Football: Transfer talks stall for AC Milan's Robinho

MILAN: AC Milan's bid to sell Robinho to Brazilian top flight side Santos floundered early on Saturday after the clubs failed to agree on a transfer fee, it was reported.

Milan have slapped a 10m-euro price tag on the talented Brazilian while Santos offered only seven million, according to ANSA news agency.

ANSA also reported that another Brazilian side that had shown an interest in purchasing Robinho, Atletico Mineiro, had now called off talks.

Citing Brazilian newspaper Folha de Sao Paulo, it said Atletico could not meet Milan's 10m euro asking price nor Robinho's wage demands.

Milan's former Brazilian striker Alexandre Pato on Thursday joined Brazilian side Corinthians in a four-year deal thought to be worth 15 million euros.

The Serie A giants sit seventh in Serie A, 17 points adrift of leaders Juventus, ahead of the visit of Siena on Sunday.

- AFP/xq

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Centre waives off bill for ITBP deployment to guard Kasab

MUMBAI: Union home minister Sushilkumar Shinde today said the Centre had decided not to recover from Maharashtra government Rs 21 crore on account of deployment of Indo-Tibetan Border Police at Arthur Road Central Jail here to guard 26/11 terrorist Ajmal Amir Kasab.

Kasab was lodged in Arthur Road jail, where the trial of 26/11 case also took place, for four years, before he was shifted to Pune's Yerawada jail for execution last November.

Shinde today visited the Arthur Road jail and reviewed the security.

He said the state should spend the money — otherwise payable to the Centre — for prison reforms.

Maharashtra home minister R R Patil had written to the Centre saying that state alone should not bear the financial burden for Kasab's security.

Shinde today said he would be visiting all the major jails in the metro cities to review the security, and his next stop would be Tihar in New Delhi.

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FDA: New rules will make food safer

WASHINGTON (AP) — The Food and Drug Administration says its new guidelines would make the food Americans eat safer and help prevent the kinds of foodborne disease outbreaks that sicken or kill thousands of consumers each year.

The rules, the most sweeping food safety guidelines in decades, would require farmers to take new precautions against contamination, to include making sure workers' hands are washed, irrigation water is clean, and that animals stay out of fields. Food manufacturers will have to submit food safety plans to the government to show they are keeping their operations clean.

The long-overdue regulations could cost businesses close to half a billion dollars a year to implement, but are expected to reduce the estimated 3,000 deaths a year from foodborne illness. The new guidelines were announced Friday.

Just since last summer, outbreaks of listeria in cheese and salmonella in peanut butter, mangoes and cantaloupe have been linked to more than 400 illnesses and as many as seven deaths, according to the federal Centers for Disease Control and Prevention. The actual number of those sickened is likely much higher.

Many responsible food companies and farmers are already following the steps that the FDA would now require them to take. But officials say the requirements could have saved lives and prevented illnesses in several of the large-scale outbreaks that have hit the country in recent years.

In a 2011 outbreak of listeria in cantaloupe that claimed 33 lives, for example, FDA inspectors found pools of dirty water on the floor and old, dirty processing equipment at Jensen Farms in Colorado where the cantaloupes were grown. In a peanut butter outbreak this year linked to 42 salmonella illnesses, inspectors found samples of salmonella throughout Sunland Inc.'s peanut processing plant in New Mexico and multiple obvious safety problems, such as birds flying over uncovered trailers of peanuts and employees not washing their hands.

Under the new rules, companies would have to lay out plans for preventing those sorts of problems, monitor their own progress and explain to the FDA how they would correct them.

"The rules go very directly to preventing the types of outbreaks we have seen," said Michael Taylor, FDA's deputy commissioner for foods.

The FDA estimates the new rules could prevent almost 2 million illnesses annually, but it could be several years before the rules are actually preventing outbreaks. Taylor said it could take the agency another year to craft the rules after a four-month comment period, and farms would have at least two years to comply — meaning the farm rules are at least three years away from taking effect. Smaller farms would have even longer to comply.

