Iraqi president in hospital after suffering stroke

BAGHDAD (Reuters) - Iraqi President Jalal Talabani, a Kurd who has mediated among Shi'ite, Sunni and Kurdish parties, was in hospital on Tuesday after suffering a stroke that left him in "critical but stable condition", government officials and lawmakers said.

Without Talabani, Iraq would lose an influential peace-maker who often eased tensions in the fragile power-sharing government and negotiated in the growing rift over oil between Baghdad and the OPEC member country's autonomous Kurdistan region.

Reports on his medical condition varied. Three government sources said he was in critical condition, but his office said the 79-year-old president was stable under intensive medical supervision after receiving treatment for blocked arteries.

"President Talabani has suffered a light stroke. His condition is stable now and doctors are closely monitoring him and if they decide he should be transferred outside then he'll go," veteran Kurdish politician Mahmoud Othman, a close Talabani associate who was in the Baghdad hospital.

Talabani had been suffering from ill health much of this year and received medical treatment overseas several times in the last two years.

Prime Minister Nuri al-Maliki visited the hospital earlier on Tuesday.

TOUGH TIMES AHEAD?

Under Iraq's constitution, the parliament should elect a new president if the post becomes vacant and Iraq's power-sharing deal calls for the presidency to go to a Kurd while two vice presidents are shared by a Sunni Muslim and a Shi'ite Muslim.

Political analysts said former Kurdistan prime minister Barham Salih is favored candidate to replace Talabani should the president be incapacitated.

But his exit from Iraqi politics would come at a sensitive time and any succession would be complicated, a year after the last American troops left the country.

"He is the most moderate among Iraqi politicians and the most able to defuse political shocks. I do not think any one will be able to fill his position as a president and as a politician," Iraqi analyst Ibrahim al-Sumaidaie said.

Iraq law would see one of the vice presidents take over Talabani's duties before the parliamentary vote. But Iraq's Sunni Vice President, Tareq al-Hashemi, is a fugitive outside of the country after he fled to escape charges he ran death squads. He was sentenced to death in absentia.

Any parliament vote would also be complex, with Maliki locked in a struggle with Sunni, Kurdish and some Shi'ite rivals in the power-sharing government. Talabani was crucial in helping the Shi'ite leader survive a no-confidence motion directed against him earlier this year.

Talabani also recently helped ease a military stand-off between Maliki's central government and the autonomous Kurdistan president, Masoud Barzani, in their long-running dispute over oil-field rights and internal boundaries.

But that situation remains sensitive after both regions sent troops to reinforce positions along their internal frontier.

A veteran of the Kurdish guerrilla movement, Talabani survived wars, exile and infighting in northern Iraq to become the country's first Kurdish president a few years after the 2003 invasion that toppled Saddam Hussein.

(Additional reporting by Raheem Salman, Aseel Kami and Isabel Coles; Writing by Patrick Markey; Editing by Michael Roddy)

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Iran defiant on enrichment ahead of possible nuclear talks

DUBAI (Reuters) - Iran will not stop higher-grade uranium enrichment in response to external demands, its top nuclear energy official was quoted as saying on Tuesday, signaling a tough bargaining stance ahead of planned new talks with world powers.

The West wants Iran to halt enrichment of uranium to a fissile concentration of 20 percent as it represents a significant step closer to the level that would be required to make nuclear bombs. Iran says it needs this higher-grade uranium to run its medical research reactor in Tehran.

Israel has threatened air strikes on Iran if its nuclear work is not curbed through diplomacy or sanctions, raising the specter of a Middle East war damaging to the global economy.

Iran "will not suspend 20 percent uranium enrichment because of the demands of others," said Fereydoun Abbasi-Davani, head of Iran's Atomic Energy Organisation, the Iranian Students' News Agency (ISNA) reported.

Iran "will produce 20 percent enriched uranium to meet its needs and for however long it is required."

He did not specify what he meant by "needs". Western diplomats say Iran already has made sufficient amounts to fuel its Tehran Research Reactor for several years. Abbasi-Davani has in the past said Iran plans to build another research reactor.

The European Union quickly responded to Abbasi-Davani's comments, saying Iran must come to grips with increasing international disquiet over the ultimate purpose of its uranium enrichment program to resolve the protracted dispute.

"Iran has to address the immediate key concern, which is the issue of 20 percent enrichment, by taking an initial comprehensive confidence-building step in this area, thereby creating space for more diplomacy and negotiations," the spokesman for EU foreign policy chief Catherine Ashton said.

In his statements, Abbasi-Davani signaled renewed Iranian defiance in negotiations with world powers expected to resume soon. But he did not appear to categorically rule out that Tehran at some point could shelve higher-grade enrichment.

