International pressure mounts for Gaza truce

GAZA/JERUSALEM (Reuters) - Israel bombed dozens of suspected militant sites in the Hamas-ruled Gaza Strip on Monday and Palestinians kept up their cross-border rocket fire as international pressure for a truce intensified.

Twelve Palestinian civilians and four fighters were killed in the air strikes, bringing the Gaza death toll since fighting began on Wednesday to 90, more than half of them non-combatants, local officials said. Three Israeli civilians have been killed.

After an overnight lull, militants in the Hamas-run Gaza Strip fired 12 rockets at southern Israel in the span of 10 minutes, causing no casualties, police said. One landed near a school, but it was closed at the time.

The deaths of 11 Palestinian civilians - nine from one family - in an air strike on Sunday - drew more international calls for an end to six days of hostilities and could test Western support for an offensive Israel billed as self-defedefensence after years of cross-border rocket attacks.

Israel's military did not immediately comment on a report in the liberal Haaretz newspaper that it had mistakenly fired on the Dalu family home, where the dead spanned four generations, while trying to kill a Hamas rocketry chief.

United Nations Secretary-General Ban Ki-moon was due to arrive in Cairo to weigh in on ceasefire efforts led by Egypt, which borders both Israel and Gaza and whose Muslim Brotherhood-rooted government has been hosting leaders of Hamas and Islamic Jihad, a smaller armed faction in the Palestinian enclave.

Israeli media said a delegation from Israel had also been to Cairo for the truce talks. A spokesman for Prime Minister Benjamin Netanyahu's government declined comment on the matter.

Italian Foreign Minister Giulio Terzi, speaking in Brussels ahead of a meeting of European Union foreign ministers, said: "I believe there are the conditions to quickly reach a ceasefire in the next few hours."

He said that from his conversations with members of the Israeli government, he understood "there is no interest at all" to invade the Gaza Strip.

"Exactly the opposite is true," Terzi said. "Obviously, this Israeli self-restraint should rely on a guarantee that the launches of rockets should end."

China on Monday urged both sides to halt the violence, while U.S. President Barack Obama said at the weekend it would be "preferable" if Israel did not mount a ground invasion of Gaza.

The Gaza flare-up, and Israel's repeated signaling that it could soon escalate from the aerial campaign to a ground sweep of the cramped and impoverished territory, have stoked the worries of world powers watching an already combustible region.

In the absence of any prospect of permanent peace between Israel and Hamas and other Islamist factions, mediated deals for each to hold fire unilaterally have been the only formula for stemming bloodshed in the past. But both sides now placed the onus on the other.

Izzat Risheq, aide to Hamas politburo chief Khaled Meshaal, wrote on Facebook that Hamas would enter a truce only after Israel "stops its aggression, ends its policy of targeted assassinations and lifts the blockade of Gaza".

Listing Israel's terms, Vice Prime Minister Moshe Yaalon wrote on Twitter: "If there is quiet in the south and no rockets and missiles are fired at Israel's citizens, nor terrorist attacks engineered from the Gaza Strip, we will not attack."

Yaalon also said Israel wanted an end to Gaza guerrilla activity in the neighboring Egyptian Sinai, a desert peninsula where lawlessness has spread during Cairo's political crises.

AIR STRIKES

Israel bombed some 80 sites in Gaza overnight, the military said, adding in a statement that targets included "underground rocket launching sites, terror tunnels and training bases" as well as "buildings owned by senior terrorist operatives".

Netanyahu has said he had assured world leaders that Israel was doing its utmost to avoid causing civilian casualties in Gaza. At least 22 of the Gaza fatalities have been children, medical officials said.

China, which has cultivated good ties with Israel, said on Monday it was extremely concerned about the Israeli military operations in Gaza.

"We condemn the over-use of force causing deaths and injuries amongst innocent ordinary people," Foreign Ministry spokeswoman Hua Chunying told a daily news briefing in Beijing.

Before leaving for Cairo, Ban urged Israel and the Palestinians to cooperate with all Egyptian-led efforts to reach an immediate ceasefire.

In scenes recalling Israel's 2008-2009 winter invasion of Gaza, tanks, artillery and infantry have massed in field encampments along the sandy, fenced-off border and military convoys moved on roads in the area.

