The rare suspension order on April 11 by the movie's importer, China Film Group Corp., led to speculation that the Hollywood film had run afoul of Chinese censors despite weeks of promotion.

"Django Unchained" reportedly already had some violent scenes cut and had been cleared by China's rigorous censors, who generally remove violence, sex and politically edgy content.

"The new version is one minute shorter than the previous one," said a manager at a UME Cineplex cinema in Beijing.

The manager, who gave only his surname, Wang, speculated that a nude scene might have been cut.

Calls to China's regulatory agency, the State Administration of Press, Publication, Radio, Film and Television, were not answered.

"Django Unchained," which won two Oscars, stars Leonardo DiCaprio as a plantation owner and Jamie Foxx as a freed slave who trains to become a bounty hunter and demands his wife's freedom before the U.S. Civil War.

China has become the second-biggest movie market behind the U.S. with sales of $2.7 billion last year, according to the Motion Picture Association of America. While Hollywood is eager for a slice of this market, directors are having to accept the altering of their movies if they show China in a bad light, or to make them suitable for all ages in the absence of a classification system in China.

Earlier this year, some Chinese moviegoers were left confused because of awkward cuts to the James Bond feature "Skyfall" that included unflattering references to the sex trade in the Chinese territory of Macau. Then "Cloud Atlas" was shown in Chinese cinemas minus 38 minutes that included gay and straight love scenes.

China is even getting American studios to sanction alternative versions of films specially tailored for Chinese audiences, such as "Iron Man 3." The Chinese version features local heartthrob Fan Bingbing absent from the version showing abroad and lengthy clips of Chinese scenery.

___

Associated Press researcher Henry Hou contributed to this report.

NASHVILLE (Reuters) - Country music legend George Jones' final standing ovation, after a career filled with them, came on Thursday afternoon at the Grand Ole Opry House in Nashville.

And the song that brought about 4,000 fans and friends to their feet was Jones' signature song, "He Stopped Loving Her Today," fittingly a tune about both love and death.

Alan Jackson, a long-time friend, sang the song, channeling Jones' country traditionalism. Jackson ended by removing his white cowboy hat and waving it toward the heavens, looking up, tears on his cheeks, saying: "We love you, George."

Jones, whose honky-tonk career spanned more than six decades, died on April 26 at the Vanderbilt University Medical Center in Nashville after being hospitalized with a fever and irregular blood pressure. He was 81.

Tanya Tucker and the Imperials, Randy Travis, The Oak Ridge Boys, Charlie Daniels, Travis Tritt, Kid Rock, Ronnie Milsap, Kenny Chesney and Wynonna Judd all paid tribute to Jones during a service that lasted 2 hours and 45 minutes.

All four Nashville TV stations carried the event live.

After Jackson left the stage, a spotlight shone on the yellow flower-draped coffin, and family members began to exit as a recording of Jones' voice filled the Grand Ole Opry with "When the Last Curtain Falls."

It was Jones' final farewell to the Grand Ole Opry, the home of the venerable radio show in which he had been a cast member since 1956, almost from the East Texas beginnings of a career that was celebrated by musicians, politicians and other guests throughout the service.

ELDER STATESMAN OF COUNTRY MUSIC

Although the stunningly successful early years of his career were celebrated, the spotlight was on the last 30 years and his marriage to the former Nancy Ford Sepulvado, who Jones frequently said "saved my life."

During his career, Jones' drug and alcohol abuse and the incidents that accompanied them often gained more headlines than his legendary voice.

But country's King of Broken Hearts - with the help of his wife - was able to chase away those demons for the most part and live out his career as a revered elder statesman of country music.

Brad Paisley was among the performers to take their turns on a stage that was filled with floral arrangements, photographs and a rocking chair, a salute to Jones' classic "I Don't Need Your Rocking Chair."

"I'm lucky enough to have met George when he had gotten right, beat the demons, found Nancy and found God," Paisley said.

CBS chief Washington correspondent Bob Schieffer talked about the voice, the songs and the dreams they fueled.

"Nobody could sing like George Jones unless you were George Jones," said Schieffer, a part-time country musician by hobby.

Former first lady Laura Bush, who sat next to Nancy Jones during the service, said she heard Jones' voice frequently during her White House years.

"We've had few sounds more lovely than the voice of George Jones," she said. "I heard White Lightning' as George W. worked out on the treadmill listening to George J."

"He was blessed to be able to walk through the last 30 years with wife Nancy by his side," she said.

(Editing by Brendan O'Brien and Cynthia Johnston, Gary Hill)

HONG KONG/LONDON (Reuters) - Standard Charteredfaced a protest from over 20 percent of shareholders over its board structure on Wednesday and warned it could miss this year's revenue target after higher bad debts and falling interest rates hit first-quarter earnings.

Shares in the Asia-focused bank, one of the most consistent performers during the financial crisis, fell over 4 percent.

More than 22 percent of the London-based bank's shareholders abstained or voted against the re-election of four directors at an annual meeting, including probably its largest investor, Singapore state investor Temasek. Almost 13 percent of shareholders also failed to back the bank's pay policy.

