WASHINGTON (AP) -- The U.S. trade deficit widened in April, as demand for foreign cars, cell phones and other imported goods outpaced growth in U.S. exports.

The Commerce Department said Tuesday that the trade gap rose 8.5 percent in April from March to $40.3 billion.

Exports increased 1.2 percent to $187.4 billion, the second-highest level on record. Companies sold more telecommunications equipment, industrial machinery and airplane parts, while U.S.-made autos and auto parts also rose to an all-time high of $12.8 billion.

But imports grew an even faster 2.4 percent to $227.7 billion. Sales of foreign cars increased to $25.5 billion. Americans also bought more consumer goods, led by big gain in foreign-made cell phones.

A wider trade gap can restrain growth because it means U.S. consumers and businesses are spending more on foreign goods than U.S. companies are taking in from overseas sales.

But Joel Naroff, chief economists at Naroff Economic Advisors, said the wider deficit does show growth in the U.S. remains stronger than most others nations. And that growth has helped fuel more spending by consumers on imported goods.

"The U.S. economy may not be robust but with growth continuing, the demand for foreign goods is picking up," Naroff.

Most economists said trade will likely be neutral in the April-June quarter after subtracting slightly from growth in the January-March quarter. They expect economic growth has slowed to an annual rate of around 2 percent, down from a 2.4 percent rate in the first quarter.

Still, a weaker global economy is reducing demand for U.S. exports and that could weigh on growth this year.

Europe's recession continues to be a problem for U.S. companies. The deficit with the 27-nation European Union grew 25.6 percent to $12.4 billion. U.S. exports to the region declined 7.9 percent, while imports from the region rose slightly.

The politically sensitive deficit with China surged to $24.1 billion, the highest level since January and the largest with any single nation. Imports jumped 21 percent, while exports fell 4.7 percent. The March deficit had been artificially lowered by shipping disruptions caused by the Chinese New Year holiday.

The April deficit with South Korea climbed to a record $2.4 billion. Imports from that country rose to an all-time high of $5.6 billion.

Fewer exports have slowed activity at American factories, according to a measure of U.S. manufacturing released Monday.

The Institute for Supply Management said Monday that its index of manufacturing activity fell to 49 last month from 50.7 in April. It was the lowest reading since June 2009 and the first time the index had slipped below 50 since November. A reading under 50 indicates contraction in manufacturing.

A measure of export orders in the ISM report fell to its lowest level since January.

The weakness abroad has coincided with less investment by U.S. businesses, possibly out of concern that government spending cuts could hobble economic growth.

The deficit so far this year is running at an annual rate of $491.9 billion, down 8 percent from the revised annual deficit of $534.7 billion for 2012.

The testimony of the tea party and other conservative organizations before the House Ways and Means Committee was the first time groups complaining about the IRS's treatment have appeared directly before lawmakers since the IRS revealed the problem and apologized for it last month. They talked about applications for tax-exempt status that took three years for approval or in some cases haven't yet been approved and queries from the agency about the identity of their donors, video of meetings and whether speakers at such gatherings expressed political views.

"I'm a born-free American woman," Becky Gerritson, president of the Wetumpka Tea Party in Alabama, tearfully told the committee, adding, "I'm telling my government, you've forgotten your place."

Sue Martinek, president of the Coalition for Life of Iowa, an anti-abortion group, said the IRS asked them about "the content of our prayers."

"As Christians, we know we needed to pray for better solutions for unplanned pregnancies," she said.

The president of another group, the National Organization for Marriage, said the IRS publicly disclosed confidential information about donors. George Eastman said he thought the IRS's release of that information was designed to intimidate contributors to the group which opposes same-sex marriage "to chill them from donating again."

The testimony came as the Treasury Department inspector general who released a report last month detailing the inappropriate IRS behavior prepared to release another report, this one on excessive IRS spending at employee conferences.

At Tuesday's Ways and Means hearing, committee Chairman Dave Camp, R-Mich., said the conservative groups were being singled out for their beliefs.

"They are Americans who did what we ask people to do every day add their voice to the dialogue that defines our country," Camp said. "And for pursuing that passion, for simply exercising their First Amendment rights the freedoms of association, expression and religion the IRS singled them out."

The committee's top Democrat, Rep. Sander Levin, said it was time to correct the IRS's problems.

"You are owed an apology," Levin, from Michigan, told the witnesses. "We say to you that each of us is committed to doing our part to ensure this does not happen again."

