South Africa's Pistorius goes free on $113,000 bail


PRETORIA (Reuters) - A South African court granted bail on Friday to Oscar Pistorius, charged with the murder of his girlfriend on Valentine's Day, after his lawyers successfully argued the "Blade Runner" was too famous to flee justice.


The decision by Magistrate Desmond Nair drew cheers from the Paralympics star's family and supporters. Pistorius himself was unmoved, in marked contrast to the week-long hearing, when he repeatedly broke down in tears.


Nair set bail at 1 million rand ($113,000) and postponed the case until June 4. Pistorius would be released only when the court received 100,000 rand in cash, he added.


Less than an hour later, a silver Land Rover left the court compound, Pistorius visible through the tinted windows sitting in the back seat in the dark suit and tie he wore in court.


The car then sped off through the streets of the capital, pursued by members of the media on motorcycles, before it entered his uncle Arnold's home in the plush Pretoria suburb of Waterkloof.


At least five private security guards stood outside the concrete walls, keeping reporters at bay.


Under the terms of his bail, Pistorius, 26, was also ordered to hand over firearms and his two South African passports, avoid his home and all witnesses, report to a police station twice a week and abstain from drinking alcohol.


The decision followed a week of dramatic testimony about how the athlete shot dead model and law graduate Reeva Steenkamp at his luxury home near Pretoria in the early hours of February 14.


Prosecutors said Pistorius committed premeditated murder when he fired four shots into a locked toilet door, hitting his girlfriend cowering on the other side. Steenkamp, 29, suffered gunshot wounds to her head, hip and arm.


Pistorius said the killing was a tragic mistake, saying he had mistaken Steenkamp for an intruder - a possibility in crime-ridden South Africa - and opened fire in a blind panic.


However, in delivering his nearly two-hour bail ruling, Nair said there were a number of "improbabilities" in Pistorius's version of events, read out to the court in an affidavit by his lawyer, Barry Roux.


"I have difficulty in appreciating why the accused would not seek to ascertain who exactly was in the toilet," Nair said. "I also have difficulty in appreciating why the deceased would not have screamed back from the toilet."


By local standards, the bail conditions are onerous but it remains to be seen if they appease opposition to the decision from groups campaigning against the violence against women that is endemic in South Africa.


"We are saddened because women are being killed in this country," said Jacqui Mofokeng, a spokeswoman for the ruling African National Congress' Women's League, whose members stood outside the court this week with banners saying "Rot in jail".


TOO FAMOUS TO RUN


However, Nair said he made his decision in the "interests of justice" and argued that the prosecution, who suffered a setback when the lead investigator withered under cross-examination by Roux, failed to show Pistorius was either a flight risk or a threat to the public.


Roux stressed the Olympic and Paralympics runner's global fame made it impossible for him to evade justice by skipping bail and leaving the country.


"He can never go anywhere unnoticed," Roux told the court.


Pistorius, whose lower legs were amputated in infancy forcing him to race on carbon fiber "blades", faces life in prison if convicted of premeditated murder.


Prosecutors had portrayed him as a cold-blooded killer and said they were confident that their case, which will have to rely heavily on forensics and witnesses who said they heard shouting before the shots, would stand up to scrutiny at trial.


"We are going to make sure that we get enough evidence to get through this case during trial time," a spokesman for the National Prosecuting Authority told reporters.


In court, lead prosecutor Gerrie Nel was scornful of Pistorius's inability to contain his emotions. "I shoot and I think my career is over and I cry. I come to court and I cry because I feel sorry for myself," Nel said.


"DEEPLY IN LOVE"


In his affidavit, Pistorius said he was "deeply in love" with Steenkamp, leading Roux to stress his client had no motive for the killing.


Pistorius contends he reached for a 9-mm pistol under his bed because he felt particularly vulnerable without his prosthetic limbs.


According to police, witnesses heard shouting, gunshots and screams from the athlete's home, which sits in the heart of a gated community surrounded by 3-m- (yard-) high stone walls topped with an electric fence.


