Euro continues push against dollar

NEW YORK: The euro pushed higher against the dollar Tuesday, helped by improvements in Greece's financial status and a Spanish debt sale, and as Washington continued to battle over the looming fiscal cliff.

Meanwhile the yen slipped to its lowest level since April 2011 as Japan's incoming prime minister pressed the central bank for more stimulus.

The euro reached its best level since the beginning of May, ending at $1.3225 at 2300 GMT, up from $1.3161 late Monday.

The seven-month high for the euro came "on the back of successful sales of Greek and Spanish bills," said Benjamin Spier of Daily FX.

"Spain sold 3-month and 6-month bills for 3.52 billion euros, better than the maximum target of 3.5 billion euros. Greece sold 13-week treasury bills for 1.3 billion euros at a 4.11 percent yield," he said.

Shortly afterward, Greece's credit rating was upgraded by Standard & Poor's from "selective default" to B-, with a stable outlook, following Athens' debt buyback that earned it fiscal breathing space and new bailout funds releases from the eurozone.

The upgrade "reflects our view of the strong determination of European Economic and Monetary Union (eurozone) member states to preserve Greek membership in the eurozone," S&P said.

Meanwhile, the dollar got no help from Washington politicians, who have not yet reached a deal on a long-term deficit reduction plan that would also help the country avoid crunching tax hikes and spending cuts slated for January 1.

The yen continued to fall, setting 20-month lows against the dollar and euro, two days after the Liberal Democratic Party swept to a general election victory that is returning Shinzo Abe to the premiership.

Abe met with Bank of Japan governor Masaaki Shirakawa at his party's headquarters Tuesday and told the central banker he wanted to set a two percent inflation target, in the opening salvo of his battle to kickstart the economy.

"I told him I want to reach a policy accord with the BoJ for the two percent inflation target that I promoted throughout the election campaign," Abe told reporters.

The dollar rose to 84.28 yen from 83.87 yen Monday, while the euro hit 111.47 yen from 110.40

In other currencies, the dollar slipped to 0.9134 Swiss francs, while the pound gained to $1.6247.

- AFP/fa

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India lost $123bn in black money in 10 yrs: US think tank report

BEIJING: China is listed as the leading source of global outflows of tainted money with India ranking eighth in the list compiled by a Washington-based think tank, Global Financial Integrity. China lost $2.74 trillion and India $123 billion to international outflows of illicit cash between 2001 and 2010, it said.

Some 150 developing countries lost $5.9 trillion by way of illegal outflows in those 10 years, the Global Financial Integrity said in a report, which showed that the financial crisis has not adversely affected the production and flow of corrupt money.

The report, co-authored by an economist of Indian origin, Dev Kar, said the global outflows rose from $776 billion in 2009 amid the financial crisis to $859 billion in 2010. The all-time high of $871 billion was in 2008.

Malaysia with $64 billion in illegal outflows took the second position followed by Mexico. The bulk of illegal money flows accounting for 61% came from Asia. It is followed by just over 15% from the Western hemisphere and just over 10% from West Asia-Gulf and North Africa.

Illegal money out of China was $420 billion in 2010 and exceeded $2.7 trillion for the decade ending in 2010, which was nearly half that period's total for all developing countries.

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Experts: Kids are resilient in coping with trauma

WASHINGTON (AP) — They might not want to talk about the gunshots or the screams. But their toys might start getting into imaginary shootouts.

Last week's school shooting in Connecticut raises the question: What will be the psychological fallout for the children who survived?

For people of any age, regaining a sense of security after surviving violence can take a long time. They're at risk for lingering anxiety, depression, post-traumatic stress disorder.

But after the grief and fear fades, psychiatrists say most of Newtown's young survivors probably will cope without long-term emotional problems.

"Kids do tend to be highly resilient," said Dr. Matthew Biel, chief of child and adolescent psychiatry at MedStar Georgetown University Hospital.

And one way that younger children try to make sense of trauma is through play. Youngsters may pull out action figures or stuffed animals and re-enact what they witnessed, perhaps multiple times.

"That's the way they gain mastery over a situation that's overwhelming," Biel explained, saying it becomes a concern only if the child is clearly distressed while playing.

Nor is it unusual for children to chase each other playing cops-and-robbers, but now parents might see some also pretending they're dead, added Dr. Melissa Brymer of the UCLA-Duke National Center for Child Traumatic Stress.

