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(generated from captions) This program is LIVE captioned. This morning - as Chechen rebels strike again. A deadly struggle in southern Russia for the trial of his alleged killer. Peter Falconio's girlfriend returns to shine at Caulfield. And El Segundo the hot favourite with Chris Bath. This is Seven's Morning News Good morning. the Beslan School massacre The rebels behind have struck again in southern Russia. launched simultaneous attacks Chechen fighters across the city of Nalchik and sparking gun battles with police taking hostages littered with bodies. that have left the streets Russian President Vladimir Putin to surround the town has ordered security forces who puts up resistance. and to shoot anyone


feels the fear. Another anonymous Russian city nothing as bad as Beslan What happened in Nalchik today

but even so this town of 250,000 for most of the day. became a war zone GUNFIRE held running battles Russian police and security forces with Islamic militants from Chechnya. anything between 60 and 300. It is said to number It is also said to begin with fellow travellers from a jail that they wanted to free police stations but they also attacked several hostage were taken. and in one, Within a few hours, there were reports of up to 60 dead of up to a dozen civilians. including estimates Vladimir Putin, the president, to adopt a shoot-to-kill policy ordered border guards to stop anyone getting away. by the warlord Shamil Basayev Responsibility for this was claimed seen here in the woods of Ingushetia preparing his troops for Beslan. Just before these images were taken a similar raid on another town his militants had carried a massive haul of weapons and they came away with in Beslan. which they used against the school once again in Nalchik Tonight there's relative calm in the Caucasuses. but there's no peace

In Pakistan to reach scores of villages rescue crews are still trying devastated by Saturday's earthquake. from the disaster could reach 40,000. Local officials say the death toll are homeless. At least 2.5 million people A city truly in ruins. Driving through this city World War II somewhere in Germany is like driving through a town after blanket aerial bombardment. that has suffered to the latest unofficial figures. About 11,000 dead according inside their tombs Many of those dead remain banks and hospitals. that were once houses, schools, fled into the streets Those who did survive the last five nights in the streets and have been spending too traumatised to go back inside, to do that, which is rare. even if it's possible for them There is for the first time and organisation a sense of international aid becoming visible. for the first time today We are seeing of blankets and some tents. a flow of food aid, of medicine, Shelter was a real key problem

bad weather here. because of the increasingly is beginning to come in. All of that now is due to face court today. The last member of the Bali Nine is the only woman in the group Renae Lawrence is the only woman in the group

of accused heroin traffickers. and joins us on the phone from Bali. Paul Kadak is covering the trials Paul, there were concerns well enough to face court today. Renae Lawrence may not have been What's the latest on her condition?

That was a thought earlier in the

week. On Monday her lawyer applied

to the court for permission to

leave the jail to have medical

attention for quite a serious

toothache. That hasn't delayed the

start of her trial. She did undergo

that treatment. It has been quite a

week and also Tuesday was her 28th

birthday. She will be the last of

the Bali Nine to start trial

proceedings. She is one of the

accused drug couriers who was

arrested at Bali's airport with

heroin strapped to her body. drug smuggler Schapelle Corby Renae Lawrence and fellow accused them company in Kerobokan Prison. now have another Australian to keep

That is correct. Michelle Leslie

has been transferred to kerb can

jail. That was yesterday. It marks

a transition in her case. It means

she was officially charged with

two counts relating to alleged drug

possession. At least one of those

counts could lead to 16 years in

jail. The next step is to begin

court proceedings. Her lawyers hope

that will happen as soon as

possible but that is up to the Bali court system. A funeral for a Newcastle couple, suicide bombings in Bali killed in the 1 October is being held today. Fiona and Colin Zwolinski died at Jimbaran Beach. after a bomb exploded with their two sons. The couple had been holidaying city lost their lives in the blasts. Three people from the New South Wales remain in a Singapore hospital Two Australians in a stable condition. killed on the job overnight. A Sydney road worker has been Airport Drive at Mascot The 70-year-old man was walking along