The new rules, which come exactly two years to the day President Barack Obama's signed food safety legislation passed by Congress, were already delayed. The 2011 law required the agency to propose a first installment of the rules a year ago, but the Obama administration held them until after the election. Food safety advocates sued the administration to win their release.

The produce rule would mark the first time the FDA has had real authority to regulate food on farms. In an effort to stave off protests from farmers, the farm rules are tailored to apply only to certain fruits and vegetables that pose the greatest risk, like berries, melons, leafy greens and other foods that are usually eaten raw. A farm that produces green beans that will be canned and cooked, for example, would not be regulated.

Such flexibility, along with the growing realization that outbreaks are bad for business, has brought the produce industry and much of the rest of the food industry on board as Congress and FDA has worked to make food safer.

In a statement Friday, Pamela Bailey, president of the Grocery Manufacturers Association, which represents the country's biggest food companies, said the food safety law "can serve as a role model for what can be achieved when the private and public sectors work together to achieve a common goal."

The new rules could cost large farms $30,000 a year, according to the FDA. The agency did not break down the costs for individual processing plants, but said the rules could cost manufacturers up to $475 million annually.

FDA Commissioner Margaret Hamburg said the success of the rules will also depend on how much money Congress gives the chronically underfunded agency to put them in place. "Resources remain an ongoing concern," she said.

The farm and manufacturing rules are only one part of the food safety law. The bill also authorized more surprise inspections by the FDA and gave the agency additional powers to shut down food facilities. In addition, the law required stricter standards on imported foods. The agency said it will soon propose other overdue rules to ensure that importers verify overseas food is safe and to improve food safety audits overseas.

Food safety advocates frustrated over the last year as the rules stalled praised the proposed action.

"The new law should transform the FDA from an agency that tracks down outbreaks after the fact, to an agency focused on preventing food contamination in the first place," said Caroline Smith DeWaal of the Center for Science in the Public Interest.

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Debt Limit Negotiating Tactic? No Negotiating

President Barack Obama and Vice President Joe Biden walk away from the podium after Obama made a statement regarding the passage of the fiscal cliff bill in the Brady Press Briefing Room at the White House in Washington, Tuesday, Jan. 1, 2013. (AP Photo/Charles Dharapak)

Analysis

New for 2013: In the Washington, D.C. fiscal wars we’ve gone from everything must be on the table to politicians declaring they won’t debate.

The fiscal cliff deal either averted disaster or compounded the problem, depending on who you ask. It certainly created new mini-cliffs in a few months as Congress and the president square off on the debt ceiling, spending cuts and government funding. But it also made sure the vast majority of Americans won’t see as big a tax hike as they might have.

President Obama was pretty clear late on New Year’s night as he reacted to Congress’s passage of a bill to take a turn away from the fiscal cliff. He won’t negotiate with Republicans about the debt ceiling.

“Now, one last point I want to make,” said the president, before wrapping up and hopping on Air Force One for a redeye to Hawaii. “While I will negotiate over many things, I will not have another debate with this Congress over whether or not they should pay the bills that they’ve already racked up through the laws that they passed.”

(Read more here about the Fiscal Cliff)

That’s pretty clear. No debt ceiling negotiation. Then he added for emphasis: ”Let me repeat: We can’t not pay bills that we’ve already incurred. If Congress refuses to give the United States government the ability to pay these bills on time, the consequences for the entire global economy would be catastrophic — far worse than the impact of a fiscal cliff.”

But in Washington, saying you won’t do something these days has almost become like an opening bid. At least, that’s how Republicans are treating the president’s line in the sand.

“The president may not want to have a fight about government spending over the next few months, but it’s the fight he is going to have because it’s a debate the country needs,” wrote Senate Minority Leader Mitch McConnell, the Kentucky Republican, in an op-Ed on Yahoo! News about 36 hours later. “For the sake of our future, the president must show up to this debate early and convince his party to do something that neither he nor they have been willing to do until now.”

“We simply cannot increase the nation’s borrowing limit without committing to long overdue reforms to spending programs that are the very cause of our debt,” McConnell said.