In a magazine interview a week before her death, published on Friday, Steenkamp spoke about her three-month relationship with the runner, who won global fame last year when he reached the semi-final of the 400 meters in the London Olympics despite having no lower legs.


"I absolutely adore Oscar. I respect and admire him so much," she told celebrity gossip magazine Heat. "I don't want anything to come in the way of his career."


Police pulled their lead detective off the case on Thursday after it was revealed he himself faces attempted murder charges for shooting at a minibus. He has been replaced by South Africa's top detective.


Pistorius's arrest stunned the millions around the world who saw him as an inspiring example of triumph over adversity.


But the impact was greatest in South Africa, where he was seen as a rare hero for both blacks and whites, transcending the racial divides that persist 19 years after the end of apartheid.


(Writing by Ed Cropley; Editing by Michael Roddy)



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HTC settles FTC charges that it fails to secure software






WASHINGTON (Reuters) – HTC America, a maker of cell phones that use Android and Windows software, has agreed to settle Federal Trade Commission charges that it failed to take adequate steps to eliminate security flaws that put smartphone and tablet users’ data at risk, the agency said on Friday.


HTC America, a subsidiary of HTC Corp in Taiwan, made millions of phones with programming flaws that allowed third-party applications to evade Android’s permission-based security model, the FTC said in a release.






The settlement requires HTC to establish a comprehensive security program and patch the software holes, the FTC said.


(Reporting By Diane Bartz)


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Spring Breakers Threesome Scene

Vanessa Hudgens' new role in Spring Breakers is a far (very far) cry from her squeaky clean breakout role in High School Musical. In the latest, NSFW red-band trailer for the film, we get a sneak peek into the threesome that occurs between Hudgens, Pretty Little Liars star Ashley Benson and James Franco's characters -- and it rivals that infamous pool scene in the 1998 flick Wild Things.

A little over a minute into the trailer we see the stars triple kiss in a hotel pool as Franco's Kevin Federline-like character Alien calls the ladies his "soul mates."


RELATED PICS: Bikini-Clad Spring Breakers posters

But don't expect Hudgens, 24, in a role like this again. She told Glow magazine of the threesome, "It was very nerve-racking for me. I told my agent that I never want to do it ever again.”

So, how does this pool rendezvous come about? Spring Breakers, in theaters March 22, follows four college girls (Hudgens, Benson, Selena Gomez and Rachel Korine) who land in jail after robbing a restaurant in order to fund their spring break vacation. Bailed out by a drug and arms dealer (Franco), the girls end up doing his dirty work in exchange for their freedom ...from jail at least.

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FDA approves new targeted breast cancer drug


WASHINGTON (AP) — The Food and Drug Administration has approved a first-of-a-kind breast cancer medication that targets tumor cells while sparing healthy ones.


The drug Kadcyla from Roche combines the established drug Herceptin with a powerful chemotherapy drug and a third chemical linking the medicines together. The chemical keeps the cocktail intact until it binds to a cancer cell, delivering a potent dose of anti-tumor poison.


Cancer researchers say the drug is an important step forward because it delivers more medication while reducing the unpleasant side effects of chemotherapy.


"This antibody goes seeking out the tumor cells, gets internalized and then explodes them from within. So it's very kind and gentle on the patients — there's no hair loss, no nausea, no vomiting," said Dr. Melody Cobleigh of Rush University Medical Center. "It's a revolutionary way of treating cancer."


Cobleigh helped conduct the key studies of the drug at the Chicago facility.


The FDA approved the new treatment for about 20 percent of breast cancer patients with a form of the disease that is typically more aggressive and less responsive to hormone therapy. These patients have tumors that overproduce a protein known as HER-2. Breast cancer is the second most deadly form of cancer in U.S. women, and is expected to kill more than 39,000 Americans this year, according to the National Cancer Institute.


The approval will help Roche's Genentech unit build on the blockbuster success of Herceptin, which has long dominated the breast cancer marketplace. The drug had sales of roughly $6 billion last year.


