Disney joins JAKKS, LA billionaire to bring toys to life

LOS ANGELES (Reuters) – Walt Disney toys are sold around the world. Now, children can find them in the cloud as well.

The media giant is teaming up with toy company JAKKS Pacific and Patrick Soon-Shiong, Los Angeles’ wealthiest person, on a new line of toys – with a nifty technological twist designed to link the goodies that kids lug home from the store with Disney’s stable of well-known animated characters.

“DreamPlay“, developed by Soon-Shiong’s NantWorks company, and JAKKS works via an app that can be downloaded on Apple Inc devices like the iPad, or smartphones and tablets running Google Inc Android software. When a device’s camera is trained on any toy specifically designed to work with DreamPlay, it triggers one of thousands of preset animations that appear on the device’s screen and seem to be unfolding in the real world.

With viewers’ eyes locked on the tablet or smartphone screen, fairies appear to glide in and out of buildings, animated critters start playing musical instruments, mythical characters prance on a toy piano’s keyboard.

Disney, which licensed its characters to DreamPlay, and its partners hope that children will take to the new approach, which is intended to extend and expand the life of the toy. But it remains to be seen if the concept will prove to be more than a novelty, and be able to arrest a child’s infamously short attention span.

The three will demo their concept on Tuesday at the Consumer Electronics Show in Las Vegas, but Reuters got a sneak peak at the technology on Monday.

In a showroom in the 20th floor of a Santa Monica, Calif. building, visitors to JAKKS’ demonstration are treated to an animated version of Sebastian – the red Jamaican crab from Disney’s “Little Mermaid” movie – who pops up onscreen on an iPad seconds after the tablet’s camera is trained on a real-life set of toy bongo drums.

The animated crab pounces on the drums and proceeds to bang out a calypso song onscreen, with both Sebastian and the physical drum set appearing together as if the two shared the same cartoon.

REAL, VIRTUAL INTERACTION

DreamPlay allows not just Sebastian, but also Tinker Bell and a host of other well-loved Disney characters to “interact” virtually with specially made toys via image-recognition software. The software was developed by Soon-Shiong, a former cancer surgeon who created drugs to fight diabetes and breast cancer and then sold the companies that produced them for $ 8.6 billion.

Soon-Shiong teamed with JAKKS, a $ 678 million-a-year toy maker and licensee of toys based on the Princess line of dolls, Marvel action figures and other Disney toys, among others.

The technology works via the “cloud” – images and video clips stored on remote servers that are streamed to kids’ mobiles when the app recognizes a particular item.

“It’s a tremendous way to combine great technology and Disney’s magical story telling to extend the time a child can play with a toy,” said Bob Chapek, president of Disney’s consumer products unit. “Kids find out that playing with their toy doesn’t end when they get it home.”

Since taking over in 2011, Chapek has repositioned Disney’s consumer product unit to expand its use of technology with its toys. DreamPlay is the first of what Chapek says are other products that will twin technology with familiar Disney toys, although he won’t name them.

Down the road, Disney may explore new business models, including selling subscriptions to content created specifically to be used with a particular toy, said Chapek.

The market is hardly certain for a product that requires a child to hold up a phone or tablet, and peer through it to play with a toy that’s stationary. Will children want to see Rapunzel endlessly dancing on the keys of a piano or Rosetta, a fairy from Disney’s “Tinker Bell” movies, fly in and out of a cottage?

“The technology may be great, but no one has proven to me yet that a kid will sit in front of an iPhone or iPad instead of playing with a toy that’s right in front of him,” said Sean McGowan, a toy analyst with Needham & Co who downgraded JAKKS to hold in September along with other toy companies, and then downgraded JAKKS to underperform in October.

JAKKS intends to begin selling DreamPlay versions of toys from the Disney Princess line in October. It will then expand its offerings next year, with international sales starting in 2014, said Stephen Berman, JAKKS President and CEO.

DreamPlay toys will be “a couple of dollars” costlier than the regular version, he says.

Target stores and Toys R Us are among the U.S. retailers who will carry the DreamPlay line, Berman says. Top-Toy, the giant Nordic retailer, has also signed on, while Beijing Hualian Group, which operates supermarkets and department stores across China, is coming onboard as well.

