Asian shares, euro fall on uncertainty over Greek bailout

TOKYO (Reuters) – The euro skidded on Wednesday and Asian shares fell after European officials failed to reach a deal on another bailout for Greece, a day after Federal Reserve Chairman Ben Bernanke highlighted the dangers of a U.S. fiscal crisis.

U.S. stock futures eased 0.4 percent, pointing to a weak Wall Street open.

Financial spreadbetters predict London’s FTSE 100 <.FTSE>, Paris’s CAC-40 <.FCHI> and Frankfurt’s DAX <.GDAXI> would open down as much as 0.2 percent, following weakness in Asia. <.L> <.EU> <.N>

The euro slumped 0.5 percent to $ 1.2752, extending losses and retreating from Tuesday’s two-week high of $ 1.28295.

The euro’s decline lifted the dollar up 0.3 percent against a basket of key currencies <.DXY> and weighed on commodities such as gold, which eased 0.3 percent to $ 1,722.70 an ounce.

Euro zone finance ministers and Greece’s international lenders will gather again on Monday. Their meeting in Brussels ended on Wednesday without an agreement on the next tranche of loans to Greece, as they haggled over myriad options on how to bring the country’s debt down to a sustainable level, without which emergency aid cannot be disbursed to Athens.

“The euro is being sold because markets had believed the ministers would agree on aid for Greece at today’s meeting,” said Yuji Saito, director of foreign exchange at Credit Agricole in Tokyo.

“Instead, a settlement is postponed, highlighting the difficulty of getting consensus on the debt crisis. But I feel this is a typical European political show and an agreement will be reached.”

The bearish news from Europe dragged down Asian shares, whose two-day rise had already been stalled after Bernanke on Tuesday repeated a warning that failure to avoid the $ 600 billion “fiscal cliff” in expiring tax cuts and government spending reductions could lead to recession in the United States.

The Fed chief said worries over how budget negotiations will be resolved were already damaging growth.

Concerns about the United States failing to raise its debt ceiling rattled financial markets in August 2011 and prompted Standard & Poor’s to cut the top-notch U.S. government bond rating for the first time ever.

“The price action suggests market participants are unclear of what to make of recent developments and therefore this warrants some caution,” said Stan Shamu, strategist at IG Markets.

But Hirokazu Yuihama, a senior strategist at Daiwa Securities, said that for all the concerns over the fiscal cliff, most of the market expected the U.S. Congress and White House to reach a compromise to avert the crisis.

MSCI’s broadest index of Asia-Pacific shares outside Japan <.MIAPJ0000PUS> slipped 0.2 percent. Hong Kong <.HSI> shares bucked the falling trend but pared earlier gains to rise 0.5 percent while Shanghai shares <.SSEC> inched up 0.3 percent.

Japan’s Nikkei stock average <.N225> closed up 0.9 percent at a two month-high as exporters were buoyed by a weaker yen.

The yen has come under pressure on expectations that a general election on December 16 will result in victory for an opposition leader who wants the Bank of Japan to aggressively ease monetary policy to stem the economy from further deterioration. <.T>

MACRO DATA EYED

Daiwa’s Yuihama said concerns over third-quarter earnings have subsided as most Asian companies had already reported results.

“This has prompted investors to turn to economic fundamentals. Signs of recovery in the U.S. and China are offering some assurances that the global economic slump may not be as severe as previously feared, even if growth remains fragile,” Yuihama said.

Investors will now focus on HSBC China flash PMI for November due on Thursday to see whether a low point for China, the world’s second largest economy, is over. U.S. manufacturing figures are due later on Wednesday while those from Europe are due on Thursday.

Trading activity was slowing ahead of the U.S. Thanksgiving long weekend.

Going into the holiday, the dollar has been underpinned broadly by data indicating a moderate U.S. recovery taking root, while the yen remained under pressure, with more data showing Japan‘s economy struggling.

Japan’s exports fell 6.5 percent in October from a year ago, dropping for a fifth consecutive month, weighed down by weakening global demand and a territorial row with China, its main customer.

In the U.S. on Tuesday, a report showed housing starts rose to the highest rate in more than four years in October.