by a road maintenance truck. when he was hit from severe head and chest injuries. He died a short time later has been treated for shock. The 26-year-old truck driver Melbourne's Arson Squad of two police cars overnight. is investigating the torching

a fenced car park in Northcote Firefighters were called to completely burnt out where they found one of the vehicles

and the other badly damaged. British tourist Peter Falconio The girlfriend of missing has returned to Australia of his alleged killer. ahead of Monday's trial in Darwin Ms Lees is expected to remain for the duration of the case. Bradley John Murdoch West Australian mechanic has been charged with murder. He's pleaded not guilty. the couple was stopped by a gunman Mr Falconio has not been seen since

four years ago. while touring the Northern Territory To Canberra Treasurer Peter Costello where the Opposition is accusing until closer to the next election. of deliberately holding back tax cuts A secret Treasury analysis shows to slash the top tax rate to 30% Mr Costello costed plans but the proposal was too expensive.

Only days proposal for tax reform after he ridiculed Malcolm Turnbull's Treasury documents have revealed Peter Costello secretly costed plans for a 30% top tax rate in the lead-up to the May Budget. The government, quite properly if it's an energetic government, will look at a whole range of options

and we always do. Treasury's analysis argued slashing the rate would boost employment and reduce tax avoidance but the proposal was too costly.

It turned out that having a top tax rate of 30% was unaffordable for Australia. The Opposition has jumped on the revelations accusing the Treasurer of deliberately holding back tax cuts until closer to the next election.

He is sitting on this so that when he does his victory lap as Treasurer at the next budget he can then make himself look like a big fella

and come out with some tax proposals then. And with the Budget surplus $4 billion better than expected Labor says voters should be offered relief amid increasing costs and rising fuel prices.

Cut the taxes now so they can pay for their petrol. The debate over tax reform isn't the only issue generating tensions

within Coalition ranks with ongoing rifts between the Liberals and Nationals over industrial relations. Outspoken Nationals senator Barnaby Joyce this week voted with the Opposition and minor parties to radically change a government bill limiting the power of the ACCC to approve company mergers. The Opposition Leader is urging him to do the same over the government's workplace reforms. You've helped the Opposition, the Labor Party, protect small business. Now how about giving us a bit of a hand with Australian workers. Chocolate chip cookies may spark a legal battle between the family of the late Sir Donald Bradman and the Bradman Foundation. The organisation has approved plans for an Australian-based company to sell Bradman Biscuits in India. But his family is outraged, saying it makes a mockery of the cricketing legend's good name. Next in Seven's Morning News, our business and finance report, and the real life drama of Lost's bad boy. and lives in a remote rural village in Tanzania. She is so poor that she barely gets enough to eat. Each night she goes to bed hungry. The only water Gerefasia has to drink is dirty and makes her sick. leave her weak. like enough food to eat, clean drinking water, Long-term changes will be carried out to help make her community Tony Blair's chief scientific adviser is in Australia to convince Canberra to sign the Kyoto Protocol. Australia and the US are the only developed countries refusing to sign. Both nations argue that reducing greenhouse gas emissions will impact negatively on the economy. It's an excuse dismissed by experts. Investment in alternative energy sources is likely to boost economies. Next month countries that have signed up will meet in Montreal to discuss climate change. A strain of the bird flu virus, deadly to humans, has been detected in Turkey sparking alarm that it could spread through Europe. The European Commission is warning countries to prepare in case of a pandemic. The strain of the virus, known as H5N1, is the type that's killed more than 60 people in Asia since 2003. Tests are under way One of the stars of Seven's smash-hit series Lost to confirm whether or not it's also spread to Romania.

One of the stars of Seven's smash-hit series Lost has been robbed at gunpoint. Josh Holloway and his wife were in the bedroom of their Honolulu home where they woke to find themselves staring down the barrel of a gun.

The thief stole cash and credit cards before driving off in the couple's Mercedes. Neighbours in their exclusive Hawaiian suburb are shocked. In this neighbourhood, it's really surprising because it's really quiet.