Among the challenges will be spotting which children are struggling enough that they may need professional help.

Newtown's tragedy is particularly heart-wrenching because of what such young children grappled with — like the six first-graders who apparently had to run past their teacher's body to escape to safety.

There's little scientific research specifically on PTSD, post-traumatic stress disorder, in children exposed to a burst of violence, and even less to tell if a younger child will have a harder time healing than an older one.

Overall, scientists say studies of natural disasters and wars suggest most children eventually recover from traumatic experiences while a smaller proportion develop long-term disorders such as PTSD. Brymer says in her studies of school shootings, that fraction can range from 10 percent to a quarter of survivors, depending on what they actually experienced. A broader 2007 study found 13 percent of U.S. children exposed to different types of trauma reported some symptoms of PTSD, although less than 1 percent had enough for an official diagnosis.

Violence isn't all that rare in childhood. In many parts of the world — and in inner-city neighborhoods in the U.S., too — children witness it repeatedly. They don't become inured to it, Biel said, and more exposure means a greater chance of lasting psychological harm.

In Newtown, most at risk for longer-term problems are those who saw someone killed, said Dr. Carol North of the University of Texas Southwestern Medical Center, who has researched survivors of mass shootings.

Friday's shootings were mostly in two classrooms of Sandy Hook Elementary School, which has about 450 students through fourth-grade.

But those who weren't as close to the danger may be at extra risk, too, if this wasn't their first trauma or they already had problems such as anxiety disorders that increase their vulnerability, she said.

Right after a traumatic event, it's normal to have nightmares or trouble sleeping, to stick close to loved ones, and to be nervous or moody, Biel said.

To help, parents will have to follow their child's lead. Grilling a child about a traumatic experience isn't good, he stressed. Some children will ask a lot of questions, seeking reassurance, he said. Others will be quiet, thinking about the experience and maybe drawing or writing about it, or acting it out at playtime. Younger children may regress, becoming clingy or having tantrums.

Before second grade, their brains also are at a developmental stage some refer to as magical thinking, when it's difficult to distinguish reality and fantasy. Parents may have to help them understand that a friend who died isn't in pain or lonely but also isn't coming back, Brymer said.

When problem behaviors or signs of distress continue for several weeks, Brymer says it's time for an evaluation by a counselor or pediatrician.

Besides a supportive family, what helps? North advises getting children back into routines, together with their friends, and easing them back into a school setting. Studies of survivors of the Sept. 11 terrorist attacks found "the power of the support of the people who went through it with you is huge," she said.

Children as young as first-graders can benefit from cognitive-behavioral therapy, Georgetown's Biel said. They can calm themselves with breathing techniques. They also can learn to identify and label their feelings — anger, frustration, worry — and how to balance, say, a worried thought with a brave one.

Finally, avoid watching TV coverage of the shooting, as children may think it's happening all over again, Biel added. He found that children who watched the 9/11 clips of planes hitting the World Trade Center thought they were seeing dozens of separate attacks.

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EDITOR'S NOTE — Lauran Neergaard covers health and medical issues for The Associated Press in Washington.

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Can Cops Read Shooter's Sabotaged Computer?

Sandy Hook Elementary School shooter Adam Lanza may have tried to sabotage his own computer before going on a murderous rampage that claimed the lives of 20 children, but experienced investigators said today that law enforcement forensic experts could still recover critical evidence from the damaged drives.

Connecticut State Police Lt. Paul Vance revealed Monday that a computer crimes unit was working in conjunction with a forensics laboratory to "dissect" any evidence relevant to the case, but he declined to comment further on what type of evidence was involved and in what condition it was in. Later that day, law enforcement officials told ABC News that police recovered a badly damaged computer from Lanza's home that appeared to have been attacked by a hammer or screwdriver.

Sources said if they can still read the computer's hard drive, they hope to find critical clues that may help explain Lanza's motives in the killing.

Former FBI forensic experts told ABC News that in cases similar to this one, damage to the computer does not necessarily mean the computer files cannot be accessed.

"If he took a hammer to the outside, smashed the screen, dented the box, it's more than likely the hard drive is still intact," said Al Johnson, a retired FBI special agent who now works privately examining digital evidence and computer data. "And even if the hard drive itself is damaged, there are still steps that can be taken to recover everything."

