With Eye on China, Japan Weighs Raising Military Spending

TOKYO — Japan’s new conservative government announced a review of national military strategy on Monday that analysts said was aimed at offsetting China’s growing military power and that may increase defense spending for the first time in a decade.

Prime Minister Shinzo Abe ordered his government to replace the nation’s five-year military spending plan and to review defense guidelines adopted in 2010 by the left-leaning Democratic Party, which his party defeated in elections last month. Those guidelines called for gradual reductions in defense spending, and also in the size of Japan’s military, particularly in the number of tanks and infantry members.

Mr. Abe had promised during the election campaign to strengthen the military to defend Japan’s control of islands in the East China Sea that are also claimed by China.

Mr. Abe did not release details of his intent on the military revisions, but news reports said the replacement plan would probably reverse the Democrats’ cuts, starting with a 120 billion yen, or $1.4 billion, increase in the military budget in the 2013 fiscal year, which begins in April. That would be the first increase in Japanese military spending since 2002, as the nation has tightened its belt during a long economic decline.

The reports said the new spending plan, proposed by members of Mr. Abe’s governing Liberal Democratic Party, would seek to increase the number of ground troops, strengthen air and sea defenses around the disputed islands, and buy new early-warning aircraft to guard against Chinese intrusions near the islands, as well as missile launchings by North Korea.

The reports said the plan could also include financing for a feasibility study on acquiring Osprey aircraft, American vertical-takeoff transport planes whose introduction last year to a Marine airfield on Okinawa set off protests. The Osprey can fly farther and faster than Japan’s current helicopters, allowing its troops to more easily reach the disputed islands, known as the Senkaku in Japan and Diaoyu in China.

Despite a decade of defense cuts, analysts said Japan last year had the world’s sixth-largest military budget, spending 4.65 trillion yen, or $5.3 billion, on defense. Japan has one of the largest and most advanced militaries in Asia, though it has kept a low profile to avoid stirring bitter memories of its early-20th-century empire building.

Mr. Abe’s efforts to raise Japan’s military profile in the region are intended not only to bolster his nation’s declining influence, but also to help an economically ailing ally, the United States, counter China’s rising military prowess.

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Kuwait sentences second man to jail for insulting emir: lawyer

DUBAI (Reuters) – A Kuwaiti court sentenced a man to two years in prison on Monday for insulting the country’s ruler on Twitter, his lawyer said, the second to be jailed for the offence in as many days.

The U.S.-allied Gulf Arab state has clamped down in recent months on political activists who have been using social media websites to criticize the government and the ruling family.

Kuwait has seen a series of protests, including one on Sunday night, organized by the opposition since the ruling emir, Sheikh Sabah al-Ahmad al-Sabah, used emergency powers in October to change the voting system.

The court sentenced Ayyad al-Harbi, who has more than 13,000 followers on Twitter, to the prison term two months after his arrest and release on bail.

Harbi used his Twitter account to criticize the Kuwait government and the emir. He tweeted on Sunday: “Tomorrow morning is my trial’s verdict on charges of slander against the emir, spreading of false news.”

His lawyer, Mohammed al-Humidi, said Harbi would appeal against the verdict. “We’ve been taken by surprise because Kuwait has always been known internationally and in the Arab world as a democracy-loving country,” Humidi told Reuters by telephone. “People are used to democracy, but suddenly we see the constitution being undermined.”

On Sunday, Rashid Saleh al-Anzi was given two years in prison over a tweet that “stabbed the rights and powers of the emir”, according to the online newspaper Alaan. Anzi, who has 5,700 Twitter followers, was expected to appeal.

Kuwait, a U.S. ally and major oil producer, has been taking a firmer line on politically sensitive comments aired on the Internet.

In June 2012, a man was sentenced to 10 years in prison after he was convicted of endangering state security by insulting the Prophet Mohammad and the Sunni Muslim rulers of Saudi Arabia and Bahrain on social media.