Israel has also authorized the call-up of 75,000 military reservists, so far mobilizing around half that number.

A big, bloody rocket strike might be enough for Netanyahu to give a green light for a ground offensive, despite the political risks of heavy casualties before a January election he is favored to win.

But while 84 percent of Israelis supported the Gaza assault, according to a Haaretz poll, only 30 percent wanted an invasion. Nineteen percent wanted their government to work on securing a truce soon.

Israel's declared goal is to deplete Gaza arsenals and force Hamas to stop rocket fire that has bedeviled Israeli border towns for years.

The rockets now have greater range, becoming a strategic weapon for Gaza's otherwise massively outgunned militants. Several projectiles have targeted Tel Aviv and Jerusalem. None hit the two cities and some of the rockets were shot down by Israel's Iron Dome interceptor system.

As a precaution against the rocket interceptions endangering nearby Ben-Gurion International Airport, civil aviation authorities said on Monday new flight paths were being used.

There was no indication takeoffs and landings at Ben-Gurion had been affected.

SWORN ENEMIES

Hamas and other groups in Gaza are sworn enemies of the Jewish state which they refuse to recognize and seek to eradicate, claiming all Israeli territory as rightfully theirs.

Hamas won legislative elections in the Palestinian Territories in 2006 but a year later, after the collapse of a unity government under President Mahmoud Abbas the Islamist group seized control of Gaza in a brief and bloody civil war with forces loyal to Abbas.

Abbas then dismissed the Hamas government led by the group's leader Ismail Haniyeh but he refuses to recognize Abbas' authority and runs Gazan affairs.

While it is denounced as a terrorist organization in the West, Hamas enjoys widespread support in the Arab world, where Islamist parties are on the rise.

U.S.-backed Abbas and Fatah hold sway in the Israeli-occupied West Bank from their seat of government in the town of Ramallah. The Palestinians seek to establish an independent state in the West Bank and the Gaza Strip with East Jerusalem as its capital.

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Justin Bieber Brings His Mom to the American Music Awards

By Maggie Coughlan

11/18/2012 at 09:35 PM EST

Pattie Mallette and Justin Bieber

Jonathan Alcorn/Reuters/Landov

Mother knows best!

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

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

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

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

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

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

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EU drug regulator OKs Novartis' meningitis B shot

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

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

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

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

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

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

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World shares rally on U.S. fiscal hopes

LONDON (Reuters) - Share markets worldwide rebounded from last week's sharp selloff on Monday, with investors encouraged by signs of progress in talks to resolve the fiscal crunch in the United States.

U.S. lawmakers said on Sunday that a compromise was possible in talks to avert the $600 billion "fiscal cliff", which threatens to send the economy back into recession.

MSCI's world equity index <.miwd00000pus> jumped 0.5 percent to 318.94 points, recovering some of last week's 2.7 percent fall, its biggest five-day drop since early June.

"The thing about markets is if they can see it as light at the end of the tunnel, then they're going to discount that," said Mike Ingam, market analyst at BGC Partners.

"At the moment...there is very little clarity as to what the end game actually is although, of course, everybody expects there to be a compromise."

There was also optimism in Europe where officials looked closer to releasing delayed aid for Greece.

European officials are expected to discuss a two-year funding deal for Greece at a meeting on Tuesday, which would postpone any longer-term solution until after a September 2013 German general election.

European Central Bank policymaker Joerg Asmussen said at the weekend the ministers were likely to agree the deal for Greece and leave resolution of a longer-term debt stabilization plan, at the heart of a disagreement with the IMF, until a later date.

The euro rose 0.3 percent on Monday hitting a high of $1.2788, well above a two-month low of $1.2661 hit last week when suffered a selloff on the worries over Greece and the worsening euro zone outlook.

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

European share markets also enjoyed a strong rebound from the lows of last week mainly on the growing optimism over the positive tone of the U.S. political negotiations.

The FTSE Eurofirst 300 index <.fteu3> of top European shares was up 0.8 percent at 1,076.03 points, led by sectors that depend on economic growth, such as auto stocks <.sxap>, basic resources <.sxpp> and banks <.sx7p>.

In the region's main centers London's FTSE 100 <.ftse>, was up 0.9 percent, Paris's CAC-40 <.fchi> gained 1.25 percent and Frankfurt's DAX <.gdaxi> rose 1.3 percent. <.l><.eu/>

Gains in U.S. stock futures pointed to a firmer start on Wall Street as well, extending a rally that began on Friday.

