World highlights

• Iranians voted for local councils and a powerful clerical body in elections that will give the first indication of President Mahmoud Ahmadinejad's popularity since he swept to office last year. The votes for municipal councillors and members of the Assembly of Experts, in theory Iran's most powerful institution, will show if the president's reformist rivals are making any inroads even if these results have no direct impact on policy.

• US Treasury Secretary Henry Paulson said that China's reluctance to let its currency appreciate remained a core bilateral issue but claimed some progress in talks on reducing trade imbalances. At a news conference after two days of talks and meetings with Chinese Prime Minister Wen Jiabao and President Hu Jintao, Mr Paulson said he had told Chinese officials "in the clearest possible terms" it needed to move towards currency flexibility.

• North Korea may conduct another nuclear test or engage in sabre rattling next week when it sits down at six-country talks on ending its nuclear weapons programme, South Korea's defence minister said. "We have to be thoroughly prepared to counter the possibility of a second or third nuclear test by North Korea and a possible hostile act by it in the process of negotiations over its nuclear weapons programme," Kim Jang-soo said in a letter to commanders and officers, Yonhap news agency reported.

• British Prime Minister Tony Blair defended a decision to halt a corruption inquiry into a multi-billion-pound defence deal with Saudi Arabia, but analysts questioned his argument that vital national security interests were at stake. The decision to scrap the two-year corruption inquiry followed reports that Saudi Arabia had warned Britain it might cancel an order for 72 Eurofighter Typhoon jets from BAE Systems over the probe into past dealings involving Saudi officials and people working on behalf of BAE.

• The United States and the European Union stepped up calls for Sudan to let international troops in to support African Union forces in Darfur amid growing talk of sanctions on Khartoum. The calls followed warnings from London and Washington that Sudan could face measures such as imposition of a no-fly zone over its vast west if it did not agree to such a force soon.