Two months later, authorities detained Sheikh Meshaal al-Malik Al-Sabah, a member of the ruling family, over remarks on Twitter in which he accused authorities of corruption and called for political reform, a rights activist said.

Public demonstrations about local issues are common in a state that allows the most dissent in the Gulf, and Kuwait has avoided Arab Spring-style mass unrest that has ousted four veteran Arab dictators in the past two years.

But tensions have risen between Kuwait’s hand-picked government, in which ruling family members hold the top posts, and the elected parliament and opposition groups.

(Reporting by Mahmoud Habboush; Editing by Mark Heinrich)

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Kate Falls Under Vogue's Microscope

By Stephen M. Silverman

01/07/2013 at 12:45 PM EST

Duchess of Cambridge

Fame; Landov (2); WireImage

What's a little more scrutiny?

Arguably the most-watched fashion icon – certainly the most closely followed expectant mother – in the world, the Duchess of Cambridge has been placed under the microscope of U.K. Vogue for its February issue.

Before determining the key to her "feminine and traditional" style (at least, before her baby bump), the publication first categorizes Kate's look as "International Sleekness."

Just how close is the mag's inspection? Close enough to note exactly how often and the manner in which Kate, who turns 31 Jan. 9, holds her clutch bags: hands together, 48% of the time; one-handed, 31%.

As for when the Kate phenomenon actually started, the article's author, Lisa Armstrong, fashion editor of the Daily Telegraph, turns to Reiss's brand director, Andy Rogers. He pinpoints the moment to "when Kate wore that nude-pink Shola dress to meet the Obamas at Buckingham Palace in May 2011."

Comparing the two women's styles, Rogers says, "Michelle wore a beautiful blue silk dress and fuchsia jacket, very bold, and probably bang-on trend – but whoa, it clashed with the [gaudy] decor." As a result, "Kate," he insists, "dominates the picture."

She also helped put the fashion brand on the map. "In the past 18 months, thanks to the Kate Effect, Reiss's reputation has grown globally," Armstrong writes. "Before Kate, Reiss had eight stores in America. Now it has 14 more concessions, all in Bloomingdale's."

By Vogue's calculation, Kate also helped boost sales of hosiery at the British supermarket chain Asda by a staggering 500%.

Apparently, too, Kate is strictly hands-on when it comes to her appearance. "She's got someone who organizes appointments with designers," a fashion-industry fixer tells Vogue. "Obviously there are ladies-in-waiting who do the packing. But she had to work out her look herself."

Other vitals: the royal ringlets measure nearly one inch; she works out "all the time, apparently"; necklines are "usually curved"; she wears blue 24% of the time and cream or yellow only 5%; she positions her hats "to the right of the royal 'do at a 50-degree angle, thus emphasizing her cheekbones"; and she prefers three-quarter-length sleeves, the better to reveal her wrist bling and confirm the fact that her arms are not too thin.

So, what's ahead? "Diverting looks," writes Armstrong, "and a fair few raised waists that accommodate, rather than flaunt, the royal belly." But wait, there's more: "And even more luxuriant hair."

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Your medical chart could include exercise minutes

CHICAGO (AP) — Roll up a sleeve for the blood pressure cuff. Stick out a wrist for the pulse-taking. Lift your tongue for the thermometer. Report how many minutes you are active or getting exercise.

Wait, what?

If the last item isn't part of the usual drill at your doctor's office, a movement is afoot to change that. One recent national survey indicated only a third of Americans said their doctors asked about or prescribed physical activity.

Kaiser Permanente, one of the nation's largest nonprofit health insurance plans, made a big push a few years ago to get its southern California doctors to ask patients about exercise. Since then, Kaiser has expanded the program across California and to several other states. Now almost 9 million patients are asked at every visit, and some other medical systems are doing it, too.

Here's how it works: During any routine check of vital signs, a nurse or medical assistant asks how many days a week the patient exercises and for how long. The number of minutes per week is posted along with other vitals at the top the medical chart. So it's among the first things the doctor sees.

