EU wants financial services in US deal

THE European Union wants to include financial services in negotiations on the world's largest free-trade accord with the US despite American opposition.

EU Financial Markets Commissioner Michel Barnier said that on a visit earlier this week to Washington, he had called for the inclusion of "all financial services, not only access to financial markets but also regulatory aspects" in the talks.

Barnier met US Treasury Secretary Jack Lew who was quoted by Le Figaro daily on Tuesday as saying that the issue should be left out of the negotiations, which officially began earlier this month.

However, Barnier insisted the issue was still alive. "The decision has not been taken yet."

He conceded that after meetings with senior US officials, it was clear that Washington preferred to exclude the issue, as it has made clear several times.

"We don"t want a trade agreement getting in the way of implementation of financial reforms," US Under Secretary of the Treasury Lael Brainard said recently.

Brainard said a G20 summit in 2009 had set an agenda for reforms to address the causes of the global financial crash and it was important that they be implemented.

"Our focus has to be on making sure that all of our partners actually implement and not start a new set of discussions about a new set of rules with a new set of deadlines," Brainard said.

Barnier said Washington's concerns were unfounded.

The US "worries that we want to reduce the level of regulation but that is not what I am about, on the contrary," the Commissioner said.

The targeted US-EU agreement is aimed at removing bureaucratic, regulatory and protectionist barriers to create what would be the world's largest free-trade area.

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Britain to review cyber-security agreement

THE British government is looking again at how it safeguards its telecommunications networks from feared security risks posed by Chinese giant Huawei.

Britain, the US and Australia have all raised concerns that Huawei's alleged ties to the Chinese state could see telecoms equipment supplied by the company used for spying and cyber-attacks.

Parliament's intelligence and security committee warned last month that the British government must take more action against risks posed by a decade-old deal between Huawei and BT, the company which manages much of Britain's networks.

Huawei agreed in 2010 to invest in a Cyber Security Evaluation Centre, known as the Cell, to test updates to hardware and software for vulnerabilities before they are deployed.

But the committee expressed concern that this Cell was funded by Huawei and staffed by company employees.

The government has now agreed to the committee's request to review the effectiveness of the Cell as a matter of urgency.

Huawei denies it has any direct links to the Chinese state, but the US Congress last year called for its exclusion from US government contracts, while Australia has barred it from involvement in the country's new broadband network.

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Nokia losses narrow in Q2, revenue plunges

NOKIA has reported a reduced loss of 227 million euros ($A325 million) in the second quarter, but sales again fell sharply.

The loss was 84 per cent less than in the same period last year, but sales fell by 24 per cent to 5.695 billion euros.

The decline in sales of traditional mobile phones continued, dropping 39 per cent from the level a year earlier, while smartphone sales were down 24 per cent over the same period.

"Sales of low end phones - a cash cow - collapsed," said Eric Beaudet, an analyst at investment bank Natixis.

"It's worrying because this division needs to be profitable in order for them to manage the transition (to high end phones)," he said.

Sales of Lumia, the smartphone on which the troubled company has bet its future, rose by 32 per cent from the previous quarter to 7.4 million units.

But analysts had expected more.

"Lumia sales were slightly lower than expected," said Hannu Rauhala, an analyst at Finnish bank Pohjola.

Mikael Rautanen of equity research provider Inderes was disappointed by the Lumia's average selling price, which at 157 euros per unit was significantly lower than his own expectation of 175 euros.

Nokia chief executive Stephen Elop said the phone was "showing increasing momentum".

"During the third quarter, we expect that our new Lumia products will drive a significant part of our smart devices revenue," he said in a statement.

Nokia used to be the global leader in making mobile phones but has been overtaken by rivals and is struggling to establish winning business models and mobile devices.

Shares in the company were 4.45 lower in late afternoon trading on the Helsinki bourse, where the main index was down 0.66 per cent.

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Indian children poisoned by lunch buried

A CHILDREN'S playing field outside an Indian primary school has been turned into a mass graveyard as victims of a poisoned lunch scandal, which killed 23 youngsters, were laid to rest.

As grieving parents spoke of how they relied on the school to give their children their main daily meal, officials in impoverished Bihar state tried to stem a wave of panic among other pupils who were dumping their free lunches.

Police meanwhile stepped up their investigation, exploring the possibility that the food given to the youngsters was poisoned deliberately, as the school's headmistress remained on the run.

The burials were held on an area of open ground just outside the school where pupils play during their breaks.

"The school killed our children and so we decided to bury all of them here," said Shanti Devi, whose daughter was among those being laid to rest outside the school in Gandaman village.

"The government is responsible for converting a playground into a burial ground," she told AFP.

The sense of anger was echoed by many other parents as they tried to come to terms with the deaths of loved ones.

"My children always liked eating at the school and I was happy that at least they were getting one square meal every day, but I never dreamt that it would end up killing them," said Sanjudevi Mahato as she wept for the loss of three of her four children.

The 23 children, aged four to 12, died after eating lentils, potatoes and rice cooked at the school on Tuesday. Initial tests have shown the meal may have been contaminated with insecticide.

Some 30 children are still being treated for food poisoning, although doctors say their condition is not life-threatening.

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Deactivate Dreamliner beacons: Fire probe

BRITISH authorities probing a fire on board a parked Boeing Dreamliner at London's Heathrow airport has recommended that Honeywell distress beacons on all 787 planes be deactivated pending further checks.

The Air Accidents Investigation Branch says it is not clear, however, whether the fire originated in the transmitter batteries or was caused by an "external mechanism such as an electrical short".

Nobody was hurt in the fire last Friday on an Ethiopian Airlines plane, which was empty at the time.

But the incident is a blow to US planemaker Boeing, which withdrew from service its entire fleet of Dreamliners earlier this year due to separate concerns that lithium ion batteries on board could cause fires.

A total of 68 Dreamliners have so far been delivered, and the AAIB recommends to US aviation authorities that emergency locator transmitter systems in each of them be made inert.

"It is recommended that the Federal Aviation Administration initiate action for making inert the Honeywell International RESCU406AFN fixed emergency locator transmitter system in Boeing 787 aircraft until appropriate airworthiness actions can be completed," the report said.

It also recommended that the FAA and other regulatory authorities "conduct a safety review of installations of lithium-powered emergency locator transmitter systems in other aircraft types and, where appropriate, initiate airworthiness action".

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European stocks close higher

EUROPEAN stock markets closed higher on Wednesday, with London's FTSE 100 index of leading shares up 0.24 per cent to end at 6,571.93 points.

Frankfurt's DAX 30 gained 0.65 per cent to 8,254.72 points and in Paris the CAC 40 rose 0.55 per cent to 3,872.02 points.

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Mandela makes dramatic progress: daughter

NELSON Mandela's daughter says the South African leader has made a "dramatic" progress on the eve of his 95th birthday.

Zindzi Mandela said in an interview with Sky TV that her father may be going home soon.

Mandela turns 95 on Thursday.

She said her father is watching television with headphones in his bed in a Pretoria hospital and that he smiles at family members and raises his hand.

The latest description by Zindzi - who is one of Mandela's daughters by his second wife, Winnie Madikizela-Mandela - is a significant improvement from court documents from the family that said he was on life support and near death.

Mandela has been in a Pretoria hospital since June 8 and officials say his condition is critical but stable.

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