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Brett Harrison, a former FBI computer forensics expert who now works with a D.C. consulting firm, said that authorities have a great deal of technology at their disposal to retrieve that data. How much is recovered, he said, will depend entirely on how much damage was done to the well-insulated "platters" -- discs lodged deep inside the machine -- where Lanza's every digital footstep was recorded.

It is likely, he said, that Lanza's computer has been moved to a "clean room" where, if the discs are intact, they could be removed and then carefully re-inserted in a fresh hard drive. If the calibrations are done correctly, investigators would still be able to unlock the clues on the discs.

If the discs aren't in perfect condition, Harrison said, "There is equipment they can use to read the data off a record even if a portion of it is damaged."

Johnson said it is tedious work done in a clean environment because the tolerances of the discs is so precise – even a particle of dust could destroy crucial evidence.

"We're talking about a tolerance of less than a human hair," said Johnson, who now does computer forensics for a South Carolina-based investigative firm.

Police have not said exactly what they expect to find on the computer's hard drive, but the former FBI experts said typically there could be record of visits to violent web sites, or to online stores that sell ammunition, or to email that might reveal if Lanza shared any hints of his plans with others.

"I'm not big on speculation," Harrison said, "but you're talking about potentially finding all the normal things that people do with their computer – Facebook pages, internet activity, email, you name it."

For now, the FBI is keeping mum on what kind of computer forensic help it could be offering in the case.

"At this time, in deference to the ongoing investigation being conducted by the CSP, the FBI is not releasing information regarding operational or forensic assistance provided in the Sandy Hook Elementary School shooting," an FBI spokesperson said.

Click Here for the Blotter Homepage.

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Clinton gets accountability report on Benghazi attacks

WASHINGTON (Reuters) - Secretary of State Hillary Clinton on Monday received an official review of the September attack on a U.S. diplomatic mission in Benghazi, Libya, setting the stage for testimony on an incident that prompted a political furor and sharp questions about security at U.S. diplomatic facilities overseas.

The State Department said Clinton - who is convalescing after suffering a concussion last week - received the report from the Accountability Review Board formed to probe the attack which killed U.S. Ambassador Christopher Stevens and three other Americans.

"The ARB has completed its work. Its report has gone to the secretary this morning. She now has it," State Department spokeswoman Victoria Nuland said.

The committee has been meeting in private and State Department officials have declined to discuss almost all specifics of the Benghazi attack pending its reports.

The findings are expected to cover questions on whether enough attention was given to potential threats and how Washington responded to security requests from U.S. diplomats in Libya.

A determination that top State Department officials turned down those requests, as Republican congressional investigators allege, could refuel criticism of the officials - and possibly even end the careers of some of them.

Clinton had been expected to testify to Congress on December 20 on the report's results, but is under doctors' orders to remain at home this week.

Deputy Secretary William Burns and Deputy Secretary Thomas Nides will testify in her stead at Thursday's open hearings of the Senate and House foreign affairs committees, Nuland said.

Prior to that, the Accountability Review Board's two leaders - retired Ambassador Thomas Pickering and retired chairman of the U.S. Joint Chiefs of Staff Michael Mullen - will testify in closed door hearings of the two committees on Wednesday, she said.

POLITICAL FALLOUT

The political uproar over the September 11 Benghazi attack has already claimed one victim.

U.S. Ambassador to the United Nations Susan Rice, widely tipped as a front-runner to replace Clinton when she steps down as secretary of state early next year, last week withdrew her name from consideration, saying she wished to avoid a potentially disruptive Senate confirmation process.

Republican lawmakers had blasted Rice for televised comments she made in the aftermath of the attack in which she said preliminary information suggested the assault was the result of protests over an anti-Muslim video made in California rather than a premeditated strike.

Rice has said she was relying on talking points drawn up by U.S. intelligence officials.

Nuland said the final report could contain both classified and unclassified sections, and that only the latter would be made publicly available.

Central questions raised include why the ambassador was in such an unstable part of Libya on the anniversary of the September 11, 2001, attacks on New York and the Pentagon.

The five-person independent board usually includes retired ambassadors, a former CIA officer and a member of the private sector. It has the power to issue subpoenas, and members are required to have appropriate security clearances to review classified information.

