Instead, the 28 EU foreign ministers called on the military authorities and the supporters of deposed President Mohammed Morsi's Muslim Brotherhood movement to resume negotiations to avoid further bloodshed.

"It was decided ... to suspend all arms deliveries that can be used internally," said French Foreign Minister Laurent Fabius following the emergency meeting in Brussels. "We have decided to maintain our aid for the Egyptian population because it already suffers enormously," he added.

Clashes between Egyptian security forces and Morsi's supporters have killed hundreds of people since last week.

"We do believe that the recent operations of the security forces have been disproportionate and we're worried about the resulting alarming number of people that have been killed," said the EU's foreign policy chief Catherine Ashton.

"We call on all sides to stop the cycle of violence, to stop the provocations, to stop the hate speech," she said, adding that the EU "strongly condemns" the recent violence.

While the EU lacks the military muscle and long-standing ties that give the U.S. a special position in dealing with Cairo, the EU is Egypt's biggest trading partner and a major source of aid, loans and tourists. The EU and its member states last year pledged a combined 5 billion euros ($6.7 billion) in loans and aid for Egypt.

The bloc's decision to suspend some export licenses falls short of a full weapons embargo, but many member states including Germany and Britain have already suspended new exports to Egypt.

EU ministers shied away from more radical steps such as cutting aid programs right away or imposing economic sanctions, hoping to maintain its political leverage as a broker in the crisis by continuing to talk to both sides in Egypt, who are less suspicious of the EU than of the U.S.

Ashton was the first international dignitary whom Egypt's military-backed interim government allowed to meet Morsi in detention. Still, a joint meditation effort with the U.S. failed, leading to last week's bloody crackdown on Morsi's supporters.

It left the EU walking a tightrope of what is politically feasible.

"Doing too much would risk upsetting completely the current power in Egypt, but not doing enough risks corroborating this vision of a Europe that is extremely cynical," Elena Aoun, professor of international relations at Brussels University, said before the meeting.

The U.S. so far has canceled joint military exercises and delayed the delivery of four F-16 fighter jets in response to the violence, but it is still weighing whether to suspend some of its annual $1.5 billion in aid to Egypt.

Egypt, the most populous nation in the Arab world, is a longtime U.S. ally and has been the bedrock of Washington's Middle East policy, not least because of its peace treaty with Israel. Egypt also controls the Suez Canal, an important trade route, and has so far granted the U.S. fast passage through the canal to deploy carrier groups to the Persian Gulf.

Moreover, EU threats to cut some aid may not frighten Egypt's leadership since Saudi Arabia a long-time critic of the Muslim Brotherhood has pledged to plug any shortfall. Saudi Arabia and other wealthy Gulf nations, including Kuwait and the United Arab Emirates, have so far promised $12 billion in new aid.

EU officials insisted that Egypt's leaders know that they need business, investment and tourism from Europe if they want to succeed in pulling their economy back from the brink.

Losing support from the EU, the world's biggest economy, "cannot be made up for by one, two or three Gulf states," German Foreign Minister Guido Westerwelle said.

The EU is Egypt's biggest trading partner with a trade volume of about 24 billion euros in 2011 (then $34.5 billion), compared with $8.2 billion with the United States.

The ultimate goal, Dutch Foreign Minister Frans Timmermans said after the meeting, must be a political solution which would also avoid further destabilizing the region.

"I am fundamentally convinced there is no alternative to getting both of them around the negotiating table," Timmermans said.

Otherwise, he warned, "I would consider it tragic that at the end of the road we are back in the 1990s, with a permanent state of siege and an underground Brotherhood that partly get involved in terror."

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(Reuters) - A radical new treatment for genetic disorders has catapulted Alnylam Pharmaceuticals Inc into the crosshairs of investors seeking the next breakthrough name in biotechnology.

The challenge for the Cambridge, Massachusetts-based company now is to prove that its 'gene silencing' technology can make the leap from the laboratory to the doctor's office and eclipse an alternative therapy already in use.