“Kids don’t own iPhones or iPads but they all know how to use them,” says Berman. “Kids have so much more imagination than we do. Imagine recording a bunch of the videos and giving the kid an iPad to play with them on a trip to see the grandparents.”

JAKKS will ramp up marketing for the DreamPlay line, said Berman. DreamPlay toys will be prominently displayed at all the partner-retailers, he added, and shoppers will be encouraged to use their smartphones to view them.

Those that aim smartphones at a boxed Tinker Bell, for instance, may get a start as the fairy from “Peter Pan” literally soars out of the box, leaving an empty package behind.

“Technology can help people live better, work better, play better,” said Soon-Shiong as he showed off the line of toys. “This is the way they will play better.”

(Reporting By Ronald Grover; Edited By Edwin Chan)

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How Eva Mendes Helped Ryan Gosling's Mom Get Red Carpet Ready

Stylewatch
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01/08/2013 at 11:00 AM ET

Matt Baron/BEImages; Stacie McChesney/NBC/AP

Ryan Gosling looked smokin’ hot in his sleek Gucci suit at Monday night’s Gangster Squad premiere in Los Angeles. But Gosling’s mom Donna (his date for the evening) almost distracted us from his sexiness, because she looked so darn good, too. So what was her secret?

“My mother’s wearing all my girlfriend’s clothes,” Gosling told E! News of his mom’s ruched dress, paisley trench and statement necklace. “I’m wearing Eva Mendes,” Donna confirmed, adding, “She let me raid her closet.”

Gosling and Mendes, who clicked while filming The Place Beyond the Pines together in 2011, were first spotted holding hands in September of that year on a low-key date at Disneyland. Since then, they’ve taken their romance to New York, Los Angeles, Gosling’s native Canada and Paris, with Mendes first meeting Gosling’s mom on a movie date in N.Y.C. last January.

The stars have managed to remain pretty quiet about their relationship to this point, making Gosling’s use of the world “girlfriend” last night all the more poignant. Tell us: Would you ever lend your partner’s mom your clothes? 

–Kate Hogan

PHOTOS: SEE MORE GLAM RED CARPET LOOKS IN ‘LOVE IT OR LEAVE IT?’

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Report: Death rates from cancer still inching down

WASHINGTON (AP) — Death rates from cancer are continuing to inch down, researchers reported Monday.

Now the question is how to hold onto those gains, and do even better, even as the population gets older and fatter, both risks for developing cancer.

"There has been clear progress," said Dr. Otis Brawley of the American Cancer Society, which compiled the annual cancer report with government and cancer advocacy groups.

But bad diets, lack of physical activity and obesity together wield "incredible forces against this decline in mortality," Brawley said. He warned that over the next decade, that trio could surpass tobacco as the leading cause of cancer in the U.S.

Overall, deaths from cancer began slowly dropping in the 1990s, and Monday's report shows the trend holding. Among men, cancer death rates dropped by 1.8 percent a year between 2000 and 2009, and by 1.4 percent a year among women. The drops are thanks mostly to gains against some of the leading types — lung, colorectal, breast and prostate cancers — because of treatment advances and better screening.

The news isn't all good. Deaths still are rising for certain cancer types including liver, pancreatic and, among men, melanoma, the most serious kind of skin cancer.

Preventing cancer is better than treating it, but when it comes to new cases of cancer, the picture is more complicated.

Cancer incidence is dropping slightly among men, by just over half a percent a year, said the report published by the Journal of the National Cancer Institute. Prostate, lung and colorectal cancers all saw declines.

But for women, earlier drops have leveled off, the report found. That may be due in part to breast cancer. There were decreases in new breast cancer cases about a decade ago, as many women quit using hormone therapy after menopause. Since then, overall breast cancer incidence has plateaued, and rates have increased among black women.

Another problem area: Oral and anal cancers caused by HPV, the sexually transmitted human papillomavirus, are on the rise among both genders. HPV is better known for causing cervical cancer, and a protective vaccine is available. Government figures show just 32 percent of teen girls have received all three doses, fewer than in Canada, Britain and Australia. The vaccine was recommended for U.S. boys about a year ago.

