Its downbeat tone was replicated by many of its rivals, fuelling concerns that consumers are feeling the pinch from a rapidly weakening housing market.

Richard Iley, senior US economist at BNP Paribas in New York, said: "This is an economy slowing down rapidly as the housing market loses pace." He said there could be some "short-term tailwinds" from falling petrol prices but further ahead, the outlook was dark: "The tectonic plates of the economy are shifting and that spells very gloomy news for the American consumer."

The data firm Thomson Financial said that of 50 American retailers reporting October data, 28 have missed expectations and only 22 have beaten forecasts.

The struggling clothes chain Gap was among the poorest performers with a 7% fall in like-for-like takings despite efforts to revive its fortunes with a back-to-basics autumn collection. Target had a 3.9% rise but missed estimates of a 4.2% increase. Chico's, a specialist in clothes for older women, reported a 4.1% fall in same-store sales, prompting a 10% drop in its shares.

There was better news at the top end of the market with solid sales rises for the department store firm Nordstrom, the designer boutique owner Saks and the trendy teenage specialist Aéropostale.

Adrianne Shapira, a retail analyst at Goldman Sachs, said there were signs of a "considerable disparity between high-end and low-end consumers" but added: "People will be pushing some panic buttons if this softness continues."

Growth in the US economy has plummeted in the third quarter to its slowest for more than three years, sparking speculation among analysts that the Federal Reserve may cut interest rates before too long. The economy grew at an annualised rate of only 1.6% in the third quarter, down from 2.6% in the previous three months. This was the weakest rate since the first quarter of 2003, when growth was 1.2%. Recent data showed that new housebuilding fell 17.4% over the same period - the biggest drop for 15 years.

Julian Jessop, of Capital Economics, said he saw a 30% chance of a recession. "While too much should not be read into individual reports, the retail news today fits in with other elements of the economy, such as consumer confidence, which has been disappointing," he said. "Considering oil prices have fallen and the strength of the stock market, confidence should be very strong but the fact it is not suggests there's something else going on."

The housing slowdown is one of two "pockets of acute weakness" Froeschle said Caterpillar is girding for in the coming year, one in which it has already warned it expects to see revenue rise no more than 5 percent -- and perhaps flatline entirely -- after years of double-digit gains. Caterpillar makes a variety of earth-moving equipment used by builders.

Speaking late Thursday at a presentation for analysts at the company's large engine factory here, Froeschle said the United States would experience a "significant slowdown" in the housing market in the coming year.

He also warned that new clean-air rules governing on-highway diesel engines that take effect in 2007 would make that business -- an important niche for Caterpillar -- "a clear area of weakness."

The reason is that many trucking companies are refreshing their fleets this year, ahead of the new rules, which will require expensive new engines. That's pulling sales forward -- but it is also widely expected to result in a sharp drop in sales next year.

Even so, Froeschle said Caterpillar was optimistic that the worldwide economic recovery had "lots of legs left" and that the current environment -- low inflation, low interest rates and strong corporate profits, among other things -- represented a "near ideal climate" for companies like Caterpillar.

He predicted that most of the world was poised for faster growth over the next few years than it experienced either in the 1990s or the first half of the current decade.

But he cautioned that Caterpillar's rosy view was predicated on the assumption that the U.S. Federal Reserve would begin to cut interest rates in 2007.

Another source familiar with the Air Force plans said the extra funds would help pay to transport growing numbers of U.S. soldiers being killed and wounded in Iraq and Afghanistan.

Thompson, who has close ties to U.S. military officials, said the big funding request was fueled by Deputy Defense Secretary Gordon England. England told the services in a October 25 memo to include the "longer war on terror," not just the wars in Iraq and Afghanistan, in their emergency requests.

"This amount of money is so much bigger than the Air Force would normally request ... it hints at a basic breakdown in the process for planning and funding war costs," said Thompson.

He said the Air Force had identified $30 billion just in past war-related costs that were not approved by the Pentagon.

The Air Force's proposed emergency budget is nearly half the $105.9 billion it requested as its total base budget for fiscal year 2007, which began on October 1.

The Air Force said it asked Pentagon officials for $17.4 billion in emergency war funds in August, but was now submitting "additional requirements to cover costs for the longer war against terror," based on England's memo.