The dollar rose to a 7-1/2-month high against the yen of 81.975 yen while the euro briefly touched a peak of 105.05 yen, its highest point since May 4.

A retreat in shares dragged oil lower, although prices remained supported by a lack of ceasefire between Israelis and Palestinians, which raised concerns about supply disruptions from the Middle East.

U.S. crude futures pared earlier gains and were up 0.1 percent to $ 86.85 a barrel by midafternoon, and Brent crude also trimmed earlier rises and was up 0.2 percent at $ 110.03.

Weak appetite for riskier assets also interest in Asian credit markets subdued, with the spreads on the iTraxx Asia ex-Japan investment-grade index tightening by 1 basis point.

(Additional reporting by Miranda Maxwell in Melbourne; Editing by Simon Cameron-Moore & Kim Coghill)

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U.S. soldier accused of Iraq shooting “psychotic”: doctor

TACOMA (Reuters) – A U.S. soldier accused of killing five fellow servicemen at a military combat stress center in Baghdad in 2009 was psychotic and suffered from post-traumatic stress disorder during the shooting frenzy, a top U.S. forensic psychiatrist testified on Tuesday.

Sergeant John Russell, 48, is accused of going on a shooting spree at Camp Liberty, near the Baghdad airport, in an assault the military said at the time could have been triggered by combat stress.

Russell, of the 54th Engineer Battalion based in Bamberg, Germany, faces five charges of premeditated murder, one charge of aggravated assault and one charge of attempted murder in connection with the May 2009 shootings.

Six months ago, he was ordered to stand trial in a military court that has the power to sentence him to death, if he is convicted.

Russell’s civilian attorney, James Culp, entered no plea at an arraignment on Monday at a military base in Washington state. Russell’s court martial is tentatively set for mid-March and could last four to five weeks, attorneys told Reuters on Tuesday.

In a second day of hearings to discuss Russell’s state of mind at the time of the shooting and establish what evidence or testimony to admit at the court martial, Robert Sadoff, a University of Pennsylvania forensic psychiatry expert, gave the opinion that Russell was suffering from post-traumatic stress disorder.

Russell has “dissociative disorder,” or a lack of memory about the shootings, said Sadoff, who examined Russell for a total of 20 hours after the shootings. “He cannot remember. It’s a legitimate disorder. He also has post-traumatic stress disorder.”

Sadoff, a veteran of 10,000 criminal cases added: “It’s a matter of what’s going on in this man’s mind. He was psychotic. He was not dealing with reality. That’s what psychosis is.”

If the defense can persuade a jury that Russell was not in control of his actions, it may be able to argue that he is not legally responsible and could spare him from the death penalty, if convicted.

During Tuesday’s hearing, Culp sought authority from Judge Colonel David Conn to hire a forensic hypnotist to unlock Russell’s buried memories and conduct a specialized magnetic resonance imaging (MRI) test to measure Russell’s “mild diffused brain atrophy”, which Culp argues played a part in his behavior.

This would help diagnose “the extent of brain damage as it relates to criminal responsibility,” Culp said.

Army prosecutors urged the judge to decline. Major Dan Mazzone, one of four Army attorneys prosecuting the case, told the judge that an Army medical review already indicated that Russell’s brain atrophy was typical of a man his age and further testing is an unnecessary expense to the Army.

“The bottom line, this is just not necessary. It’s something the government should not be entitled to fund,” Mazzone said.

The judge is set to rule on the matter over the next few days.

The proceedings, held at Joint Base Lewis-McChord near Tacoma, Washington, come at a sensitive time for the Army, which is in the process of deciding how to prosecute Staff Sergeant Robert Bales, a soldier accused of killing Afghan villagers in cold blood earlier this year.

A two-week hearing at Lewis-McChord to establish if there is sufficient evidence to send Bales to a court martial wrapped up last week after harrowing testimony from Afghan adults and children wounded in the attack.

Bales’ civilian defense lawyers have also suggested he was suffering from post-traumatic stress disorder.

On Monday, Russell’s attorney outlined a defense based on his declining mental state.

