DUBAI Iran denied on Thursday that its Revolutionary Guards launched rockets near a U.S. aircraft carrier in the Gulf on Saturday and condemned U.S. plans for new sanctions over its ballistic missile programme.

The dispute comes after Iran and six world powers, including the United States, reached a deal in July that will remove certain U.S., European Union and U.N. sanctions on Tehran in exchange for Iran accepting curbs on its nuclear programme.

"The naval forces of the Guards have not had any exercises in the Strait of Hormuz during the past week and the period claimed by the Americans for them to have launched missiles and rockets," the Revolutionary Guards website quoted Ramezan Sharif, the Guard's spokesman, as saying.

"The publication of such false news under the present circumstances is akin to psychological warfare," Sharif said.

NBC News, citing unnamed U.S. military officials, said the Guards were conducting a live-fire exercise and the U.S. aircraft-carrier Harry S. Truman came within about 1,500 yards (metres) of a rocket as it entered the Gulf with other warships.

In Washington, Commander Kyle Raines said the action was "highly provocative, unsafe and unprofessional."

Several Revolutionary Guard vessels fired the rockets "in close proximity" of the warships and nearby merchant traffic "after providing only 23 minutes of advance notification," said Raines, spokesman for the U.S. Central Command.

Iranian and U.S. forces have clashed in the Gulf in the past, especially during the Iran-Iraq war in the 1980s after the 1979 Islamic revolution.

Diplomats have held out hope that the deal over Iran's disputed nuclear programme could ease decades of mistrust and reduce tensions in the Middle East.

The West has long suspected the programme was aimed at creating a nuclear bomb, something denied by Iran, which sent a shipment of low-enriched uranium materials to Russia this month as part of the deal.

MISSILES

But ahead of the formal easing of international sanctions on Tehran set for the beginning of 2016, tensions have mounted.

Hardliners in Iran have carried out a wave of arrests of activists they accuse of promoting Western "infiltration," while the United States passed a law restricting visa-free travel rights for people who have visited Iran or hold dual Iranian nationality, a measure Iran has called a breach of the deal.

Iran's Foreign Ministry spokesman Hossein Jaber Ansari on Thursday condemned as "arbitrary and illegal" U.S. plans for new sanctions on international companies and individuals over Iran's ballistic missile programme.

"As we have declared to the American government ... Iran's missile programme has no connection to the (nuclear) agreement," state television quoted Ansari as saying.

"Iran will resolutely respond to any interfering action by America against its defensive programmes," said Jaber Ansari.

In Washington, sources familiar with the situation said on Wednesday the U.S. government was preparing the sanctions, which the Wall Street Journal said would target about 12 companies and individuals in Iran, Hong Kong and the United Arab Emirates for their suspected role in developing Iran's missile programme.

A team of U.N. sanctions monitors said in a confidential report seen by Reuters on Dec. 15 that Iran tested a rocket on Oct. 10 capable of delivering a nuclear warhead, which Iran maintains was a convention missile.

U.S. officials have said the Treasury Department retains a right under the nuclear agreement to blacklist Iranian entities suspected of involvement in missile development.

Supreme Leader Ayatollah Ali Khamenei has said such new penalties would nullify the nuclear accord.

"There may actually be a link between the accusations made by the United States (about the Gulf incident) and the new sanctions," Mohammad Marandi, a Tehran University professor, told state-run PressTV. "The regime in Washington is trying to reimpose these sanctions by other means."

(Reporting by Dubai newsroom; Editing by Janet Lawrence)

BEIRUT The Syrian army and allied militias launched an offensive in the Golan Heights on Thursday, in what rebels said was part of a major assault to regain ground in southern Syria the government had lost over the last three years.

Rebels said the attacks began at dawn, when the army stormed the village of Samdaniya al Gharbiya, near the border with Israel. The army said the village was captured, but rebels in the area said heavy fighting continued.

Under cover of rain and fog, government troops pushed towards the strategic town of Hamdanieh, in the Syrian Golan Heights, which they lost two years ago, according to residents and rebels.

"They staged a large-scale attack under cover of heavy fog, where you can hardly someone only a few metres away from you, on the two villages," said Abu Yahya, a spokesman for al-Wiyat al Furqan, a rebel group in the area.

The attacks came in Quneitra province, a sensitive piece of territory around 70 km (40 miles) southwest of the capital, Damascus. It has seen frequent fighting between various insurgent groups and the Syrian military and its militia allies.

The army was mostly relying on ground troops and heavy artillery bombardments, said a member of another rebel group, Seif al Sham. Proximity to the Israeli border makes it difficult to use air power extensively.

Israel seized part of the Golan Heights from Syria in the 1967 Arab-Israeli war and annexed it later. Concern is growing in Israel over the presence in Quneitra of the Lebanese militant group Hezbollah, an ally of the Syrian government.

Syrian state media said Samir Qantar, a Hezbollah leader killed in Damascus two weeks ago, had been involved in another offensive earlier this year in Quneitra. Israel welcomed Qantar's death but has not confirmed it carried out the attack that killed him.

The offensive in Quneitra was the government's first in the south since Russia joined the war on Sept. 30 in support of its ally, Syrian President Bashar al-Assad. Thursday's attacks came just days after an assault on the town of Sheikh Maksin that saw Russia's heaviest bombing campaign so far in the south.

The commander of one rebel group in the region said Russia had launched at least 100 air raids against its positions over two days. The air campaign had tipped the balance in favour of the government, the commander said. But its initial gains were lost and the army repelled.

Before it gained Russia's help, the government had mounted an offensive in the south last February but failed to make much headway after months of attacks.

Sheikh Maskin appears to be the main objective of the latest offensive. The town lies on one of the main supply routes from Damascus to the city of Deraa, close to the border with Jordan. Taking Sheikh Maskin would allow the army to press further south against other mainly rebel-held towns.

