Cyprus Bailout: MPs Stumble Towards Deal

Cyprus Bailout: Threat To Savings

Updated: 7:36am UK, Saturday 23 March 2013

By Ashish Joshi, Sky News Correspondent

Finally late into Friday night - an agreement on Plan B, meaning Cyprus has moved one giant step towards securing a Brussels bailout.

It includes a solidarity fund pooling together state assets and the granting of power to the Government to control bank capital.

The latter move is to prevent a run on the banks when their doors finally open on Tuesday.

There will also be a restructuring of the country's banks and a savings tax on Cypriot savers.

The details of the tax have still to be finalised, but the framework is in place.

It could mean savings over 100,000 euros held in Bank of Cyprus accounts being taxed up to 20%, according to one source close to the negotiations.

The same source said if that proposal is rejected there will be a plan to impose a tax of around 10% on all Cypriot bank accounts over 100,000 euros.

The threat of savers being hit hangs over the heads of people like Loizos Michael.

The 60-year-old tailor worked hard for 35 years, building up a good business.

He was looking forward to a wealthy retirement. Not anymore. Times are hard.

Speaking from his small tailor's shop in central Nicosia, Mr Michael said: "With the banks being closed, it is hard because I don't have a credit card and so cash flow is a problem.

"Even filling your car with petrol needs thinking about.

"Cypriots have always been workers by nature and nobody could have imagined that unemployment would be so high.

"This has hit us hard in the pockets."

Cyprus is weathering a storm - the likes of which this Mediterranean island has never faced in her young history.

Mr Michael said he knew things were getting bad, but expected solutions to be found to avoid ordinary people having to suffer.

"I expected something better. But now, it looks like the problem has been brewing for some time," he said.

"There used to be some people talking about the crisis, but now everyone's talking about it.

"I think things are harder now than just after the war. After the war of '74 people could still find work. Now, there is just no work so people have no money. What can we do?"

In the 1990s, Cyprus boasted a dynamic, booming economy, but it grew and unchecked.

An overbloated banking sector exposed to Greek debt has crippled the country's economy.

Now people like Loizos Michael must pay the price. He and the rest of Cyprus will soon find out exactly how much that is going to be.

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Weather: Snow And Rain Continues To Batter UK

Britain is continuing to endure extreme winter storms as snow, rain, high winds and freezing temperatures affect large swathes of the country.

The severe weather, which has already claimed the life of one woman, has been extending south, affecting London and parts of Kent.

The Met Office has issued two amber warnings for snow, with Northern Ireland and Wales, parts of northwest and northeast England and the Midlands expecting to see up to 15cm of snowfall over the course of the day.

Tens of thousands of homes in Northern Ireland, Scotland and Cumbria remain without power, while many roads are impassable and runways have been forced to close.

Two amber warnings have been issued

Birmingham Airport has suspended all arrivals and departures due to heavy snowfall, while Leeds Bradford is experiencing heavy delays.

The AA has warned motorists that even short journeys may be difficult, and there could be a repeat of the scenes in southern England last week when hundreds of drivers were stranded in their cars overnight.

In stark contrast to yesterday, there are only two flood warnings, meaning flooding is expected, in place in Britain. Both warnings are for southwest England.

A further 91 flood alerts, where flooding is possible, remain in place across the South East, Anglia, the Midlands and Wales.

The rain has been a particular problem in Cornwall, where a landslide, thought to have been triggered by torrential rain, smashed through a block of flats, partially collapsing the building.

Emergency crews found a woman's body after picking through debris at the Veronica flats in Looe on Friday night.

The body is believed to be that of Susan Norman, who was in her 60s and had been unaccounted for, according to the police.

Sky weather presenter Nazaneen Ghaffar said: "Saturday will see snow over central parts slowly fading, but there'll be a raw wind and it will stay near freezing away from the South West.

A woman died when this house in Looe collapsed

"The average temperature for the month so far, combining day and night, has been around 3C, well below the long-term average of 6C.

"It's highly unlikely to be record breaking (the coldest March on record was in 1962, at 1.9C), but it could well be the coldest for over 25 years."

Meanwhile, Electricity North West said about 1,500 properties in Cumbria remain without power but repair work was being held back by road closures, preventing access to some communities.

The company said it was considering using a helicopter to transport engineers to the areas to which power could not immediately be restored.

A complete blackout was reported for between 15 and 30 minutes across Belfast on Friday evening.

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Child Smokers: Thousands More Take Up Habit

The number of children who have taken up smoking has risen by 50,000 in just one year - the equivalent of 567 a day.