The national debt is soon set to reach $16.4 trillion. That’s not a problem that can be solved with one bill or budget. And the two sides will have to figure out some sort of way to talk about entitlement/social safety net reform – meaning things like Medicare, Medicaid, and Social Security – in addition to cutting spending and, most importantly, hope for an improving economy, to deal with those deficits.

House Speaker John Boehner, who has several times now failed to reach a big, broad fiscal deal with President Obama, told colleagues, according to The Hill newspaper, that he’s done with secret White House negotiations. He wants to stick with the constitutional way of doing things, with hearings and bills that are debated on Capitol Hill rather than hatched by the vice president and Senate Republicans.

Okay. Obama won’t negotiate on the debt ceiling. McConnell won’t not negotiate on the debt ceiling. Boehner doesn’t to do things by the book.

But McConnell won’t negotiate on taxes any more.

“Predictably,” McConnell had written earlier in his post, “the president is already claiming that his tax hike on the ‘rich’ isn’t enough. I have news for him: the moment that he and virtually every elected Democrat in Washington signed off on the terms of the current arrangement, it was the last word on taxes. That debate is over.”

It’s a new chapter in the ongoing fiscal saga in Washington. Back when the two sides were talking about a grand bargain or a big deal – some sort of all-inclusive reform that would right the listing deficit with one flip of the rudder – the popular trope was that “everything must be on the table.” That’s basically how Obama put it back in the summer of 2011 when he and Boehner failed to reach a grand bargain. He wanted higher taxes – they were calling them revenues back then. More recently, after Obama won the election and when he and Boehner were trying to hammer out another grand bargain to avert the fiscal cliff, Boehner wanted entitlements on the table. That means he wanted to find ways to curb future spending.

Both sides are declaring they won’t debate certain points, but this far – a full two months – before the mini-cliffs start, those are easier declarations to make than they will be when the government is in danger of defaulting or shutting down.

Even though they’re trying to take elements off the table, both men hope that coming negotiations can be a little more cordial and a little less down-to-the wire.

“Over the next two months they need to deliver the same kind of bipartisan resolution to the spending problem we have now achieved on revenue — before the 11th hour,” wrote McConnell.

“The one thing that I think, hopefully, in the New Year we’ll focus on is seeing if we can put a package like this together with a little bit less drama, a little less brinksmanship, not scare the heck out of folks quite as much,” said Obama.

That’ll be tough if neither side will talk about what the other side wants to talk about.

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Eleven dead in Damascus gas station blast

AZAZ, Syria (Reuters) - At least 11 people were killed and 40 wounded when a car bomb exploded at a crowded petrol station in the Syrian capital Damascus on Thursday, opposition activists said.

The station was packed with people queuing for fuel that has become increasingly scarce during the country's 21-month-long insurgency aimed at overthrowing President Bashar al-Assad.

The semi-official al-Ikhbariya television station showed footage of 10 burnt bodies and Red Crescent workers searching for victims at the site.

The opposition Revolution Leadership Council in Damascus said the explosion was caused by a booby-trapped car.

There was no immediate indication of who was responsible for the bombing in the Barzeh al-Balad district, whose residents include members of the Sunni Muslim majority and other religious and ethnic minorities.

"The station is usually packed even when it has no fuel," said an opposition activist who did not want to be named. "There are lots of people who sleep there overnight, waiting for early morning fuel consignments."

It was the second time that a petrol station has been hit in Damascus this week. Dozens of people were incinerated in an air strike as they waited for fuel on Wednesday, according to opposition sources.

In northern Syria, rebels were battling to seize an air base in their campaign against the air power that Assad has used to bomb rebel-held towns.

More than 60,000 people have been killed in the uprising and civil war, the United Nations said this week, a much higher death toll than previously thought.

DRAMATIC ADVANCES

After dramatic advances over the second half of 2012, the rebels now hold wide swathes of territory in the north and east, but they cannot protect towns and villages from Assad's helicopters and jets.

Hundreds of rebel fighters were attempting to storm the Taftanaz air base, near the highway that links Syria's two main cities, Aleppo and Damascus.

