CHICAGO (Reuters) - A Merck & Co drug designed to unmask tumor cells and mobilize the immune system into fighting cancer helped shrink tumors in 38 percent of patients with advanced melanoma in an early-stage study, U.S. researchers said on Sunday.

Based on the findings about the drug lambrolizumab, published in the New England Journal of Medicine and presented at the American Society of Clinical Oncology meeting in Chicago, Merck says it will move directly into a late-stage clinical trial, which will start in the third quarter.

"This is a top priority at Merck," Dr. Gary Gilliand, senior vice present and head of oncology at Merck Research Laboratories said in a meeting with investors. "We're going flat out to deliver benefit to patients with this novel mechanism."

The moves may heap pressure on market leader Bristol-Myers Squibb, maker of Yervoy - the only approved immune system drug for the treatment of advanced melanoma, the deadliest form of skin cancer.

Bristol-Myers is conducting three phase-three studies of its own drug called nivolumab in advanced melanoma, and is studying the drug's effect on a range of other cancers, including lung cancer.

Both nivolumab and lambrolizumab are part of a promising new class of drugs that disable programmed death 1 or PD-1, a protein that keeps the immune system from spotting and attacking cancer cells.

"Even though it's (lambrolizumab) the second player in the field and even though it's all early, it impressed me," said Dr. Antoni Ribas of the University of California Los Angeles' Jonsson Comprehensive Cancer Center, the lead author of the study.

Last month, the U.S. Food and Drug Administration deemed the treatment a "breakthrough therapy," a designation FDA cancer drugs chief Dr. Richard Pazdur described as "knock-your-socks-off therapies."

Results of an early-stage study of nivolumab in advanced melanoma released at the cancer meeting showed 31 percent of patients overall responded to different doses of the drug. Among those who took the 3 milligram per kilogram dose, 41 percent of patients responded. The drug response lasted an average of two years, and in many patients the drug kept working even after they stopped taking it.

Analysts expect the drugs to generate billions of dollars in sales. Nivolumab alone is forecast to have sales of $1.2 billion in 2017, according to Wall Street analysts tracked by Thomson Reuters Pharma.

MERCK'S STUDY

Merck's results are from the first clinical trial of lambrolizumab in advanced melanoma. They are based on analysis of 135 patients with metastatic melanoma who were divided into three groups with different treatment regimens.

Overall, lambrolizumab resulted in 38 percent of patients having confirmed improvement of their cancer across all dose levels given after 12 weeks of treatment. But there was a wide range among doses, with only a 25 percent rate among patients who got the lowest dose and 52 percent among those who got the highest dose. In the highest dose group, 10 percent had a complete response, meaning their tumors could not be detected on scans.

Side effects were generally mild and included fatigue, fevers, skin rash, loss of skin color and muscle weakness. More severe side effects were seen in 13 percent of patients, including inflammation of the lung or kidney and thyroid problems.

"This study is showing the highest rate of durable melanoma responses of any drug we have tested thus far in this cancer, and it is doing it without serious side effects in the great majority of patients," Ribas said.

Merck said it plans to start a late-stage randomized trial of the drug in melanoma and in non-small cell lung cancer in the third quarter of this year.

The company recently started a global, randomized mid-stage study of the drug versus standard chemotherapy in patients whose disease had progressed. And it is studying the drug as a treatment for triple negative breast, metastatic bladder and head and neck cancers.

Researchers at the meeting marveled at responses to new immune system treatments after decades of failed studies among patients with melanoma.

Only about one in five patients respond to Yervoy, approved in 2011 as the first immunotherapy to extend survival in patients with advanced melanoma. Yervoy works by blocking CTLA-4, a different molecule that also keeps the immune system from attacking cancer.

Ribas said he has followed one patient on Yervoy for 12 years now. "She's not supposed to be around, and she's alive and well and melanoma free. That is why we've been doing these immunotherapies," he said.

With Yervoy, Ribas said these types of responses were few and far between. With the new PD-1 drugs, they are much more common, with fewer side effects.

However, an early-stage Bristol-Myers' study released this month showed that 53 percent of patients who got a combination of Yervoy and nivolumab had at least a 50 percent reduction in tumor size, with fewer side effects.

Tim Turnham, executive director of the Melanoma Research Foundation, said combination treatments would make a major difference for patients because they help overcome cancer's "sneaky" ability to evade treatment. But, at this point, he said, "Nobody knows which one is better."

