Wall Street Week Ahead: Bears hibernate as stocks near record highs

NEW YORK (Reuters) - Stocks have been on a tear in January, moving major indexes within striking distance of all-time highs. The bearish case is a difficult one to make right now.

Earnings have exceeded expectations, the housing and labor markets have strengthened, lawmakers in Washington no longer seem to be the roadblock that they were for most of 2012, and money has returned to stock funds again.

The Standard & Poor's 500 Index <.spx> has gained 5.4 percent this year and closed above 1,500 - climbing to the spot where Wall Street strategists expected it to be by mid-year. The Dow Jones industrial average <.dji> is 2.2 percent away from all-time highs reached in October 2007. The Dow ended Friday's session at 13,895.98, its highest close since October 31, 2007.

The S&P has risen for four straight weeks and eight consecutive sessions, the longest streak of days since 2004. On Friday, the benchmark S&P 500 ended at 1,502.96 - its first close above 1,500 in more than five years.

"Once we break above a resistance level at 1,510, we dramatically increase the probability that we break the highs of 2007," said Walter Zimmermann, technical analyst at United-ICAP, in Jersey City, New Jersey. "That may be the start of a rise that could take equities near 1,800 within the next few years."

The most recent Reuters poll of Wall Street strategists estimated the benchmark index would rise to 1,550 by year-end, a target that is 3.1 percent away from current levels. That would put the S&P 500 a stone's throw from the index's all-time intraday high of 1,576.09 reached on October 11, 2007.

The new year has brought a sharp increase in flows into U.S. equity mutual funds, and that has helped stocks rack up four straight weeks of gains, with strength in big- and small-caps alike.

That's not to say there aren't concerns. Economic growth has been steady, but not as strong as many had hoped. The household unemployment rate remains high at 7.8 percent. And more than 75 percent of the stocks in the S&P 500 are above their 26-week highs, suggesting the buying has come too far, too fast.

MUTUAL FUND INVESTORS COME BACK

All 10 S&P 500 industry sectors are higher in 2013, in part because of new money flowing into equity funds. Investors in U.S.-based funds committed $3.66 billion to stock mutual funds in the latest week, the third straight week of big gains for the funds, data from Thomson Reuters' Lipper service showed on Thursday.

Energy shares <.5sp10> lead the way with a gain of 6.6 percent, followed by industrials <.5sp20>, up 6.3 percent. Telecom <.5sp50>, a defensive play that underperforms in periods of growth, is the weakest sector - up 0.1 percent for the year.

More than 350 stocks hit new highs on Friday alone on the New York Stock Exchange. The Dow Jones Transportation Average <.djt> recently climbed to an all-time high, with stocks in this sector and other economic bellwethers posting strong gains almost daily.

"If you peel back the onion a little bit, you start to look at companies like Precision Castparts , Honeywell , 3M Co and Illinois Tool Works - these are big, broad-based industrial companies in the U.S. and they are all hitting new highs, and doing very well. That is the real story," said Mike Binger, portfolio manager at Gradient Investments, in Shoreview, Minnesota.

The gains have run across asset sizes as well. The S&P small-cap index <.spcy> has jumped 6.7 percent and the S&P mid-cap index <.mid> has shot up 7.5 percent so far this year.

Exchange-traded funds have seen year-to-date inflows of $15.6 billion, with fairly even flows across the small-, mid- and large-cap categories, according to Nicholas Colas, chief market strategist at the ConvergEx Group, in New York.

"Investors aren't really differentiating among asset sizes. They just want broad equity exposure," Colas said.

The market has shown resilience to weak news. On Thursday, the S&P 500 held steady despite a 12 percent slide in shares of Apple after the iPhone and iPad maker's results. The tech giant is heavily weighted in both the S&P 500 and Nasdaq 100 <.ndx> and in the past, its drop has suffocated stocks' broader gains.

JOBS DATA MAY TEST THE RALLY

In the last few days, the ratio of stocks hitting new highs versus those hitting new lows on a daily basis has started to diminish - a potential sign that the rally is narrowing to fewer names - and could be running out of gas.

Investors have also cited sentiment surveys that indicate high levels of bullishness among newsletter writers, a contrarian indicator, and momentum indicators are starting to also suggest the rally has perhaps come too far.

The market's resilience could be tested next week with Friday's release of the January non-farm payrolls report. About 155,000 jobs are seen being added in the month and the unemployment rate is expected to hold steady at 7.8 percent.

"Staying over 1,500 sends up a flag of profit taking," said Jerry Harris, president of asset management at Sterne Agee, in Birmingham, Alabama. "Since recent jobless claims have made us optimistic on payrolls, if that doesn't come through, it will be a real risk to the rally."

A number of marquee names will report earnings next week, including bellwether companies such as Caterpillar Inc , Amazon.com Inc , Ford Motor Co and Pfizer Inc .

On a historic basis, valuations remain relatively low - the S&P 500's current price-to-earnings ratio sits at 15.66, which is just a tad above the historic level of 15.

Worries about the U.S. stock market's recent strength do not mean the market is in a bubble. Investors clearly don't feel that way at the moment.

"We're seeing more interest in equities overall, and a lot of flows from bonds into stocks," said Paul Zemsky, who helps oversee $445 billion as the New York-based head of asset allocation at ING Investment Management. "We've been increasing our exposure to risky assets."

