TSX drops as miners weaken, focus on U.S. earnings

TORONTO (Reuters) - Canada's main stock index retreated on Monday as mining stocks were pressured by softer gold prices and investors braced for the upcoming U.S. fourth-quarter earnings season.
The Toronto Stock Exchange's S&P/TSX composite index's <.gsptse> fall tracked declines on U.S. stock markets as cautious investors cashed in recent gains ahead of the earnings season. The U.S. results are expected to be only marginally stronger than the previous quarter's lackluster performance. <.n>
"We're in earnings season in the U.S. That might cause some kind of hesitation," said Michael Gayed, chief investment strategist at Pension Partners.
Gold prices slipped as investors eyed the outlook for U.S. budget talks and the U.S. Federal Reserve's quantitative easing program. Two top Fed officials suggested on Friday the central bank may halt its bullion-friendly asset purchases by the end of the year due to an improving economy.
The Toronto index's materials group, where miners reside, finished 0.97 percent lower.
"There's going to be some kind of noise near term, most of it due to the concern about the (U.S. budget) debt ceiling coming up. That's going to cause some near-term back and forth movement," Gayed said.
The index's energy group gave back 0.65 percent as oil prices steadied after retreating earlier in the session. TD Securities downgraded several Canadian oil and gas companies.
The S&P/TSX composite index finished down 41.26 points, or 0.33 percent, at 12,499.55. Eight of its 10 main sectors fell.
Barrick Gold Corp was the biggest drag, falling 1.67 percent to close at C$33.57, while Suncor Energy Inc slipped 1.04 percent to C$33.23. Goldcorp Inc rounded off the top three negative weights on the index, giving back 1.76 percent to C$34.69.
Canadian Natural Resources was down 1.23 percent at C$29.78, while fellow oil producer Talisman Energy Inc was off 2.27 percent at C$11.62. TD Securities cut its rating on both companies.
Toronto's resource-heavy market pared some of the robust gains it made made the previous week, when the index hit a nine-month high after the landmark U.S. budget deal.
"The markets are coming off a hangover of feeling good from last week," said Barry Schwartz, vice president and portfolio manager at Baskin Financial Services.
"Until we get a good feel on the fourth-quarter earnings and the guidance for first-quarter earnings, the market will probably trade sideways," he added.
Investors were also taking in news that global regulators gave banks four more years and greater flexibility to build up cash buffers.
The financial sector, the index's biggest, slid 0.04 percent. Royal Bank of Canada was down 0.43 percent at C$60.81. The Bank of Nova Scotia was up 0.1 percent at C$57.65.
In company news, Canada's airlines flew fuller planes in December, with dominant carrier Air Canada and No. 2 WestJet Airlines reporting record monthly passenger levels. Air Canada shares were up 5.08 percent at C$1.86. WestJet shares inched up 0.10 percent to C$20.23.

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Violence in Northern Ireland for 3rd day over flag

BELFAST, Northern Ireland (AP) — Northern Ireland police used water cannons to fend off brick-hurling protesters in Belfast on Saturday as violent demonstrations over flying the British flag stretched into a third straight day.
The Police Service of Northern Ireland said it was investigating reports that a number of shots were fired at police lines. A 38-year-man has been arrested on suspicion of attempted murder, police said.
More than 1,000 demonstrators marched on Belfast's city hall earlier Saturday afternoon amid a heavy police presence. While the rally passed largely without incident, police then came under attack from a mob of more than 100 people hurling bricks and fireworks. Two men were arrested, police said.
Protesters have been out in force — with sometimes violent results — since a Dec. 3 decision by Belfast City Council to stop flying the British flag year-round.
Such issues of symbolism frequently inflame sectarian passions in Northern Ireland, where Protestants mainly want to stay in the United Kingdom and Catholics want to unite with the Republic of Ireland.
Many Protestants want the council to reverse its decision about the flag, and dozens of police have been injured in ensuing demonstrations.
Saturday's flare-up followed a tense Friday night in Belfast when nine police officers were injured and 18 rioters arrested during rioting. Police said that more than 30 petrol bombs were thrown at officers, along with ball bearings, fireworks and bricks as they responded to clashes in Protestant sections of the city.
Similar clashes on Thursday saw 10 police injured in east Belfast.
The controversy has also seen death threats made against politicians.

