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NKorea rocket launch shows young leader as gambler

PYONGYANG, North Korea (AP) — A triumphant North Korea staged a mass rally of soldiers and civilians Friday to glorify the country’s young ruler, who took a big gamble this week in sending a satellite into orbit in defiance of international warnings.

Wednesday’s rocket launch came just eight months after a similar attempt ended in an embarrassing public failure, and just under a year after Kim Jong Un inherited power following his father’s death.

The surprising success of the launch may have earned Kim global condemnation, but at home the gamble paid off, at least in the short term. To his people, it made the 20-something Kim appear powerful, capable and determined in the face of foreign adversaries.

Tens of thousands of North Koreans, packed into snowy Kim Il Sung Square, clenched their fists in a unified show of resolve as a military band tooted horns and pounded on drums.

Huge red banners positioned in the square called on North Koreans to defend Kim Jong Un with their lives. They also paid homage to Kim Jong Un’s father, Kim Jong Il, and his grandfather, North Korean founder Kim Il Sung.

Pyongyang says the rocket put a crop and weather monitoring satellite into orbit. Much of the rest of the world sees it as a thinly disguised test of banned long-range missile technology. It could bring a fresh round of U.N. sanctions that would increase his country’s international isolation. At the same time, the success of the launch could strengthen North Korea’s military, the only entity that poses a potential threat to Kim’s rule.

The launch’s success, 14 years after North Korea’s first attempt, shows more than a little of the gambling spirit in the third Kim to rule North Korea since it became a country in 1948.

“North Korean officials will long be touting Kim Jong Un as a gutsy leader” who commanded the rocket launch despite being new to the job and young, said Kim Byung-ro, a North Korea specialist at Seoul National University in South Korea.

The propaganda machinery churned into action early Friday, with state media detailing how Kim Jong Un issued the order to fire off the rocket just days after scientists fretted over technical issues, ignoring the chorus of warnings from Washington to Moscow against a move likely to invite more sanctions.

Top officials followed Kim in shrugging off international condemnation.

Workers’ Party Secretary Kim Ki Nam told the crowd, bundled up against a winter chill in the heart of the capital, that “hostile forces” had dubbed the launch a missile test. He rejected the claim and called on North Koreans to stand their ground against the “cunning” critics.

North Korea called the satellite a gift to Kim Jong Il, who is said to have set the lofty goal of getting a satellite into space and then tapped his son to see it into fruition. The satellite, which North Korean scientists say is designed to send back data about crops and weather, was named Kwangmyongsong, or “Lode Star” — the nickname legendarily given to the elder Kim at birth.

Kim Jong Il died on Dec. 17, 2011, so to North Koreans, the successful launch is a tribute. State TV have been replaying video of the launch to “Song of Gen. Kim Jong Il.”

But it is the son who will bask in the glory, and face the international censure that may follow.

Even while he was being groomed to succeed his father, Kim Jong Un had been portrayed as championing science and technology as a way to lift North Korea out of decades of economic hardship.

“It makes me happy that our satellite is flying in space,” Pyongyang citizen Jong Sun Hui said as Friday’s ceremony came to a close and tens of thousands rushed into the streets, many linking arms as they went.

“The satellite launch demonstrated our strong power and the might of our science and technology once again,” she told The Associated Press. “And it also clearly testifies that a thriving nation is in our near future.”

Aside from winning him support from the people, the success of the launch helps his image as he works to consolidate power over a government crammed with elderly, old-school lieutenants of his father and grandfather, foreign analysts said.

Experts say that what is unclear, however, is whether Kim will continue to smoothly solidify power, steering clear of friction with the powerful military while dealing with the strong possibility of more crushing sanctions. The United Nations says North Korea already has a serious hunger problem.

“Certainly in the short run, this is an enormous boost to his prestige,” according to Marcus Noland, a North Korea analyst at the Peterson Institute for International Economics in Washington.

Noland, however, also mentioned the “Machiavellian argument” that this could cause future problems for Kim by significantly boosting the power of the military — “the only real threat to his rule.”

Successfully firing a rocket was so politically crucial for Kim at the onset of his rule that he allowed an April launch to go through even though it resulted in the collapse of a nascent food-aid-for-nuclear-freeze deal with the United States, said North Korea analyst Kim Yeon-su of Korea National Defense University in Seoul.

The launch success consolidates his image as heir to his father’s legacy. But it could end up deepening North Korea’s political and economic isolation, he said.