(Editing by Christopher Wilson and Eric Walsh)

Still grieving, Djokovic began shakily Monday. Six of the match's first seven unforced errors were his. After one poor exchange, he chucked his racket hard enough to break it. He dropped a set for the only time in four matches so far.

After recovering quickly to dispatch 16th-seeded Philipp Kohlschreiber of Germany 4-6, 6-3, 6-4, 6-4 and reach the quarterfinals at a 16th consecutive major tournament, Djokovic spoke from the heart about the passing of Jelena Gencic, who was 76.

"It hasn't been easy, but this is life. You know, life gives you things (but also) takes away close people," Djokovic said. "We were very close throughout my whole life, and she taught me a lot of things that are part of me, part of my character."

Gencic connected with a 6-year-old Novak at a tennis camp, then worked with him for five years.

"I feel even more responsible now to go all the way in this tournament," said the No. 1-ranked Djokovic, who owns six Grand Slam titles but none from Roland Garros. "I want to do it for her."

He'll need to beat three more opponents to accomplish that, starting with 12th-seeded Tommy Haas, who at 35 became the oldest French Open quarterfinalist since 1971 by eliminating Mikhail Youzhny 6-1, 6-1, 6-3 in less than 1 hours.

By the second set, Youzhny was so out of sorts he destroyed a racket by slamming it nine times against his sideline seat.

Haas is a four-time Grand Slam semifinalist who climbed to No. 2 in the rankings at age 24. But recent times have been difficult because of serious injuries and operations, including to his right shoulder and hip, and he missed more than a full season.

"Who would have thought two years ago I'd be in this position today?" Haas asked. "I wouldn't have."

He's certainly persistent.

The 12 French Open appearances it took Haas to reach his first quarterfinal in Paris is a record. And he needed 13 match points in the third round to get past John Isner in five sets.

"It's easy sometimes to ... throw the white towel and say, 'I'm done. I have achieved a lot of things. I don't really have to worry so much financially and I can live a good life.' But at the same time," Haas explained, "maybe there was something in me still that said, 'You know what? I can maybe still do something.'"

If Djokovic can get past Haas, he'll find a familiar foe in the semifinals: seven-time French Open champion Rafael Nadal, who played his first relatively routine opening set of the tournament and put together a 6-4, 6-1, 6-3 victory over No. 13 Kei Nishikori of Japan.

Nadal, who beat Djokovic in last year's final and is 56-1 in his French Open career, declared: "I played much better today than the first three matches. No doubt about that."

Consider that something of a warning for No. 9 Stanislas Wawrinka, who was trailing by two sets when he got into an extended and animated argument with the chair umpire, demanding that a line judge be replaced. Wawrinka slowly, steadily turned the match around and edged No. 7 Richard Gasquet 6-7 (5), 4-6, 6-4, 7-5, 8-6.

Gasquet tired as the match stretched past four hours. Asked afterward where he felt pain, he replied: "In the soul, for sure. A little bit in the leg, too. But more in the soul."

Nadal began the first round by losing the first set. Did the same in the second round. In the third, he was taken to an opening tiebreaker. On Monday, Nishikori started well, winning each of the first five points that lasted at least 10 strokes, no easy feat against Nadal.

Ahead 2-1, Nishikori earned two break points with a forehand winner that had Nadal rolling his eyes. That, though, is when Nadal really got going. A short return set up a backhand winner to erase one break point, and a 121 mph ace took of the other. Nadal broke in the next game, helped by Nishikori's three unforced errors.

"One bad game for me," Nishikori said, "and he (started) playing well."

Nadal was in control the rest of the way on the day he turned 27. The crowd helped him celebrate by singing "Happy Birthday" in French as he was presented with an enormous layered cake festooned with rackets and yellow tennis balls.

"That," said the tournament's other defending champion, Maria Sharapova, "was a pretty cool cake."

She moved into the quarterfinals by beating 17th-seeded Sloane Stephens of the United States 6-4, 6-3, part of a rough day for Americans.

The other two in action also exited in straight sets: 54th-ranked Jamie Hampton lost to 18th-seeded Jelena Jankovic 6-0, 6-2, and 67th-ranked Bethanie Mattek-Sands was beaten by 12th-seeded Maria Kirilenko 7-5, 6-4. Kirilenko, who's engaged to two-time NHL MVP Alex Ovechkin of the Washington Capitals, now meets two-time Australian Open champion Victoria Azarenka, a 6-3, 6-0 winner over 2010 French Open titlist Francesca Schiavone.

