Algeria ends desert siege with 23 hostages dead

ALGIERS/IN AMENAS, Algeria (Reuters) - Algerian troops ended a siege by Islamist militants at a gas plant in the Sahara desert where 23 hostages died, with a final assault which killed all the remaining hostage-takers.

Believed to be among the 32 dead militants was their leader, Abdul Rahman al-Nigeri, a Nigerien close to al Qaeda-linked commander Mokhtar Belmokhtar, presumed mastermind of the raid.

An Algerian interior ministry statement on the death toll gave no breakdown of the number of foreigners among hostages killed since the plant was seized before dawn on Wednesday.

Details are only slowly emerging on what happened during the siege, which marked a serious escalation of unrest in northwestern Africa, where French forces are ratcheting up a war against Islamist militants in neighboring Mali.

Algeria's interior ministry said on Saturday that 107 foreign hostages and 685 Algerian hostages had survived, but did not give a detailed breakdown of those who died.

"We feel a deep and growing unease ... we fear that over the next few days we will receive bad news," said Helge Lund, Chief Executive of Norway's Statoil, which ran the plant along with Britain's BP and Algeria's state oil company.

"People we have spoken to describe unbelievable, horrible experiences," he said.

British Prime Minister David Cameron said he feared for the lives of five British citizens unaccounted for at the gas plant near the town of In Amenas, which was also home to expatriate workers from Japanese engineering firm JGC Corp and others.

One American and one British citizen have been confirmed dead. Statoil said five of its workers, all Norwegian nationals, were still missing. Japanese and American workers are also unaccounted for.

The Islamists' attack has tested Algeria's relations with the outside world, exposed the vulnerability of multinational oil operations in the Sahara and pushed Islamist radicalism in northern Africa to center stage.

Some Western governments expressed frustration at not being informed of the Algerian authorities' plans to storm the complex. Algeria, scarred by a civil war with Islamist insurgents in the 1990s which claimed 200,000 lives, had insisted there would be no negotiation in the face of terrorism.

President Barack Obama said on Saturday the United States was seeking from Algerian authorities a fuller understanding of what took place, but said "the blame for this tragedy rests with the terrorists who carried it out."

Official sources had no immediate confirmation of newspaper reports suggesting some of the hostages may have been executed by their captors as the Algerian army closed in for the final assault on Saturday.

One source close to the crisis said 16 foreign hostages were freed, including two Americans and one Portuguese.

BP's chief executive Bob Dudley said on Saturday four of its 18 workers at the site were missing. The remaining 14 were safe.

PLANNED BEFORE FRENCH LANDED IN MALI

The attack on the heavily fortified gas compound was one of the most audacious in recent years and almost certainly planned long before French troops launched a military operation in Mali this month to stem an advance by Islamist fighters.

Hundreds of hostages escaped on Thursday when the army launched a rescue operation, but many hostages were killed.

Before the interior ministry released its provisional death toll, an Algerian security source said eight Algerians and at least seven foreigners were among the victims, including two Japanese, two Britons and a French national. One British citizen was killed when the gunmen seized the hostages on Wednesday.

The U.S. State Department said on Friday one American, Frederick Buttaccio, had died but gave no further details.

U.S. Defense Secretary Leon Panetta said nobody was going to attack the United States and get away with it.

"We have made a commitment that we're going to go after al Qaeda wherever they are and wherever they try to hide," he said during a visit to London. "We have done that obviously in Afghanistan, Pakistan, we've done it in Somalia, in Yemen and we will do it in North Africa as well."

Earlier on Saturday, Algerian special forces found 15 unidentified burned bodies at the plant, a source told Reuters.

Mauritanian news agencies identified the field commander of the group that attacked the plant as Nigeri, a fighter from one of the Arab tribes in Niger who had joined the Algerian Salafist Group for Preaching and Combat (GSPC) in early-2005.

That group eventually joined up with al Qaeda to become Al Qaeda in the Islamic Maghreb (AQIM). It and allied groups are the targets of the French military operation in Mali.

The news agencies described him as "one of the closest people" to Belmokhtar, who fought in Afghanistan and then in Algeria's civil war of the 1990s. Nigeri was known as a man for "difficult missions", having carried out attacks in Mauritania, Mali and Niger.

NO NEGOTIATION

Britain, Japan and other countries have expressed irritation that the Algerian army assault was ordered without consultation.

