Update 9:15am: Stories Making Headlines Right Now

ECONOMY
New jobless claims drop unexpectedly

New claims for unemployment benefits dropped
unexpectedly last week, but the number of people continuing to seek
aid rose sharply.
The Labor Department says initial applications for unemployment
insurance dropped by 24,000 to a seasonally adjusted 467,000 for
the week ending Jan. 3. Wall Street economists expected initial
claims to increase to 540,000. The figure partly reflects seasonal
volatility that occurs around the New Year's holiday.
Still, the number of people continuing to claim jobless benefits
jumped unexpectedly by 101,000 to 4.61 million. That was above
analysts' expectations of 4.5 million and the highest level since
November 1982.

RETAIL SALES
Retailers report dismal December sales

Retailers are reporting dismal sales for
December, confirming fears that the holiday season was the weakest
in four decades.
As merchants report their sales figures Thursday, the big
exceptions to the gloom were discounters and warehouse clubs.
Sears Holdings Inc., which operates Kmart and Sears stores, and
Limited Brands Inc. are among the many stores that are reporting
steep declines in sales at stores opened at least a year. Shoppers,
grappling with tightening credit and rising layoffs, focused on
smaller purchases and the deepest discounts.
But Costco Wholesale Corp. is reporting a 4 percent gain when
the effect of lower gas prices is excluded.

MACY'S-STORE CLOSINGS
Macy's will shutter 11 stores

Macy's says it will close 11 underperforming
stores in 9 states - affecting 960 employees - after one of the
weakest holiday seasons in years.
Stores slated for closure include locations in Los Angeles, West
Palm Beach, Nashville and St. Louis, among others. Cincinnati-based
Macy's Inc. says the closures will cost about $65 million, most of
which will be booked in the 2008 fourth quarter.
The news comes as Macy's says its December sales at stores open
at least a year, or same-store sales, fell 4 percent. That's better
than the 5.3 percent drop analysts surveyed by Thomson Reuters were
expecting. However, Macy's is lowering its forecast for the fourth
quarter and full year due to heavy markdowns.

OBAMA-ECONOMY
Obama warns of dire consequences without stimulus

President-elect Barack Obama says that without
big-time federal stimulus dollars now, the nation's recession could
go on for years.
In a speech set to be delivered today at Virginia's George Mason
University, outside Washington, Obama is making his highest-profile
case yet for a stimulus plan.
Obama says there's still time to change course but without
"dramatic action as soon as possible," it may become too late.
Obama says a worst-case scenario could include double-digit
unemployment and $1 trillion in lost economic activity that recalls
the days of the Great Depression.
It's the fourth day in a row that Obama has made a pitch for a
huge infusion of taxpayer dollars to revive the sinking economy.

ISRAEL-PALESTINIANS: UN
UPDATE: UN: Israel kills driver on aid mission to Gaza
A U.N. official in the Gaza Strip
says Israeli forces have fired on a truck on a U.N. aid mission and
killed the driver.
U.N. spokesman Adnan Abu Hasna says the incident took place
during a lull declared by Israel to allow humanitarian aid to enter
the territory.
He says the U.N. coordinated the delivery with Israel, and the
vehicle and was marked with a U.N. flag and insignia when it was
shot in northern Gaza.
The Israeli army said it was investigating.
Earlier this week, an Israeli attack near a U.N. school killed
more than 30 people. At the time, Israel said it opened fire after
militants hiding in the crowd shot mortar shells at Israeli troops.

RED CROSS-GAZA
NEW: Red Cross slams Israel over access to Gaza wounded

The international Red Cross is accusing Israeli
forces of failing to help wounded Palestinians in Gaza.
In one specific instance, the aid group says Israel caused
"unacceptable" delays in letting rescue workers reach a Gaza home
where four small children were found alive next to their mothers'
bodies.
Israeli officials said the delay was caused by fighting in the
area.
The international Red Cross says rescuers eventually received
permission to go to the site Wednesday, four days after it was hit
by Israeli shells.
They found 15 dead and 18 wounded in three houses, including the
children who were too weak to stand.
Israel's ambassador in Geneva (Aharon Leshno-Yaar) denies his
country is failing in its humanitarian obligations.
The ambassador says Israel respects international humanitarian
law and is working with aid groups to allow the wounded to be
removed and in some cases transferred to hospitals in Israel.