Rebels have seized almost 70 percent of the countryside over three years. But this year they failed to capture Baath city and Khan Arnabah, the last remaining major towns in hands of the government.

Baath city, effectively the provincial capital of Quneitra province, was shelled with mortars on Thursday in response to the army assault, two rebels in the area said.

(Reporting by Suleiman Al-Khalidi, editing by Larry King)

PARIS/BRUSSELS Shaken by a year of militant attacks, Europeans will ring in 2016 in subdued fashion on Friday, with soldiers on the streets of Paris, a heightened police presence at Berlin's Brandenburg Gate, and silence across the vast cobbled emptiness of Moscow's Red Square.

Bookended by deadly Islamist assaults on Paris, the departing year limped to a close with security forces on raised alert in many capitals and Belgian authorities announcing a series of terrorism-related arrests.

Prosecutors said police had seized a 10th suspect in Belgium in connection with the Nov. 13 Paris attacks that killed 130 and were claimed by Islamic State.

Six more were detained during house searches in Brussels in an investigation into a plot to carry out an attack in the city on New Year's Eve. Two others were arrested earlier this week, prompting authorities to call off the city's traditional Dec. 31 fireworks display, which last year drew a crowd of around 100,000.

"We couldn't guarantee keeping control of everyone," Mayor Yvan Mayeur said. "Operations are under way... it was felt best not to take any risk."

In Russia, officials said the closure of Red Square, usually the focal point of celebrations, was to allow the filming of a New Year concert.

But that was denied by the television company concerned, prompting speculation that the real reason is fear of an attack. Russia began bombing Syrian rebel targets on Sept. 30 in support of its ally President Bashar al-Assad; a month later, a Russian plane was downed over Egypt, with the loss of 224 lives, in an attack claimed by Islamic State.

SHADOW OVER PARIS

Seven weeks after the latest attacks and a week before the first anniversary of the gunning-down of cartoonists and staff at satirical paper Charlie Hebdo, Paris is greeting the New Year in what Mayor Anne Hidalgo called "an atmosphere of sobriety and togetherness".

The city has shortened a New Year video light show at the Arc de Triomphe at midnight, and cancelled a firework display to keep down crowds. Soldiers are deployed at key tourist sites including Notre Dame cathedral, where tourist Mark Scarrott was visiting from Australia.

    "We do feel safe. Obviously, New Year's Eve will be a little bit different for this city. I don't think we will be heading out into the main attractions, just because of the things that have happened," he said.

Across Europe, the deadliest year of militant attacks since 2004 has compounded a mood of worry and uncertainty. Evidence that two of the Nov. 13 attackers had entered the continent under cover of a wave of Middle Eastern refugees has heightened anxieties over the migration crisis and emboldened right-wing nationalist parties across the European Union who want a halt to the influx.

On Dec. 26, Vienna police said a "friendly" intelligence service had warned European capitals of the possibility of a shooting or bomb attack before New Year, prompting police across the continent to increase security measures.

POLICING THE PARTYGOERS

Many Europeans will still be out to party, of course, but under a much tighter than usual security presence.

At the Brandenburg Gate in Berlin, organisers expect more than one million people to gather to watch a fireworks display at midnight. Some 150 additional police officers will be deployed to secure the event, a police spokesman said, and no one will be allowed to bring in bags and backpacks.

Authorities in Madrid said they were fielding 15 percent more police and emergency staff than a year ago for year-end events, including the 'Saint Silvester' evening fun run through the Spanish capital.

About 3,000 police will be on duty across central London, with an increased number of firearms officers in and around major stations.

A spokesman for the Italian police force said there would be more than 30 percent more officers on duty across the country than a year ago, "not because it's New Year but because of what happened on Nov. 13 in Paris".

Security has been tightened for the customary open air concert at the Circus Maximus in Rome. In Milan, those attending the New Year concert in the square outside the Gothic cathedral will have to negotiate security corridors with barriers, checkpoints, police patrols and a ban on fireworks and glass bottles.

STAYING IN

In the Turkish city of Istanbul, a bridge between the continents of Europe and Asia, police said they had ramped up the number of officers on the streets by around 10,000, thanks to staff working longer shifts.

"Normally I go out to the bars on the Asian side of Istanbul but this year, because of the danger of ISIS (Islamic State), I will spend New Year’s Eve in my home,” said Seyda Yilmaz, a 26-year old IT expert.

    On Wednesday, Turkish police detained two suspected Islamic State members they believe to have been plotting New Year's Eve suicide attacks in the capital Ankara, where less than three months ago a double suicide bombing killed more than 100 people.

The streets of Kizilay in central Ankara were still busy on Thursday afternoon despite the looming security threat and sub-zero temperatures. Selih, who works in one of the many bars dotting the area, said the latest arrests had alarmed people.

"It makes tonight harder, but these are natural risks. We're expecting 500 people this evening. We think they will still come and we'll have security on the door like usual," he said.

But student Hande Balkis said many were choosing to stay away from the capital's busier areas.

"Of course we're scared," she said. "Turkey is very complex at the moment and Ankara feels a bit dangerous."

(Additional reporting by Jason Bush in Moscow, Dasha Afanasieva and Melih Aslan in Istanbul, Jonny Hogg in Ankara, Isla Binnie in Rome, Sarah White in Madrid, Joseph Nasr in Berlin, Andy Bruce in London; Writing by Mark Trevelyan; editing by Ralph Boulton)

BRUSSELS Belgian police detained six people during house searches in Brussels on Thursday as part of an investigation into an alleged plot to carry out an attack in the capital on New Year's Eve.

Authorities on Wednesday called off the traditional New Year's Eve fireworks display in the capital, citing fears of a militant attack.