Safe haven bond markets reflected the better risk appetite with the 10-year U.S. Treasury yield edging up as prices fell to around 1.60 percent, still only about 22 basis points above a record low set in late July.

The 10-year German government bond yield was steady at 1.34 percent but traders said there was room for yields to rise if euro zone policymakers reached an agreement at their meeting on Tuesday.

DOLLAR STRENGTH

In the currency markets the dollar strengthened against the yen on expectations a new Japanese government will push the central bank into taking aggressive monetary stimulus measures to boost growth after next month's elections.

The greenback rose to 81.59 yen, its highest level since April 25, before settling to trade around 81.25 yen, down 0.2 percent from late U.S. trade on Friday.

The Bank of Japan began a two-day policy meeting on Monday, but is not expected to take any fresh policy steps ahead of the December 16 vote.

In oil markets, Brent crude rose to almost $110 a barrel as the escalating violence between Israel and the Palestinians fuelled concern about supplies from the Middle East.

Investors fear the conflict may draw in other countries and possibly disrupt energy exports from the region, which supplies more than a third of the world's crude.

Brent crude for January delivery was up $1 to $109.95 and U.S. crude futures gained 80 cents to $87.72 a barrel.

(Reporting by Richard Hubbard; Editing by Giles Elgood and Anna Willard)

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Israel, Gaza fighting rages on as Egypt seeks truce

GAZA/JERUSALEM (Reuters) - Israel bombed Palestinian militant targets in the Gaza Strip from air and sea for a fifth straight day on Sunday, preparing for a possible ground invasion while also spelling out its conditions for a truce.

Palestinian fire into Israel subsided during the night but resumed in the morning, with rockets targeting the country's commercial capital Tel Aviv for a fourth day. The two missiles were shot down by Israel's Iron Dome air shield.

Speaking shortly after the attack, Prime Minister Benjamin Netanyahu said Israel was ready to widen its offensive.

"We are exacting a heavy price from Hamas and the terrorist organizations and the Israel Defence Forces are prepared for a significant expansion of the operation," he said at a cabinet meeting, giving no further details.

Some 51 Palestinians, about half of them civilians, including 14 children, have been killed since the Israeli offensive began, Palestinian officials said, with hundreds wounded. More than 500 rockets fired from Gaza have hit Israel, killing three civilians and wounding dozens.

Israel unleashed intensive air strikes on Wednesday, killing the military commander of the Islamist Hamas movement that governs Gaza and spurns peace with the Jewish state.

Israel's declared goal is to deplete Gaza arsenals and press Hamas into stopping cross-border rocket fire that has bedeviled Israeli border towns for years and is now displaying greater range, putting Tel Aviv and Jerusalem in the crosshairs.

Air raids continued past midnight into Sunday, with warships shelling from the sea. Two Gaza City media buildings were hit, witnesses said, wounding six journalists and damaging facilities belonging to Hamas's Al-Aqsa TV as well as Britain's Sky News.

An employee of Beirut-based al Quds television station lost his leg in the attack, medics said.

An Israeli military spokeswoman said the strike had targeted a rooftop "transmission antenna used by Hamas to carry out terror activity". International media organizations demanded further clarification.

Three other attacks killed three children and wounded 14 other people, medical officials said, with heavy thuds regularly jolting the small, densely populated coastal enclave.

Egyptian President Mohamed Mursi said in Cairo, as his security deputies sought to broker a truce with Hamas leaders, that "there are some indications that there is a possibility of a ceasefire soon, but we do not yet have firm guarantees".

Egypt has mediated previous ceasefire deals between Israel and Hamas, the latest of which unraveled with recent violence.

A Palestinian official told Reuters the truce discussions would continue in Cairo on Sunday, saying "there is hope", but that it was too early to say whether the efforts would succeed.

At a Gaza news conference, Hamas military spokesman Abu Ubaida voiced defiance, saying: "This round of confrontation will not be the last against the Zionist enemy and it is only the beginning."

SYRIAN FRONT

Israel's military also saw action along the northern frontier, firing into Syria on Saturday in what it said was a response to shooting aimed at its troops in the occupied Golan Heights. Israel's chief military spokesman, citing Arab media, said it appeared Syrian soldiers were killed in the incident.

