SEOUL/WASHINGTON, May 20 (Reuters) – South Korea accused the reclusive North on Thursday of torpedoing one of its warships, heightening tensions in the region and drawing a warning from Washington that Pyongyang must face consequences. Jittery South Korean financial markets and its currency fell as Seoul vowed to take "firm" measures against its neighbor. Nuclear North Korea, furiously denying the charge, warned it was ready for war if fresh sanctions were imposed. The United States, which has about 28,000 troops stationed in the South following the 1950-53 Korean War, said it stood ready to help South Korea defend itself against any further "acts of aggression." [ID:nN19274098] Seoul has made clear it has no plans for a retaliatory strike but will press the international community to take action, probably more sanctions, against the North. Amid international condemnation of North Korea, the impoverished country’s only major ally, China, said it would make its own assessment of the South Korean investigation. Mindful of the tension on the Korean peninsula, U.S. Defense Secretary Robert Gates and spokesmen for the White House and the U.S. State Department chose their words carefully in their responses to the report. "Clearly this was a serious provocation by North Korea and there will definitely be consequences because of what North Korea has done," said State Department spokesman P.J. Crowley. Gates said the United States was consulting with South Korea, which would decide what action to take. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ For complete North Korea coverage, click [nNORKOR] For scenarios on how the ship sinking could affect regional security dynamics, click [ID:nTOE64I04V] ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> A report by investigators, including experts from the United States, Australia, Britain and Sweden, concluded that a North Korean submarine had fired the torpedo that sank the Cheonan corvette in March, killing 46 sailors. FINANCIAL MARKET FALLOUT The escalating tension weighed on South Korean financial markets, already worried that investors jumpy about global financial concerns may pull out their money. The South Korean won <KRW=> suffered its biggest daily fall against the dollar in 10 months. Stocks <.KS11> closed at their lowest level in almost three months. [ID:nTOE64J07D]. U.N. Secretary-General Ban Ki-moon called the result of the South Korean investigation deeply troubling. [ID:nN19273875] Envoys at the United Nations suggested the issue could come before the Security Council early next week if Seoul asked the 15-nation body discuss it. President Barack Obama’s administration was talking to South Korea’s neighbors and the U.N. Security Council on what to do next, White House spokesman Robert Gibbs said. Japan said it would be difficult to resume nuclear disarmament talks between five regional powers and the North, and said Washington shared its view that such negotiations, aimed at aiding Pyongyang in return for a promise to drop its nuclear arms, were unthinkable. The State Department’s Crowley did not go as far as that, saying only that Washington would consult Japan, China and South Korea on the six-party talks in the coming days. Chinese Foreign Ministry spokesman Ma Zhaoxu urged both sides on the divided Korean peninsula to exercise restraint. China, a veto-wielding member of the U.N. Security Council, could derail any efforts to impose tougher sanctions on Pyongyang. Its hesitance to echo the international condemnation of the North could also complicate U.S. diplomatic efforts to work with Beijing on bilateral and global issues. South Korean President Lee Myung-bak will hold an emergency meeting of his National Security Council on Friday. "We will be taking firm, responsive measures against the North, and through international cooperation, we have to make the North admit its wrongdoing and come back as a responsible member of the international community," Lee’s office quoted him as telling Australian Prime Minister Kevin Rudd. The South Korean report said intelligence had shown that North Korean submarines were likely operating near the scene of the sinking. "The evidence points overwhelmingly to the conclusion that the torpedo was fired by a North Korean submarine," it said. North Korea said the South’s conservative government was using the incident for political gain. "Our army and people will promptly react to any ‘punishment’ and ‘retaliation’ and to any ‘sanctions’ infringing upon our state interests with various forms of tough measures including an all-out war," the North’s official news agency quoted the powerful National Defence Commission as saying. [nTOE64J03R] North Korea has previously made bellicose threats to turn Seoul into a "sea of fire". But military experts do not believe its army is any match for the modern military forces of the South and those of its ally, the United States. (Additional reporting by Rhee So-eui, Miyoung Kim, Christine Kim and Kim Yeon-hee in SEOUL, Chris Buckley in BEIJING, Paul Eckert, Matt Spetalnick, David Alexander in WASHINGTON, Patrick Worsnip in NEW YORK; Writing by Jonathan Thatcher and Ross Colvin; Editing by Chris Wilson)

, May 13 (Reuters) – President Barack Obama defended his administration’s economic recovery efforts on Thursday and accused Republicans of trying to block Democratic policies for political gain.