The powers - the United States, France, Britain, Germany, China and Russia - also want Iran to shut down the Fordow underground site where its 20 percent enrichment is carried out.

Nuclear expert Mark Fitzpatrick, of the International Institute for Strategic Studies, said about Abbasi-Davani's comments: "This hard line doesn't bode well for success in the next round of talks, where stopping the 20 percent enrichment is just one of the steps Iran will be asked to take."

BEHIND THE SCENES

But others suggested Abbasi-Davani's comments, and those of other Iranian officials, were intended more for public consumption at home and abroad.

Iranian foreign and security policies are ultimately decided by clerical Supreme Leader Ayatollah Ali Khamenei.

"What matters is not stay-the-course statements like these but whether behind the scenes the Supreme Leader and his entourage, and the Obama White House, step out of their shadow and agree to direct bilateral talks," Mark Hibbs, of the Carnegie Endowment think tank, said.

Iranian foreign ministry spokesman Ramin Mehmanparast said Iranian and EU officials had held discussions regarding the time and place of the next negotiations between the powers and Iran.

"If there is an agreement, it will be announced," Mehmanparast said in his weekly news conference.

The EU spokesman said the six powers are still waiting for an Iranian answer regarding a possible date for new talks: "We made contact last week and suggested getting together for another round. We are waiting to hear the response."

Though Israel has threatened to bomb Iranian nuclear sites, Vice Prime Minister Moshe Yaalon said the Jewish state had noticed renewed U.S.-led efforts to curb Iran's nuclear work since President Barack Obama's re-election last month, including preparation for possible military action.

He also cited contacts among the powers and Iran about holding new negotiations and ongoing sanctions against Iran.

Iranian media quoted Foreign Minister Ali Akbar Salehi as saying that any calls for direct talks between the U.S. and Iran were meaningless as long as Washington continued to exert pressure on Iran through sanctions and other measures.

In October, the New York Times reported that secret exchanges between U.S. and Iranian officials had yielded agreement "in principle" to hold one-on-one talks. Both Iran and the United States denied that the two countries had scheduled direct bilateral negotiations on the nuclear program.

(Additional reporting by Fredrik Dahl in Vienna and Justyna Pawlak in Brussels; Editing by Mark Heinrich)

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In second verdict, war crimes court acquits Congolese

THE HAGUE (Reuters) - Congolese militia leader Mathieu Ngudjolo Chui was acquitted at the Hague war crimes court on Tuesday, after prosecutors failed to prove he ordered atrocities in eastern Congo a decade ago.

Delivering only its second verdict in 10 years of existence, the International Criminal Court (ICC) found Ngudjolo not guilty of ordering killings during a war in Ituri district in 2003. In its first ever verdict, delivered in July, the court had jailed an opposing commander, Thomas Lubanga Dyilo, for 14 years.

Ngudjolo had been accused of war crimes and crimes against humanity, including overseeing killings, rape and pillage. His prosecutors will appeal the verdict and, though the court said Ngudjolo should be freed in the meantime, it was not immediately clear that he could leave the ICC detention facility for now.

The judges said they had no doubt the people of Ituri suffered the massacres described at Ngudjolo's trial and critics of the ICC called for better prosecutions in future in order that victims and their surviving relatives should have justice.

"The people trusted the International Criminal Court more than our national courts," said Emmanuel Folo of Ituri human rights group Equitas. "After this decision, for those who were victims of this, there is a feeling of disappointment. The victims feel forgotten, abandoned by international justice."

The acquittal also raised doubts about the case against Ngudjolo's better known co-accused, Germain Katanga. Judges extended Katanga's trial last month in a move that some observers said might raise the probability of a conviction.

The violence in Ituri was a localized ethnic clash over land and resources among myriad conflicts that spun out of the wider war in Democratic Republic of Congo from 1998 to 2003.

Some rebels involved in the current M23 insurgency in neighboring North Kivu province were involved in fighting in Ituri - among them M23 leader Bosco Ntaganda, who is himself on the ICC wanted list for war crimes alleged in Ituri in 2003.

Prosecutors accused Ngudjolo of ordering fighters to block roads around the village of Bogoro in February 2003 in order to kill civilians attempting to flee and said civilians, including women and small children, were burned alive inside their homes.

Two hundred people were killed during and after the attack on the village when ethnic Lendu and Ngiti fighters destroyed the homes of the village's mainly Hema inhabitants.

Describing the prosecution case as relating to a "a very concise incident", international criminal lawyer Nick Kaufmann, said: "The prosecution failed to investigate the chain of command adequately as far as the attack in Bogoro is concerned."