Genentech said Friday that Kadcyla will cost $9,800 per month, compared to $4,500 per month for regular Herceptin. The company estimates a full course of Kadcyla, about nine months of medicine, will cost $94,000.


FDA scientists said they approved the drug based on company studies showing Kadcyla delayed the progression of breast cancer by several months. Researchers reported last year that patients treated with the drug lived 9.6 months before death or the spread of their disease, compared with a little more than six months for patients treated with two other standard drugs, Tykerb and Xeloda.


Overall, patients taking Kadcyla lived about 2.6 years, compared with 2 years for patients taking the other drugs.


FDA specifically approved the drug for patients with advanced breast cancer who have already been treated with Herceptin and taxane, a widely used chemotherapy drug.


Kadcyla will carry a boxed warning, the most severe type, alerting doctors and patients that the drug can cause liver toxicity, heart problems and potentially death. The drug can also cause severe birth defects and should not be used by pregnant women.


Kadcyla was co-developed by South San Francisco-based Genentech and ImmunoGen Inc., of Waltham, Mass. ImmunoGen developed the technology that binds the drug ingredients together and is scheduled to receive a $10.5 million payment from Genentech on the FDA decision. The company will also receive additional royalties on the drug's sales.


Shares of ImmunoGen Inc. slipped 8 cents to $14.22 in afternoon trading. They have traded in a 52-wek range of $10.85 to $18.10.


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Wall Street drops again, data raises growth concerns

NEW YORK (Reuters) - U.S. stocks fell on Thursday and were on track for their biggest two-day decline since November as weak data suggested expectations for economic growth were overly optimistic.


The two-day decline marked the U.S. stock market's first sustained pullback this year. The Standard & Poor's 500 is up 5.2 percent so far this year. The benchmark index has climbed for seven straight weeks, putting it near five-year highs.


In the latest economic data, initial claims for unemployment benefits rose more than expected last week while the Federal Reserve Bank of Philadelphia said its index of business conditions in the U.S. mid-Atlantic region fell in February to minus 12.5, the lowest in eight months.


"The Philly Fed report was troublingly weak, and adds to concerns about whether growth will remain up," said Brad Sorensen, director of market and sector analysis at Charles Schwab in Denver. "The only growth we're seeing is sluggish."


On Wednesday, the S&P 500 and the Nasdaq posted their worst daily declines of the year after the minutes from the Federal Reserve's most recent meeting sparked concerns that the central bank may rein in its economic stimulus measures.


"The upside momentum in markets appears to be coming to an end as we consolidate recent gains," said Adam Sarhan, chief executive at Sarhan Capital in New York. "If the S&P breaks under its 50-day moving average, something more serious could be in store."


The S&P 500 would need to fall 1.9 percent to reach that level of 1,473.58.


Other reports showed consumer prices were flat in January while existing-home sales edged higher and left the inventory of homes at the lowest level in 13 years.


Wal-Mart Stores Inc shares gained 2.5 percent to $70.94 and helped curb the Dow's decline after the world's largest retailer reported earnings that beat expectations, though early February sales were sluggish.


The Dow Jones industrial average <.dji> was down 70.03 points, or 0.50 percent, at 13,857.51. The Standard & Poor's 500 Index <.spx> was down 11.23 points, or 0.74 percent, at 1,500.72. The Nasdaq Composite Index <.ixic> was down 36.50 points, or 1.15 percent, at 3,127.92.


The benchmark S&P 500 index has dropped 1.9 percent over the past two sessions, the biggest two-day decline since November.


Wall Street will soon face another test with the upcoming debate in Washington over the automatic across-the-board spending cuts put in place as part of a larger congressional budget fight. Those cuts, set to kick in on March 1 unless lawmakers agree on an alternative, are expected to depress economic growth.


Semiconductor stocks ranked among the weakest of the day, pressuring the Nasdaq as the Philadelphia Semiconductor index <.sox> fell 1.8 percent. Intel Corp fell 2.2 percent to $20.27 while Advanced Micro Devices lost 4.8 percent to $2.57 as the S&P's biggest percentage decliner.