Nuland said that Clinton - who intends to step down toward the end of January when President Barack Obama is sworn in for his second term - was "on the mend" following her concussion, which occurred when she fell as a result of dehydration due to a stomach virus.

She added that Clinton remained open to discussing the attack with lawmakers herself next month.

"She looks forward to continuing to engage with them in January and she will be open to whatever they consider appropriate in that regard," Nuland said. (Editing by Warren Strobel and Mohammad Zargham)

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Egypt referendum dispute triggers protest call

CAIRO: Egypt's opposition is calling for mass protests on Tuesday over alleged polling violations after Islamists backing President Mohamed Morsi claimed victory in the first round of a referendum on a new charter.

A group of top judges, meanwhile, announced on Monday it would boycott supervision of the second round, and Germany said it has postponed debt relief for Egypt because of concerns over the country's commitment to democracy.

Adding to the complications for Morsi, the prosecutor general named by the president as he temporarily assumed sweeping powers last month handed in his resignation, a judicial source told AFP.

"The prosecutor general has submitted his resignation under pressure from protesters," said the source, referring to magistrates who have been clamouring for his immediate departure.

The Supreme Judicial Council will examine prosecutor general Talaat Ibrahim Abdallah's resignation next Sunday, a day after the second and final round of voting in the referendum, the source said.

The opposition coalition, the National Salvation Front, urged Egyptians to "take to the streets on Tuesday to defend their freedoms, prevent fraud and reject the draft constitution" ahead of the second round.

It claimed "irregularities and violations" marred the initial stage of the referendum last weekend across half of Egypt that Morsi's Muslim Brotherhood said resulted in a 57 percent "yes" vote, according to its unofficial tally.

On the legal front, the State Council Judges Club, whose members took part in overseeing the first round as required by law, said it would boycott next Saturday's vote because the authorities had failed to live up to their promises.

The association has demanded that a "siege" of the Supreme Constitutional Court by Brotherhood supporters be lifted. But the action has continued without any intervention by the authorities, it said.

In Germany, a spokesman for the overseas development ministry said a plan to forgive up to 240 million euros ($316 million) of Cairo's debt had been delayed indefinitely.

Germany's Development Minister Dirk Niebel said earlier he had serious reservations. "There is the danger that the dictatorial system of ousted president (Hosni) Mubarak is returning," he told the daily Berliner Zeitung.

Niebel said Berlin had cancelled talks on development aid scheduled for mid-December and that future assistance was dependent on Egypt's progress toward democracy and the rule of law.

Also increasing the pressure, Mohamed ElBaradei, the Salvation Front's coordinator and a Nobel Peace Prize laureate, renewed his call for Morsi to cancel the referendum altogether and enter talks with the opposition.

"Last chance: cancel the ill-reputed referendum and begin a dialogue to close the rift," he wrote on Twitter, although a spokesman for ElBaradei's group said the comment was not a call to boycott the second round.

Large protests both for and against the proposed constitution have been staged during the past three weeks, sparking violent clashes and revealing deep divisions in society over Morsi's rule.

Early this month, eight people were killed and more than 600 hurt when rival protesters fought outside the presidential palace in Cairo.

The opposition says the constitution weakens human rights, especially those of women, and undermines the independence of judges while strengthening the military.

It fears Islamists propelled into power after a revolution last year that toppled Mubarak's 30-year regime want to establish sharia-style laws.

Morsi, though, argues the slender majority he won in June presidential elections gives him a mandate for change and that the draft constitution is a key step to securing stability.

The opposition claims Saturday's first round of the referendum, which took place in the biggest cities of Cairo and Alexandria and in eight other regions, had numerous violations.

Those included monitors not being allowed into some polling stations, judges not present in all as required and some fake judges employed, and women prevented in some cases from casting their ballot.

- AFP/fa

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Time for mutton feasts in Himachal Pradesh

SHIMLA: No election victory, and sometimes even a loss, is complete without big mutton feasts in Himachal Pradesh. The forthcoming election results of the HP assembly will be no exception as with only two days left for the D-Day, the contestants of both BJP and Congress have started making arrangements for the mutton feasts in anticipation.