Russell suffered from depression, thoughts of suicide, anxiety and stress from multiple deployments, and suffered “at least one traumatic experience involving civilian casualties” and “mass grave sites” while serving in Bosnia and Kosovo during 1998 and 1999, Culp said in presenting arguments to the judge after the arraignment.

(Reporting by Bill Rigby; Editing by Lisa Shumaker)

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Autonomy ‘misled HP on finances’

20 November 2012 Last updated at 14:58 ET

HP chief executive Meg Whitman: “We uncovered a whole host of very concerning accounting improprieties”

Computer maker Hewlett Packard has asked US and UK authorities to investigate alleged misrepresentations of Autonomy’s finances before HP took over the UK software group last year.

HP said Autonomy appeared to have “inflated” the value of the company prior to the takeover as part of a “wilful effort to mislead”.

This led to a $ 5bn (£3.1bn) charge in its latest quarterly accounts.

The former management team of Autonomy “flatly rejected” the allegations.

Three former senior members of staff, including former chief executive Mike Lynch, said they were “shocked” to see the statement.

“HP’s due diligence review was intensive,” Autonomy’s former chief executive, chief financial officer and chief operating officer said, referring to the process of investigating a firm prior to purchase.

“It took 10 years to build Autonomy’s industry-leading technology and it is sad to see how it has been mismanaged since its acquisition by HP,” the statement from the former management team said.

During a conference call following the announcement, HP chief executive Meg Whitman said: “We did a whole host of due diligence but when you’re lied to, it’s hard to find.

“[Autonomy] was smaller and less profitable that we had thought,” she said, adding that HP’s investigations suggested that the UK firm had misstated its revenues and growth rate.

Taking into account recent falls in HP’s share value and lower-than-anticipated returns from the merger, the total one-off charge recorded in HP’s accounts for the three months to the end of October was $ 8.8bn, pushing the company to a $ 6.85bn net loss.

‘Questionable accounting’

Continue reading the main story

HP’s allegations… are shocking if true – not least because for years Autonomy was regarded as that rarest and most precious of British companies, a global hi-tech success”

End Quote

HP said during the conference call that “a very senior person” from Autonomy had come forward “with specific details [of accounting misrepresentations]“. That person was still at the company, it said.

Ms Whitman said HP had discovered a number of irregularities, including hardware sales that had been reported as software revenues, which inflated both overall revenues and profit margins.

She said margins of between 40% and 45% had been reported, whereas HP now believed them to be between 20% and 28%.

As well as referring the matter to the regulatory authorities, the company would be “aggressively pursuing individuals responsible for this wrongdoing”, she added.

This would involve trying to recover money for HP shareholders.

HP shares fell 13% in early trading in New York following the announcement.

Deloitte, the accountancy firm which audited Autonomy’s accounts, said it could not comment on the allegations due to client confidentiality, but would cooperate with any investigations.

Criticism

HP completed the takeover of Autonomy for $ 12bn in October last year.

Autonomy was founded by Mike Lynch in 1996 and grew to become one of the largest software companies in the UK.

Mr Lynch is a non-executive director of the BBC, which said in a statement: “We expect to discuss these reports with Dr Lynch imminently.”

Autonomy gained a listing on the US Nasdaq exchange in May 2000, at the height of the technology boom, and was listed in London six months later.

The firm has often been cited as an example of how academic research can be turned into a profitable business, although it has attracted criticism from the City, particularly when, in October 2010, it warned there had been unexpected volatility in its customers’ “purchasing behaviour” and lowered its full-year forecasts.

HP’s decision to buy the company was part of the US firm’s long-term plan to move away from making computers into the more profitable software business.

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Turbulence on Cuba-Italy flight leaves 30 bruised

ROME (AP) — An airliner flying from Havana to Milan abruptly plunged some 1,000 meters (3,300 feet) when it hit unusually strong turbulence over the Atlantic on Monday, terrifying passengers and leaving some 30 people aboard with bruises and scrapes, airline officials said.

The flight continued to Milan’s Malpensa airport after the plane’s captain determined that it suffered no structural damage and two passengers who are physicians found no serious injuries, Giulio Buzzi, head of the pilots division at Neos Air, told Sky TG24 TV.