On Friday, the section at the rally reserved for foreign diplomats was noticeably sparse. U.N. officials and some European envoys stayed away from the celebration, as they did in April after the last launch.

Despite the success, experts say North Korea is years from even having a shot at developing reliable missiles that could bombard the American mainland and other distant targets.

North Korea will need larger and more dependable missiles, and more advanced nuclear weapons, to threaten U.S. shores, though it already poses a shorter-range missile threat to its neighbors.

The next big question is how the outside world will punish Pyongyang — and try to steer North Korea from what could come next: a nuclear test. In 2009, the North conducted an atomic explosion just weeks after a rocket launch.

Scott Snyder, a Korea specialist for the Council on Foreign Relations, wrote recently that North Korea‘s nuclear ambitions should inspire the U.S., China, South Korea and Japan to put aside their issues and focus on dealing with Pyongyang.

If there is a common threat that should galvanize regional cooperation, “it most certainly should be the prospect of a 30-year-old leader of a terrorized population with his finger on a nuclear trigger,” Snyder said.

____

Jon Chol Jin in Pyongyang, and Foster Klug and Sam Kim in Seoul, South Korea, contributed to this report. Follow Jean H. Lee on Twitter: (at)newsjean.

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One Direction, Rihanna, Adele lead Billboard 2012 charts

LOS ANGELES (Reuters) – Newcomer British boy band One Direction joined R&B diva Rihanna and British singer Adele to top Billboard‘s year-end music charts, released on Friday.

One Direction, who topped the Billboard 200 album chart twice this year with their debut, “Up All Night” in March and their sophomore album “Take Me Home” in November, were named Billboard‘s top new artist/group, rounding off a stellar year of U.S. success for the band.

Adele, 24, who became the first woman top score No. 1 single, album and artist on Billboard’s 2011 year-end charts, continued her reign in 2012, when her Grammy-winning record “21″ was the top-selling album in the U.S. and she was once again named artist of the year.

“21″ has sold more than 10 million copies in the U.S. since its release in February 2011, becoming a fixture on the Billboard 200, especially after Adele’s six wins at the Grammy Awards earlier this year.

She is the only act to be named both top artist and have the top album in Billboard’s charts for two years in a row.

Adele was also named the No. 1 female artist while R&B rapper-singer Drake was named No. 1 male artist and pop-rock band Maroon 5 were named No. 1 group.

Rihanna, also 24, was named the top Hot 100 artist after a year of chart-topping hit singles such as “We Found Love” and “Diamonds” on the Hot 100 chart, which measures top-selling singles each week.

But Australia’s Gotye picked up the Hot 100 single of the year, with his heartbreak hit “Somebody That I Used To Know.”

Billboard compile their end-of-year lists based on chart performances between December 3 2011 and November 24 2012, tallying data including album sales and streaming figures.

For more on Billboard’s year-end charts, visit http://www.billboard.com/news/the-best-of-2012-the-year-in-music-1008045682.story#

(Reporting By Piya Sinha-Roy, editing by Jill Serjeant and Andrew Hay)

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Venezuela furious at Obama’s comments on ailing Chavez

CARACAS (Reuters) – Venezuela‘s government reacted with fury on Friday to U.S. President Barack Obama‘s criticism of ailing Hugo Chavez‘s “authoritarian” government at a time of national anxiety over his battle to recover from cancer surgery.

In an interview with U.S. network Univision, Obama declined to speculate on the 58-year-old socialist president’s health in Cuba, where he is in a delicate state after his fourth operation since mid-2011 for cancer in his pelvic region.

But he did say U.S. policy was aimed at ensuring “freedom” in Venezuela. “The most important thing is to remember that the future of Venezuela should be in the hands of the Venezuelan people. We’ve seen from Chavez in the past authoritarian policies, suppression of dissent,” Obama said.

Those remarks went down badly with officials in Caracas where emotions are running high over the future of Chavez and his self-styled revolution in the South American OPEC nation.

In power since 1999, Chavez is due to start a new six-year term on January 10 after winning re-election just weeks before Obama did. His health crisis has thrown that into doubt, and Chavez has named a successor in case he is incapacitated.

“With these despicable comments at such a delicate moment for Venezuela, the U.S. president is responsible for a major deterioration in bilateral relations, proving the continuity of his policy of aggression and disrespect towards our country,” the Venezuelan government said in a statement.