In the older days purely vegetarian 'dham' or community feasts was served but now non-vegetarian delicacies too are finding a prominent place in the menu fueling the demand for mutton and chicken for post victory celebrations. As sacrificing goats to local deities on the fulfillment of wishes is a common practice in many parts of the state, supporters of many candidates have already purchased goats from shepherds.

The tradition of sacrificing a goat is common in the districts of Lahaul-Spiti, Kullu, Mandi, Kinnaur, Chamba and Sirmaur district. "We had promised to offer goats on winning the election. All arrangements have been made for a grand feast but we are not disclosing it before the results," said the supporter of a candidate from Kullu district.

According to sources in Sirmaur district, order for mutton and chicken has already been placed with meat sellers by the supporters of candidates while in some pockets goats have been kept in the stock. Many of the candidates said that as reaching out to individual voters is not possible after the results, so a good community meal is the best option to thank the voters.

"Earlier we had the restriction of Election Commission but now we would serve the community lunch," a leader from Mandi district said. During this assembly election campaign, candidates stayed away from serving meals as the EC kept a hawk's eye on which nominee or his kin holds or attends a large community feast, and had threatened to include it in their poll expenditure.

The EC had decided that if a candidate is present at a marriage function with many guests, then the district electoral officer would serve him a show-cause notice, asking why the entire cost of the function should not be added to his election expenditure. The results are to be announced on December 20.

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Experts: No link between Asperger's, violence

NEW YORK (AP) — While an official has said that the 20-year-old gunman in the Connecticut school shooting had Asperger's syndrome, experts say there is no connection between the disorder and violence.

Asperger's is a mild form of autism often characterized by social awkwardness.

"There really is no clear association between Asperger's and violent behavior," said psychologist Elizabeth Laugeson, an assistant clinical professor at the University of California, Los Angeles.

Little is known about Adam Lanza, identified by police as the shooter in the Friday massacre at a Newtown, Conn., elementary school. He fatally shot his mother before going to the school and killing 20 young children, six adults and himself, authorities said.

A law enforcement official, speaking on condition of anonymity because the person was not authorized to discuss the unfolding investigation, said Lanza had been diagnosed with Asperger's.

High school classmates and others have described him as bright but painfully shy, anxious and a loner. Those kinds of symptoms are consistent with Asperger's, said psychologist Eric Butter of Nationwide Children's Hospital in Columbus, Ohio, who treats autism, including Asperger's, but has no knowledge of Lanza's case.

Research suggests people with autism do have a higher rate of aggressive behavior — outbursts, shoving or pushing or angry shouting — than the general population, he said.

"But we are not talking about the kind of planned and intentional type of violence we have seen at Newtown," he said in an email.

"These types of tragedies have occurred at the hands of individuals with many different types of personalities and psychological profiles," he added.

Autism is a developmental disorder that can range from mild to severe. Asperger's generally is thought of as a mild form. Both autism and Asperger's can be characterized by poor social skills, repetitive behavior or interests and problems communicating. Unlike classic autism, Asperger's does not typically involve delays in mental development or speech.

Experts say those with autism and related disorders are sometimes diagnosed with other mental health problems, such as depression, anxiety, bipolar disorder or obsessive-compulsive disorder.

"I think it's far more likely that what happened may have more to do with some other kind of mental health condition like depression or anxiety rather than Asperger's," Laugeson said.

She said those with Asperger's tend to focus on rules and be very law-abiding.

"There's something more to this," she said. "We just don't know what that is yet."

After much debate, the term Asperger's is being dropped from the diagnostic manual used by the nation's psychiatrists. In changes approved earlier this month, Asperger's will be incorporated under the umbrella term "autism spectrum disorder" for all the ranges of autism.

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AP Writer Matt Apuzzo contributed to this report.

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Online:

Asperger's information: http://1.usa.gov/3tGSp5

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Gunman's Computer Damaged, Drive Possibly Ruined

A computer at the Connecticut home where Newtown, Conn., school shooter Adam Lanza lived with his mother was badly damaged, perhaps smashed with a hammer, said police who hope the machine might still yield clues to the gunman's motive.

The computer's hard drive appeared to have been badly damaged with a hammer or screw driver, law enforcement authorities told ABC News, complicating efforts to exploit it for evidence.

Officials have "seized significant evidence at [Lanza's] residence," said Connecticut State Police spokesman Paul Vance, adding that the process of sifting through that much forensic evidence would be a lengthy and "painstaking process."

