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as rockets strike deep into Israel. More attacks on Lebanon as the PM shows States the money. All smiles at COAG

latest nuclear reactor The green light for Sydney's new heights on the Tour de France. And the Aussie who's climbing to Deborah Rice with ABC News. Good evening. action in Lebanon, Israel has increased its military

in the capital Beirut bombing militant strongholds head of the radical Hezbollah group. and threatening to assassinate the

isolated Lebanon, The bombardment has further the international airport with warplanes striking for a second time. Major roads have also been cut, concentrated with much of the bombing on the south-east of the country. more rockets into Israel Hezbollah has also fired south as Haifa for the first time. with some of them reaching as far from central Lebanon. The ABC's Matt Brown reports

its attacks in Lebanon Israel said it would intensify in the southern suburbs of Beirut. and this was the result This is a stronghold of Hezbollah, Israel aims to eliminate. the militant group It also wants to punish those who support the radical Islamists. BOOMING EXPLOSIONS by the Israeli attacks. Scores of people have been killed Lebanese officials say 10 members of one family and 7 members of another in this village. were in the line of fire its attacks on Israel. Hezbollah has also stepped up in Nahariya, There were more injuries by a Hezbollah rocket the town where a woman was killed earlier in the day. And for the first time,

rockets fired from Lebanon reached the Israeli port city of Haifa. it's a major escalation For the Hezbollah to do that,

that there is no timetable - and it goes to show with the operation we will have to continue of the Hezbollah until there is no capability to do what they are doing. of two soldiers Israel is demanding the return in a raid two days ago. captured by Hezbollah holding funerals The military has been killed in that raid. for the eight soldiers has drawn international criticism, The Israeli military reaction

most important ally. but not from its to defend herself. Israel has a right against terrorist attacks Every nation must defend herself and the killing of innocent life. from Lebanon and the Palestinians. Israel faces similar accusations The Israelis are doing nothing children and women but murdering and butchering in their bedrooms, their homes.

that are dedicated Destroying institutions to development, negotiations and peace. While Lebanon tries to rally as it can, as much international support it's been isolated physically. the international airport Israeli warplanes targeted for a second time, leaving a fuel depot ablaze. The Lebanese military has deployed to defend the nation in a probably futile attempt have already been hit. and some key roads in Lebanon

a high mountain pass. This road runs through Now that it's cut, Beirut and Damascus is also cut. the main route between

of smaller roads But there's a whole network that are not yet destroyed. in the valley to the east of here Matt Brown, ABC News, Lebanon. citizens in Lebanon With thousands of Australian trying to find a way out, has re-opened. the australian embassy in Beirut

is telling them to stay put, But the Federal Government increasingly anxious. leaving relatives here in Australia while bombs were dropping in Beirut, Over the past day, their embassy heard this. Australians who called travel advice, I can give you country-specific of the country now. just say the name 43 members of a Sydney dance troupe. Among those stuck in Lebanon, They've closed all borders to any bordering countries and there's no way we can travel

by plane - bus or car. either by plane, bus - especially have been hanging on the line In Australia, anxious relatives of Foreign Affairs. for the Department So John Haddad called John Howard.

in Lebanon... I've got my wife and three children ..and my kids are 10 and 8. Oh dear. Oh dear, oh dear oh me. Well, I mean, I obviously feel very much for you.

be able to get out? When do you think they might any information. They don't know. They're not giving There is a hotline. But when I rang the hotline, advised to tell Australians now they said, look, they've only been to stay put where they are what to do next, until the Government decides really comforting, you know. but I don't think that's He wants the Australian Government for its citizens. to negotiate a way out get them out. Protect their people, you know, have been heartened Community leaders the Australian embassy reopened. that late today They, too, want the Government to apply diplomatic pressure. Whatever they can to calm down

feel the pressure and make everybody, you know, and stop this madness. As the horrors continue, can only wait, watch and hope. Australian Lebanese Michael Vincent, ABC News. oil prices hit record highs The Middle East tension has seen into sharp decline. and sent share markets the All Ordinaries Index slump Nervous investors watched by more than 100 points or 2%. Australia's trade performance Surging oil prices also hurt with a huge blowout in the deficit due partly to oil imports.