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Man arrested after shots fired at Northern Irish police in flag riots

BELFAST (Reuters) - Northern Irish police arrested a 38-year-old man on Saturday on suspicion of attempted murder after shots were fired at police officers during protests over the removal of the British flag from Belfast City Hall.
Police used water cannon against more than 100 protesters hurling fireworks, smoke bombs and bricks in the eastern part of the city shortly after a demonstration outside City Hall calling for the flag to be reinstated on a permanent basis.
Pro-British loyalists began rioting a month ago in the most sustained violence in the city for years after a vote by mostly nationalist pro-Irish councillors to end the century-old tradition of flying the British flag from Belfast City Hall.
The violence, which stopped over Christmas, began again on Thursday and 19 police officers have been injured since then, bringing the total number of officers hurt since early December to more than 60.
Loyalists blamed Saturday's fighting on anti-British Catholic nationalists who they said attacked them first.
Militant nationalists, responsible for the killings of three police officers and two soldiers since 2009, have so far not reacted violently to the flag protests, limiting any threat to 15 years of peace in Northern Ireland.
However, Peter Robinson, the British-controlled province's first minister, said on Friday that rioters were playing into the hands of nationalist groups, who would seek to exploit every opportunity "to further their terror aims".
At least 3,600 people were killed during Northern Ireland's darkest period as Catholic nationalists seeking union with Ireland fought British security forces and mainly Protestant loyalists determined to remain part of the United Kingdom.
The violence was mostly ended by a 1998 peace deal.

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Spanish police seize ancient plundered vase

MADRID (AP) — The owner of an antique shop in Spain was arrested after police investigators found a vase there dating back to the late second century B.C., officials said Saturday.
The antiquity had been illegally plundered from an Iberian era archeological site in the province of Alicante, an Interior Ministry statement said.
Inspectors found it in a cardboard box during a routine search of the shop in the eastern town of El Campello.
"We are not yet aware of the full importance of this discovery, but in 20 years' time we will still be talking about this vase," said Jose Luis Simon, an expert from the cultural heritage service of the Ministry of Culture.
Simon said the piece showed decorative paintwork from the Iberian era that tells the story of a hunter who had managed to kill a wild boar, one of the rituals of the time that proved a youth had attained the status of manhood.
He said that while fragments of vases from this antiquity exist in Spain, this was the first to be found whole, making it "of exceptional value."
Simon said the hunting sequences showed similarities to some found on an ancient Greek vase, known as a crater, in the Vatican museum in Rome.
The Interior Ministry said the inspectors who opened the cardboard box knew right away they were dealing with something out of the ordinary and requested technical backup.
"The technicians did not take long to arrive and issue a report confirming the vase's originality," Simon said.
He said it has been moved to the Alicante Archeological Museum for safekeeping.

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Piano maker Steinway takes down "for sale" sign