Fifteen-time major champion Serena Williams, the only U.S. singles player left, plays her quarterfinal against 2009 French Open champion Svetlana Kuznetsova on Tuesday, when No. 4 Agnieszka Radwanska faces No. 5 Sara Errani. The men's quarterfinals Tuesday are 17-time major champion Roger Federer against No. 6 Jo-Wilfried Tsonga, and No. 4 David Ferrer against No. 32 Tommy Robredo, the first man in 86 years to win three consecutive Grand Slam matches after dropping the opening two sets.

For Federer, this is the 36th Grand Slam quarterfinal in a row, a record for the 45-year Open era. Djokovic's streak isn't even half as long, but it ranks third.

The last time the Serb failed to get that far at a major tournament was the 2009 French Open, where he lost to Kohlschreiber in the third round. Once out of Monday's tricky first set, Djokovic found his strokes and, most of all, his serve, which erased 11 of 13 break points.

His former coach, Gencic, died Saturday, when Djokovic played his third-round match, but his entourage kept the news from him until after that victory. In April 2012, during a tournament at Monte Carlo, Djokovic found out hours before playing a match that his grandfather died.

That experience, Djokovic said, "helped me a little bit to kind of stay tough this time because it took me a long time last year to recover. It was very emotional. This year, of course, again, very close person, so another shock for me. But I'm handling it better. I'm trying to focus my thoughts on the nicest memories."

Djokovic last spent time with Gencic when he visited Belgrade a couple of months ago. Their final phone conversation, he said, was two weeks ago, shortly before the French Open.

"She was honest and open," Djokovic recounted. "She told me, 'Listen, you have to focus. You have to give your attention to this tournament. This is a tournament you need to win.' She was giving me this kind of inspiration and motivation."

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Follow Howard Fendrich on Twitter at http://twitter.com/HowardFendrich

SAN FRANCISCO/DUBLIN (Reuters) - Apple has operated almost tax-free in Ireland since 1980, welcomed by a government keen to bring jobs to what was then one of Europe's poorest countries, former company executives and Irish officials have said.

Chief Executive Tim Cook faced criticism from a Senate subcommittee in Washington on Tuesday over the iPad and iPhone maker's tax practices, which had been shrouded from full view behind secretive tax-exempt Irish-based corporate entities.

Apple, one of Ireland's top multinational employers, denied avoiding billions of dollars in U.S. taxes and said its arrangements helped fund research jobs in the United States.

The committee revealed that Apple's Irish companies, some of which are not tax resident in any jurisdiction, allowed the group to pay no tax on much of its overseas earnings in recent years.

Senator Carl Levin, chairman of the subcommittee, said Apple had sought "the Holy Grail of tax avoidance".

A former company executive and Irish officials told Reuters the almost tax-free status dates all the way back to Apple's arrival in County Cork 32 years ago.

Apple must have seemed attractive to Ireland and to Cork. Amid a generally moribund Irish economy, Cork had been hard hit by the closure of its shipyards and a Ford car plant, and in 1986 nearly one in four were out of work in the city.

In the early days, Apple's staff sat down to meals together. Now the company employs 4,000 in Ireland.

"There were tax concessions for us to go there," said Del Yocam, who was Vice President of manufacturing at Apple in the early 1980s. "It was a big concession."

In fact, the deal was about as good as a company can get.

"We had a tax holiday for the first 10 years in Ireland. We paid no taxes to the Irish government," one former finance executive, who asked not to be named, said.

Apple wasn't an exception, although it was among the last to enjoy such favorable treatment. From 1956 to 1980, Ireland attracted foreign companies by offering a zero rate of tax, according to the Irish government's website. Eligible companies arriving in 1980 were given holidays until 1990.

"Any multinational attracted into Ireland that was focusing on the export market paid zero percent corporation tax," said Barry O'Leary, CEO of IDA Ireland, which is charged with attracting investment into Ireland.

Apple said it pays all the tax due in every country where it operates. It declined to comment on the tax treatment it received in the 1980s.

As part of Ireland's accession to the European Economic Community, precursor to the European Union, in 1973, it was forced to stop offering tax holidays to exporters.

From 1981, companies arriving in Ireland had to pay tax, albeit at a low 10 percent rate, providing they qualified for manufacturing status.