Investors, for now, are betting that it will. A steady drip of positive trial data has helped to triple Alnylam's market value to more than $2.7 billion in the space of 12 months. Eight of the nine analysts covering the stock rate it "buy" or above.

For some, gene silencing could be a revolutionary treatment. It works by 'switching off' the genes that cause disease, while its potency derives from an ability to reproduce itself - meaning a small dose can eliminate multiple targets.

"People know this mechanism works in a laboratory, but in humans there is the challenge of delivering it to the appropriate cell," said Marko Kozul, analyst at Leerink Swann, an investment bank that specializes in healthcare.

"The question isn't one of mechanism. It's one of delivery."

Alnylam is testing its technology in conditions as varied as liver cancer, respiratory tract infections, hemophilia and high cholesterol.

Its most advanced drug candidate, however, is a treatment for amyloidosis, a rare condition caused by mutations in the gene that produces the protein transthyterin (TTR). The mutation leads to an abnormal build-up of proteins in various organs.

On Thursday, Alnylam's stock rose 16 percent after the company said an early-stage trial of the therapy - known as ALN-TTR - suppressed production of the protein. The drug was administered subcutaneously, under the skin, ensuring its slow release.

Chief Executive John Maraganore told Reuters in an interview that Alnylam was in talks with the U.S. Food and Drug Administration (FDA) and wants to establish late-stage trial goals which, if negotiated, would offer a more streamlined path to approval.

"There is recognition by the authorities of the significant unmet need in this disease," said Maraganore, who invented and led development of anti-clotting medicine Angiomax in a previous job at Biogen Idec Inc.

PLAYING CATCH-UP

Alnylam is not alone in fighting genetic disease. In terms of getting a drug to market, the company is playing catch-up.

Often compared with Alnylam because of its focus on gene-based drug technologies, Isis Pharmaceuticals Inc had its drug, Kynamro, approved by the FDA in January. Its stock price has more than doubled in the last year.

Kynamro is a treatment for a rare genetic disorder causing dangerously high levels of 'bad' LDL (low-density lipoprotein) cholesterol. Isis is also developing a different drug to treat amyloidosis with its partner, GlaxoSmithKline Plc.

Isis uses a different technology to tackle genetic illness. Known as antisense, it helps a drug bind to a specific gene in order to interrupt the production of disease-causing proteins.

Alnylam's RNA interference, or RNAi - the scientific term for gene silencing - works by turning off so-called messenger RNAs, or mRNAs, which signal the production of similar proteins.

"One molecule of RNA can lead to silencing or destruction of many RNA targets," said Daniel Anderson, a scientist based at the Harvard-MIT Division of Health Sciences and Technology, who holds a research grant from Alnylam.

"It recycles, basically, and keeps going. Perhaps there is some debate in the field, but there is an argument to be made that RNAi-based drugs do have the potential for increased potency and longevity."

They might be safer, too. Edward Tenthoff, analyst at investment bank Piper Jaffray, said that RNAi-based drugs can be administered in comparatively small doses.

To date, the problem has been in the delivery. Alnylam's gene silencing therapies, when tested intravenously, have been degraded by enzymes in the blood before they could act.

Analysts say that, if this hurdle can be overcome, the treatment could be more effective than antisense. The latest data on subcutaneous delivery removed some of the uncertainty.

Alnylam said on Thursday that the subcutaneous GalNAc-siRNA conjugate delivery platform would now be the primary approach for development of its RNAi pipeline.

It is partnering with companies such as Arrowhead Research Corp and Tekmira Pharmaceuticals Corp to explore delivery techniques.

Tenthoff estimated that the subcutaneous version of the drug could bring in as much as $4.1 billion in 2020. He estimated it would reach market in 2018.

'EXCITING' PIPELINE

Alnylam has $450 million in cash, cash equivalents and marketable securities - but no plans for deals.