The ANSA news agency quoted bruised passenger Edoardo De Lucchi as saying meals were being served when suddenly there was “10 seconds of terror.” He recounted how plates went flying and some passengers not wearing seatbelts bounced about.

Buzzi had said that the drop measured some 3,000 meters (10,000 feet) in a cloudless sky. But Milan daily’s Corriere della Sera’s web site, quoting Neos official Davide Martini, later reported that the plane first bounced up some 500 meters (1,650 feet), then dropped some 1,000 meters (3,300 feet) to some 500 meters (1,650 feet) below the original altitude.

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People turn to Twitter for CPR information: study

(Reuters) – Amid snarky comments and links to cat videos, some Twitter users turn to the social network to find and post information on health issues like cardiac arrest and CPR, according to a U.S. study.

Over a month, researchers found 15,234 messages on Twitter that included specific information about resuscitation and cardiac arrest, said the study published in the journal Resuscitation.

“From a science standpoint, we wanted to know if we can reliably find information on a public health topic, or is (Twitter) just a place where people describe what they ate that day,” said Raina Merchant, the study’s lead author and a professor at the Department of Emergency Medicine at the University of Pennsylvania.

According to the researchers, they found people using Twitter to send and receive a wide variety of information on CPR and cardiac arrest, including their personal experiences, questions and current events.

Some researchers and organizations already use Twitter for public health matters, including tracking the 2009 H1N1 “swine flu” pandemic and finding the source of the Haitian cholera outbreak, the researchers said.

For the study, the researchers created a Twitter search for key terms, such as CPR, AED (automatic external defibrillators), resuscitation and sudden death.

Between April and May 2011, their search returned 62,163 tweets, which were whittled down to 15,324 messages that contained specific information about cardiac arrest and resuscitation.

Only 7 percent of the tweets were about specific cardiac arrest events, such as a user saying they just saw a man being resuscitated, or a user asking for prayers for a sick family member.

About 44 percent of the tweets were about performing CPR and using an AED. Those types of tweets included information on rules about keeping AEDs in businesses and questions about how to resuscitate a person.

The rest of the tweets were about education, research and news events, such as links to articles about celebrities going into cardiac arrest.

The vast majority of the Twitter users send fewer than three tweets about cardiac arrest or CPR throughout the month. Users that sent more tweets typically had more followers – people who subscribe to their messages – and often worked in a health-care related field.

About 13 percent of the tweets were re-sent, or retweeted, by other users. The most popular retweeted messages were about celebrity-related cardiac arrest news, such as an AED being used to revive a fan at a Lady Gaga concert.

“I think the pilot (study) illustrated for us that there is an opportunity to potentially provide research and information for people in real time about cardiac arrest and resuscitation,” Marchant said.

“I can imagine in the future we will see systems that would automatically respond to tweets of individual users. Twitter is a really powerful tool, and we’re just beginning to understand its abilities.”

SOURCE: http://bit.ly/T2bj7u

(Reporting from New York by Andrew Seaman at Reuters Health; editing by Elaine)

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Jackie Chan: upcoming film will be last big action movie

BEIJING (Reuters) – Kung Fu superstar Jackie Chan said that while the upcoming film “Chinese Zodiac 2012″ will be his last major action movie, citing his increasing age, he will still be packing punches in the world of philanthropy.

Chan wrote, directed and produced his latest film, set to premiere in cinemas in China next month. He also plays the lead role and said that he regarded it the “best film for myself” in the last ten years.

“I’m the director, I’m the writer, I’m the producer, I’m the action director, almost everything,” the 58-year-old Hong Kong actor told Reuters while in Beijing to film a documentary.

“This really, really is my baby. You know, I’ve been writing the script for seven years,” and the film took a year and half to make, he added.

In the film, Chan is a treasure hunter seeking to repatriate sculpture heads of the 12 animals of the Chinese zodiac, which were taken from Beijing‘s Summer Palace by French and British forces during the Opium Wars.

He said it was an important movie for him because it will be his last major action feature, although he insisted it is not the end of his action career.

“I’m not young any more, honestly,” he said, noting that with special effects technology and doubles a lot can be done without physical risk.