"All we ask our physicians to do is to make a comment on it, like, 'Hey, good job,' or 'I noticed today that your blood pressure is too high and you're not doing any exercise. There's a connection there. We really need to start you walking 30 minutes a day,'" said Dr. Robert Sallis, a Kaiser family doctor. He hatched the vital sign idea as part of a larger initiative by doctors groups.

He said Kaiser doctors generally prescribe exercise first, instead of medication, and for many patients who follow through that's often all it takes.

It's a challenge to make progress. A study looking at the first year of Kaiser's effort showed more than a third of patients said they never exercise.

Sallis said some patients may not be aware that research shows physical inactivity is riskier than high blood pressure, obesity and other health risks people know they should avoid. As recently as November a government-led study concluded that people who routinely exercise live longer than others, even if they're overweight.

Zendi Solano, who works for Kaiser as a research assistant in Pasadena, Calif., says she always knew exercise was a good thing. But until about a year ago, when her Kaiser doctor started routinely measuring it, she "really didn't take it seriously."

She was obese, and in a family of diabetics, had elevated blood sugar. She sometimes did push-ups and other strength training but not anything very sustained or strenuous.

Solano, 34, decided to take up running and after a couple of months she was doing three miles. Then she began training for a half marathon — and ran that 13-mile race in May in less than three hours. She formed a running club with co-workers and now runs several miles a week. She also started eating smaller portions and buying more fruits and vegetables.

She is still overweight but has lost 30 pounds and her blood sugar is normal.

Her doctor praised the improvement at her last physical in June and Solano says the routine exercise checks are "a great reminder."

Kaiser began the program about three years ago after 2008 government guidelines recommended at least 2 1/2 hours of moderately vigorous exercise each week. That includes brisk walking, cycling, lawn-mowing — anything that gets you breathing a little harder than normal for at least 10 minutes at a time.

A recently published study of nearly 2 million people in Kaiser's southern California network found that less than a third met physical activity guidelines during the program's first year ending in March 2011. That's worse than results from national studies. But promoters of the vital signs effort think Kaiser's numbers are more realistic because people are more likely to tell their own doctors the truth.

Dr. Elizabeth Joy of Salt Lake City has created a nearly identical program and she expects 300 physicians in her Intermountain Healthcare network to be involved early this year.

"There are some real opportunities there to kind of shift patients' expectations about the value of physical activity on health," Joy said.

NorthShore University HealthSystem in Chicago's northern suburbs plans to start an exercise vital sign program this month, eventually involving about 200 primary care doctors.

Dr. Carrie Jaworski, a NorthShore family and sports medicine specialist, already asks patients about exercise. She said some of her diabetic patients have been able to cut back on their medicines after getting active.

Dr. William Dietz, an obesity expert who retired last year from the Centers for Disease Control and Prevention, said measuring a patient's exercise regardless of method is essential, but that "naming it as a vital sign kind of elevates it."

Figuring out how to get people to be more active is the important next step, he said, and could have a big effect in reducing medical costs.

___

Online:

Exercise: http://1.usa.gov/b6AkMa

___

AP Medical Writer Lindsey Tanner can be reached at http://www.twitter.com/LindseyTanner

Read More..

Wall Street falls after five-year high, earnings in focus

NEW YORK (Reuters) - Stocks fell on Monday as banks agreed to pay billions in a settlement with U.S. regulators and investors speculated that U.S. earnings for the end of 2012 would be only modestly better than in the previous quarter.

Financials declined after a group of home mortgage servicers, including major U.S. banks, agreed to pay a total of $8.5 billion to end a government-ordered, case-by-case review of foreclosures.

The KBW bank index <.bkx>, a gauge of U.S. bank stocks, was down 0.7 percent.

Earnings are expected to be only slightly better than the third-quarter's lackluster results, and analysts' current estimates are down sharply from what they were in October.

"There is little doubt that concerns about the fiscal cliff created spending hesitancy in both consumers and businesses in the fourth quarter, and it is likely that will adversely impact earnings season," said Randy Frederick, managing director of active trading and derivatives at Charles Schwab.