NEW YORK (Reuters) - Steinway Musical Instruments Inc, the famous manufacturer of pianos, saxophones and trumpets, said on Wednesday it had decided not to sell itself following a 17-month-long exploration of strategic alternatives.
An American icon synonymous with handmade grand pianos, Steinway has struggled to keep its production margins competitive amid stagnant sales, and has seen its shares plunge 10 percent year-to-date. Still, its third-quarter earnings last month offered signs that cost-cutting was paying off.
In a statement on Wednesday, Steinway said it had received several non-binding indications of interest in buying the company, following talks with other companies in the sector as well as private equity, yet these did not offer more value than its own strategic plan.
"We will continue to focus management's efforts on execution of that plan and we look forward to a prosperous 2013," Steinway CEO Michael Sweeney said in the statement.
An in-principle agreement to sell its band instrument division to an investor group led by two of its board members, Dana Messina and John Stoner, was also scrapped in light of the current operating performance of the band division, Steinway said.
In July 2011, Messina, Stoner and other members of management made an offer for Steinway's band instrument and online music divisions, prompting the company to set up a special committee in order to assess it.
Later that month, Steinway asked investment bank Allen & Company LLC to a assist the special committee on exploring strategic alternatives that could also include selling the whole company outright to other interested parties.
By October 2011, Messina had stepped down as CEO of the company after 15 years at the helm to pursue his bid, yet he remained a board member. He was replaced by Sweeney, a chairman of the board of Star Tribune Media Holdings and a former president of Starbucks Coffee Company (UK) Ltd.
Steinway said on Wednesday that it was continuing a separate process to sell its leasehold interest in New York's Steinway Hall building, situated on Manhattan's 57th Street, and was in talks with several parties.
According to its website, Steinway & Sons, the company's piano unit, opened the first Steinway Hall on 14th Street in Manhattan in 1866.
With a main auditorium of 2,000 seats, it became New York City's artistic and cultural center, housing the New York Philharmonic until Carnegie Hall opened in 1891. These days, Steinway Hall is a showroom for the company's instruments.
The Waltham, Massachusetts-based company's pianos have been used by legendary artists such as Cole Porter and Sergei Rachmaninoff and by contemporary ones like Chinese concert pianist Lang Lang.

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RIM shares jump in Toronto, rebound from sharp decline

TORONTO (Reuters) - Shares of Research In Motion Ltd jumped nearly 10 percent on the Toronto Stock Exchange on Thursday, following similar gains in New York on Wednesday, in a rebound from last week's sharp decline.
Last Friday, the volatile stock plunged more than 20 percent after the company said on an earnings conference call that it was rolling out a new fee structure for its services segment, which some investors fear could pressure the high-margin business.
"It got hit so hard after the conference call," said Ed Snyder, an analyst with Charter Equity Research. "People are still fairly optimistic about (BlackBerry 10) coming out in January, so (the rebound is) really just a value play."
The new fee structure overshadowed stronger-than-expected quarterly results.
RIM shares were up 9.7 percent to C$11.42 in midday trade on the Toronto Stock Exchange. The company's Nasdaq-listed stock was down 2 percent to $11.60 after big gains on Wednesday, when Canadian equity markets were closed for Boxing Day.
Through the autumn of 2012, RIM rallied as investors grew optimistic about prospects for its new make-or-break BlackBerry 10 devices, to be formally unveiled January 30. On Thursday, the shares were still up more than 80 percent from the year's low, touched in September.
The Wednesday and Thursday gains also came after several websites posted photos of what they said could be the first BlackBerry 10 phone with a physical keyboard.
Evercore Partners analyst Mark McKechnie said the photos boosted RIM's stock, which he said was depressed from last week's selloff, on a quiet trading day.
"There certainly are folks that believe in the new product cycle," he said. "The whole Wall Street community's been trying to handicap how strong that product cycle will be for RIM."
RIM has said it plans to roll out touchscreen-only devices first, a few weeks before it releases a smartphone with the QWERTY keyboard many longtime BlackBerry users rave about. But some analysts believe devices with hard keyboards will not hit the market until spring.
Management has touted BlackBerry 10's new on-screen keyboard, but some see the company's reputation for building solid, usable physical keyboards as an important competitive advantage as RIM fights for market share against Apple Inc and Samsung Electronics .
McKechnie said volatility is not unusual ahead of big smartphone launches.
"There's so much scale involved in this industry, one way or the other. A successful product versus a failure is going to really change the earnings power of a company," he said.