Temasek, which owns an 18 percent stake, last year abstained on the re-election of some directors, in part because it wants fewer executives on the board. The investor was considering abstaining again this year, sources familiar with the matter told Reuters before the shareholder meeting. It could not immediately be reached for comment after the vote.

Standard Chartered Chairman John Peace said he had discussed governance with Temasek, and said his bank - which has six executives on its board of 19 people - had a structure that reflected best UK corporate practice.

"They believe in a different model. They expressed a different philosophy to us and I respect that," Peace said.

Standard Chartered said that, despite a weak March, it was still on course to achieve an 11th consecutive year of record profits, driven by strong Asian markets, but it would ease back on hiring to rein in growing wage costs.

The profitability of banks in Asia has been squeezed by ultra-easy monetary policy in the West, which has created a flood of cheap money that has pressured margins for banks competing to lend to fast-growing emerging markets.

Operating profit at both Standard Chartered's consumer and investment banking arms fell by about 5 percent in the first three months of 2013.

Revenues in the first quarter were slightly higher than in the first quarter of 2012 and Finance Director Richard Meddings said profit margins had stabilized.

But he said the impact of Western monetary policy on Asia was "the key anxiety" that could affect revenues, which Standard Chartered aims to increase by 10 percent a year.

"At this point, we'd prefer to wait to see how May and June land before we give that guidance (of 10 percent revenue growth)," Meddings told reporters on a conference call. "Last year we produced revenue growth of 8 percent and it may be that we're more likely to be at that level."

The bank, which makes about four-fifths of its operating profit in Asia and the Middle East, said it was comfortable with analyst forecasts for pretax profit of $8.2 billion this year, up 18 percent from 2012.

It said its performance had weakened in South Korea and in Singapore. South Korea's government has overhauled personal debt restructuring processes as part of a wider social welfare program, which includes more forgiveness on troubled long-term loans, and Standard Chartered said its consumer bad debts there had increased by more than 10 percent, more than expected.

STAFF COSTS GROW

Its shares closed down 4.4 percent at 16.25 pounds, the biggest daily drop since they slumped in August after charges the bank violated U.S. sanctions against Iran. That ended in a $667 million settlement with U.S. authorities.

"The Q1 trading statement is the first one in a long time in which Standard Chartered is down in operating profit comparisons on a year-on-year basis, both in the wholesale bank and the consumer bank," said Bernstein analyst Chirantan Barua.

Costs rose on the year, including a "high single-digit" percentage rise in staff costs after the addition of 560 staff in the quarter and wage inflation, the bank said. It does not issue full quarterly numbers and releases earnings twice a year.

Standard Chartered has previously said it could hire about 2,000 staff this year.

"We will still be hiring, the business still has good growth, but we will be pacing the rate of that hiring more acutely until we are more certain of the income run rate," Meddings said.

Hong Kong was once again Standard Chartered's standout market in the first quarter, with income growing more than 10 percent, mirroring a strong performance there reported by rival HSBCon Tuesday.

Income in Africa also rose more than 10 percent.

(Editing by Tom Pfeiffer and Mark Potter)

SAO PAULO (Reuters) - While Brazil struggles to finish its stadiums in time for the 2014 World Cup, Twitter is already working to cash in on what the U.S. company's head of revenue, Adam Bain, sees as a potentially huge business opportunity.

Robust consumer spending, growth potential from still-low Internet penetration and fast adoption of smart phones have turned this nation of 194 million people into an attractive market for Twitter and other online giants.

With soccer's World Cup rapidly approaching and the 2016 Olympics around the corner, Brazil stands out as the kind of opportunity a company under pressure to monetize its 200 million-strong user base doesn't want to miss.

"You think about the next 10 years in Brazil and it is really going to be amazing from a business perspective," Bain, Twitter's global president of revenue, said in an interview on a visit to Sao Paulo this week.

"Brazil is the largest opportunity we see in Latin America and frankly across all of the other markets," the executive said. "That's why we are here building and we will continue to invest in this market in a big way."

The World Cup and the Olympics are meant to showcase Brazil's status as an emerging economic power. But with just a year left before the opening match, Latin America's biggest economy is struggling to finish new stadiums and put in place key infrastructure such as G4 mobile networks.

For Twitter, the international sports events are also crucial. The San Francisco-based company saw record levels of traffic during the 2012 London Olympics and launched a model of integration with TV that company executives like Bain think may be a substantial part of its monetizing strategy.

Twitter makes money through its "promoted tweets" or advertisement posts that users receive in their tweet feeds. The company is expected to generate nearly $600 million in revenues this year, according to the research firm eMarketer.

Bain, the man in charge of turning Twitters' huge user base into money, came to Brazil to talk to businesses that are starting to lay out their strategies for the World Cup and the Olympics.

"Some of our most strategic deals that we have signed with marketers, which are global deals that we have signed over multiple years, many of them include work that they want to do here in Brazil during the World Cup and the Olympics," he said.

The challenge is not so much explaining to marketers why they have to incorporate the microblogging platform into their marketing strategies as it is to show them how to do it.

BRAZIL, A NO-BRAINER

Twitter is one of the latest U.S. Internet companies to land in Brazil, an emerging market that has embraced social media with almost religious zeal.