Police carried out searches at six locations in the Belgian capital and one just outside the city, seizing computers, mobile phones and equipment for airsoft, a sport involving guns that shoot non-lethal plastic pellets.

A judge was to decide later on Thursday whether the six detained people could be held further.

Two Belgian nationals arrested earlier this week and named as 30-year-old Said S. and 27-year-old Mohammed K., are being held on suspicion of planning a terrorist attack, prosecutors said. A court on Thursday extended their custody for a month.

Both are members of the Kamikaze Riders, a Brussels-based motor bike group whose members are mostly of North African origin and carry out bike stunts which can be seen in online videos.

Some Belgian media say the group harbours Islamic State sympathisers and that the search for other group members had led Brussels to cancel Thursday night's planned firework display.

Belgium has been on alert level three - which means a possible and probable serious threat - since the Nov. 13 Paris attacks. The capital itself was on the maximum alert level four for almost a week last month.

The presumed ringleader of the Paris attackers, Abdelhamid Abaaoud, was Belgian and grew up in the poor Brussels district of Molenbeek. Two further Paris attackers had been living in the Belgian capital.

Federal prosecutors said on Thursday that a 10th person had been charged with involvement in the attacks after 10 mobile phones were found during a search at a Molenbeek residence on Wednesday.

(Reporting by Robert-Jan Bartunek; Editing by Richard Balmfvorth)

BAGHDAD Iraqi forces may face a big battle near Baghdad before they can try to retake the Islamic State stronghold of Mosul: Falluja, a long-time bastion of Sunni Muslim jihadists at the capital's western gates.

Prime Minister Haider al-Abadi's government and the U.S.-led coalition backing it have been cagey so far in plans for Falluja, which lies between Baghdad and Ramadi, the capital of western Anbar province that the Iraqi military recaptured this week from the militants.

Falluja was the first Iraqi city to fall to Islamic State in January 2014, six months before the group that emerged from al Qaeda swept through large parts of Iraq and neighbouring Syria.Abadi said on Monday the army would head next to Mosul, the biggest urban centre under Islamic State control. He said its capture would mark the end of the "caliphate" proclaimed from the northern city's main mosque in June 2014.

But with many western and northern areas still held by Islamic State, the authorities have not made clear what path they intend to take to Mosul, 400 km (250 miles) north of Baghdad."The government will need to control Falluja before Mosul," Jabbar al-Yawar, secretary-general of the peshmerga - the forces of the Kurdish regional government fighting Islamic State in northern Iraq - told al-Hadath TV.

Ahmed al-Assadi, a spokesman for the Hashid Shaabi - a coalition of mostly Iranian-backed Shi'ite militias set up to fight Islamic State - said Falluja would likely come before Mosul. "But the final decision is with the commander-in-chief," he added, referring to Abadi, to whom the Hashid formally report.

Daily military statements mention air strikes and attacks by the Iraqi army and the international coalition in and around Falluja, a city with a pre-war population of around 300,000 located 70 km (45 miles) west of the capital.

But there has been no indication of if and when a battle will be launched to take the city, which Baghdad-based analyst Hisham al-Hashimi said contains around 1,000 Islamic State fighters."There's a military leadership; there's planning and a military vision," Brigadier-General Yahya Rasool, spokesman for the joint operations command told Reuters on Thursday. "If a battle starts to liberate the centre of Falluja, Falluja itself or any other area, we will announce it officially."

About 3,000 families remaining in Falluja could be used as human shields, said Hashimi, who has worked with the Iraqi government.

Around 70,000 families have taken refuge around Baghdad, according to Iraq's High Commission for Human Rights.

TURBULENT PAST

Falluja, downstream from Ramadi in the Euphrates River valley, is encircled by Iraqi forces, according to the international coalition, though some militants manage to slip past the cordon.

Assadi said the Hashid were present south of Falluja, on the road leading to the Shi'ite shrine city of Kerbala, as well as in some eastern and western areas. There they had helped to isolate the city and hold areas, freeing up the military to advance.

Maria Fantappie, Iraq analyst at the International Crisis Group, said that despite Falluja's proximity to Baghdad, it was not necessarily the next target.

Ramadi's strong tribal networks had made it easier for Iraqi forces to forge alliances and take control of key areas. "Falluja has more of an urban structure where tribes are present but are less a structuring element of the city, so it's going to be much harder to retake and keep the city under control," she said from Istanbul.

Known as the "City of Minarets and Mother of Mosques", Falluja is a focus for Sunni faith and identity in Iraq. It was badly damaged in two offensives by U.S. forces against al Qaeda insurgents in 2004.

The tribes of Anbar helped turn the tide of that insurgency at its height in 2006, banding together and making common cause with U.S. troops to rout al Qaeda.

The group's resurgence as Islamic State has divided residents of Anbar, where many accuse former Prime Minister Nuri al-Maliki of shutting Sunnis out of power and being a pawn of Shi'ite power Iran. Some support the Islamist militants, or are too fearful to move against them.

Fantappie said any attempt to retake Falluja could face local resistance because of a deal struck more than two years ago between the jihadis and the city's tribal and urban elements.

Yet local government officials said the capture of Ramadi, the largest Sunni city regained from Islamic State, had weakened the militants' morale. It had also created tension with Falluja residents as well as provoking clashes with Sunni tribes. Those reports could not be independently confirmed."After some Daesh fighters fled Ramadi to Falluja ... fears mounted among Falluja residents that a government offensive on their city could be imminent and pushed many families to try to leave the city," said Ibrahim al-Fahdawi, a member of the city council, using a derogatory Arabic acronym for the militants. "Daesh elements threatened to execute anyone trying to flee, which triggered a squabble that developed into clashes between residents and Daesh, who were mostly foreigners," he told Reuters by phone.