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A surprisingly good vintage as market logs gains

NEW YORK (AP) — If you'd told investors what was going to happen in 2012 — U.S. economic growth at stall speed, an intensifying European debt crisis, a slowdown in China, fiscal deadlock in Washington, decelerating corporate earnings growth — and asked how the stock market would perform, few would have predicted a good year.
But that's just what they got.
The Dow Jones industrial average, the Standard & Poor's 500 and the Nasdaq composite index all ended the year substantially higher, despite losing ground in the final days of year as concerns about the looming "fiscal cliff" mounted.
The Dow gained 7 percent for the year, its fourth consecutive annual advance, having started the year at 12,217. The S&P 500, which started the year at 1,257, is up 13 percent, beating the 7.8 percent average annual gain of the past 20 years. The Nasdaq also logged a better-than-average gain, 16 percent.
Including dividends, the total return on the S&P 500 index was even better: 16 percent.
Financial companies led the gains among S&P 500 stocks, advancing 26 percent, as banks continued their restructuring efforts after the recession. Bank of America more than doubled, gaining $6.05 to $11.61 and Citigroup advanced $13.25, or 50 percent, to $39.56. Utilities, the best-performing industry group last year, was the only sector of 10 industry groups in the index to decline, dropping 2.9 percent.
"There's been a lot thrown at this market, and it's proven to be very resilient," said Gary Flam, a portfolio manager at Bel Air Investment Advisors in California. "Here we are at the end of the year, and it's still relatively strong."
Stocks started the year on a tear, with optimism about an improving job market and a broader economic recovery providing the backdrop to the S&P 500's best first-quarter rally in 14 years.
The index advanced 12 percent by the end of March, closing the quarter at 1,408, its highest in almost four years, with financial companies and technology firms leading the charge. The Dow ended the first quarter at 13,212, logging an 8 percent gain.
Apple was one of the star performers of the first quarter and was probably the year's most talked-about company.
The popularity of the iPhone and iPad led to staggering sales growth that helped push its stock up 48 percent to almost $600 at the end of March. Apple also announced a dividend and overtook Exxon Mobil as the U.S.'s most valuable company.
At the start of the second quarter, the intensifying European debt crisis and concerns about the impact that it would have on global economic growth prompted a sell-off.
By the start of June, U.S. stocks had given up the year's gains. Borrowing costs for Spain surged and investors fretted over the outcome of Greek elections that had the potential to pull the euro currency bloc apart.
The outlook for growth in China, the world's second-largest economy, also began to weigh on investors' minds. Economic growth there slowed to 8.1 percent in the first quarter as export demand waned, and investors worried that it would keep falling.
The Dow fell as low as 12,101 June 4. The S&P dropped to 1,278 June 1.
The second quarter was also marred by Facebook's initial public offering.
The stock sale was one of the most keenly anticipated initial public offerings in years, but investors didn't "like" the $16 billion market debut. The social network priced its IPO at $38 per share, and the stock started to fall soon after the first day of trading on concern about the company's mobile strategy.
Facebook closed as low as $17.73 on Sept. 4 before recovering some of the ground it lost to close the year at $26.62.
Company earnings reports were also starting to make uncomfortable reading for investors. Earnings growth for S&P 500 companies fell as low as 0.8 percent in the second quarter, according to S&P Capital IQ data.