Authorities also told ABC News that the weapons used in Friday's rampage at Sandyhook Elementary School, which left dead 20 children and seven adults including Lanza's mother Nancy, were purchased by his mother between 2010 and 2012.

According to the Bureau of Alcohol Tobacco and Firearms, Lanza visited shooting ranges several times in recent years, and went at least one time with his mother.

The first funeral for a child killed in the massacre was held today in Fairfield, Conn., where mourners gathered to remember the too-short life of first-grader Noah Pozner.

Authorities also revealed this morning that two adult women shot during the rampage survived and their accounts will likely be integral to the investigation.

"Investigators will, in fact, speak with them when it's medically appropriate and they will shed a great deal of light on the facts and circumstances of this tragic investigation," Connecticut State Police Lt. Paul Vance said at a news conference today.

Both survivors are women and are now home from the hospital after being shot, police said. Officials had previously mentioned just one adult survivor. The women have not been identified and police did not give details on their injuries.

READ MORE: School nurse hid from gunman.

Both adults, Vance said, were wounded in the "lower extremities," but did not indicate where in the building they were when they were injured.

Moving trucks were seen outside Sandy Hook Elementary School this morning, as school officials prepare to move furniture and supplies to a vacant school in neighboring Monroe.

Sandy Hook itself will remain a secure crime scene "indefinitely," said Vance.

Emily Friedman/ABC News, Handout

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CLICK HERE for complete coverage of the tragedy at Sandy Hook.

Police say Adam Lanza, 20, forced his way into Sandy Hook Elementary School on Friday, spraying bullets on students and faculty. Lanza killed 20 children and six adults before turning the gun on himself.

Lanza also killed his mother Nancy Lanza at the home they shared before going to school.

"There are many, many witnesses that need to be interviewed," Vance said. "We will not stop until we have interviewed every last one of them."

Vance said the investigation could take weeks or months to complete. "It's not something done in 60 minutes like you see on T.V."

Some of the other key witnesses will be children who survived the shooting spree by playing dead, hiding in closets and bathrooms and being rescued by dedicated teachers.

"Any interviews with any children will be done with professionals...as appropriate," Vance said. "We'll handle that extremely delicately when the time arises."

CLICK HERE for a tribute to the shooting victims.

The first funerals for victims of the shooting are today, beginning with 6-year-olds Noah Pozner and Jack Pinto.

Officials said today that the Sandy Hook Elementary School, where the shooting took place, will be closed "indefinitely."

Both the school and the home where shootings took place are being held by police as crime scenes and Vance predicted authorities would spend "months" investigating the elementary school.

All Newtown schools are closed today to give residents more time to cope. Every school except for Sandy Hook is expected to re-open Tuesday.

The town of Monroe has offered to open to Sandy Hook students the Chalk Hill School, a former middle school that currently houses the town's EMS and recreational departments.

Officials in Monroe, less than 10 miles from Newtown, say the building could be ready for students by the end of the week, but have not yet set a date to resume classes.

Nearly 100 volunteers are working to ensure the building complies with fire and security regulations and are working to retorfit the school with bathroom facilities for young children.

"We're working to make the school safe and secure for students," said Monroe Police Department spokesman Lt. Brian H. McCauley.

The neighboring community's school is expected to be ready to accommodate students in the next few days, though an exact schedule has not yet been published.

While the families grieve, federal and state authorities are working around the clock to answer the question on so many minds: "Why?"

ABC News has learned that investigators have seized computers belonging to Adam Lanza from the home he shared with his mother. Three weapons were found at the school scene and a fourth was recovered from Lanza's car. Lanza had hundreds of rounds and used multiple high-capacity magazines when he went on the rampage, according to Connecticut State Police.

Vance said that every single electronic device, weapon and round will be thoroughly examined and investigated as well as every aspect of Lanza's life going "back to the date of birth."

ABC News has learned that both the shooter and his mother spent time at an area gun range; however it was not yet known whether they had shot there.

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Japan's next PM Abe must deliver on economy, cope with China

TOKYO (Reuters) - Japan's hawkish ex-premier Shinzo Abe will get a second chance to run the country after his conservative Liberal Democratic Party (LDP) surged to power in Sunday's election, but must swiftly move to bolster the sagging economy while managing strained ties with China.