The ICC judges stressed that atrocities had been committed during the conflict, but said the witnesses prosecutors had chosen to testify to Ngudjolo's involvement were not credible.

"This does not in any way throw into question what befell the people of that area on that day," presiding judge Bruno Cotte said.

UNLIKELY TO BE OVERTURNED

Legal experts said it was unlikely the acquittal would be overturned because new evidence cannot be introduced at appeal. Appeals panels rarely reassess the credibility of witnesses.

Until then, it was not immediately clear where Ngudjolo might go. He remains under a United Nations travel ban dating from his indictment. The Netherlands, where he has been detained since 2008, is not obliged to take him in from prison. A Congo government spokesman said he saw no reason for Congo not to take Ngudjolo back but suggested it may wait until after the appeal.

"The acquittal of Ngudjolo leaves the victims of Bogoro and other massacres by his forces without justice for their suffering," said Geraldine Mattioli-Zeltner, international justice advocacy director at New York-based Human Rights Watch.

"The ICC prosecutor needs to strengthen its investigations of those responsible for grave crimes in Ituri, including high-ranking officials in Congo, Rwanda, and Uganda who supported the armed groups fighting there."

Luis Moreno Ocampo, who stepped down as chief prosecutor this year, failed to convince judges to approve some of his requests for arrest warrants or for cases to be tried in relation to the Congo conflicts.

In May, the ICC refused to issue an arrest warrant for Sylvestre Mudacumura, a militia leader operating in the Kivu provinces, saying his charge sheet was not detailed enough.

Judges last month split the cases against Katanga and Ndgujolo, postponing a verdict on the former until next year and giving prosecutors time to build a case centered around the claim that Katanga was part of a criminal plan to commit war crimes.

That decision, which would allow Katanga to be convicted even if he had not himself committed or ordered war crimes, has been appealed by the defense and criticized by scholars and by dissenting judge Christine van den Wyngaert. She said the decision would cause Katanga "irreparable prejudice".

Thomas Lubanga, the court's first convict, was sentenced to 14 years earlier this year for his role in recruiting child soldiers to another side in the same conflict in Ituri.

Some observers said the different outcomes of the trials for militia leaders from different tribes could cause new friction.

"Lubanga was a Hema leader, and the acquittal of a Ngudjolo, a Lendu, just after the conviction of a Hema could exacerbate tension between the two ethnicities in Ituri," Jennifer Easterday of the Open Society Justice Initiative said.

(Additional reporting by Joe Bavier in Abidjan and Pascal Fletcher; Editing by Michael Roddy and Alastair Macdonald)

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South Africa's Zuma boosted by Ramaphosa return in ANC win

BLOEMFONTEIN, South Africa (Reuters) - South Africa's ruling African National Congress (ANC) re-elected President Jacob Zuma as its leader on Tuesday, setting him up for seven more years as head of state of Africa's biggest economy.

Nelson Mandela's 100-year-old liberation movement also chose respected businessman Cyril Ramaphosa as his deputy, seeking to repair the image of a Zuma administration battered by corruption scandals and strikes and facing growing discontent among the poor black majority.

More than 4,000 ANC delegates crammed into a marquee in the central city of Bloemfontein erupted into wild cheers when Zuma was confirmed in the top party post after comfortably seeing off a challenge by Deputy President Kgalema Motlanthe.

Given the ANC's dominance at the ballot-box less than two decades after the end of apartheid, 70-year-old Zuma is virtually assured a second, five-year term as President of South Africa in 2014 elections.

The rand briefly edged higher against the dollar, reflecting relief among investors at the prospect of policies remaining largely unchanged.

After the vote, the beaming president, who secured 2,995 votes out of 3,977 cast, walked on stage to shake hands with his fellow 'comrades' - a label reflecting the ANC's roots in the communist-backed struggle against decades of white-minority rule.

Zuma, a polygamous Zulu traditionalist, came to power in 2009 amid the first recession in 18 years and has had a chequered economic record, culminating in violent labor unrest in the mines this year that triggered two downgrades in South Africa's credit ratings.

He has also been dogged by personal scandals, including fathering a child by the daughter of a close friend. Despite this, his popularity within the party is overwhelming.

"I don't care what people say about Jacob Zuma," said Sinovuyo Kley, a delegate from the impoverished Eastern Cape. "When you hear him sing, you know he is one with the people. He speaks our language and knows our struggles."

RAMAPHOSA RETURNS

Zuma's re-election had looked likely for much of the year, making the main talking point of the five-day Bloemfontein conference the political renaissance of Ramaphosa after a decade-long absence to focus on his business interests.