The stock market only recovered its poise after the European Union put together loans to bail out Spain's banks on June 10 and the head of the European Central Bank, Mario Draghi, pledged to do "whatever it takes" to save the euro.
Speculation that the Federal Reserve was set to provide the economy with more stimulus to prevent it from slipping back into recession also bolstered stocks.
The rally even survived a blip when a software glitch at trading firm Knight Capital threw stock prices into chaos Aug. 1.
The firm said the problem was triggered by new trading software it installed. Erroneous orders were sent to 140 stocks listed on the New York Stock Exchange, causing sudden price swings and surging trading volume.
Apple launched the iPhone 5, the latest version of its smartphone, in September, and the company's stock climbed to a record close of $702.10 on Sept. 19. That gave Apple a market value of $658 billion, and many analysts predicted more gains lay ahead.
By the time Fed Chairman Ben Bernanke announced Sept. 13 that the U.S. central bank would start a third round of its bond-purchase program, which is intended to push longer term interest rates lower and encourage borrowing and investment, the S&P 500 had surged 14 percent from its June 1 low. A day later, the index peaked at five-year high of 1,466. The Dow Jones reached its peak for the year of 13,610, Oct. 5.
As is often the case on Wall Street, investors "bought the rumor and sold the fact," and quickly turned their attention to the challenges that lay ahead.
Analysts had also been cutting their outlook for growth in the final quarter of the year. At the start of the second quarter, estimated earnings growth for the period was 15.7 percent. That forecast had fallen to 3.4 percent by Dec. 27.
"One of the blessings that supported the stock market's moves in prior years was earnings growth," said Lawrence Creatura, a portfolio manager at Federated Investors. "That's true this year, but at a decelerating rate. It's not gone unnoticed that earnings growth is slowing, and many forecasts now include a full stall."
Apple's halo also began to slip in the final three months of the year. Its iPad Mini tablet, launched Nov. 2, met with lukewarm reviews, there were hints of unrest among its executive ranks. Investors began to fret that the intensifying competition in the smartphone market would crimp Apple's profits. The stock tumbled, and despite rallying in recent days is still down 27 percent from its September peak.
The year's final twist came in Washington.
Stocks wavered ahead of a presidential election that at times seemed too close to call, and while President Barack Obama ultimately reclaimed the White House by a comfortable margin, the Republicans retained control of the House.
The divided government set the stage for a tense end to the year as Democrats and Republicans sought to thrash out a budget plan that would avoid the U.S. falling off the "fiscal cliff," a series of tax hikes and government spending cuts that economists say would push the economy back into recession.
Initially, markets fell as much as 5 percent in the 10 days after the elections as investors worried that a divided government would not be able to agree on a budget plan to cut the U.S. deficit.
While the S&P 500 managed to recoup those losses by December on optimism that a deal would be reached, some investors are still urging caution. Any agreement will still be "ill-tasting medicine" to the economy, as it will almost certainly involve both spending cuts and tax hikes, says Joe Costigan, director of equity research at Bryn Mawr Trust Company.
"The question is, how much will the drag from the government be offset by business and personal spending," says Costigan. "The market has reasonable expectations for growth priced in, so I don't think we're going to see a big run-up.