Just six months ago the company hired a former Yahoo! executive to lead the charge and the sense of work in progress is apparent in the impersonal, half-empty rental office Twitter occupies in Sao Paulo's financial district.

But things have changed since rival Facebook got here a couple of years ago. Brazil's once hefty economic growth slowed down to a mere 0.9 percent in 2012 and mounting inflation is beginning to dent consumer confidence, dimming some of the enthusiasm over the Internet's potential here.

And yet Bain says opening an office in Brazil was a no-brainer. Even before setting foot here, the country was already Twitter's No. 3 market after the United States and Japan, with an estimated 40 million subscribers.

"The overall impact has potential to be huge," he said when asked when asked about the revenue Twitter expected from the World Cup and the Olympics, which he declined to estimate.

An Internet penetration rate of just 44 percent - half that of the United States - combined with soaring sales of smart phones to a booming middle class, make Brazil attractive in the long run for companies like Twitter and Facebook.

And, according to Bain, users in Brazil are responding better than others to advertisement in the form of "promoted tweets," with an engagement rate two or three times higher than the global average.

"The world's spotlight is going to move to Brazil in a very dramatic fashion and investment certainly follows with that."

(Reporting by Esteban Israel; Editing by Vicki Allen)

WASHINGTON (Reuters) - Even as the U.S. government confronts rival powers over widespread Internet espionage, it has become the biggest buyer in a burgeoning gray market where hackers and security firms sell tools for breaking into computers.

The strategy is spurring concern in the technology industry and intelligence community that Washington is in effect encouraging hacking and failing to disclose to software companies and customers the vulnerabilities exploited by the purchased hacks.

That's because U.S. intelligence and military agencies aren't buying the tools primarily to fend off attacks. Rather, they are using the tools to infiltrate computer networks overseas, leaving behind spy programs and cyber-weapons that can disrupt data or damage systems.

The core problem: Spy tools and cyber-weapons rely on vulnerabilities in existing software programs, and these hacks would be much less useful to the government if the flaws were exposed through public warnings. So the more the government spends on offensive techniques, the greater its interest in making sure that security holes in widely used software remain unrepaired.

Moreover, the money going for offense lures some talented researchers away from work on defense, while tax dollars may end up flowing to skilled hackers simultaneously supplying criminal groups. "The only people paying are on the offensive side," said Charlie Miller, a security researcher at Twitter who previously worked for the National Security Agency.

A spokesman for the NSA agreed that the proliferation of hacking tools was a major concern but declined to comment on the agency's own role in purchasing them, citing the "sensitivity" of the topic.

America's offensive cyber-warfare strategy - including even the broad outlines and the total spending levels - is classified information. Officials have never publicly acknowledged engaging in offensive cyber-warfare, though the one case that has been most widely reported - the use of a virus known as Stuxnet to disrupt Iran's nuclear-research program - was lauded in Washington. Officials confirmed to Reuters previously that the U.S. government drove Stuxnet's development, and the Pentagon is expanding its offensive capability through the nascent Cyber Command.

Stuxnet, while unusually powerful, is hardly an isolated case. Computer researchers in the public and private sectors say the U.S. government, acting mainly through defense contractors, has become the dominant player in fostering the shadowy but large-scale commercial market for tools known as exploits, which burrow into hidden computer vulnerabilities.

In their most common use, exploits are critical but interchangeable components inside bigger programs. Those programs can steal financial account passwords, turn an iPhone into a listening device, or, in the case of Stuxnet, sabotage a nuclear facility.

Think of a big building with a lot of hidden doors, each with a different key. Any door will do to get in, once you find the right key.

The pursuit of those keys has intensified. The Department of Defense and U.S. intelligence agencies, especially the NSA, are spending so heavily for information on holes in commercial computer systems, and on exploits taking advantage of them, that they are turning the world of security research on its head, according to longtime researchers and former top government officials.

Many talented hackers who once alerted companies such as Microsoft Corp to security flaws in their products are now selling the information and the exploits to the highest bidder, sometimes through brokers who never meet the final buyers. Defense contractors and agencies spend at least tens of millions of dollars a year just on exploits, which are the one essential ingredient in a broader cyber-weapons industry generating hundreds of millions annually, industry executives said privately.

Former White House cybersecurity advisors Howard Schmidt and Richard Clarke said in interviews that the government in this way has been putting too much emphasis on offensive capabilities that by their very nature depend on leaving U.S. business and consumers at risk.

"If the U.S. government knows of a vulnerability that can be exploited, under normal circumstances, its first obligation is to tell U.S. users," Clarke said. "There is supposed to be some mechanism for deciding how they use the information, for offense or defense. But there isn't."

Acknowledging the strategic trade-offs, former NSA director Michael Hayden said: "There has been a traditional calculus between protecting your offensive capability and strengthening your defense. It might be time now to readdress that at an important policy level, given how much we are suffering."

The issue is sensitive in the wake of new disclosures about the breadth and scale of hacking attacks that U.S. intelligence officials attribute to the Chinese government. Chinese officials deny the allegations and say they too are hacking victims.

