* U.S.: Senior al Qaeda in Iraq leader held The U.S. military on Wednesday announced the arrest of a senior leader of al Qaeda in Iraq.

* Dollar Slumps to Record Low Versus Euro on Bear Stearns Losses The dollar fell to a record low against the euro and dropped versus the yen after Bear Stearns Cos. reported hedge fund losses.

* Israel confirms third-party contacts with Syria Israel and Syria have been in contact through third parties for “some time,” but the mediators have been unable to get the two sides to resume peace talks.

* U.S. Eyes Direct Talks With Iran The United States is ready to hold new direct talks with Iran on the deteriorating security situation in Iraq.

* FBI: Iraqis Being Smuggled Across the Rio Grande The FBI is investigating an alleged human smuggling operation based in Chaparral, N.M.

* PA Chairman Abbas says will back expected PLO call for early elections Palestinian Authority Chairman Mahmoud Abbas said Wednesday he would back a decision by the Palestine Liberation Organization to call early elections.

* Olmert ‘failed severely’ in Lebanon war, says report Israel’s latest inquiry into last year’s Lebanon war Wednesday blasted Prime Minister Ehud Olmert for “intolerable” failures in protecting civilians during the conflict.

* EU constitution architect deplores ‘cosmetic’ text changes The architect of the rejected European constitution, Valery Giscard d’Estaing, says the recently agreed changes to the document are “cosmetic”.

* Gaza’s econonomy on verge of collapse Gaza’s economy could collapse within weeks unless Israel reopens crucial commercial trade crossings.

* Water find ‘may end Darfur war’ A huge underground lake has been found in Sudan’s Darfur region, scientists say.