"Boy! We have not seen anything in the outside world that even comes close to being as exciting as investing in our pipeline," Maraganore said. "We are going to stay pretty focused on organic growth."

A year ago, the company's stock was worth $13.12. Even before Thursday's spike, shares were trading at three times that level.

Maraganore, 50, said he hopes Alnylam can follow the same upward trajectory as market darlings Alexion Pharmaceuticals Inc and Regeneron Pharmaceuticals Inc.

"Those are two companies that have built enormous value by virtue of commercializing breakthrough medicines with significant retention of product rights and using partnerships," he said.

Regeneron, for example, has risen from relative obscurity to a $23 billion company on the strength of its eye drug, Eylea.

If it can silence genes enough to treat just a few diseases, Alnylam holds similar prospects, said Kozul at Leerink Swann.

"Alnylam could become a multi-billion-dollar market-cap company even if it only targets liver-mediated disease."

(Editing by Robin Paxton)

The U.S. Food and Drug Administration (FDA) created the "breakthrough therapy" designation earlier this year for medicines deemed likely to demonstrate "substantial improvement" over existing drugs.

sIBM is a rare yet potentially life-threatening muscle-wasting condition. Patients suffering from the disease can gradually lose the ability to walk. There are currently no approved treatments, according to Novartis.

Bimagrumab was developed by Novartis in collaboration with Morphosys. The drug works by stimulating muscle growth by blocking from inhibitory molecules.

(This corrects day of the week to Tuesday from Thursday)

(Reporting by Caroline Copley)

WASHINGTON (Reuters) - When cardiologist Asad Qamar gave $50,000 earlier this year to the non-profit group established to promote President Barack Obama's national agenda it was one of the group's biggest single donations from the state of Florida.

Shortly after that, Qamar, already a major donor to Democratic politicians and causes, was invited to a meeting of the group, Organizing for Action (OFA), in Chicago in May attended by the group's Executive Director Jon Carson. There he says he agreed to help promote aspects of Obama's healthcare reforms this fall.

At the same time, Qamar has been engaged in a campaign of his own. Since January, he has sent letters and emails to government leaders, including Obama and members of Congress, complaining about a lengthy review of the billing practices led by the Department of Health and Human Services at his own Ocala, Florida, Institute of Cardiovascular Excellence, which he says is delaying payments and threatens to put him out of business.

Some people question whether OFA's acceptance of Qamar's support could end up drawing unwelcome publicity for the group, run by veterans of Obama's election campaigns and dedicated to implementing his general agenda.

Qamar's letter-writing campaign is continuing: a 61-page document drafted by high-profile law firm Greenberg Traurig went Thursday to HHS officials, and was copied to the offices of Obama, Vice President Joe Biden, HHS Secretary Kathleen Sebelius, and members of Congress on relevant subcommittees. The White House and HHS did not respond to requests for comment.

The review of the institute's books has been carried out under enhanced investigative procedures put in place as part of the Obama healthcare reforms as a way to guard against fraud and reduce costs.

SUSPENDED PAYMENTS

Qamar said he had become involved in the outreach effort to promote Obama's policies partly so that he would have an opportunity to make his case that medical practices like his are suffering because contractors conducting the reviews for the HHS were slow and unresponsive. He says they also do not provide doctors with enough information about the review status.

The contractors are looking for payment irregularities in billing to Medicare, the government healthcare program for the elderly, and suspending payments while the reviews are under way. Florida is one of the states targeted for extensive pre-payment reviews by HHS because of high volumes of billing errors in the past.

HHS declined to discuss Qamar's case.

"I see a tremendous harassment of the physician community and so one of the things I was trying to do with OFA was telling them when we arrange these seminars, and physicians come and ask, the first question is going to be about excessive paperwork and excessive scrutiny," Qamar told Reuters.

The merits of HHS' reviews of Qamar's billing and the effectiveness of his own campaign are unclear. But some people familiar with Qamar's high-profile effort say OFA's apparent acceptance of his support may backfire on the group.