Top U.S. officials told Congress this year that poor Internet security has surpassed terrorism to become the single greatest threat to the country and that better information-sharing on risks is crucial. Yet neither of the two major U.S. initiatives under way - sweeping cybersecurity legislation being weighed by Congress and President Barack Obama's February executive order on the subject - asks defense and intelligence agencies to spread what they know about vulnerabilities to help the private sector defend itself.

Most companies, including Microsoft, Apple Inc and Adobe Systems Inc, on principle won't pay researchers who report flaws, saying they don't want to encourage hackers. Those that do offer "bounties", including Google Inc and Facebook Inc, say they are hard-pressed to compete financially with defense-industry spending.

Some national-security officials and security executives say the U.S. strategy is perfectly logical: It's better for the U.S. government to be buying up exploits so that they don't fall into the hands of dictators or organized criminals.

UNINTENDED CONSEQUENCES

When a U.S. agency knows about a vulnerability and does not warn the public, there can be unintended consequences. If malign forces purchase information about or independently discover the same hole, they can use it to cause damage or to launch spying or fraud campaigns before a company like Microsoft has time to develop a patch. Moreover, when the U.S. launches a program containing an exploit, it can be detected and quickly duplicated for use against U.S. interests before any public warning or patch.

Some losses occur even after a patch.

That happened to Microsoft and its customers with a piece of malicious software known as Duqu. Experts say it was designed to steal industrial-facility designs from Iran and that it used an exploit that tricked computers into installing malicious software disguised as a font to render type on the screen.

Those who dissected the program after its discovery in 2011 believe it was created by a U.S. agency. Though Duqu resembled Stuxnet in some respects, they couldn't say for sure how it was assembled, or whether the spying tool had accomplished its mission.

What's certain is that criminal hackers copied Duqu's previously unheard-of method for breaking into computers and rolled it into "exploit kits," including one called Blackhole and another called Cool, that were sold to hackers worldwide.

Microsoft had by then issued a patch for the vulnerability. Nevertheless, hackers used it last year to attack 16 out of every 1,000 U.S. computers and an even greater proportion in some other countries, according to Finland-based security firm F-Secure.

The flaw became the second-most frequently tried among tens of thousands of known vulnerabilities during the second half of 2012, F-Secure said. Hackers installed a variety of malicious software in cases when the exploit worked, including copies of Zeus, a notorious program for stealing financial login information that has been blamed for hundreds of millions of dollars in bank thefts. Microsoft won't say whether it has confronted U.S. officials about Duqu and other programs, but an executive said the company objects "to our products being used for malicious purposes."

THE BUSINESS OF "ZERO-DAYS"

Former NSA Director Hayden and others with high-level experience have boasted that U.S. offensive capabilities in cyberspace are the best in the world. But few outsiders had any idea what was possible before 2010, when a small laboratory discovered the worm called Stuxnet.

It took teams of security experts in several countries months to dissect the program. They discovered that it had been meticulously engineered to launch invisibly from a portable flash drive and spread through connected Windows-based personal computers in search of machines running a specific piece of industrial control software made by Siemens AG of Germany.

If Stuxnet found that software and a certain configuration, it changed some of the instructions in the program and hid its tracks. Eventually, the truth came out: The only place deliberately affected was an Iranian nuclear facility, where the software sped up and slowed down uranium-enriching centrifuges until they broke.

Stuxnet was unique in many ways, one of them being that it took advantage of four previously unknown flaws in Windows. In the industry, exploits of such vulnerabilities are called "zero-days," because the software maker has had zero days' notice to fix the hole before the tool's discovery.

It can take months for security patches to be widely installed after a vulnerability is reported, so even a "two-day" exploit, one released two days after a warning, is valuable.

But exploits can't be counted on to work once the holes they rely on are disclosed. That means contractors are constantly looking for new ones that can be swapped in to a particular program after the original vulnerability is fixed. Some security firms sell subscriptions for exploits, guaranteeing a certain number per year.

"My job was to have 25 zero-days on a USB stick, ready to go," said a former executive at a defense contractor that bought vulnerabilities from independent hackers and turned them into exploits for government use.

HOW THE MARKET WORKS

Zero-day exploits will work even when the targeted software is up to date, and experts say the use of even a single zero-day in a program signals that a perpetrator is serious. A well-publicized hacking campaign against Google and scores of other companies in early 2010, attributed by U.S. officials and private experts to Chinese government hackers, used one zero-day.

Many zero-day exploits appear to have been produced by intelligence agencies. But private companies have also sprung up that hire programmers to do the grunt work of identifying vulnerabilities and then writing exploit code. The starting rate for a zero-day is around $50,000, some buyers said, with the price depending on such factors as how widely installed the targeted software is and how long the zero-day is expected to remain exclusive.

It's a global market that operates under the radar, often facilitated by other companies that act as brokers. On the buy side are U.S. government agencies and the defense contractors that fold the exploits into cyber-weapons. With little or no regulation, it is impossible to say who else might be purchasing zero-days and to what end, but the customers are known to include organized crime groups and repressive governments spying on their citizens.