‘SLOW’ RECOVERY, BUT SPEAKING

During his tumultuous rule, Chavez has gleefully assumed former Cuban leader Fidel Castro’s mantle as Washington’s main irritant in the region – though oil has continued to flow freely north to the benefit of both nations’ economies.

Adored by poor supporters for his charismatic style and channeling of oil revenue into a wide array of welfare projects, Chavez is regarded as a dictator by opponents who point to his often harsh treatment of political foes.

Officials said doctors had to use “corrective measures” on Chavez to stop unexpected bleeding caused during Tuesday’s six-hour operation, but that his condition had since improved.

“The patient is fulfilling his post-operation protocol satisfactorily, given the complexity of the surgery,” the latest Venezuelan government statement on his condition said. “Recovery has been slow but progressive,” it added, saying Chavez had communicated with relatives and sent greetings to Venezuelans.

Amid rumors Chavez had been unconscious since his operation, presidential press officer Teresa Maniglia indicated he had spoken for the first time on Friday. “‘How are my people?’ was the first thing Chavez said today when he spoke with his family for the first time,” she said via Twitter.

Chavez’s situation is being closely tracked around the region, especially among fellow leftist-run nations from Cuba to Bolivia which depend on his generous oil subsidies and other aid for their fragile economies.

“The president is battling hard – this time for his life, before it was for the Latin American fatherland,” said President Evo Morales of Bolivia, a Chavez friend and ally who announced he was flying to Havana overnight for an “emergency” visit.

“This is very painful for us.”

SPECULATION

Venezuela’s leader has not divulged details of the cancer that was first diagnosed in June 2011, sparking endless speculation among the country’s 29 million people and criticism from opposition leaders for lack of transparency.

“They’re hiding something, I think,” said 57-year-old housewife Alicia Marquina. “I’m not convinced by the announcements they’re making. I’m not a ‘chavista’, but neither am I cruel. I hope he does not suffer much and finds peace.”

If Chavez has to leave office, new elections must be held within 30 days. Chavez has named his vice president, Nicolas Maduro, a 50-year-old former bus driver and union leader, as his heir apparent.

Opposition flagbearer Henrique Capriles, who lost the presidential race against Chavez in October, is the favorite to face Maduro should a new vote be held, though first the governor of Miranda state must retain his post in local elections on Sunday.

“The regime change is already occurring,” Jefferies’ & Co. managing director Siobhan Morden said in one of numerous Wall Street analyses of events in Venezuela. “The question is whether the alternative is Chavista-light or the opposition.”

Even if he dies, Chavez is likely to cast a long shadow over Venezuela’s political landscape for years – not unlike Argentine leader Juan Peron, whose 1950s populism is still the ideological foundation of the country’s dominant political party.

There are parallels with the situation in Cuba too, where Chavez’s close friend and mentor, Fidel Castro, suffered a health downturn, underwent various operations in secret, then eventually handed over power to his brother Raul Castro.

(Additional reporting by Mario Naranjo and Eyanir Chinea in Caracas, Carlos Quiroga in La Paz; Editing by Paul Simao)

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'Evil visited this community today': 20 children killed in shooting

Twenty children died today when a heavily armed man invaded a Newtown,
Conn., elementary school and sprayed staff and students with bullets.

The gunman, identified as Adam Lanza, 20, was found dead in the school.

Lt. Paul Vance said 18 children died in the school and two more died
later in a hospital. Six adults were also slain, bringing the total to
26.

In addition to the casualties at the school, Lanza's mother Nancy Lanza
was killed in her home, federal and state sources told ABC News.

According to sources, Lanza shot his mother in the face, then left his
house armed with at least two semi automatic handguns, a Glock and a Sig
Sauer, and a semi automatic rifle. He was also wearing a bullet proof
vest.

Lanza drove to Sandy Hook Elementary School and continued his rampage,
killing 26 people, authorities said. He was found dead at the school. It
appears that he died from what is believed to be a self inflicted
gunshot wound. The rifle was found in his car.

In the early confusion surrounding the investigation, federal sources
initially identified the suspect as Adam's older brother Ryan Lanza, 24.
He is being questioned by police.

LIVE UPDATES: Newtown, Conn., School Shooting

"Evil visited this community today," Gov. Dan Malloy said at a news conference this evening.

