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Iran is poised to greatly expand uranium enrichment at a fortified underground bunker to a point that would boost how quickly it could make nuclear warheads, diplomats tell The Associated Press.

They said Tehran has put finishing touches for the installation of thousands of new-generation centrifuges at the cavernous facility _ machines that can produce enriched uranium much more quickly and efficiently than its present machines.

While saying that the electrical circuitry, piping and supporting equipment for the new centrifuges was now in place, the diplomats emphasized that Tehran had not started installing the new machines at its Fordo facility and could not say whether it was planning to.

Still, the senior diplomats _ who asked for anonymity because their information was privileged _ suggested that Tehran would have little reason to prepare the ground for the better centrifuges unless it planned to operate them. They spoke in recent interviews _ the last one Saturday.

The reported work at Fordo appeared to reflect Iran’s determination to forge ahead with nuclear activity that could be used to make atomic arms despite rapidly escalating international sanctions and the latent threat of an Israeli military strike on its nuclear facilities.

Fordo could be used to make fissile warhead material even without such an upgrade, the diplomats said.

They said that although older than Iran’s new generation machines, the centrifuges now operating there can be reconfigured within days to make such material because they already are enriching to 20 percent _ a level that can be boosted quickly to weapons-grade quality.

Their comments appeared to represent the first time anyone had quantified the time it would take to reconfigure the Fordo centrifuges into machines making weapons-grade material.

In contrast, Iran’s older enrichment site at Natanz is producing uranium at 3.4 percent, a level normally used to power reactors. While that too could be turned into weapons-grade uranium, reassembling from low to weapons-grade production is complex, and retooling the thousands of centrifuges at Natanz would likely take weeks.

The diplomats’ recent comments came as International Atomic Energy Agency inspectors are scheduled to visit Tehran on Sunday. Their trip _ the second this month _ is another attempt to break more than three years of Iranian stonewalling about allegations that Tehran has _ or is _ secretly working on nuclear weapons that would be armed with uranium enriched to 90 percent or more.

Diplomats accredited to the IAEA expect little from that visit. They told the AP that _ as before _ Iran was refusing to allow the agency experts to visit Parchin, the suspected site of explosives testing for a nuclear weapon and had turned down other key requests made by the experts.

Iranian officials deny nuclear weapons aspirations, saying the claims are based on bogus intelligence from the U.S. and Israel.

But IAEA chief Yukiya Amano has said there are increasing indications of such activity. His concerns were outlined in 13-page summary late last year listing clandestine activities that either can be used in civilian or military nuclear programs, or “are specific to nuclear weapons.”

Among these were indications that Iran has conducted high explosives testing and detonator development to set off a nuclear charge, as well as computer modeling of a core of a nuclear warhead. The report also cited preparatory work for a nuclear weapons test and development of a nuclear payload for Iran’s Shahab 3 intermediate range missile _ a weapon that could reach Israel.

Iran says it is enriching only to make nuclear fuel. But because enrichment can also create fissile warhead material, the U.N. Security Council has imposed sanctions on Tehran in a failed attempt to force it to stop.

More recently, the U.S., the European Union and other Western allies have either tightened up their own sanctions or rapidly put new penalties in place striking at the heart of Iran’s oil exports lifeline and its financial system.

The most recent squeeze on Iran was announced Friday, when SWIFT, a financial clearinghouse used by virtually every country and major corporation in the world, agreed to shut out the Islamic Republic from its network.

Diplomats say the choke-holds are being applied in part to persuade Israel to hold off on potential military strikes on Iranian nuclear facilities _ among them Fordo, a main Israeli concern because it is dug deep into a mountain and could be impervious to the most powerful bunker busting bombs.

Diplomats told the AP earlier this month that Iran had added two new series or cascades of old-generation IR-1 centrifuges to its Fordo operation, meaning 348 centrifuges were now operating in four cascades.