But French President Francois Hollande said the Algerian military's response seemed to have been the best option given that negotiation was not possible.

"When you have people taken hostage in such large number by terrorists with such cold determination and ready to kill those hostages - as they did - Algeria has an approach which to me, as I see it, is the most appropriate because there could be no negotiation," Hollande said.

The apparent ease with which the fighters swooped in from the dunes to take control of an important energy facility, which produces some 10 percent of the natural gas on which Algeria depends for its export income, has raised questions over the country's outwardly tough security measures.

Algerian officials said the attackers may have had inside help from among the hundreds of Algerians employed at the site.

Security in the half-dozen countries around the Sahara desert has long been a preoccupation of the West. Smugglers and militants have earned millions in ransom from kidnappings.

The most powerful Islamist groups operating in the Sahara were severely weakened by Algeria's secularist military in the civil war in the 1990s. But in the past two years the regional wing of al Qaeda gained fighters and arms as a result of the civil war in Libya, when arsenals were looted from Muammar Gaddafi's army.

(Additional reporting by Balazs Koranyi in Oslo, Estelle Shirbon and David Alexander in London, Brian Love in Paris; Writing by Giles Elgood and Myra MacDonald)

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By-election is about choosing the right candidate who can serve: minister

SINGAPORE: Education Minister Heng Swee Keat said the by-election in Punggol East is not about voting more opposition into Parliament.

He said it is about electing the right candidate who can best serve the residents in the ward.

Mr Heng said these in response to comments made by the Workers' Party (WP) secretary-general Low Thia Khiang at the WP rally on Saturday.

Mr Low had said that residents should vote for the opposition to make the government work harder for them.

Mr Heng said the government is already working hard to improve the lives of Singaporeans.

He said the People's Action Party candidate for Punggol East Koh Poh Koon is a sincere, dedicated and hardworking man.

And that Dr Koh will work hard to understand the needs of residents and work with ministers to convey feedback to improve the lives of residents.

Mr Heng urged voters to focus on what Dr Koh can do for them and how he can contribute to a better future for them.

He said voters should cast their votes on who is the best person to serve residents and not to serve the interests of the opposition party.

- CNA/ck

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UPA has fulfilled most of the promises made in 2004, 2009, PM says

JAIPUR: Prime minister Manmohan Singh has expressed hope that the Jaipur chintan shivir will give a new direction to the party.

Addressing workers on the last day of the meeting here, Manmohan Singh highlighted the achievements of the UPA government.

The government has fulfilled most of the promises made in 2004 and 2009, the PM said.

Manmohan stressed the need to improve communication strategy to ensure the good work done by the government is made known to the people.

The PM claimed that poverty had gone down under the UPA rule and said it is important to tell the people how they have benefited from the central schemes.

The PM said the UPA government had done better than the previous NDA government.

Speaking on the recent tension at the LoC, Prime Minister Manmohan Singh said we want friendship with our neighbour, but for that they will also have to make an effort.

Earlier, Congress president Sonia Gandhi outlined the road ahead for the party.

Expressing happiness at the large participation of youth leaders, she said it was a positive sign for the party.

Sonia said the party must lead the 'struggle' to counter the effect of corruption.

"Let me reiterate corruption at all levels is a deep-rooted malice and all sections of society are effected by it. As a party we must lead struggle to combat its effect," Sonia Gandhi said.

She said corruption was the main concern of the nation when the party held its session at Burari in July 2011 and the party has moved on with a five-point agenda to deal with corruption.

The key among the steps taken was introducing Lokpal Bill in the Parliament and introducing more transparency in process of allocating natural resources, said the Congress president.

"We have introduced path breaking legislation for grievance redressal, whistle blowers, and historic 'apka paisa apke hath' (your money in your hands, the direct cash transfer scheme) initiative," she said.

Referring to the brutal gang-rape in the national capital that shook the nation, Gandhi described the victim as a symbol of women and children who suffer from similar fates.

Her death would not go in vain, she said and added that every woman and every girl has a fundamental right to be secure and safe in the country.

Sonia vowed to take personal initiative to see that women are adequately represented in the Parliament.

She also objected to some of the outrageous comments made by certain politicians, adding that:"We can not tolerate mindsets that lead to crimes against women. Every woman, every girl in our country has the fundamental right to be secure and safe."