The leader of a small South Carolina tea party group said her organization first applied for tax-exempt status in 2010 and is still waiting for the application to be processed.

"Nearly three years in waiting for an answer is totally unacceptable," said Dianne Belsom, president of the Laurens County Tea Party. "The IRS needs to be fully investigated and held accountable for its incompetence harassment and targeting of conservative groups."

Belsom said her group in rural South Carolina has about 60 members and "seeks to educate ourselves and fellow citizens on various issues pertinent to living in a free country." The group also holds candidate forums in election years, she said.

"I'd like to note that our group is a small-time operation with very little money and this represents a complete waste of time by the IRS in terms of any money they would collect if we were not tax-exempt," Belsom said.

For more than 18 months during the 2010 and 2012 election campaigns, IRS agents in a Cincinnati office singled out tea party and other conservative groups for additional scrutiny when they sought tax-exempt status, according to a report by J. Russell George, the Treasury Department inspector general for tax administration.

The report said tea party groups were asked inappropriate questions about their donors, their political affiliations and their positions on political issues. The additional scrutiny delayed applications for an average of nearly two years, making it difficult for many of the groups to raise money.

George was scheduled to release another report Tuesday, one that said the IRS spent $50 million to hold at least 220 conferences for employees between 2010 and 2012.

The conference spending included $4 million for an August 2010 gathering in Anaheim, Calif., for which the agency did not negotiate lower room rates, even though that is standard government practice, according to a statement by the House Oversight and Government Reform Committee, which requested the report.

Instead, some of the 2,600 attendees received benefits, including baseball tickets and stays in presidential suites that normally cost $1,500 to $3,500 a night. In addition, 15 outside speakers were paid a total of $135,000 in fees, with one paid $17,000 to talk about "leadership through art," the committee said.

Acting IRS Commissioner Danny Werfel has called the conferences "an unfortunate vestige from a prior era."

Werfel took over the agency about two weeks ago, after President Barack Obama forced the previous acting commissioner to resign.

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Follow Stephen Ohlemacher on Twitter: http://twitter.com/stephenatap

PRAGUE, June 5 (Reuters) - The Czech Republic hope a rousing performance against leaders Italy on Friday can cheer up a nation hit by serious floods and re-energise their faltering push for World Cup qualification.

Michal Bilek's side complicated their World Cup hopes after drawing against Bulgaria and losing to Denmark in their last two home games with a 3-0 win in Armenia in March at least keeping them third in Group B.

Friday's match in Prague is expected to go ahead despite floods that have left swathes of the country submerged and threatened parts of the capital's historic centre.

"We will try to raise the spirit of the people by beating Italy," goalkeeper Petr Cech told a Czech newspaper.

Euro 2012 runners-up Italy lead the group with 13 points from five games, ahead of Bulgaria on 10 from six and the Czech Republic with eight points from five matches with five more to play.

The top side qualify directly for Brazil 2014 with the runners-up facing a playoff.

"It will not be easy but it all depends on us," Cech added. "A victory would put us back in the running for qualification for Brazil but one point would also keep us in the hunt. A loss would make things extremely complicated."

One factor for the Czech team will be whether playmaker Tomas Rosicky can put in a full 90 minutes. The diminutive midfielder spent much of the year injured but came on strong at the end of the season for his English club side Arsenal.

Rosicky's skills will mean nothing if the Czechs continue to struggle in front of goal with only six goals scored in their five matches so far.

Italy, who have no real surprises in their squad, have knocked in 12 goals in their five matches but are taking nothing for granted in Prague before they head off to the Confederations Cup in Brazil.

"The Czechs are one of those teams you have to go out and beat because they don't give you anything," goalkeeper Gianluigi Buffon told reporters.

"You play a below-par game then you risk losing, if you play only normally then you might be able to grab a point but we want to play a great game to increase our lead at the top of the group." (Additional reporting by Michael Kahn, editing by Mark Meadows)

BRUSSELS (Reuters) - SABMiller, the world's second-biggest brewer, forecast margin expansion in the year ahead after profit grew in line with expectations thanks to a surge in earnings in Latin America and Africa.

The maker of Grolsch, Peroni and Pilsner Urquell, said on Thursday it expected trading conditions to be broadly unchanged in the next 12 months, with strong growth in developing markets and difficulties in Europe and the United States.

The brewer said it would increase prices in places, with input costs expected to rise by a low to mid-single digit percentage from a mid single-digit rise in 2012/2013.