Aluminum company Alcoa Inc will unofficially launch the reporting season by announcing its results after Tuesday's market close.

The Dow Jones industrial average <.dji> was down 77.33 points, or 0.58 percent, at 13,357.88. The Standard & Poor's 500 Index <.spx> was down 8.69 points, or 0.59 percent, at 1,457.78. The Nasdaq Composite Index <.ixic> was down 12.39 points, or 0.40 percent, at 3,089.26.

The day's decline came a session after the S&P 500 finished at a five-year high and investors booked profits on stocks' best weekly gain in more than a year, boosted by a budget deal and economic data. The S&P 500 rose 4.6 percent last week.

Ten mortgage servicers - including Bank of America , Citigroup , JPMorgan , and Wells Fargo - agreed on Monday to pay $8.5 billion to end a case-by-case review of foreclosures required by U.S. regulators.

Bank of America also announced roughly $11.6 billion of settlements with mortgage finance company Fannie Mae and a $1.8 billion sale of collection rights on home loans.

The bank also entered into agreements with Nationstar Mortgage Holdings and Walter Investment Management to sell about $306 billion of residential mortgage servicing rights.

Bank of America shares were down 0.6 percent at $12.04 while Nationstar Mortgage Holdings jumped 11.3 percent to $36.97.

JPMorgan shares were down 0.4 percent at $45.16 and Citigroup shares were down 0.8 percent to $42.07. Wells Fargo shares fell 1.1 percent to $34.55.

Walt Disney Co started an internal cost cutting review several weeks ago that may include layoffs at its studio and other units, three people with knowledge of the effort told Reuters. Disney shares fell 2.4 percent to $50.95.

Video-streaming service Netflix Inc shares gained 5.8 percent to $101.55 after it said it will carry previous seasons of some popular shows produced by Time Warner's Warner Bros Television.

Amazon.com shares hit their highest price ever at $269.22 after Morgan Stanley raised its rating on the stock. Shares were up 3.3 percent at $267.77.

Major U.S. technology companies could miss estimates for fourth-quarter earnings as budget worries likely led some corporate clients to tighten their belts last month.

(Reporting By Angela Moon; Editing by Kenneth Barry)

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IHT Rendezvous: Hints of Taiwan Leading the Way on Same-Sex Marriage in Asia

BEIJING — Will Taiwan become the first place in Asia to legalize same-sex marriage in 2013?

Perhaps, judging from recent developments on the island, where the legislature has held its first hearings on the issue, a move that signifies “a major step towards becoming the first Asian territory to approve marriage equality,” the Shanghai-based Web site Shanghaiist reported, citing Gay Star News.

In another sign that change may be on the way for Taiwan, senior judges recently asked for advice from the country’s constitutional court, the Grand Justices, on whether to legalize same-sex marriages after two men from Taiwan, Nelson Chan and his long-term partner, Kao Chih-wei, filed an administrative lawsuit last year following the rejection by a local registration office in Taipei of their application to marry.

As The Taipei Times reported late last month, the Taipei High Administrative Court had been expected to hand down a decision on Mr. Chen and Mr. Kao’s case, “but instead said it was seeking a constitutional interpretation while holding further debates before making a judgment.”

To Mr. Chen, that was a victory. “I think this is a good decision. I’m happy to see it,” he told The Taipei Times. “I am confident and hopeful of the outcome of the constitutional interpretation, because the world is changing. I hope Taiwan would be the first Asian country to recognize same-sex marriages through a judicial ruling.”

The moves come as more states in the United States have legalized gay marriage – Maine and Maryland becoming the latest, with Maryland’s new law taking effect Jan. 1. Same-sex marriage is now legal in nine states and Washington, D.C.

One of the most socially and politically progressive societies in Asia, “Taiwan is moving closer to allowing same-sex marriage,” predicted Gay Star News, though it pointed out that top judges in Taiwan had said that the proposed changes did not go far enough and that legislation needed to be rewritten and expanded before that could happen – and that it would not be a simple matter.