Spokeswoman Maj. Morshe Araujo gave no details on the new request, saying it would be completed only next week.

She said the service had already mapped out an expected supplemental funding request of $50 billion for fiscal 2008.

The Army, which got the lion's share of an initial $70 billion supplemental budget passed by Congress last month, is asking for more than $80 billion in additional funds for the second half of fiscal 2007, according to published reports. The Navy is also expected to seek funds for the Marine Corps.

Defense Secretary Donald Rumsfeld will decide on the supplemental funding requests on November 15, according to the England memo, reported by Inside Defense last week.

In the memo, England said the emergency funding requests should include reset costs for combat losses, accelerated wear and necessary repairs for equipment, or upgrades to newer models when repairs were not economically feasible.

But Arizona Republican Sen. John McCain and some other lawmakers are alarmed about continued use of "emergency" funding requests when the war in Iraq has been under way for over three years. Such requests should be reserved for true emergency situations, they argue.

With the latest bill passed last month, Congress has approved about $507 billion in spending for the Iraq and Afghanistan wars, under some 13 "emergency" spending requests, according to the Congressional Research Service.

That compares to two supplemental requests made during 11 years of fighting in Vietnam several decades ago, and just one request for the Korean War, according to a congressional aide.

Thompson said Rumsfeld was clearly challenging Congress.

"Rumsfeld is playing budgetary chicken with Capitol Hill. Congress is saying it's time to stop doing budgeting outside the regular process, and the secretary is saying, 'Well, give us the money we need to defend the nation'," Thompson said.

In recent months, top military brass have called for more defense dollars, arguing that current spending as a percentage of gross domestic product is lower than during other wars.

Army officials say they can accurately calculate war costs this far into the conflict, but the White House does not want those costs included in the base budget.

Defense consultant Jim McAleese said the White House took exception to a clause in the 2007 defense spending law, which required the Pentagon to include all foreseeable Iraq and Afghanistan war costs within its 2008 budget.

Given that, he predicted the Bush administration could try to ram through a 2007 emergency budget during the congressional "lame duck" session in November and December.

The combined figure was an increase on the 26,021 people who went insolvent in the previous quarter.

Experts believe the figures could have already reached a parity, with IVAs boosted by aggressing advertising by debt management firms and increased pressure on household budgets.

The hike in IVAs increases concern held by many that they are being "over sold" to people who would be better off looking at other ways of dealing with debt.

Malcolm Hurlston, chairman of the Consumer Credit Counselling Service, said: "We are concerned by the narrowing gap between the number of bankruptcies and IVAs.

"If the current trend continues the number of IVAs will overtake the number of bankruptcy next year and that is an indication that the IVA solution is becoming more popular than is good for people."

According to the mass-circulation Bild newspaper, chemical experts believe "the destroyed bank notes came in contact with sulfuric acid, which led to the observed disintegration." They believe the bills were somehow coated -- either deliberately or through a manufacturing error -- with sulfur salt. Contact with perspiration (like sweaty hands) can trigger a chemical reaction that turns sulfur salt into corrosive sulfuric acid over time.

Though the authenticity of the bills has been proven based on their serial numbers, officials have ruled out the possibility of a production error at Germany's federal printing plant.

That's what has people scratching their heads. "Maybe a racketeer is behind all of this, someone who wants to prove to us that he can destroy the euro," an unnamed European Central Bank source told Bild. "But so far, no one has announced anything in this regard."

It could have been anything -- even an accident. "We still haven't been able to determine whether this was an unintentional chemical spill or whether it was a conscious manipulation," a spokesman from the Bundesbank, Germany's central bank, said.

In the meantime, the euro bills continue to disintegrate and officials are baffled.

The strike will run from late Tuesday to early Thursday next week, the unions said.

The workers are pushing for better job security and pay.

France's state rail company SNCF said it would advise passengers about the extent of the disruption on Monday.

The judge ruled that, under Spanish law, a person who downloaded music for personal use could not be punished or branded a criminal. "That would imply criminalising socially admitted and widely practised behaviour where the aim is not to gain wealth illegally but to obtain private copies," she said in her judgment.