"Clearly, this is one of the big problems with OFA, and the president being tied to a nonprofit," said Bill Allison, editorial director of the Washington-based Sunlight Foundation, which advocates for government transparency.

"There's the perception that when people give, they're generally interested in getting something out of it, too. And the fact that (Qamar) is under review while making these donations raises all kinds of red flags, that if you give money you might get a different kind of justice than other people."

An OFA official said the group reviews all of its donations for "issues," and "any future issue would be reviewed as would any donors."

HELPING TOUT OBAMACARE

Qamar said his role with OFA was to help plan its fall campaign to promote Obamacare by speaking with physicians and patients about the law's components.

He said he was acting not so much for himself but to counter what he saw as a more general problem. "I honestly was not so much thinking of my case because I obviously didn't think I could ask that of OFA, but I did think of getting help for other physicians."

He said every one of his practice's Medicare payments was under review between October and the end of January, but that the review's scope has since been reduced.

The OFA official said Qamar had not asked the group for help with his own issues. Qamar said he was confident his institute would pass the review.

Controlling spending on Medicare has been a priority of Obama's healthcare reforms and government auditors credit pre-payment reviews by HHS's Centers for Medicare and Medicaid Services with saving taxpayers billions of dollars.

Qamar and his family have given at least $300,000 to politicians and political causes in the 2012 election cycle and in 2013, according to contribution disclosure records.

The letters appealed for help from recipients of Qamar's donations, such as Pennsylvania Senator Robert Casey, whose office said it referred the doctor to his own representative, and Indiana Representative Andre Carson, whose office said it initially inquired into the case before being told that Democratic Florida Senator Bill Nelson was involved.

Nelson's office, however, denied knowledge of Qamar's case, although the doctor credits the office with helping him get information about the review. Qamar has not made any direct contributions to Nelson.

(Editing by Marilyn Thompson and David Storey)

The U.S. Fish and Wildlife Service announced the arrests Thursday after an undercover operation that included officers from 16 states, three federal agencies and three Asian countries.

Items seized under "Operation Wild Web" include the pelts of endangered big cats such as the Sumatran tiger, leopard and jaguar; live migratory birds such as the California scrub jay; whale teeth; elephant and walrus ivory; and a zebra pelt.

"Our message is clear and simple: The Internet is not an open marketplace for protected species," said Edward Grace, deputy assistant director for law enforcement for the Fish and Wildlife Service.

Working with counterparts in California, Texas, New York, Florida and Alaska and other states, federal officials targeted illegal wildlife sellers who operate through Craigslist, eBay and other Internet marketplaces and classified ads. Wildlife officers in Singapore, Thailand and Indonesia ran similar operations at the same time.

The items were seized last August, although charges are still being brought in many cases. Six Southern California residents were charged Thursday with selling endangered species and animal parts, the U.S. Attorney's Office in Los Angeles said.

"As a major platform for the illicit trade in wildlife, the Internet has become a dangerous place for animals," said Jeff Flocken, North American regional director for the International Fund for Animal Welfare, an advocacy group that worked with the federal task force.

"Wildlife crimes are not only harmful to endangered species, they also pose serious threats to national and global security," Flocken said.

Illegal wildlife trade generates an estimated $19 billion a year worldwide and ranks fourth on the list of the most lucrative global illegal activities behind narcotics, counterfeiting and human trafficking, the animal welfare group said in a report last year.

Federal laws regulating the sale of wildlife include the Endangered Species Act, Migratory Bird Treaty Act, Bald and Golden Eagle Protection Act; the Marine Mammal Protection Act and the Lacey Act, which prohibits trade in wildlife, fish and plants that have been illegally taken, transported or sold.

Other states involved in "Operation Wild Web" were Massachusetts, Pennsylvania, Nebraska, Kansas, Oklahoma, North Dakota, South Dakota, Washington, Oregon, New Jersey and Rhode Island.