There were no reported casualties on the Israeli side from the shootings, the third case this month of violence that has been seen as a spillover of battles between Syrian President Bashar al-Assad's forces and rebels trying to overthrow him.

With tanks and artillery poised along the Gaza frontier for a possible ground operation, Israel's cabinet decided on Friday to double the current reserve troop quota set for the offensive to 75,000. Some 30,000 soldiers have already been called up.

"If there is quiet in the south and no rockets and missiles are fired at Israel's citizens, nor terrorist attacks engineered from the Gaza Strip, we will not attack," Israeli Vice Prime Minister Moshe Yaalon wrote on Twitter.

Israel's operation so far has drawn Western support for what U.S. and European leaders have called its right to self-defense, but there was also a growing number of appeals from them to seek an end to the hostilities.

Netanyahu, in his comments at Sunday's cabinet session, said he had emphasized in telephone conversations with world leaders "the effort Israel is making to avoid harming civilians, while Hamas and the terrorist organizations are making every effort to hit civilian targets in Israel".

Israel withdrew settlers from Gaza in 2005 and two years later Hamas took control of the slender, impoverished territory, which the Israelis have kept under blockade.

PRESSURE ON SIDES TO "DE-ESCALATE"

British Prime Minister David Cameron "expressed concern over the risk of the conflict escalating further and the danger of further civilian casualties on both sides", in a conversation with Netanyahu, a spokesperson for Cameron said.

Britain was "putting pressure on both sides to de-escalate," the spokesman said, adding that Cameron had urged Netanyahu "to do everything possible to bring the conflict to an end."

Ben Rhodes, a deputy national security adviser to President Barack Obama, said the United States would like to see the conflict resolved through "de-escalation" and diplomacy, but also believed Israel had the right to self-defense.

Diplomats at the United Nations said Secretary-General Ban Ki-moon was expected to visit Israel and Egypt in the coming week to push for an end to the fighting.

A possible move into the Gaza Strip and the risk of major casualties it brings would be a significant gamble for Netanyahu, favored to win a January election.

The last Gaza war, a three-week Israeli blitz and invasion over the New Year of 2008-09, killed 1,400 Palestinians, mostly civilians. Thirteen Israelis died in the conflict.

The current flare-up around Gaza has fanned the fires of a Middle East ignited by a series of Arab uprisings and a civil war in Syria that threatens to spread beyond its borders.

One significant change has been the election of an Islamist government in Cairo that is allied with Hamas, which may narrow Israel's maneuvering room in confronting the Palestinian group. Israel and Egypt made peace in 1979.

In attacks on Saturday, Israel destroyed the house of a Hamas commander near the Egyptian border.

Casualties there were averted however, because Israel had fired non-exploding missiles at the building beforehand from a drone, which the militant's family understood as a warning to flee, witnesses said.

Israeli aircraft also bombed Hamas government buildings in Gaza on Saturday, including the offices of Prime Minister Ismail Haniyeh and a police headquarters.

Israel's "Iron Dome" missile interceptor system has destroyed more than 200 incoming rockets from Gaza in mid-air since Wednesday, saving Israeli towns and cities from potentially significant damage.

However, one rocket salvo unleashed on Sunday evaded Iron Dome and wounded two people when it hit a house in the coastal city of Ashkelon, police said.

(Writing by Allyn Fisher-Ilan and Jeffrey Heller; Editing by Crispian Balmer and Mark Heinrich)

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Kansas robber recognizes victim from prison, gives wallet back

KANSAS CITY, Kansas (Reuters) – A Kansas robber who helped seize a man’s cell phone and wallet at gunpoint recognized the victim as an ex-convict he had served time with and gave the possessions back, police said on Thursday.

A Wichita, Kansas man reported that two young men approached him on the street late on Wednesday, one of them brandishing a large semi-automatic handgun, Wichita police Sergeant Joe Schroeder said.

The gunman demanded the victim’s phone and took his wallet while the second man searched his pockets, Schroeder said.

“Then, he (the second man) realized he spent some time in prison with him. He apologized, shook hands and walked away,” Schroeder said.

Although the victim went to police and said he knew one of the robbers in prison, the man said he did not think he could identify them in a suspect line-up, Schroeder said.