First grade teacher Kaitlin Roig, 29, locked her 14 students in a class bathroom and listened to "tons of shooting" until police came to help.

"It was horrific," Roig said. "I thought we were going to die."

She said that the terrified kids were saying, "I just want Christmas…I don't want to die. I just want to have Christmas."

A tearful President Obama said there's "not a parent in America who doesn't feel the overwhelming grief that I do."

The president had to pause to compose himself after saying these were
"beautiful little kids between the ages of 5 and 10." As he continued
with his statement, Obama wiped away tears from each eye.

He has ordered flags flown as half staff.

CLICK HERE for more photos from the scene.

The alert at the school ended when Vance announced, "The shooter is deceased inside the building. The public is not in danger."

The massacre prompted the town of Newtown to lock down all its schools
and draw SWAT teams to the school, authorities said today. Authorities
initially believed that there were two gunmen and were searching cars
around the school, but authorities do not appear to be looking for
another gunman.

It is the second worst mass shooting in U.S. history, exceeded only by
the Virginia Tech shooting in 2007 when 32 were killed before the
shooter turned the gun on himself. Today's carnage exceeds the 1999
Columbine High School shooting in which 13 died and 24 were injured.

The Newtown shooting comes three days after masked gunman Jacob Roberts
opened fire in a busy Oregon mall, killing two before turning the gun
on himself.

Today's shooting occurred at the Sandy Hook Elementary School, which
includes 450 students in grades K-4. The town is located about 12 miles
east of Danbury.

State Police received the first 911 call at 9:41 a.m. and immediately
began sending emergency units from the western part of the state.
Initial 911 calls stated that multiple students were trapped in a
classroom, possibly with a gunman, according to a Connecticut State
Police source.

Lt. Paul Vance said that on-duty and off-duty officers swarmed to the
school and quickly checked "every door, every crack, every crevice" in
the building looking for the gunman and evacuating children.

A photo from the scene shows a line of distressed children being led out of the school.

Three patients have been taken to Danbury Hospital, which is also on lockdown, according to the hospital's Facebook page.

"Out of abundance of caution and not because of any direct threat
Danbury Hospital is under lockdown," the statement said. "This allows us
simply to focus on the important work at hand."

Newtown Public School District secretary of superintendent Kathy June
said in a statement that the district's schools were locked down because
of the report of a shooting. "The district is taking preventive
measures by putting all schools in lockdown until we ensure the safety
of all students and staff," she said.

State police sent SWAT team units to Newtown.

All public and private schools in the town were on lockdown.

"We have increased our police presence at all Danbury Public Schools due
to the events in Newtown. Pray for the victims," Newtown Mayor Boughton
tweeted.

State emergency management officials said ambulances and other units were also en route and staging near the school.

A message on the school district website says that all afternoon
kindergarten is cancelled today and there will be no midday bus runs.

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U.S. drops China’s Taobao website from “notorious” list

WASHINGTON (Reuters) – The United States on Thursday dropped a website owned by China‘s largest e-commerce company, Alibaba Group, from its annual list of the world’s most “notorious markets” for sales of pirated and counterfeit goods.

Taobao Marketplace, an online shopping site similar to eBay and Amazon that brings together buyers and sellers, “has been removed from the 2012 List because it has undertaken notable efforts over the past year to work with rightholders directly or through their industry associations to clean up its site,” the U.S. Trade Representative‘s office said in the report.

The move came just before an annual high-level U.S.-China trade meeting next week in Washington.

Taobao Marketplace is China’s largest consumer-oriented e-commerce platform, with estimated market share of more than 70 percent. The website has nearly 500 million registered users, with more than 800 million product listings at any given time. Most of the users are in China, Hong Kong, Taiwan and Macao.

The U.S. Chamber of Commerce has called Taobao “one of the single largest online sources of counterfeits.”

The Chinese Commerce Ministry strongly objected to Taobao’s inclusion on the USTR’s 2011 notorious markets list. A ministry spokesman said it did not appear to be based on any “conclusive evidence or detailed analysis.

Alibaba hired former USTR General Counsel James Mendenhall to help persuade USTR to remove Taobao from its list.

The Chinese company’s bid to shed its “notorious” label won support from the Motion Picture Association of America, a former critic of Taobao, which praised its effort to reduce the availability of counterfeit goods on its website.

But U.S. software, clothing and shoe manufacturers urged USTR to keep Taobao on the list.