Among children, overall cancer death rates are dropping by 1.8 percent a year, but incidence is continuing to increase by just over half a percent a year. Brawley said it's not clear why.

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Wall Street dips as earnings season begins

NEW YORK (Reuters) - Stocks were little changed at the open on Tuesday as an earnings season expected to show sluggish corporate growth gets under way.

Profits in the fourth quarter are seen above the previous quarter's lackluster results, but analysts' current estimates are down sharply from where they were in October. Quarterly earnings are expected to grow by 2.8 percent, according to Thomson Reuters data.

If earnings growth appears to be "less bad" than expected that would translate into a near-term uptick in the market, according to Eric Wiegand, senior portfolio manager at U.S. Bank Wealth Management in New York.

"But I think there's still ample areas for concern," he said, listing policy worries in Washington and uneven economic activity as a result of Superstorm Sandy during last quarter.

The Dow Jones industrial average <.dji> fell 40.65 points, or 0.30 percent, to 13,343.64. The S&P 500 <.spx> lost 4.28 points, or 0.29 percent, to 1,457.61. The Nasdaq Composite Index <.ixic> dropped 5.04 points, or 0.16 percent, to 3,093.78.

German data showed industrial orders fell more than forecast in November due to a sharp drop in demand from abroad, reinforcing concerns that Europe's largest economy may have contracted in the fourth quarter of 2012.

Monsanto Co shares rose 3.2 percent to $99.05 after hitting a more than four-year high at $99.99. The world's largest seed company raised its earnings outlook for fiscal 2013 and posted strong first-quarter results.

Education provider Apollo Group and Dow component Alcoa Inc , the largest U.S. aluminum producer, round out the start of earnings season after the closing bell.

Shares of restaurant-chain operator Yum Brands Inc fell 4.6 percent to $64.78 a day after the KFC parent warned sales in China, its largest market, shrank more than expected in the fourth quarter.

London-traded Vodafone shares rose almost 2 percent after its partner in U.S. joint venture Verizon Wireless said it would be "feasible" to buy out the British group. U.S.-traded Vodafone stock fell 1.5 percent.

Sears Holdings shares fell 1.4 percent to $42.31 a day after the company said its chief executive will step down for family health reasons. The U.S. retailer also reported a 1.8 percent decline in quarter-to-date sales at stores open at least a year.

GameStop shares fell 7.1 percent to $23 after it reported sales for the holiday season and cut its guidance.

(Reporting by Rodrigo Campos; Editing by Nick Zieminski)

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Five accused of rape in India appear in court for charges

NEW DELHI (Reuters) - Five men accused of the rape and murder of an Indian student appeared in court on Monday to hear charges against them after two of them offered evidence possibly in return for a lighter sentence in the case that has provoked widespread anger.

The five men, along with a teenager, are accused of raping the 23-year-old physiotherapy student after she boarded their bus on the way home from a movie in New Delhi on December 16. She died two weeks later in a Singapore hospital.

The attack on the student has ignited protests against the government and anger towards the police for their perceived failure to protect women. It has also provoked a rare national debate about rising violence against women.

A police guard said the men had their faces covered when they entered the courtroom, which had been closed to the public minutes earlier.

The five had already been charged with murder, rape and abduction along with other offences and the magistrate gave them copies of the charges, a prosecutor in the case told Reuters.

The court has yet to assign them defense lawyers or legal aid, said public prosecutor Rajiv Mohan. Most lawyers are unwilling to defend them because of the brutality of the crime.

Reuters video images showed the men stepping out of a blue police van that brought them from Tihar jail, and walking through a metal detector into the South Delhi court, across the street from the cinema where the victim watched a film before boarding the bus with a male friend on December 16.

Following shouting and angry scenes in the packed court, the magistrate, Namrita Aggarwal, closed the hearing to the media and the public. The court was cleared and police were posted at its doors before the accused were brought in.

"Keeping in view the sensitivity of this case that has risen, the proceedings including the inquiry and trial are to be held in camera," Aggarwal said, before ordering people not connected with the case out of the courtroom.

Aggarwal said the next hearing would be on January 10. She did not say when the case would go to trial in a separate, fast-track court, set up after the attack on the woman.

