Obama vows 'much tougher' stance on US-China trade

Mr Obama said China would be one of the biggest markets for the US

President Barack Obama says he will be much tougher with China to make sure it opens its markets to trade with the US.

Mr Obama told Democratic Party senators that he would put "constant pressure" on China and other countries to stick to their side of trade agreements.

But he said he did not intend to take a protectionist stance towards China, warning that "to close ourselves off from that market would be a mistake".

Tension between the US and China has increased over arms sales to Taiwan.

Relations have also been strained by reports of Chinese cyber attacks on US-run websites and a planned visit to the US by the Dalai Lama.

Earlier, a Chinese foreign ministry spokesman warned Mr Obama that meeting the Dalai Lama would further erode ties.

"We urge the US to fully grasp the high sensitivity of the Tibetan issues, to prudently and appropriately deal with related matters, and avoid bringing further damage to China-US relations," Ma Zhaoxu said.

Exchange rates

At a meeting with Senate Democrats, Mr Obama was asked whether the US would cut ties with Beijing over ongoing trade disputes.

The president said he would continue to make sure that China and other countries lived up to abide by trade agreements, but warned it would be a mistake for the US to become protectionist.

The approach that we're taking is to try to get much tougher about the enforcement of existing rules, putting constant pressure on China and other countries to open up their markets in reciprocal ways," he said.

"But what I don't want to do is for us as a country or as a party, to shy away from the prospects of international competition."

"Our future is going to be tied up with our ability to sell products all around the world, and China is going to be one of our biggest markets," he added.

Mr Obama also said foreign exchange rates would also be checked to ensure countries were not giving themselves an unfair advantage against the dollar.

"One of the challenges that we've got to address internationally is currency rates and how they match up to make sure that our goods are not artificially inflated in price and their goods are artificially deflated in price," he explained.

The BBC's Imtiaz Tyab in Washington says the president did not specifically mention the Chinese yuan, but the US has long pushed for Beijing to let its currency appreciate in value.

Obama pushes new bank regulation

US President Barack Obama: "I am proposing simple, common sense reforms"

US President Barack Obama has proposed significant new curbs on the activities of banks to try to prevent future financial crises.

The plans - the most far-reaching yet -include limits to the size of banks and restrictions on riskier trading.

"Never again will the American taxpayer be held hostage by banks that are too big to fail," Mr Obama said.

He added he was ready for a "fight" with any banks prepared to lobby against tougher regulations.

US stocks such as JP Morgan Chase and Bank of America fell sharply as the sweeping planned reforms were announced.

JP Morgan lost 6.6%, while Bank of America gave up 6.2%.

Limiting risk taking

"While the financial system is far stronger today than it was one year ago, it is still operating under the exact same rules that led to its near collapse," Mr Obama said.

His proposals also include a ban on retail banks from using their own money in investments - known as proprietary trading. Instead, banks would be limited to investing their customers' funds.

"Banking reforms do not come bigger than those proposed by President Obama," the BBC's business editor Robert Peston said.

This may mean that some of the US' biggest banks, such as Bank of America and JP Morgan, whose shares were badly hit, may have to be broken up.

The industry lobby group for banks suggested Mr Obama was trying to return the US to the past.

"The better answer is to modernise the regulatory framework and not take the industry and the economy back to the 1930s," said the Financial Services Roundtable, an industry group that represents large Wall Street institutions.

In the UK, shadow chancellor George Osborne said that if the Conservatives won the next general election, they would impose an identical dismantling of UK banks to those suggested by the US president.

City Minister Lord Myners said the US proposals were "very much in accordance with the direction we have been setting".

Fighting talk

Mr Obama's move is his first proposal since Republican Scott Brown's shock victory in Massachusetts to win a Senate seat.

The Republican victory may make it harder to get Mr Obama's proposals passed in the Senate, as they are more likely to get held up in political wrangling.

"This is a political effort because of what happened in Massachusetts," said economist Peter Morici of the University of Maryland.

Banks have also been lobbying against more stringent regulation.

"If these folks want a fight, it's a fight I'm ready to have," Mr Obama vowed.

The president dubbed his proposals on limiting bank risk the Volcker rule - after Paul Volcker, one of his economic advisors and a former chairman of the Federal Reserve central bank.

The moves follow popular anger at financial institutions, who have been paying large bonuses to staff even as they accepted government bail-outs to keep them going.