“Why (do) I have to use my own life to still do these kind of things?” he said. “I will still do as much as I can. But I just don’t want to risk my life to sit in a wheelchair, that’s all.”

Chan was recently awarded the Social Philanthropist of the Year award by Harpers Bazaar magazine. He said he wanted to increase time devoted to charitable work and hoped China’s leagues of newly wealthy will follow his example – which he underlined by auctioning a Bentley 666 for around 6 million yuan ($ 961,837).

China now has more billionaires than any other Asian country, but very few philanthropic organizations, and giving to charity remains a relatively new phenomenon in the world’s most populous country.

Chan said while Chinese philanthropists have made some encouraging strides, much more still needs to be done – a task made harder by the Internet, with netizens willing to leap on every perceived wrong move.

“Right now people (must) very, very be careful, but that doesn’t stop them to want to do the charity. I think it’s a good sign,” Chan said. (Reporting by Reuters Television, editing by Elaine Lies and Christine Kearney)

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Pharmacies Dispense Meds Even After Docs Stop Prescription

Image courtesy of iStockphoto/monkeybuisnessimages

When doctors take patients off of a prescription medicine, it is often for a good reason. But pharmacists don’t always get the memo. A new study finds that more than 1 in 100 discontinued prescriptions were filled by the pharmacy anyway, putting some patients at serious risk. In the U.S., pharmacists filled more than 3.7 trillion prescriptions in 2011. With so many prescriptions and refills–and our still largely human- and paper-based prescribing system–there are bound to be mistakes. Pharmacists may overlook drug interactions, dispense inappropriate medications, or commit other little-understood errors. One such underappreciated problem area is the process of taking patients off medication. While errors in initial prescribing have drawn much attention, potential for error when doctors order a prescription to stop also looms large. And electronic health records, which have helped to minimize medical errors in other areas, might be partly to blame. These electronic communiqu?s might be giving some doctors–and patients–a false sense of efficacy. Doctors might assume that when they make a note on a patient’s electronic health record to stop a prescription the pharmacy will automatically get the message as it does when they first prescribed that medication. This, however, is not always the case, wrote Adrienne Allen, of the North Shore Physician Group, and Thomas Sequist, of Brigham and Women’s Hospital in the new paper, published online November 19 in Annals of Internal Medicine. To find out how often the pharmacies continue to dispense meds the doctor no longer ordered, Allen and Sequist analyzed electronic health records of 30,406 adults in a Massachusetts health system whose doctor had discontinued a drug to treat a high-risk condition such as high cholesterol, hypertension, diabetes, blood coagulation or platelet aggregation. Some 83,900 medications were discontinued during the course of a year. Nevertheless, pharmacists still dispensed 1,218 of these prescriptions after they were discontinued. The most common drug that pharmacists dispensed after a doctor canceled the prescription was metoprolol (Lopressor or Toprol), which is often prescribed to treat high blood pressure after a heart attack and which can have harmful drug interactions with other commonly prescribed drugs. In a subset of medical records, a computer analysis flagged more than a third (34 percent) of the improper dispensations as creating a “high risk of potential adverse events” such as a harmful reaction, potential drug interaction or suspect lab test result, the researchers noted. And manual assessment verified that potential harm actually occurred in at least 12 percent of cases. Patients receiving these drugs were more likely to be taking more medications, older, enrolled in Medicare and black. Additional medications make it more likely that a patient will suffer an adverse drug interaction if they take an unintended prescription (especially if a doctor has subsequently prescribed a similar drug to take the discontinued drug’s place). And older adults might be less likely to notice a mistake. One limitation of the study is that the researchers could only study the 52 percent of discontinued prescriptions that were filled at participating health care system pharmacies; unaffiliated pharmacies might have even higher inappropriate dispensation rates. Additionally, the researchers only studied a limited number of drugs. Adding other drugs to the analysis would likely increase the number of discontinued prescriptions dispensed, even if the risk of side effects might be lower. They researchers see promise for filling this communication gap in the future. Electronic health records offer an opportunity to track these missteps, and adding more direct communication with pharmacies about prescription discontinuation should help avoid these errors. For now, however, the new technology is often not as powerful as many doctors think it is. So some of the responsibility will continue to lie with the patient. Officials would be wise to help “increase patient awareness of their medication list,” the researchers concluded. That is, until the computers can just do it for us.