To stay off in the future, USTR urged “Taobao to further streamline procedures … for taking down listings of counterfeit and pirated goods and to continue its efforts to work with and achieve a satisfactory outcome with U.S. rights holders and industry associations.”

USTR said it also removed Chinese website Sogou from the notorious markets list, based on reports that it has made “notable efforts to work with rights holders to address the availability of infringing content on its site.”

U.S. concerns about widespread piracy and counterfeiting of American goods in China are expected to be high on the agenda at next week’s meeting in Washington of the U.S.-China Joint Commission on Commerce and Trade.

The 2012 notorious markets list includes Xunlei, which USTR described as a Chinese-based site that facilitates the downloading and distribution of pirated movies.

Baixe de Tudo, a website hosted in Sweden but targeted at the Brazilian market, was also put on the list along with the Chinese website Gougou.

Warez-bb, which USTR described as a hub for pre-release music, software and video games, was also included. The forum site is registered in Sweden but hosted by a Russian Internet service provider, USTR said.

The full report can be found on USTR’s website at: http://www.ustr.gov/sites/default/files/121312%20Notorious%20Markets%20List.pdf

(Reporting by Doug Palmer; Editing by Will Dunham, Dan Grebler and Jim Marshall)

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Cuban lawmakers meet to consider economy, budget

HAVANA (AP) — Cuban lawmakers are holding the second of their twice-annual sessions with a year-end report expected on the state of the country’s economy.

Legislators are also to approve next year’s budget.

Cuban leaders have sometimes used the parliamentary gatherings to make important announcements or policy statements.

Observers will be watching for word on the progress of President Raul Castro‘s economic reform plan and efforts to promote younger leaders.

The unicameral parliament will reconvene in February with a new membership following elections. It is then expected to name Castro to another five-year term.

State-run media said Castro presided over Thursday’s session.

It was not open to international journalists.

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Sitar maker: Ravi Shankar’s legacy inspires others

NEW DELHI (AP) — The walls of Sanjay Sharma‘s music shop are lined with gleaming string instruments and old photographs of legendary musicians.

Beatles George Harrison, John Lennon and Paul McCartney. Indian classicial musicians Zakir Hussain, Shiv Kumar Sharma and Vishwamohan Bhatt. And the man who brought these two very different musical worlds together: Ravi Shankar.

Like his grandfather and father before him, Sharma built, tuned and repaired instruments for the sitar virtuoso, who introduced Westerners to Indian classical music, and through his friendship with Harrison became a mainstay of the 1960s counterculture scene.

From his tiny shop tucked into the crowded lanes of central Delhi’s Bhagat Singh market, Sharma traveled the world with Shankar. Late in the maestro’s life, as his health and strength flagged, he even designed a smaller version of the instrument that allowed him to keep playing.

Shankar, who died Tuesday at age 92, was “a saint, an emperor and lord of music,” Sharma says in a tribute posted to the website of his sought-after shop, Rikhi Ram’s Music.

“When I opened my eyes there was him,” says Sharma, 44, surrounded by display cases full of sitars, sarangis (a stringed instrument played with a violin-like bow), guitars, tabla drums and sarods, a deeply resonating instrument played by plucking the strings.

Shankar “was music and music was him,” he says.

Sharma’s grandfather started the business in 1920 in the northern city of Lahore, now in Pakistan. He met a young Ravi Shankar at a concert there in the 1940s. Following the India-Pakistan partition and the relocation of the shop to New Delhi, the family began making sitars for Shankar in the 1950s.

By then, the musician was already famous in India and beginning to collaborate with some of the greats of Western music, including violinist Yehudi Menuhin and jazz saxophonist John Coltrane.

The Beatles visited in 1966 and bought instruments, memorialized in some of the many photographs that line the shop’s walls. Another shows Shankar’s daughter and the heir of his sitar legacy, Anoushka Shankar. But there is no picture of another Shankar daughter, American singer Norah Jones, who was estranged from her father.

Sharma’s own father succeeded his grandfather as the supplier of Shankar’s sitars. And then Sharma himself in the 1980s.

The bedroom-sized shop has two counters, one for conducting business and one for working on instruments under the beam of a large work lamp. Wood shavings and dust cover the floor of a workshop at the back.

As he chatted with visiting Associated Press journalists on Thursday, Sharma worked on a sitar, peering through his glasses as he used a mallet to hammer in a new fret. He plucked the strings, and as the sound resonated around the room, he leaned close in to the instrument and listened intently to the vibrations. Satisfied with the results, he moved on to the next fret.