(Editing by Greg McCune and Eric Walsh)

Wireless News Headlines – Yahoo! News

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Taylor Swift and One Direction's Harry Styles: Are They Dating?

By Patrick Gomez

11/17/2012 at 10:40 PM EST

Taylor Swift and Harry Styles

Janet Mayer/Splash News Online; Don Arnold/Wireimage

Taylor Swift appears to be taking her love life in a new direction.

The "Never Ever Getting Back Together" singer is seemingly taking her lyrics to heart as she moves on from recent ex, Conor Kennedy, and enjoys the company of One Direction hottie Harry Styles.

"I had to literally do a double-take," an onlooker tells PEOPLE of finding Styles, 18, with Swift, 22, on the set of The X Factor Thursday morning.

Styles was on hand to watch Swift rehearse the debut of "State of Grace," which she performed later that night on the Fox reality show.

"He was smiling at her while she rehearsed. When she was done he jumped up on stage, picked her up, put her over his shoulder and carried her off stage," the onlooker says. "The whole crew was really surprised."

The young singers were also spotted by X Factor host Mario Lopez, who says he was slapped on the back by Styles during Swift's rehearsal.

"I said, 'What are you doing here,' " Lopez said on his 104.3 MY FM radio show Friday. "And he sort of [pointed] toward Taylor."

Lopez went on to say he later saw the two "hand-in-hand."

A telling sign of the budding relationship may have been a look Styles shared with his bandmate Niall Horan a week earlier after Horan told PEOPLE his favorite song of 2012 was Swift's "Never Ever Getting Back Together."

When asked if he would ever date Swift, Horan gave a small laugh, looked at Styles and answered with a succinct, "no."

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EU drug regulator OKs Novartis' meningitis B shot

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

BUY THE DIP?

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

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

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

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

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

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

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

KEEP CALM AND HEDGE

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

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

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

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

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

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

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Egypt feelers open tiny window to Gaza truce

GAZA (Reuters) - Egypt opened a tiny window to emergency peace diplomacy in Gaza on Friday, but hopes for even a brief ceasefire while its prime minister was inside the bombarded enclave to talk to leaders of the Islamist Hamas movement were immediately dashed.

Prime Minister Hisham Kandil visited the Gaza Strip on Friday officially to show solidarity with the Palestinian people after two days of relentless attacks by Israeli warplanes determined to end militant rocket fire at Israel.

But a Palestinian official close to Egypt's mediators told Reuters that Kandil's visit, which included members of Cairo's secret service, "was the beginning of a process to explore the possibility of reaching a truce. It is early to speak of any details or of how things will evolve".

Israel undertook to cease fire during the visit if Hamas did too. But it said rockets fired from Gaza had hit several sites in southern Israel as he was in the enclave.

According to a Hamas source, the Israeli air force launched an attack on the house of Hamas's commander for southern Gaza which resulted in the death of two civilians, one a child.

But Israel's military strongly denied carrying out any attacks from the time Kandil entered Gaza, and accused Hamas of violating the three-hour deal. "Israel has not attacked in Gaza for the past two hours," a spokesman said.

"Even though about 50 rockets have fallen in Israel over the past two hours, we chose not to attack in Gaza due to the visit of the Egyptian prime minister. Hamas is lying and reporting otherwise," the army said in a Twitter message.

Kandil said: "Egypt will spare no effort ... to stop the aggression and to achieve a truce."

At a Gaza hospital he saw the bloodied body of a child. He left the Gaza Strip after meeting with Hamas leader Ismail Haniyeh, the enclave's prime minister.

Palestinian medics said two people were killed in the disputed explosion at the house, one of them a child. It raised the Palestinian death toll since Wednesday to 21. Three Israelis were killed by a rocket on Thursday.

Air raid sirens wailed over Tel Aviv on Thursday evening, sending residents rushing for shelter and two long-range rockets exploded just south of the metropolis. The location of the impacts was not disclosed.

They exploded harmlessly, police said. But they have shaken the 40 percent of Israelis who, until now, lived in safety beyond range of the southern rocket zone.

"Even Prime Minister (Benjamin) Netanyahu was rushed into a reinforced room," said cabinet minister Gilad Eldan.

Israel has started drafting 16,000 reserve troops, in what could be a precursor to invasion.