Current proposals for change affect only the articles of the Civil Code that pertain to marriage in gendered language, and propose “altering the words from ‘male’ and ‘female’ to gender-neutral language,” Gay Star News reported.

It quoted a senior judge, Hsu Li-ying, from the Supreme Court’s Juvenile and Family Department (the court is known in Taiwan’s complex political-legal system as the Judicial Yuan) as saying that the new legislation might “need to be more comprehensive.”

The deputy justice minister, Chen Ming-tang, said it was not just the Civil Code that would have to change, but also laws regarding parentage, taxes and health insurance. That means the Justice Ministry could not do it alone, the report said.

Others believed the road ahead will be long and same-sex marriage difficult to achieve, with the decision to seek advice from the constitutional court a way of avoiding making a decision.

Taiwan has a flourishing civil society and a gay community that has long been pressuring the government to legalize gay marriage. Many believe it is a matter of time. Taiwan hosts Asia’s biggest gay pride parade, with the one held last October drawing more than 50,000 participants from across the region.

Taiwan even has its own gay god – the Taoist Rabbit God, to whom homosexuals can pray for love and good fortune (there is a small temple to the Rabbit God near Taipei). As The Taipei Times reports, the rabbit deity is based on the real-life figure of Hu Tianbao, an official in 18th-century Qing dynasty China.

And last year, two women in Taiwan were “married” in a Buddhist ceremony by a Buddhist master, Shih Chao-hwei, who is also a professor at Hsuan Chuang University. Homosexuality is not prohibited in Buddhism, the professor said: “It’s difficult enough to maintain a relationship,” the professor said in a telephone interview with The Taipei Times. “How could you be so stingy as to begrudge a couple for wanting to get married, regardless of their sexual orientation?”

A poll in September by The United Daily News found that 55 percent of those surveyed approved of gay marriage laws, with only 37 percent against. But the poll also found that 61 percent could not accept their children being gay, with only 37 percent saying they could.

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10 Vintage Photographs of Snowflakes

Photo courtesy of Flickr, Smithsonian Institution.

Click here to view this gallery.

[More from Mashable: 5 YouTube Videos to Help Winterize Your Home]

If for some reason you didn’t believe no two snowflakes were alike, here’s your proof.

In 1885, Wilson A. Bentley successfully photographed over 5,000 snowflakes by attaching a camera to a microscope (and in turn honing the field of Photomicrography). His photographs supported his and others’ beliefs that all snowflakes were unique.

[More from Mashable: 20+ Online Resources for Planning a Winter Getaway]

Bentley become fascinated with snow as a child on a Vermont farm. He later spent time experimenting with ways to view individual snowflakes and their crystalline structure, which eventually came in handy when he had to be quick enough to capture a flake in a picture before it melted.

These photographs quickly became popular with dozens of scientists who studied Bentley’s work and published the images in several scientific magazines. In 1903, Bentley sent about 500 of his photographs to the Smithsonian, hoping they would be of interest to Secretary Samuel P. Langley.

The Smithsonian now has his vintage pics on display, undeniably proveing that snow is just so, so pretty.

Gallery photos courtesy of Flickr, Smithsonian Institution. Thumbnail photo courtesy of Flickr, AMagill.

This story originally published on Mashable here.

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Courteney Cox: Ex David Arquette Is Still My 'Best Friend in the World'

By Alison Schwartz

01/06/2013 at 12:00 PM EST

Courteney Cox and Ellen DeGeneres

Michael Rozman/Warner Bros.

The romance didn't work out for Courteney Cox and David Arquette, but the Cougar Town star still has plenty of love for her ex – as a friend.

"He's my best friend in the world," the actress says on an episode of The Ellen DeGeneres Show airing Monday. "I love him."

Months since the former couple both filed divorce papers citing irreconcilable differences in June, Cox says, "I appreciate David more now than I ever did. I mean ... it's hard. I don't recommend divorce in general, but, you know, he is my best friend and we've both grown and changed."