ECONOMIC COUP

Apple's investment was a major coup for Ireland. At the time, the country was struggling with high and rising unemployment, double-digit inflation and a brain drain of the young and educated through emigration.

"We were the first technology company to establish a manufacturing operation in Ireland," recalled John Sculley, Apple's CEO from 1983 to 1993. He said government subsidies had also played a role in deciding to set up a base in Ireland.

Ireland also offered low wage rates - a big attraction when it came to hiring hundreds of people for the relatively low-skilled work of assembling electronic equipment.

Apple told the subcommittee it could not answer questions about why it chose Ireland as a base since it had lost the paperwork from the period.

The operation in Cork built the company's Apple II computer and would later build disc drives, Mac' computers and others. These would be sold in Europe, the Middle East, Africa and Asia.

But having a tax holiday in Ireland would not, in itself, have allowed Apple to operate tax free in these markets.

Equipment assembly is not the kind of activity that economists or tax authorities usually credit with generating a large share of a technology company's profits.

More value has been associated with generating the intellectual property behind the technology - which Apple did in the United States - and with the selling of goods, which was to be done on the ground in France, Britain and India.

But none of these countries offered the tax advantages Ireland did. The key to minimizing Apple's tax bill was maximizing the amount of profit that could be ascribed to Apple's Irish operations.

THE ARCHITECT

This task fell to Mike Rashkin, Apple's first tax director, two executives from the period said. One called him "the father of it all".

Rashkin arrived at Apple in 1980, from computer pioneer Digital Equipment Corp (DEC) in Massachusetts, where he had learnt about tax-efficient corporate structuring in tech companies.

Apple had already decided to establish its base in Ireland when Rashkin moved to Silicon Valley, but he used his experience at DEC to set up a tax structure that took advantage of Apple's base in the country, the executives said. Rashkin declined to comment.

The Senate subcommittee's report reveals how the arrangement was structured. In 1980, Apple entered into a deal with its Irish operation, whereby the latter would share the cost of funding Apple's research and development. In return, the Irish unit would be able to enjoy rights to Apple's intellectual property for goods sold outside the Americas.

Apple secured the blessing of the U.S. tax authority, the Internal Revenue Service, for the deal, one executive said. The IRS gave Apple an advance pricing agreement, or APA, an agreement which establishes how the IRS will treat a transaction between affiliates for tax purposes, before it is entered into.

Many countries' tax authorities offer APAs, and companies say they are necessary to facilitate international trade and investment. Tax campaigners say tax authorities have been too ready to accept the pricing proposed by companies which apply for APAs.

The New York Times reported last year that Apple's low taxes were at least in part due to the confidential technology transfer arrangement.

The terms of the deal and subsequent cost-sharing deals were favorable for Apple's Irish unit. In effect, the Irish unit paid much less to its U.S. parent for the use of Apple intellectual property than it made from selling that property on to affiliates.

"Apple's cost sharing agreement (CSA) with its offshore affiliates in Ireland is primarily a conduit for shifting billions of dollars in income from the United States to a low tax jurisdiction," the subcommittee's report said.

Meanwhile, Apple also constructed a system whereby the affiliates which were actually selling the finished equipment would earn minimal profits.

The techniques Apple used over the years included selling goods to affiliates at prices which generated little profit at the retail level, or by paying sales affiliates commissions which are just about enough to cover their operating costs.

Rashkin's work and Ireland's accommodating approach had the desired result for Apple.

"We're very, very pleased," Apple's then-President A.C. Mike' Markulla said in 1981. "The Irish have really lived up to their promises."

Indeed, the accounts for Apple's main Irish unit, then known as Apple Computer Inc. Ltd, for 1989, the earliest year for which detailed accounts were filed, show exactly how effective the arrangement was.

The subsidiary paid $500,000 in income tax on profits of $317 million, a rate of 0.2 percent.

END OF THE HOLIDAY

In 1990, Apple's tax holiday came to an end, and in that year, the Irish operation's tax rate hit 4 percent, accounts from the period show.

At the same time, Apple's Irish manufacturing activities came under question as the company looked to cut costs by outsourcing. In 1992, the company announced plans to cut hundreds of jobs after deciding to shift some work to Singapore, which at this time was attracting increasing investment by offering tax holidays.

"They nearly left Ireland altogether," O'Leary said.

By this stage, the European Community had banned tax holidays of the kind given to Apple, so the company and Dublin negotiated an arrangement which had a similar outcome but fell within European rules.