"I will personally continue to press for the Women's Reservation Bill which will allow 1/3rd reservation for women in Parliament and state legislatures," she said.
Sonia Gandhi also stressed the need for electoral reforms in her speech.

She also highlighted the achievements of the UPA government.

The draft Jaipur declaration of the Congress party has called on all secular and progressive forces to unite in ideological battle against those who polarize and divide society.

The draft says that the party will go to the people on the basis of performance of UPA govt, the promise of stability and good governance and restatement of its core values.

(With inputs from agencies)

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Lilly drug chosen for Alzheimer's prevention study

Researchers have chosen an experimental drug by Eli Lilly & Co. for a large federally funded study testing whether it's possible to prevent Alzheimer's disease in older people at high risk of developing it.

The drug, called solanezumab (sol-ah-NAYZ-uh-mab), is designed to bind to and help clear the sticky deposits that clog patients' brains.

Earlier studies found it did not help people with moderate to severe Alzheimer's but it showed some promise against milder disease. Researchers think it might work better if given before symptoms start.

"The hope is we can catch people before they decline," which can come 10 years or more after plaques first show up in the brain, said Dr. Reisa Sperling, director of the Alzheimer's center at Brigham and Women's Hospital in Boston.

She will help lead the new study, which will involve 1,000 people ages 70 to 85 whose brain scans show plaque buildup but who do not yet have any symptoms of dementia. They will get monthly infusions of solanezumab or a dummy drug for three years. The main goal will be slowing the rate of cognitive decline. The study will be done at 50 sites in the U.S. and possibly more in Canada, Australia and Europe, Sperling said.

In October, researchers said combined results from two studies of solanezumab suggested it might modestly slow mental decline, especially in patients with mild disease. Taken separately, the studies missed their main goals of significantly slowing the mind-robbing disease or improving activities of daily living.

Those results were not considered good enough to win the drug approval. So in December, Lilly said it would start another large study of it this year to try to confirm the hopeful results seen patients with mild disease. That is separate from the federal study Sperling will head.

About 35 million people worldwide have dementia, and Alzheimer's is the most common type. In the U.S., about 5 million have Alzheimer's. Current medicines such as Aricept and Namenda just temporarily ease symptoms. There is no known cure.

___

Online:

Alzheimer's info: http://www.alzheimers.gov

Alzheimer's Association: http://www.alz.org

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Follow Marilynn Marchione's coverage at http://twitter.com/MMarchioneAP

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Algeria Hostage Crisis Over, One American Dead

After the Algerian military's final assault on terrorists holding hostages at a gas complex, the four-day hostage crisis is over, but apparently with additional loss of life among the foreign hostages.

One American, Fred Buttaccio of Texas, has been confirmed dead by the U.S. State Department. Two more U.S. hostages remain unaccounted for, with growing concern among U.S. officials that they did not survive.

But another American, Mark Cobb of Corpus Christi, Texas is now confirmed as safe. Sources close to his family say Cobb, who is a senior manager of the facility, is safe and reportedly sent a text message " I'm alive."

Inside Algerian Hostage Crisis, One American Dead Watch Video

American Hostages Escape From Algeria Terrorists Watch Video

In a statement, President Obama said, "Today, the thoughts and prayers of the American people are with the families of all those who were killed and injured in the terrorist attack in Algeria. The blame for this tragedy rests with the terrorists who carried it out, and the United States condemns their actions in the strongest possible terms. ... This attack is another reminder of the threat posed by al Qaeda and other violent extremist groups in North Africa."

According to Algerian state media, 32 militants are dead and a total of 23 hostages perished during the four-day siege of the In Amenas facility in the Sahara. The Algerian Interior Ministry also says 107 foreign nationals who worked at the facility for BP and other firms were rescued or escaped from the al Qaeda-linked terrorists who took over the BP joint venture facility on Wednesday.

The Japanese government says it fears "very grave" news, with multiple casualties among the 10 Japanese citizens working at the In Amenas gas plant.

Five British nationals and one U.K. resident are either deceased or unaccounted for in the country, according to British Foreign Minister William Hague. Hague also said that the Algerians have reported that they are still trying to clear boobytraps from the site.

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UN council slams 'heinous' Algeria attacks

UNITED NATIONS: The UN Security Council on Friday strongly condemned the "heinous" attack and hostage-taking at an Algerian gas complex by Al-Qaeda linked militants.

