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The United Nations has voted overwhelmingly to recognise a Palestinian state, a long-sought victory for the Palestinians but an embarrassing diplomatic defeat for the United States.

The resolution upgrading the Palestinians' status to a nonmember observer state at the United Nations was approved by a more than two-thirds majority of the 193-member world body - a vote of 138-9, with 41 abstentions.

A Palestinian flag was quickly unfurled on the floor of the General Assembly, behind the Palestinian delegation.

Real independence, however, remains an elusive dream until the Palestinians negotiate a peace deal with the Israelis, who warned that the General Assembly action will only delay a lasting solution.

Israel still controls the West Bank, east Jerusalem and access to Gaza, and it accused the Palestinians of bypassing negotiations with the campaign to upgrade their UN status.

The United States immediately criticised the historic vote. "Today's unfortunate and counterproductive resolution places further obstacles in the path peace," UN Ambassador Susan Rice said.

 

The Taliban has threatened revenge unless India returns the body of a Pakistani man executed for his role in the 2008 Mumbai attacks that killed 166 people.

Mohammed Ajmal Kasab's body must be given back to his family or handed over to the Taliban, it said.

"If his body is not given to us or his family, we will, God willing, carry on his mission," Pakistani Taliban spokesman Ahsanullah Ahsan Ahsan told The Associated Press news agency by telephone. "We will take revenge for his murder."

India secretly hanged Mohammed Ajmal Kasab on Wednesday and buried his body at the jail in the city of Pune where he was executed.

Indian External Affairs Minister Salman Khurshid has said the government would consider any request from the Pakistani government or Kasab's family to hand over his body, but no such request had been received.

 

Israel and the Hamas militant group are edging closer to a ceasefire to end the week-long Israeli offensive in the Gaza Strip, but a deal remains elusive after a day of furious diplomatic efforts.

Israeli tanks and gunboats pummelled targets in Gaza in what appeared to be a last-minute burst of fire on Tuesday, while at least 200 rockets were fired into Israel.

As talks dragged on near midnight, Israeli and Hamas officials, communicating through Egyptian mediators, expressed hope that a deal would soon be reached, but warned that it was far from certain.

"If there is a possibility of achieving a long-term solution to this problem by diplomatic means, we prefer that. But if not, then I am sure you will understand that Israel will have to take whatever actions are necessary to defend its people," Israeli prime minister Benjamin Netanyahu said at a late-night meeting with visiting US secretary of state Hillary Clinton.

Mrs Clinton was hastily dispatched to the region by President Barack Obama to join a group of world leaders working to halt the violence. "In the days ahead, the United States will work with our partners here in Israel and across the region toward an outcome that bolsters security for the people of Israel, improves conditions for the people of Gaza and moves toward a comprehensive peace for all people of the region," she said.

She expressed sorrow for the heavy loss of life on both sides, but called for Palestinian rocket attacks on Israel to end and stressed that the American commitment to Israel's security was "rock solid". "The goal must be a durable outcome that promotes regional stability and advances the security and legitimate aspirations of Israelis and Palestinians alike," she said.

US State Department spokeswoman Victoria Nuland said Mrs Clinton met Mr Netanyahu and other Israeli officials for two hours. "They discussed efforts to de-escalate the situation and bring about a sustainable outcome that protects Israel's security and improves the lives of civilians in Gaza," Ms Nuland said. "They also consulted on her impending stops in Ramallah and Cairo, including Egyptian efforts to advance de-escalation."

 

Baghdad cancelled a $4.2 billion (3.3 billion euro) weapons package with Russia on Saturday citing graft concerns, torpedoing a deal that would have made Moscow Iraq's biggest arms supplier after the US.

Cancellation of the deal, which had been announced when Prime Minister Nuri al-Maliki led a delegation to Russia last month, is a setback for Moscow's attempts to firm up its slipping foothold in the Middle East and also throws into doubt efforts by Iraq to equip its armed forces.

"The deal was cancelled," Maliki's spokesman Ali Mussawi said.

"When Maliki returned from his trip to Russia, he had some suspicions of corruption, so he decided to review the whole deal... There is an investigation going on, on this."