A rebel fighter speaking from near the Taftanaz base overnight said much of the base was still in loyalist hands but insurgents had managed to destroy a helicopter and a fighter jet on the ground.

The northern rebel Idlib Coordination Committee said the rebels had detonated a car bomb inside the base.

The government's SANA news agency said the base had not fallen and that the military had "strongly confronted an attempt by the terrorists to attack the airport from several axes, inflicting heavy losses among them and destroying their weapons and munitions".

Rami Abdulrahman, head of the opposition-aligned Syrian Observatory for Human Rights which monitors the conflict from Britain, said as many as 800 fighters were involved in the assault, including Islamists from Jabhat al-Nusra, a powerful group that Washington considers terrorists.

Taftanaz is mainly a helicopter base, used for missions to resupply army positions cut off by the rebels, as well as for dropping crude "barrel bombs" on rebel-controlled areas.

Near Minakh, another northern air base that rebels have surrounded, government forces have retaliated by shelling and bombing nearby towns.

NIGHTLY BOMBARDMENTS

In the town of Azaz, where the bombardment has become a near nightly occurrence, shells hit a family house overnight. Zeinab Hammadi said her two wounded daughters, aged 10 and 12, had been rushed across the border to Turkey, one with her brain exposed.

"We were sleeping and it just landed on us in the blink of an eye," she said, weeping as she surveyed the damage.

Family members tried to salvage possessions from the wreckage, men lifting out furniture and children carrying out their belongings in tubs.

"He (Assad) wants revenge against the people," said Abu Hassan, 33, working at a garage near the destroyed house. "What is the fault of the children? Are they the ones fighting?"

Opposition activists said warplanes struck a residential building in another rebel-held northern town, Hayyan, killing at least eight civilians.

Video footage showed men carrying dismembered bodies of children and dozens of people searching for victims in the rubble. The provenance of the video could not be independently confirmed.

In addition to their tenuous grip on the north, the rebels also hold a crescent of suburbs on the edge of Damascus, which have come under bombardment by government forces that control the center of the capital.

On Wednesday, according to opposition activists, dozens of people died in an inferno caused by an air strike on a petrol station in a Damascus suburb where residents were lining up for fuel.

The civil war in Syria has become the longest and bloodiest of the conflicts that rose out of uprisings across the Arab world in the past two years.

Assad's family has ruled for 42 years since his father seized power in a coup. The war pits rebels, mainly from the Sunni Muslim majority, against a government supported by members of Assad's Shi'ite-derived Alawite minority sect and some members of other minorities who fear revenge if he falls.

The West, most Sunni-ruled Arab states and Turkey have called for Assad to step down. He is supported by Russia and Shi'ite Iran.

(Additional reporting by Khaled Yacoub Oweis in Amman and Dominic Evans in Beirut; Writing by Peter Graff; Editing by Ruth Pitchford and Giles Elgood)

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King speaks to sceptical Spaniards

MADRID: After a year blighted by embarrassing scandals, Spain's King Juan Carlos moves to repair his damaged reputation Friday with the broadcast of a rare televised interview to mark his 75th birthday.

No details of the pre-recorded interview had leaked from the royal palace ahead of its airing on Friday evening, but Spanish media trailed it by scrutinising the recent tribulations of the king, a key player in Spain's modern history.

Juan Carlos has recently appeared hobbling around on crutches after having both hips replaced, but any sympathy for his health has been overshadowed by scandals over elephant-hunting in Africa and a corruption probe implicating his family.

In a poll published Thursday by El Mundo newspaper, only half of people expressed a positive judgement of his reign, compared with three-quarters a year ago.

Juan Carlos, who turns 75 on Saturday, won respect in Spain for helping guide it to democracy after the death of dictator Francisco Franco in 1975.

But the king's image suffered last year from two scandals.

The first was a corruption case against his son-in-law Inaki Urdangarin, the duke of Palma, who went before a judge in February.

The other was an expensive game-hunting trip the king himself made to Botswana, seen as an unacceptable extravagance while Spain suffered in a recession.