Mr Obama's proposals appear to be a return to the principles underlying the Glass-Steagall Act.

That law - from the 1930s in the aftermath of the Great Depression - separated commercial and investment banking and was eventually abolished in 1999 under President Bill Clinton.

Mr Clinton's financial secretary at the time, Robert Rubin, previously worked at Goldman Sachs and went on to be an advisor to Citigroup until last year.

The latest proposals follow a $117bn (£72bn) levy on banks to recoup money US taxpayers spent bailing out the banks.

The tax will claw back some of the losses from a $700bn taxpayer bail-out of US banks known as the Troubled Asset Relief Program (Tarp).

It was drawn up in the midst of the financial crisis in 2008, following the collapse of US investment bank Lehman Brothers and rescue of insurance giant American International Group (AIG).

Obama rallies CIA after Afghanistan bomb attack

Barack Obama has sent a letter of support to the CIA after seven staff were killed by an Afghan bomber - one of the worst attacks in its history.

The US president's condolence message praised the work of those killed.

The dead include the head of the CIA's base in Khost Province, near the border with Pakistan, the Associated Press news agency reports.

The Taliban said one of their members wearing an explosive vest and an army uniform had carried out the attack.

It was the worst against US intelligence officials since the American embassy in Beirut was bombed in 1983.

A total of 90 CIA employees have been honoured for their deaths in the agency's service since its inception in 1947, according to the Washington Post newspaper.

Taliban hotbed

The bombing has raised questions about the coalition's ability to protect itself against infiltrators, analysts say.

CIA DEATHS: 1965-2009 2009: Seven killed in suicide attack on their base in Afghanistan 2003: Two CIA contractors die in Shkin, Afghanistan; CIA officer killed during training exercise in Afghanistan 2001: Officer shot during prison uprising in Afghanistan 1993: Two CIA employees killed at the agency's Virginia headquarters 1989: Six CIA employees die when a plane carrying military equipment from DR Congo to Angola crashes 1985: CIA Beirut station chief killed after having been kidnapped and tortured 1983: Eight CIA employees killed in the US embassy bombing in Beirut 1965: Seven CIA employees die, most of them in Vietnam Source: Washington Post

Quoting former CIA officials, AP said the base chief would have led intelligence-gathering operations in Khost, a hotbed of Taliban activity due to its proximity to Pakistan's lawless tribal region.

An unnamed official added that the bomber was being courted as an informant and was not frisked as he entered Forward Operating Base Chapman.

Paying tribute to the fallen, Mr Obama said those killed were "part of a long line of patriots who have made great sacrifices for their fellow citizens, and for our way of life".

He told CIA employees that they had "taken great risks to protect our country" and that their sacrifices had "sometimes been unknown to your fellow citizens, your friends, and even your families".

CIA Director Leon Panetta said six other agents had been injured in Wednesday's attack.

"Those who fell yesterday were far from home and close to the enemy, doing the hard work that must be done to protect our country from terrorism," he said.

"We owe them our deepest gratitude, and we pledge to them and their families that we will never cease fighting for the cause to which they dedicated their lives - a safer America."

Taliban spokesman Zabiullah Mujahid told the BBC the Khost bomber was wearing an army uniform when he managed to breach security at the base, detonating his explosives belt in the gym.

Drone attacks

Neither the names of the CIA officials killed nor the details of their work were released because of the sensitivity of US operations, the agency said.

Mr Panetta paid tribute to the fallen and pledged to continue their fight

The flags at the CIA headquarters in Langley, Virginia, are being flown at half-mast in honour of the dead.

Reports say the Chapman base is used by provincial reconstruction teams - which include soldiers and civilians.

It has been described as "not regular" - a phrase that implies it was a centre of CIA operations, says the BBC's Peter Greste in Kabul.

The forward operating base is reportedly used for US drone attacks on suspected militants in neighbouring Pakistan.

In the latest such attack, two people were reportedly killed in a strike on a house in Pakistan's North Waziristan on Thursday, security officials said.

Meanwhile, in a series of deadly attacks in Afghanistan:

• Taliban militants beheaded six men they suspected of being spies for the government in the southern province of Uruzgan, police said
• Four Canadian soldiers and a journalist died in a roadside bomb attack in Kandahar, in the most deadly attack on Canadians in the country for more than two years
• Two French journalists were reportedly kidnapped in Kapisa province, north-east of Kabul, along with their Afghan driver and interpreter