Intel CEO Paul Otellini to retire in surprise move

SAN FRANCISCO (AP) — Intel CEO Paul Otellini dropped a bombshell on the company’s board of directors last week, telling them in private that he plans to retire from the world’s largest maker of microprocessors in May. Otellini‘s move comes at a time when Intel faces a shaky economy and a mobile gadget craze that is eating away at demand for its PC chips —and it gives the company just six months to find a new leader.

Intel‘s board expected the 62-year-old Otellini to remain chief executive until the company’s customary retirement age of 65. The company announced his impending departure on Monday.

“The decision was entirely Paul’s,” said Intel spokesman Paul Bergevin. “The board accepted his decision with regret.”

Otellini will be ending a nearly 40-year career with Intel, including an eight-year stint as CEO by the time he leaves. He joined the Santa Clara, Calif. company after graduating from the nearby University of California at Berkeley and worked his way up the ranks before succeeding Craig Barrett as CEO in May 2005.

“It’s time to move on and transfer Intel‘s helm to a new generation of leadership,” Otellini said in a statement.

In another statement, Intel Chairman Andy Bryant praised Otellini for leading the company through “challenging times and market transitions.”

Intel‘s board plans to consider candidates inside and outside the company as it searches for Otellini’s successor. Otellini will be involved in the search.

Otellini and the four other men who have been Intel‘s CEO during the company’s 45-year history have all been promoted from within. The company’s board is believed to be leaning in that direction again.

Intel identified the leading internal candidates Monday by anointing three of Otellini’s current lieutenants as executive vice presidents. They are: Renee James, head of Intel‘s software business; Brian Krzanich, chief operating officer and head of worldwide manufacturing; and Stacy Smith, chief financial officer and director of corporate strategy.

If recent history is any indication, Krzanich has the inside track to become Intel‘s CEO. Both Barrett and Otellini served as chief operating officer before becoming CEO.

Although Otellini is generally well regarded, he has faced criticism for initially underestimating the impact that smartphones and tablet computers would have on the personal computer market. It was a pivotal change that also confounded Microsoft Corp. CEO Steve Ballmer, whose software company makes the Windows operating system that runs most of the PCs relying on Intel‘s chips.

“The shift came more quickly than they expected, and when they did finally see what was happening, they were a little late to react,” said technology analyst Patrick Moorhead of Moor Insights & Strategy.

Indeed, in 2008, nearly 300 million PCs were sold and most of them were powered by Microsoft‘s Windows and Intel‘s microchips, according to Forrester Research. Some 142 million smartphones sold that year, at a time when the tablet market hadn’t really taken off. That wouldn’t happen until Apple‘s 2010 release of the iPad.

By contrast, this year, Forrester estimates 330 million PCs will be sold worldwide compared with 665 million smartphones and just over 100 million tablets. By 2016, Forrester predicts annual sales of PCs will rise only slightly to 370 million machines while more than 1.6 billion smartphones and tablets will be purchased.

The fates of Intel and Microsoft have been so tightly wound for the past 30 years that computers using a combination of their chips and software are famously known as “Wintel” machines.

Now, much of the technology industry is questioning whether Intel and Microsoft can catch up in the mobile market to ensure their products remain as essential — and profitable — in the future as they have been in the past three decades.

It’s a challenge that Ballmer, 56, is confident he can tackle. He signaled his intent to remain Microsoft‘s CEO earlier this month when he ushered out the head of the company’s Windows division because of philosophical differences over the company’s future direction. For whatever reasons, Otellini concluded it was time for new leadership at Intel — an opinion that many investors share, according to RBC Capital Markets analyst Doug Freedman.

“A shift in leadership could be welcome news to investors as Intel could be in greater position to broaden its portfolio into higher growth markets,” Freedman wrote in a Monday research note.

Intel‘s stock was unchanged at $ 20.19 shortly before the market closed Monday. The stock has fallen more than 20 percent during Otellini’s reign. Most of the decline occurred this year amid concerns about the company’s ability to adjust to mobile computing and weakening demand for its core products in countries with troubled economies, particularly in Europe and China. The company blamed the poor economy for a 14 percent drop in its earnings during its most recent quarter.