Thursday's poll showed general support for having a monarchy in Spain has fallen to 54 percent, six points down from a year ago and "a historic low", according to the newspaper.

For days ahead of the interview broadcast, national television has aired old footage including Juan Carlos's solemn address, dressed in his officer's uniform, condemning an attempted coup on February 23, 1981.

A generation after those historic events, the poll found that nearly 58 percent of people aged between 18 and 29 said they thought a monarchy was not the best form of governance for Spain.

El Mundo suggested people of this generation do not share their parents' reverence for the king since they "did not live through the transition and are not very interested in it".

In his annual Christmas speech to the nation, Juan Carlos called on Spaniards to unite against the current economic crisis that has thrown millions out of work.

"We cannot ignore that there is pessimism, and that its effects are felt in the social climate we are living in," the king said, after a year of mass street demonstrations and two general strikes.

Of all the measures to combat the crisis, "the main stimulus that will get us out of this crisis is called confidence," he said in the speech, in which he made a point of appearing without crutches, standing beside his desk.

Observers saw this as one in a series of efforts to strengthen the monarchy's standing.

"The royal palace has launched in recent months a studious marketing operation to improve the image of the king," El Mundo wrote in an editorial.

In this week's poll nearly 45 percent of people questioned said Juan Carlos should abdicate to make way for his son, Felipe, 44.

-AFP/fl

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Italian marines surrender passport in trial court

KOLLAM (Kerala): The two Italian marines, facing murder charges in Kerala, today surrendered their passports at the trial court here within hours of returning to India after Christmas holidays at home.

The marines -- Massimiliano Latorre and Salvatore Girone -- drove to Kollam after arriving in Kochi to comply with the court direction that they should surrender their passports as soon as they returned to India.

As part of the procedures, the marines filed an affidavit before District and Sessions Judge P D Rajan stating they had not only kept their assurance to the court but had returned to India a few days earlier than the time-frame set by the court.

The marines also urged the court to return the Rs six crore bank guarantee submitted by them as part of the condition set by the Kerala High Court for allowing them to join their families in Italy for a few days.

The judge extended the residence permit of the marines upto May 13, 2013 and asked them to appear before the court on January 15 for further proceedings in the case.

On December 22, the marines had left for Rome after the Kerala high court permitted them to go for Christmas for two weeks.

The marines were arrested on February 19 last for shooting to death two Indian fishermen -- Ajesh Binki (25) and Jelestine (45) from onboard merchant vessel 'Enrica Lexie' off Alapuzha coast, 'mistaking' them for Somali pirates.

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Indian court to rule on generic drug industry

NEW DELHI (AP) — From Africa's crowded AIDS clinics to the malarial jungles of Southeast Asia, the lives of millions of ill people in the developing world are hanging in the balance ahead of a legal ruling that will determine whether India's drug companies can continue to provide cheap versions of many life-saving medicines.

The case — involving Swiss drug maker Novartis AG's cancer drug Glivec — pits aid groups that argue India plays a vital role as the pharmacy to the poor against drug companies that insist they need strong patents to make drug development profitable. A ruling by India's Supreme Court is expected in early 2013.

"The implications of this case reach far beyond India, and far beyond this particular cancer drug," said Leena Menghaney, from the aid group Doctors Without Borders. "Across the world, there is a heavy dependence on India to supply affordable versions of expensive patented medicines."

With no costs for developing new drugs or conducting expensive trials, India's $26 billion generics industry is able to sell medicine for as little as one-tenth the price of the companies that developed them, making India the second-largest source of medicines distributed by UNICEF in its global programs.

Indian pharmaceutical companies such as Cipla, Cadila Laboratories and Lupin have emerged over the past decade as major sources of generic cancer, malaria, tuberculosis and AIDS drugs for poor countries that can't afford to pay Western prices.

The 6-year-old case that just wrapped up in the Supreme Court revolves around a legal provision in India's 2005 patent law that is aimed at preventing companies from getting fresh patents for making only minor changes to existing medicines — a practice known as "evergreening."

Novartis' argued that a new version of Glivec — marketed in the U.S. as Gleevec — was a significant change from the earlier version because it was more easily absorbed by the body.