sent traders into a familiar frenzy, Another crisis in the Middle East or the crude oil price - pushing the world anxiety index - to a peak of US$76.55 a barrel. But some futures contracts traded over US$80. Almost everywhere you look the Middle East - between Iran, North Korea, factor after another it's all been one geopolitical and they don't seem to stop. on Australia's trade performance. And it's taking its toll due largely to expensive oil A 3% jump in imports saw Australia's trade deficit double to almost $2.3 billion - well above forecasts. Also disappointing was a 3% fall in exports. We were supposed to have had shiploads of extra exports

but the ships have been running late. Hopefully they'll come through later this quarter. The other issue is we're starting to pay the penalty for Bass Strait running down. The long-awaited export improvement is yet to arrive, and once again, Australia's trade performance

will be a drag on growth. The Prime Minister, John Howard, said these higher oil prices could cause economic pain. But he was also anxious to play down the threat

caused by another painful development - the building case for higher interest rates in the face of a tight labour market. Strong employment growth and strong wages growth, providing it's based on productivity, do not together constitute a case for an interest rate rise. It has to be something that is determined ultimately by the inflation level. And we'll know that soon enough with the next inflation numbers to be released later this month.

Phillip Lasker, ABC News. John Howard has agreed to compensate the states and territories if a new wave of reform leaves them out of pocket. At their meeting in Canberra today, State leaders agreed to embark on what the Prime Minister called a "mammoth" program of change.

It covers everything from child care and literacy to transport and electricity. And at the end of a week of leadership tension

with Peter Costello, the premiers unanimously threw their weight behind Mr Howard. The state and territories' regular get-together with John Howard

ended as it had began. My message is that Peter Costello looks like a permanent bridesmaid. The Labor premiers' praise for the PM was as unanimous as their condemnation of Peter Costello's dismissal of the states as branch offices. Those who seek to denigrate this relationship don't understand it.

Cooperative federalism is producing results for Australia, and indeed this relationship between the states and the Commonwealth is probably the best in Australia's history. This is the second COAG meeting I've attended. The first one was good, this one was even better. The PM laughed off the praise, but did offer a few more titbits on his Liberal Party rival, dodging the question of whether the Treasurer had been disloyal but denying he deserved the sack. This has never entered my head. These days, Mr Howard seems to find it more fun to deal with leaders from across the political divide. In just 2.5 hours they endorsed a lengthy agenda, with the nation's creaking health system at the head. Significant progress has been made at this meeting

in the area of doctor numbers, nurse numbers and allied health professionals.

The PM and the premiers also agreed on a new, decade-long national reform agenda covering everything from child care and early childhood learning, improved literacy and numeracy to a national electricity grid. What's more, John Howard agreed to pay the states if the reforms cost them money. If there's a disproportionate sharing of the costs as opposed to the enjoyment of the benefits,

well, we're prepared to look at some compensation. The leaders did not settle their differences over tax deductibility for James Hardie's compensation fund or over stem cell research, But NSW, Victoria and the ACT did agree to consider starting daylight saving a month earlier, in line with Tasmania.

It is an important lifestyle reform.

If you want to see good lifestyle, just have a look at Tasmania. And they're all getting behind a bid for soccer's World Cup

in 12 years' time. RADIO ANNOUNCER: Will you still be Prime Minister when it comes? (Laughs) Oh, look I think I can definitely say there'll be another prime minister then. Nevertheless, it looks to be quite some time before he hangs up his boots. Jim Middleton, ABC News, Canberra.

In India, police are continuing to hunt for those behind the train bombings in Mumbai that killed about 180 people.

Police have rounded up scores of people for questioning. Those detained include many petty criminals, who police believe could hold vital clues about stolen vehicles and mobile phones used in the attacks. Members of a banned group, the Students' Islamic Movement, are also among those being held, but they deny any involvement. So far, no group has claimed responsibility. In a first for Iraq, coalition forces, including Australian troops, have handed over responsibility for security of the country's southern Muthanna province to local forces. Coalition commanders signed over control to the Muthanna governor in a ceremony to celebrate the transfer. Despite the hand-over, coalition forces will remain in the area

to provide support and advice to local police. Muthanna has been relatively stable under coalition control, but there are concerns

that insurgents may now step up their activities to test the new administration. East Timor's government has been sworn in with the new leadership saying its first priority is returning the country to stability. 10 of the 15 ministers have been retained from the former government led by Mari Alkatiri. I think this is a promising moment

and it really is up to the, to the leaders and the people of Timor Leste to seize this moment, make the most of it, make it work, and concentrate very hard on moving the country forward in a positive direction. Prime Minister Jose Ramos Horta will also take on the role of defence minister. The government will serve for nine months when elections will be held. The go-ahead has been given to fire up the replacement nuclear reactor at Lucas Heights in Sydney's south.