Intel‘s chips have become even more dominant in the PC computer market during Otellini’s tenure, helping to boost the company’s annual revenue from $ 39 billion in 2005 to $ 54 billion last year. Besides supplying Windows-powered PCs, Otellini also scored a coup in 2006 when he convinced Apple to start using Intel chips in Mac computers instead of IBM Corp.’s microprocessors.

But Apple‘s pioneering work in smartphones and tablet computers also muddled Intel‘s future. Both the iPhone and iPad inspired a wave of sophisticated handheld devices that are undercutting demand for desktop and laptop machines that house Intel processors.

Most tablets rely on a technology licensed from British chip designer ARM Holdings Plc. Even Microsoft has tweaked the latest version of the Windows operating system so it works on ARM chips.

Other chip makers such as Qualcomm Inc. have developed less expensive microprocessors that have eclipsed Intel in the smartphone market. Qualcomm‘s inroads in the mobile market are a key reason why its stock has soared by more than 70 percent while Otellini was running Intel.

The contrasting performances of the two companies’ stocks enabled Qualcomm to surpass Intel as the world’s most valuable chip maker. Qualcomm‘s market value now stands at about $ 106 billion versus $ 100 billion for Intel.

Even though its stock under Otellini has lagged the rest of the market, Intel‘s ongoing prosperity has enabled the company to reward shareholders in other ways. Intel has paid stock dividends totaling $ 23.5 billion under Otellini as its quarterly payments rose 8 cents per share in 2005 to 22.5 cents per share currently.

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Dancing with the Stars: Couples Perform Crazy Combinations in Semi-Finals

TV Watch

Dancing With the Stars

By Aaron Parsley

11/19/2012 at 11:05 PM EST

Shawn Johnson and Derek Hough

Craig Sjodin/ABC

It's the semi-finals!

The remaining five couples on Dancing with the Stars faced two rounds of competition on Monday. First, the pairs performed mixed-up routines, blending uncommon styles with unusual themes. Then, they celebrated the 25th anniversary of Michael Jackson's hit album Bad with more traditional ballroom numbers.

Keep reading for all the details and scores ...

Melissa Rycroft & Tony Dovolani
Last week's top scorers kicked off the night with a caveman hustle. "Fred and Wilma have never danced so well," Len Goodman said, while Bruno Tonioli said they lost footing during the turns. They scored a 27.5. But their red-hot Argentine tango to "Dirty Diana" was a perfect 30. "That was beyond anything I could have imagined for you," a thrilled Carrie Ann Inaba said. "I would be really disappointed if you're not here next week," Len added.

Shawn Johnson & Derek Hough
Hough said he would rather put mustard on ice cream than combine their Knight Rider theme with the Bhangra style. But the judges ate up the routine – and awarded the pair a perfect 30. In round two, their Argentine tango sparked disagreement on the panel. Bruno and Len held up 10s but Carrie Ann knocked off a point. "Every line was perfect, but dance is sometimes more than just movement and I thought that you lacked the real passion of the Argentine tango," she said.

Apolo Ohno & Karina Smirnoff
Their big top jazz routine was another sticking point for Carrie Ann and Bruno. She found the mime-themed dance "very disjointed," "out of sync" and "quite sloppy." He found it "edgy, surreal" and a "great mixture of jazz movement." They earned 27 points. But there was no arguing over their rumba to "Man in the Mirror," which earned a perfect 30. "It was like the sea," Len said. "There was wave after wave of effortless motion. There was a subtlety to it, there was a calmness. It captivated. It was fabulous."

Emmitt Smith & Cheryl Burke
The goal of their espionage lindy hop was to be cartoonish. Though that was tough for the former Dallas Cowboy, the judges were pleased and awarded the pair 27 points. "It was like a Looney Tunes version of James Bond," Bruno said. "It was the most fun performance I've seen you do." Their tango to "Leave Me Alone" was more of a challenge, but Len still gave Smith credit: "You've coped marvelously well with two dances that didn't really suit you," he said.

Kelly Monaco & Val Chmerkovskiy
Their surfer flamenco was super sexy – Val ended up in nothing but Speedo! – but the judges had issues with their technique, and handed out only 25.5 points. "It had a lot of aggression and a lot of fire. But the flamenco has very, very exact placement and it wasn't there," Bruno said. Carrie Ann called it "robotic." But they added 28.5 points with a romantic rumba to "I Just Can't Stop Loving You." "That was smoldering, driven by desire, consumed by lust," Bruno said. "The chemistry between you two is literally singeing."