About 207,000 children aged 11 to 15 started to smoke in 2011, a sharp rise from 157,000 in 2010, Cancer Research UK said.

Almost one in three (27%) of under-16s have tried smoking at least once, a study by the charity found.

It urged the Government to commit to having all cigarettes put in plain standardised packs.

Sarah Woolnough, executive director of policy and information at Cancer Research UK, said: "With such a large number of youngsters starting to smoke every year, urgent action is needed to tackle the devastation caused by tobacco.

"Replacing slick, brightly-coloured packs that appeal to children with standard packs displaying prominent health warnings is a vital part of efforts to protect health.

"Reducing the appeal of cigarettes with plain, standardised packs will give millions of children one less reason to start smoking."

Last April, the Government launched a consultation on plans to introduce mandatory standardised packaging for tobacco products.

Health campaigners have welcomed the proposal, although opponents claim it would lead to increased smuggling and job losses.

Information generated by the consultation, which closed in August, is still being analysed by health officials.

In December, Australia became the first country in the world to put all tobacco products in standardised packs.

Cigarette packets and other products are all sold in a standardised colour, with only the brand name and graphic warnings visible.

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Weather: Snow And Rain Warning For Drivers

Severe weather warnings have been issued across much of the country as flooding blights communities and heavy snowfall is expected.

Shops and homes were flooded in Cornwall overnight, as the AA warns motorists even short journeys "can quickly turn bad".

There are 96 flood warnings and two amber warnings for snow in place across the country, with southwest England the worst affected.

Seventeen flood warnings, meaning flooding is expected, are in place, affecting parts of Devon and Dorset.

And 79 flood alerts, where flooding is possible, are in place across the South East and Midlands, but the South West is being the hardest hit.

There has already been major flooding in Cornwall.

Amber alerts have been issued for snow and rain

And the severe cold weather continues with the two amber warnings for snow affecting Northern Ireland and Wales, while parts of northwest England could expect to see up to 15cm of snowfall over the day.

Scotland also looks likely to see heavy snowfall today.

Police said they received a "significant" surge in call-outs on Thursday evening in the South West.

Sgt Dave Opara, based in Plymouth, said: "There has been a considerable amount of rainfall across the force area."

Cornwall opened its dedicated control centre to deal with the volume of calls about flooding. Fire crews had already been called out to 50 incidents before 10pm on Thursday.

Newlyn, in the southwest of the county, was reported to be the worst affected area.

Newlyn resident Adam Gibbard said the river through the town had burst its banks and swept into the main street.

"This is the second time it has happened in three months and a lot of these properties are businesses who were just getting back on their feet," he told Sky News.

"It has been very heavy rain all day and the deepest areas are a couple of feet deep.

"There are a lot of people out with sandbags, there are a lot of fire crews, people pitching in and trying to stem it but I don't think they have much of a chance."

Environment Agency spokesperson Pete Fox said: "Heavy rain in southwest England and south Wales on Thursday and into Friday means there is a risk of localised surface water and river flooding in the south west, the southern counties and parts of south Wales.

The worst flooding was reported to be around Newlyn in Cornwall

"The public can sign up for flood warnings and check the latest information on the Environment Agency's website, or follow us on Twitter at @EnvAgency."

Sky News weather producer Joanna Robinson said: "March can be a month of extremes and that's certainly what we're seeing this year.

"The cold theme is set to continue, with disruptive snow across parts of the UK.

"Over the next 24 hours, central parts of the UK will be most at risk of significant snow, particularly Northern Ireland, southwest Scotland, northwest England, northeast Wales and the north Midlands.

"There will be drifting in the raw wind and blizzard conditions. Disruption is likely to transport and perhaps even power supplies."

Darron Burness, head of the AA's Special Operations Response Team, said: "It's going to be a real witch's brew of driving wind, rain and snow, which will inevitably cause disruption on the roads.

"Drivers should be well prepared as even short journeys can quickly turn bad.

"Drifting snow could repeat the scenes we saw in southern England last week when hundreds of drivers got stuck overnight - it only takes one or two vehicles struggling for grip for the situation to quickly escalate.

"Keep your speed down as visibility could be seriously reduced and there's a risk of localised flooding - just stay out of flood water.

"Also with temperatures set to remain low, any snow that settles will likely persist for several days, so be wary of icy patches.

"Wherever you're going, take plenty of warm layers, check the travel reports before heading out and stick to the main roads where possible."

The Local Government Association said council gritting and ploughing teams would be out in force to try to ensure main roads remained passable.