Follow Scientific American on Twitter @SciAm and @SciamBlogs. Visit ScientificAmerican.com for the latest in science, health and technology news.
© 2012 ScientificAmerican.com. All rights reserved.

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Maybe Diamonds Aren’t Forever

Ian Harebottle is looking for the next Marilyn Monroe. The chief executive officer of London-based Gemfields (GEM), the world’s largest producer of emeralds, says he’s seeking “an A-lister” who can do for the green gems what Monroe did for diamonds when she sang Diamonds Are a Girl’s Best Friend in Gentlemen Prefer Blondes. Monroe’s performance in the 1953 flick added extra sparkle to diamond sales.

Diamonds still dominate the $ 21 billion precious stone market, accounting for 90 percent of all sales, according to BMO Capital Markets (BMO). But for the first time in decades they have a little competition from the colored also-rans in the gem trade. Rarer than diamonds yet cheaper, emeralds, rubies, and sapphires are gaining favor just as sales for diamonds are beginning to show weakness. Polished diamond prices have fallen for five straight quarters as jewelry buyers in Asia and Europe become more cautious about luxury shopping, according to PolishedPrices.com. Uncut diamond prices are heading for their first annual decline since 2008, according to WWW International Diamond Consultants.

Colored gems’ rising popularity is starting to worry the diamond industry. “During the past three years these other gemstone categories have taken away yet another half percent from our market share,” Moti Ganz, president of the International Diamond Manufacturers Association, said in a speech at the World Diamond Congress on Oct. 15. As a result, colored stones are becoming more valuable. Prices for high-quality emeralds have soared more than tenfold in the past three years, according to Gemfields company filings. Cut rubies have risen in value 63 percent since 2005 and sapphires by 45 percent, according to Gemval, an online gem appraisal site.

The reason for the shift in tastes is multifaceted. Colored stones are still less expensive, a plus for star-struck lovers on a budget during hard times. A 0.9-carat round diamond that’s internally flawless and of rare white color costs about $ 7,000, according to online retailer Blue Nile (NILE). A round emerald with “excellent clarity” of the same size costs about half as much, according to online vendor AfricaGems.

Some of the interest in colored stones is “celebrity driven,” says Caitlin Mociun, a Brooklyn-based jewelry designer. “One reason might be Kate Middleton having a sapphire engagement ring, or even Beyoncé having a black diamond engagement ring. Those things, especially for a mass market, can definitely drive a trend.” Hollywood personality Jessica Simpson’s engagement ring sported two diamonds, but the ruby in its center got all the press and sparked numerous knockoffs. Halle Berry’s ring featured a 4-carat emerald that several celebrity magazines breathlessly announced came from “closed-down mines in Muzo, Colombia.” At a gem trade show in Hong Kong last year, Russell Shor, an analyst with the Gem Institute of America, immediately noticed the new interest in colored stones. “People were all of a sudden really hot to buy emeralds,” he says.

That may not be an accident. Harebottle, whose company produces about 20 percent of the world’s emeralds, is increasing Gemfields’ marketing budget, trying to exploit fissures in the diamond industry that until recent years was controlled by De Beers. Until the 1940s, the colored-stone market was about equal in size to the diamond industry. Then, in 1947, De Beers coined the slogan “A Diamond Is Forever,” later voted the best of the 20th century by Advertising Age. De Beers funded most of the marketing for the diamond industry through its generic marketing, similar to the dairy industry’s “Got Milk?” campaign. That changed in 2004 when De Beers’s monopoly ended after it pleaded guilty to price fixing in the U.S., concluding a 10-year legal battle. The diamond industry became chaotic and the amount spent on marketing plummeted, with De Beers cutting its ad budget in half, according to Stephen Lussier, the company’s executive director in London. The industry tried to reorganize in 2008 at a meeting in St. Petersburg, Russia, that led to the creation of the International Diamond Board. But members, including Russian state monopoly OAO Alrosa and mining giant Rio Tinto (RIO), failed to come to an agreement over how to fill the advertising void left by De Beers. “Not all people were willing to do their part,” says Lussier. “De Beers can do its part, but it alone is not enough.”