Two couples are heading home Tuesday night, leaving just three to compete in next week's finale. Who deserves a chance at the mirror-ball trophy? Discuss in the comments below.

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EU drug regulator OKs Novartis' meningitis B shot

LONDON (AP) — Europe's top drug regulator has recommended approval for the first vaccine against meningitis B, made by Novartis AG.

There are five types of bacterial meningitis. While vaccines exist to protect against the other four, none has previously been licensed for type B meningitis. In Europe, type B is the most common, causing 3,000 to 5,000 cases every year.

Meningitis mainly affects infants and children. It kills about 8 percent of patients and leaves others with lifelong consequences such as brain damage.

In a statement on Friday, Andrin Oswald of Novartis said he is "proud of the major advance" the company has made in developing its vaccine Bexsero. It is aimed at children over two months of age, and Novartis is hoping countries will include the shot among the routine ones for childhood diseases such as measles.

Novartis said the immunization has had side effects such as fever and redness at the injection site.

Recommendations from the European Medicines Agency are usually adopted by the European Commission. Novartis also is seeking to test the vaccine in the U.S.

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Asian shares rise on positive U.S. tone, yen slips

TOKYO (Reuters) - Asian shares rose on Monday, boosted by a positive tone in U.S. equities last week, while the yen fell to a near seven-month low against the dollar on expectations a new government after next month's election in Japan may deliver more stimulus.

MSCI's broadest index of Asia-Pacific shares outside Japan <.miapj0000pus> rose 0.6 percent, recovering from Friday's nine-week low.

Its energy sector <.miapjen00pus> outperformed as mounting supply concerns on escalating tension from Israeli air strikes on the Gaza Strip and Hamas rocket attacks on Israel underpinned oil prices.

The material sector <.miapjmt00pus> also were among top gainers as London copper rallied 1 percent to $7.684 a tonne on expectations for economic measures in China and hopes for a solution to the U.S. fiscal crisis.

Australian shares <.axjo> inched up 0.2 percent but Shanghai shares <.ssec> underperformed with a 0.3 percent drop, hovering near the seven-week low touched on Friday.

"We had some positive leads from the U.S. on Friday. Our market had been underperforming last week," Peter Esho, chief market analyst at City Index, said of Australian equities. "There's some hope that the negotiations in the U.S. around the fiscal situation may somewhat improve -- the prospects around that may improve this week."

Japan's Nikkei average <.n225>, which bucked the broad Asian downtrend on Friday and surged 2.2 percent, extended gains with a 1.3 percent climb to a two-month high. <.t/>

Speculation that the leader of the opposition Liberal Democratic Party, which is expected to win the December 16 elections, will call for more stimulus including further aggressive easing by the Bank of Japan also undermined the yen.

The BOJ begins a two-day policy meeting on Monday, and is expected to refrain from taking fresh policy steps.

The dollar hit a near seven-month high against the yen at 81.59 yen on Monday. A weaker yen helps support the economy and boosts sentiment for Japanese equities investors.

A senior trader at a foreign bank said investors had been underweight Japanese equities and the rally could have further to go as they start to put their money into Japan, advising investors to cover their positions in very heavily short-sold sectors such as electronics.

FISCAL CLIFF, GREECE EYED

Aside from Japanese politics, market players closely watched negotiations among U.S. Congressional leaders to avoid a budget crisis, and prepared for European officials' meeting on Tuesday to discuss aid for debt-stricken Greece.

Hope that U.S. politicians would find common ground to steer clear of the "fiscal cliff" boosted U.S. stocks on Friday. European shares sank to a 3-1/2-month closing low, for their worst week since the end of May, on persistent concerns over U.S. fiscal policy and the euro zone debt crisis.

U.S. Treasury yields fell to their lowest levels in over two months on Friday as skepticism over the U.S. budget talks drew safe-haven bids.

Top lawmakers from both major U.S. political parties on Friday hinted at the possibility of a budget compromise that involves spending cuts and additional revenue, although they were short on details.

"The good news is the tone of Friday's White House meeting but the prospect of no agreement until at least mid-December fits our view that the two sides are starting negotiations from rather distant points," Sean Callow, senior currency strategist at Westpac bank in Sydney, said in a note.

"As such, there will be plenty of negative headlines in coming weeks that weigh on Treasury yields and boost USD, which is yet again trading like a safe haven even when the bad news is generated by the US."