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North Korea Issues Fresh Threat To The US

By Mark Stone, Asia Correspondent

North Korea has threatened to attack American airbases on the Japanese island of Okinawa and the Pacific island of Guam.

A statement by Kim Yong Chul, the spokesman of the Supreme Command of the Korean People's Army warned of "military actions".

"The US should not forget that the Anderson Air Force Base on Guam where B-52 bombers take off and naval bases in Japan and Okinawa where nuclear-powered submarines are launched are within the striking range of the Democratic People's Republic of Korea (DPRK) precision strike means," the statement read.

"Now that the US started open nuclear blackmail and threat, the DPRK, too, will move to take corresponding military actions."

The words mark the latest escalation in a lengthy stand-off as North Korea defies calls from the rest of the world to halt its dual nuclear and ballistic missile programmes.

The American government has not yet responded to the threat.

Military guard posts of South Korea (front) and North Korea (far)

British diplomatic sources speaking to Sky News from Seoul have said the UK Government "takes any threats seriously and there is some concern over the more harsh rhetoric coming from the DPRK".

However, the source insisted that there was no panic or alarm among diplomatic circles and that UK travel advice to South Korea remains unchanged.

The latest threat from North Korea is a direct response to a series of joint military exercises involving the US and South Korea.

On Tuesday, the US Air Force deployed its giant B-52 bombers from their base on Guam. The planes, which are capable of carrying and deploying nuclear bombs, flew sorties over the Korean peninsula as part of the military exercise.

The Pentagon in Washington confirmed the B-52 deployment. Spokesman George Little said the US wanted to underline its commitment and capacity to defend South Korea against an attack from the North.

However, the flights were condemned by Pyongyang as "an unpardonable provocation".

The Pentagon has confirmed the B-52 deployment

"The US is introducing a strategic nuclear strike means to the Korean peninsula at a time when its situation is inching close to the brink of war," the North Korean statement added.

The North Korean military does have rockets capable of reaching both Okinawa and Guam.

The surprisingly successful rocket launch in December followed a trajectory similar to that which any strike against Okinawa would take.

Okinawa is 600 miles due south of the Korean peninsula. Guam is further away, to the east of the Philippines.

While Pyongyang has proved it has the range capability, it is not clear whether or not their missiles are accurate enough to hit a specific target. And the country does not yet have the ability to carry out a nuclear strike at this range.

Earlier this month, the UN imposed the toughest sanctions yet on North Korea.

Kim Jong-Un reacted with anger, threatening to attack America, South Korea and Japan. The young and unpredictable leader toured military units calling for them to prepare for 'all out war'.

Computers are seen down at the main office of broadcaster YTN in Seoul

Meanwhile, Wednesday's unusually large cyberattack in South Korea, which brought down banks and broadcasters for one hour, has been traced to China.

Experts in Seoul claim the simultaneous attacks all bore the same IP address which was traced to the Chinese mainland.

Many of North Korea's internet and computing operations are tied to China. There is no suggestion that the Chinese government had any involvement.

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Archbishop Of Canterbury Due To Be Enthroned

The new Archbishop of Canterbury has revealed he is looking forward to meeting and working with Pope Francis as both religious leaders start their high-profile roles.

Speaking ahead of his inauguration at Canterbury Cathedral, The Most Rev Justin Welby told Sky News presenter Eamonn Holmes on Sunrise: "The papacy is a completely different thing to an Archbishop of Canterbury.

"I am one of almost 100 English bishops with a particular role, whereas he is the head of the Roman Catholic Church globally.

"I am greatly looking forward to meeting him. His story - his life story - is extraordinary. He is a great intellectual, but also an incredibly pastoral and simple, down-to-earth character.

"I am absolutely sure that we will be able to work together on a vast number of issues."

The Archbishop chose to visit West Sussex on Tuesday as part of a pilgrimage of his own around five English cities this month, instead of the Vatican for Pope Francis' inauguration.

He will lead 80 million Christians - in comparison to the Pope, who is leader of the world's 1.2 billion Catholics.

The Most Rev Justin Welby with his wife Caroline

However, they do have one thing in common. Like the newly-installed Pope, the Archbishop also likes to travel on the bus.

"I don't know what he will do, but I find it the easiest way of getting around," he said.

In the process of moving into Lambeth Palace, he conceded: "It is a very different life, it'll take a while to settle. We have a very close family. They tease relentlessly and keep my feet very firmly on the ground."

He faces many divisive issues within the Church, including women bishops, gay clergy and relations with the Catholic Church.

"I think reconciliation is about learning to be very different ... and continue to love and care for each other as we should within the Church, and within society to be able to hold very different views without being destructive," he said.