The precise details of the arrangement were not disclosed, but Phillip Bullock, Apple's head of tax operations, indicated that it was linked to minimizing taxable profit.

"Since the early 1990s, the Government of Ireland has calculated Apple's taxable income in such a way as to produce an effective rate in the low single digits," he told the subcommittee.

The deal didn't stop Apple from shifting manufacturing work to Asia, but in the years that followed new jobs were created in Cork, in sales and administrative support for the European operation, the accounts of the Irish units show. Some manufacturing remains in Ireland, the subcommittee said.

An Irish government spokesman declined to even confirm it held discussions with Apple regarding tax, citing rules on taxpayer confidentiality.

From 1996 Ireland phased in a 12.5 percent tax on all corporate trading income, although foreign companies often pay effective rates lower than this by shifting money into tax havens such as Bermuda.

Apple's Cook told the Senate panel on Tuesday that Apple does not hold money on a Caribbean island or divert profits from sales to U.S. customers to other jurisdictions to avoid U.S. taxes.

(Writing by Tom Bergin; Additional reporting by Conor Humphries in Dublin, Jonathan Weber and Peter Henderson in San Francisco, and Tom Bergin in London; Editing by Giles Elgood)

Get a life?

33: The percentage of Americans who like or love doing their taxes, according to a poll in April by the Pew Research Center. That includes 32 percent of Republicans and 40 percent of Democrats. More Republicans than Democrats (78 percent versus 68 percent) say it is morally wrong to underreport income to the IRS.

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Your odds of trouble

1: The approximate percentage of individual tax returns that are audited. Returns with certain red flags are much more likely to earn IRS scrutiny. And the more you make, the more likely you'll be audited.

12: The percentage of 2011 returns reporting income over $1 million that were audited.

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A money-maker

48 cents: The average cost to the IRS of collecting $100, in 2012. Since 1980, that cost has hit a low of 39 cents in 2000 and a high of 60 cents in 1993.

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Happy campers?

66: The IRS score, out of 100, in a measure of employee morale by the federal Office of Personnel and Management. In a 2012 ranking of job satisfaction in 292 federal divisions, the IRS finished in 98th place.

76.6: The score in the Office of the Inspector General for Tax Administration, making it the 13th best place to work in government. This is the office that exposed special IRS audits of tea party and conservative groups.

85.7: The blissful score of the U.S. Army Audit Agency, which topped the survey.

34.7: The worst score in the survey went to the Homeland Security Department's office of the undersecretary for science and technology.

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Gender bender

65.5: Percentage of the IRS workforce that is female. In contrast, women make up only 43.5 percent of the federal civilian labor force and 46.8 percent of the civilian workforce. IRS employees are less likely to be white, 57 percent, compared with 66 percent in the federal bureaucracy overall and 73 percent of the civilian workforce.

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Who they are

97,717: The IRS workforce in 2012, down about 10,000 from 2010. Peak fulltime employment in modern times: 116,673 in 1992.

$27,568 to $41,771: Starting salaries for revenue agents. The IRS promises new hires "an outstanding work-life balance," ''substantive and rewarding work" and "satisfaction in knowing that you're serving your nation."

3,000: The number of IRS employees who work on identity theft and refund fraud efforts that the IRS says saved more than 3 million fraudulent refunds worth more than $20 billion from being issued in 2012.

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Oops!

2.7 million: The number of taxpayer math errors caught by the IRS in the 2011 tax year. Way up from 1.2 million the year before.

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The stat blizzard

$2.5 trillion: Gross taxes collected in 2012 $2.2 trillion after refunds.

54,000: The number of IRS audits that went swimmingly for the individual taxpayer last year, resulting in even higher refunds, altogether worth almost $1 billion. The odds of this happening are slim: In all, 1.5 million individual returns were examined.

10,743: The number of returns from tax-exempt organizations audited by the IRS in the 2011 budget year. That's roughly 1 in 8 returns. Although such groups don't owe federal income tax, they may owe payroll, excise or other taxes.

2.2 billion: The number of third-party forms, from employers, banks and the like, filed to the IRS in 2012. These forms are key to tracking down income that the taxpayer doesn't report. The IRS found enough underreported income this way to issue an additional $7.1 billion in tax assessments. Using this information, it also assessed almost $6.8 billion from people who didn't file any return and should have.

If someone who owes taxes doesn't file a tax return and the IRS finds out, it can prepare its own return for that person, assessing the tax. This helping hand comes with the slap of interest and penalties.