The industry regulator says the OPAL reactor meets all safety and security requirements and could even withstand the impact of a passenger jet. But critics say it's a real security threat for Sydney. The nuclear industry safety watchdog says all the 'i's have been dotted the 't's crossed and the OPAL Reactor can be switched on.

The design of the reactor is up to date, it's at the cutting edge, it's very strong in its inherent safety. The current Lucas Heights Reactor is almost 50 years old and the operator says the replacement will be one of the world's top three research facilities. We can design new drugs for the body, we can look into foods and understand how foods behave, and how we can make new foods. The safety regulator says it's satisfied with a plan to store spent fuel on site for seven years before it's sent to the US. We should not have a nuclear reactor in the middle of Sydney. This reactor makes us also the nuclear waste dump of Australia because there's no solution to the problem of waste. Eventually the waste will return to an Australian dump to be built in the Northern Territory. The safety regulator accepts that many people are concerned about security here. It says Australia's leading security agencies have worked on a series of sabotage scenarios and the regulator is now satisfied with the security measures in place.

ANSTO says the anti-aircraft grid around the facility is designed to cope with the impact of a passenger jet. One can never give 100% guarantees but I think I can assure people that these issues have been looked at very closely. The so-called hot commissioning period will happen over the next six months. Adrian Raschella, ABC News, Sydney. A waterfront standoff Police have laid more charges against a Coburg grandfather

accused of infecting people with HIV through unprotected sex.

47-year-old Michael Neal is currently in prison awaiting trial on 35 charges. Now that's more like 80 after another 11 people came forward claiming to be his victims.

Michael Neal currently faces 35 charges relating to unprotected sex with five men. It's alleged he drugged and raped one of them. Last month the Magistrates Court heard Mr Neal befriended men, some over the Internet,

and convinced them to have unprotected sex, assuring them he was not HIV-positive. He was deemed an unacceptable risk to public safety and denied bail, but his family and partner are standing by him. Today a magistrate gave police permission to question Mr Neal about child pornography found on his computers, and primarily about statements from 11 new alleged victims who've come forward since an appeal on a gay radio station. Partly because of that and we would encourage anyone else that might be able to assist us to please come forward. In one of the sexual crime squad's more lengthy and complex investigations, the court's heard one victim contracted HIV after allegedly being raped,

and others are waiting on test results. In a previous court appearance, the Department of Human Services revealed it had been monitoring Mr Neal for some time as the subject of a Chief Health Officer's order. The ABC contacted the department today in light of the possible further charges against Mr Neal, but it declined to comment. A handful of other Victorians are subject to similar orders from the Chief Health Officer, which aim to discourage those who are HIV-positive from engaging in reckless behaviour, but the last case to be referred to police was in the mid-'90s. Rachael Brown, ABC News, Melbourne. Tonight's top story - thousands of Australians remain stranded in Lebanon as fighting intensifies between Israel and Hezbollah. And still to come, tensions in the Swans camp on the eve of the grand final rematch. A former Sydney police officer has become the first person found to be in contempt of the Police Integrity Commission. Christopher Walker gave evidence at a PIC hearing into the conduct of corrupt police officer christopher laycock. He told the commission He couldn't remember anything about his involvement in an alleged extortion attempt.

The Supreme Court has found Walker lied

about his inability to recall the event. A decision will be made in august on whether he should be jailed. There are calls to reinstate a process that allowed prisoners to have their DNA tested to possibly prove their innocence. The State Government suspended the innocence panel three years ago

after an application from a man convicted of murdering Janine Balding in 1988. The Bar Association wants prisoners to once again be able to have their DNA tested against material found at a crime scene in an attempt to clear their name. If there is someone in jail who is actually innocent, there's an unpunished offender walking on the streets, and so security and fairness go hand in hand on this. Mr Slattery says there's been a number of cases in the United States where DNA evidence has been used to exonerate prisoners. Two of inner Sydney's major roads were cut last night and scores of people were evacuated because of fires. In Chippendale, Cleveland Street was closed and about 150 people were forced from their homes when this car repair shop went up in flames. At Petersham, in the inner west, a gymnasium on Parramatta Road was also gutted by fire. Both blazes started around 9.30 last night. Investigations are continuing. To the markets now and shares fell across the board today as oil prices in the Asian region took their lead from developments in the Middle East. Alan Kohler has the details. This is the oil price that matters to us and it has gone above US$80 a barrel for the first time. Tapis crude is produced in Malaysia

and it's the benchmark price for the Asian region, as well as for Australian petrol prices, via the Singapore refinery gate price for unleaded petrol. Tapis crude is now up 22% this year,

compared to 25% for West Texas crude and 30% for Brent crude in Europe. And like the others it's taken off in the past few days, rising $5 since Wednesday, which will find its way to our petrol bowsers in a week or two. Gold is the other commodity most affected by the problems in the Middle East - up nearly $6 today and more than $40 this week, or 6.5%. European stock markets were hardest hit overnight by the market anxiety, falling by as much as 2%. And on Wall Street, the main indices fell about 1.5%. In Australia today the fall was a bit over 2%.