Two of the accused, Vinay Sharma and Pawan Gupta, moved an application on Saturday requesting they be made "approvers", or informers, against the other accused, Mukesh Kumar, Ram Singh and Akshay Thakura, prosecutor Mohan said.

Mohan said he was seeking the death sentence given the "heinous" crime.

"The five accused persons deserve not less than the death penalty," he said, echoing public sentiment and calls from the victim's family.

Most members of the bar association in Saket district, where the case is being heard, have vowed not to represent the accused.

GROUNDS FOR APPEAL?

But on Monday, lawyers Manohar Lal Sharma and V. K. Anand stood up to offer representation to the men. They were heckled by other lawyers who said the accused did not deserve representation.

"We are living in a modern society. We all are educated. Every accused, including those in brutal offences like this, has the legal right to represent his or her case to defend themselves," Lal Sharma said.

The court asked Anand to get the approval of the accused to represent them. If the men, most of them from a slum neighborhood, cannot arrange their own lawyers, the court will offer them legal aid before the trial begins.

Police have conducted extensive interrogations and say they have recorded confessions, even though the five have no lawyers.

Legal experts say their lack of representation could give grounds for appeal should they be found guilty. Similar cases have resulted in acquittals years after convictions.

Last week, chief justice Altamas Kabir inaugurated six fast-track courts to help reduce a backlog of sex crime cases in Delhi.

But some legal experts have warned that previous attempts to fast-track justice in India in some cases led to imperfect convictions that were later challenged.

The sixth member of the gang that lured the student and a male friend into the private bus is under 18 and will be tried in a separate juvenile court.

The government is aiming to lower the age teenagers can be tried as an adult, given widespread public anger that the boy will face a maximum three-year sentence.

The victim, who died on December 29 in hospital in Singapore, where she had been taken for treatment, was identified by a British newspaper on the weekend but Reuters has opted not to name her.

Indian law generally prohibits the identification of victims of sex crimes. The law is intended to protect victims' privacy and keep them from the media glare in a country where the social stigma associated with rape can be devastating.

But her father repeated on Monday his wish that she be identified and said he would be happy to release a photograph of her.

"We don't want to hide her identity, there is no reason for that. The only condition is it should not be misused," he told Reuters.

He said he was confident the trial would be quick and reiterated a call that those responsible be hanged.

(Writing by Frank Jack Daniel; Editing by Robert Birsel)

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Kuwaiti journalist jailed for Twitter ‘insults’

KUWAIT CITY (AP) — A Kuwait newspaper says an online journalist has been sentenced to two years in prison for posts deemed “insulting” to the Gulf nation’s ruler — the second such ruling this week.

The decision reflects a widening social media crackdown across the Gulf Arab states to quell perceived political dissent.

Kuwait’s pro-government Al Watan newspaper reported Monday that Ayyad al-Harbi, a journalist at news website Sabr, was charged with posting Twitter messages considered offensive to the nation’s Western-allied emir. No other details were given.

Kuwait, which hosts thousands of U.S. troops, has been gripped by months of political unrest led by anti-government groups, including Islamist factions.

On Sunday, Kuwaiti media said a social media activist also has received a two-year prison term for Twitter posts that allegedly insulted the emir.

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Brad Pitt Hints at Return to China - Despite Being Banned

01/07/2013 at 11:35 AM EST

Brad Pitt as Austrian mountaineer in Seven Years in Tibet

David Appleby/AP

Looks like Brad Pitt is about to say "Ni hao" to China ... in person.

The actor – who was reportedly banned from China following the government's disapproval of his 1997 film Seven Years in Tibet, which portrayed harsh Chinese rule in Tibet – has hinted at a return to the country. And he took to social media to do it.

Via China's version of Twitter, called Sina Weibo, the actor posted from his verified account, "It is the truth. Yup, I'm coming ..."

The surprising statement is the actor's only "Tweet" on the social network, but it generated more than 24,000 comments from his nearly 160,000 followers.

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Your medical chart could include exercise minutes

CHICAGO (AP) — Roll up a sleeve for the blood pressure cuff. Stick out a wrist for the pulse-taking. Lift your tongue for the thermometer. Report how many minutes you are active or getting exercise.