"One of the greatest challenges of my job is following Rowan Williams because he was such an extraordinary, exceptional, wonderful man, and such a wonderful Archbishop."

When he is not working, he likes to spend time with his family, reading and running. Asked what he likes to watch on TV, he confessed he has not owned one for the last two years.

"I love The West Wing. If I want to kick back I watch something like The West Wing - and I must start watching the new series of The Newsroom.

"We do now have a TV and I do watch a bit. The great thing I love about the telly is I like happy endings, simple stories and things that don't make me think too much. Though I do watch some more serious stuff, but not too much, because life is pretty serious on the whole and telly is great entertainment."

The Most Rev Welby was named as Dr Rowan Williams' successor in November and is due to be enthroned as Archbishop of Canterbury in a service at Canterbury Cathedral later.

The father-of-five resigned as an oil executive in 1987 after 11 years in the industry to train for the Anglican priesthood.

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Budget: Osborne's Hopes Of Rescuing Economy

By Jon Craig, Chief Political Correspondent

George Osborne will today unveil a Budget with the twin aims of attempting to rescue both the British economy and the political fortunes of the Conservative Party.

The Chancellor will announce a raft of measures he hopes will not only kick-start economic growth but also reverse a Tory slump that began with his Budget a year ago.

Many Conservative MPs blame last year's so-called "Omni-shambles" Budget - containing a series of blunders that required embarrassing U-turns - for the collapse in support for the party over the past 12 months.

This year Mr Osborne has already promised help for pensioners, working couples and homebuyers.

But to avoid another onslaught from critics he will also need to provide help for motorists on fuel duty and businesses with incentives to invest.

On tax, the Chancellor is tipped to help the low paid by accelerating raising the income tax threshold to £10,000, a move championed by the Tories' LibDem Coalition partners.

And after the furore in the Conservative Party over gay marriage, the Chancellor may boost the married couples' allowance to cheer up disgruntled Tory backbenchers. A cut in corporation tax from 21p to 20p would also delight business leaders.

Mr Osborne is also expected to agree to unlock £4.8bn in child trust funds and allow parents to transfer their investments into more generous Junior ISAs. This move could leave some children up to £34,000 richer.

He will also announce that thousands of elderly people who lost up to half of their life savings when Equitable Life came close to collapse a decade ago will receive compensation.

But in a bleak message to MPs and voters on the state of the economy, there will be no U-turn on spending cuts or unfunded tax cuts and some grim economic forecasts.

Speaking at the weekend, the Chancellor rejected calls from Lib Dem Cabinet colleague Vince Cable and former Tory defence secretary Liam Fox to change course and abandon his so-called "Plan A".

Warning that economic recovery would be a slow process, he said: "There is no easy answer to Britain's problems. There is no miracle cure, because of course if there was a miracle cure it would have been deployed.

"It is just a lot of hard work dealing with Britain's debts, helping businesses create jobs and helping families who work hard and want to get on."

It has been revealed the Chancellor will unveil another £2.5bn of cuts to fund capital spending, although health, schools, overseas aid and HM Revenue and Customs will be shielded from the latest round of savings.

Osborne warned there would be no U-turn on spending cuts

Mr Osborne told the Cabinet other departments would have to find 1% savings on day-to-day budgets for each of 2013/14 and 2014/15.

But the move was attacked by Labour. Shadow Treasury Minister Chris Leslie MP said: "An increase in capital spending of just £2.5bn compares to deep cuts of £12.8bn to infrastructure investment in the last three years on the plans George Osborne inherited.

"If this is the only additional investment in infrastructure in the Budget it will be a huge disappointment. Business groups, the IMF and even Vince Cable have all said now is the right time to invest, at record low interest rates, in building homes, road and schools to create jobs now and strengthen our economy for the future.

"The test for the Budget is whether it delivers bold action to kickstart our flat-lining economy and significant tax cuts for middle and low income families, not a £3bn tax cut for the very richest and more of the same failing policies."

But only weeks after Britain lost its AAA credit rating and slipped into a double dip recession with the risk of a triple dip, Mr Osborne is expected to have to deliver more gloomy news about the country's finances.

The Office for Budget Responsibility is expected to raise borrowing forecasts and lower those for growth.

Confirmation of Mr Osborne's unpopularity comes in a survey suggesting that more than four out of 10 voters (44%) think he should be sacked as Chancellor.

Fewer than one in five (18%) of those questioned said Mr Osborne should keep his job, while 38% did not know.