"We would assume that our margins would grow next year by a modest amount, somewhere between 20 and 50 basis points, so similar to the current year," Chief Financial Officer Jamie Wilson told a conference call.

Operating margin grew by 40 basis points on a constant currency basis in the financial year to the end of March.

SABMiller shares were down 1.7 percent at 1007 GMT, compared with the 1.1 percent decline of the STOXX European food and beverage index. However, the brewer's shares have outperformed its rivals in the year to date, gaining 23 percent, against 11 percent for the index.

Analysts said SABMiller's earnings were slightly lower than expected at the operating level, with more or less in line earnings per share and a reasonable outlook.

"Directionally it's better than the others largely due to geographical mix. They aren't in Brazil and have minimal exposure to Western Europe," said Bernstein Research analyst Trevor Stirling.

Anheuser-Busch InBev has cut its sales forecast for Brazil and Heineken its view for overall group growth after weak starts to the year, while rival Carlsberg benefited from its push into Asia.

Stirling said that with a price to forward earnings ratio of 21 times, SABMiller was trading at a premium of 20 percent to peers so many of its positives were already priced in.

SABMiller, which now earns 75 percent of its profit from emerging markets, said adjusted earnings per share rose 11 percent to 238.7 U.S. cents, matching the Thomson Reuters I/B/E/S average forecast of 239 cents.

The London- and Johannesburg-listed company said EBITA (earnings before interest, tax and amortisation) rose 14 percent to $6.42 billion, in line with the Thomson Reuters mean forecast but below the $6.54 billion StarMine SmartEstimate, which weights analyst forecasts according to previous track record.

The brewer, which has expanded rapidly since the 2002 takeover of Miller by SAB, whose origins were in South Africa, said EBITA (earnings before interest, tax and amortisation) in Latin America grew 11 percent on a like-for-like basis.

The continent now makes up about a third of SABMiller's earnings, with leading positions in Colombia, Ecuador and Peru, although volume growth slowed in the January-March period, with a decline in Colombia, partly due to price increases.

In Africa, EBITA grew by 20 percent and overtook both North America and Europe through brands such as Nile and Castle, which dominate the east of the continent from Uganda to South Africa.

Asia-Pacific earnings also improved, as it made gains in China and India and achieved half the targeted $180 million cost savings from its end-2011 acquisition of Australia's Foster's.

James, the NBA's reigning most valuable player, was fined along with David West and Lance Stephenson of the Indiana Pacers for exaggerating contact during Tuesday's Game Four of the best-of-seven series, which is tied at two games apiece.

With the intense series set to resume on Thursday in Miami, the league decided to crack down on the theatrics displayed in Game Four, where the players involved tried to trick referees into calling fouls off limited contact.

James and West were cited for flopping on the same play during Indiana's 99-92 home victory.

West, guarded by James, was backing in toward the basket in anticipation of receiving a pass when the nine-time Miami All Star spun and sprawled onto the floor as West stumbled awkwardly toward the baseline after minimal contact.

Stephenson earned his fine for exaggerating contact after a slight elbow push from Ray Allen following an Indiana basket.

The NBA instituted an anti-flopping policy this season to cut down on the practice.

(Reporting by Larry Fine in New York; Editing by Frank Pingue)

Winfrey declared the co-hosts "the reigning king and queen" during a surprise appearance on Tuesday's "Live with Kelly and Michael."

Winfrey, who now runs the OWN cable network, where she appears on-camera on a less-frequent basis, insisted she doesn't miss the daily talk-show grind.

She was brought on "Live," unannounced, by guest Tyler Perry. He is now producing shows for her network. Perry's new drama, "The Haves and the Have Nots," was scheduled to premiere Tuesday night. His new comedy, "Love Thy Neighbor," debuts Wednesday.

NEW YORK (Reuters) - New York City mayoral hopeful Christine Quinn spoke out on Tuesday about her decade-long struggle with bulimia and alcohol abuse after her mother's death from breast cancer.

"It was such a challenging time, and it was a time where everything was just bad," Quinn, the speaker of the New York City Council, told an audience at Barnard College. "I thought I was the only 16-year-old girl in the world who had no ability to deal with her mother dying."

Quinn, who in polls is leading a crowded field of Democratic candidates running to succeed Michael Bloomberg, would be the city's first lesbian and female mayor.

Her personal history is well known, but her comments marked the first time Quinn, who was elected council speaker in 2006, has so directly addressed her emotional unraveling after her mother's death in 1982.