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Backward step for reform in Myanmar?

Myanmar's military has stepped up attacks on ethnic Kachin rebels in recent days with airstrikes. This move calls into question efforts by the United States and other international powers to richly and quickly reward the nominally civilian regime there for a series of gestures toward political reform.
US State Department spokesman Victoria Nuland told reporters yesterday that the Obama administration is "deeply troubled" by increased violence and urged dialogue between Myanmar's government and the Kachin Independence Organization, the political wing of the Kachin Independence Army, which has been in an on again, off again, war against the central state for decades.
Simon Roughneen wrote for the Monitor yesterday that "the Myanmar Army offensive – which includes helicopter gunships and aerial bombardment – comes after weeks of heavy fighting at outposts about 10 miles outside the KIA headquarters on the Myanmar-China frontier." He then quoted Joseph Nbwi Naw, a Kachin Catholic priest in the KIA headquarters town of Laiza as saying "the situation is very tense. The bombers are bombing just about four or five miles from the town here."
Myanmar (also known as Burma) is as ethnically complex a country as they come, and while most in the West have focused on the democracy struggle of Aung San Suu Kyi and her National League for Democracy, there is no guarantee that any new order that emerges from a political promise, with promised free elections scheduled for 2015, will create stability or justice for its minorities. Ms. Aung San Suu Kyi, an ethnic Burman like most of the junta that kept Myanmar under military rule from 1962 until 2011, has been mostly silent on violence targeting the ethnic Muslim Rohingyas recently and does not appear to have spoken out on the situation involving the Kachin.
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In September, the Irrawady, a Thailand-based news organization that focuses on Myanmar, reported that Aung San Suu Kyi argued against taking a strong stand, as it could make the situation worse. "There are people who criticized me when I remained [silent] on this case," she told a Burmese group on a visit to New York. "They can do so as they are not satisfied with me. But, for me, I do not want to add fire to any side of the conflict." The Irrawady wrote: "Some critics have condemned [Aung San Suu Kyi] for staying silent on Kachin as well as the sectarian violence between Arakanese Buddhists and Rohingya Muslims in western Burma."
In early November, I wrote about doubts over the wisdom of America's breakneck pace of normalization with Myanmar, with President Obama becoming the first US leader to ever visit the country that month.
Has there ever been faster restoration of US relations with a country it had once worked so hard to isolate, in the absence of either a US invasion or a revolution? I can't think of one. The once-maligned leaders are being brought in from the cold. The US even indicated in October that Burmese officers would be invited to the annual Cobra Gold military exercise between the US and Thailand as official observers.
The Obama administration's motivations are clear: Demonstrate the benefits of the generals’ political opening and turn toward democracy. But with the breathless rush to friendship comes a country where ethnic tensions still dominate, and ethnic violence, specifically against ethnic Rohingya Muslims, that the generals have been either unwilling or unable to stop.
... If all goes well, the Obama administration’s overture toward Myanmar will go down as a major foreign policy achievement, and more importantly signal a brighter future for Myanmar’s 48 million people. But there are challenges and pitfalls ahead, and with each concession the US and other major powers make before 2015, a potential carrot to offer for positive change is spent.
Hopefully, Obama will not have gone to Myanmar too soon.
The recent war with the Kachin is evidence of how hard it has been to build on the fruits of "dialogue" between Myanmar and armed ethnic-minorities. A 17-year cease-fire between the Kachin rebels, in northeastern Myanmar along the Chinese border, broke in June of 2011, and the results have been catastrophic. Human Rights Watch estimated that 75,000 Kachin were displaced from their homes in the fighting, recording the razing of homes, stealing of property, torture of Kachin civilians, use of civilians as slave labor, and the rape of Kachin women, all by Myanmar soldiers.
Such events have been frequent for Myanmar's ethnic minorities since shortly after independence from Britain in 1948. In February 1947, nationalist hero Aung San, the father of Aung San Suu Kyi, and other nationalist leaders signed the Panglong agreement with ethnic minorities, who today make up about 40 percent of the national population. The agreement envisioned Myanmar as a federal state, with regional autonomy for ethnic minority states like Kachin, where the residents are mostly Christian and speak a language distinct from the ethnic-majority Burmans, who are mostly Buddhist.
But autonomy was never delivered, and when Aung San and six members of his cabinet were assassinated in July 1947, the stage was set for decades of conflict not just with the Kachin but other ethnic minorities like the Shan and the Wa, many living in the rugged mountains in eastern and northern Burma.
For now, the elections of 2015 are a long way away, and whether those elections will lead to a more just approach to ethnic minorities remains an open question. That Aung San Suu Kyi has suffered personally and for decades for her principled stand on democracy for Myanmar is no guarantee that she or anyone else who may come to power there will handle the country's ethnic tensions any better than their predecessors have for the past 60 years.
Holding some diplomatic and sanctions pressure in the back pocket may prove a wiser course than declaring a democracy victory in early 2013.

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US drone strike in Pakistan kills influential Taliban commander