"If the purpose of the copy is not to gain wealth there is no way that it can be considered illegal," Victor Domíngo, head of Spanish internet user's association Internautas, told the Abc newspaper yesterday. "It would be a lot different if someone downloaded in order to sell on."

But Antonio Guisasola, from Spain's Promusicae recording industry federation, said the judge had got it wrong. "We have already appealed against the decision," he said. "Peer-to-peer [P2P] sharing is not legal in Spain."

Mr Guisasola, whose federation had backed a prosecution case that demanded a two-year prison sentence and €25,000 (£16,700) in fines and compensation, explained it had tried to prove the man was selling the music he sent out on CDs, rather than just distributing it for free.

Even though it had failed to prove that he was selling, Mr Guisasola said his federation was still convinced "private use" was not a legal excuse for downloading music for free. "I have been with both the justice minister and the culture minister today and they are both quite clear that peer to peer is illegal," he said.

This was even more clearly so in a case where music was being shared by more than one person, he said. "People should understand that we all have to respect people who create," justice minister Juan Fernando Lopéz Aguilar said yesterday. "These are people who have the right to control the use of their literary or artistic creations in all media."

But the judge insisted Spain's intellectual property law protected people against being prosecuted if they could prove private use. Spain is drawing up a new law that is likely to strike out the existing right to "private copies" of material.

The licensing of digital content has become a major issue for the entertainment industry. The Financial Times today reported that Google has been offering up to $100m to media companies including CBS, Viacom, Time Warner and News Corp to license their content to the video website YouTube, which it bought last month for $1.65bn. Analysts have warned that YouTube could be targeted by lawsuits for carrying copyrighted material.

In an interview published in the Financial Times Deutschland on Monday, Matthew Bryza, the U.S. deputy assistant secretary of state for the Caucasus and southern Europe, said Germany could be making a mistake by relying too much on Russia for its gas.

Germany's BASF and E.ON are minority shareholders in the new Nord Stream pipeline that will run from gas fields in Russia, under the Baltic Sea, to Germany's north.

"That project simply raises the question what diversification means when it comes to gas supply," Bryza said.

Germany is already the top European customer of Russian gas monopoly Gazprom. It supplies a quarter of Europe's gas and its share of the market is expected to rise in coming decades as North Sea supplies begin to peter out.

But the huge firm, the world's largest gas company, tarnished its reputation at the start of this year by cutting gas supplies to Ukraine, the key transit route to Europe, because of a price dispute.

"If you live in Germany you do not want to go through what happened last winter with Ukraine," Bryza said in the interview. "I wonder as a U.S. official how much diversification anybody can develop by having more pipelines into the same supplier."

President Vladimir Putin has said Germany could become a gas distribution hub for Europe, a vision that worries some of the European Union's newest members, who rely on the bloc's collective bargaining power to get a fair deal from Gazprom.

The Russian Foreign Ministry statement said U.S. officials had previously criticized the Blue Stream pipeline supplying Russian gas to Europe via Turkey, as if the link meant Turkey and Europe were falling into dependence on Russia.

It said reality had been quite different, and the success of the pipeline meant there were now discussions about expanding it.

"Unfortunately, the impression is being created that U.S. opposition first to Blue Stream and now to the Nord Stream is not based on worries about Europe's energy security, but on the principle professed by some American officials -- that a good gas pipeline is one that skirts around Russia."

48-year-old retired military officer Alexei Rykov had bought just one lottery ticket as a present for his own birthday and the ticket proved to be lucky - the man won one million rubles (about $37,000). He used the money to buy an apartment (until then the family was renting) and a car.

After a while his wife Irina Rykova started to suspect the winner of hiding some of the money from her. The woman and her mother made Alexei's life so miserable that he decided to divorce. The divorce didn't stop the woman, however, and she kept claiming the money.

The ex-wife even hired a man to extort money from Alexei, instructing the thug to kill him in case of refusal. Alexei turned to the police and the racketeer was detained while receiving marked money.

At the trial, the detained man denied any connections with former Mrs. Rykov and she acted at the trial only as a witness. Alexei Rykov said he did not want his ex-wife to be jailed. "Whatever she has done, she remains the mother of my children," he said.