The semiconductor sector has performed well so far in 2013, rising 8.4 percent.


In company news, shares of supermarket operator Safeway Inc jumped 13.4 percent to $22.83 and ranked as the S&P 500's top percentage gainer after the company reported earnings that beat expectations.


In contrast, shares of VeriFone Systems Inc tumbled nearly 40 percent to $19.28 after the credit-card swipe machine maker forecast first- and second-quarter profits well below expectations.


Of the 427 companies in the S&P 500 that have reported results so far, 69.3 percent have exceeded analysts' expectations, compared with a 62 percent average since 1994 and 65 percent over the past four quarters, according to Thomson Reuters data through Thursday morning.


Fourth-quarter earnings for S&P 500 companies are estimated to have risen 5.9 percent, according to the data, above a 1.9 percent forecast at the start of the earnings season.


Berry Petroleum Co jumped 17.3 percent to $45.25 after oil and gas producer Linn Energy LLC said it would buy the company in an all-stock deal valued at $4.3 billion, including debt. Linn Energy shares advanced 1.9 percent to $37.33.


(Editing by Kenneth Barry and Jan Paschal)



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French hostages probably separated, Hollande says


PARIS/MAIDUGURI, Nigeria (Reuters) - Seven French hostages abducted by suspected Nigerian Islamist militants have probably been separated into two groups and efforts are continuing to locate them, French President Francois Hollande said on Thursday.


French, Nigerian and Cameroonian officials earlier denied French media reports that the seven family members, who were seized in Cameroon on Tuesday and taken over the border, had been freed.


"It's best to work discreetly for now to identify the exact place where our citizens are being held - most likely in two groups - and work out how we can free them under the best conditions," Hollande told reporters.


Paris was "fully cooperating" with Nigeria and Cameroon, he added, noting that French troops were nearby as their base was in the Chadian capital N'Djamena, 150 km (93 miles) away.


The Nigerian military located the hostages and kidnappers between Dikwa and Ngala in the far northeast, a Nigerian military source in Borno said earlier on Thursday, asking not to be identified.


Dikwa is less than 80 km (50 miles) from the border with Cameroon where the three adults and four children were taken hostage on Tuesday.


A senior Cameroonian military official declined to comment, saying the matter was too sensitive.


French gendarmes backed by special forces arrived in northern Cameroon on Wednesday to help locate the family, a local governor and French defense ministry official said.


Citing a Cameroon army officer, French media reported earlier on Thursday that the hostages had been found alive in a house in northern Nigeria. That was denied by the France, Nigeria and Cameroon.


DIFFICULT SITUATION


The abduction was the first case of foreigners being seized in the mostly Muslim north of Cameroon, a former French colony, and highlighted the threat to French interests in West Africa since Paris deployed thousands of troops to Mali to oust al Qaeda-linked Islamists who controlled the country's north.


But the region - like others in West and North Africa with porous borders - is considered within the operational sphere of Boko Haram and fellow Nigerian Islamist militants Ansaru.


On Sunday, seven foreigners were snatched from the compound of Lebanese construction company Setraco in northern Nigeria's Bauchi state, and Ansaru took responsibility.


Northern Nigeria increasingly is afflicted by attacks and kidnappings by Islamist militants. Ansaru, which rose to prominence only in recent months, has claimed the abduction in December of a French national who is still missing.


Three foreigners were killed in two failed rescue attempts last year after being kidnapped in northern Nigeria and Ansaru, blamed for those kidnaps, warned this could happen again.


"Staging a successful rescue is always difficult, but even more so if the kidnappers are waiting for it," said Peter Sharwood-Smith, Nigeria country manager of security firm Drum Cussac.


"After the death of three European hostages in rescue-intervention attempts last year, Nigeria and France will be hoping for a peaceful resolution. The problem could be the kidnappers lack of enthusiasm for negotiation or deals. The fact that four of the hostages are children adds further difficulty to the decision for France and Nigeria."