Attention was also diverted by the arrest of four whites on suspicion of a plot to bomb the meeting and execute Zuma and top ministers as part of a plan to carve an independent Afrikaner state out of Mandela's "Rainbow Nation".

Having risen to prominence as a charismatic union leader in the 1980s, Ramaphosa became the ANC's main negotiator in the talks that led to historic all-race elections in 1994 and Mandela's appointment as South Africa's first black president.

He was also tipped as a successor to the revered Mandela - now 94 and recovering in hospital from a lung infection - but gradually removed himself from politics when the job went to party stalwart Thabo Mbeki in 1999.

It was unclear just how much impact Ramaphosa's inclusion in Zuma's inner circle could have on the ANC government.

Some analysts say he should help push through plans to lift long-term economic growth and stop South Africa's competitive slide against fast-growing economies in Asia and South America.

However, others who know his business style told Reuters he tended not to throw his weight around in company board-rooms, suggesting he might avoid challenging South Africa's politically powerful unions.

"He is surprisingly quiet and non-confrontational on boards," one person who knows Ramaphosa said.

Others suggest that his ranking as South Africa's second richest black businessman could limit his appeal to the legions of poor and jobless who are increasingly doubting the ANC's post-apartheid promise to deliver "a better life for all".

LOOMING DOWNGRADE

"Looking further ahead, we remain doubtful that Zuma can oversee the reforms needed to pull the South African economy out of its current rut," said Shilan Shah, Africa economist at UK-based Capital Economics.

There is precious little time to make an impact, with Fitch expected in January to follow Moodys and Standard & Poor's in cutting South Africa's credit rating because of concerns about sluggish growth, forecast at 2.5 percent this year.

"The leadership issue is never really decisive for the market," said Nomura emerging markets analyst Peter Attard-Montalto. "It's always interested in policy and that's far more what the ratings agencies are looking at."

Zuma may also find his Bloemfontein victory dance cut short, with a poll published this week putting his nationwide approval rating at 52 percent, in contrast to 70 percent for the outgoing Motlanthe. This reflects just how much the internal politics of the ruling ANC is insulated from daily realities.

The opposition Democratic Alliance (DA) is starting to make in-roads into ANC support at local and regional level despite its reputation among many black South Africans as the party of white privilege. The DA said it had been inundated with membership inquiries within an hour of Zuma being re-elected.

Even within his own party, young South Africans are snapping at Zuma's heels, demanding political and economic change for a generation that has little memory of apartheid but which remains at the sharp end of 25 percent unemployment.

"The young people of South Africa are tired of promises and need action for economic freedom in our lifetime," the ANC Youth League, which had backed Motlanthe, said in a statement.

(Additional reporting by Jon Herskovitz, David Dolan, and Stella Mapenzauswa; Writing by Ed Cropley; Editing by Pascal Fletcher and Matthew Tostevin)

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Russia expects Obama visit despite "mini-crisis" in ties

MOSCOW (Reuters) - U.S. President Barack Obama is likely to visit Russia in the first half of 2013 despite a "mini-crisis" in relations over U.S. moves to punish Russians accused of rights abuses, a Kremlin aide said on Tuesday.

Russia's President Vladimir Putin has been angered by the U.S. Congress passing the so-called Magnitsky Act which will bar entry to alleged Russian human rights violators and freeze any assets they hold in the United States.

Obama signed the legislation last week. But, signaling that the Kremlin does not want the spat to block efforts to improve relations, foreign policy aide Yury Ushakov said Putin stood by an invitation for the U.S. president to visit Russia.

"We reckon that Obama's visit could take place in the first half of next year," he told a news briefing.

The Russian parliament has given initial approval to a tit-for-tat law barring Americans accused of human rights violations from entering the country, and the "reset" in relations which Obama called for four years ago has not gone as well as hoped.

Lawmakers have also proposed banning adoption of Russian children by Americans, a move backed by Russia's Children's Rights Commissioner, Pavel Astakhov.

The proposal has upset Kremlin critics and human rights activists, and two government ministers called on Tuesday for restraint over such a move. Foreign Minister Sergei Lavrov said the ban would be wrong and Education Minister Dmitry Livanov criticized the idea on Twitter.

"The logic is like 'an eye for an eye', but the logic is wrong, as children could suffer harm if they cannot find adoptive parents in Russia," he said.

Any such ban would go back on a bilateral agreement ratified in June on rules for U.S. citizens adopting Russian children.

MINI-CRISIS

Both Obama and Putin have signaled, since winning presidential elections this year, that they want U.S.-Russian ties to warm up, and Putin invited Obama to visit soon after the U.S. election last month.