(Additional reporting by Saif Hameed; Writing by Maher Chmaytelli; Editing by Giles Elgood and David Stamp)

BEIJING A French journalist has been forced to leave China after the government said it would not renew her press credentials for the new year in response to a critical report on Beijing's policies in the troubled western region of Xinjiang.

The departure of Ursula Gauthier, a reporter for the French current affairs magazine L'Obs, marked the first time in more than three years that a journalist has been forced to leave China due to a refusal by authorities to renew accreditation.

China's foreign ministry said on Saturday that Gauthier could no longer work in China because she did not make a public apology for an article she wrote on Nov. 18.

Hours after Chinese President Xi Jinping told his French counterpart, Francois Hollande, that China stood by France in the wake of the Paris attacks in November, the article said, China's public security ministry announced the capture of suspects over a coal mine attack in September in Xinjiang.

"Beautiful solidarity, but not entirely free of ulterior motives," Gauthier wrote in her article.

On Nov. 20, the government announced that security forces in Xinjiang had killed 28 "terrorists" from a group that carried out a deadly attack at a coal mine in September under the direction of "foreign extremists". The government has given no details of the composition of the group.

Reuters has not been able to independently verify that the suspects were Muslim Uighurs, or if they had a role in the mine attack due to tight government reporting restrictions in Xinjiang.

Hundreds of people have died in unrest in Xinjiang, home to the Uighurs, and other parts of China over the past three years.

On Saturday, Chinese Foreign Ministry spokesman Lu Kang said Gauthier's article "openly supports terrorist activity, the killing of innocents and has outraged the Chinese public".

Gauthier said the government's decision meant that she had to leave Beijing on a 1 a.m. flight on Friday to Paris.

When asked whether Gauthier would be allowed to return to China, Lu told reporters on Thursday it was "up to her". He did not elaborate.

Gauthier, who has been based in China for six years, said she met officials from China's foreign ministry three times starting in late November after the state-run Global Times published a commentary criticising the article she had written on China's policy in Xinjiang in the wake of attacks in Paris.

"DEATH THREATS"

Gauthier, who said she had received death threats after her report, told Reuters she had told the foreign ministry that the Global Times had distorted the meaning of her article.

"They wanted me to apologise publicly for my wrongs," Gauthier said. "But I said my wrongs were all invented by the Global Times. I cannot apologise for crimes I did not commit."

When asked to confirm the meetings, Lu said that the ministry did not want to "publicise the situation". He noted that Gauthier did not call the police.

"This is not that usual, unless she's got other considerations," he said at a briefing.

Gauthier said she did not report the death threats as she "did not expect the police to take the case seriously".

The Global Times declined to comment when contacted by Reuters.

France's ambassador to China, Maurice Gourdault-Montagne, has raised Gauthier's case with China's foreign ministry, said a spokeswoman for the French embassy in Beijing.

China requires all foreign journalists to renew their accreditation annually.

In May 2012, Melissa Chan, a reporter for Al Jazeera's English language channel in Beijing, was forced to leave China after authorities refused to renew her press credentials over unspecified alleged violations of Chinese regulations - the first such case in 13 years at the time.

(Additional reporting by Joseph Campbell and Ben Blanchard; Editing by Nick Macfie)

JOHANNESBURG The king of the AbaThembu clan of South Africa's late anti-apartheid icon Nelson Mandela has started a 12-year jail sentence for arson, kidnapping and assault, local media reported on Thursday.

Buyelekhaya Dalindyebo, 51, was convicted of the offenses in 2009 but has been fighting the verdict in the courts for years. He turned himself over to the Mthatha Correctional Centre in the Eastern Cape Province just before midnight on Wednesday, media reported.

Prosecutors said he had kidnapped subjects and had homes set ablaze to punish those who refused to do his bidding.

He is the king of Mandela's clan in a poor, rural region in South Africa's Eastern Cape province. South Africa recognizes several royal families, who command respect, especially in the countryside.

(Reporting by Ed Stoddard)

DUBAI Iran condemned on Thursday as arbitrary and illegal reported U.S. plans for new sanctions on international companies and individuals over Tehran's ballistic missile program.

"As we have declared to the American government ... Iran's missile program has no connection to the (nuclear) agreement," state television quoted Foreign Ministry spokesman Hossein Jaber Ansari as saying.

In Washington, sources familiar with the situation said on Wednesday the U.S. government was preparing the sanctions, which the Wall Street Journal said would target about 12 companies and individuals in Iran, Hong Kong and the United Arab Emirates for their suspected role in developing Iran's missile program.

"Iran will resolutely respond to any interfering action by America against its defensive programs," said Jaber Ansari, rejecting any new sanctions as "arbitrary and illegal".

U.S. officials have said the Treasury Department retains a right under July's landmark nuclear agreement between Iran and six world powers, including Washington, to blacklist Iranian entities suspected of involvement in missile development, the Journal said.

Iranian officials have said the supreme leader would view such penalties as violating the nuclear accord.

A team of U.N. sanctions monitors said in a confidential report seen by Reuters on Dec. 15 that the medium-range Emad rocket that Iran tested on Oct. 10 was a ballistic missile capable of delivering a nuclear warhead, making it a violation of a U.N. Security Council resolution.

Ballistic missile tests by Iran are banned under Security Council resolution 1929, which dates from 2010 and remains valid until the July nuclear deal between Iran and world powers goes into effect.

Once the deal takes effect, Iran will still be "called upon" not to undertake any ballistic missiles work designed to deliver nuclear weapons for a period of up to eight years, according to a Security Council resolution adopted in July right after the nuclear deal.

Iran says the resolution would only ban missiles "designed" to carry a nuclear warhead, not "capable of", so it would not affect its military program as Tehran does not pursues nuclear weapons. Iran has called Emad a "conventional missile".