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The enforcers

5,125: The number of criminal investigations started by the IRS in 2012 in cases involving legal income, illegal income generally and narcotics-related income specifically.

$27 billion: Civil penalties assessed by the IRS in 2012 for delinquent individual taxes, serious inaccuracies, negligence, fraud, bad checks and other misbegotten filings.

2,466: The number of people sentenced for tax crimes in 2012. Of them, 81.5 percent, or 2,009, were sentenced to prison, home confinement, electronic monitoring or a combination.

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The gentler IRS

31 million: The number of calls to the IRS toll-free assistance line that resulted in a conversation with an actual IRS person. In addition, the assistance center handled 59 million automated calls. Also, nearly 7 million face-to-face contacts in assistance centers.

98,978: The number of volunteers who helped taxpayers complete returns at 13,143 IRS assistance sites.

3.3 million: The number of returns prepared under an IRS program using volunteers to help the elderly with their taxes.

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The tax-exempt pipeline

52,615: The number of organizations granted tax-exempt status in 2012, out of 60,795 applications processed by the IRS.

2,324: The number of "social welfare" groups granted tax-exempt status in 2012, out of 2,774 applications processed. Only 8 were rejected outright, but 442 did not get approved because they were withdrawn, contained incomplete information or had other problems.

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Death and taxes

546: The number of cemetery companies granted tax-exempt status in 2012.

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These figures are for a mix of calendar and budget years.

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Online:

IRS Data Book: http://tinyurl.com/cucf954

Survey of best places to work in government: http://tinyurl.com/mq5hlne

Iraq is facing its most relentless wave of bloodshed since the 2011 U.S. military withdrawal, deepening fears that the country is heading back toward the widespread sectarian fighting that pushed it to the brink of civil war in the years after the invasion.

More than 500 people have been killed in May. April was Iraq's deadliest month since June 2008, according to a United Nations tally that put last month's death toll at more than 700.

The extent of the violence is increasingly reminiscent of the widespread sectarian fighting that peaked in 2006 and 2007 and threatened to tear the country apart.

Most of Thursday's blasts went off in Baghdad. Car bombs killed four in the northeastern Shiite neighborhood of Binouq, and three died in a bombing at a market selling spare car parts in central Baghdad, according to police.

Police officials also said that a roadside bomb exploded on a police patrol in the largely Shiite central commercial district of Karradah, killing three people there. Hospital officials confirmed the casualties.

The Karradah blast shattered glass and twisted metal signs on several storefronts, and left the stricken police unit's modified Ford pickup truck charred and mangled.

"What have these innocent people done to deserve this?" asked witness Sinan Ali. "So many people were hurt. Who is responsible?"

In the northern city of Mosul, two police officers said a suicide bomber killed three when he blew himself up on a federal police checkpoint. Mosul is a former insurgent stronghold, located about 360 kilometers (225 miles) northwest of Baghdad.

All officials spoke on condition of anonymity because they weren't authorized to talk to the media.

There was no immediate claim of responsibility for the attacks but blame is likely to fall on al-Qaida's Iraq arm, which frequently carries out bombing attacks against civilians and security forces in an effort to undermine faith in the Shiite-led government.

Other militant groups have also grown more active in recent months, including the Army of the Men of the Naqshabandi Order, which has ties to members of Saddam Hussein's now-outlawed Baath party.

The attacks came hours after bomb blasts tore through two Baghdad neighborhoods Wednesday evening. At least 30 people were killed, including several members of a wedding party in the mixed Sunni-Shiite Jihad neighborhood.

The southwestern neighborhood was one of the earliest flashpoints in Baghdad's descent into sectarian bloodshed in the years following the 2003 U.S. led invasion. It housed mainly Sunni civil servants and security officials under Saddam Hussein's regime, though many Shiites now live there too.

Many of Jihad's Sunni residents earlier this year received threatening leaflets from a Shiite militant group, the Mukhtar Army, warning them to leave.

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Associated Press writer Adam Schreck contributed to this story.

Researchers at the University of Pittsburgh and the University of Illinois at Chicago said they identified 723 workers diagnosed with tumors between 1976 and 2004 at the United Technologies Corp. subsidiary. The tumors were malignant, benign or unspecified and included 277 cases of brain cancer.

Researchers examined records such as work documents and cancer registries of 222,123 men and women who worked in one or more of eight Connecticut Pratt & Whitney plants between 1952 and 2001. They also reviewed 11 chemical or physical agents on the basis of known or suspected carcinogenic potential that could affect the central nervous system or other organs.