Obama is expected to come to Russia in September anyway, for a Group of 20 summit in St Petersburg, but a separate visit for a bilateral summit would send a positive signal to Moscow about his intentions.

Obama visited Russia in 2009, and struck up a good rapport with then-President Dmitry Medvedev. The "reset" led to the signing of a new nuclear-arms reduction treaty, but Obama has a more difficult relationship with Putin.

The Magnitsky Act was drawn up because of U.S. concern over the death in a Russian prison of anti-corruption lawyer Sergei Magnitsky in 2009. It has outraged Russian politicians and members of parliament.

"This is an unfriendly move," Ushakov said at Tuesday's briefing. "These moves cannot be left unanswered."

"The Americans have created a mini-crisis out of nothing. We are losing time for the normal development of relations," he said. "Now we need to spend some time getting through this mini-crisis."

Putin has described the legislation as an attempt by Washington to "reap some political dividends at home".

(Additional reporting by Sonia Elks; Writing by Alexei Anishchuk; Editing by Louise Ireland and Timothy Heritage)

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Russia eyes Syria evacuation as rebels take Damascus district

BEIRUT (Reuters) - Russia sent warships to the Mediterranean to prepare a potential evacuation of its citizens from Syria, a Russian news agency said on Tuesday, a sign President Bashar al-Assad's key ally is worried about rebel advances now threatening even the capital.

Moscow acted a day after insurgents waging a 21-month-old uprising obtained a possible springboard for a thrust into Damascus by seizing the Yarmouk Palestinian camp, an urban zone just 2 miles from the heart of the city, activists said.

The Syrian opposition has scored significant military and diplomatic gains in recent weeks, capturing several army installations across Syria and securing formal recognition from Western and Arab states for its new coalition.

Despite those rebel successes, bloodshed has been rising with more than 40,000 killed in a movement that began as peaceful street protests but has transformed into civil war.

Assad's pivotal allies have largely stood behind him and Iran, believed to be his main bankroller in the conflict, said there were no signs of Assad was on the verge of being toppled.

"The Syrian army and the state machine are working smoothly," Deputy Foreign Minister Hossein Amir-Abdollahian said in Moscow on Tuesday.

But Russia, Assad's primary arms supplier, has appeared to waver with contradictory statements over the past week stressing opposition to Assad stepping down and airing concerns about a possible rebel victory.

Russia's Interfax news agency quoted unnamed naval sources on Tuesday as saying that two armed landing craft, a tanker and an escort vessel had left a Baltic port for the Mediterranean Sea. Russia has a naval maintenance base in the Syrian port of Tartus, around 250 km (155 miles) northwest of Damascus.

"They are heading to the Syrian coast to assist in a possible evacuation of Russian citizens ... Preparations for the deployment were carried out in a hurry and were heavily classified," the Russian agency quoted the source as saying.

Assad and his minority Alawite sect retain a solid grip on most of the coastal provinces of Tartus and Latakia, where their numbers are high. But the mostly Sunni Muslim rebels now control wide swathes of rural Syria, have seized border zones near Turkey in the north and Iraq to the east, and are pushing hard to advance on Damascus, Assad's fulcrum of power that sits close to the western frontier with Lebanon.

It was not possible to independently verify the Interfax report, which came a day after Russia confirmed that two citizens working in the Latakia province were kidnapped along with an Italian citizen. About 5,3000 Russian citizens are registered with consular authorities in Syria.

YARMOUK A "RED LINE"

In Damascus, activists reported overnight explosions and early morning sniper fire around the Palestinian refugee camp of Yarmouk. The Yarmouk and Palestine refugee "camps" are actually densely populated urban districts home to thousands of impoverished Palestinian refugees and Syrians.

"The rebels control the camp but army forces are gathering in the Palestine camp and snipers can fire in on the southern parts of Yarmouk," rebel spokesman Abu Nidal said by Skype.

"Strategically, this site is very important because it is one of the best doors into central Damascus. The regime normally does not fight to regain areas captured any more because its forces have been drained. But I think they could see Yarmouk as a red line and fight back fiercely."

Syria hosts half a million Palestinian refugees, most living in Yarmouk, descendants of those admitted after the creation of Israel in 1948. Damascus has always cast itself as a champion of the Palestinian struggle, sponsoring several guerrilla factions.

The battle in Yarmouk was one of a series of conflicts on the southern edges of Damascus, as the rebels try to seal off the capital in their campaign to end 42 years of rule over the major Arab state by the Assad family.