(Reporting by Dubai newsroom; Editing by Janet Lawrence)

JERUSALEM Israeli troops shot and killed a Palestinian who rammed them with his car in the occupied West Bank on Thursday, the Israeli military said, as a wave of violence approached its fourth month.

Almost daily Palestinian stabbings, car-rammings and shooting attacks have killed 21 Israelis and a U.S. citizen, raising fears of a wider escalation a decade after the last Palestinian uprising subsided.

Since the start of October, Israeli forces or armed civilians have killed at least 132 Palestinians, 82 of whom authorities described as assailants. Most of the others have been killed in clashes with security forces.

The Israeli military said a Palestinian drove his vehicle into a group of soldiers, injuring one of them, on a road by the village of Hawara, near the West Bank city of Nablus.

"The assailant was shot by forces on the site, resulting in his death," the military said in a statement.

An Israeli civilian stabbed by a Palestinian in an attack earlier this month and a Palestinian in Gaza wounded in a stone-throwing clash with Israeli soldiers, also died of their wounds in hospital this week.

The surge in violence has been fuelled by Palestinians' frustration over Israel's 48-year occupation of land they seek for an independent state, and the expansion of settlements in those territories which were captured by Israel in the 1967 Middle East war.

Palestinian leaders say a younger generation sees no hope for the future living under Israeli security restrictions and with a stifled economy. The latest round of U.S.-brokered peace talks collapsed in April 2014.

Violence has also been triggered by Muslim anger over stepped-up Israeli visits to Jerusalem's al Aqsa mosque complex. The site, Islam's holiest outside Saudi Arabia, is also revered by many Jews as a vestige of their biblical temples.

Israeli leaders says Islamist groups who call for the destruction of Israel have played a major role in inciting the recent violence.

(Writing by Ori Lewis; Editing by Andrew Heavens)

KUALA LUMPUR Malaysia's anti-graft agency said on Thursday it had sent two reports to the attorney-general's office about its probes into the transfer of huge sums of money into Prime Minister Najib Razak's bank accounts and the affairs of state fund 1MDB.

The Malaysian Anti-Corruption Commission (MACC) did not reveal their findings or say whether any wrongdoing was involved. It would be up to Attorney-General Mohamed Apandi Ali to decide any further action, it said.

Najib has weathered months of calls to resign over alleged financial mismanagement at indebted state fund 1Malaysia Development Berhad (1MDB), whose advisory board he chairs.

Controversy turned to scandal in July when the Wall Street Journal reported that investigators looking into 1MDB had identified funds worth 2.6 billion ringgit ($605.36 million) that had been transferred directly to the prime minister's bank accounts.

Najib has denied any wrongdoing and says he did not take any money for personal gain.

The MACC had earlier said the funds were a political donation from an unidentified Middle Eastern benefactor.

The scandal has shaken investors in Southeast Asia's third-biggest economy and rocked public confidence in the coalition led by Najib's United Malays National Organisation (UMNO) party, which has held power since independence in 1957.

The fund had racked up more than $11 billion in debt - a burden that had weighed on the ringgit currency - before beginning a restructuring programme this year.

"The MACC has high hopes that the Attorney-General in his capacity as the public prosecutor will make a professional decision," the MACC's deputy chief commissioner of operations, Mohd Shukri Abdull, said in a statement on Thursday.

Najib said in a New Year's message that a string of asset sales combined with other deals would see 1MDB's debt cut by about 40.4 billion ringgit ($9.4 billion).

"It is therefore clear that 1MDB's major challenges are now behind it," he said.

The MACC submitted a separate report on SRC International, a former 1MDB subsidiary being probed for an alleged misappropriation of funds worth 4 billion ringgit ($931.32 million).

The WSJ report, which Reuters has not independently verified, had also said that 42 million ringgit ($9.78 million) of the funds channeled into Najib's account originated from SRC.

1MDB is under investigation by law enforcement agencies in Switzerland, Hong Kong and the United States, media and sources have said.

Opposition leaders and some establishment figures have called for Najib to step down over the scandal.

However, Najib still enjoys the backing of most of UMNO's powerful division chiefs, and even his fiercest internal critics, such as influential former Prime Minister Mahathir Mohamad, accept that he cannot be unseated.

($1 = 4.2900 ringgit)

(Reporting by Rozanna Latiff and Joseph Sipalan; Editing by John Chalmers and Simon Webb)

ISTANBUL Turkish President Tayyip Erdogan on Thursday vowed no let-up in a military campaign which he said had killed more than 3,000 mostly Kurdish militants this year in some of the heaviest fighting since their insurgency began three decades ago.

In a New Year statement, Erdogan said Turkey had "the resources and determination" to deal with the Kurdistan Workers Party (PKK), which first took up arms in 1984 to push for greater autonomy in the largely Kurdish southeast.

The violence has preoccupied the NATO member's armed forces and complicated international efforts to fight Islamic State in neighbouring Syria, where a Kurdish group linked to the PKK is fighting the jihadists. Western allies want Turkey to focus more squarely on the threat from Islamic State.

"Our security forces are continuing to cleanse every place of terrorists, in the mountains and in the cities, and will continue to do so," Erdogan said, referring to the PKK.

Turkey launched what it dubbed a "synchronized war on terror" in July, meant to include a campaign against Islamic State in Syria as well as Kurdish militants at home. But it has overwhelmingly concentrated its efforts on the PKK.

Southeastern Turkey has plunged back into some of its worst violence since the 1990s after a two-year ceasefire between the PKK - designated a terrorist group by Turkey, the United States and European Union - and the state collapsed in July.

Warplanes have bombed PKK camps in southeastern Turkey and across the border in the mountains of northern Iraq, while thousands of troops backed by tanks have in recent weeks pressed a campaign within Turkey to flush out militants on the ground.