The $12 million study, commissioned by Pratt & Whitney, was overseen by the state Department of Public Health. William Gerrish, a spokesman for the state agency, called it a "comprehensive study that has met its goals," and the project's principal researcher said the results were positive.

"The news is good," said Gary Marsh, the University of Pittsburgh researcher who led the study.

Employees can be reassured that working at Pratt & Whitney before 2002, the start of the study period, "does not increase your risk of developing brain cancer and does not increase your risk of dying," Marsh said.

The son of a Pratt & Whitney worker who died at age 46 was not so certain, though.

"It leaves a lot of questions unanswered," said Todd Atcherson, whose father, Charles Atcherson, died in 1998 after working at Pratt & Whitney for about 25 years.

Workers and the union expressed concerns about several workers who died of brain cancer within a few years of each other and the study became too large, "losing sight" of individuals, he said.

Paul Dickes, chief health and safety representative at the Machinists union, which represents Pratt & Whitney workers, said he's reassured that the study determined it's safe to work at the two remaining Connecticut plants.

"It doesn't bring closure to people who had illnesses," he said. "I'm disappointed it doesn't resolve those issues."

Pratt & Whitney spokesman Ray Hernandez said: "We are pleased that employees have answers to their questions and there is no correlation between cancer and the workplace."

Comparisons among Pratt & Whitney plants showed a slightly higher incidence of tumors and cancer among workers at the North Haven plant, the researchers said. But further evaluation found no association with estimated workplace exposures.

The slightly elevated cancer rates at the North Haven plant may reflect external occupational factors that researchers did not measure such as other companies where employees worked or factors unique to North Haven, Marsh said.

The study is one of the largest and most comprehensive in an occupational setting, he said. It also is the first large-scale study of workers in the jet engine manufacturing industry.

The results echo what was released in the first stage of the three-stage study in 2008. The researchers said then they did not find statistically significant excesses in deaths from malignant brain tumors among North Haven workers.

Workers and their families, joined by the Machinists union, pushed for the study after widows and union officials said they were concerned with what appeared to be numerous and similar deaths at Pratt & Whitney plants.

NEW YORK (Reuters) - Canada's Valeant Pharmaceuticals International is nearing a deal to acquire eye care company Bausch & Lomb Holdings Inc from Warburg Pincus LLC for about $9 billion, a person familiar with the matter said on Friday.

Valeant shares spiked to their highest level since 2001 and were up 13 percent at C$86.86 in afternoon trading in Toronto.

"This deal would not be too surprising given that Valeant has said it wants to do a big, mega deal and there are not that many candidates," said David Krempa, an analyst at Morningstar. "Still, I would not expect that they are done doing big deals."

The source that spoke to Reuters on Friday requested anonymity because the matter is not public. Montreal-based Valeant could not be immediately reached for comment. Bausch & Lomb and Warburg Pincus declined to comment.

The Wall Street Journal, which earlier reported on the talks over Bausch & Lomb, said a deal might come as soon as next week.

Separately on Friday, the U.S. Department of Justice said that ISTA Pharmaceuticals, which Bausch & Lomb acquired in March 2012 for $500 million, pleaded guilty to charges related to the drug Xibrom, including offering doctors kickbacks to prescribe it. ISTA will pay $33.5 million related to conduct from 2006 to 2011, Bausch & Lomb said in a statement.

"It kind of removes an obvious overhang," said a Valeant shareholder. But "I would expect that, regardless of whether Valeant was going to be interested in them or not."

The shareholder, who asked not to be named as the transaction is not complete, said it makes sense for Valeant to increase its clout in opthalmology by acquiring Bausch & Lomb.

Valeant had attempted to buy eye drugmaker ISTA in late 2011 in a hostile bid.

Last month Valeant tried to acquire generic drugmaker Actavis Inc in an all-stock deal that would have topped $13 billion, according to sources familiar with the matter. The talks broke down, and Actavis ended up with a deal to buy pharmaceutical company Warner Chilcott Plc.

"At first glance, it looks like Mike Pearson has pulled yet another rabbit out of his hat," Gautam Dhingra, chief executive of High Pointe Capital Management, a small Valeant investor, said, referring to Valeant's CEO. "We are grateful for his magical acts but keeping a close eye on whether it is possible to keep pulling bigger and bigger rabbits out of the same hat."