Favourite to replace him is Mr Cable, favoured by 12%, followed by Foreign Secretary William Hague (5%) and Home Secretary Theresa May (3%).

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Al Qaeda Says It Beheads French Hostage

Al Qaeda says it has beheaded a French hostage in reprisal for France's military intervention in Mali, according to reports.

Its North African arm claimed responsibility, Mauritania's ANI news agency reported, citing a commander for the group.

A French foreign office spokesman said they were trying to verify the report of the killing of Philippe Verdon, adding that "we don't know at the moment" whether it is reliable.

In a telephone call to the news agency, the group spokesman said Mr Verdon had been beheaded on March 10 "in response to the French military intervention in the north of Mali", ANI reported.

The AQIM commander described Mr Verdon as a French spy and said France's President Francois Hollande "bore the responsibility for the remaining hostages".

Mr Verdon and another Frenchman, Serge Lazarevic, were kidnapped from their hotel room on November 24, 2011, in the northern Mali town of Hombori.

Their families denied that the two men were mercenaries or secret service agents.

It is not known whether Mokhtar Belmokhtar is dead or alive

The killing, if proved true, would be a worrying development for Mr Hollande.

Another 14 French hostages are detained in Western Africa, including seven believed to be held in the Sahel region by al Qaeda in the Islamic Maghreb (AQIM) and its affiliates.

In August last year a video showing Mr Verdon describing the "difficult living conditions" was released on a Mauritanian website.

The hostages' families have in recent weeks expressed growing fears for their loved ones in the light of France's military actions in Mali.

Earlier Tuesday, Mr Verdon's father Jean-Pierre, complained that the families were hearing nothing from the French authorities.

"We are in a total fog and it is impossible to live this way," he told RTL radio. "We have no information."

French soldiers on the ground in Timbuktu

Asked about France's refusal to pay ransoms to kidnappers, he replied that the families had no say in such "decisions of state".

Terror chief Mokhtar Belmokhtar, an AQIM leader and one of the world's most wanted men, had pledged revenge and vowed to attack western targets in Africa after France launched a campaign to help the country's embattled government drive Islamist militants out of northern Mali.

France now has more than 4,000 troops on the ground in Mali.

It launched a nine-week assault in January to dislodge the group and other Islamist militants who had hijacked a Tuareg rebellion in Sahel and seized the northern half of the country.

They were driven out from the main cities of Gao, Timbuktu and Kidal, after which some 1,600 French and Chadian troops began searching for Islamist rebels in their pocket hideouts in the mountainous region of northern Mali.

When asked by the ANI news agency whether Belmokhtar had been killed, the AQIM commander neither denied nor confirmed it.

There have been conflicting reports on whether he was killed in the French military campaign against the rebels.

Soldiers from Chad fighting Islamists in Mali had claimed to have killed Belmokhtar, who is said to have been the mastermind behind the recent Algerian hostage crisis at a remote gas facility in the Algerian desert.

The one-eyed gangster, nicknamed Mr Marlboro because of his involvement in cigarette smuggling, had also been dubbed "The Uncatchable" by French intelligence after being linked to a series of kidnappings of foreigners in north Africa over the past decade.

France has been carrying out DNA tests to determine whether militant leaders Belmokhtar and Abdelhamid Abou Zaid are among those killed in recent fighting in Mali.

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Cyprus Urged To Protect Savings Under 100k

Eurozone finance ministers have urged Cyprus to protect savers with less than 100,000 euros (£86,000) in their accounts from a proposed tax on bank deposits.

Under a bailout deal agreed with the EU, Cyprus planned to impose a levy of 6.7% on all savings below that level.

The scheme was then changed to a 6.7% tax on all savings between 20,000 and 100,000 euros and 9.9% on all savings over 100,000 euros.

But the finance ministers, known as the Eurogroup, said they favoured a higher, 15.6% tax on richer savers in order to protect those with smaller deposits.

A statement from the group's president Jeroen Dijsselbloem said: "The Eurogroup continues to be of the view that small depositors should be treated differently from large depositors and reaffirms the importance of fully guaranteeing deposits below 100,000 euros."

Sparing more modest savers in favour of the higher rate on bigger deposits, would not impact on the overall amount of the bailout - 10bn euros (£8.6bn) - the group said.

Protesters gathered outside the parliament in Nicosia

On Saturday the Eurogroup told debt-ridden Cyprus it would not give it a bailout unless it recouped some of the money it needed from savers.

The scheme had the potential to affect thousands of Britons who had either moved to Cyprus to live or had money saved in Cypriot accounts.

Russia, whose citizens are thought to have up to $30bn of their cash tied up in Cypriot accounts, was left furious by the proposal.