Wait, what?

If the last item isn't part of the usual drill at your doctor's office, a movement is afoot to change that. One recent national survey indicated only a third of Americans said their doctors asked about or prescribed physical activity.

Kaiser Permanente, one of the nation's largest nonprofit health insurance plans, made a big push a few years ago to get its southern California doctors to ask patients about exercise. Since then, Kaiser has expanded the program across California and to several other states. Now almost 9 million patients are asked at every visit, and some other medical systems are doing it, too.

Here's how it works: During any routine check of vital signs, a nurse or medical assistant asks how many days a week the patient exercises and for how long. The number of minutes per week is posted along with other vitals at the top the medical chart. So it's among the first things the doctor sees.

"All we ask our physicians to do is to make a comment on it, like, 'Hey, good job,' or 'I noticed today that your blood pressure is too high and you're not doing any exercise. There's a connection there. We really need to start you walking 30 minutes a day,'" said Dr. Robert Sallis, a Kaiser family doctor. He hatched the vital sign idea as part of a larger initiative by doctors groups.

He said Kaiser doctors generally prescribe exercise first, instead of medication, and for many patients who follow through that's often all it takes.

It's a challenge to make progress. A study looking at the first year of Kaiser's effort showed more than a third of patients said they never exercise.

Sallis said some patients may not be aware that research shows physical inactivity is riskier than high blood pressure, obesity and other health risks people know they should avoid. As recently as November a government-led study concluded that people who routinely exercise live longer than others, even if they're overweight.

Zendi Solano, who works for Kaiser as a research assistant in Pasadena, Calif., says she always knew exercise was a good thing. But until about a year ago, when her Kaiser doctor started routinely measuring it, she "really didn't take it seriously."

She was obese, and in a family of diabetics, had elevated blood sugar. She sometimes did push-ups and other strength training but not anything very sustained or strenuous.

Solano, 34, decided to take up running and after a couple of months she was doing three miles. Then she began training for a half marathon — and ran that 13-mile race in May in less than three hours. She formed a running club with co-workers and now runs several miles a week. She also started eating smaller portions and buying more fruits and vegetables.

She is still overweight but has lost 30 pounds and her blood sugar is normal.

Her doctor praised the improvement at her last physical in June and Solano says the routine exercise checks are "a great reminder."

Kaiser began the program about three years ago after 2008 government guidelines recommended at least 2 1/2 hours of moderately vigorous exercise each week. That includes brisk walking, cycling, lawn-mowing — anything that gets you breathing a little harder than normal for at least 10 minutes at a time.

A recently published study of nearly 2 million people in Kaiser's southern California network found that less than a third met physical activity guidelines during the program's first year ending in March 2011. That's worse than results from national studies. But promoters of the vital signs effort think Kaiser's numbers are more realistic because people are more likely to tell their own doctors the truth.

Dr. Elizabeth Joy of Salt Lake City has created a nearly identical program and she expects 300 physicians in her Intermountain Healthcare network to be involved early this year.

"There are some real opportunities there to kind of shift patients' expectations about the value of physical activity on health," Joy said.

NorthShore University HealthSystem in Chicago's northern suburbs plans to start an exercise vital sign program this month, eventually involving about 200 primary care doctors.

Dr. Carrie Jaworski, a NorthShore family and sports medicine specialist, already asks patients about exercise. She said some of her diabetic patients have been able to cut back on their medicines after getting active.

Dr. William Dietz, an obesity expert who retired last year from the Centers for Disease Control and Prevention, said measuring a patient's exercise regardless of method is essential, but that "naming it as a vital sign kind of elevates it."

Figuring out how to get people to be more active is the important next step, he said, and could have a big effect in reducing medical costs.

___

Online:

Exercise: http://1.usa.gov/b6AkMa

___

AP Medical Writer Lindsey Tanner can be reached at http://www.twitter.com/LindseyTanner

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Wall Street falls after five-year high, earnings in focus

NEW YORK (Reuters) - Stocks fell on Monday as traders cashed in recent gains that lifted the S&P 500 to a five-year high on Friday and awaited Tuesday's start of the fourth-quarter earnings season.