Even one of the four exploits used by Stuxnet may have been purchased. Swedish Defense Research Agency expert David Lindahl said the same trick employed by the exploit in question was used in a piece of Russian crime software called Zlob prior to Stuxnet's discovery. The same person may have sold the exploit to both the United States and to Russian criminals. However, Lindahl and other experts said simultaneous invention can't be ruled out.

The issue of rival countries or gangs using a flaw that U.S. officials have known about but decided to keep secret is a big concern. The National Security Agency declined to say whether or how often that happens, but researchers said simultaneous security discoveries occur often.

"It's pretty nave to believe that with a newly discovered zero-day, you are the only one in the world that's discovered it," said Schmidt, who retired last year as the White House cybersecurity coordinator. "Whether it's another government, a researcher or someone else who sells exploits, you may have it by yourself for a few hours or for a few days, but you sure are not going to have it alone for long."

China is thought to do a lot of its work on exploits in-house, relying on its own programmers, though Reuters has reviewed email from self-declared Chinese buyers offering large sums. "I really need some 0days,if you have some remote exploit 0days of windows system, I think I can buy it. you know, money is not the problem," one hopeful wrote in 2006.

ON THE FRONT LINE

Cesar Cerrudo, a researcher in Argentina and the recipient of the 2006 email, was among the first to sell zero-days in the open, targeting experts who wanted to test the security of networks for their employers or clients.

Cerrudo said he ignored some requests from China that seemed suspiciously detailed, such as one for an exploit for an out-of-date version of Microsoft Office. Cerrudo said he regrets selling to a research institution in Europe he won't name that he later realized received a great deal of funding from a national government. Now Cerrudo works at IOActive Inc, a Seattle-based consulting firm that advises corporate clients on security.

"Fewer people are publishing details about vulnerabilities and exploits," Cerrudo said, and that hurts overall safety. "People are trying to keep their techniques and exploits private so they can make a lot of money."

A Paris-based security company called Vupen sells tools based on exploits to intelligence, law-enforcement and military authorities in most of the world. It refrains from selling to countries such as Iran or North Korea, and says it voluntarily follows European and U.S. rules limiting arms exports, though others say it isn't clear whether exploits are subject to the most restrictive U.S. rules.

Until 2010, Vupen often notified software vendors for free when it found vulnerabilities, said chief executive Chaouki Bekrar. That has now changed. "As our research costs became higher and higher, we decided to no longer volunteer for multi-billion-dollar companies," Bekrar said. When software makers wouldn't agree to a compensation system, he said, Vupen chose to sell to governments instead. "Software vendors created this market by not decently paying researchers for their hard work."

In Bekrar's estimation, Vupen is doing good. "Exploits are used as part of lawful intercept missions and homeland security operations as legally authorized by law," he said, "to protect lives and democracies against both cyber and real world threats."

The company is one of the most visible players in the business. Vupen sent a dozen researchers to an elite April conference on offensive hacking techniques at the luxury Fontainebleau Hotel in Miami Beach, where attendees eschewed nametags, dined on stone crab and heard such talks as "Advanced Heap Manipulation in Windows 8." The only larger contingents were one from the conference's organizer, zero-day reseller Immunity Inc, and one from the U.S. government.

A newer entrant to the market is ReVuln, based in Malta. ReVuln says it specializes in crafting exploits for industrial control systems that govern everything from factory floors to power generators.

This is a major concern for governments because such systems are considered prime targets for terrorists and enemy nations, with the potential for high loss of life. Additionally, the software that controls them is much harder to patch than something like Windows, which Microsoft frequently fixes with updates over the Internet. Employees at several large makers of control systems say they don't know how to reach all their users, let alone convince them to make changes when holes are discovered.

ReVuln's founders, Italian researcher Luigi Auriemma and former Research in Motion vulnerability hunter Donato Ferrante, declined to say anything about their customers. In an email interview, they said they sold some exploits exclusively and others more widely. Asked if they would be troubled if some of their programs were used in attacks that caused death or destruction, they said: "We don't sell weapons, we sell information. This question would be worth asking to vendors leaving security holes in their products."

DEFENSE CONTRACTORS

Much of the work on offensive cyber-warfare is done by publicly traded U.S. defense contractors, now joined by a handful of venture capital-backed start-ups seeking government buyers for a broad array of cyber-weapons that use exploits. Defense contractors both buy exploits and produce them in-house.

Major players in the field include Raytheon Co, Northrop Grumman Corp and Harris Corp, all of which have acquired smaller companies that specialize in finding new vulnerabilities and writing exploits. Those companies declined to discuss their wares. "It's tough for us, when you get into the realm of offensive," said Northrop spokesman Mark Root.

Reuters reviewed a product catalogue from one large contractor, which was made available on condition the vendor not be named. Scores of programs were listed. Among them was a means to turn any iPhone into a room-wide eavesdropping device. Another was a system for installing spyware on a printer or other device and moving that malware to a nearby computer via radio waves, even when the machines aren't connected to anything.

There were tools for getting access to computers or phones, tools for grabbing different categories of data, and tools for smuggling the information out again. There were versions of each for Windows, Apple and Linux machines. Most of the programs cost more than $100,000, and a solid operation would need several components that work together. The vast majority of the programs rely on zero-day exploits.