Anish Aggarwal, a partner at consulting firm Gemdax, says the diamond industry has had “four to five years without any real category marketing, and there are some markets that are suffering, such as Japan.” He adds that there’s “a danger of losing some of the cultural imperative.”

Even if Gemfields does find a modern Marilyn Monroe, it’s doubtful the company will ever be able to match De Beers’s old business model, in which a single firm mines, markets, and largely controls wholesale prices. Still, Harebottle has learned from the former monopoly’s experience. The colored-stone industry has traditionally been highly fragmented, divided up among many small, family-owned outfits. By bringing corporate heft to it, Harebottle hopes to boost supplies and raise prices at the same time. He aims to increase Gemfields’ share of the global emerald market to about 30 percent by expanding production at its African emerald and ruby mines. The company already owns 75 percent of the Kagem emerald mine in Zambia, the world’s largest, and controls 75 percent of the Montepuez ruby field in Mozambique.

De Beers still spends hundreds of millions of dollars a year on advertising, according to Lussier. But if Gemfields can demonstrate “clear industry leadership, they will have a chance” to capitalize on the diminished marketing power of diamonds, says Aggarwal of Gemdax.

Harebottle plans to boost his marketing budget to at least $ 4 million next year, up from just $ 150,000 in 2009. Next year’s budget will likely contain money for a celebrity endorser. Gemfields currently pays for about 70 percent of global emerald advertising, says Harebottle, but he doesn’t mind bearing the marketing cost for the entire colored- gems industry: “The fact that people free carry, I don’t mind—so long as it benefits us.”

The bottom line: Gemfields, the No. 1 emerald producer, is adding corporate heft to the colored-stone market, boosting its ad budget to $ 4 million.

With Caroline Winter

Businessweek.com — Top News

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Rebels in Congo reach door of Goma

GOMA, Congo (AP) — A Rwandan-backed rebel group advanced to within 3 kilometers (1.8 miles) of Goma, a crucial provincial capital in eastern Congo, marking the first time that rebels have come this close since 2008.

Congolese army spokesman Col. Olivier Hamuli said the fighting has been going on since 6 a.m. Sunday and the front line has moved to just a few kilometers (miles) outside the city. After more than nine hours of violent clashes the two sides took a break, with M23 rebels establishing a checkpoint just 100 meters (yards) away from one held by the military in the village of Munigi, exactly 3 kilometers (1.8 miles) outside the Goma city line.

Contacted by telephone on the front line, M23 rebel spokesman Col. Vianney Kazarama said the group will spend the night in Goma.

“We are about to take the town. We will spend the night in Goma tonight,” said Kazarama. “We are confident that we can take Goma and then our next step will be to take Bukavu,” he said mentioning the capital of the next province to the south.

The M23 rebel group is made up of soldiers from a now-defunct rebel army, the National Congress for the Defense of the People, or CNDP, a group made-up primarily of fighters from the Tutsi ethnic group, the ethnicity that was targeted in Rwanda‘s 1994 genocide. In 2008, the CNDP led by Rwandan commando Gen. Laurent Nkunda marched his soldiers to the doorstep of Goma, abruptly stopping just before taking the city.

In the negotiations that followed and which culminated in a March 23, 2009 peace deal, the CNDP agreed to disband and their fighters joined the national army of Congo. They did not pick up their arms again until this spring, when hundreds of ex-CNDP fighters defected from the army in April, claiming that the Congolese government had failed to uphold their end of the 2009 agreement.

Reports, including one by the United Nations Group of Experts, have shown that M23 is actively being backed by Rwanda and the new rebellion is likely linked to the fight to control Congo’s rich mineral wealth.

The latest fighting broke out Thursday and led to the deaths of 151 rebels and two soldiers. On Saturday U.N. attack helicopters targeted M23 positions in eastern Congo.

