• Israeli Prime Minister Ehud Olmert has dropped the idea of freeing Palestinian prisoners as a gesture to President Mahmoud Abbas ahead of a Muslim holiday, Israeli political sources said.Following his first formal meeting with Abbas on December 23, Mr Olmert had suggested such a release could happen as a way to strengthen Mr Abbas and cement hopes of a revival in peacemaking even before militants in Gaza free a captured Israeli soldier.
• Belarus President Alexander Lukashenko said he would not tolerate Russian blackmail and vowed never to surrender as talks started in Moscow in a late attempt to settle a gas row that may disrupt supplies to Europe. The European Commission and Germany have urged Russia and ex-Soviet neighbour Belarus to settle their differences quickly to avoid any chance of disrupting supplies to European consumers as happened last January in a similar row with Ukraine.
• China's military modernisation will focus on strengthening its navy and air force as it faces security threats from border spats, historical disputes and self-ruled Taiwan, a defence white paper said. But China, whose increasing defence spending and military build-up has been a source of friction with the US, will never engage in an arms race or threaten any other nation, the policy paper said.
• South Korea termed North Korea a grave threat, a further sign of the deepening chill in relations between the two since Pyongyang's nuclear test nearly three months ago. A defence white paper used some of the harshest language to describe its communist neighbour since the South tried to set aside decades of outright hostility towards the North with the diplomacy of what Seoul dubbed its 'sunshine policy'.
• Foreign troops will be forced out of Afghanistan in the face of Taliban attacks, the Islamic group's fugitive leader, Mullah Mohammad Omar, was reported as saying in a rare message.
• Former army ruler Hossain Mohammad Ershad appealed against the Bangladesh Election Commission's decision to ban him from contesting next month's parliamentary elections.
• Two people were wounded in a blast in a van on the outskirts of the Sri Lankan capital, the military said.
• A severe cash crunch in India's banking system caused by central bank measures to combat double-digit credit growth may ease in coming days, but the market isn't betting on a return to big cash surpluses just yet.