Olli Heinonen, who retired last year as the IAEA’s chief Iran inspector, recently estimated that these machines, and two other cascades at Natanz can produce around 15 kilograms (more than 30 pounds) of 20-percent enriched uranium a month, using Iran’s tons of low-enriched uranium as feedstock.

The low and higher enriched uranium now being produced “provides the basic material needed to produce four to five nuclear weapons,” Heinonen said.

But he suggested “an altogether different scenario” _ a much quicker pace of enrichment to levels easily turned into weapons-capable uranium if Iran starts using newer, more powerful centrifuges at Fordo. That, said the diplomats, is exactly what Iran appears to be on the verge of doing by finishing preparatory work recently for new centrifuge installations.

Fordo, which can house 3,000 centrifuges, was confidentially revealed to the IAEA by Iran in 2009, just days before the U.S. and Britain jointly announced its existence.

Iran announced last year that it would move its 20-percent uranium production to Fordo from Natanz and sharply boost capacity. It started making higher grade material two years ago saying it needed it to fuel a research reactor.

But the U.S. and others question the rationale, pointing out that Iran rejected offers of foreign fuel supplies for that reactor and is making more of the higher-enriched material than that small reactor needs.

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A storm of criticism in China over share listing plans by a company that sells tonics made with bear bile is highlighting the increasingly affluent country’s changing attitudes toward the environment and wildlife.

Reports Friday said dozens of well-known entertainers, writers and other celebrities signed a petition to the China Securities Regulatory Commission urging it to withhold approval for the initial public offering by Guizhentang, a Chinese medicines maker. The company is awaiting approval for a share listing in Shenzhen.

Hundreds of thousands of comments on “weibo,” the Chinese version of Twitter, blasted the company for extracting bile from bears.

Animal rights groups contend the practice of bear bile farming is cruel because the animals are confined to small cages and milked of bile through catheters inserted into fistulas, or permanent wounds, in their gall bladders.

They say that antibiotics used to counter chronic infections from the practice, and other contaminants in the bile, also pose a hazard to human health.

A photo on the front page of the state-run newspaper China Business News on Friday showed a satirical photo montage of a caged bear, its muzzle bloodied, with a picture of the head of the China Association of Traditional Chinese Medicines, Fang Shuting, quoted as saying that bears are “very comfortable” while the bile is extracted.

News reports cited Fang as saying China has 68 licensed bear farms and more than 10,000 bears farmed for their bile, which can cost up to 4,000 yuan ($635) a kilogram.

A spokesman for Guizhentang, who gave his surname as “Xu,” refused comment.

“It is not the right time for an interview now. We will let you know when we want to do an interview,” Xu said.

Officials at the CSRC said they could not comment on an IPO plan under consideration.

Animal rights are gaining increasing attention in China, with public figures like basketball star Yao Ming and actor Jackie Chan speaking out against eating shark fins and other customs that many view as cruel or a threat to endangered species.

The change reflects both a growing awareness of the need to protect the environment and wildlife and also increasing affluence among many ordinary Chinese who now keep pets, travel overseas and have changing attitudes toward traditions they may not have questioned in the past.

In recent years, for example, animal protection groups have staged mass releases of cats and dogs caged for shipment to restaurants and markets, where they are slaughtered for dishes considered to be delicacies or especially nourishing.

The petition to the stock watchdog from more than 70 celebrities and environmental protection groups seeks to block the IPO and urges the use of synthetic substitutes for bear bile, which is a digestive substance made in the liver and stored in the gall bladder.

The main active ingredient in the bile is ursodeoxycholic acid, or UDCA, which is thought to act as an anti-inflammatory and is used to treat gall stones and liver ailments. It is mainly taken from the Asiatic Black Bear, a protected but not endangered species in China.

Chinese media reports cited Fang as defending Guizhentang’s bile collecting practices in a news conference in Beijing, after visiting its facilities in southeast China’s Fujian province.