Last week was the best for U.S. stocks in more than a year as a budget deal and economic data boosted investor confidence.

Investors will likely turn their attention to the fourth-quarter earnings season that kicks off this week. Earnings are expected to be only slightly better than the third-quarter's lackluster results and analysts' current estimates are down sharply from what they were in October.

"We have a cautious market entering fourth-quarter earnings season," said Peter Cardillo, chief market economist at Rockwell Global Capital in New York. "I think it's going to be a disappointing one this time around."

Financial shares will be in focus a day after global regulators known as the Basel Committee gave banks four more years and greater flexibility to build up cash buffers, scaling back moves that aimed to help prevent another financial crisis.

"Basel giving banks four more years to get their act together will be good" for stocks, Cardillo said.

Bank of America shares rose 0.5 percent to $12.17 after hitting their highest since May 2011 as it reached a settlement with Fannie Mae worth roughly $11.6 billion to resolve agency mortgage repurchase claims.

The bank also entered into agreements with Nationstar Mortgage Holdings and Walter Investment Management to sell about $306 billion of residential mortgage servicing rights.

Nationstar rose 16.8 percent to $38.80 and Walter Investment added 7 percent to $47.13.

The Dow Jones industrial average <.dji> fell 63.59 points, or 0.47 percent, to 13,371.62. The S&P 500 <.spx> dropped 6.53 points, or 0.45 percent, to 1,459.94. The Nasdaq Composite <.ixic> lost 12.56 points, or 0.41 percent, to 3,089.09.

Walt Disney Co started an internal cost cutting review several weeks ago that may include layoffs at its studio and other units, three people with knowledge of the effort told Reuters. Disney shares fell 1.4 percent to $51.46.

Video-streaming service Netflix Inc shares gained 4 percent to $99.78 after it said it will carry previous seasons of some popular shows produced by Time Warner's Warner Bros Television.

Amazon.com shares hit their highest price ever at $269.22 after Morgan Stanley raised its rating on the stock. Shares were up 3.6 percent at $268.50.

Roche's chairman was quoted as saying the Swiss pharmaceutical group is no longer considering a bid for the U.S. gene-sequencing company Illumina . Illumina shares were off 8 percent at $50.20.

Major U.S. technology companies could miss estimates for fourth-quarter earnings as budget worries likely led some corporate clients to tighten their belts last month.

(Reporting by Rodrigo Campos; Editing by Kenneth Barry)

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Assad "peace plan" greeted with scorn by foes

BEIRUT (Reuters) - Syrian President Bashar al-Assad rejected peace talks with his enemies on Sunday in a defiant speech that his opponents described as a renewed declaration of war.

Although the speech was billed as the unveiling of a new peace plan, Assad offered no concessions and even appeared to harden many of his positions. He rallied Syrians for "a war to defend the nation" and disparaged the prospect of negotiations.

"We do not reject political dialogue ... but with whom should we hold a dialogue? With extremists who don't believe in any language but killing and terrorism?" Assad asked supporters who packed Damascus Opera House for his first speech since June.

"Should we speak to gangs recruited abroad that follow the orders of foreigners? Should we have official dialogue with a puppet made by the West, which has scripted its lines?"

It was his first public speech to an audience in six months. Since the last, rebels have reached the capital's outskirts.

George Sabra, vice president of the opposition National Coalition, told Reuters the peace plan Assad put at the heart of his speech did "not even deserve to be called an initiative":

"We should see it rather as a declaration that he will continue his war against the Syrian people," he said.

"The appropriate response is to continue to resist this unacceptable regime and for the Free Syrian Army to continue its work in liberating Syria until every inch of land is free."

The speech was seen by many as a response to U.N. mediator Lakhdar Brahimi, who has been meeting U.S. and Russian officials to try to narrow differences between Washington and Moscow over a peace plan. Brahimi also met Assad in Syria late last month.

"Lakhdar Brahimi must feel foolish after that Assad speech, where his diplomacy is dismissed as intolerable intervention," said Rana Kabbani, a Syrian analyst who supports the opposition.