With public anxiety over the fragile economy threatening Obama’s Democrats in November’s congressional elections, he tried to turn the tables on Republican critics, accusing them of sitting on the sidelines last year when he was tackling the financial crisis.

Obama, speaking to factory workers in Buffalo, New York, made the case that his administration acted “boldly and quickly” to avert another Great Depression and move the country on the path to recovery.

Touting the latest government reports showing job growth for the fourth straight month, Obama argued that his efforts were working despite a 9.9 percent unemployment rate in April.

“Today, we are heading in the right direction,” he said. “Despite all the naysayers who were predicting failure a year ago, our economy is growing again.”

Later, at a Democratic fund-raising speech in Manhattan, Obama was blistering in his criticism of Republicans who are poised to pick up seats against Democratic majorities in November elections for the U.S. House of Representatives and the Senate.

Obama said Republicans have “done their best to gum up the works” and said they generated much of the country’s fiscal deficit that they now complain about.

WASHINGTON (Reuters) – The Obama administration is waging a largely behind-the-scenes campaign to convince foreign companies that it is becoming too politically risky for them to do business with an increasingly isolated Iran.

On the world stage, the United States and its allies are aggressively pushing for new sanctions on Iran over its nuclear program. Out of the public eye, it has dispatched a top U.S. Treasury official to foreign capitals to talk to governments, financial regulators, banks and business leaders.

Stuart Levey, the under secretary for terrorism and financial intelligence, is armed with U.S. intelligence on how Iran’s powerful Islamic Revolutionary Guard Corps is controlling a growing swath of Iran’s economy and is setting up front companies to try to evade sanctions.

His mission is part of a multi-pronged U.S. effort to tighten the screws on Iran, running parallel to the drive for fresh U.N. sanctions.

Levey, a silver-haired former white-collar criminal lawyer appointed in 2004, has been successful in persuading foreign banks to cut ties with Iran. Now, he is widening his focus to include service providers, insurers and manufacturers.

“We view the business community as an ally and we talk to them in that sense. We have information regarding Iranian illicit conduct that they might not have, and we provide them with the advantage of our viewpoint so they can better assess their own risks,” Levey told Reuters in an interview.

Since March a spate of foreign companies have announced plans to cut, suspend or curb ties with Iran, including oil majors Eni, LUKOIL and Royal Dutch Shell, Indian refiner Reliance Industries, U.S. construction and mining equipment maker Caterpillar and luxury German carmarker Daimler.

WASHINGTON (Reuters) – President Barack Obama said if the United States has a strong economy it will have a strong dollar, in rare comments about the U.S. currency in an interview with Russian television broadcast on Saturday.

Obama also expressed fresh American concern over the debt turmoil roiling Greece, which has affected world markets.

The interviewer from Russian television’s state-run Channel Rossiya asked Obama whether he would like to see a weaker or a stronger dollar.

“My basic principle is to focus on the fundamentals of the economy. I think that if we have a strong U.S. economy we’re going to have a strong dollar,” Obama said, according to an English-language transcript of the May 6 interview provided by the White House.

Obama’s remarks were unusual as he normally leaves it to Treasury Secretary Timothy Geithner to take the lead role in commenting on the U.S. currency.

Geithner has typically repeated his long-standing mantra that a strong dollar is in the U.S. interest and its value would reflect the strength of the U.S. economy.

Some foreign investors, including China, expressed concern about dollar weakness late last year. Russia joined China in calling for discussion of the possibility of creating a new international reserve currency.

WASHINGTON (Reuters) – Democrats in Congress plan to unveil tough proposals this week to counter a Supreme Court ruling that allows corporations to spend unlimited amounts on elections.

President Barack Obama, who took the unusual step of publicly criticizing the ruling in his State of the Union address in January, has warned it will give corporations and special interest groups undue influence in elections.

The bill would require the leaders of corporations, unions and other groups to put their names on television ads and would ban election spending by government contractors, companies with more than 20 percent foreign ownership and recipients of taxpayer-funded bailout money.

“It is about restoring the proper balance. Certainly special interests have a right to be heard. The problem is when special interest voices drown out the voices of average Americans,” a senior White House official told Reuters.

Democratic aides said they hoped to introduce the measure this week but acknowledged they face hurdles that could delay it becoming law until after congressional elections in November, when Republicans hope to shrink Democrats’ majorities in the Senate and the House of Representatives.