The local market has lost about half of what's been gained since the rally that started on 13 June. Today there were big falls among the miners, banks and retailers and Telstra was one of the very few stocks to go the other way. Today's other bit of news is that the Bank of Japan has raised interest rates. After six years of an official overnight cash rate of zero, Japanese money now costs 0.25%. With Australia's about to go to 6%, our heart bleeds. Finally the Australian dollar has eased a bit - back below US$0.75.

I'll be back at 10am on Sunday with 'Inside Business' with a special report on the Cloncurry copper strike of Australian Mining Investments. Till then, that's finance. ABC staff in Brisbane have backed away from industrial action to allow an expert panel time to investigate a recent spate of breast cancer cases. More than 100 employees met to discuss the ABC's response to staff health concerns, reiterating their call for relocation of the Toowong studios. Employees are giving every opportunity

for that investigation to run its course. Notwithstanding that, serious concerns remain about working on this site. The meeting was told a number of former employees have come forward about further incidents of cancer. Australian cyclist Cadel Evans has used the Pyrenees to climb into fourth position overall on the Tour de France. Russian Denis Menchov claimed the 11th stage

with Evans just behind the top three. With some of the leading contenders missing from this year's Tour due to the doping investigation, Cadel Evans is aiming for a top-three finish. The former world mountain bike champion is a 1min 17sec from the lead and well-placed to improve on his overalls finish of eighth at last year's Tour. After a gruelling 207km stage, Russian Denis Menchov outsprinted American Levi Leipheimer and Floyd Landis.

COMMENTATOR: It looks to me as though Denis Menchov is going to make this for the victory. Landis has the overall lead. Evans crossed the line in fourth position. Australian Robbie McEwen leads the sprint category by 29 points. Australia remains winless

after four games at the women's Champions Trophy hockey tournament. The Hockeyroos led Argentina 2-1 before conceding two goals from penalty corners. The second came after the final siren.

There's a shot! Oh, it's gone in, and Argentina with a last hit of the game. Hockeyroos coach Frank Murray says the team needs to improve its fitness. American teenager Michelle Wie is taking on the men and the bugs after receiving a wildcard at the US PGA event in Illinois. And a third time as well, so easily distracted. Wie shot a 6-over-par 77 and faces a difficult task in her bid to make the cut

for the first time in a US men's event. Americans JP Hayes, Zach Johnson, Australian John Senden and Swede Daniel Chopra share the lead on 7 under. Duncan Huntsdale, ABC News. A forecast of rain in Brisbane for tomorrow night's Tri-Nations Test could hinder the Wallabies' plans to play open and free-flowing rugby against South Africa. The Springboks believe they have the speed and athleticism to test Australia, who are looking to rebound from last week's defeat by the All Blacks. The Wallabies claim Lang Park as their favourite ground. It's been a fortress against the Springboks,

who have never won there. Australian pride was wounded by last week's heavy defeat by New Zealand and the Wallabies are keen to unleash an attacking blitz against South Africa. We feel as though probably in our last match against the All Blacks

we went into our shells a little bit, so certainly looking to keep on attacking with a real positive mind-set tomorrow night. South Africa has attacking weapons of its own - Bryan Habana showed how dangerous he could be last year, punishing the Wallabies with turnover ball. The Springboks' coach says it is the fastest team he has ever picked.

It'll be a nice way to see if it is a high-tempo game where the ball is moved from side to side and goes through a lot of phases, you know. Be nice to know that you can fill a lot of gaps in defence because of the kind of players we've picked. But both teams' hopes of playing running rugby

could be hijacked by the weather. The forecast of possible rain could help the Springboks who are expected to be stronger in the set pieces. It could be seen as an advantage for them if they think that's an area they're going to dominate, but, as I said, we've done a lot of work and we're looking forward to playing tomorrow night and rectifying a few areas which we felt let us down last week.

Australia's Tri-Nations campaign could be scuttled for 2006 if they suffer their second straight defeat. Ian Eckersley, ABC News. The Sydney Swans are playing down a public rift between coach Paul Roos and senior player Nick Davis in the build-up to tomorrow's clash with West Coast. The Swans say they're focused on tomorrow's grand final replay.