___

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The North's state media last week showed leader Kim Jong Un inspecting "Arirang" phones at a Pyongyang factory. The Korean Central News Agency's Aug. 10 report said the factory began manufacturing smartphones "a few days ago" and they were already in high demand.

North Korea has promoted the development of science and technology as a means of improving its moribund economy. It says it developed a tablet computer last year and has its own Red Star operating system.

But access to the global Internet is severely restricted and mobile phones used on the state-authorized network cannot make overseas calls. The North's Intranet gives access to government sanctioned sites and works with its own browsers, search engine and email programs, according to South Korea's Unification Ministry.

Factory workers in photos released by the state news agency are inspecting and testing finished phones but no manufacturing is shown, said tech expert Martyn Williams on the northkoreatech.org blog.

"Despite KCNA's reporting that the handsets are made at the factory, they are probably made to order by a Chinese manufacturer," said Williams, who writes for PC World and other publications.

South Korean computer experts say North Korea is strong enough in software technology to have launched cyberattacks that disrupted banking and government websites in the South but it lags in hardware capabilities behind South Korea.

The 1950-53 Korean War ended in a truce and the Korean Peninsula remains technically at war. Since then, the South has prospered and produced giant corporations such as Samsung Electronics Co., which is the world's biggest maker of smartphones, computer memory chips and displays. The North's economy has languished under socialist central planning though the capital Pyongyang is an oasis of relative affluence.

North Korea has shown a persistent interest in computer technology since the early 1980s so it is conceivable that a country, which has launched long-range missiles and tested nuclear weapons has also developed a smartphone, said Kang Ho Jye, a research fellow at Ewha Institute of Unification Studies.

But it might face difficulties in securing the necessary components for mass production.

"If people believe it is impossible for North Korea to make smartphones because it lags in technology, that's not right," he said "If people believe it is impossible because they are wondering how North Korea supplied components, then that makes sense."

North Korea said the Arirang phone features "Korean style" apps and can be used for "communications and learning." It sports a high-resolution camera and a touch screen.

Kim Mun-gu, a manager at a South Korean mobile phone company, said the Arirang smartphone appears to be using the Android operating system.

He said the photos aren't convincing as proof the North is manufacturing the phones.

"It looks too clean for a factory. If it's a factory, there should be components. There seemed to be machines but I can't tell whether they are operating or not," he said.

The "May 11 Factory" where North Korea says it is producing smartphones has been promoted as the country's hub for research, development and production of high-tech electronics. Kim's previous visit to the factory was in July 2011 to see what state media called an automated production system for LCD televisions an announcement also doubted abroad.

Kim, who became leader after his father Kim Jong Il's death in late 2011, said making phones based on home-grown technology "can instill national pride and self-respect into the Korean people," according to KCNA.

___

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He's played golf on four of six days since arriving on the Massachusetts island of Martha's Vineyard last Saturday. The White House never releases his scores and generally does not allow news coverage of his games although it did allow the press to watch him briefly once this week.

Tiger Woods played with Obama in Florida last February and said at the time that the left-handed president hits the ball well.

"If he ever spent after these four years spent more time playing the game of golf, I'm sure he could get to where he's a pretty good stick," Woods said. "He's got an amazing touch. He can certainly chip and putt."

Obama's interest in golf dates back to his high school years when he started playing in Hawaii. Later, golf was a pastime during the eight, sometimes frustrating, years he spent as an Illinois senator.

Democrats were the minority party when Obama took his Illinois Senate seat in January 1997. Majority Republicans hardly ever sought them out and paid scant attention to their priorities. So when he had free time, Obama often joined fellow senators and lobbyist friends on golf courses in the state capital of Springfield.

"When you're in the minority you have a lot of time on your hands because nobody is seeking you out for advice or votes," said state Sen. Terry Link, who took his seat the same year as Obama. "So what we did is we decided to start playing golf when the weather broke and we were still down" in Springfield. They tried to play a couple of times a week, he said.

