Three suspects accused of trying to sell a surface-to-air missile to an FBI agent posing as an Al Qaeda operative appeared in federal court in Newark, N.J., after arrests in that city and in New York. Federal officials said the capture of Hemat Lakhani - identified as a British arms dealer - and two suspected money-launderers resulted from a five-month sting operation by the US, Britain, and Russia. While the suspects were told that the Russian-made SA-18 missile would be used to attack commercial aircraft, the motive for the deal was profit and no actual terrorists were involved, officials said. The incident was expected to renew debate over protecting airliners from such attacks, however. In a possibly related move, British Airways suspended flights to Saudi Arabia due to credible intelligence of a "serious threat" that it did not identify.

The US, Britain, and Libya have agreed on a settlement in the 1988 terrorist bombing of Pan Am flight 103 over Lockerbie, Scotland, reports said. Under the deal, Libya would pay $2.7 billion into a UN-run Swiss bank account to compensate families of the 270 victims, acknowledge responsibility for the attack, and renounce support for terrorism, the Financial Times reported. That, in turn, would pave the way for the formal lifting of UN sanctions, suspended since 1999.

The economy and effects of recent tax cuts were the focus as President Bush met with the secretaries of the treasury, commerce, and labor at his Texas ranch. Among the latest economic developments, Federal Reserve policymakers held interest rates steady - as expected - Tuesday and indicated readiness to keep short-term rates low for "a considerable period." And the Commerce Department reported that retail sales rose 1.4 percent in July, the biggest jump in four months.

Raising the stakes in a walkout by 11 Democrats in the Texas state Senate, their mainly Republican colleagues Tuesday OK'd fines of $1,000 a day - doubling each day up to $5,000 - for each missed session. The fines begin Thursday, but Democrats say they won't pay, calling the move illegal. They fled to Albuquerque, N.M., last month to block a controversial redistricting bill.

In a move likely to reignite debate over the teaching of evolution in Kansas, the state's education board Tuesday ordered a full review of standards for science tests. A committee is expected to submit recommendations by early 2005. The board voted in 1999 to remove test references to evolutionary theory - which some conservative Christians reject - but a newly elected board restored them in 2001.

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