While Davis is in Wagga Wagga where he'll line up for the Swans reserves. How Nick Davis might like to wind back the clock. Last September he was instant hero as his string of final-quarter goals against Geelong helped catapult the Swans through the finals. Now after a season marked by poor form, the 26-year-old former Magpie is out of the Paul Roos game plan and it may be a long road back from seconds football after Davis claimed he'd been made a scapegoat

for Sydney's big loss last Sunday to Adelaide. It's very un-Sydney-like and it's certainly something that we, you know, we pride ourselves on having a team that plays for each other and thinks about the team first. The usually tight-knit Swans squad is trying to regroup for the first and potentially only clash this season between last year's grand finalists. Davis's outburst, despite a media ban, has riled the coach and left his team-mates needing to reassure the fans. I don't think he was unlucky. I think as a group we haven't been playing well, so there was always going to be blokes who were going to miss out. It's probably how a player goes about it.

about his character. Tells a little bit any sleep over Nick Davis, I certainly won't be losing I can assure you of that. Being in Round 15, could not be any later the Eagles/Swans match 4-point win since Sydney's thrilling in the premiership decider. are champions! COMMENTATOR: The Swans Both clubs maintain won't enter the players' thoughts last year's grand final outcome come game time tomorrow. John Hayes Bell, ABC News. The work of local architects on the Australian landscape and their influence is about to be shown to the world. from industrial woolsheds 12 buildings ranging to high-rise apartments the Venice Architecture Biennale. will be showcased at in small towns and capital cities These images of new buildings in Australian architecture today. reflect what's going on in Venice Soon they'll be centre stage most important display as part of the world's of international design. It's seriously the most important exhibition. and highly regarded international Many of the country's top architects to promote Australian work are behind a new push that's emerged in recent years. and pleased with the diversity to fill our brief It was very easy for us urban condition to describe the Australian architecture. and find really good Australian

are at Sydney Olympic Park Two of the projects the reuse of industrial sites. and both of them highlight This one is the shipwreck lookout. It's not a traditional building - and viewing platforms rather a series of paths the industrial heritage where visitors can experience of Homebush Bay among the mangroves. and can peek at shipwrecks beneath the Olympic Stadium, Not far away, circular walkway, is a giant steel built over a brick pit. an extraordinary construction excavated all the way down. This whole area had been was to enhance the landscape Architect Neil Durbach's brief with a rare species of bell frogs and not to interfere discovered in the ponds. with the people We had to work really closely

that the frogs and their world who were quite concerned wouldn't be interrupted at all or by the structure itself. not only by the building,

The Australian designs will be shown Pavilion in Venice in September. in the Australian Art Anne Maria Nicholson, ABC News.

The weather now with Mike Bailey. Thanks, Deb. Good evening. from the far west and north-west Rain has been moving in tomorrow. and should spread across the State Only a few traces in Sydney today, but cloud kept temperatures down. of 7 to 15 degrees, The coastal range giving a top that's 2 below average.

and the pressure is falling. Light winds -8 at Perisher Temperatures went from to 28 degrees.

Sydney was wettest today.

3mm in 24 hours to 9am. is moving SE A low pressure cell over the next 24 hours. in far west of NSW Thunderstorms possible

at least some rain. all of NSW will get Strong wind warning

south of Smoky Cape

in the West. and sheep graziers warning Sea swell from the south.

Thanks, Deb. Good evening. Thanks, Mike. at tonight's top stories. Before we go, another look and air blockade on Lebanon Israel has imposed a land, sea the militant group Hezbollah as it tries to force Israeli soldiers. to return two captured

have agreed State and Territory governments to a national reform agenda and education. designed to boost health

And in sport, will continue his challenge Australian cyclist Cadel Evans for the leader's yellow jersey

stage of the Tour de France. in tonight's He's currently fourth overall. And that's ABC News. International Pty Ltd Captioning and Subtitling Closed Captions produced by

This week premier Iemma

goes to Canberra. What did he

find there? There are two

elephants in the room. Les

Wielinga goes to the top at

the RTA. I've pent my life

building roads. And the Clive

Caldwell story, the flying

ace that never quite fitted

in. He had a heart of in. He had a heart of gold.

He was bomb Bass tick, he was

abrasive. Welcome to

Stateline New South Wales.

I'm Quentin Dempster. Blame

game seems to have been

turned Tina Mutual admiration

photo opportunity. The

Premier's conference now

Australian Governments was known as the Council of

again a picture of teamwork