THOUSANDS KILLED

Erdogan said 3,100 militants had been killed by the Turkish military in and outside the country since the start of 2015, which would be one of the highest rates of attrition for years.

Since the PKK launched its insurgency, fighting has been largely in the countryside, but the latest violence has focused on urban areas, where the PKK youth wing has set up barricades and dug trenches to keep security forces out.

Residents in towns such as Cizre and Silopi, which have been rocked by explosions and gunfire in recent weeks, have complained that the military operations are indiscriminate and that round-the-clock curfews have left even the sick unable to get to hospitals.

The violence has also hit once-thriving cross-border trade. The UND transporters' association said on Thursday around 10,000 truck drivers were stuck on the Iraqi side of the border because of the security concerns in Silopi and Cizre.

In apparent reference to a row with Baghdad over the deployment of Turkish troops to northern Iraq, Erdogan said Turkey had no territorial ambitions in any other country and did not question the sovereignty of its neighbours.

Iraq's prime minister accused Turkey on Wednesday of failing to respect an agreement to withdraw its troops from the north and its foreign minister said if forced, Iraq could resort to military action to defend its sovereignty.

The diplomatic dispute flared after Turkey deployed a force protection unit of around 150 troops earlier this month, citing heightened security risks near a military base where its troops were training an Iraqi militia to fight Islamic State.

"We just want people who are historically and culturally our brothers to live in peace and security," Erdogan said.

(Additional reporting by Ceyda Caglayan in Istanbul; Writing by Nick Tattersall; Editing by Giles Elgood)

BEIJING China's Defence Ministry said on Thursday that it was carrying out routine tests of a new long-rang missile, after a U.S.-based website said China had tested it from a railroad car, which would be difficult to locate in a conflict.

The Washington Free Beacon said last week U.S. intelligence agencies had recently monitored a test of the DF-41 on the train, a missile that could hit U.S. targets.

The report said the test was a "significant milestone", and would add to an existing capability to move the missile on road-mobile launchers.

Chinese Defence Ministry spokesman Yang Yujun, asked about the report, would not comment on the specifics.

"The scientific research tests carried out domestically are done in accordance with plans," he told a monthly news briefing, without elaborating.

Chinese President Xi Jinping is overseeing an ambitious military modernisation programme, including developing stealth fighters and building its own aircraft carriers.

That has rattled Beijing's neighbours, several of whom are engaged in territorial disputes with China, as well as Washington.

China says it has no hostile intent and that it needs a modern military to protect its legitimate security needs as the world's second-largest economy.

(Reporting by Ben Blanchard; Editing by Nick Macfie)

BEIJING After months of speculation, China confirmed on Thursday it is building a second aircraft carrier to go with an existing one bought second-hand, as neighbours worry about Beijing's new assertiveness to claims in the South China Sea.

Defence Ministry spokesman Yang Yujun said the carrier had been designed in China and was being built in the port of Dalian. Foreign military analysts and Chinese media have for months published satellite images, photographs and news stories purporting to show the second carrier's development.

"China has a long coast line and a vast maritime area under our jurisdiction. To safeguard our maritime sovereignty, interests and rights is the sacred mission of the Chinese armed forces," Yang said.

The design draws on experiences from the country's first aircraft carrier, the Liaoning, bought from Ukraine in 1998 and refitted in China, Yang said.

Yang said the conventionally powered carrier has a displacement of 50,000 tonnes, will be able to operate the Shenyang J-15 fighter and, unlike the 60,000-tonne Liaoning, have a ski-jump take-off.

Little is known about China's aircraft carrier programme, which is a state secret.

Yang would not say when the second carrier would enter service, saying it depended on progress in the design process.

A Shanghai-based naval expert who asked not to be identified because of the sensitivity of the matter said tensions in the South China Sea made the carrier particularly necessary to furthering Chinese interests.

"The U.S. has many aircraft carriers that are traveling all over the place in the South China Sea, which has caused problems for us," he said. "Having a second aircraft carrier reduces the pressure on us. It will keep us from being bullied."

China claims almost all the South China Sea, believed to have huge deposits of oil and gas, through which about $5 trillion in ship-borne trade passes every year, and has been building up military facilities like runways on the islands it controls.

Brunei, Malaysia, the Philippines, Taiwan and Vietnam also have claims.

China says it has no hostile intent and wants to manage the dispute through bilateral talks with the other claimants. Yang also announced the defence ministry had just set up a new hotline with Vietnam, as it seeks to manage the tensions.

But Beijing has been involved in a diplomatic spat with Washington too over ship and aircraft patrols in the region.

Asked whether China was thinking of a third carrier, Yang said that "relevant authorities" would take various factors into consideration about future carrier plans.

The Pentagon, in a report earlier this year, said Beijing could build multiple aircraft carriers over the next 15 years.

Taiwan's Defence Ministry said in September China was building two aircraft carriers that would be the same size as the Liaoning.

Successfully operating the Liaoning is the first step in what state media and some military experts believe will be the deployment of domestically built carriers by 2020.

The Liaoning has taken part in military exercises, including in the South China Sea, but is not yet fully operational.

Last week, the military said the Liaoning had made a "key breakthrough" in shifting from the testing phase to being able to operate ship-borne aircraft, as the country's navy chief paid a visit.

(Reporting By Ben Blanchard, Writing By Megha Rajagopalan; Editing by Nick Macfie)

KIEV Ukraine, which marks Christmas on Jan. 7 according to Orthodox Christian tradition, has embarked upon a national debate about whether it should also celebrate on Dec. 25, a step that would bring it in line with Western Europe.

The debate - which reflects a re-examination of national identity under the impact of the falling-out with Russia - could sharply divide opinion and comes amid a heightened battle for influence between the Russian and Ukrainian branches of the Orthodox Church.