After all, the split seemed amicable for Cox, 48, and Arquette, 41, who initially separated in 2010, as they sought joint legal and physical custody of their 8-year-old daughter Coco in their filings.

"I think we both appreciate each other more," she adds. "I hope he does. I do."

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Your medical chart could include exercise minutes

CHICAGO (AP) — Roll up a sleeve for the blood pressure cuff. Stick out a wrist for the pulse-taking. Lift your tongue for the thermometer. Report how many minutes you are active or getting exercise.

Wait, what?

If the last item isn't part of the usual drill at your doctor's office, a movement is afoot to change that. One recent national survey indicated only a third of Americans said their doctors asked about or prescribed physical activity.

Kaiser Permanente, one of the nation's largest nonprofit health insurance plans, made a big push a few years ago to get its southern California doctors to ask patients about exercise. Since then, Kaiser has expanded the program across California and to several other states. Now almost 9 million patients are asked at every visit, and some other medical systems are doing it, too.

Here's how it works: During any routine check of vital signs, a nurse or medical assistant asks how many days a week the patient exercises and for how long. The number of minutes per week is posted along with other vitals at the top the medical chart. So it's among the first things the doctor sees.

"All we ask our physicians to do is to make a comment on it, like, 'Hey, good job,' or 'I noticed today that your blood pressure is too high and you're not doing any exercise. There's a connection there. We really need to start you walking 30 minutes a day,'" said Dr. Robert Sallis, a Kaiser family doctor. He hatched the vital sign idea as part of a larger initiative by doctors groups.

He said Kaiser doctors generally prescribe exercise first, instead of medication, and for many patients who follow through that's often all it takes.

It's a challenge to make progress. A study looking at the first year of Kaiser's effort showed more than a third of patients said they never exercise.

Sallis said some patients may not be aware that research shows physical inactivity is riskier than high blood pressure, obesity and other health risks people know they should avoid. As recently as November a government-led study concluded that people who routinely exercise live longer than others, even if they're overweight.

Zendi Solano, who works for Kaiser as a research assistant in Pasadena, Calif., says she always knew exercise was a good thing. But until about a year ago, when her Kaiser doctor started routinely measuring it, she "really didn't take it seriously."

She was obese, and in a family of diabetics, had elevated blood sugar. She sometimes did push-ups and other strength training but not anything very sustained or strenuous.

Solano, 34, decided to take up running and after a couple of months she was doing three miles. Then she began training for a half marathon — and ran that 13-mile race in May in less than three hours. She formed a running club with co-workers and now runs several miles a week. She also started eating smaller portions and buying more fruits and vegetables.

She is still overweight but has lost 30 pounds and her blood sugar is normal.

Her doctor praised the improvement at her last physical in June and Solano says the routine exercise checks are "a great reminder."

Kaiser began the program about three years ago after 2008 government guidelines recommended at least 2 1/2 hours of moderately vigorous exercise each week. That includes brisk walking, cycling, lawn-mowing — anything that gets you breathing a little harder than normal for at least 10 minutes at a time.

A recently published study of nearly 2 million people in Kaiser's southern California network found that less than a third met physical activity guidelines during the program's first year ending in March 2011. That's worse than results from national studies. But promoters of the vital signs effort think Kaiser's numbers are more realistic because people are more likely to tell their own doctors the truth.

Dr. Elizabeth Joy of Salt Lake City has created a nearly identical program and she expects 300 physicians in her Intermountain Healthcare network to be involved early this year.

"There are some real opportunities there to kind of shift patients' expectations about the value of physical activity on health," Joy said.

NorthShore University HealthSystem in Chicago's northern suburbs plans to start an exercise vital sign program this month, eventually involving about 200 primary care doctors.

Dr. Carrie Jaworski, a NorthShore family and sports medicine specialist, already asks patients about exercise. She said some of her diabetic patients have been able to cut back on their medicines after getting active.

Dr. William Dietz, an obesity expert who retired last year from the Centers for Disease Control and Prevention, said measuring a patient's exercise regardless of method is essential, but that "naming it as a vital sign kind of elevates it."