Valeant has been on the acquisition trail since its 2010 takeover by Biovail Corp, which assumed the Valeant name. It has been pursuing deals with strong cash flow in high-growth areas where big pharmaceutical companies have little presence.

The company, known for prescription drugs such as anti-depressant Wellbutrin and over-the-counter remedies such as Cold-FX, has built up its dermatology and anesthetics portfolio in a dozen deals in the past year, most recently for Obagi Medical Products.

Bausch & Lomb would bring to Valeant its well-known contact lenses, drugs to treat eye conditions such as glaucoma, and instruments and devices used in eye surgery.

If the deal goes through, some analysts wonder if Valeant would spin off or sell Bausch & Lomb's surgical instruments business. That area would be new to Valeant, and big players including Novartis AG and Abbott Laboratories are already entrenched there. About 17 percent of Bausch & Lomb's $3 billion in revenues last year came from that business.

Valeant has become a stock market darling, jumping about 50 percent so far this year, in large part because of its success in cutting costs at the companies it acquires, particularly in research and development.

But Bausch & Lomb is run by a private equity firm, so cost-cutting opportunities may be below average, Dhingra said. Private equity firms generally have a reputation for being cost cutters.

Bausch & Lomb filed with U.S. regulators for an initial public offering in March. At the same time, Warburg Pincus was exploring an outright sale of the company, a source told Reuters.

(Additional reporting by writing by Rod Nickel in Winnipeg, Manitoba; Editing by Lisa Von Ahn, Phil Berlowitz, John Wallace and Leslie Adler)

WASHINGTON (Reuters) - The FBI last month gave temporary security clearances to scores of U.S. bank executives to brief them on the investigation into the cyber attacks that have repeatedly disrupted online banking websites for most of a year.

Bank security officers and others were brought to more than 40 field offices around the country to join a classified video conference on "who was behind the keyboards," Federal Bureau of Investigation Executive Assistant Director Richard McFeely told the Reuters Cybersecurity Summit on Monday.

The extraordinary clearances, from an agency famed for being close-mouthed even among other law enforcement agencies, reflect some action after years of talk about the need for increased cooperation between the public and private sectors on cybersecurity.

The attacks, which have been ascribed by U.S. intelligence officials to Iran, are seen as among the most serious against U.S. entities in recent years. McFeely declined to discuss details of the investigation, including what the banks had been told and whether Iran was behind the attacks.

Banks have spent millions of dollars to get back online and make sure they can stay online. JP Morgan Chase & Co, Bank of America, Wells Fargo, Citigroup and others have been affected.

McFeely said the one-day secrecy clearances are part of a broader effort by the FBI to communicate more with victims of cybercrime, some of whom feel that cooperating with federal authorities carries too much risk of exposure to investor and media scrutiny.

A February executive order from President Barack Obama called for expedited security clearances.

McFeely, who began overseeing FBI cyber and criminal cases last year, said the agency was changing its approach after being "terrible" in the past about keeping targeted companies informed of progress in investigations.

"That's 180 degrees from where we are now," McFeely said at the summit, held at the Reuters office in Washington.

The FBI is working harder at securing international help in combating cybercrime and sabotage, but also needs dramatic gestures, such as espionage arrests of hackers from rival countries, to convince U.S. companies to be more open about their losses, he said.

On the international front, the FBI and Department of Homeland Security have notified 129 other countries about 130,000 Internet protocol addresses that have been used in the banking attacks.

Many of the computers involved in the attacks were infected by viruses before being directed to attack banking websites, and the bulletins have helped other countries to clean some of the computers, FBI officials said.

National Security Agency Director Keith Alexander and other officials have said that the massive theft of intellectual property by China and other countries amounts to the largest transfer of wealth in history. Individual companies, however, have rarely admitted material losses.

McFeely said that part of the problem was that companies have been frustrated at the extreme rarity of overseas arrests or other signs of tangible progress in nascent international talks over the issue. Even some defense contractors contacted by the FBI after breaches are reluctant to share information with agents, he said.

But McFeely said that some indictments have been issued under seal and that arrests would follow, perhaps when hackers identified by name travel outside their home countries.

"The first time we bring someone in from out of the country in handcuffs, that's going to be a big deal," McFeely said.

(Follow Reuters Summits on Twitter @Reuters_Summits)

(Reporting by Joseph Menn; additional reporting by Andrea Shalal-Esa and Jim Finkle; editing by Jackie Frank)