“Collecting bile is like turning on a tap. It’s painless, natural and simple. I didn’t see bears suffering in the process,” Caijing magazine quoted Fang as saying.

“After the bile is extracted, bears can still drink milk and honey and have fun in the farm.”

Fang argued that bear farms helped to protect wild bears by discouraging poaching, and that China must preserve its unique, ancient medicinal practices. Animal rights groups contend that poaching continues because buyers view wild bear bile as more potent.

Farmed bears live about four or five years, while those in the wild live up to 30, according to the Animals Asia Foundation, which has been working to close down bear farms and rescue the animals.

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Japan

A number of top Federal Reserve officials likely saw a need for additional monetary easing at the central bank’s meeting last month, although there are few signals the central bank will move soon.

Minutes from the Fed’s January meeting, which will be released on Wednesday, should offer more insight than usual into where officials stand on the question of whether more bond purchases are warranted to help a still-frail economy.

While the minutes always give a flavor of the policy debate, the central bank for the first time will provide “qualitative” details on officials’ views on the Fed’s near-record $2.9 trillion balance sheet.

This new information — a counterpart to the first-ever interest rate projections released last month — could suggest a greater willingness to ease further than was evidenced following the meeting. Last month, the Fed said it would likely leave rates near zero until at least late 2014, but offered no details on how it should handle its asset holdings.

The prospects for further easing appeared to be dampened by the latest employment figures, which showed a healthier job market than economists had expected. Still, many feel the economy is unlikely to gain enough vigor this year to satisfy the Fed, and they look for a third round of quantitative easing, probably through purchases of mortgage bonds.

“I doubt the qualitative information from participants on the balance sheet would sway decisively on the near-term prospect of QE3,” said Thomas Lam, an economist at OSK-DMG. “While the hurdle for QE3 seems lower, I don’t view this policy option as imminent at this time.”

Speaking before a group of home builders on Friday, Fed Chairman Ben Bernanke stayed away from any explicit references to monetary policy, but made clear he still does not see the pace of economic growth as sufficient or satisfactory.

“The state of housing has been an impediment to a faster recovery,” he said. “We need to continue to develop and implement policies that will help the housing sector get back on its feet.”

The projections from Fed officials on when interest rates should rise off the floor were all over the place, ranging from this year to 2016. Given varying appetites within the Fed’s policy committee for expanding or shrinking the central bank’s portfolio, the minutes will likely put even more daylight between inflation hawks and doves.

Analysts are not expecting any hard data on balance sheet expectations but rather broad-brush descriptions of policymakers’ leanings. The minutes could say, for instance, that some members favor additional stimulus now, while others would rather take a wait-and-see approach.

There is also a risk that the markets could get a hawkish surprise, for instance, if some officials appear to be making the case for near-term asset sales.

“It will be an interesting trading day when this ‘qualitative information’ begins to include ruminations about when to start shrinking the nearly $3 trillion balance sheet and whether such shrinkage will happen through passive asset run-off or active asset sales,” said Dana Saporta, an economist at Credit Suisse.

Bernanke has said that when the Fed chooses to tighten policy it will first raise the interest it pays on bank reserves, currently at 0.25 percent, only later resorting to selling some of the assets it accumulated in response to the financial crisis.

But not all officials may agree.

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Greek political leaders announced agreement on austerity measures, clearing the way for a deal to cut the nation

Spain’s three top banks said Tuesday they will set aside an additional euro6.1 billion ($8 billion) to meet a new government demand for all banks to boost their buffers against troubled real estate assets.

Banco Santander, Europe’s biggest bank by market capitalization, said it would make allowance for an extra euro2.3 billion ($3 billion) buffer to meet the government requirement. It said the amount will be partially covered through anticipated capital gains, including euro900 million ($1.2 billion) from the sale of Banco Santander Colombia.

Banco Santander SA said in a statement the new reserve comes on top of euro1.8 billion ($2.4 billion) charged against the bank’s 2011 financial results.