"We played and worked on his game and eventually he got a little bit better," Link said. "I guess he plays a lot more than he used to or I think he'd like to play a lot more than he could."

Phil Manning, a lobbyist Obama played with, said "it was a healthy outlet" for blowing off steam.

Competitive at athletics, Obama paid for private instruction to help his game, Link said.

Obama was elected to the U.S. Senate in 2004 and moved to Washington. By 2007, he was a candidate for president, winning the race in 2008 and re-election last year.

Being in the White House seems to have deepened Obama's love of the game.

He's has played 137 rounds of golf as president in the past four and a half years, including at Andrews Air Force Base in Maryland, the Army's Fort Belvoir in Virginia, during family vacations to Hawaii and Martha's Vineyard, and elsewhere, according to meticulous records kept by CBS News White House correspondent Mark Knoller.

Many of the presidents who played golf wrestled with the image of themselves playing in front of cameras, according to Don Van Natta's 2003 book, "First off the Tee: Presidential Hackers, Duffers and Cheaters from Taft to Bush."

George W. Bush quit playing golf in the fall of 2003, after 2 years in office, saying it was inappropriate for the commander in chief to be seen playing while Americans were fighting and dying in the wars in Iraq and Afghanistan.

Golf suffers from its reputation as a sport for the elite the same perception the Columbia and Harvard-educated Obama has pushed back against throughout his political career.

It's partly for these reasons that White House officials, even former members who've played with Obama, decline to discuss his golf game.

Obama has said the hours he spends walking from hole to hole or driving the golf cart, as he did this week, are special for someone who is always surrounded by a tight knot of armed security personnel and military aides who drive or fly him practically everywhere he goes.

"It is the only time that, for six hours, first of all, that I'm outside, and second of all, you almost feel normal in the sense that you're not in the bubble," he told CBS News shortly after taking office in 2009. "There are a whole bunch of Secret Service guys, but they're sort of in the woods. And when you're up there in the tee box and you're hacking away and hitting some terrible shot and your friends are laughing at you, you know, it feels as though, you know, you're out of the container."

On Golf Digest's June 2011 list of the top 150 Washington golfers, Obama was tied for 108th place with Republican Rep. Mo Brooks, R-Ala., behind House Speaker John Boehner, R-Ohio, and Vice President Joe Biden. He was eighth, behind Bill Clinton, George W. Bush and George H.W. Bush, on the magazine's January 2009 ranking of the 15 presidents who played golf.

___

Associated Press writer John O'Connor in Springfield, Ill., and Associated Press researchers Monika Mathur and Susan James contributed to this report.

___

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LONDON (Reuters) - Prime Minister David Cameron may be close to pulling off one of the most significant feats of his premiership: delivering a solid economic recovery ahead of a 2015 election.

Two consecutive quarters of growth have shifted the sands of British politics: six months ago, MPs in his Conservative party warned him that failure to lead the country out of stagnation could cost him, and them, the election. Those fearful voices have fallen silent.

After cutting the biggest budget deficit since World War Two by a third, Cameron leads what could be the fastest growing major economy in the European Union this year.

"Will the better economic data change the political landscape? Well, economics is the biggest issue," said Steven Bell, director of multi-asset investment at F&C Asset Management which has about 98 billion pounds under management.

"Having pursued a policy of austerity, the government will get credibility both for prudent management and for the recovery," said Bell. "They will get the credit for this."

Britain's $2.5 trillion (1.59 trillion pounds) economy grew by 0.6 percent in the second quarter after a 0.3 percent rise in the first quarter, putting it on course to grow by at least 1.4 percent this year.

That would be the strongest annual growth since 2010, the year Cameron forced Labour's Gordon Brown from office by forming a coalition government with the Lib Dems after no party won an outright majority in a general election.

Some investors say Cameron's policies may in fact be partly to blame for the recovery's long wait. But they still expect the government to benefit.