Cyprus may still ignore the advice from the Eurogroup and its parliament is expected to vote on a plan to save its economy on Tuesday.

Foreign Secretary William Hague said Britain had been "separated" from contributing towards the bailout, adding that 3,000 Britons in the country would not suffer in the proposed raid on bank savings.

Large numbers of Russian millionaires have stashed savings in Cypriot banks

It is believed, however, that many British Cypriots may have millions in accounts that are not protected by UK rules.

It was also unclear whether British troops serving in Cyprus who had set up large savings accounts would be able to escape the tax.

Cyprus had been due to vote on the levy on Sunday but it was first pushed back until Monday and then Tuesday.

Banks were closed in the country on Monday because of a bank holiday, which prevented people withdrawing their money but cash machines across the island were emptied.

Branches will stay shut for another two days - Tuesday and Wednesday - to prevent people removing all their cash while the authorities decide what to do.

A large amount of cash was withdrawn from Cypriot banks on Monday

The decision to target bank accounts stunned Cypriots, and police sealed off parliament as about 400 people staged a noisy protest outside, aggrieved that their small island of one million people should be singled out for such treatment.

It is the first time within the EU that it has been proposed to tax savers in a country to pay for the failings of their government.

The euro and stock markets fell on concern that developments in tiny Cyprus could reignite the financial crisis in the 17-nation eurozone.

If Cyprus does tax large savers heavily there are fears that money could flood out of the country as two thirds of deposits are from abroad.

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Pope Francis Inauguration Draws Huge Crowds

Pope Francis is touring St Peter's Square in an open-top car at the start of his inauguration as leader of the world's Catholics.

The pope waved to the tens of thousands of pilgrims, who carried flags from around the world and shouted "Long live the pope!"

Heads of state, royalty and religious leaders will be among the guests at a two-hour ceremony in St Peter's Square, although the Queen and Prime Minister David Cameron will be absent.

An estimated 300,000 people listened to Pope Francis's first Angelus prayer

Large crowds are also expected in Buenos Aires in the Pope's native Argentina, where big screens have been erected outside the city's main cathedral.

The Vatican said the Mass would be a simplified version of events in 2005 that brought Pope Benedict XVI to the papacy.

Pope Francis will wear the Fisherman's Ring

The service will make several gestures towards Eastern Rite Catholics and Orthodox Christians, with the Gospel chanted in Greek not Latin and Eastern Rite prelates joining the Pope at an initial prayer at the tomb of St Peter under the Basilica's main altar.

The Vatican also released details of the coat of arms and official ring Pope Francis will receive during the Mass. Both are in keeping with his simple style.

The coat of arms is the same Jesuit-inspired one he used as Archbishop of Buenos Aires, while the ring was once offered to Pope Paul VI, who presided over the second half of the Second Vatican Council, the church meetings that modernised the church.

Argentina's President Cristina Kirchner will be among those present for the inauguration.

She met the Pope at the Vatican on Monday in what had the potential to be a tense discussion.

She and her predecessor and late husband, Nestor Kirchner, defied church teaching to push through a series of measures with popular backing in Argentina, including mandatory sex education in schools, free distribution of contraceptives in public hospitals and the right for transsexuals to change their official identities on demand.

Pope Francis meets the Argentine president

In 2010, Argentina became the first Latin-American country to legalise same-sex marriages.

But today those differences appear to have been brushed aside. President Kirchner gave the Pope a mate gourd and straw to hold the traditional Argentine tea that the new leader of the Catholic church loves. To her surprise, she got a kiss in return.

"Never in my life has a Pope kissed me!" she said afterwards.

A worker makes final preprations for the inauguration Mass in Vatican City

Britain will be represented at the ceremony by HRH The Duke of Gloucester, as well as cabinet minister Kenneth Clarke and Baroness Warsi, the Minister for Faith and Communities.

Zimbabwe's President Robert Mugabe also arrived in Rome for the inaugural Mass.

He is the subject of a travel ban by European nations in protest at his human rights record but it does not affect his trips to the Vatican through Italy.

Former Pope Benedict XVI will not attend the Mass and is likely to be watching on television at the papal retreat at Castel Gandolfo outside Rome.

He is due to greet Pope Francis in an unprecedented meeting at the retreat next Saturday.

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Father And Son Killed In Alps Hiking Trip Named

A British father and his 12-year-old son who died while hiking in the Alps have been named by the Foreign Office.

Peter and Charlie Saunders were killed on a walking trip in the Chamonix valley in France after flying there for a short weekend adventure, the FCO said in a statement issued on behalf of their family.