Spain last week ordered banks to raise euro50 billion ($65.6 billion) to protect themselves against troubled real estate assets from a domestic construction boom that went bust business cards.

The country’s second bank, Banco Bilbao Vizcaya Argentaria SA, said it would be setting aside euro1.4 billion ($1.8 billion) to boost its cover of toxic assets. BBVA said it would be able to absorb the total sum in 2012 thanks to its strong results.

CaixaBank SA, Spain’s No. 3 bank, will designate euro2.4 billion ($3.2 billion) in additional reserves.

Spanish banks have about euro175 billion ($229.5 billion) in troubled holdings. The bank reform require institutions to increase provisions for troubled assets from 30 percent to up to 80 percent of book value, creating the incentive for them to sell them off.

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It’s been three months since MF Global became the eighth-largest bankruptcy in U.S. history. Did anyone see this coming?

Well, a few people had some idea, and a congressional subcommittee heard from them on Capitol Hill Thursday.

Michael Roseman, MF Global’s former chief risk officer, warned early of the dangers in the firm’s massive bets on troubled European debt. He clashed with ex-CEO Jon Corzine over the strategy before being replaced early last year by Michael Stockman, who also appeared at the hearing.

"I discussed my concerns about the positions and the risk scenarios with Mr. Corzine and others," Roseman told the subcommittee. "However, the risk scenarios I presented were challenged as being implausible."

Under questioning, Roseman said he believed his views on risk "certainly played a factor" in the firm’s decision to dismiss him.

MF Global () filed for bankruptcy on Halloween following a frantic week in which executives including Corzine, the former CEO and an ex-governor and senator from New Jersey, attempted to offload assets and sell the business.

The firm had come under intense pressure in the previous days after its $6.3 billion investment in European debt came to public notice. Trading partners called for increased margin payments and clients took their business elsewhere, leaving the firm scrambling for cash to meet its obligations.

"It almost looks like that they took Mr. Roseman out and replaced Mr. Roseman with a ‘yes man,’" Rep. Stephen Fincher said.

Stockman responded that he had initially signed off on the European bets, but later raised concerns and recommended bringing the firm’s risk down in July of last year.

Corzine, for his part, has acknowledged pushing the aggressive European strategy after arriving at MF Global in 2010, anxious to take it to the ranks of Wall Street’s elite.

The investments themselves didn’t actually lose money, as Corzine noted in Congressional testimony in December. None of the bonds MF Global held came from countries that have defaulted and all were set to mature before 2013. But Europe’s precarious finances and the massive leverage MF Global took on spooked investors and ultimately helped doom the firm need a personal loan with bad credit.

While an examination of MF Global’s risk management may have been the main focus of Thursday’s hearing, for the firm’s former customers, the bigger question is what happened to their money.

Customer funds at futures brokers like MF Global are supposed to be protected even in the event of a bankruptcy. In MF Global’s case, however, staffers were unable to account for roughly $1.2 billion in customer money that is now suspected to have been unlawfully appropriated for the firm’s own purposes.

Ratings agencies under fire: Others facing scrutiny Thursday were rating agencies Moody’s and Standard & Poor’s, which waited until just days before MF Global’s bankruptcy to flag its European exposure even though the firm had disclosed it back in May.

By the time the rating agencies acted, the bets were already sparking concern among MF Global’s trading partners. The downgrades then sharply acclerated the firm’s downward spiral.

"[T]he abruptness of the downgrades and the suddenness of MF Global’s collapse raise questions about why the credit rating agencies did not consider MF Global’s exposure to European sovereign debt until late October," the House committee said in a memo last week.

Also appearing Thursday was James Gellert, head of the smaller ratings agency Rapid Ratings International, which maintained a grim outlook on MF Global long before its larger counterparts did. Gellert noted in his testimony that MF Global’s business model had been deteriorating for several years prior to its failure, and that the new risks in the European strategy only made its situation more precarious.