It takes 15 months for a sitar to be ready for use. The actual crafting of the instrument from red cedar and hollowed-out, dried pumpkins takes three months. Then, it is left untouched to go through what is called “Delhi seasoning,” in which the extremes of New Delhi’s climate — blistering summer, followed by a brief monsoon, and a near-freezing, three-month winter — work their magic.

In 2005, a serious bout of pneumonia left Shankar with a frozen left shoulder.

“He was growing old and he wanted to experiment and change the instrument” so he could continue playing, Sharma says.

Sharma, a large, balding man, created what he calls the “studio sitar,” a smaller version of the instrument. But holding it was still difficult. So Sharma went to a Home Depot near Shankar’s San Diego, California-area home and bought some supplies to build a detachable stand.

The musician was thrilled. Sharma says Shankar told him, “Your father was a brilliant sitar maker, but you are a genius.”

Shankar was performing in public until a month before his death. Despite ill health, he appeared re-energized by the music, Sharma said.

Now, as Sharma mourns the giant of Indian music, he also worries about the future of the art itself. He sees traditional Indian instruments gradually losing their place in their own country to zippy, electronic Bollywood music.

“We are losing the originality and the core of our Indian music,” says Shankar, himself a trained Hindustani classical musician who plays the sitar and tabla, the Indian pair-drums.

At the same time, Shankar’s work as a global ambassador of music has borne fruit, Sharma says: “Because the music has gone to the West, we’re getting lots of new musical aspirants from the Western countries.”

When jazz artist Herbie Hancock was in New Delhi a few years ago, he stopped by Sharma’s shop to buy a sitar.

And in one of the shop’s display windows gleams a newly crafted sitar made of teak.

“That,” Sharma said, “is for Bill Gates.”

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Actelion says FDA accepts lung drug for review

ZURICH (Reuters) – Biotechnology company Actelion said on Friday the U.S. health regulator accepted a submission on the company’s macitentan drug, meant to treat patients with a potentially life-threatening lung condition.

Actelion submitted the application for its drug for the treatment of pulmonary arterial hypertension, a condition characterized by abnormally high blood pressure in the arteries of the lungs, in October.

The Swiss company is banking on macitentan to replace Tracleer, which also treats pulmonary arterial hypertension (PAH) and currently accounts for around 90 percent of group sales, but goes off patent from 2015 and faces growing competition from U.S. rival Gilead’s Letairis.

The review period of the U.S. regulator, the Food and Drug Administration, is expected to last 12 months, Actelion said.

(Reporting by Martin de Sa’Pinto; Editing by Muralikumar Anantharaman)

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With Rice withdrawing, Kerry may get call

WASHINGTON (AP) — Susan Rice, the embattled U.N. ambassador, abruptly withdrew from consideration to be the next secretary of state on Thursday after a bitter, weekslong standoff with Republican senators who declared they would fight to defeat her nomination.

The reluctant announcement makes Massachusetts Sen. John Kerry the likely choice to be the nation's next top diplomat when Hillary Rodham Clinton departs soon. Rice withdrew when it became clear her political troubles were not going away, and support inside the White House for her potential nomination had been waning in recent days, administration officials said.

In another major part of the upcoming Cabinet shake-up for President Barack Obama's second term, former Republican Sen. Chuck Hagel of Nebraska now is seen as the front-runner to be defense secretary, with official word expected as soon as next week.

For the newly re-elected president, Rice's withdrawal was a sharp political setback and a sign of the difficulties Obama faces in a time of divided and divisive government. Already, he had been privately weighing whether picking Rice would cost him political capital he would need on later votes.

When Rice ended the embarrassment by stepping aside, Obama used the occasion to criticize Republicans who were adamantly opposed to her possible nomination.

"While I deeply regret the unfair and misleading attacks on Susan Rice in recent weeks, her decision demonstrates the strength of her character," he said.

"I am saddened we have reached this point," Rice said.

Obama made clear she would remain in his inner circle, saying he was grateful she would stay as "our ambassador at the United Nations and a key member of my Cabinet and national security team." Rice, too, said in her letter she would be staying.

Clinton, in a brief statement, said that Rice had "been an indispensable partner over the past four years" and that she was confident "that she will continue to represent the United States with strength and skill."