The bill, if it is passed, is also likely to face legal challenges in the courts as opponents probe for loopholes to circumvent the spending restrictions. The country’s biggest business group, the U.S. Chamber of Commerce, signaled on Friday it would fight it.

“No matter what text you choose, if you’re clear enough there is always a way around it, and if you try to be spongy with it to make sure there is no way around it, then it is really not clear the court will uphold it,” said Joseph Birkenstock, a registered lobbyist and partner at Caplin & Drysdale in Washington.

WASHINGTON (Reuters) – U.S. Vice President Joe Biden said on Thursday he expects new sanctions on Iran by May as Tehran began lobbying the U.N. Security Council to oppose new steps against the Islamic Republic over its atomic plans.

Biden issued the latest U.S. warning to Iran, locked in a standoff with the West over a nuclear program Tehran insists is entirely peaceful, in an appearance on ABC television’s “The View” talk show.

“Everyone from the Israeli prime minister straight through to the British prime minister to the president of Russia, everyone agrees the next step we should take is the U.N. sanction route,” Biden said.

“I believe you will see a sanction regime coming out by the end of this month, beginning of next month,” he said. Asked if Israel might attack Iran’s nuclear facilities without consulting Washington, Biden said Israel had agreed to wait and see what the impact of new U.N. sanctions would be.

As closed-door negotiations continue on a draft resolution for the U.N. Security Council, Iranian Foreign Minister Manouchehr Mottaki heads to Vienna and other capitals to lobby council members to oppose any new U.N. sanctions.

If negotiations on a fourth round of U.N. punitive measures against Tehran run past May, the U.S. House of Representatives has declared Congress should finalize legislation to impose new unilateral U.S. sanctions on Iran by the end of next month — whether or not the Security Council has acted.

The 403-11 vote signaled growing impatience on Capitol Hill with efforts by U.S. President Barack Obama’s administration and its allies to get a fourth round of U.N. sanctions to pressure Iran to curb a nuclear program the West fears is aimed at making a bomb.

WASHINGTON (Reuters) – President Barack Obama said on Wednesday he will announce his U.S. Supreme Court nominee by the end of May and insisted his pick must back women’s rights but would not have to pass a “litmus test” on the abortion issue.

Obama spoke as he consulted with lawmakers on his effort to fill a vacancy on the nation’s highest court while hoping to avoid a politically divisive fight that could distract from his legislative agenda in a congressional election year.

He has begun informal talks with potential nominees, signaling an intent to start narrowing his choices for a replacement for retiring Justice John Paul Stevens, considered the court’s leading liberal. His pick will be subject to U.S. Senate confirmation.

“I am confident that we can come up with a nominee who will gain the confidence of the Senate and the confidence of the country,” Obama told reporters as he sat down with leading Democratic and Republican senators.

Touching on a hot-button social issue, Obama, asked whether he would nominate someone who did not support a woman’s right to have an abortion, said: “I am somebody who believes that women should have the ability to make often very difficult decisions about their own bodies and issues of reproduction.”

Obama added, “I don’t have litmus tests around any of these issues. But I will say that I want somebody who is going to be interpreting our Constitution in a way that takes into account individual rights, including women’s rights. That is something that is going to be very important to me.”

NON-TRADITIONAL CHOICE?

WASHINGTON (Reuters) – U.S. President Barack Obama’s drive for tougher sanctions on Iran gained momentum on Monday in talks with Chinese President Hu Jintao that also focused on their countries’ fractious economic relationship.

Obama stressed to Hu the need to act urgently against Iran’s nuclear program, and Hu agreed that Beijing would help craft a U.N. resolution, a U.S. official said afterward.

Their 90-minute encounter came at the start of an unprecedented two-day summit of nearly 50 countries that Obama has called to highlight the global threat of nuclear terrorism and to agree an action plan to prevent weapons-grade atomic material from falling into the hands of terrorists.

Ukraine provided the first example by agreeing to give up its highly enriched uranium.

Iran’s nuclear program, which the West fears is a cover to build an atomic bomb, is not on the agenda of the summit, but the presence of so many world leaders in one place gave Obama an opportunity to again make his case for fresh sanctions to be imposed on Tehran over its refusal to halt uranium enrichment.

China has close economic ties with Iran and has so far been reluctant to agree to tougher sanctions. U.S. and Chinese officials who briefed reporters after the Hu-Obama talks described a positive, constructive atmosphere on Iran.

Hu told Obama that China and the United States shared the same overall goal on reining in Iran’s nuclear program, Chinese Foreign Ministry spokesman Ma Zhaoxu said.