"Had MF Global offered a lower risk foundation, MF Global might have been able to withstand the failure of the new business strategy," Gellert said. "As it was, Mr. Corzine inherited an unhealthy company and made it worse by some high-stakes gambles." 

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The Greek government resumed stalled talks with its private creditors in Athens on Wednesday in the hope of sealing a euro100 billion ($128 billion) debt relief deal needed to avoid a disastrous default this spring.

Charles Dallara, a top official at the Institute of International Finance, a global banking association, returned to Greece after negotiations stalled last week, and held a nearly three-hour meeting with Prime Minister Lucas Papademos and Finance Minister Evangelos Venizelos.

“A very crucial meeting, that lasted several hours, has just finished at the prime minister’s office,” Venizelos told Parliament shortly afterward. “The meetings between the Greek government and the IIF have resumed and they will continue (Thursday).”

Earlier, he said the talks “are without a doubt at a very sensitive stage.”

The so-called private sector involvement, or PSI, deal is meant to write off half of the debt Greece owes private bondholders. Creditors would get most of the remaining debt in new bonds with extended repayment periods, as well as a cash payment.

“We want this (deal) to happen in a way that is safe for Greece _ with Greece in the eurozone _ and safe for the real economy and the financial system,” Venizelos said.

Since May 2010, Greece has kept solvent with rescue loans from its European partners and the International Monetary Fund. In the event of bankruptcy, Greece would likely have to abandon the euro and revert to a devalued currency. Since the country imports more than it exports, the costs of fuel and basic consumer goods would skyrocket, further frustrating a population angered by two years of harsh austerity.

The PSI talks have mainly been held up by a disagreement on interest rates for the new bonds.

“The interest rate on the new loans is a key issue here,” Dallara told CNN before Wednesday’s meeting. “Some seem to have a view that we should actually extend the loans at interest rates even lower than what the IMF and (the Europeans) extend their loans at, and there’s not much logic in that in our viewpoint.”

Dallara urged the EU to make clear that a similar deal would not apply to other troubled eurozone countries. “Greece really is a unique situation,” he said.

A Greek government official said Athens is still considering whether to impose so-called collective action clauses on its bonds. Such clauses could force private debt holders resisting a settlement to fall in line with the majority if an agreement is reached. The official asked not to be identified, citing the sensitive nature of the talks Payday advance.

A second government official, who also spoke on condition of anonymity, said Athens estimates there could be an agreement by the end of the week.

Greece needs to clinch the deal quickly to qualify for more bailout loans before it faces a euro14.5 billion ($18.6 billion) bond repayment on March 20. The bond swap is a key part a new euro130 billion ($166 billion) bailout package in loans and bank support from international rescue creditors.

Recession-bound Greece needs to write off some of its borrowings, if it is to have a fighting chance of emerging from its debt hole.

It has so far relied on austerity measures, which were a condition for it to receive the emergency loans. The Greek government has cut pensions and salaries, raised taxes and sold some state property.

Yanis Varoufakis, a professor of economics at the University of Athens, argued that even with a debt deal Greece could do little to eventually avoid default.

“Let the truth be revealed. Let’s have a default because Greece is insolvent and insolvent entities have to default. It’s a law of nature and of society and of reason, and we should simply succumb to that,” Varoufakis told AP Television.

“If European leaders are worried about the effect this will have on banks, they might as well recapitalize them, not continue to drip-feed the Greek state,” he said.

Dallara, the Institute of International Finance official, said that if Greece is forced to default, it will be messy. “I personally believe that there is no such thing as an orderly default for Greece,” he told CNN. “If there is a default, it is likely to be very disorderly.”

As austerity measures have cut deeply into incomes and unemployment has risen, unions have held frequent strikes and protests over the past two years.

