carl Pistorius, to reach out and touch his back.

"He (Pistorius) wants to continue with his life like this never happened," Nel went on, prompting Pistorius, who was crying softly, to shake his head. "The reason you fire four shots is to kill," Nel persisted.

Earlier Thursday, Nair questioned Botha over delays in processing records from phones found in Pistorius' house following the killing of Steenkamp, a 29-year-old model and budding reality TV contestant.

"It seems to me like there was a lack of urgency," Nair said as the efficiency of the police investigation was questioned.

Botha is himself to appear in court in May to face seven counts of attempted murder. Botha was dropped from the case but not suspended from the police force, Phiyega said, and could still be called by defense lawyers at trial.

Pisatorius' behavior Thursday reflected the change of mood in the courtroom as his defense lawyers attacked police procedures and maintained his innocence.

Pistorius, in the same gray suit, blue shirt and gray tie combination he has worn throughout the bail hearing, stood ramrod straight in the dock, then sat calmly looking at his hands. On Tuesday and Wednesday, the athlete had been slumped over and sobbing uncontrollably at times as detail was read out of how Steenkamp died in his house.

"The poor quality of the evidence offered by investigative officer Botha exposed the disastrous shortcomings of the state's case," Roux said Thursday. "We cannot sit back and take comfort that he is telling the truth."

Roux also raised issue of intent, saying the killing was not "pre-planned" and referred to a "loving relationship" between the two.

He said an autopsy showed that Steenkamp's bladder was empty, suggesting she had gone to use the toilet as Pistorius had claimed. Prosecutors claim Steenkamp had fled to the toilet to avoid an enraged Pistorius.

"The known forensics is consistent" with Pistorius' statement, Roux said, asking that bail restrictions be eased for Pistorius.

But the prosecutor said Pistorius hadn't given guarantees to the court that he wouldn't leave the country if he was facing a life sentence. Nel also stressed that Pistorius shouldn't be given special treatment.

"I am Oscar Pistorius. I am a world-renowned athlete. Is that a special circumstance? No." Nel said. "His version (of the killing) is improbable."

Nel said the court should focus on the "murder of the defenseless woman."

Botha testified Thursday that he had investigated a 2009 complaint against Pistorius by a woman who claimed the athlete had assaulted her. He said that Pistorius had not hurt her and that the woman had actually injured herself when she kicked a door at Pistorius' home.

The hearing is to continue Friday morning.

___

AP Sports Writer Gerald Imray contributed to this report from Johannesburg.

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Major snowstorm bearing down on Chicago region

A winter storm that is walloping the Great Plains will hit the Chicago area tonight and linger through the morning commute on Friday, possibly dumping up to half a foot of snow here.

A winter weather advisory has been issued for the Chicago area from 9 p.m. Thursday until 6 p.m. Friday,  with snow falling at a rate of an inch per hour overnight in some places and winds blowing at 25 to 30 miles per hour, according to the National Weather Service.

The snow will change over to freezing drizzle Friday morning, the weather service said.

Anywhere from 3 to 7 inches could fall here, but up to 16 inches are expected in Kansas and Nebraska, states expected to bear the brunt of the storm that has already closed schools, scuttled air travel and cut off power to some communities.

The storm could be the worst to hit the Midwest since a storm dumped 1 to 2 feet of snow from central Oklahoma to the lower Great Lakes and central New England between Jan. 31 to Feb. 2, 2011. The storm spawned the infamous Groundhog Day Blizzard that buried Chicago in 20.2 inches of snow.

Winter storm warnings and advisories are in place for much of the central and southern Plains and into the upper Midwest and Mississippi River Valley as the storm moves east, packing snow, sleet and freezing rain, the National Weather Service said.

Ice storm warnings were in effect for parts of northern Arkansas. The massive storm was expected to unleash thunderstorms and rain on its southern edge from eastern Texas to Georgia, the forecaster said.

Missouri Gov. Jay Nixon declared a state of emergency because of hazardous travel and possible power outages. Kansas Gov. Sam Brownback ordered state offices closed because of the storm.

Kansas City encountered an unusual mixture of snow, thunder and lightning, with 2 to 3 inches of snow falling per hour.

"When there is thunder and lightning, it's a pretty screaming clue that you are going to have massive snowfall," said Andy Bailey, a meteorologist with the National Weather Service in Pleasant Hill, Mo. A foot of snow is likely there by Thursday afternoon, he said.

In Nebraska, a woman was killed in a two-car Interstate 80 accident Wednesday afternoon near Giltner. The victim was identified as Kristina Leigh Allen, 19, of Calloway, Neb. The Nebraska State Patrol said weather was a factor.

More than 90 percent of flights out of Kansas City International Airport were canceled Thursday morning, according the airport website.

Some 55 commuter flights were canceled out of Denver International Airport overnight, mostly due to adverse conditions in Midwestern destinations in Kansas and Nebraska, said spokeswoman Laura Coale.

About 30 flights in and out of Omaha's Eppley Airfield were canceled by mid-morning Thursday.

The brunt of the snowstorm churned through Kansas, causing scores of accidents and vehicles sliding off roads, but no fatalities, according to the state highway patrol. Two semi-trucks got stuck on Interstate 35 near Emporia, Kansas, closing the southbound lane Thursday morning, according to transportation officials.

"Most of the issues we are dealing with are people getting stuck in the snow on ramps when they go to exit," said Gary Warner of the Kansas Highway Patrol office in Wichita. Snow on Wednesday resulted in about 50 crashes with no injuries and 11 with injuries on Wichita area highways, he said.

Some parts of southeast Kansas reported power outages because warmer temperatures created sleet and ice on power lines, said Sharon Watson, spokesperson for Kansas emergency management services.

The snowstorm had been predicted well in advance, prompting schools and offices to close and keeping a lot of people off the roads, said Watson.

In Oklahoma, up to 12.5 inches of snow fell in northern parts of the state while schools were closed throughout the Oklahoma City area because of treacherous driving conditions.

Areas of southwest and central Nebraska received 8 inches of snow overnight, according to the National Weather Service. Snowfall of 3 to 4 inches was widespread in central Nebraska.

Omaha and Lincoln in eastern Nebraska were bracing for about 8 or more inches of snow.

Even as students were making their way to school this morning in Iowa, administrators in dozens of districts announced early dismissals.

Few of the 150 members of the Iowa General Assembly were in the state capitol in Des Moines this morning, deciding not to brave the weather.

Snow from the powerful storm fell as far south as Tucson, Ariz. on Wednesday. The rare snowfall halted play at the World Golf Championships-Accenture Match Play tournament near Tucson.

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