"The recovery could have happened a lot sooner with a bit more government support for infrastructure spending in particular," said Trevor Greetham, asset allocation director for Fidelity's Investment Solution Group, who has responsibility for $14 billion of assets.

"But that is not the way things tend to work in the minds of the electorate - you cannot say 'well actually this would have happened earlier and we would all be a lot wealthier with a policy that didn't happen'. In reality it is the strength of the economy at the time of an election that tends to matter most."

For Cameron and his Chancellor, George Osborne, the political gamble was always on economic growth. But even as signs emerge that their bet may be paying off, they remain cautious.

Party sources say they are acutely aware of the risk of premature triumphalism 21 months before the election.

When asked on almost a daily basis whether Britain is seeing "the green shoots of recovery", Cameron's spokesman says only that the economy "is healing" or "out of intensive care". He always stresses that tough times still lie ahead.

IT'S THE ECONOMY STUPID

Staking their reputation on reducing Britain's debt mountain and nursing the economy back to health, Cameron and Osborne knew they had just a few years to make inroads into what they said was the profligate legacy of the 1997-2010 Labour governments.

But as the economy stagnated, Britain's two most powerful men were branded "dipsticks" by Rupert Murdoch's Sun newspaper and their privileged backgrounds - both went to expensive schools and were members of the same exclusive high-society dining club at Oxford - were mocked.

One outspoken Conservative MP even called them "arrogant posh boys" who "don't know the price of milk".

Cameron's party lost ground in opinion polls and was convulsed by internal rebellions over Britain's ties with the European Union and over gay marriage, while Labour warned voters austerity was killing off the recovery.

But from services and consumer spending to house prices, Britons' best loved measure of economic virility, data now shows the world's sixth largest economy may be about to do better than at any time since the onset of the 2007-2008 financial crisis.

Under its new governor, Mark Carney, the Bank of England upgraded its mean growth projection this month by 0.8 percentage points to 2.5 percent in 2014. If achieved, that would be Britain's fastest annual growth rate since 2007.

"A renewed recovery is now underway in the United Kingdom, and it appears to be broadening," Carney said at his first news conference as Bank chief while unveiling a promise -- with caveats -- not to raise interest rates above 0.5 percent until unemployment falls below 7 percent.

While a recovery is underway, the economy is a long way from regaining its pre-crisis strength. Britain remains vulnerable to any more shocks from the euro zone debt crisis and voters' incomes are at some of their lowest levels in a decade.

Yet ultra-loose monetary policy, support for the housing market, the potential of North Sea oil production, and the ability to ease the pain of austerity with tax revenues give Cameron one of the best economic backdrops of his premiership.

If he can keep the recovery on track right up to the next election, Cameron's chances of winning - possibly even the Conservatives' first outright victory since 1992 - increase.

If he wins, Cameron has promised an in-out referendum on Britain's membership of the European Union by the end of 2017. Economic growth could ease voter unease at immigration - one of the drivers of anti-European Union feeling in Britain.

LABOUR

Growth leaves Labour and its leader, Ed Miliband, in a tough spot. Labour's drive to convince voters it can run the economy has fallen flat so far: support for Conservative economic management soared to 40 percent from 28 percent in June, according to a Guardian/ICM poll.

The poll put Labour's overall support at 35 percent, a mere three percentage points higher than the Conservatives. Labour's lead was 12 percentage points in the same poll in February.

Now it is Miliband and Labour finance chief Ed Balls, rather than Cameron and Osborne, who are mocked by the domestic press.

After a protester threw an egg at Miliband's head during a visit to an East London market in August, the Sun branded him "Scrambled Ed" and cast him in a cartoon as the broken-egg character from the English nursery rhyme Humpty Dumpty.

But Labour says improving economic data shows no signs of translating into higher living standards.

"It may be a recovery for those at the top, but it is not a recovery for most people," a senior Labour source told Reuters. "For most, living standards are being squeezed as inflation outstrips wages more and more. This is what we're going to be pointing out."