Holloway plays swarthy con man Sawyer in the award-winning show. His publicist says the couple is still shaken by the ordeal. British playwright Harold Pinter has been awarded the Nobel Prize in Literature. The 75-year-old, who has been fighting cancer of the oesophagus for three years, was overwhelmed by the accolade. I was speechless and I remain so but I'll have to stop being speechless when I get to Stockholm apparently because I'll have to make a speech. Pinter is credited with restoring the art of playwriting. Critics coined the term "Pinteresque" to describe the Londoner's sparse style. British spy agency MI6 is coming in from the cold officially declaring that it does exist. It has launched a web site offering a tantalising glimpse of its clandestine world.

From today your licence to log on

to Her Majesty's secret server.

Until recently this organisation

didn't exist. Now it is online. 50

pages covering frequently asked

question. Is it like James Bond? A

little. Legislation covering by law.

In six languages. It is out there

but it doesn't come from in here.

The web site is hosted outside the

MI6. There is an air gap between

the site and their own computers.

But why do it all? We are a serious

organisation and we are coming out

of the shadows. Up to a point

especially on how to recruit the

next generation of agents. The

international connections of the

London bombings was a need to cast

the recruiting net far and wide.

MI6 6 say they want to get away

from the image , the tap on the

shoulder. The web site includes a.

O box you can write to or if you

are the sort of person to use

high-tech gadgets. The spirit of

Bond lives on who believe the

worldwide web is not enough. It is

computing with business and perhaps

Sky news. Some were recruited from

universities. Now they are being

recruited over the web. This may be

the future I'd of James Bond So

WWWW meets MI6 6. Come in. To business and finance news and joining me is Warren Hogan from ANZ. Morning, Warren. How's our local market faring this morning?

The local market is pretty soft.

They were lacklustre and we saw

some small declines here. The ASX

is around 417. The resources are

leading the way on prices overnight We've had some mixed economic data this week. What does it mean for interest rates?

We had softer growth indicators.

There was a a decline in employment.

We got rising inflation pressures

in this economy. We had an increase

of petrol prices but it is

filtering through to other prices.

It is not a done deal that we will

get an interest rate increase but

we look at the official CPI data in two weeks foufplt It looks like the Aussie dollar is continuing to struggle.

That is the lowest it has been. It

has been a defined range of 75 to

78. There seems to be some support

but we are seeing a decline in the last week or so. Next in Seven's Morning News, sport and spring racing. We'll go live to Caulfield as superstar El Segundo leads the pack on the eve of the Cup. DOOR SQUEAKS HAPPY MUSIC # I spy these are just some of the many changes you'll notice at McDonald's. and feed your inner child. # My, my. # MCDONALD'S THEME World champion Australian kayaker Nathan Baggaley has tested positive to banned performance-enchancing steroids. Australian Canoeing says Baggaley returned a positive A sample during an out-of-competition drug test. The Athens silver medallist faces a ban of two years from the sport if he's found guilty of a violation. Baggaley has withdrawn marathon championships in Perth. from this weekend's world canoe Tomorrow sees the running of the first big event on Melbourne's Spring Racing calendar, the $2.5 million Caulfield Cup. For the inside running on how the field is shaping up, we're joined trackside by Seven's Michael Felgate. Good morning, Michael. Still a big question mark hanging over Mummify to start?

Yes, good morning, Chris. We are

here at Caulfield where the final

preparations are taking place.

There is still a question mark

hanging over the 2003 Caulfield Cup

winner Mummify. It is most likely

he will take place in the cup. He

drew barrier 20 on Wednesday and it

is difficult to win from barrier 20.

The other option is to go to the

Cox Plate which is shaping to be a hotter race.

A big break for young Sydney apprentice Kathy O'Hara thrown in the deep end?

Absolutely. Kathy is just 19 years

of age and she is the glam are girl

of racing. She will be only third

female no be riding in the Cup.

They rides Wild Iris. Glen boss was

to ride it but he was suspended.

She gets a big stage to race it.