The United States, European Union, Turkey and most Arab states have called on Assad to quit. Russia, which sells arms to and leases a naval base from Syria, says it backs a transition of power but that Assad's departure should not be a precondition for any talks.

REPETITIONS

Assad's foreign foes were scornful and dismissive of the speech: "His remarks are just repetitions of what he's said all along," said Turkish Foreign Minister Ahmet Davutoglu.

"It seems he's locked himself up in a room and only reads the intelligence reports presented to him."

British Foreign Secretary William Hague said "empty promises of reform fool no one". In a Twitter message, he added: "Death, violence and oppression engulfing Syria are of his own making."

EU foreign affairs chief Catherine Ashton said Brussels would "look carefully if there is anything new in the speech, but we maintain our position that Assad has to step aside and allow for a political transition".

The 47-year-old Assad, tall and mustachioed, in a business suit and tie, spoke confidently for about an hour before a crowd of cheering loyalists, who occasionally interrupted him to shout and applaud, at one point raising their fists and chanting: "With blood and soul we sacrifice for you, oh Bashar!"

At the end of the speech, supporters rushed to the stage, mobbing him and shouting: "God, Syria and Bashar is enough!" as a smiling president waved and was escorted from the hall past a backdrop showing a Syrian flag made of pictures of people whom state television described as "martyrs" of the conflict so far.

"We are now in a state of war in every sense of the word," Assad said in the speech, broadcast on Syrian state television. "This war targets Syria using a handful of Syrians and many foreigners. Thus, this is a war to defend the nation."

Independent media are largely barred from Damascus.

Giving the speech in the opera house, in a part of central Damascus that has been hit by rebel attacks, could be intended as a show of strength by a leader whose public appearances have grown rarer as the rebellion has gathered force.

Critics saw irony in the venue: "Assad speech appropriately made in Opera House!" tweeted Rami Khouri, a commentator for Lebanon's Daily Star newspaper. "It was operatic in its other-worldly fantasy, unrelated to realities outside the building."

DEATHS

The United Nations says 60,000 people have been killed in the civil war, the longest and bloodiest of the conflicts to emerge in two years of revolts in Arab states.

Rebels now control much of the north and east of the country, a crescent of suburbs on the outskirts of the capital and the main border crossings with Turkey in the north.

But Assad's forces are still firmly in control of most of the densely populated southwest, the main north-south highway and the Mediterranean coast. The army also holds military bases throughout the country from which its helicopters and jets can strike rebel-held areas with impunity, making it impossible for the insurgents to consolidate their grip on territory they hold.

Assad, an eye doctor, has ruled since 2000, succeeding his late father Hafez, who had seized power in a 1970 coup.

The rebels are drawn mainly from Syria's Sunni Muslim majority, while Assad, a member of the Alawite sect related to Shi'ite Islam, is supported by some members of religious minorities who fear retribution if he falls.

The conflict has heightened confrontation in the Middle East between Shi'ite Iran and Sunni Arab rulers, particularly those in the Gulf who are allied with the West against Tehran.

The plan unveiled in Sunday's speech could hardly have been better designed to ensure its rejection by the opposition. Among its proposals: rebels would first be expected to halt operations before the army would cease fire, a certain non-starter.

Assad also repeatedly emphasized rebel links to al Qaeda and other Sunni Islamist radicals. Washington has also labeled one of the main rebel groups a terrorist organization and says it is linked to the network founded by Osama bin Laden.

Diplomacy has been largely irrelevant so far in the conflict, with Moscow vetoing U.N. resolutions against Assad.

U.N. mediator Brahimi has been trying to bridge the gap, meeting senior U.S. and Russian officials to discuss his own peace proposal, which does not explicitly mention Assad's fate.

National Coalition spokesman Walid Bunni said Assad's speech appeared timed to prevent a breakthrough in those talks, by taking a position that could not be reconciled with diplomacy.

"The talk by Brahimi and others that there could be a type of political solution being worked out has prompted him to come out and tell the others 'I won't accept a solution'," Bunni said, adding that Assad feared any deal would mean his downfall.

(Additional reporting by Suleiman al-Khalidi in Amman, Gulsen Solaker in Ankara and Tim Castle in London; Writing by Peter Graff; Editing by Alastair Macdonald)

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