Intelligence agencies have a good reason to leave a lot of the spyware development work to outsiders, said Alex Stamos, chief technology officer at an Internet security unit of NCC Group Plc. "It's just like munitions development," he said. "They don't purchase it until the vendors can demonstrate it works."

Another newcomer with U.S. agencies as clients is Atlanta-based Endgame Inc, which in March raised $23 million in a second round of funding led by the blue-chip Silicon Valley venture capital firm Kleiner Perkins Caufield & Byers. Endgame is chaired by the chief executive of In-Q-Tel, a venture capital firm set up in 1999 at the request of the CIA to fund private companies developing technology that could be useful to the intelligence community.

Some of Endgame's activities came to light in purloined emails published by hackers acting under the banner Anonymous. In what appear to be marketing slides, the company touted zero-day subscriptions as well as lists of exactly which computers overseas belonged to specific criminal "botnets" - networks of compromised machines that can be mobilized for various purposes, including stealing financial passwords and knocking websites offline with traffic attacks.

The point was not to disinfect the botnet's computers or warn the owners. Instead, Endgame's customers in the intelligence agencies wanted to harvest data from those machines directly or maintain the ability to issue new commands to large segments of the networks, three people close to the company told Reuters.

Endgame declined to comment.

Ted Schlein, a Kleiner partner who sits on Endgame's board, said he couldn't comment on the company's classified business. But he defended the idea of captive botnets.

"If you believe that wars are going to be fought in the world of cyber in the future, wouldn't you want to believe you would have a cyber-army at your disposal? Why wouldn't you want to launch a cyber-army if needed?"

(Reporting by Joseph Menn; Editing by Jonathan Weber and Claudia Parsons)

Thethousands of atoms that have been carefully arranged into nearly 250 frames with a scanning tunneling microscope (STM),tool invented by scientists at IBM three decades ago. The tool first allowed scientists to visualize single atoms.

"It weighs two tons, operates at a temperature of negative 268 degrees Celsius [minus 450 degrees Fahrenheit] and magnifies the atomic surface over 100 million times," Christopher Lutz, an IBM research scientist, said of the machine.

To position the atoms, the team used the microscope to drag a super-sharp needle along a copper surface. This needle, positioned just a nanometer away from the surface,and pulled them into place so that the scientists could take still images for each movie frame. The film shows a boy playing with a single atom, dancing and jumping on a trampoline. It was verified as the world's smallest stop-motion movie by Guinness World Records.

The moviemakers say there's more to their work than mere novelty. Atoms are the smallest raw materials for data storage devices, and the same researchers who made the stop-motion film also made the world's smallest magnetic bit using just 12 atoms, according to IBM. That's astoundingly small considering a bit of data on the average computer or electronic device today is made up of roughly 1 million atoms. A chip the size of a fingernail using the researchers' 12-atom bits would be able to store all of the movies ever made, IBM researchers say.

"As data creation and consumption continue to get bigger, data storage needs to get smaller, all the way down to the atomic level," IBM researcher Andreas Heinrich said. "We're applying the same techniques used to come up with new computing architectures and alternative ways to store data to making this movie."

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SUNDAY, MAY 5: CINCO DE MAYO

Profile America Sunday, May 5th. In Spanish, today's date is Cinco de Mayo, and celebrations will be held in many cities across the U.S., as well as Mexico. These events mark the anniversary of the Battle of Puebla in 1862, when outnumbered Mexican troops defeated the invading French forces of Napoleon III. Over the years, the celebration has evolved from one of military victory to a colorful and vibrant event, celebrating Mexican culture. Appropriately, this is also National Salsa Month. There are almost 34 million people of Mexican descent in the U.S., some 10 percent of the total population.Some 20.6 million of these live in either California or Texas. You can find more facts about America from the U.S. Census Bureau, online at .

Sources: U.S. Census Bureau, Facts for Features, CB13-FF.12

Profile America is produced by the Center for New Media and Promotions of the U.S. Census Bureau. These daily features are available as produced segments, ready to air, on a monthly CD or on the Internet at(look for "Multimedia Gallery" by the "Newsroom" button).

SOURCE U.S. Census Bureau

Syria and its patron Iran hinted at possible retribution, though the rhetoric in official statements appeared relatively muted.

Despite new concerns about a regional war, Israeli officials signalled they will keep trying to block what they see as an effort by Iran to send sophisticated weapons to Lebanon's Hezbollah militia ahead of a possible collapse of Syrian President Bashar Assad's regime.

Israel has repeatedly threatened to intervene in the Syrian civil war to stop the transfer of what it calls "game-changing" weapons to Hezbollah, a Syrian-backed group that battled Israel to a stalemate during a monthlong war in 2006.

Since carrying out a lone air strike in January that reportedly destroyed a shipment of anti-aircraft missiles headed to Hezbollah, Israel had largely stayed on the sidelines. That changed over the weekend with a pair of air strikes, including an attack near a sprawling military complex close to the Syrian capital of Damascus early Sunday that set off a series of powerful explosions.