The dollar fell 0.3 percent, retreating from a two-month high of 81.455 hit on Friday against a basket of key currencies <.dxy>. The drop in the dollar supported gold, which added 0.5 percent to $1,722.39 an ounce.

The euro rose 0.3 percent to $1.2772, with traders waiting to know whether euro zone finance ministers and International Monetary Fund's Managing Director Christine Lagarde would agree on how to make Greece's debt manageable.

"As the EU prepares a bundled aid package to avert a Greek default, headlines coming out of the meeting may fuel a relief rally in the euro, but we will maintain our bearish forecast for the single currency as the region faces a deepening recession," said David Song, currency analyst at DailyFX.

U.S. crude futures rose 0.8 percent to 87.57 a barrel and Brent rose 0.6 percent to $109.59.

Asian credit market spreads on the iTraxx Asia ex-Japan investment-grade index were little changed.

(Additional reporting by Thuy Ong and; Ian Chua in Sydney, Dominic Lau in Tokyo; Editing by Eric Meijer)

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Syria Assails Foreign Support for Rebels

BEIRUT, Lebanon — Senior Syrian officials lashed out on Sunday at foreign governments that have recognized the opposition, while armed skirmishes around the country included a fresh salvo across the border with Israel.

The information minister, Omran al-Zoubi, accused France, Turkey and Qatar of supporting “terrorism” in Syria by extending diplomatic recognition to the new National Coalition of Syrian Revolutionary and Opposition Forces, including the acceptance of an official envoy in Paris, according to a summary of his remarks carried by SANA, the official news agency.

The new coalition does not represent anybody, Mr. Zoubi said, calling it a creation of the foreign states and thus ineligible to participate in any national dialogue.

In Tehran, Iran held a meeting on Sunday of about 200 members of the officially sanctioned opposition, but no members of the new coalition were invited. It was unclear who those attending actually represented.

Iran has backed the government of Syria, its most important Arab ally, throughout the conflict, reportedly providing arms and training for government forces.

On the sidelines of the conference, Ali Haidar, Syria’s minister of national reconciliation, told Agence France-Presse that France was acting as if it wanted to re-establish its colonial occupation of Syria.

The government of President Bashar al-Assad has said from the start of the crisis in March 2011 that it would engage with its opposition, but it has sought to handpick the participants in any negotiations. As the death toll has grown to 40,000, much of the opposition in exile and in Syria has rejected negotiations with Mr. Assad.

Iran’s foreign minister, Ali Akbar Salehi, also addressed the gathering, warning that outside interference could incite violence throughout the region. Arming the opposition would only aggravate the crisis, SANA quoted him as saying.

France broached the idea last week of lifting the arms embargo on Syria, saying it was studying the idea of helping the rebels. In general, Western nations have avoided providing weapons.

There were reports on Sunday of a minor exchange of fire across the border with Israel in the Golan Heights, the third such episode reported this month, and of an artillery shell landing in Jordan.

Small-arms fire from Syria hit a military vehicle on the Israeli side on Saturday without causing any casualties, and Israel responded with artillery, according to news agency reports that quoted the Israeli Army.

There may have been Syrian Army casualties, said Brig. Gen. Yoav Mordechai, the chief Israeli Army spokesman, but he said that could not be confirmed. There was no immediate comment from Syria, which demands the return of the Golan Heights, occupied by Israel since 1967, but has long kept the border quiet.

The Local Coordinating Committees, a network of opposition activists who monitor the conflict in Syria, reported that stray shelling in the southern province of Dara’a had landed in Jordan.

Both Syria’s official media and the opposition also reported fierce skirmishes in Damascus, Aleppo, Deir al-Zour and other cities.

The Free Syrian Army captured more than 10 tanks after taking a regimental headquarters in Aleppo Province that it had besieged for weeks, according to the Local Coordinating Committees.

Fighting also continued around Bukamal, SANA reported, with government troops inflicting “painful blows” by killing and wounding “dozens” of opposition fighters in the town, which is near Deir al-Zour.

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Soccer-Liverpool’s Sterling apologises to Watson over collision

Nov 18 (Reuters) – Liverpool winger Raheem Sterling has wished Wigan Athletic‘s Ben Watson a speedy recovery after a freak collision between the pair on Saturday left Watson with a suspected shin fracture.

