* Livni: If necessary, Israel will reoccupy the Gaza Strip Israel has informed foreign diplomats that it would reoccupy Hamas-ruled Gaza if necessary.

* Rice tries to save Mid-East talks US Secretary of State Condoleezza Rice has held talks with Egyptian officials, the first stage of a trip aimed at saving Israeli-Palestinian peace talks.

* PM: Iran not just Israel’s problem Prime Minister Ehud Olmert on Tuesday expressed his satisfaction with the United Nations Security Council’s decision to go forward with a third round of sanctions against Iran.

* China to raise military spending China says it plans to increase military spending by nearly 18% this year, to 417.8bn yuan ($59bn; £30bn).

* Oil Jumps to New Record on Dollar’s Fall The surging price of oil reached another milestone Monday, jumping to an inflation adjusted record high of $103.95.

* Sarkozy and Merkel find agreement on key EU issues French President Nicolas Sarkozy and his German counterpart, Angela Merkel, appear to have reached a deal on two key issues.

* Vatican-Muslim talks due in Italy Vatican and Muslim officials are due to meet in Rome to lay the foundations for landmark Catholic-Islamic talks later this year.

* EU woos western Balkans with initiatives for citizens The European Commission is on Wednesday expected to publish a series of proposals aimed at binding citizens of the western Balkan states to the EU.

* ‘Egypt, Jordan may rule Gaza, W. Bank’ Egypt and Jordan may have to temporarily take control of the Gaza Strip and the West Bank.

* UN Chief: Israel says Hezbollah has 30,000 rockets in S. Lebanon Israel says Hezbollah is rearming and has an arsenal including 10,000 long-range rockets and 20,000 short-range rockets in southern Lebanon.