A statement agreed by the 15-member council stressed the need to bring the Al-Qaeda linked attackers and their backers to justice.

At least 12 hostages and 18 kidnappers were killed in an assault by Algerian security forces on the Sahara desert complex. Between seven and 10 hostages were still being held.

"The Security Council condemned in the strongest terms the terrorist attack in In Amenas, Algeria," said the statement.

The council expressed "deep sympathy and sincere condolences to the victims of these heinous acts and their families and to the people and governments of Algeria and those countries whose nationals have been affected."

It "underlined the need to bring perpetrators, organizers, financiers and sponsors of these reprehensible acts of terrorism to justice."

In addition, it urged all countries "to cooperate actively with the Algerian authorities" in line with international law and Security Council resolutions.

The statement also added a phrase that said countries must ensure that "measures taken to combat terrorism comply with all their obligations under international law, in particular international human rights, refugee and humanitarian law."

Several countries have urged Algeria to do everything to prevent harm to the remaining hostages at In Amenas.

- AFP/ck

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India hesitant to implement US, EU sanctions on Iran: Report

WASHINGTON: India is hesitant to implement all aspects of US and European Union sanctions against Iran, a congressional report has said, attributing this to New Delhi's reliance on Tehran with regards to Afghanistan and the historic, cultural and economic ties between the two nations.

"India is implementing UN sanctions against Iran but its cultural, economic, and historic ties--as well as its strategic need for access to Afghanistan-- have made India hesitant to adopt all aspects of US and EU sanctions on Iran," the independent and bipartisan Congressional Research Service (CRS) said in its latest report on Iran.

"India first signalled greater support for sanctioning Iran in late 2012 when its central bank ceased using a Tehran-based regional body, the Asian Clearing Union, to handle transactions with Iran," said the report.

Apparently perceiving international sentiment for tightening sanctions on Iran, India has been reducing its dependence on Iranian oil, CRS said.

Since 2008, India has reduced its imports of Iranian oil by volume and as a percentage of India's total oil imports, to the point where, by the end of 2012, Iran was only supplying about 10 per cent of India's oil imports, down from over 16 per cent in 2008, it said.

"Despite requiring significant investment to switch over refineries that handle Iranian crude, deputy oil minister R P N Singh told India's Parliament on May 15, 2012, that India would cut Iranian imports by another 11 per cent from May 2012 until the end of India's fiscal year in March 2013," the CRS told US lawmakers on its latest report on Iran.

"The Obama administration welcomed the pledge, and India received an exemption from P L 112-81 sanctions on June 11, 2012. Indian refiners have cut buys from Iran largely in line with the government's requests, although some months might show fluctuations as batches of oil shipments arrive. India's exemption was renewed on December 7, 2012," it noted.

CRS said India appears to be distancing itself from participation in the Iran-Pakistan gas pipeline project.

India reportedly has been concerned about the security of the pipeline, the location at which the gas would be officially transferred to India, pricing of the gas, tariffs, and the source in Iran of the gas to be sold.

If Iran resolves its disputes with the international community, India may envision an alternative to the pipeline project as a means of tapping into Iran's vast gas resources.

"During high-level economic talks in early July 2010, Iranian and Indian officials reportedly raised the issue of constructing an underwater natural gas pipeline, which would avoid going through Pakistani territory. However, such a route would presumably be much more expensive to construct than would be an overland route," it said.

According to a table compiled by CRS, even as India has considerably reduced its import of oil from Iran from a high 320,000 barrels per day (bpd) in 2011 to 280,000 bpd in 2012, it is the second largest importer of crude oil after China, which in 2012 imported 400,000 bpd.

CRS said the international sanctions has adversely affected Iran's economy to the point where key Iran leaders are considering the need for a nuclear compromise.

"Oil exports provide about 70 percent of Iran's government revenues and Iran's oil exports declined to about 1.25 million barrels by the end of 2012--a dramatic decline from the 2.5 million barrels per day Iran exported during 2011.

"The cause of the drop has been a European Union embargo on purchases of Iranian crude oil that took full effect on July 1, 2012 coupled with decisions by several other Iranian oil customers to substantially reduce purchases of Iranian oil in order to comply with a provision of the FY2012 National Defence Authorisation Act (P L 112-81). To date, 20 countries have been deemed in compliance," it said.