In a New York Times article on Tuesday, Quinn said that eating and purging and drinking excessively had become habits by the time she entered college.

Quinn, whose memoir will be published next month, entered rehab for 28 days in 1992. A decade later, Quinn began dating Kim Catullo, a lawyer, whom she married last May.

Quinn declined to say if she was part of Alcoholics Anonymous.

"Asking for help, going to the rehab, dealing with bulimia, cutting back on drinking, getting drinking out of my life altogether - all of that helped me put the pieces back together," Quinn, 46, told the Times.

'REALITY ELECTIONS'

Quinn's dominance in the race for mayor has been challenged in recent weeks, as former Congressman Anthony Weiner openly mulls entering the race.

Weiner, an outspoken liberal who resigned from office two years ago after admitting he had sent lewd pictures of himself to women he met online, was the subject of a lengthy article in the New York Times Magazine in April.

Several media reports have suggested Weiner has already begun hiring aides for a mayoral candidacy, which he could announce within days.

Douglas Muzzio, a professor of political science at Baruch College and a long-time observer of city politics, said the volume of personal information the public has received about the mayoral candidates is "unprecedented."

"It's like reality elections," Muzzio said.

Other candidates, especially Public Advocate Bill de Blasio, have criticized on Quinn for her role in temporarily dismantling the city's term limits law, allowing Bloomberg, Quinn and other city officials to stay in office an extra four years.

Over the weekend, de Blasio held a fundraiser with gay and lesbian New Yorkers in an effort to undercut Quinn's support and exploit disenchantment with Quinn among liberals.

Asked at the Barnard event if Quinn was talking about her past travails in an effort to "soften" her image ahead of what is expected to be a bruising lead-up to the September 10 Democratic primary, Quinn said the timing had nothing to do with the race.

"To some degree I wish I had been ready sooner. But you're ready when you're ready. And no matter who you are these are not easy things to talk about publicly. They're not easy things to talk about at all," Quinn said.

For her part, Quinn said she has learned to cut herself some slack.

"The drive to be perfect as people, but particularly the drive to be perfect as women, is what keeps us from being great. Because we're not perfect," Quinn said. "It's that imperfection, those cracks, those errors and those blemishes that are the most interesting."

(Editing by Scott Malone and Nick Zieminski)

Knox, 25, spent four years in prison for the murder of Meredith Kercher while they were exchange students in Perugia, a hilltop Italian university town popular with foreigners. Knox, who became a tabloid sensation in Britain and Italy, was acquitted on appeal in 2011. She returned to her Seattle-area home, but Italy's high court last month ordered a retrial.

In the hotly anticipated memoir, published by HarperCollins and in bookstores on Tuesday, Knox maintained her innocence and wrote that she regretted that in prison she had never reached out to Kercher's family to say that the girl's death had been a "heartbreak to so many."

The memoir was released in conjunction with an interview with ABC's Diane Sawyer that is due to air on Tuesday evening.

Knox wrote that she wished she had reached out to Patrick Lumumba, a Congolese bar owner whom Knox falsely accused of the murder. Lumumba, who was briefly jailed and then cleared, said in 2011 that Knox's accusation destroyed his life.

"Naming him was unforgivable, and he didn't deserve it, but I wanted to say that it wasn't about him," Knox wrote. "I was pushed so hard that I'd have named anyone."

Knox penned letters to both, but her lawyers advised against sending them because it would hurt her legal case.

In the 457-page memoir, Knox writes of arriving in Italy at age 20 with "rookie Italian" and a penchant for "immature antics," eager to develop independence and come into her own.

Knox writes that she and Kercher bonded right away: "We did what all girls do: we talked about the guys we liked in Perugia and the ones we'd left behind."

She denies that the relationship soured and describes a friendly final encounter as Knox and her new boyfriend, Raffaele Sollecito, left the shared apartment hours before the murder.

Knox writes that she did not understand that she was a suspect in Kercher's murder, and believed that she could help investigators find the killer.

"I was too confused to know what the truth was," she writes at one point, after implicating Lumumba and saying she witnessed the murder.

Her "bafflement" at the situation eventually gave way to "quiet indignation and defiance," Knox writes.

"I followed their directions like a lost, pathetic child," she writes of the investigation leading up to her arrest. "I didn't question, I didn't object, I just put my head down when they told me to and trusted that this would all make sense soon."

Knox, dubbed "Foxy Knoxy" in many early media reports, was initially portrayed as promiscuous and dishonest but a lobbying campaign by her family helped change perceptions.