Also on Saturday, United Nations Secretary-General Ban Ki-Moon had called Rwandan President Paul Kagame “to request that he use his influence on the M23 to help calm the situation and restrain M23 from continuing their attack,” according to peacekeeping chief Herve Ladsous who spoke at the U.N. headquarters in New York on Saturday.

North Kivu governor Julien Paluku said Saturday that the Congolese army had earlier retreated from Kibumba, which is 30 kilometers (19 miles) north of Goma, after thousands of Rwandans, who he says were backing the rebels, attacked early Saturday.

“Rwandan forces bombarded our positions in Kibumba since early this morning and an estimated 3,500 crossed the border to attack us,” he said Saturday.

In downtown Goma, panicked residents had come out to try to get more information on what was happening. A 45-year-old mother of five said that she has nowhere to go.

“I don’t really know what is happening, I’ve seen soldiers and tanks in the streets and that scares me,” said Imaculee Kahindo. Asked if she planned to leave the city, she said: “What can we do? I will probably hide in my house with my children.”

Hamuli, the spokesman for the Congolese army, denied reports that soldiers were fleeing.

In 2008 as Nkunda’s CNDP rebels amassed at the gates of Goma, reporters inside the city were able to see Congolese soldiers running in the opposite direction, after having abandoned their posts. The Congolese army is notoriously dysfunctional with soldiers paid only small amounts, making it difficult to secure their loyalties during heavy fighting.

“We are fighting 3 kilometers from Goma, just past the airport. And our troops are strong enough to resist the rebels,” said Hamuli. “We won’t let the M23 march into our town,” he said. Asked if his troops were fleeing, he added: “These are false rumors. We are not going anywhere.”

U.N. peacekeeping chief Ladsous said that the rebels were very well-equipped, including with night vision equipment allowing them to fight at night.

Reports by United Nations experts have accused Rwanda, as well as Uganda, of supporting the rebels. Both countries strongly deny any involvement and Uganda said if the charges continue it will pull its peacekeeping troops out of Somalia, where they are playing an important role in pushing out the Islamist extremist rebels.

The U.N. Security Council called for an immediate stop to the violence following a two-hour, closed-door emergency meeting. The council said it would add sanctions against M23 rebels and demanded that rebels immediately stop their advance toward the provincial capital of Goma.

“We must stop the M23″ because Goma’s fall “would, inevitably, turn into a humanitarian crisis,” said France‘s U.N. Ambassador, Gerard Araud. He added that U.N. officials would decide in the coming days which M23 leaders to target for additional sanctions.

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Associated Press writer Maria Sanminiatelli at the United Nations and Rukmini Callimachi in Dakar, Senegal, contributed to this report.

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Cisco to buy cloud-networking start-up Meraki for $1.2 billion

(Reuters) – Networking equipment company Cisco Systems Inc said it will buy privately held cloud networking company Meraki for $ 1.2 billion in cash as part of its cloud and networking strategy.

Cisco said the acquisition of Meraki, which was founded in 2006 by members of MIT’s Laboratory for Computer Science, is expected to close in the second quarter of Cisco’s 2013 fiscal year and is subject to regulatory approval.

Cisco’s second quarter runs until the end of January.

Meraki – funded by Sequoia Capital and Google Inc – offers Wi-Fi technology, switching, security and mobile device management from the cloud with a focus on mid-sized businesses.

“This is a very logical move for Cisco,” said ZK research analyst Zeus Kerravala.

He said the deal will allow Cisco to offer alternative solutions to traditional Wi-Fi deployment models like smaller competitors, such as Aruba Networks and Ruckus Wireless, which debuted on Friday.

“Cisco didn’t really have anything to counter that before,” Kerravala noted.

Meraki’s Chief Executive Sanjit Biswas said in a letter to employees posted on the company website that Cisco had approached the company several weeks ago.

The company’s founders had at first rejected the offer in favor of continuing Meraki’s strategy aimed at an initial public listing.

“After several weeks of consideration, we decided late last week that joining Cisco was the right path for Meraki,” Biswas said.

He also said that Meraki had achieved a $ 100 million bookings run rate, grown to 330 employees and had a positive cash flow.

(Reporting by Nicola Leske, editing by Gary Crosse)

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