Unions and employers were to start talks on Wednesday on reducing labors costs, but the negotiations were disrupted when protesters from a Communist-backed labor union occupied the central building where the meetings were to take place.

EU-IMF debt inspectors are back in Athens this week to monitor progress of those reforms aimed at slashing the country’s high budget deficits.

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Derek Gatopoulos and Theodora Tongas in Athens contributed to this report.

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British and Hong Kong leaders said Monday they will team up to develop London into an international trading center for China’s currency.

British Treasury chief George Osborne said in Hong Kong that his trip to Asia this week, which also includes stops in Beijing and Tokyo, furthers dialogue with Chinese authorities and Chinese and British banks “on establishing London as a new hub for the renminbi market as a complement to Hong Kong.”

Hong Kong’s leader, Chief Executive Donald Tsang said a new private sector-led group will be set up to look at strengthening ties between Hong Kong and London in terms of settlement systems, market liquidity and the development of renminbi financial products.

Beijing is promoting the international use of the renminbi, also known as the yuan. It’s also promoting Hong Kong, a semiautonomous Chinese territory with its own financial system and currency, as an offshore trading center for the yuan.

Last year, yuan-denominated bank deposits in Hong Kong doubled to 630 billion renminbi ($100 billion) as savers sought higher returns from the yuan, which has been strengthening 4-5 percent a year.

Beijing would like to see the currency become an alternative to the dollar, although tight capital controls limit its circulation overseas.

“It’s clear that there’s scope for substantial expansion of the renminbi market in coming years,” said Osborne, who was speaking at a financial conference.

He said that in June 2011, China’s share of world trade was 11 percent but the yuan’s share of global foreign exchange trading last year was only 0.9 percent.

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Spain’s Parliament approved the new conservative government’s first austerity measures Wednesday, which aim to rein in the country’s swollen deficit with euro8.9 billion ($11.5 billion) in spending cuts.

The measures, which also include income and property tax hikes, were approved by 197 deputies in the 350-seat lower house, where the ruling Popular Party has an absolute majority of 185 seats after a landslide election win in November.

Finance Minister Cristobal Montoro said the measures were severe but necessary, owing to what he called the mismanagement of the economy by the former Socialist government.

“The economy is stopped, we’re on the verge of a recession and the accounts are unbalanced as a consequence, among other things, of the deplorable decisions taken by the former government, which only made the situation worse,” Montoro told lawmakers.

Spain is battling to avert being dragged further into a debt crisis that has already forced Greece, Ireland and Portugal to seek financial bailouts.

In 2010, Spain began to emerge from a near two-year recession triggered by the collapse of a property and construction bubble that had fueled growth for nearly a decade. The country now has a 21.5 percent unemployment rate _ the highest in the eurozone _ and Economy Minister Luis de Guindos said recently the economy would slide back into recession early this year with the last quarter of 2011 and the first of 2012 both registering negative growth.

Montoro accused the former Socialist government of deliberately hiding figures that showed that Spain’s deficit for 2011 would be 8 percent of national income, and not 6 percent as the Socialists had claimed easy to get unsecured personal loans. He said the deviation represented an estimated euro20 billion ($25.4 billion) “black hole.”

However, Prime Minister Mariano Rajoy has acknowledged that the deficit of regional governments, most of which are run by his own conservative party, was responsible for 75 percent of the deviation.

Other measures in the austerity package include a freeze on civil servants’ salaries and on practically all government hiring. Pensions, however, are to be increased by 1 percent, the only area of spending to rise. Taxes on income and property will also be raised but only for two years.

Treasury Minister Cristobal Montoro said the tax increases will be progressive, with the wealthiest paying more and that the impact on lower-income earners will be minimal.

The government projects that the tax increases will bring in euro6.2 billion ($7.9 billion) on top of the euro8.9 billion saved on the spending cuts.

The package was part of an extension of the 2011 budget because the last government did not pass one for 2012. More austerity measures are expected when the government presents its 2012 budget by the end of March.

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