The Israeli government and military refused to comment. But a senior Israeli official said both air strikes targeted shipments of Fateh-110 missiles bound for Hezbollah. The Iranian-made guided missiles can fly deep into Israel and deliver powerful half-ton bombs with pinpoint accuracy. The official spoke on condition of anonymity because he was discussing a covert military operation.

Syria's government called the attacks a "flagrant violation of international law" that has made the Middle East "more dangerous." It also claimed the Israeli strikes proved the Jewish state's links to rebel groups trying to overthrow Assad's regime.

Syria's information minister, Omran al-Zoubi, reading a Cabinet statement after an emergency government meeting, said Syria has the right and duty "to defend its people by all available means."

Israeli defence officials believe Assad has little desire to open a new front with Israel when he is preoccupied with the survival of his regime. More than 70,000 people have been killed since the uprising against Assad erupted in March 2011, and Israeli officials believe it is only a matter of time before Assad is toppled.

Still, Israel seemed to be taking the Syrian threats seriously. Israel's military deployed two batteries of its Iron Dome rocket defence system to the north of the country Sunday. It described the move as part of "ongoing situational assessments."

Israel says the Iron Dome shot down hundreds of incoming short-range rockets during eight days of fighting against Hamas militants in the Gaza Strip last November. Hezbollah fired some 4,000 rockets into Israel during the 2006 war, and Israel believes the group now possesses tens of thousands of rockets and missiles.

The Iron Dome deployment followed a surprise Israeli drill last week in which several thousand reservists simulated conflict in the north. In another possible sign of concern, Israel closed the airspace over northern Israel to civilian flights on Sunday and tightened security at embassies overseas, Israeli media reported. Israeli officials would not confirm either measure.

Reflecting fears of ordinary Israelis, the country's postal service, which helps distribute government-issue gas masks, said demand jumped to four times the normal level Sunday.

Israel's deputy defence minister, Danny Danon, would neither confirm nor deny the air strikes. He said, however, that Israel "is guarding its interests and will continue to do so in the future."

"Israel cannot allow weapons, dangerous weapons, to get into the hands of terror organizations," he told Army Radio.

Israeli defence officials have identified several strategic weapons that they say cannot be allowed to reach Hezbollah. They include Syrian chemical weapons, the Iranian Fateh-110s, long-range Scud missiles, Yakhont missiles capable of attacking naval ships from the coast, and Russian SA-17 anti-aircraft missiles. Israel's air strike in January destroyed a shipment of SA-17s meant for Hezbollah, according to U.S. officials.

Israeli officials said Sunday they believe that Iran is stepping up its efforts to smuggle weapons through Syria to Hezbollah because of concerns that Assad's days are numbered.

They said the Fateh-110s reached Syria last week. Friday's air strike struck a site at the Damascus airport where the missiles were being stored, while the second series of air strikes early Sunday targeted the remnants of the shipment, which had been moved to three nearby locations, the officials said.

None of the Iranian missiles are believed to have reached Lebanon, said the officials, who spoke on condition of anonymity because they were discussing a classified intelligence assessment.

The attacks pose a dilemma for the embattled Assad regime.

If it fails to respond, it looks weak and opens the door to more air strikes. But any military retaliation against Israel would risk dragging the Jewish state and its powerful army into a broader conflict. With few exceptions, Israel and Syria have not engaged in direct fighting in roughly 40 years.

The air strikes come as Washington considers how to respond to indications the Syrian regime may have used chemical weapons in its civil war. President Barack Obama has described the use of such weapons as a "red line," and the administration is weighing its options.

The White House declined for a second day to comment directly on Israel's air strikes in Syria, but said Obama believes Israel, as a sovereign nation, has the right to defend itself against threats from Hezbollah.

"The Israelis are justifiably concerned about the threat posed by Hezbollah obtaining advanced weapons systems, including some long-range missiles," said White House spokesman Josh Earnest. He said the U.S. was in "close co-ordination" with Israel but would not elaborate.

British Foreign Secretary William Hague also seemed to back Israel, telling Sky News that "all countries have to look after their own national security."

Iran condemned the air strikes, and a senior official hinted at possible retribution from Hezbollah.

Gen. Masoud Jazayeri, assistant to the Iranian chief of staff, told Iran's state-run Arabic-language Al-Alam TV that Tehran "will not allow the enemy (Israel) to harm the security of the region." He added that "the resistance will retaliate to the Israeli aggression against Syria." ''Resistance" is a term used for Hezbollah and the Palestinian Hamas, another anti-Israel militant group supported by Iran.

Iran has provided both financial and military support to Hezbollah for decades and has used Syria as a conduit for both. If Assad were to fall, that pipeline could be cut, dealing a serious blow to Hezbollah's ability to confront Israel.

UN Secretary General Ban Ki-moon spoke to Arab League Secretary-General Nabil ElAraby by telephone Sunday and both shared their "grave concern" over the air strikes, UN spokesman Martin Nesirky said.

Ban called on all sides "to exercise maximum calm and restraint, and to act with a sense of responsibility to prevent an escalation of what is already a devastating and highly dangerous conflict," Nesirky said.

Israel appears to be taking a calculated risk that its strikes will not invite retaliation from Syria, Hezbollah or even Iran.