After Russia annexed Ukraine's Crimea last year and pro-Kremlin separatists launched a rebellion in the east of the country, some Ukrainians began to re-examine their historically close cultural ties to Russia.

Activists in favour of making Dec. 25 - currently an ordinary working day in Ukraine - an official holiday have started two petitions which have appeared on the presidential web site.

If they garner enough support President Petro Poroshenko will have to consider the matter, though the Ukrainian parliament would have the final word.

Oleksander Turchynov, the secretary of Ukraine's security council, has backed the idea, saying he favours a transition period during which Ukrainians could celebrate Christmas on Dec. 25 as well as on Jan. 7.

The Russian Orthodox Church dominates Ukraine's central, eastern and southern regions, while Catholics and Greek Catholics are concentrated in the west of the country.

"We, Christians of different confessions of Ukraine, without abandoning their own traditions and wanting to celebrate Christmas with the whole Christian world, ask for a holiday to be established in Ukraine on Dec. 25 in honour of Christmas," one of the petitioners said.

(Reporting by Pavel Polityuk, Editing by Andrew Osborn and Richard Balmforth)

BANGKOK Thailand's military government has expanded a draconian "attitude adjustment" programme aimed at muzzling its critics to include drink drivers in a bid to limit road accidents during the New Year period.

Driving under the influence of alcohol remains a chronic problem in Thailand, a big consumer of beer and whiskey. It causes thousands of deaths each year, with a surge of accidents recorded during holidays.

Drivers who fail breathalyser tests or people caught racing face seven to 15 days in detention, according to an announcement made in the Royal Gazette. People causing "disturbances, danger and damage from driving vehicles" could lose their licenses for 30 days and have their cars confiscated for a week or more.

Hundreds of Thais have been hauled in for "attitude adjustment" since a May 2014 coup led by General Prayuth Chan-ocha, who is now prime minister and has used the sessions to stifle detractors ranging from pro-democracy activists and journalists to politicians he ousted.

On Tuesday and Wednesday this week, 104 Thais were killed in road accidents, mostly due to drink driving, according to the interior ministry. The junta said 612 vehicles, mostly motorcycles, had been seized from Dec. 25 to Dec. 30.

The zero-tolerance junta has led a series of crackdowns it says are to promote the rule of law and rid the country of graft and social ills. The measures have ranged from rounding up illegal migrant workers and halting gambling dens to banning bars near universities and vendors who clog sidewalks.

(Reporting by Pairat Temphairojana; Writing by Martin Petty; Editing by Larry King)

Missouri, Illinois, Arkansas and eastern Oklahoma braced for more flooding on Thursday as rain-swollen rivers, some at record heights, overflowed their banks, washing out hundreds of structures, closing major highways and leaving thousands of people displaced from their homes.

Days of downpours from a winter storm that set off deadly tornadoes in Texas and significant snowfall in New England has pushed rivers in the U.S. Midwest to levels not seen in decades, the National Weather Service and local officials aid.

The flood has closed sections of Interstate 44 and Interstate 55, both major trucking routes, along with many local roads near rivers, the Missouri Department of Transportation said on Thursday.

Freezing temperatures in the area in the coming days will cause some flooded areas in Missouri and Illinois to turn icy, adding to challenges, forecasters said.

At least 27 people have died in the region's flooding since the weekend, mostly from driving into flooded areas after storms dropped up to 12 inches (30 cm) of rain, officials said.

Flooding has destroyed hundreds of homes and businesses and overflowing rivers could menace Southern states as the water moves downstream toward the Gulf of Mexico, the National Weather Service said.

"Floodwaters will move downstream over the next couple of weeks, with significant river flooding expected for the lower Mississippi into mid-January," the NWS said.

Water rose to the rooftops of some structures in Missouri towns. Governor Jay Nixon spoke with President Barack Obama on Wednesday and received a pledge of federal support.

Two rivers west of St. Louis crested at historic levels, flooding towns, disabling sewer plants and forcing hundreds of residents from their homes.

Some evacuees stayed with family or friends or went to hotels, while others found refuge in Red Cross shelters set up in the area.

Eureka, Missouri, Mayor Kevin Coffey said his town had not seen such bad flooding in 150 years and some of its oldest businesses have been damaged. He said about 2,000 people in Eureka were cut off due to flooded roads.

The Mississippi River, the third longest river in North America, is expected to crest in the next few days in Thebes, Illinois, at 47.5 feet, more than a foot and a half (46 cm) above the 1995 record, the National Weather Service said.

Several levees, including one along the Meramec River near St. Louis, were at risk of a breach, the St. Louis Post-Dispatch said.

(Reporting by Victoria Cavaliere in Los Angeles and Mary Wisniewski in Chicago; Editing by Janet Lawrence and Bill Trott)

BEIJING Chinese judicial authorities are processing a corruption case against a one-time mistress of the country's disgraced top security boss, a state-run Beijing newspaper reported on Thursday.

Citing anonymous sources, the paper said Li Xiaomei reaped more than 30 million yuan ($4.6 million) by illicitly obtaining and reselling distribution rights for natural gas.

Jiang Jiemin, once the top regulator of state-owned assets and a close acolyte of former security tsar Zhou Yongkang, aided Li in obtaining rights to sell the natural gas, the paper said.

Neither Li nor China's top anti-corruption body, the Central Commission for Discipline Inspection, could be reached for comment.

China's biggest oil company, China National Petroleum Corporation (CNPC), was a power base for Zhou.

Jiang himself was felled in President Xi Jinping's corruption crackdown, along with many other Zhou allies. Jiang is also a former head of CNPC, the parent of PetroChina Co. Ltd..

Zhou was jailed for life in June after a secret trial.

He was the most senior Chinese official to be caught up in a graft scandal since the Communists took power in 1949 and the highest-ranking to be prosecuted since the fall of the Gang of Four in 1976 after the Cultural Revolution.