Mussawi declined to say who specifically was being investigated, or if Iraq would begin new negotiations with Moscow.

He also did not say exactly when the final decision was made to stop the deal.

The Russian embassy in Baghdad was not available for comment.

Had the deal been finalised and implemented, it would have made Russia Baghdad's second-biggest arms supplier, after the United States.

America has moved from the bitter election campaign that gave President Barack Obama a second White House term towards a test of whether Republicans and Democrats are now ready to set aside their deep partisan divisions and legislative gridlock.

Meanwhile US stocks suffered their worst one-day loss of the year as investors looked past the election and focused on big problems ahead in Washington and Europe.

The Dow Jones industrial average plunged 313 points to end at 12,933, its worst day of 2012, the Standard & Poor's 500 index fell 34 points to 1,395 and the Nasdaq composite index gave up 75 points to 2,937.

The challenge is to overcome the self-imposed "fiscal cliff", dramatic and automatic tax increases and spending cuts that could drag the nation back into recession.

But in day-after-election remarks Republicans signalled no readiness to give up on their ideological opposition to raising taxes on high-income Americans, but instead were continuing to push for lower rates across the board.

That Reagan era theory, known as trickle-down economics, holds that cutting taxes will vastly increase the size of the income and profit pie, thereby producing more revenue even at lower tax rates.

Speaker of the Republican-controlled House of Representatives, John Boehner, laid down that position yet again as the condition for working for any increase in government revenue in return for Mr Obama's stated - but undefined - willingness to cut spending on crucial social programmes.

David Cameron has sent his congratulations to Barack Obama, saying: "I think he's a very successful US president and I look forward to working with him in the future."

Speaking during a tour of the Middle East, the Prime Minister said: "I would like to congratulate Barack Obama on his re-election.

"I have really enjoyed working with him over the last few years and I look forward to working with him again over the next four years.

"There are so many things that we need to do: we need to kick start the world economy and I want to see an EU-US trade deal.

Troops rescued more people from storm-flooded homes on Thursday and millions remained without power along the US East Coast even as New York struggled back to life with the first subway trains rolling in four days.

The US death toll from Hurricane Sandy rose to at least 85 as New York reported a major jump in fatalities caused by Monday's storm. Fuel shortages led to long lines of cars at gasoline stations in many states and the country faced a storm bill of tens of billions of dollars.

Despite a huge cleanup operation after the devastating storm, major difficulties remained along the East Coast, particularly in New Jersey.

National Guard troops were still helping to get people out of flooded homes in Hoboken, across the Hudson River from New York, a Guard spokesman said. "We are still doing search and rescue operations across the state," the spokesman said.

Hoboken authorities estimated on Wednesday that 20,000 people were stuck in their homes and high-wheel military trucks were brought in to reach stricken houses and apartment blocks.

The floodwaters receded slowly, leaving desolation on Thursday. A yacht, thrown up by the storm, blocked one street near the Hoboken ferry terminal. 

New Jersey, where President Barack Obama went Wednesday, emerged as the state with the most widespread destruction. At least 12 people were reported dead in the state, and many isolated districts were still being searched.

Some 1.8 million people in New Jersey were still without electricity three days after the storm and fuel shortages were becoming critical, with huge queues of cars at the rare gas stations open in the state.

The first subway trains brought some cheer to New York City, but difficulties remained significant with Con Edison power company saying that about 650,000 thousand people in the city were still without power.

Con Edison spokesman Alfonso Quiroz promised that more than 200,000 Manhattan customers blacked out by an explosion at a sub-station would have power by Saturday morning.

New York authorities handed out ice across the city to help people preserve food.

A skeleton metro service started just before dawn and trains were quickly packed. Train fees were waived on Thursday and Friday. "It is not comfortable but it is a huge relief to get moving again," said commuter Dave Stetman.

In a bid to avoid gridlock traffic jams that hit Manhattan on Wednesday, Mayor Michael Bloomberg said cars entering the island must have at least three occupants. Police set up checkpoints at bridges on Thursday and turned back hundreds of cars.

Police said the New York City death toll from Sandy in the city had risen from 24 to 37. At least 85 people have now been reported dead along the 15 eastern states hit by Sandy.