Sterling, who made his England debut midweek, used his Twitter account to offer an apology to Watson following the Reds’ 3-0 win at Anfield.

Midfielder Watson was taken from the pitch in the first half when he was struck just above the shin by Sterling‘s knee as both competed in the air for the ball.

“To Ben Watson I didn’t realise it was serious as that ill (sic) be praying for a speedy recovery mate ill (sic) have you in my prayers every day. #sorry,” posted the 17-year-old.

Following the defeat, Wigan manager Roberto Martinez expressed concern for Watson as well as Gary Caldwell who has a problem with his hamstring.

“The injury to Ben Watson is a really nasty blow and what we believe to be a broken leg,” Martinez told Wigan’s official website (www.wiganlatics.com).

“We will have to assess the injury and the treatment that Ben will need before we can judge how long he is going to be missing.

“Ben was starting to have a very strong season and was putting in some commanding performances and it is a real shame to lose him to an injury like that.”

Martinez also accused Liverpool scorer Luis Suarez of stamping on David Jones. (Reporting By Mark Pangallo; Editing by Mark Meadows; mark.meadows@thomsonreuters.com; +44 20 7542 7933; Reuters Messaging:; mark.meadows.reuters.com@reuters.net)

Internet News Headlines – Yahoo! News

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Justin Bieber Brings His Mom to the American Music Awards

By Maggie Coughlan

11/18/2012 at 09:35 PM EST

Pattie Mallette and Justin Bieber

Jonathan Alcorn/Reuters/Landov

Mother knows best!

Despite his recent split from Selena Gomez, Justin Bieber still had a date for the 40th American Music Awards on Sunday: his mother, Pattie Mallette.

Malette – who recently penned Nowhere But Up: The Story of Justin Bieber's Mom – looked thrilled to pose for photographs with her son.

When Bieber won the first award of the night, for favorite pop/rock male artist, his proud mother, 38, beamed.

"I want to say this is for all the haters who thought I was just here for one or two years. I feel like I'm going to be here for a very long time," the singer said as he accepted the award.

The award was a highlight during a rocky week for Bieber, who on Friday reunited with Gomez, 20, for dinner at a Japanese restaurant in Los Angeles. But just five minutes after entering the restaurant, the couple emerged with Gomez looking visibly "mad," says a source.

Later that night, Bieber Tweeted "Things aren't always easy. there is a lot of pressure. im figuring it all out. im trying. but i care, i notice, i still hear u. #Beliebers."

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EU drug regulator OKs Novartis' meningitis B shot

LONDON (AP) — Europe's top drug regulator has recommended approval for the first vaccine against meningitis B, made by Novartis AG.

There are five types of bacterial meningitis. While vaccines exist to protect against the other four, none has previously been licensed for type B meningitis. In Europe, type B is the most common, causing 3,000 to 5,000 cases every year.

Meningitis mainly affects infants and children. It kills about 8 percent of patients and leaves others with lifelong consequences such as brain damage.

In a statement on Friday, Andrin Oswald of Novartis said he is "proud of the major advance" the company has made in developing its vaccine Bexsero. It is aimed at children over two months of age, and Novartis is hoping countries will include the shot among the routine ones for childhood diseases such as measles.

Novartis said the immunization has had side effects such as fever and redness at the injection site.

Recommendations from the European Medicines Agency are usually adopted by the European Commission. Novartis also is seeking to test the vaccine in the U.S.

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Wall Street Week Ahead: Going off "cliff" with a bungee cord

NEW YORK (Reuters) - The 1987 crash. The Y2K bug. The debt ceiling debacle of 2011.

All these events, in the end, turned out to be buying opportunities for stocks. So will the "fiscal cliff," some investors say as they watch favorite stocks tumble during the political give-and-take happening in Washington.

The first round of talks aimed at avoiding the "fiscal cliff" caused a temporary rise in equities on Friday, signaling Wall Street's recent declines could be a buying opportunity. The gains were small and sentiment remains weak, but it suggests hope for market bulls.

Though shares ended moderately higher on Friday, it was not enough to offset losses for the week. The S&P was down 1.5 percent, while both the Dow and the Nasdaq fell 1.8 percent.

The S&P 500 is down more than 5 percent in the seven sessions that followed President Barack Obama's re-election. Uncertainty arose as attention turned to Washington's task of dealing with mandated tax hikes and spending cuts that could take the U.S. economy back into recession.