Mr Saunders tumbled to his death as he tried to search for his son who had fallen 300 metres, French police believe.

"Charlie was always full of life, had a really happy temperament and loved spending time with his father. Peter was fantastic at making things happen, resourceful, with a positive approach to life. They will both be sorely missed by friends and family alike," it said.

"We would like to take this opportunity to thank the French rescue services for all their efforts."

Rescue services in Chamonix were called by 48-year-old Mr Saunders at 2pm local time on Saturday.

He apparently said his son had fallen into a crevasse near Mont Blanc and that they were lost.

Captain Patrice Ribes, a French police officer, told Sky News that emergency services tried to trace the mobile phone call and launched a rescue mission.

But the rescuers lost contact and had to launch their search with little information about the pair's location.

The Saunders were said to be exploring a 'dangerous' mountain trail

A helicopter eventually spotted their bodies on Sunday morning at an altitude of 1,600m.

Capt Ribes said: "We think the father tried to find his son after he called us and asked for rescue. We believe he fell as he tried to find his son. Their bodies were found together this morning at 7.40am."

The father and son, reportedly from Buckinghamshire, had ventured into the Glacier des Bossons area of the Mont Blanc mountain range.

Capt Ribes said they had inadequate equipment and were exploring a "dangerous, deep, snowy" mountain trail.

Richard Mansfield, a mountain guide who has worked in the area for 20 years and lives near the Bossons glacier, said: "I don't know exactly where the accident happened but all the trails on the north side of the valley are covered in snow at the moment.

"The footpaths usually don't get that many people out at this time of year because they are much more difficult to navigate, although yesterday was a beautiful sunny day."

Mr Mansfield described a "number of footpaths which weave in and out of indentures in the mountainside" and this "is where they may have slipped off".

The valley, which boasts five ski resorts, receives a lot of British tourists throughout the year, with many owning holiday homes in the area.

According to reports, no less than 10 off-piste skiers and mountaineers had already been killed in the area this month.

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Press Regulation: Politicians 'Reach' A Deal

Politicians have reached a deal on plans to regulate the press, Labour's Deputy Leader Harriet Harman has told Sky News.

However, a Downing Street source insisted cross-party agreement was "very close" but there would be further talks this morning.

The Conservatives, Labour and the Liberal Democrats are understood to have held talks for more than five hours.

David Cameron - faced with a possible defeat in a House of Commons vote on the issue - was not present but was represented by Oliver Letwin, who has been the key figure for the party in recent negotiations.

The eleventh-hour talks came after Culture Secretary Maria Miller hinted at a "Labour climb-down", claiming Ed Miliband's party was now "much closer" to the Tories' position.

But Labour claimed the deal would be based on their plans for a Royal Charter underpinned by law.

Mr Cameron has been clear that he is very uncomfortable with the idea of setting anything down in law because it could be seen as politicians meddling with the press.

However, it is understood a compromise has been reached to include three lines of Statute - a clause in the legislation to ensure that the Royal Charter can not be amended in the future without two-thirds majorities in both Houses of Parliament.

There will be no industry veto of who sits on the regulator, and there will be a specific rule to ensure apologies are proportionate.

A senior Labour source told PA the party was in "lock-step" with the Lib Dems, adding: "We are clear we are not going to accept their Royal Charter. Any agreement must be on the basis of our Royal Charter."

Mr Cameron, who last week pulled out of talks about implementing Lord Justice Leveson's recommendations, previously warned that legislation would endanger press freedom.

Labour leader Ed Miliband, Deputy Prime Minister Nick Clegg and shadow culture secretary Harriet Harman attended the talks.

An agreement is not yet thought to have been signed, although Labour said it expects details to be announced in the Commons later.

Actor Hugh Grant, who is leading the Hacked Off campaign for tighter controls in the wake of the hacking scandal, accused the Prime Minister of turning his back on victims of press intrusion.

"For him, politically, it was more important to suck up to the newspapers than to fulfil the promise that he made under oath," he told Sky News.

"(He said) that what mattered as an outcome to all this was that those victims should never be subject to those kind of abuses again."

Harry Potter author JK Rowling also spoke out, saying Mr Cameron's actions had left her feeling "hung out to dry".

"Monday's vote will make history one way or another," she said.

"I am merely one among many turning their eyes towards Ed Miliband and Nick Clegg and hoping that they have the courage to do what Mr Cameron promised, but which he failed to deliver."

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Cyprus Politicians Decide On Bailout Demands

Cyprus's parliament will decide later today whether savers must pay a levy on bank deposits under terms for an international bailout to avert bankruptcy.