The 21 Palestinian dead include eight militants and 13 civilians, among them seven children and a pregnant woman. A Hamas rocket killed three Israeli civilians a town north of Gaza, men and women in their 30s.

The last Gaza war, a lopsided three-week long Israeli air blitz and ground invasion over the New Year period of 2008-2009 aimed at ending repeated rocket attacks, left more than 1,400 Palestinians dead, mostly civilian, and killed 13 Israelis.

THE MESSAGE

"If Hamas says it understands the message and commits to a long ceasefire, via the Egyptians or anyone else, this is what we want. We want quiet in the south and a stronger deterrence," Israeli vice prime minister Moshe Yaalon said.

"The Egyptians have been a pipeline for passing messages. Hamas always turns (to them) to request a ceasefire. We are in contact with the Egyptian defense ministry. And it could be a channel in which a ceasefire is reached," he told Israeli radio.

At the same time, there were signs of possible preparations for a ground assault on Gaza. In pre-dawn strikes, warplanes bombed open land along the border zone with Israel, in what could be a softening-up stage to clear the way for tanks.

Self-propelled heavy artillery was seen near the border.

The United States has asked countries that have contact with Hamas to urge the Islamist movement to stop its recent rocket attacks from Gaza, a White House adviser said.

"We've ... urged those that have a degree of influence with Hamas, such as Turkey and Egypt and some of our European partners, to use that influence to urge Hamas to de-escalate," Ben Rhodes, deputy national security adviser, said in a conference call with reporters.

U.S. Defense Secretary Leon Panetta said in an interview with Voice of America: "I understand the reasons Israel is doing what they're doing. They've been the target of missiles coming in from Gaza ... ."

EGYPT ON THE SPOT

The Gaza conflagration has stoked the flames of a Middle East ablaze with two years of Arab revolution and a civil war in Syria that threatens to engulf the whole region.

Hamas refuses to recognize Israel's right to exist. By contrast, Palestinian President Mahmoud Abbas, who rules in the nearby West Bank, does recognize Israel, but peace talks between the two sides have been frozen since 2010.

Abbas's supporters say they will push ahead with their plan to become an "observer state" rather than a mere "entity" at the United Nations later this month.

Despite fierce opposition from both Israel and the United States, they look certain to win the vote in the General Assembly, where they have a built a majority of supporters.

Egypt's new Islamist president, Mohamed Mursi, viewed by Hamas as a protector, led a chorus of denunciation of the Israeli strikes by allies of the Palestinians.

Mursi faces domestic pressure to act tough. But Egypt gets $1.3 billion a year in U.S. military aid and looks to Washington for help with its ailing economy, constraining Mursi despite his need to show Egyptians that his policies differ from those of his U.S.-backed predecessor, Hosni Mubarak.

Hamas leader Ismail Haniyeh on Thursday urged Egypt to do more to help the Palestinians.

"We call upon the brothers in Egypt to take the measures that will deter this enemy," the Hamas prime minister said.

The appeal poses a test of Mursi's commitment to Egypt's 1979 peace treaty with Israel, which the West views as the bedrock of Middle East peace.

The Muslim Brotherhood, which brought Mursi to power in an election after the downfall of pro-Western Hosni Mubarak, has called for a "Day of Rage" in Arab capitals on Friday. The Brotherhood is seen as the spiritual mentor of Hamas.

The Israel Defence Forces (IDF) said they had targeted over 450 "terror activity sites" in the Gaza Strip since Operation Pillar of Defence began with the assassination of Hamas' top military commander on Wednesday by an Israeli missile.

Some 150 medium range rocket launching sites and ammunition dumps were targeted overnight, the IDF said.

"The sites that were targeted were positively identified by precise intelligence over the course of months," it said. "The Gaza strip has been turned into a frontal base for Iran, forcing Israeli citizens to live under unbearable circumstances."

Israeli bombing has not yet reached the saturation level seen before it last invaded Gaza in the first days of 2009, when armored bulldozers and tanks flattened whole districts of the crowded enclave to make way for fire bases and open routes for infantry.

(Additional reporting by Ori Lewis, Ari Rabinovitch, Jeffrey Heller and Crispian Balmer in Jerusalem; writing by Douglas Hamilton; editing by Philippa Fletcher)

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