She won the Sydney premiership last week. Tell us about the top challengers and or course, the horse to beat, El Segundo?

El Segundo is the new one that

burst on the scene a couple weeks

ago. He won the stakes last week.

There has been a nationwide betting

plunge on her. He is $3.40 as

favour for the cup. Darren Goucher

to ride. He is due to win it He is

to overcome saddlecloth 16. Only

one win for saddlecloth in the history. How's the track looking and can we expect capacity crowds?

The track is perfect. We

had a lovely day. It has been great weather all weekend. They are

expecting a full house. They shut

the gates at 55 ,000. They are

expecting to break all records.

Shane Watson's call-up to the Australian Super Test to play the World XI is being heralded as a master stroke by former players. Watson will be playing just his second Test when the six-day match starts in Sydney today. Skipper Ricky Ponting knows just how much work the Queenslander has put in to earn his place in the team. I know that he has worked harder than most on his game over the last couple of years. A lot of injury setbacks as well, particularly on the bowling side of things, which has given him the opportunity to work really hard on his batting. Australia will start favourites for the match. To League, and the Kangaroos will finalise preparations today opener against New Zealand in Sydney.

Australia is a short-priced favourite for the match with Andrew Johns and Darren Lockyer paired in the halves for the first time in four years. Round 8 of the A-League kicks off tonight with Adelaide United meeting Newcastle at Hindmarsh Stadium. On Sunday, Melbourne clash with Sydney. The Central Coast takes on Perth Glory while the Knights and Queensland Roar round out in the weekend in New Zealand. Socceroos assistant coach Graham Arnold says Australia is happy they will be taking on Uruguay again for a spot in next year's World Cup.

Arnold says the pain of the 2001 defeat in Montevideo will be the perfect motivation when Australia plays for a finals berth in Germany. The man who has taken Mick Doohan and Valentino Rossi to 10 world motorcycle championships says he wants young Australian Casey Stoner at Yamaha. Yamaha's boss Jeremy Burgess says he is confident Stoner is ready to step up to the MotoGP class next year. Meantime, Rossi will be after his fifth Australian Motorcycle Grand Prix this weekend at Phillip Island. He has already clinched his fifth world title but can set a new mark of 13 wins in a season if he takes out the last three races. Prequalifying starts today. British Open organisers have officially opened the door for women to qualify for next year's tournament. The top five women from the Ladies British Open will automatically become eligible for men's qualifying. One lady who is hoping for a spot is Karrie Webb who is set to be inducted into the US Hall of Fame next month.

Stay with us here on Seven's Morning News. I'll be back with all the weekend weather details after this break. (Growls) Eat me. Look into my apple & cinnamon Swirl. Know that I will taste amazing. Mmm! New Tip Top Swirls. Hypnotically delicious. HAPPY MUSIC # I spy New-look restaurants, lighter options and espresso coffee - at McDonald's. Come and experience the difference, and feed your inner child. # My, my. # MCDONALD'S THEME Let's take a look now at the national weather. Above-average temperatures are producing a broad low pressure system across the continent bringing tropical moisture. Expect showers and storms over north-east New South Wales and South East Queensland, A few showers too in Tasmania.

For all you parents thinking you've got a lot on your hands you'll appreciate this story.

An American woman in Arkansas has just given birth to her 16th child. Michelle and Jim Bob Duggar and their clan live in a purpose-built home with nine bathrooms and a commerical kitchen. The names of all 16 of their children start with the letter J, the latest a little girl called Johannah. The couple say they are happy for a No.17. That's Seven's Morning News to now but we will have more for you throughout the day and in our bulletins at 4.30 and 6.00. On Weekend Sunrise this Sunday morning, the final preparations in Denmark as Princess Mary prepares to give birth. That's Sunday from 8am. I'm Chris Bath Thanks for your company this week.

Here's Anthony Callea in Sydney's Martin Place this morning with his forecast for the weekend. # I guess I wasn't fast enough # She's falling like rain # Just not for me # She's falling like rain # Captioned by Seven Network Email -