But Salman Shaikh of the Brookings Doha Center in Qatar warned: "All this could lead us into a wider conflict."

MILAN (Reuters) - Wardrobes made from exotic Japanese wood by Armani, a brass and leather "Donatella Versace" chair and other "home" furnishings from Italian luxury designers were on show in Milan this week in an effort to woo wealthy tourists and high end hotel developers.

Fashion groups such as Versace and Armani diversified into home design decades ago in an effort to capture a bigger slice of the $750 billion global luxury goods market.

But they continue to add items from drinks coasters costing 100 euros ($130) to leather-covered wardrobes in an effort to lure buyers across the luxury spectrum from the aspirational European middle-class to wealthy Asians and property developers.

"We have always looked at distant parts of the world, but this is inevitable now with the economic problems in Italy," designer Giorgio Armani told Reuters at an evening presentation of his Armani Casa 2013/14 collection at his theatre in Milan.

Armani, who used natural but rare materials such as Japanese tamo wood for a trunk-shaped wardrobe and banana tree stripes for round gaming tables, has made home design an integral part of his group, which had total revenues of 6.7 billion euros ($8.77 billion) in 2011.

In 2003, Armani set up an interior design studio for private clients and real estate builders, which also worked with Indian prime property developer Lodha at the World Towers in Mumbai.

Global sales of luxury home furnishing rose 3 percent to 18 billion euros in 2012, according to U.S. consultancy Bain.

The sector grew below the average of the industry, as Europeans cut back on non-essential purchases. But analysts expect it to benefit from demand for all-round luxury services from travelers, who account for 40 percent of global luxury goods sales.

Hotel services, according to Bain, outpaced any other sector in the luxury industry in 2012, with global turnover estimated at 127 billion euros, up 18 percent on the year before.

Fashion houses at the design week, which includes an international furniture fair near Milan running until Sunday, used archive items to strengthen their brand image.

Some partnered with other designers on limited collections to satisfy the most demanding clients.

Platinum-blonde creative director Donatella Versace collaborated with Los Angeles designers Nikolai e Simon Haas on a "Donatella Chair", made of honeycomb brass and black leather.

Fashion house Missoni also presented outdoor furniture and a variety of textiles inspired by their trademark "zigzag" motif.

"Our chairs can even be used in a kitchen," Rosita Missoni, who started the family business with her husband Ottavio over half a century ago, said at a crowded cocktail event.

($1 = 0.7642 euros)

(Reporting by Antonella Ciancio, editing by Paul Casciato)

[More from BGR: ]

Because of this, I decided to have an open mind as I read through some entries on , where hes written a lot about the wireless industry and telecom policy in general. What I found was that hes indeed a very smart guy who has a core philosophy of what telecom policy should be and is not a talking point-spouting shill for the incumbent carriers. All that said, however, I cannot overlook the fact that I think he got the most important decision of American wireless policy over the past four years completely wrong.

[More from BGR: ]

Yes, Im referring to the now-dead merger betweenand T-Mobile, which . In a blog entry from September 2011, Wheeler wrote that the best solution would be for the government to sign off on the merger between the two carriers in exchange foragreeing to tougher new regulations. In proposing this idea, Wheeler said that his hope was that the conditions ultimately imposed on AT&T by the government would not only establish rules for Ma Bell, but would then expand from the largest carrier to all others.

So whats the problem here? For starters, it seems as though Wheelers framework for approving AT&Ts purchase of T-Mobile has a significant danger of entrenching regulatory capture that is, when a private company uses its vast size and influence within the government to craft rules that perpetuate its status as either a monopoly or as part of a protected oligopoly.

In fact, Wheelers proposal didnt even call for formal regulations but rather for the government and the incumbent carriers to agree to a consent decree to pseudo-regulatory behavioral standards that would hopefully be pushed out to the rest of the wireless industry at some point. Wheeler himself concedes that such consent decrees are traditionally for a limited duration, he believes that such concepts once established with the largest carrier could have been lifted into subsequent consent decrees for other carriers and even into the terms for subsequent spectrum auctions.

Whats more, the whole concept of pseudo-regulatory behavioral standards doesnt sound nearly as enforceable as actual regulations and laws. Even worse, the quality of such handshake deals is usually based entirely on the quality of the regulators and even well-constructed ad hoc deals can easily overturned by an FCC that is more sympathetic to carriers complaints that theyre being regulated too heavily.

In all, then, Wheelers plan to make the AT&T-T-Mobile merger beneficial to consumers relies too much on a complex series of levers that have no guarantee of ever being pressed. In contrast, consider what has happened ever since the merger was blocked: T-Mobile has acquired additional spectrum from AT&T as part of a severance deal between the two carriers and has now successfully merged with MetroPCS to give it enough spectrum to compete with the big incumbents on a nationwide basis. Even more importantly, T-Mobile has engaged in a relatively bold experiment to ditch wireless contracts and give consumers different options for how they pay for their favorite wireless devices.

While its too soon to say whether consumers will find these new plans beneficial, it is clear that T-Mobile has emerged as a significant fourth option in the wireless market. And call me crazy, but Ill take a more competitive wireless market over a state-sanctioned duopoly any day of the week.

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