Both Assad's government and the rebels have enlisted and armed divided Palestinian factions.

Streams of refugees have fled Yarmouk. Many have headed to central Damascus while hundreds more have crossed into Lebanon.

"We walked out on foot without our belongings until we reached central Damascus. We got in a taxi and drove straight for the border," said 75-year-old Abu Ali, speaking at the Lebanon's Masnaa border crossing.

Abu Ali said around 70 percent of Yarmouk residents had fled and many had slept rough on the streets of Damascus.

MEDICAL SHORTAGES, EXTREME HUNGER

Around 200 people died in Syria on Monday alone, according to the British-based Syrian Observatory for Human Rights, which has a network of activists across the nation. Violence has risen sharply, and with it humanitarian conditions are deteriorating.

The World Health Organisation said around 100 people were being admitted daily to the main hospital of Damascus and that supplies of medicines and anesthetics were scarce.

It also reported a rise in cases of extreme hunger and malnutrition coming from across Syria, including the insurgent-dominated rural areas outside the capital, where Assad has unleashed warplanes to try to dislodge rebel units.

Aid organizations say fighting has blocked their access into many conflict zones, and residents in rebel-held areas in particular have grappled with severe food and medical shortages.

Fighting raged across Syria on Tuesday, with fighter jets and ground rockets bombarding rebel-controlled eastern suburbs of the capital and army forces shelling a town in Hama province after clashes reignited there over the weekend.

The Syrian government severely restricts media access into the country, making it difficult to report events on the ground.

An news team for the American NBC network who were kidnapped after entering Syria through the rebel-held northern border returned to Turkey on Tuesday after being freed in a gunfight.

NBC chief foreign correspondent Richard Engel said his team was held by an unidentified band for five days, and the men were subjected to psychological torture including mock shootings.

He said he had a "very good idea" who his captors were.

"This was a group known as the shabbiha. This is a government militia. These are people who are loyal to President Bashar Assad," he said on NBC, adding that the kidnappers spoke openly about their allegiance to the Damascus government.

(Additional reporting by Oliver Holmes, Erika Solomon and Dominic Evans in Beirut, Stephanie Nebehay in Geneva, Afif Diab in Masnaa, Lebanon, Susan Heavey in Washington; Editing by Mark Heinrich)

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Egyptian prosecutor's resignation angers Brotherhood

CAIRO (Reuters) - Egypt's public prosecutor resigned under pressure from his opponents in the judiciary, dealing a blow to President Mohamed Mursi and drawing an angry response on Tuesday from the Islamist leader's supporters in the Muslim Brotherhood.

Seeking to keep pressure on Mursi, the main opposition coalition staged protests against an Islamist-backed draft constitution that has divided Egypt but which looks set to be approved in the second round of a referendum on Saturday.

A few hundred protesters made their way through the streets of Cairo chanting "Revolution, revolution, for the sake of the constitution" and calling on Mursi to "Leave, leave, you coward".

But as the protest got under way, the numbers were well down on previous demonstrations.

Mursi obtained a 57 percent "yes" vote for the constitution in a first round of the referendum last weekend, state media said, less than he had hoped for.

The opposition, which says the law is too Islamist, will be emboldened by the result but is unlikely to win the second round, to be held in districts seen as even more sympathetic towards Mursi's Muslim Brotherhood.

Protesters broke into cheers when the public prosecutor appointed by Mursi last month announced his resignation late on Monday.

In a statement on its Facebook page, the Muslim Brotherhood, which propelled Mursi to power in elections in June, said the enforced resignation of public prosecutor Talaat Ibrahim was a "crime".

The Supreme Judiciary Council, which governs the country's judicial system, should refuse to accept the prosecutor's resignation, the Brotherhood said.

Further signs of opposition to Mursi emerged when a judges' club urged its members not to supervise Saturday's vote. But the call is not binding and balloting is expected to go ahead.

If the constitution passes next weekend, national elections can take place early next year, something many hope will help end the turmoil that has gripped Egypt since the fall of Hosni Mubarak nearly two years ago.

The National Salvation Front opposition coalition said there were widespread voting violations in the first round and called for protests to "bring down the invalid draft constitution".

The Ministry of Justice said it was appointing a group of judges to investigate complaints of voting irregularities around the country.

DEMONSTRATIONS

Opposition marchers headed for Tahrir Square, cradle of the revolution that toppled Mubarak, and Mursi's presidential palace, still ringed with tanks after earlier protests.

A protester at the presidential palace, Mohamed Adel, 30, said: "I have been camping here for weeks and will continue to do so until the constitution that divided the nation, and for which people died, gets scrapped."