Kercher's half-naked body, with more than 40 wounds and a deep gash in the throat, was found in the apartment she shared with Knox in the town in central Italy. A student at Leeds University, she was 21 when she died.

The Italian high court in March also overturned the acquittal of Sollecito, Knox's former boyfriend, and ordered a new trial on a date still to be set.

The acquittal came after independent forensic experts said the police scientific evidence was deeply flawed and the investigation had been bungled.

An Ivorian drifter named Rudy Guede, was found guilty and sentenced to 16 years in a separate trial. He is now the only person serving time for the murder, although prosecutors say he could not have killed Kercher by himself.

(Reporting by Edith Honan; Editing by Paul Thomasch and Lisa Shumaker)

Obama has been pressured from both the left and right to allow greater scrutiny of the secret decision-making process for using drones overseas. He said earlier this year he wanted to be more open about how the drone war is conducted.

The U.S. government formally acknowledged for the first time on Wednesday that it had killed four Americans using drones in Yemen and Pakistan, including militant cleric Anwar al-Awlaki.

"He (Obama) will discuss why the use of drone strikes is necessary, legal, and just, while addressing the various issues raised by our use of targeted action," the official said.

The speech will coincide with the signing of new "presidential policy guidance" to lay out standards for lethal drone strikes.

"Beyond the use of force, the president will discuss our broader strategy, including diplomatic and assistance efforts around the world, and how we can better secure our diplomatic facilities while remaining engaged in dangerous regions," the official said.

Obama will again repeat his pledge to close the U.S. military prison at Guantanamo Bay, Cuba where foreign terrorism suspects are held and announce specific steps to achieve that, the official said.

Obama promised during his 2008 presidential campaign that he would close the controversial prison, where most of the detainees have been held without charge or trial, but has been unable to make good on that goal.

(Reporting by Roberta Rampton and Jeff Mason; editing by Christopher Wilson)

MIAMI (Reuters) - The Indiana Pacers fell just short in the Eastern Conference finals opener but their gritty display pumped life into the NBA playoffs and let the defending champion Miami Heat know they have a battle on their hands.

The ease with which the top-seeded Heat have brushed aside opponents during the regular season and playoffs has given an air of inevitability to this year's postseason, resulting in falling television ratings and plummeting interest.

But those hoping for tighter games with the chance of an upset would have been encouraged by the way the Pacers gave a timely warning to the Heat that they will need to draw on all their talent to reach a third straight final.

"It doesn't matter if you win by one or if you win by 30 or whatever the case may be. You just want to win. We have to be better Friday if we want to win again," LeBron James said after powering Miami to a 103-102 overtime victory on Wednesday.

Indiana have struggled on the road this year, losing 21 of 40 games in the regular season, but in a scrappy, foul-ridden game that came alive spectacularly in the closing stages, the Pacers showed their mettle.

"It was a terrific basketball game. Two great teams throwing punch for punch. Our spirit is very high and very confident. And we know we can play with this basketball team," said Indiana coach Frank Vogel.

A layup from James as time expired gave Miami the win after Paul George's heroics looked to have earned the Pacers a shock victory in the opening game of the best-of-seven series that will send the winner to the NBA Finals.

George drained a long-range three-pointer to force overtime and then, in the final stages of the extra period, kept calm to put away three free throws after he was fouled by Dwyane Wade.

But, with just 2.2 seconds left on the clock, it was George who allowed James the space to drive the left of the lane and grab the win for a relieved Heat.

"We have got to feel good about how we played," said George, who nonetheless engaged in some self-criticism.

"At this point every possession counts and that's what we've got to understand. Myself included. We had a couple of turnovers that I wish we could take back I could take back. But the margin of error is so small at this level, so going into Game Two, we have just got to improve off that."

The Heat will look to recapture the intelligent and fast ball movement that has characterized their best displays this year but, after a six-day layoff following their 4-1 series win over Chicago, was not quite there on Wednesday.

But it was significant there was little discussion of style or flow from the Heat after the game with the overarching feeling being one simply of relief.

"In the end it just came down to finding a way, even if it wasn't pretty. And it took an overtime to get it done. We're glad to get that one," said Heat coach Erik Spoelstra.

The Eastern Conference representative will face the winner of the Western Conference finals, which the San Antonio Spurs lead 2-0 over the Memphis Grizzlies, to determine the National Basketball Association (NBA) champion.

(Editing by Frank Pingue)