Italy - Factors to watch on May 25
The following factors could affect Italian markets on Thursday.
* Defense Secretary asked president to delay general's nomination
* Alleged inappropriate communication involved
* Investigation involves woman at center of Petraeus scandal
By Phil Stewart
ABOARD A U.S. MILITARY AIRCRAFT, Nov 13 The top U.S. commander in Afghanistan, General John Allen, is under investigation for alleged inappropriate communication with a woman at the center of the scandal involving former CIA Director David Petraeus, a senior U.S. defense official said on Tuesday.
The revelation threatens to fell another of the U.S. military's biggest names and suggests that the scandal involving Petraeus - a retired four-star general who had Allen's job in Afghanistan before moving to the CIA last year - could expand.
The U.S. official said the FBI uncovered between 20,000 and 30,000 pages of communications - mostly emails spanning from 2010 to 2012 - between Allen and Jill Kelley, who has been identified as a longtime friend of the Petraeus family and a Tampa, Florida, volunteer social liaison with military families at MacDill Air Force Base.
It was Kelley's complaints about harassing emails from the woman with whom Petraeus had had an affair, Paula Broadwell, that prompted an FBI investigation that ultimately disclosed Petraeus' involvement with Broadwell. Petraeus resigned from the CIA post on Friday.
Asked whether there was concern about the disclosure of classified information, the official said, on condition of anonymity: "We are concerned about inappropriate communications. We are not going to speculate as to what is contained in these documents."
Defense Secretary Leon Panetta told reporters flying with him to Australia that he had asked that Allen's nomination to be Commander of U.S. European Command and Supreme Allied Commander Europe be delayed "and the president has agreed."
President Barack Obama has put the nomination on hold, the White House said on Tuesday.
Allen, who is now in Washington, was due to face a Senate confirmation hearing on Thursday, as was his successor in Afghanistan, General Joseph Dunford.
The FBI referred the case to the Pentagon on Sunday and Panetta directed the Defense Department's Inspector General to handle the investigation. Panetta informed the top Republican and Democrat on the Senate Armed Services Committee during the flight to Australia. The House Armed Services Committee was also notified.
The U.S. defense official said that Allen denied wrongdoing and that Panetta had opted to keep him in his job while the matter was under review - and until Dunford can be confirmed to replace him, a process that gains urgency given the cloud the scandal could cast over the mission in Afghanistan.
"While the matter is under investigation and before the facts are determined, General Allen will remain commander of ISAF," Panetta said, referring to the NATO-led force in Afghanistan.
Only hours earlier, Panetta had said he was reviewing Allen's recommendations on the future U.S. presence in Afghanistan after most troops withdraw by the end of 2014.
Commending Allen's leadership in Afghanistan, Panetta said: "He is entitled to due process in this matter."
At the same time, he noted that he wanted the Senate to act promptly on Dunford's nomination.
The U.S. official said Panetta was informed of the matter involving Allen on Sunday as he flew to Hawaii, after the Pentagon's top lawyer called Panetta's chief of staff. The White House was informed next.
FBI RAID, SHIRTLESS PHOTOS
Evidence that the case involving Petraeus was not fully closed came late Monday when FBI agents searched the Charlotte, North Carolina, house of Broadwell.
Agents entered the house carrying boxes at around 9 p.m. (0200 GMT Tuesday) and about four hours later took away what appeared to be two computers and about 10 boxes.
During the search, agents inside could be seen moving through multiple rooms, gathering materials and taking photos.
Broadwell's family was not at home at the time. The FBI and a Justice Department official would not comment on the raid.
U.S. officials had said in recent days that their investigation was largely complete and that prosecutors had determined it was unlikely they would bring charges in that case, which started when Kelley contacted an FBI agent in Tampa about harassing emails from an anonymous source.
That FBI agent, who has not been identified, has also come under scrutiny after it was discovered he had sent shirtless photographs of himself to Kelley, but "long before" this investigation, a law enforcement official told Reuters. The photographs were first reported by the Wall Street Journal.
The agent had never been on the Broadwell case, but had taken the information about the emails to the FBI cyber squad in Tampa, the law enforcement official said.
The FBI agent, who works in the Tampa office, apparently became frustrated at the pace of the investigation and complained to a member of Congress about it, the official said.
The FBI investigation of the emails received by Kelley traced them to Broadwell and subsequently uncovered emails that revealed an affair between Broadwell and Petraeus.
The emails between the two women were of a "childish", jealous nature and showed some one-upmanship of trying to come across as being more important to Petraeus, the official said.
When Petraeus resigned as CIA director on Friday he publicly admitted to having engaged in an extramarital affair.
Lawmakers and others have questioned whether Broadwell, who co-wrote a biography of the decorated former general, obtained classified information from him or another source.
Panetta had earlier said Petraeus did the right thing by stepping down, given the security concerns, but he was saddened by the end of the retired general's distinguished career.
The following factors could affect Italian markets on Thursday.
* Yuan at 2-month high * S.Korean cen bank holds rates * Singapore Q1 GDP -1.3 pct q/q annualised; +2.7 pct y/y (Adds detail, updates prices) By Rushil Dutta May 25 Asian currencies were firm on Thursday after the minutes of the U.S. Federal Reserve's last meeting showed policymakers favouring a gradual approach to interest rate hikes, with the yuan hitting two-month highs on state-driven dollar selling after Moody's downgraded China's debt ratings. The yuan
TOKYO, May 25 Japanese stocks rose on Thursday as the strong-yen trend paused, while a surge in index-heavyweights such as SoftBank supported sentiment.