The kidnapping in Cameroon brought to 15 the number of French citizens being held in West Africa.


(Additional reporting by Elizabeth Pineau in Paris, Tansa Musa in Yaounde, Joe Brock in Abuja and Bate Felix and John Irish in Dakar; Writing by Bate Felix and John Irish; Editing by Michael Roddy)



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Diane Lane and Josh Brolin to Divorce

Diane Lane, 48, and Josh Brolin, 45, are divorcing after eight years of marriage.

"Diane Lane and Josh Brolin have decided to end their marriage," reps for the couple confirm to ET.

Pics: Top 10 Biggest Divorce Payouts

According to Us Weekly, the divorce "was a mutual decision. It is very amicable. It's not ugly, it's just over."

The two reportedly already split a couple of months ago, and have no children together.

Video: Diane Lane After Husband Josh Brolin's Arrest

This will be the second divorce for both stars.

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Flu shot did poor job against worst bug in seniors


ATLANTA (AP) — For those 65 and older, this season's flu shot is only 9 percent effective against the most common and dangerous flu bug, according to a startling new government report.


Flu vaccine tends to protect younger people better than older ones and never works as well as other kinds of vaccines. But experts say the preliminary results for seniors are disappointing and highlight the need for a better vaccine.


For all age groups, the vaccine's effectiveness is moderate at 56 percent, which is nearly as well as other flu seasons, the Centers for Disease Control and Prevention said Thursday.


For those 65 and older, it is 27 percent effective against the three strains in the vaccine, the lowest in about a decade but not far below from what's expected. But the vaccine did a particularly poor job of protecting older people against the harshest flu strain, which is causing most of the illnesses this year. CDC officials say it's not clear why.


Vaccinations are now recommended for anyone over 6 months, and health officials stress that some vaccine protection is better than none at all. While it's likely that older people who were vaccinated are still getting sick, many of them may be getting less severe symptoms.


"Year in and year out, the vaccine is the best protection we have," said CDC flu expert Dr. Joseph Bresee.


To be sure, the preliminary data for seniors is less than definitive. It is based on fewer than 300 people scattered among five states.


But it will no doubt surprise many people that the effectiveness is that low, said Michael Osterholm, a University of Minnesota infectious disease expert who has tried to draw attention to the need for a more effective flu vaccine.


Among infectious diseases, flu is considered one of the nation's leading killers. On average, about 24,000 Americans die each flu season, according to the CDC.


This flu season started in early December, a month earlier than usual, and peaked by the end of year. Older people are most vulnerable to flu and its complications, and the nation has seen some of the highest hospitalization rates for people 65 and older in a decade.


Flu viruses tend to mutate more quickly than others, and it's not unusual for multiple strains to be spreading at the same time. A new vaccine is formulated each year targeting the three strains expected to be the major threats. But that involves guesswork.


Because of these challenges, scientists tend to set a lower bar for flu vaccine. While childhood vaccines against diseases like measles are expected to be 90 or 95 percent effective, a flu vaccine that's 60 to 70 percent effective in the U.S. is considered pretty good.


By that standard, this year's vaccine is OK. The 56 percent effectiveness figure means people have a 56 percent lower chance of winding up at the doctor for treatment of flu symptoms.


For seniors, a flu vaccine is considered pretty good if it's in the 30 to 40 percent range, said Dr. Arnold Monto, a University of Michigan flu expert.


Older people have weaker immune systems that don't respond as well to flu shots. That's why a high-dose version was recently made available for those 65 and older. The new study was too small to show whether that made a difference this year.


The CDC estimates are based on about 2,700 people who got sick in December and January. The researchers traced back to see who had gotten flu shots and who hadn't. An earlier study put the vaccine's overall effectiveness slightly higher, at 62 percent.


The CDC's Bresee said there's a danger in providing preliminary results because it may result in people doubting — or skipping — flu shots. But the data was released to warn older people who got shots that they may still get sick and shouldn't ignore any serious flu-like symptoms, he said.