India's Patent Controller turned down the application, saying the change was an obvious development, and the new medicine was not sufficiently distinct from the earlier version to warrant a patent extension.

Patient advocacy groups hailed the decision as a blow to "evergreening."

But Western companies argued that India's generic manufacturers were cutting the incentive for major drug makers to invest in research and innovation if they were not going to be able to reap the exclusive profits that patents bring.

"This case is about safeguarding incentives for better medicines so that patients' needs will be met in the future," says Eric Althoff, a Novartis spokesman.

International drug companies have accused India of disregarding intellectual property rights, and have pushed for stronger patent protection that would weaken India's generics industry.

Earlier this year, an Indian manufacturer was allowed to produce a far cheaper version of the kidney and liver cancer treatment sorefinib, manufactured by Bayer Corp.

Bayer was selling the drug for about $5,600 a month. Natco, the Indian company, said its generic version would cost $175 a month, less than 1/30th as much. Natco was ordered to pay 6 percent in royalties to Bayer.

Novartis says the outcome of the new case will not affect the availability of generic versions of Glivec because it is covered by a grandfather clause in India's patent law. Only the more easily absorbed drug would be affected, Althoff said, adding that its own generic business, Sandoz, produces cheap versions of its drugs for millions across the globe.

Public health activists say the question goes beyond Glivec to whether drug companies should get special protection for minor tweaks to medicines that others could easily have uncovered.

"We're looking to the Supreme Court to tell Novartis it won't open the floodgates and allow abusive patenting practices," said Eldred Tellis, of the Sankalp Rehabilitation Centre, a private group working with HIV patients.

The court's decision is expected to be a landmark that will influence future drug accessibility and price across the developing world.

"We're already paying very high prices for some of the new drugs that are patented in India," said Petros Isaakidis, an epidemiologist with Doctors Without Borders. "If Novartis' wins, even older medicines could be subject to patenting again, and it will become much more difficult for us in future to provide medicines to our patients being treated for HIV, hepatitis and drug resistant TB."

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Chelsea Clinton Raises Profile During Mom's Illness

While Hillary Clinton was in the hospital it was daughter Chelsea -- not the secretary of state or the former president Bill Clinton -- who spoke for the family.

She, along with the State Department, doled out what little information the family wanted to share in a series of tweets and when her mother was released from the hospital, it was Chelsea who delivered the thanks on behalf of her parents, tweeting her gratitude to the doctors as well as those who kept her mother in their thoughts while she recovered from a blood clot.

When Hillary Clinton leaves office, possibly at the end of this month, it will be the first time since 1982 that a Clinton will not be holding a public office.

The watch will be on whether Hillary Clinton makes another run for the White House in 2016, but almost inevitably people will also be watching to see if Chelsea Clinton decides to run for office, too.

"Americans always look for dynasties: Bush, Kennedy, Cuomo, Clinton … it's some kind of continuity. There will always be pressure on her to run for public office," said Hank Sheinkopf, a Democratic political strategist in New York.

"She's learning from the two best politicians in recent American history and she understands when to hold them and when to fold them," Sheinkopf said.

That sense of dynasty could also present a significant hurdle.

James Devaney/Getty Images

Secretary of State Clinton: Mystery Health Issues Watch Video

Secretary of State Hillary Clinton Undergoing Blood-Thinning Therapy Watch Video

"She's got to A, demonstrate that she has the charisma of her father, or B, demonstrate that she has the policy chops of her mother. And I think like most people she is somewhere in between," a former Hillary Clinton aide from her 2008 campaign said. "People are judging her through each of her parents and it's an impossible standard."

Chelsea Clinton, 32, has inched towards a possible political career in recent statements and has become more politically active.

In an interview with Vogue published in August she was more open to it than she has been in the past, telling the magazine, "Before my mom's (presidential) campaign I would have said no," but "now I don't know."