"The loss of hard currency revenues from oil--coupled with the cut-off of Iran from the international banking system and the decline of Iran's foreign exchange reserves--caused a collapse in the value of Iran's currency, the rial, in early October," CRS said.

That collapse prompted street demonstrations and, in response, Iran has tried to impose currency controls and arrested some illegal currency traders.

These steps have not restored public confidence in the regime's economic management--inflation has soared, industrial production has fallen, and some of the more expensive medicines are reported to be in short supply, it said.

CRS said sanctions may be slowing Iran's nuclear and missile programs by hampering Iran's ability to obtain some needed technology from foreign sources.

However, Department of Defence and other assessments indicate that sanctions have not stopped Iran from developing some new weaponry with indigenous skills.

"Iran is also judged not complying with UN requirements that it halt any weapons shipments outside its borders, particularly with regard to purported Iranian weapons shipments to help the embattled Assad government in Syria.

"And, international sanctions targeting the regime's human rights abuses do not appear to have altered Iran's repression of dissent or its efforts to monitor public use of the Internet," it said.

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Lilly drug chosen for Alzheimer's prevention study

Researchers have chosen an experimental drug by Eli Lilly & Co. for a large federally funded study testing whether it's possible to prevent Alzheimer's disease in older people at high risk of developing it.

The drug, called solanezumab (sol-ah-NAYZ-uh-mab), is designed to bind to and help clear the sticky deposits that clog patients' brains.

Earlier studies found it did not help people with moderate to severe Alzheimer's but it showed some promise against milder disease. Researchers think it might work better if given before symptoms start.

"The hope is we can catch people before they decline," which can come 10 years or more after plaques first show up in the brain, said Dr. Reisa Sperling, director of the Alzheimer's center at Brigham and Women's Hospital in Boston.

She will help lead the new study, which will involve 1,000 people ages 70 to 85 whose brain scans show plaque buildup but who do not yet have any symptoms of dementia. They will get monthly infusions of solanezumab or a dummy drug for three years. The main goal will be slowing the rate of cognitive decline. The study will be done at 50 sites in the U.S. and possibly more in Canada, Australia and Europe, Sperling said.

In October, researchers said combined results from two studies of solanezumab suggested it might modestly slow mental decline, especially in patients with mild disease. Taken separately, the studies missed their main goals of significantly slowing the mind-robbing disease or improving activities of daily living.

Those results were not considered good enough to win the drug approval. So in December, Lilly said it would start another large study of it this year to try to confirm the hopeful results seen patients with mild disease. That is separate from the federal study Sperling will head.

About 35 million people worldwide have dementia, and Alzheimer's is the most common type. In the U.S., about 5 million have Alzheimer's. Current medicines such as Aricept and Namenda just temporarily ease symptoms. There is no known cure.

___

Online:

Alzheimer's info: http://www.alzheimers.gov

Alzheimer's Association: http://www.alz.org

___

Follow Marilynn Marchione's coverage at http://twitter.com/MMarchioneAP

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Armstrong Tearful Over Telling Kids Truth

Lance Armstrong, 41, began to cry today as he described finding out his son Luke, 13, was publicly defending him from accusations that he doped during his cycling career.

Armstrong said that he knew, at that moment, that he would have to publicly admit to taking performance-enhancing drugs and having oxygen-boosting blood transfusions when competing in the Tour de France. He made those admissions to Oprah Winfrey in a two-part interview airing Thursday and tonight.

"When this all really started, I saw my son defending me, and saying, 'That's not true. What you're saying about my dad? That's not true,'" Armstrong said, tearing up during the second installment of his interview tonight. "And it almost goes to this question of, 'Why now?'

"That's when I knew I had to talk," Armstrong said. "He never asked me. He never said, 'Dad, is this true?' He trusted me."

He told Winfrey that he sat down with his children over the holidays to come clean about his drug use.

"I said, 'Listen, there's been a lot of questions about your dad, about my career and whether I doped or did not dope,'" he said he told them. "'I always denied that. I've always been ruthless and defiant about that, which is why you defended me, which makes it even sicker' I said, 'I want you to know that it's true.'"

He added that his mother was "a wreck" over the scandal.

Armstrong said that the lowest point in his fall from grace and the top of the cycling world came when his cancer charity, Livestrong, asked him to consider stepping down.

George Burns/Harpo Studios, Inc.