The new data highlights an evolution in how experts are evaluating flu vaccine effectiveness. For years, it was believed that if the viruses in the vaccine matched the ones spreading around the country, then the vaccine would be effective. This year's shot was a good match to the bugs going around this winter, including the harsher H3N2 that tends to make people sicker.


But the season proved to be a moderately severe one, with many illnesses occurring in people who'd been vaccinated.


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Online:


CDC report: http://www.cdc.gov/mmwr


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Wall Street slips after rally, energy shares fall

NEW YORK (Reuters) - U.S. stocks fell on Wednesday, pressured by a drop in energy shares as investors found few reasons to buy equities following a rally that has held major indexes near five-year highs for around three weeks.


Equities have been strong recently, to the point that the day's modest decline was the largest for the S&P 500 since February 4. The index has jumped about 7 percent so far this year and is on track for its eighth straight week of gains.


However, many of those weekly gains have been slight, with equities trading within a narrow range for the past few weeks, suggesting valuations may be stretched at current levels.


"The market seems very tired and listless, and investors are prone to take profits now as they wait for the music to stop," said Matt McCormick, money manager at Bahl & Gaynor in Cincinnati.


Energy companies were among the weakest, hurt by disappointing results and a 2.2 percent drop in crude oil prices. The Energy Select Sector SPDR fell 0.9 percent, though it remains up 10.1 percent for the year.


Newfield Exploration tumbled 7.7 percent to $25.20 while Devon Energy Corp dropped 4 percent to $58.17. Both companies posted fourth-quarter losses, with Devon hurt as it wrote down the value of its assets by $896 million because of weak natural gas prices.


Housing shares also declined, pressured by weaker-than-expected results at Toll Brothers Inc and a drop in groundbreaking to build new U.S. homes, also known as housing starts, in January.


Toll Brothers' stock fell 5.4 percent to $34.91, but is up about 8 percent so far this year, building on a jump of nearly 60 percent in 2012. The Dow Jones U.S. Home Construction index <.djushb> lost 4 percent.


"Valuations appear a bit high at these levels, and if I was in a name that had seen a huge run, I'd want to take some chips off the table," said McCormick, who helps oversee about $8.2 billion in assets.


The Dow Jones industrial average <.dji> was down 12.13 points, or 0.09 percent, at 14,023.54. The Standard & Poor's 500 Index <.spx> was down 6.20 points, or 0.40 percent, at 1,524.74. The Nasdaq Composite Index <.ixic> was down 19.10 points, or 0.59 percent, at 3,194.49.


The Dow's losses were limited by Boeing Co , up 1.4 percent at $75.67 after a source told Reuters that the company had found a way to fix battery problems on its grounded 787 Dreamliner jets. Concerns over that line have weighed on Boeing recently, contributing to a 2 percent drop in the stock's price in January.


Investors are also waiting for the minutes from the Federal Open Market Committee's January meeting due at 2 p.m. (1900 GMT) for clues to the interest-rate outlook, as well as for any indication as to how long the Fed will keep buying bonds each month to bolster the U.S. economy and employment.


In other data released on Wednesday, permits for future home building rose in January to a 4 1/2-year high while a separate report showed wholesale prices rose last month for the first time in four months. The U.S. Producer Price Index rose in January for the first time in four months.


Shares of OfficeMax Inc fell 4.2 percent to $12.45 while Office Depot slid 14.3 percent to $4.30 as the companies announced a $1.2 billion merger agreement. The shares had surged in Tuesday's session after a source said a deal would be announced. Rival Staples Inc fell 7.6 percent to $13.53 and ranked as one of the S&P 500's biggest decliners.


SodaStream dropped 3.7 percent to $50.50 after the seller of home carbonated drink maker machines posted fourth-quarter earnings and provided a 2013 outlook.


According to Thomson Reuters data through Tuesday morning, of the 405 companies in the S&P 500 that have reported results so far, 71 percent have exceeded analysts' expectations, compared with a 62 percent average since 1994 and 65 percent over the past four quarters.