"I believe that engaging in the political process is part of being a good person. And I certainly believe that part of helping to build a better world is ensuring that we have political leaders who are committed to that premise. So if there were to be a point where it was something I felt called to do and I didn't think there was someone who was sufficiently committed to building a healthier, more just, more equitable, more productive world? Then that would be a question I'd have to ask and answer."

Clinton also spoke of a change in her private to public life:

"Historically I deliberately tried to lead a private life in the public eye," she told the magazine. "And now I am trying to lead a purposefully public life."

Besides her work as a special correspondent with NBC, Chelsea Clinton has taken on high profile roles with her father's Clinton Global Initiative. She sits on several corporate boards and has both moderated and sat on panels discussing both women in politics and childhood obesity, among other issues.

She has also worked toward making same-sex marriage legal in New York last year, as well as gay marriage referendums in Maine, Maryland, Wisconsin and Washington state, all of which were successful in November. She has also been active in superstorm Sandy recovery, most notably delivering aid to the devastated Rockaways with her father.

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Myanmar says jets used against Kachin rebels

YANGON (Reuters) - Myanmar's military has used jets to attacks rebel fighters in northern Kachin state, the government said on Thursday, its first admission of an intensification of a conflict that has raised doubts about its reformist credentials.

Rebel sources have reported aerial bombings, shelling and even the use of chemical weapons since December 28 after the Kachin Independence Army (KIA) ignored an ultimatum to stop blocking an army supply route in the hilly, resource-rich state where more than 50,000 people have been displaced.

Official newspapers said that air support was used on December 30 to thwart KIA fighters who had occupied a hill and were attacking logistics units of the Tatmadaw, as Myanmar's military is known.

"The Tatmadaw troops cleared Point-771 hill and its surrounding areas where the KIA troops were attacking the Tatmadaw logistic troops," the New Light of Myanmar, a government mouthpiece, said. "The air cover was used in the attack."

U.N. Secretary-General Ban Ki-moon voiced concern on Wednesday over reports of helicopters and fighter jets being used in the state bordering China. The KIA said the attacks were intended to clear the path for an assault on its headquarters in Laisa.

Ban called on Myanmar's government to "desist from any action that could endanger the lives of civilians" and reiterated demands for humanitarian aid groups to be granted access, U.N. spokesman Martin Nesirky said in a statement.

President Thein Sein's quasi-civilian administration insists it wants a ceasefire and political dialogue. It says troops have acted only in self-defense and on Thursday denied having plans to seize the KIA's stronghold.

DOMINANT MILITARY

The escalation of fighting has raised doubts about the sincerity of the reformist ex-generals running the government and the extent of their power in a country the size of Britain and France plagued by decades of internal conflict.

Some analysts and diplomats say central government is either not fully committed to peace with the KIA or unable to assert control over the military, which still dominates politics and the economy despite formally ceding power in March 2011.

Colonel James Lum Dau, a Thai-based spokesman for the KIA's political wing, said Kachin officials on the ground had reported up to 300 people killed in air strikes.

"We are in a defensive position. Right now more people are suffering not only bombings, but shelling and spraying of chemical weapons with helicopter gunships and jets," he said. "Only god knows what to do. We are praying."

It is difficult for journalists to independently verify accounts from the two sides.

Fighting erupted in Kachin in June 2010, ending a 17-year truce, and has continued even as government negotiators have agreed ceasefires elsewhere with ethnic Shan, Chin, Mon and Karen militias after decades of fighting in border areas.

Mistrust runs deep between the military and the KIA, which was once backed by China, and multiple rounds of talks aimed at reaching a ceasefire have gone nowhere. Analysts say a history of bad blood and a battle for control of resources, including highly lucrative jade, could be stoking the unrest.

Zaw Htay, a senior official in Thein Sein's office, told Reuters no air strikes had taken place but K-8 trainer jets had provided cover fire to protect ground troops from rebel attacks. The military, he said, had no intention of seizing the KIA's headquarters.

"The president has said this and at the same time he has invited KIA leaders to come and talk with him in Naypyitaw, but they still haven't responded," Zaw Htay said.

(Additional reporting by Paul Carsten in Bangkok; Writing by Martin Petty; Editing by Alan Raybould)

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