The eurozone demand that savers pay up to 10% of deposits as a condition for the 10bn euro (£8.6bn) bailout has drawn criticism and anger in the eastern Mediterranean island.

Queues of people gathered at its cash machines on Saturday as they tried to withdraw their money ahead of the move.

And the country's cooperative banks had to shut their doors after seeing a rush of savers keen to protect their money.

Savers could apparently withdraw money but were not able to carry out electronic transfers.

Newly-elected Cypriot President Nicos Anastasiades said refusing the bailout would have led to the collapse of the island's two largest banks, badly burnt by their exposure to bailed out neighbour Greece.

The tax on deposits in Cyprus, which accounts for only 0.2% of the eurozone's economy, is expected to raise up to 6bn euros (£5bn) as a condition for the bailout, mainly needed to recapitalise banks.

Those affected will include rich Russians with deposits in Cyprus and Europeans who have retired to the island as well as Cypriots themselves.

The size of foreign deposits in Cyprus - estimated at 37% of the total - was one reason the eurozone agreed to the tax on savings, to take effect when banks reopen on Tuesday.

Nicos Anastasiades with Angela Merkel in Brussels

The tax will apply to all deposits held in banks within Cyprus, including an estimated 2bn euros (£1.75bn) of British money, according to the European Central Bank.

However, it will not affect deposits held in the UK branches of Cypriot banks, such as Bank of Cyprus, whose UK subsidiary is regulated by the Financial Services Authority.

The country has a large British expatriot community, among them David Symonds who lives in Limassol.

He told Sky News: "Everybody was surprised. We were assured only a few days ago that the haircut on the deposits was a red line for the government.

"When we learned that it might become a possibility we were told it would only be on deposits above 100,000 euros. Now of course we know it affects everybody."

Cyprus was badly hit by the Greek financial crisis because of its close links to the country.

Its two largest banks saw combined losses of 4.5bn euros (£3.8bn) - equal to a quarter of the island's gross domestic product.

The rescue package was agreed after 10 hours of talks in Brussels and was significantly less than the 17bn euros (£14.7bn) asked for.

As part of the deal, the government will also have to hike corporate tax to 12.5% from 10% and sell off state assets to help balance the public finances.

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Chancellor Warns Of 'More Tough Choices'

George Osborne has warned the country of "more tough choices" and says there are no "miracle cures" for the UK economy, as he prepares to deliver Wednesday's Budget.

The Chancellor is under mounting pressure to change course and kick start growth as the UK faces an increased risk of falling into a triple-dip recession.

An opinion poll suggests most voters - including more than a quarter of Conservative supporters - think his policies are failing.

But Mr Osborne dismissed calls for extra borrowing to cut taxes or finance a "spending spree" and insisted that abandoning his austerity programme would be a "disaster".

Writing in The Sun on Sunday, Mr Osborne hinted he would do more to help homebuyers, business start-ups, apprentices and people saving for retirement.

Helping create jobs would mean "cutting tax rates and red tape, backing scientific advance, building new roads and broadband" and making the UK an attractive investment option, he said.

However he warned of "more tough choices" to be made on further slashing public spending from 2015 - with the scale of the squeeze to be unveiled in his statement.

"It won't be easy," he warned, amid rows between ministers over where the axe should fall.

Hopes the economy could grow in this quarter and thus avoid returning to recession were dealt a blow this week by a 1.5% fall in manufacturing output in January.

The Chancellor will deliver his Budget on Wednesday

Former cabinet minister Liam Fox is leading Tory calls for a change of course - suggesting Corporation Tax be reduced to zero and far bigger cuts to public spending, notably welfare.

Other prominent backbench demands include cancelling a fuel duty rise due in the autumn and scrapping the beer duty escalator that automatically ups the price of a pint.

Mr Osborne is tipped to announce extra investment in housebuilding and road projects - called for by leading business groups - and help for people to buy homes.

But he will not abandon "Plan A" by increasing borrowing to fund it - a move being mooted within the coalition by Liberal Democrat Business Secretary Vince Cable.

Shadow chancellor Ed Balls said he would welcome extra borrowing to fund a cut in the basic rate of income tax to put more money into people's pockets.

But Mr Osborne hit back: "I think the British people know there are no easy answers in today's world. They aren't fooled by the miracle cures peddled by the same snake oil politicians who got us into this mess.

"Labour's answer to Britain's borrowing problems is to borrow even more - that simply doesn't make sense. If there were easy options and miracle cures then of course I would take them, but sadly there aren't."

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