Figuring out how to get people to be more active is the important next step, he said, and could have a big effect in reducing medical costs.

___

Online:

Exercise: http://1.usa.gov/b6AkMa

___

AP Medical Writer Lindsey Tanner can be reached at http://www.twitter.com/LindseyTanner

Read More..

"Cliff" concerns give way to earnings focus

NEW YORK (Reuters) - Investors' "fiscal cliff" worries are likely to give way to more fundamental concerns, like earnings, as fourth-quarter reports get under way next week.

Financial results, which begin after the market closes on Tuesday with aluminum company Alcoa , are expected to be only slightly better than the third-quarter's lackluster results. As a warning sign, analyst current estimates are down sharply from what they were in October.

That could set stocks up for more volatility following a week of sharp gains that put the Standard & Poor's 500 index <.spx> on Friday at the highest close since December 31, 2007. The index also registered its biggest weekly percentage gain in more than a year.

Based on a Reuters analysis, Europe ranks among the chief concerns cited by companies that warned on fourth-quarter results. Uncertainty about the region and its weak economic outlook were cited by more than half of the 25 largest S&P 500 companies that issued warnings.

In the most recent earnings conference calls, macroeconomic worries were cited by 10 companies while the U.S. "fiscal cliff" was cited by at least nine as reasons for their earnings warnings.

"The number of things that could go wrong isn't so high, but the magnitude of how wrong they could go is what's worrisome," said Kurt Winters, senior portfolio manager for Whitebox Mutual Funds in Minneapolis.

Negative-to-positive guidance by S&P 500 companies for the fourth quarter was 3.6 to 1, the second worst since the third quarter of 2001, according to Thomson Reuters data.

U.S. lawmakers narrowly averted the "fiscal cliff" by coming to a last-minute agreement on a bill to avoid steep tax hikes this weeks -- driving the rally in stocks -- but the battle over further spending cuts is expected to resume in two months.

Investors also have seen a revival of worries about Europe's sovereign debt problems, with Moody's in November downgrading France's credit rating and debt crises looming for Spain and other countries.

"You have a recession in Europe as a base case. Europe is still the biggest trading partner with a lot of U.S. companies, and it's still a big chunk of global capital spending," said Adam Parker, chief U.S. equity strategist at Morgan Stanley in New York.

Among companies citing worries about Europe was eBay , whose chief financial officer, Bob Swan, spoke of "macro pressures from Europe" in the company's October earnings conference call.

REVENUE WORRIES

One of the biggest worries voiced about earnings has been whether companies will be able to continue to boost profit growth despite relatively weak revenue growth.

S&P 500 revenue fell 0.8 percent in the third quarter for the first decline since the third quarter of 2009, Thomson Reuters data showed. Earnings growth for the quarter was a paltry 0.1 percent after briefly dipping into negative territory.

On top of that, just 40 percent of S&P 500 companies beat revenue expectations in the third quarter, while 64.2 percent beat earnings estimates, the Thomson Reuters data showed.

For the fourth quarter, estimates are slightly better but are well off estimates for the quarter from just a few months earlier. S&P 500 earnings are expected to have risen 2.8 percent while revenue is expected to have gone up 1.9 percent.

Back in October, earnings growth for the fourth quarter was forecast up 9.9 percent.

In spite of the cautious outlooks, some analysts still see a good chance for earnings beats this reporting period.

"The thinking is you need top line growth for earnings to continue to expand, and we've seen the market defy that," said Mike Jackson, founder of Denver-based investment firm T3 Equity Labs.

Based on his analysis, energy, industrials and consumer discretionary are the S&P sectors most likely to beat earnings expectations in the upcoming season, while consumer staples, materials and utilities are the least likely to beat, Jackson said.

Sounding a positive note on Friday, drugmaker Eli Lilly and Co said it expects profit in 2013 to increase by more than Wall Street had been forecasting, primarily due to cost controls and improved productivity.

(Reporting By Caroline Valetkevitch; Editing by Kenneth Barry)

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