Lance Armstrong-Winfrey Interview: How Honest Was He? Watch Video

Lance Armstrong-Winfrey Interview: Doping Confession Watch Video

After the U.S. Anti-Doping Agency alleged in October that Armstrong doped throughout his reign as Tour de France champion, Armstrong said, his major sponsors -- including Nike, Anheuser Busch and Trek -- called one by one to end their endorsement contracts with him.

"Everybody out," he said. "Still not the most humbling moment."

Then came the call from Livestrong, the charity he founded at age 25 when he was diagnosed with testicular cancer.

"The story was getting out of control, which was my worst nightmare," he said. "I had this place in my mind that they would all leave. The one I didn't think would leave was the foundation.

"That was most humbling moment," he said.

Armstrong first stepped down as chairman of the board for the charity before being asked to end his association with the charity entirely. Livestrong is now run independently of Armstrong.

"I don't think it was 'We need you to step down,' but, 'We need you to consider stepping down for yourself,'" he said, recounting the call. "I had to think about that a lot. None of my kids, none of my friends have said, 'You're out,' and the foundation was like my sixth child. To make that decision, to step aside, that was big."

In Thursday's interview installment, the seven-time winner of the Tour de France admitted publicly for the first time that he doped throughout his career, confirming after months of angry denials the findings of the U.S. Anti-Doping Agency, which stripped him of his titles in October.

He told Winfrey that he was taking the opportunity to confess to everything he had done wrong, including for years angrily denying claims that he had doped.

READ MORE: Armstrong Admits to Doping

WATCH: Armstrong's Many Denials Caught on Tape

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Algeria ends desert siege, but dozens killed

ALGIERS (Reuters) - Algerian forces stormed a desert gas complex to free hundreds of hostages but 30, including several Westerners, were killed in the assault along with at least 11 of their Islamist captors, an Algerian security source told Reuters.

Western leaders whose compatriots were being held did little to disguise their irritation at being kept in the dark by Algeria before the raid - and over its bloody outcome. French, British and Japanese staff were among the dead, the source said.

An Irish engineer who survived said he saw four jeeps full of hostages blown up by Algerian troops whose commanders said they moved in about 30 hours after the siege began because the gunmen had demanded to be allowed to take their captives abroad.

And while a crisis has ended that posed a serious dilemma for Paris and its allies as French troops attacked the hostage-takers' al Qaeda allies in neighboring Mali, it left question marks over the ability of OPEC-member Algeria to protect vital energy resources and strained its relations with Western powers.

Two Japanese, two Britons and a French national were among at least seven foreigners killed, the source told Reuters. Eight dead hostages were Algerian. The nationalities of the rest, as well as of perhaps dozens more who escaped, were unclear. Some 600 local Algerian workers, less well guarded, survived.

Fourteen Japanese were among those still unaccounted for by the early hours of Friday, their Japanese employer said.

Japan's Prime Minister Shinzo Abe has cancelled part of his trip in Southeast Asia, his first overseas trip since taking office, and is considering flying home early due to the hostage crisis, Japan's top government spokesman said on Friday.

"The action of Algerian forces was regrettable," said Japan's Chief Cabinet Secretary Yoshihide Suga, adding Tokyo had not been informed of the operation in advance.

Americans, Norwegians, Romanians and an Austrian have also been mentioned by their governments as having been captured by the militants who called themselves the "Battalion of Blood" and had demanded France end its week-old offensive in Mali.

Underlining the view of African and Western leaders that they face a multinational Islamist insurgency across the Sahara - a conflict that prompted France to send hundreds of troops to Mali last week - the official source said only two of the 11 dead militants were Algerian, including the squad's leader.

The bodies of three Egyptians, two Tunisians, two Libyans, a Malian and a Frenchman were found, the security source said.

The group had claimed to have dozens of guerrillas on site and it was unclear whether any militants had managed to escape.

The overall commander, Algerian officials said, was Mokhtar Belmokhtar, a veteran of Afghanistan in the 1980s and Algeria's bloody civil war of the 1990s. He appears not to have been present and has now risen in stature among a host of Saharan Islamists, flush with arms and fighters from chaotic Libya, whom Western powers fear could spread violence far beyond the desert.

"NO TO BLACKMAIL"

Algeria's government spokesman made clear the leadership in Algiers remains implacably at odds with Islamist guerrillas who remain at large in the south years after the civil war in which some 200,000 people died. Communication Minister Mohamed Said repeated their refusal ever to negotiate with hostage-takers.