ISRAEL-PALESTINIANS
Israel again suspends operations

For a second straight day, Israel has suspended
its Gaza military operation for three hours to allow in
humanitarian supplies.
In new fighting today, Israel killed at least 11 people,
including five militants, raising the death toll from its offensive
to 699 people, according to Palestinian officials.
Meanwhile, Lebanon's prime minister has condemned rocket attacks
on Israel from his country as well as the Jewish state's
retaliation.
In a statement, Prime Minister Fuad Saniora says the attack from
south Lebanon was designed to undermine stability.
No group has claimed responsibility for the rocket firing.
Israel launched shells into southern Lebanon in retaliation.
Hezbollah and Israel fought a brutal 34-day war in 2006.

MIDEAST DIPLOMACY
Israelis arrive in Egypt for cease-fire talks

Talks about a cease-fire deal to end the
conflict in Gaza are about to get under way in Egypt, which is
trying to broker an agreement.
Israeli representatives arrived in Cairo today after the U.N.
Security Council failed to agree on action to end the escalating
crisis in Gaza.
Egypt's top diplomats say talks will be held separately with
representatives of Israel, the Palestinian Authority and Hamas on
the Egyptian-French cease-fire initiative.
Egypt's foreign minister says there won't be a direct meeting
between Israel and Gaza's Hamas rulers, whose arrival date in Cairo
is uncertain.

ILLINOIS GOVERNOR
Ill. panel to grill Burris on Senate appointment

Illinois Senate-appointee Roland Burris
can expect some tough questions from state Republicans today on why
he accepted the position offered by disgraced Gov. Rod Blagojevich
(blah-GOY'-uh-vich).
GOP lawmakers on an impeachment panel plan to ask Burris whether
he promised the governor anything in return.
Burris denies any improper conduct.
U.S. Senate leaders have said they would be open to recognizing
Burris' appointment after he deals with lingering legal obstacles.

BOULDER FIRES
Firefighters battle wildfire near Denver

Firefighters continue to battle a
stubborn, wind-driven fire near Denver.
The blaze in Boulder County triggered the evacuations of more
than 900 homes as it scorched grasslands.
The fire has burned nearly three square miles, destroying two
barns and two homes. Only two minor injuries among firefighters are
reported. Officials say the wind has died down, so the fire isn't
spreading as quickly.
The fire is believed to have started when winds knocked down a
power line. The blaze was one of three wildfires that swept through
the county Wednesday. The two others have been contained.

WINTER WEATHER
NEW: Washington dealing with flooding emergency

The forecast for Washington state may be for
drier weather. But it will be days before floodwaters recede, roads
reopen and everyone who evacuated can return home.
More than 30,000 people were urged to leave their
flood-endangered western Washington homes as swollen rivers,
mudslides and avalanches engulfed neighborhoods and roadways.
Rising waters led state highway crews to close a 20-mile stretch
of Interstate 5 around Chehalis on Wednesday evening. The state's
three major east-west routes across the Cascade mountains also were
closed by avalanches and the threat of more slides. Highway
officials hope to reopen one main east-west route sometime today.
In Oregon, high winds toppled trees along U.S. 26, forcing the
highway's closure and stranding some motorists while crews worked
to clear the road.
In Alaska, extreme cold temperatures have grounded planes,
disabled cars, frozen water pipes and even canceled several
championship cross country ski races.

TRAVOLTA'S SON
Private funeral set for Travolta's son in Fla.

A private funeral service is set to be held
in Ocala for John Travolta's teenage son.
The funeral for Jett Travolta is scheduled for Thursday
afternoon. The service is closed to the media, and the exact time
has not been disclosed.
Doctors in the Bahamas performed an autopsy on the 16-year-old
Monday but did not release the results. A Bahamas undertaker said
the teen's death certificate listed "seizure" as the cause of
death. The teen's body was cremated Monday, and the remains were
flown to the U.S. the same night.
Jett Travolta had a history of seizures and was found
unconscious Friday in a bathroom at his family's vacation home on
Grand Bahama Island.