Some see the market's move as an overreaction to hyperbolic headlines about policy gridlock in Washington, believing stocks may start to rebound in what should be a quiet few days ahead of the Thanksgiving holiday next Thursday.

"It just doesn't seem to make any sense that you suddenly wake up the day after the election and realize we've got a fiscal cliff," said Krishna Kumar, partner at New York hedge fund Goose Hollow Alpha Advisors.

Not long ago the S&P was on target for its second-best year in the last 10, riding a 17 percent advance in 2012. That's been halved to about 8 percent, which isn't bad but disappointing compared with just a month ago.

Investors have been selling the year's winners. Apple is down 25 percent from its peak above $700. General Electric is down 14 percent; Google has lost 16 percent. Overall, the stocks that make up the top 10 percent of performers in the month prior to Election Day have been the worst performers since, according to Bespoke Investment Group of Harrison, New York.

"I think it's a good opportunity to be long stocks at these levels," said Kumar.

Hikes on capital gains and dividend taxes are on the line, and Obama has dug in his heels on what he sees as a mandate to make the tax code more progressive.

He seems to have the upper hand in dealings with Congress because Republican lawmakers don't want to see tax rates increase, which is what will happen if no solution is found by the beginning of 2013. Republicans don't want to take the blame for driving the economy over the cliff.

The current crisis is similar to last year's fight to raise the U.S. debt ceiling, which led to the downgrade of the United States' top credit rating in early August 2011.

During the dealings, the S&P 500 lost 18.8 percent between its peak in July 2011 and its bottom in August. As the market slid, the political standoff badly hurt investors' confidence in Washington, setting off a spike in volatility.

In the end a deal was announced that raised the ceiling and put off longer-term fiscal decisions until January 1, 2013, setting the stage for today's "fiscal cliff" crisis.

After staying flat through September 2011, the S&P 500 jumped 31 percent between its October low and the end of March.

BUY THE DIP?

Gridlock in Washington and all that could possibly go wrong with the economy if a deal is not reached have grabbed the headlines, but the negotiations leave room for stock market gains. Congressional leaders said Friday they will work through the Thanksgiving holiday recess to find a solution.

"The debate over how to solve (the fiscal cliff) may be more productive than is commonly recognized," said Brad Lipsig, senior portfolio manager at UBS Financial Services in New York.

"The U.S. is facing a major debt overhang, and serious steps toward addressing it might ultimately be viewed as a positive for future growth," he said. "The market may recognize this and, after a time of hand wringing, recover from the concerns with a renewed sense of optimism."

The recent selling took the S&P 500's relative strength index - a technical measure of internal strength - below 30 this week, indicating the benchmark is oversold and due for a rebound.

The RSI in four of the 10 S&P sectors - utilities, telecoms, consumer staples and technology - is below 30 and the highest RSI reading, for the consumer discretionary sector, is below 40, suggesting a bounce is in store.

"What I want to do is what we did during the decline following the budget negotiations in the summer of 2011: The lower the stock market goes, the more I want to own stock," said Brian Reynolds, chief market strategist at New York-based Rosenblatt Securities.

"If we go off the cliff it will be with a bungee cord attached," he said.

KEEP CALM AND HEDGE

Volatility is expected to rise through the end of November and to spike in late December if no agreement on the fiscal cliff is reached in Congress. Alongside comes opportunity for those with high risk tolerance.

"Recently, volatility has increased in the market overall. You can't really pick it up in the VIX yet, but I think as we get through November, I think you're likely to see the VIX be at a relatively higher level," said Bruce Zaro, chief technical strategist at Delta Global Asset Management in Boston.

In 2011, the VIX averaged 19.2 in July and 35 in August. So far this month the average is 17.8 and it is expected to spike if negotiations on the cliff drag into late next month.

"Looking at the range of possibilities, I would say any of them would be better than sitting here waiting. I would even put going off the fiscal cliff in that category," said Jill Cuniff, president of Seattle-based Edge Asset Management Inc, which manages about $20 billion.

"But we don't believe Congress will let that happen; there's going to be some middle ground here."

(Reporting by Rodrigo Campos and Jonathan Spincer, additional reporting by Caroline Valetkevitch; Editing by Kenneth Barry)

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Israel Steps Up Aerial Strikes in Gaza

Tyler Hicks/The New York Times

A man injured by bombing in the Zaitoun neighborhood of Gaza City on Saturday that also killed one person.