Abe, whose party won by a landslide just three years after a crushing defeat, was expected on Monday to meet Natsuo Yamaguchi, the leader of the small New Komeito party, to cement their alliance and confirm economic steps to boost an economy now in its fourth recession since 2000.

The victory by the LDP, which had ruled Japan for most of the past 50 years before it was ousted in 2009, will usher in a government pledged to a tough stance in a territorial row with China, a pro-nuclear energy policy despite the 2011 Fukushima disaster and a potentially risky recipe for hyper-easy monetary policy and big fiscal spending to boost growth.

Projections by TV broadcasters showed that the LDP had won at least 291 seats in the 480-member lower house, while the New Komeito party took at least 29 seats.

That gives the two parties the two-thirds majority needed to overrule parliament's upper house in most matters, where they lack a majority and which can block bills. The "super majority" could help to break a policy deadlock that has plagued the world's third biggest economy since 2007.

Markets have already pushed the yen lower and share prices higher in anticipation of an LDP victory and Abe's economic stimulus. The two-thirds "super majority" could boost share prices and weaken the yen further.

Prime Minister Yoshihiko Noda's Democratic Party of Japan (DPJ) was crushed, forecast to win just about 56 seats - less than a fifth of its showing in 2009, when it swept to power promising to pay more heed to consumers than companies and pry control of policies from bureaucrats.

But voters deemed the pledges honored mostly in the breach and the party was hit by defections before the vote due to Noda's unpopular plan to raise the sales tax to curb public debt already more than twice the size of the economy.

"This was an overwhelming rejection of the DPJ," said Gerry Curtis, a professor at New York's Columbia University.

"Abe was smart to run the campaign saying 'It's the economy, stupid. His hawkish (security) views took second place to fiscal stimulus and getting a dovish Bank of Japan governor and getting the economy going. If he keeps that focus ... he has a chance of improving his standing."

Analyst Bruce Klingner of the Heritage Foundation think tank in Washington said the return of Abe and LDP was foremost a rejection of the DPJ, but "also reflects an embrace of conservative views" after recent years of strained relations with Japan's close neighbors.

"Chinese assertiveness and North Korean provocations nudged the public from its usual post-war complacency toward a new desire to stand up for Japanese sovereignty," he said.

The Japanese favor moving toward "a more normal nation status" and are not embracing resurgent militarism, added Klingner, a former CIA analyst.

Abe, expected to be voted in by parliament on December 26, will also have to prove he has learned from the mistakes of his first administration, plagued by scandals and charges of incompetence.

Voter distaste for both major parties has spawned a clutch of new parties including the Japan Restoration Party, founded by popular Osaka Mayor Toru Hashimoto, which took at least 52 seats, according to media projections.

But media estimates showed turnout at around 59 percent, which could match the previous post-war low.

LDP leader Abe, 58, who quit as premier in 2007 citing ill health, has been talking tough in a row with China over uninhabited isles in the East China Sea, although some experts say he may temper his hard line with pragmatism once in office.

The soft-spoken grandson of a prime minister, who will become Japan's seventh premier in six years, Abe also wants to loosen the limits of a 1947 pacifist constitution on the military, so Japan can play a bigger global security role.

President Barack Obama congratulated Abe and underlined U.S. interest in working with the longstanding American ally.

"The U.S-Japan Alliance serves as the cornerstone of peace and prosperity in the Asia-Pacific and I look forward to working closely with the next government and the people of Japan on a range of important bilateral, regional and global issues," he said in a statement.

The LDP, which promoted atomic energy during its decades-long reign, is expected to be friendly to nuclear utilities, although deep public concerns remain over safety.

Abe has called for "unlimited" monetary easing and big spending on public works to rescue the economy. Such policies, a centerpiece of the LDP's platform for decades, have been criticized by many as wasteful pork-barrel politics.

Many economists say that prescription for "Abenomics" could create temporary growth and enable the government to go ahead with a planned initial sales tax rise in 2014 to help curb a public debt now twice the size of gross domestic product.

But it looks unlikely to cure deeper ills or bring sustainable growth to Japan's ageing society, and risks triggering a market backlash if investors decide Japan has lost control of its finances.

(Additional reporting by Paul Eckert in Washington; Editing by Tomasz Janowski and Eric Walsh)

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