The overall toll from the storm thus went up to 157, including fatalities in Canada and the Caribbean, where Haiti and Cuba were hit particularly hard.

In New York the majority of those killed were hit by trees that fell on their homes or cars as the storm whipped into the city.

But some heartbreaking stories emerged from the storm.

Two brothers, aged two and four, were swept from their mother's arms in the floods as the family tried to escape the rising seas in Staten Island in the New York suburbs.

 

Hurricane Sandy has forced Barack Obama and Mitt Romney to cancel up to two days of campaigning in the last full week of one of the closest presidential contests in recent US history.

While putting a severe limit on campaigning, the storm gave Mr Obama the opportunity to demonstrate leadership in the face of crisis. On the other side, there was the risk that the federal government, as in past emergencies, could be faulted for an ineffective response.

He cancelled campaign events in the key battleground state of Florida to hurry back to Washington and oversee the federal response to Sandy.

Parts of four swing states were in the hurricane's path: Virginia, North Carolina, Ohio and New Hampshire. Those and five others - Florida, Iowa, Wisconsin, Nevada and Colorado - that do not reliably vote Democrat or Republican will decide the close election.

The storm threatened to draw attention from both candidates' campaigns and hinder early voting before the November 6 election. Voters in many states are already casting ballots early, and about one-third of the electorate will have voted before Election Day.

Both campaigns used social media to urge supporters to donate to the Red Cross and said they would stop sending fundraising emails to people living in areas in the storm's path.

The storm took attention from Mr Romney, and power cuts could end up halting the deluge of television ads and automatic phone calls in the eastern battleground states.

Hurricane Sandy is heading north from the Caribbean - where it left nearly 60 people dead - to threaten the eastern US with sheets of rain, high winds and heavy snow as millions were warned to get out of its path.

Sandy is expected to affect up to 60 million people when it meets two other powerful winter storms. Experts said it will not matter how strong the storm is when it hits land - the rare hybrid that follows will cause havoc over 800 miles from the East Coast to the Great Lakes.

"This is not a coastal threat alone," said Craig Fugate, director of the Federal Emergency Management Agency. "This is a very large area."

New Jersey governor Chris Christie declared a state of emergency as hundreds of coastal residents started moving inland and the state moved to close its casinos. New York's governor is considering shutting down the subways to avoid flooding and half a dozen states warned residents to prepare for several days of lost power.

Sandy weakened briefly to a tropical storm early on Saturday but was soon back up to Category 1 hurricane strength, packing 75mph winds about 335 miles south east of Charleston, South Carolina.

Hurricane Sandy has hit Cuba after lashing shanty towns, stranding travellers and downing power lines across Jamaica.

Sandy made landfall just west of Santiago de Cuba in southern Cuba, and the US National Hurricane Centre in Miami said it had maximum sustained winds of 114mph. The storm, which packed heavy wind and rain as it roared across Jamaica, could go on to threaten the Bahamas and possibly Florida.

Sandy's death toll so far is at least two. An elderly man was killed in Jamaica when he was crushed by a boulder that rolled on to his clapboard house, and a woman in Haiti was swept away by a rushing river.

The storm hit Jamaica as a Category 1 hurricane, with maximum sustained winds of 90mph, then strengthened as it spun over open sea towards Cuba. In some southern towns on Jamaica, a few crocodiles were caught in rushing floodwaters that carried them out of their homes in mangrove thickets, showing up in districts where electricity was knocked out.

The hurricane's eye crossed over Jamaica and emerged from its northern coast near the town of Port Antonio, meteorologists said, but rain and wind continued to pound the Caribbean island.

It was the first direct hit by the eye of a hurricane on Jamaica since Gilbert 24 years ago, and fearful authorities closed the island's international airports and police ordered 48-hour curfews in major towns to keep people off the streets and deter looting. Cruise ships changed their itineraries to avoid the storm, which made landfall five miles east of the capital Kingston.

Flash floods and mudslides were a threat for the debt-ridden tropical island of about 2.7 million inhabitants, which has a crumbling infrastructure and a number of sprawling shanty towns built on steep embankments and along gullies that sluice run-off water to the sea.