The build-up to the first round of voting saw clashes between supporters and opponents of Mursi in which eight people died. Recent demonstrations in Cairo have been more peaceful, although rival factions clashed on Friday in Alexandria, Egypt's second biggest city.

On Monday evening, more than 1,300 members of the General Prosecution staff gathered outside the public prosecutor's office, demanding Ibrahim leave his post.

Hours later, Ibrahim announced he had resigned. The crowd cheered "God is Great! Long live justice!" and "Long live the independence of the judiciary!" witnesses said.

The closeness of the first-round referendum vote and low turnout give Mursi scant comfort as he seeks to assemble support for difficult economic reforms.

OPPOSITION BOOST

"This percentage ... will strengthen the hand of the National Salvation Front and the leaders of this Front have declared they are going to continue this fight to discredit the constitution," said Mustapha Kamal Al-Sayyid, a professor of political science at Cairo University.

Mursi is likely to become more unpopular with the introduction of planned austerity measures, polarizing society further, Sayyid told Reuters.

To tackle the budget deficit, the government needs to impose tax rises and cut back fuel subsidies. Uncertainty surrounding economic reform plans has already forced the postponement of a $4.8 billion loan from the International Monetary Fund. The Egyptian pound has fallen to eight-year lows against the dollar.

Mursi and his backers say the constitution is needed to move Egypt's democratic transition forward. Opponents say the document is too Islamist and ignores the rights of women and of minorities, including Christians who make up 10 percent of the population.

Demonstrations erupted when Mursi awarded himself extra powers on November 22 and then fast-tracked the constitution through an assembly dominated by his Islamist allies and boycotted by many liberals.

The referendum has had to be held over two days because many of the judges needed to oversee polling staged a boycott in protest. In order to pass, the constitution must be approved by more than 50 percent of those voting.

(Additional reporting by Tamim Elyan and Edmund Blair; Writing by Giles Elgood; Editing by Robin Pomeroy)

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China appoints new top official for export powerhouse Guangdong

GUANGZHOU (Reuters) - China announced on Tuesday the appointment of rising star Hu Chunhua as Communist Party boss for the southern export powerhouse of Guangdong, the country's richest and most liberal province.

Hu will take over from reform-minded politician Wang Yang, who worked to reduce Guangdong's reliance on exports and grappled with rising social tensions among migrant workers and villagers fighting land grabs and graft.

The Guangdong Party Secretary post is one of the most prominent provincial leadership roles in China, and has served as a springboard for many politicians towards more senior national posts.

Hu's appointment was announced in a brief statement carried by the official Xinhua news agency. It said Wang Jun would replace Hu as party chief in Inner Mongolia. The article did not say where Wang Yang, seen by many in the West as a beacon of political reform, will be moved to.

Reuters reported last month that Hu, the former Inner Mongolia party chief, was tipped to take over as party chief in Guangdong.

Hu, 49, is part of the so-called "sixth generation" of potential national leaders born in the 1960s, after the generations headed by Mao Zedong, Deng Xiaoping, Jiang Zemin, Hu Jintao and Xi Jinping.

Hu Chunhua spent two decades in restive and remote Tibet, where he learned to speak Tibetan, rare for a Han Chinese official. While there, he came under the wing of Hu Jintao, the outgoing Chinese president.

The two Hus are not related despite sharing a family name.

In Inner Mongolia, Hu Chunhua, also known as "Little Hu", has been referred to as a future president. While there, Hu Chunhua oversaw rapid economic growth and dealt successfully with protests last year by ethnic Mongols.

Guangdong, however, poses a stiff challenge for Hu given its national prominence as a key economic engine, encompassing the "world's factory" of the Pearl River Delta, rapid social and industrial transformation, social unrest and corruption.

"It will be a very big jump for him," said a foreign diplomat in Guangzhou who noted the province's relatively assertive citizenry and closer scrutiny from media outlets in Hong Kong.

Hu Chunhua came to Inner Mongolia following a brief stint in Hebei, the arid province which surrounds Beijing, where he was rapidly moved after a scandal over tainted milk in which at least six children died and thousands became ill.

Hu Chunhua remains something of an enigma, even in China. He has given few clues about his deeper policy beliefs. One of the best known things about him is that he does not appear to dye his hair jet-black like many Chinese politicians.

In meetings with the public, Hu comes across as low-key and self effacing, in line with an image of a loyal, humble Communist Party member. People who have met him describe him as relaxed and easy-going.

Despite having a reputation as a moderate and a reformer, Hu Chunhua sent back to jail Inner Mongolia's most notable Mongol dissident, Hada, almost as soon as he completed a 15-year sentence for separatism in late 2010.