GAZA CITY — Israel broadened its assault on the Gaza Strip on Saturday from mostly military targets to centers of government infrastructure, obliterating the four-story headquarters of the Hamas prime minister with a barrage of five bombs before dawn.

The attack, one of several on government installations, came a day after the prime minister, Ismail Haniya, hosted his Egyptian counterpart in that very building, a sign of Hamas’s new legitimacy in a radically redrawn Arab world. That stature was underscored Saturday by a visit to Gaza from the Tunisian foreign minister and the rapid convergence in Cairo of two Hamas allies, the prime minister of Turkey and the crown prince of Qatar, for talks with the Egyptian president and the chairman of Hamas on a possible cease-fire.

But as the fighting ended its fourth day, with Israel continuing preparations for a ground invasion, the conflict showed no sign of abating. Gaza militants again fired long-range missiles at Tel Aviv, among nearly 60 that soared into Israel on Saturday. Israel said it hit more than 200 targets overnight in Gaza, and continued with afternoon strikes on the home of a Hamas commander and on a motorcycle-riding militant.

The White House reiterated its strong support for Israel, with Ben Rhodes, the deputy national security adviser, describing rocket fire from Gaza as “the precipitating factor for the conflict.”

“We believe Israel has a right to defend itself, and they’ll make their own decisions about the tactics that they use in that regard,” Mr. Rhodes told reporters on Air Force One en route to Asia.

Hamas health officials said 45 Palestinians had been killed and 385 wounded since Wednesday’s escalation in the cross-border battle. In Israel, 3 Israeli civilians have died and 63 have been injured. Four soldiers were also wounded on Saturday.

Two rockets were fired at Tel Aviv on Saturday. One landed harmlessly, probably at sea. The other was intercepted by the Iron Dome defense system in the sky above the city. An Iron Dome antimissile battery had been hastily deployed near the city on Saturday in response to the threat of longer-range rockets.

Since Wednesday, Iron Dome has knocked 245 rockets out of the sky, the military said, while 500 have struck Israel. The American-financed system is designed to intercept only rockets streaking toward towns and cities and to ignore those likely to strike open ground.

There have been failures — on Saturday a rocket crashed into an apartment block in the southern port city of Ashdod, injuring five people — but officials have put its success rate at 90 percent.

Analysts said there is no clear end to the conflict in sight, since Israel neither wants to re-engage in Gaza nor to eliminate Hamas and leave the territory to the chaos of more militant factions.

“Ultimately,” said Efraim Halevy, a former chief of Israel’s intelligence service, “both sides want Hamas to remain in control, strange as it sounds.”

But Mkhaimar Abusada, a political science professor at Al Azhar University here, cautioned that “there is no military solution to the Gaza problem.”

“There has to be a political settlement at the end of this,” he said. “Without that, this conflict is just going to go on and on.”

President Mohamed Morsi of Egypt said late Saturday night that “there could be a cease-fire soon,” after he and other members of his government spent the day in meetings with the Turkish premier, the Qatari prince, the political leaders of Hamas and other Gaza factions. But Mark Regev, a spokesman for Prime Minister Benjamin Netanyahu of Israel, denied reports that a truce was imminent.

It was unclear whether the deal under discussion would solely suspend the fighting or include other issues. Hamas — which won elections in Gaza in 2006 and took full control in 2007 but is considered a terrorist organization by Israel and the United States — wants to turn its Rafah crossing with Egypt into a free-trade zone and seeks Israel’s withdrawal from the 1,000-foot buffer it patrols on Gaza’s northern and eastern borders.

Mr. Rhodes said the Turkish and Egyptian leaders “have the ability to play a constructive role in engaging Hamas and encouraging a process of de-escalation.”

Mr. Netanyahu, for his part, spoke with the leaders of Britain, Germany, Italy, Greece, Poland, Portugal, Bulgaria and the Czech Republic, according to a statement from his office.

Jodi Rudoren reported from Gaza City, and Isabel Kershner from Jerusalem. Reporting was contributed by Fares Akram and Tyler Hicks from the Gaza Strip, Carol Sutherland and Iritz Pazner Garshowitz from Jerusalem, and David D. Kirkpatrick and Mayy El Sheikh from Cairo.

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