The official Xinhua news agency reported at the time that Zhou had abused his power to help relatives, mistresses and friends reap "huge profits", resulting in losses of state-owned assets.

Xi has warned that rampant corruption threatens the survival of the ruling party. Scores of top officials in the party, the government, the military and state-owned companies have been brought down in a sweeping anti-graft campaign.

($1 = 6.5 yuan)

(Reporting by Megha Rajagopalan; Editing by Nick Macfie)

JAKARTA Indonesian police on Thursday arrested three men with suspected links to Islamic State as part of an operation in the province of Central Sulawesi to capture the country's most-wanted man, state media reported.

The arrests came as the U.S. embassy in Jakarta issued an "emergency message" for U.S. citizens warning of potential security threats at tourist beaches on the island of Lombok surrounding the New Year's celebrations.

Counter-terrorism officials believe there are at least 1,000 sympathisers of the radical jihadist group across Indonesia. More than a dozen men suspected of planning bomb attacks over the holiday period were arrested in a series of raids recently, and the hunt is on for their ringleaders.

"This morning my team just reported that they had captured three more people," the Antara news agency quoted Central Sulawesi police chief Idham Azis as saying.

He gave no details of the arrests or the identities of the men, but said they are thought to be linked to militant leader Santoso, who has eluded capture for years and is holed up in jungles near Poso town in Central Sulawesi.

A National Police spokesman did not immediately respond to Reuters requests for comment on the Antara report.

Azis said a hunt for Santoso and about 30 of his followers would conclude on Jan. 9. He said seven suspected militants as well as two policemen and an army officer had been killed in the operation.

U.S. authorities on Wednesday noted arrests made by authorities in Turkey, Belgium and Indonesia in connection with suspected plots by Islamic State operatives or sympathisers to launch attacks over the holiday, and said they were monitoring investigations.

Analysts say that Santoso, the first Indonesian to publicly pledge loyalty to Islamic State, may be an inspiration for would-be jihadis and militants returning from fighting with the group in Syria.

However, some believe there is a bigger threat closer to the capital, Jakarta, on the populous island of Java, where most of the recent arrests were made, and say militants could increasingly target Westerners.

The U.S. embassy message did not spell out the security threat on Lombok, whose beaches are popular with Western holidaymakers, but it did mention specifically Senggigi Beach, the main tourist strip on the west of the island.

(Reporting by Fergus Jensen; Editing by John Chalmers, Robert Birsel)

BEIJING Any foreign counter-terrorism mission for China's armed forces would need to respect the charter of the United Nations and the sovereignty of the host nation, China's Defence Ministry said on Thursday, outlining the possible limits to such a deployment.

Under China's new anti-terrorism law, passed at the weekend, its military is allowed to venture overseas on counter-terrorism operations, though experts have said China faces big practical and diplomatic problems if it ever wants to do this.

China says it faces a threat not only from home-grown Islamists in its far western region of Xinjiang, but also from militants in the Middle East, some of whom it says are from Xinjiang.

In November, Islamic State said it had killed a Chinese citizen it had taken hostage in the Middle East.

Asked to elaborate on what the new law meant for China's armed forces and if they would now be venturing beyond China's borders on active anti-terror missions, Defence Ministry spokesman Yang Yujun said China had a "proactive" attitude towards international cooperation.

"Overseas anti-terrorism operations by the military and People's Armed Police must respect the purposes and principles of the United Nations Charter, adhere to the norms of international relations and fully respect the sovereignty of the country concerned," he told a monthly news briefing.

"Going forward, whether or not to send the military and People's Armed Police overseas to fight terrorism, will be arranged in accordance with a unified national plan," Yang added, without elaborating.

China always says it does not interfere in the affairs of other countries, and is the only permanent member of the U.N. Security Council which has not taken military action in Syria.

(Reporting by Ben Blanchard; Editing by Robert Birsel)

DUBAI Iran denied on Thursday that its Revolutionary Guards launched rockets near the U.S. aircraft-carrier Harry S. Truman and other warships as they were entering the Gulf on Saturday.

"The naval forces of the Guards have not had any exercises in the Strait of Hormuz during the past week and the period claimed by the Americans for them to have launched missiles and rockets," the Revolutionary Guards website quoted Ramezan Sharif, the Guard's spokesman, as saying.

"The publication of such false news under the present circumstances is akin to psychological warfare," Sharif said.

NBC News, citing unnamed U.S. military officials, said the Guards were conducting a live-fire exercise and the Truman came within about 1,500 yards (metres) of a rocket.

In Washington, Navy Commander Kyle Raines, spokesman for the U.S. Central Command, said on Tuesday several Revolutionary Guard vessels fired the rockets "in close proximity" of the warships and nearby merchant traffic "after providing only 23 minutes of advance notification".

"These actions were highly provocative, unsafe and unprofessional and call into question Iran's commitment to the security of a waterway vital to international commerce," Raines said.

Sharif said: "Preserving the security and peace of the strategic Persian Gulf region is among the serious strategies of Iran, and the Guards carry out their military exercises ... based on a set schedule."

The Truman, accompanied by two warships from the U.S.-led coalition supporting air strikes against Islamic State militants in Iraq and Syria, was entering the Gulf through the Strait of Hormuz on a routine transit when the incident occurred, he said.

NBC News said the U.S. destroyer Buckley and a French frigate were in the area where the rockets were fired.

Iranian and U.S. forces have clashed in the Gulf in the past, especially during the Iran-Iraq war in the 1980s after the 1979 Islamic revolution.

Tehran and six world powers including the United States clinched an agreement in July that would curb Iran's nuclear program in return for lifting economic sanctions.

(Reporting by Dubai newsroom; Editing by Janet Lawrence)