"We say that in the face of terrorism, yesterday as today as tomorrow, there will be no negotiation, no blackmail, no respite in the struggle against terrorism," he told APS news agency.

British Prime Minister David Cameron, who warned people to prepare for bad news and who cancelled a major policy speech on Friday to deal with the situation, said through a spokesman that he would have liked Algeria to have consulted before the raid.

A Briton and an Algerian had also been killed on Wednesday.

The prime minister of Norway, whose state energy company Statoil runs the Tigantourine gas field with Britain's BP and Algeria's national oil company, said he too was not informed.

U.S. officials had no clear information on the fate of Americans, though a U.S. military drone had flown over the area. Washington, like its European allies, has endorsed France's move to protect the Malian capital by mounting air strikes last week and now sending 1,400 ground troops to attack Islamist rebels.

A U.S. official said on Thursday it would provide transport aircraft to help France with a mission whose vital importance, President Francois Hollande said, was demonstrated by the attack in Algeria. Some fear, however, that going on the offensive in the remote region could provoke more bloodshed closer to home.

The apparent ease with which the fighters swooped in from the dunes to take control of an important energy facility, which produces some 10 percent of the natural gas on which Algeria depends for its export income, has raised questions, over the value of security measures that are outwardly draconian.

Foreign firms were pulling non-essential staff out of the country, which has recovered stability only in recent years and whose ruling establishment, heirs to fighters who ended French rule 50 years ago, has resisted demands for reform and political freedoms of the kind that swept North Africa in the Arab Spring.

"The embarrassment for the government is great," said Azzedine Layachi, an Algerian political scientist at New York's St John's University. "The heart of Algeria's economy is in the south. where the oil and gas fields are. For this group to have attacked there, in spite of tremendous security, is remarkable."

"KILL INFIDELS"

A local man who had escaped from the facility told Reuters the militants appeared to have inside knowledge of the layout of the complex, supporting the view of security experts that their raid was long-planned, even if the Mali war provided a motive.

"The terrorists told us at the very start that they would not hurt Muslims but were only interested in the Christians and infidels," Abdelkader, 53, said by telephone from his home in the nearby town of In Amenas. "'We will kill them,' they said."

Algiers, whose leaders have long had frosty relations with the former colonial power France and other Western countries, may have some explaining to do over its tactics in putting an end to a hostage crisis whose scale was comparable to few in recent decades bar those involving Chechen militants in Russia.

Government spokesman Said sounded unapologetic, however: "When the terrorist group insisted on leaving the facility, taking the foreign hostages with them to neighboring states, the order was issued to special units to attack the position where the terrorists were entrenched," he told state news agency APS, which said some 600 local workers were freed.

The militants said earlier they had 41 foreign hostages.

"ARMY BLASTED HOSTAGES"

Stephen McFaul, an electrical engineer, told his family in Northern Ireland after the operation that he narrowly escaped death, first when bound and gagged by the gunmen who fastened explosives around the hostages' necks and then on Thursday when he was in a convoy of five vehicles driving across the complex.

"(The gunmen) were moving five jeeploads of hostages from one part of the compound," his brother Brian McFaul said. "At that stage, they were intercepted by the Algerian army.

"The army bombed four out of five of the trucks and four of them were destroyed ... He presumed everyone else in the other trucks was killed ... The truck my brother was in crashed and at that stage Stephen was able to make a break for his freedom."

McFaul said it was unclear whether the vehicles had been struck by missiles fired from helicopters or by ground forces.

The attack in Algeria did not stop France from pressing on with its campaign in Mali. It said on Thursday it now had 1,400 troops on the ground there, and combat was under way against the rebels that it first began targeting from the air last week.

"What is happening in Algeria justifies all the more the decision I made in the name of France to intervene in Mali in line with the U.N. charter," Hollande said on Thursday.

The French action last week came as a surprise but received widespread public international support. Neighbouring African countries planning to provide ground troops for a U.N. force by September have said they will move faster to deploy them.

(Additional reporting by Ali Abdelatti in Cairo, Eamonn Mallie in Belfast, Gwladys Fouche in Oslo, Mohammed Abbas in London and Padraic Halpin and Conor Humprhies in Dublin; Writing by Alastair Macdonald; Editing by Peter Millership and Michael Perry)

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