(Reporting by James Pomfret in Guangzhou and Sui-Lee Wee in Beijing; Editing by Ron Popeski)

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Mandela "looking much better", to stay in hospital

JOHANNESBURG (Reuters) - Former South African President Nelson Mandela is "looking much better" after being treated for a lung infection and gallstones, but he would remain in hospital for the time being for extra care, a presidency spokesman said on Tuesday.

The country's first black president and anti-apartheid hero, who is 94, was admitted to a Pretoria hospital on December 8 after being flown from his home village of Qunu in a remote, rural part of the Eastern Cape province.

He was treated initially for a recurrent lung infection and then had a successful procedure to have gallstones removed.

Presidency spokesman Mac Maharaj said he visited Mandela on Tuesday. "He is looking much better," he said in a statement, adding that the Nobel Peace laureate had spoken to him.

Doctors were satisfied with his progress, Maharaj said.

"They say there is no crisis, but add that they are in no hurry to send him home just yet," he added.

"He is 94 years old and needs extra-ordinary care. If he spends more days in hospital, it is because that necessary care is being provided," Maharaj said.

Mandela spent 27 years in apartheid prisons, including 18 years on the windswept Robben Island off the coast of Cape Town.

He was released in 1990 and went on to use his unparalleled prestige to push for reconciliation between whites and blacks as the bedrock of the post-apartheid "Rainbow Nation".

He stepped down in 1999 after one term in office and has been largely removed from public life for the last decade.

(Reporting By Xola Potelwa; Writing by Pascal Fletcher)

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Central African Republic rebel alliance issues ultimatum to government

BANGUI (Reuters) - An alliance of rebel groups that has seized control of several towns in Central African Republic in recent days has threatened to overthrow President Francois Bozize if he fails to fully implement a five-year-old peace deal.

The resurgence of rebel activity risks sparking a new spiral of violence in the minerals-rich nation where several groups have fought low-level insurgencies since 2005.

The rebel alliance - made up of breakaway factions from the CPJP, UFDR and CPSK rebel groups in the north of the country which signed a peace treaty with the government in 2007 - said the government must fully implement the terms of that deal.

In a statement issued on Monday, the alliance demanded, among other things, that the government pay rebel soldiers money promised to them to lay down their weapons, and to free political prisoners.

"Otherwise ... (the alliance) will take it upon itself to do everything possible to change, sooner or later, this regime which has done nothing to bring justice and peace to the Central African Republic. Enough is enough," it said.

Early on Tuesday, the rebels entered Bria, a mining town with a population of about 40,000 which lies some 600 km (360 miles) from the capital Bangui.

"Fighting started about 5 a.m. today. We were woken by heavy gunfire. Most of the population started fleeing. The military base seems to be in the hands of the rebels," Bria's Mayor Moussa Gouman told Reuters by telephone as gunfire could be heard in the background.

A resident said that by late afternoon the rebels had seized control of the town.

The rebels have taken several towns in the north and north-east of the country including Ndele, Sam Ouandja, Bamingui and Ouadda during an advance that began last week.

Authorities in the capital declined to comment.

On Sunday, the rebels attacked government soldiers sent to retake Ndele which was seized on December 10.

"Our troops were ambushed by the rebels on (Sunday) night. Forty of them are unaccounted for as we speak," a CAR army captain told Reuters, requesting not to be named.

"Two of our vehicles loaded with weapons, ammunition and fuel supplies for our men were also seized by the rebels," he said.

Instability in landlocked CAR, roughly the size of former colonial master France, has discouraged major investment in its timber, gold, uranium and diamond deposits.

France said it was "extremely concerned" by the fighting.

"These attacks constitute a flagrant violation of the Libreville peace agreement, in that they undermine efforts to consolidate peace in Central African Republic," French Foreign Ministry spokesman Philippe Lalliot told journalists.

A 2006 advance by the nearly 3,000-strong UFDR on Bangui was only halted with the intervention of French armed forces before the peace deal was signed in April 2007.

The CPJP embarked on a separate rebellion with about 1,000 soldiers before agreeing a ceasefire, but most of the rebel groups remained armed.

A mix of local rebels, bandits, ethnic tensions and the spillover of conflicts from neighboring Chad, Sudan and Democratic Republic of Congo have undermined efforts to stabilize the nation which has suffered misrule since independence in 1960.

President Bozize took power in a 2003 coup and won a new mandate in January 2011 elections, which opponents dismissed as fraudulent.

(Additional reporting by John Irish in Paris and Bate Felix in Dakar; Writing by Bate Felix; Editing by Robin Pomeroy)

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