All eyes on Fed after bleak Monday

WASHINGTON, Sept. 16 (UPI) -- Turmoil in the financial markets Tuesday overshadowed the U.S. Federal Reserve Bank's regularly scheduled meeting following Monday's market shifts.

Stocks tumbled Monday after Lehman Brothers declared bankruptcy, Merrill Lynch was rescued by Bank of America in a $50 purchase and the country's largest insurance company, American International Group, found solace when New York regulators allowed it to tap $20 billion of its own restricted, subsidiary resources.

The reverberations created a blitz of selling that pulled the Dow Jones industrial average down 504 points in its worst one-day fall since Sept. 17, 2001, when it lost 684.81 points, The Washington Post reported.

Investors will be watching for the Fed to lower rates, as it did in 2001 to quickly restore calm to markets. On Monday, the Fed expanded two lending programs and relaxed rules to make it easier for regular banks to purchase investment banks, the Post reported.

In the turmoil, a record 8 billion shares traded hands Monday, including a sudden sell-off at the end of the day that pushed indexes down further.

"In the long run, I'm confident that our capital markets are flexible and resilient, and can deal with these adjustments," President Bush said Monday.

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Midwest cleans up, assesses storm damage

CHICAGO, Sept. 16 (UPI) -- Calm weather is expected, allowing cities to mop up after deadly storms pushed through the U.S. Gulf Coast to the Great Lakes, forecasters said.

High pressure building over the country this week should result in the calm conditions over most of the United States, AccuWeather.com reported. Spotty showers and thunderstorms were expected in the South.

In the Midwest, however, communities were still staggered Tuesday after weekend storms belted the region, leaving 17 dead and more than 2 million customers without power, The New York Times reported.

The storm -- a product of the remnants of Hurricane Ike joining a low-pressure front during the weekend -- produced wind gusts of up to 81 mph in Ohio, touched off five tornadoes in Michigan and dumped as much as 10 inches of rain in parts of Illinois, Indiana, Michigan and Missouri, the Times said.

Officials in the states caught in the storm's path blame Ike for at least 39 deaths, a figure likely to change as search-and-rescue operations continue, AccuWeather.com reported.

Illinois Gov. Rod R. Blagojevich declared seven counties disaster areas after rainfall forced at least 200 Illinois residents into temporary shelters. Chicago set an all-time daily rain record Saturday with 6.64 inches.

In Indiana, rains swelled rivers and wind damaged trees and buildings, the Times reported. A portion of Interstate 80/94 on the Indiana-Illinois border remained partly closed Tuesday due to flooding.

More than 40 state and country roads in Missouri were closed because of flooding and officials said more problems could be on the horizon.

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Report: Iran uranium enrichment better

TEHRAN, Sept. 16 (UPI) -- Iran has improved its centrifuges producing enriched uranium, indicating the country overcame some program challenges, an international watchdog agency said.

In a six-page report, the International Atomic Energy Agency charged that Iranian officials still won't reveal information about the country's past research on nuclear weapon design, The New York Times reported Tuesday. IAEA officials said they failed "to make any substantial progress" in their investigation.

"We seem to be at a dead end," a senior official told the Times. "We would describe it as a gridlock."

The agency report released Monday also said "foreign expertise" may have aided Iran with experiments on a detonator that could be used on a nuclear weapon. Iran, which has denied such activities, has been asked for an explanation.

The report said Iran now runs about 3,800 centrifuges, an increase of several hundred during the past several months. The document indicated Iran upped the efficiency of its centrifuges from about 50 percent to about 80 percent. The agency also criticized Iran for continuing to expand its uranium enrichment program in defiance of U.N. Security Council resolutions.

Iranian officials dismissed the report, saying they expected an escalation of international demands in advance of a possible deal, the Los Angeles Times reported.

"We know that the pressures increase when the issues are going to be resolved," Hassan Qashqavi, spokesman for Iran's Foreign Ministry, said Monday in Tehran.

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Odierno now leads U.S. troops in Iraq

BAGHDAD, Sept. 16 (UPI) -- U.S. Army Gen. Raymond Odierno took over as the top U.S. officer in Iraq Tuesday, taking the reins during a ceremony from Gen. David Petraeus.

U.S. Defense Secretary Robert Gates presided over the ceremony, traveling unannounced to Iraq for the event and to visit with Iraqi military and governmental leaders, The New York Times reported.

Petraeus will assume command of U.S. forces across the Middle East and Southwest Asia.

During a dinner Monday, Gates presented Petraeus with the Defense Distinguished Service Medal and presented U.S. Ambassador to Iraq Ryan Crocker with the Department of Defense Medal for Distinguished Civilian Service, the Pentagon's highest honor for a civilian, the Times said.

Commenting on the Iraqis' assumption of security duties, Petraeus said U.S. combat troops "are by and large already out of the populated areas in 13 or 14 of Iraq's 18 provinces," adding security duties in 11 provinces were under Iraqi control and another two were "expected to shift in the month of October."

At least three explosions in which at least 32 people died coincided with Gates's visit. One blast occurred at a Ramadan feast in Diyala province and two happened in central Baghdad.

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Russians suspected in Georgia forest fire

TSAGVERI, Georgia, Sept. 16 (UPI) -- Georgia says it has formed a commission to investigate whether Russian soldiers purposely started a forest fire in a popular national park.

Some witnesses near the Borjomi-Kharagauli National Park said they saw a helicopter in the area on Aug. 15, only hours before Russia and Georgia signed a cease-fire halting the military conflict. Some said they saw "burning things" being dropped from the chopper onto the park, The Washington Post reported Tuesday.

The Georgian government commission says it will investigate if Russia deliberately started the forest fire, which has burned 2,500 acres of old-growth forest and crippled a major tourist attraction.

"I believe that yes, (the Russians) did it," said Revaz Enukidze, an official with Georgia's Environment Ministry, adding he thought the fire was started "to make as much as possible the economic and moral damage before the cease-fire."

"They know that this place is the treasure of the country," Natia Muladze of the park's visitor services told the Post. "Borjomi was full of Russians during the Soviet times, and they wanted to destroy the things which they could not take."

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