Key Pakistani Taliban commander Maulvi Nazir – considered a "good" Taliban by some among the Pakistani military – died in a US drone strike that left at least six dead on Thursday, according to local reports.
According to Pakistan's Dawn newspaper, Taliban and local government officials confirm that Mr. Nazir and at least two of his deputies were killed when a US drone hit their vehicle in South Waziristan, a Pakistani tribal region along the Afghan border. The commander's truck had reportedly broken down at the time.
The Guardian notes that neither the Pakistani government nor the Taliban has made an official statement on the reports, and that details remain murky.
Because journalists are usually prevented by militants from visiting places hit by drones, the exact details of what happened and who was killed in such attacks are often extremely hard to verify.
Residents and an intelligence official in South Waziristan who spoke to a local journalist said the total number of people killed in the first attack was either six or 10. The intelligence source said all the men killed were "top leaders" of the Mullah Nazir group, the leading militant group in South Waziristan.
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Maulvi Nazir was the primary militant commander in South Waziristan and a key figure in Pakistan's Taliban, having maintained a complex set of relationships among the region's players.
Unlike some of Pakistan's domestic militants, Nazir chose to focus his efforts fully on Afghanistan and the NATO and US forces stationed there, and according to the US “had a clear collaboration” with Afghanistan's powerful Haqqani network, a primary foe of US and NATO troops in Afghanistan. The Washington Post notes that he was accused of regularly sending troops into Afghanistan to fight alongside the country's own Taliban against the US-led forces there.
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His Afghan focus on targeting foreign troops earned him a reputation with parts of the Pakistani military as a "good" Taliban, and he negotiated a deal with the Islamabad to stay out of its battle with domestic militants in the region. His militants have also aided Pakistani troops in attacking members of Tehrik-e-Taliban Pakistan (TTP), an anti-Islamabad faction of the Taliban.
But that also earned him the hostility of some of his domestic Taliban peers. Nazir was wounded in November during a suicide attack on his convoy. Rival Taliban commanders were believed to have been behind the attack, which was said to have caused some fracturing of the Pakistani Taliban in the region.
Security analyst Imtiaz Gul told the Guardian that Nazir's death will likely be welcomed by both the US and Pakistan – despite the latter's peace deal with the late militant.
"Both the US and Pakistan will be happy because they now have one less enemy," he said. "Although he was in an undeclared peace deal with the government, he was also subverting the stated goals of that agreement by providing support and shelter to al-Qaida people whose leaders have pleaded with the rank and file of the Pakistani army to rebel against the state."

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Russia plans biggest war games since Soviet era

The Russian navy has announced that it will hold its biggest war games since Soviet times in the Mediterranean and Black seas later this month.
The ambitious exercises, which will involve ships from all four major Russian fleets, are a sign of growing confidence on the part of Russia's military as it begins to enjoy the benefits of President Vladimir Putin's huge budget allocations for renewing and re-equipping all branches of the armed forces.
The purpose of the war games will be to strengthen integration between different types of forces and gain practice with major military deployments outside Russia's immediate neighborhood, the Defense Ministry said in a statement Tuesday.
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As part of the maneuvers, naval ships will arrive at an "unprepared" coast in the Russian northern Caucasus region to take amphibious troops onto transport vessels.
"The primary goal of the exercise is to train issues regarding formation of a battle group consisting of troops of different branches outside of the Russian Federation, planning its deployment and managing a coordinated action of a joint Navy group in accordance with a common plan," the ministry's statement said.
The participating ships, it said, will be drawn from all of Russia's four major naval formations: the Northern, Baltic, Pacific, and Black Sea fleets.
Some experts suggest the war games may be cover for an increasingly nervous Moscow's preparations to evacuate Russian citizens and their dependents from war-torn Syria.
About 9,000 Russians are registered with the Russian embassy in Damascus, but some experts say the full number may be 30,000 or more. Over the nearly half a century that Moscow has enjoyed good relations with Syria, thousands of Russian women have married Syrian men and moved to the country. Many of them may urgently demand to return with their children to Russia if the situation turns critical.
This week the Russian navy refreshed a fleet, including several huge amphibious assault ships capable of carrying thousands of people, which it had deployed to the eastern Mediterranean last summer.
Experts say the replacement fleet dispatched this week is of similar makeup, with at least five huge troop-transport ships at its core.
As part of Russia's 8-year, $659-billion rearmament program, the navy is slated to receive 50 new warships by 2016, including new Borey-class nuclear-powered ballistic-missile submarines – the third of which entered service last weekend – 18 major surface warships, and dozens of special purpose and support vessels.

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