Fourth-quarter earnings for S&P 500 companies are estimated to have risen 5.7 percent, according to the data, exceeding a forecast for a 1.9 percent gain at the start of the earnings season.


(Editing by Kenneth Barry and Jan Paschal)



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Bulgarian government resigns amid growing protests


SOFIA (Reuters) - Bulgaria's government resigned on Wednesday after mass protests against high power prices and falling living standards, joining a long list of European administrations felled by austerity during four years of debt crisis.


Prime Minister Boiko Borisov, an ex-bodyguard who took power in 2009 on pledges to root out graft and raise incomes in the European Union's poorest member, faces a tough task of propping up eroding support ahead of an expected early election.


Wage and pension freezes and tax hikes have bitten deep in a country where earnings are less than half the EU average and tens of thousands of Bulgarians have rallied in protests that have turned violent, chanting "Mafia" and "Resign".


Moves by Borisov on Tuesday to blame foreign utility companies for the rise in the cost of heating homes was to no avail and an eleventh day of marches saw 15 people hospitalized and 25 arrested in clashes with police.


"My decision to resign will not be changed under any circumstances. I do not build roads so that blood is shed on them," said Borisov, who began his career guarding the Black Sea state's communist dictator Todor Zhivkov.


A karate black belt, Borisov has cultivated a Putin-like "can-do" image since he entered politics as Sofia mayor in 2005 and would connect with voters by showing up on the capital's rutted streets to oversee the repair of pot-holes.


But critics say he has often skirted due process, sometimes to the benefit of those close to him, and his swift policy U-turns have wounded the public's trust.


The spark for the protests was high electricity bills, after the government raised prices by 13 percent last July. But it quickly spilled over into wider frustration with Borisov and political elites with perceived links to shadowy businesses.


"He made my day," said student Borislav Hadzhiev in central Sofia, commenting on Borisov's resignation. "The truth is that we're living in an extremely poor country."


POLLS, PRICES


The prime minister's final desperate moves on Tuesday included cutting power prices and risking a diplomatic row with the Czech Republic by punishing companies including CEZ, moves which conflicted with EU norms on protection of investors and due process.


CEZ officials were hopeful on Wednesday that it would be able to avoid losing its distribution license after all and officials from the Bulgarian regulator said the company would not be punished if it dealt with breaches of procedure.


But shares in what is central Europe's largest publicly-listed company fell another 1 percent on Wednesday.


If pushed through, the fines for CEZ and two other foreign-owned firms will not encourage other investors in Bulgaria, who already have to navigate complicated bureaucracy and widespread corruption and organized crime to take advantage of Bulgaria's 10-percent flat tax rate.


Financial markets reacted negatively to the turbulence on Wednesday. The cost of insuring Bulgaria's debt rose to a three-month high and debt yields rose some 15 basis points, though the country's low deficit of 0.5 percent of gross domestic product means there is little risk to the lev currency's peg against the euro.


Borisov's interior minister indicated that elections originally planned for July would probably be pulled forward by saying that his rightist GERB party would not take part in talks to form a new government.


MILLIONS GONE


GERB's woes have echoes in another ex-communist EU member, Slovenia, where demonstrators have taken to the streets and added pressure to a crumbling conservative government.


A small crowd gathered in support of Borisov outside Sofia's parliament, which is expected to approve his resignation on Thursday, while bigger demonstrations against the premier were expected in the evening.


Unemployment in the country of 7.3 million is far from the highs hit in the decade after the end of communism but remains at 11.9 percent. Average salaries are stuck at around 800 levs ($550) a month and millions have emigrated, leaving swathes of the country depopulated and little hope for those who remain.


GERB's popularity has held up well and it still led in the latest polls before protests grew in size last weekend, but analysts say the opposition Socialists should draw strength from the demonstrations.


The leftists, successors to Bulgaria's communist party, have proposed tax cuts and wage hikes and are likely to raise questions about public finances if elected.


(Additional reporting by Angel Krasimirov; editing by Patrick Graham)



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