In a change of tack, Miliband has put the cost of living at the heart of his economic policy, noting rising costs for everything from utilities to train fares.

He plans to attack Cameron with the slogan: "They're out of touch. You're out of pocket."

(Editing by Peter Graff)

* Djokovic, Murray breeze into last eight (Adds late matches)

By Steve Keating

CINCINNATI, Aug 15 (Reuters) - Novak Djokovic, Andy Murray, Rafa Nadal and Roger Federer all picked up third round wins at the Western and Southern Open on Thursday to set up a star-studded last eight in Cincinnati.

The ATP Tour's big four were joined in the quarter-finals by 2009 U.S. Open champion Juan Martin Del Potro of Argentina, the only other man to hoist a grand slam trophy since Marat Safin at the 2005 Australian Open.

Djokovic, Murray, Nadal, Federer and Del Potro have accounted for the last 34 grand slams and it is just the second time this year all five have reached the last eight of a tournament.

The marquee matchup on Friday will see world number five and 17-time grand slam winner Federer take on long-time rival Nadal, the world number three.

Nadal, whose grand slam resume lists 12 titles, and Federer will clash for the 31st time, adding yet another chapter to what will go down as one of the sport's all-time great rivalries.

Nadal has been in superb form coming off a win Montreal and ran his hardcourt winning streak to 12 matches with a 6-2 5-7 6-2 win over Bulgarian Grigor Dimitrov on Thursday.

"Always play against Roger is a special feeling," said Nadal, who has reached the finals in 10-of-11 events he has entered this season, claiming eight titles.

"We have a great history behind us in our confrontations, so it's another quarter-finals.

"It's a special one because you're playing against a very special player. Our matches were very special always.

"But, again, it's a quarter-finals match, not the final, so that's a big difference."

Federer, the five-time defending champion in Cincinnati, also needed three sets to see off evergreen German Tommy Haas 1-6 7-5 6-3 as he struggles to build some momentum going into the U.S. Open after missing the start of the North American hardcourt season with a sore back.

CRUISE CONTROL

In contrast, the world's two top-ranked players, Djokovic and Murray, cruised into the quarter-finals with no-nonsense straight sets decisions.

Looking to end a run of four runner-up finishes on the Cincinnati hardcourts, world number one Djokovic needed just 50 minutes to hand Belgian qualifier David Goffin a 6-2 6-0 tennis lesson.

While Cincinnati has been a happy hunting ground for Federer, it has been a frustrating tournament for Djokovic.

But if the big Serb is the last man standing on Sunday he would become the first player to complete what the ATP Tour has dubbed the 'Career Golden Masters', winning all nine World Tour Masters events.

"I played four times (in the) finals, so it's been one of the tournaments where I've performed well actually in the last five, six years," said Djokovic. "Never managed to take final step and hopefully this year I can do so.

"I have an extra motivation and an opportunity to make history in this tournament, so I'm very inspired to play well day after day."

World number two Murray was no less ruthless, the Wimbledon champion looking right at home as he steamrolled Frenchman Julien Benneteau 6-2 6-2 in 69 minutes.

The Scot will be chasing his third Cincinnati title as he continues to prepare for the defence of his U.S. Open crown later this month at Flushing Meadows.

Djokovic will take on top-ranked American John Isner in the last eight while Murray will meet Czech sixth seed Tomas Berdych.

"You want to try and get off quickly because you need to play the next day," said Murray. "But also in 10 days' time, we're going to have to play best-of-five sets, so sometimes the long matches can kind of set you up for that well.

"But in terms of winning this event, better to get off quick because you have to play five days in a row if you want to win."

Seventh seed Del Potro battled into the quarter-finals with a 6-4 1-6 6-4 win over Spain's Feliciano Lopez and will meet Russian qualifier Dmitry Tursunov, who pulled off the upset of the day dumping world number four David Ferrer of Spain 6-2 6-4. (Editing by Mark Lamport-Stokes/Peter Rutherford)