Rice had become the face of the bungled administration account of what happened in Benghazi, Libya, on Sept. 11, 2012 when four Americans, including the U.S. ambassador to Libya, were killed in what is now known to have been a terrorist attack.

Obama had defiantly declared he would chose her for secretary of state regardless of the political criticism, if he wanted, but such a choice could have gotten his second term off to a turbulent start with Capitol Hill.

In a letter to Obama, Rice said she was convinced the confirmation process would be "lengthy, disruptive and costly." The letter was part of a media rollout aimed at upholding her reputation. It included an NBC News interview in which she said her withdrawal "was the best thing for our country."

"Those of you who know me know that I'm a fighter, but not at the cost of what's right for our country," she tweeted later.

Rice may end up close to Obama's side in another way, as his national security adviser should Tom Donilon move on to another position, though that is not expected imminently. The security adviser position would not require Senate confirmation.

Rice would have faced strong opposition from Senate Republicans who challenged her much-maligned televised comments about the cause of the deadly raid on the U.S. Consulate in Benghazi, Libya.

Her efforts to satisfy Sens. John McCain, Lindsey Graham, Kelly Ayotte and Susan Collins in unusual, private sessions on Capitol Hill fell short. The Republicans emerged from the meetings still expressing doubts about her qualifications.

"The position of secretary of state should never be politicized," Rice said. "As someone who grew up in an era of comparative bipartisanship and as a sitting U.S national security official who has served in two U.S. administrations, I am saddened that we have reached this point."

Attention now shifts to Kerry, who came close to winning the presidency in 2004 and has been seen as desiring the State job. In a statement, he made no mention of his own candidacy but praised Rice, who was an adviser to him his in his presidential bid.

Kerry was an early backer of Obama and was under consideration to become his first secretary of state. Obama has dispatched Kerry to foreign hot spots on his behalf. Kerry played the role of Republican Mitt Romney during Obama's presidential debate preparations this year.

The longtime senator would be almost certain to be easily confirmed by his colleagues on Capitol Hill.

If Obama taps Kerry for State, the president will create a potential problem for Democrats by opening a Senate seat — one that recently defeated Republican Sen. Scott Brown is eyeing. Brown had been elected as Massachusetts' other senator in January 2010 after Democrat Ted Kennedy died, stunning the political world as he took the seat held by Kennedy for decades. Brown lost that seat in the November election.

House Democratic women had cast the criticism of Rice as sexist and racist — she is African-American — and some expressed disappointment with the news.

"If judged fairly based solely on her qualifications for the job, she would've made an extraordinary secretary of state," said Rep. Karen Bass, D-Calif., a member of the House Foreign Affairs Committee.

Rice did not have a strong relationship with members of the Senate. Graham, who is the top Republican on the Appropriations subcommittee that handles foreign aid and the State Department, said he barely knew her.

In a brief statement, a spokesman for McCain said the senator "thanks Ambassador Rice for her service to the country and wishes her well. He will continue to seek all the facts surrounding the attack on our consulate in Benghazi."

Rice's decision comes ahead of the anticipated release next week of a report by an Accountability Review Board into the attack on the Benghazi mission. The report ordered by Clinton, focuses on the run-up to and the actual attack and is not expected to mention Rice's role in its aftermath.

Clinton is to testify about the report before Congress next Thursday.

At issue is the explanation Rice offered in a series of talk show appearances five days after the attack in Libya.

Rice has conceded in private meetings with lawmakers that her initial account — that a spontaneous demonstration over an anti-Muslim video produced in the U.S. triggered the attack — was wrong, but she has insisted she was not trying to mislead the American people. Information for her account was provided by intelligence officials.

She reasserted that position in an opinion piece published late Thursday on The Washington Post's website, adding, "In recent weeks, new lines of attack have been raised to malign my character and my career. Even before I was nominated for any new position, a steady drip of manufactured charges painted a wholly false picture of me. This has interfered increasingly with my work on behalf of the United States at the United Nations and with America's agenda."

Hagel, a former Republican senator from Nebraska, is a Vietnam veteran, served two terms in the Senate and was a senior member of the Foreign Relations Committee. Obama and Hagel became close while they served in the Senate and traveled overseas together. Hagel has been critical of his party since leaving the Senate in 2008, saying the GOP had moved too far right.

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Associated Press writers Donna Cassata, Ken Thomas, Matthew Lee and Matthew Daly contributed to this story.

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