For the week, the Dow climbed 1.8 percent, the S&P 500 rose 1.1 percent and the Nasdaq advanced 0.5 percent.

(Reporting by Ryan Vlastelica; Additional reporting by Chuck Mikolajczak; Editing by Jan Paschal)

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IHT Rendezvous: 'Real' Life in North Korea

BEIJING — With North Korea in the headlines again amid concerns it could explode a third, more powerful nuclear device, many people around the world may be wondering: What are they like?

North Korea is “a real country with real people,” wrote John Everard, a former British ambassador to Pyongyang, in The Independent on Sunday.

“Above all, North Koreans are sharply differentiated human beings, with a good sense of humor and are often fun to be with,” wrote Mr. Everard, who lived in the North Korean capital from 2006 to 2008 and is the author of a recent book about his time there, titled, “Only Beautiful, Please.”

Their everyday concerns “are often not so very different from our own: their friends, how their children are doing at school, their jobs, and making enough money to get by.”

Mr. Everard’s stay in Pyongyang took in the time of North Korea’s first nuclear test. As this article on 38 North, a Web site that follows the country closely, shows, the rest of the world is watching to see whether another nuclear detonation is imminent.

Tensions have grown since North Korea launched a rocket in December, provoking a new U.N. Security Council resolution last week condemning the launching and calling for a tightening of sanctions against the country. In a sign it’s really serious, even China, the North’s longtime ally, voted for the resolution.

In response, North Korea “bluntly threatened the United States, saying North Korea had no interest in talks on denuclearizing itself and would forge ahead with its missile and weapons development, with the goal of attaining the capability to hit American territory,” my colleagues Choe Sang-hun and Rick Gladstone wrote.

Against this nasty background, Mr. Everard shows the human dimension of citizens living in Pyongyang, focusing on a group of people he says he got to know fairly well; not the inner circle of power, but not the poor of the countryside, either. “They were executives rather than leaders.”

As nknews.org wrote last year, “Foreigners are allowed within a 35 km radius of Pyongyang, and Everard took every opportunity to visit and document within this area.”

So what were they like?

Over all, “Their lives would seem very dull to most Westerners,” Mr. Everard wrote. “They revolved around daily rituals of carefully phased breakfasts in overcrowded flats, tedious journeys to work (often prolonged because Pyongyang’s rickety public transport so often broke down), and generally tedious work days.”

Tedious, maybe, but “relaxed.” Yet, working day done, getting home wasn’t always easy. “Some of my contacts refused to use the Pyongyang metro because of the risk of a power cut while they were in a tunnel.” Some chose to walk home.

They were curious about the world. “I once lent one a set of DVDs of ‘Desperate Housewives’ and met the same person the next day with big rings under their eyes. They had sat up all night and watched the entire series in one sitting,” he wrote.

More fun, perhaps, than a visit home: “My contacts spoke of their parents with respect rather than affection, and chafed at the Confucian authority that they exercised. Visits to their homes seemed to be a duty rather than a pleasure, particularly when they involved dressing children up in their best and crossing Pyongyang (especially in autumn, when the city gets muddy – a difficult time to deliver clean children to grandparents),” he wrote.

Intriguingly, “Alcoholism and prostitution were rampant within the capital,” nknews.org reported, from a talk Mr. Everard gave last year.

And, “Although they all had access to showers, none could remember when they had last had one with hot water. Taking a cold shower in the Pyongyang winter, when temperatures can fall to -20C, is not fun,” Mr. Everard wrote in The Independent.

Most people he mingled with had enough food – but it wasn’t varied or tasty. “These people did not eat well, but at least they ate regularly,” mostly rice and boiled vegetables. And kimchi.

“Evening life at home revolved around chatting with family members and watching TV,” he wrote. “Sometimes there would be a film on. Even though North Korea had hardly produced any new films for some years before my time there, so that my contacts had seen almost all the national repertoire several times, they would still sometimes watch repeats. But the best time was the half-hour of (heavily edited and slanted) international news on Sunday evenings. Everyone watched that, and questioned me about what they had seen.”

While the anti-American propaganda the state puts out is powerful, not everyone believed it, wrote Mr. Everard.

“They had been taught to hate Americans, but most of them did not. One of them told me that they had worked with Americans during one of the thaws in relations with that country, had liked them and hoped that they would return,” wrote Mr. Everard. Of course this all was based on experiences that ended in 2008, but it’s unlikely attitudes have changed fundamentally since then, despite the latest round of threats to target the United States.

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Facebook founder to host fundraiser for New Jersey Governor Christie

(Reuters) – Facebook CEO Mark Zuckerberg and his wife, Priscilla, will host a fundraiser for New Jersey Republican Governor Chris Christie at their California home on February 13, the social networking site said on Thursday.

Zuckerberg and Christie, a potential presidential contender in 2016, have teamed up before, when the tech guru donated $ 100 million to the struggling public schools in Newark, New Jersey, in 2010.

“Mark and Priscilla … admire his leadership on education reform and other issues and look forward to continuing their important work together on behalf of Newark’s school children,” Facebook said in a statement.

The blunt-spoken Christie is seeking re-election in November to a second term as governor. He took office in 2010.

Right now, he doesn’t seem to need much help as his approval rating skyrocketed after Superstorm Sandy hit the state last October. A Quinnipiac University poll released on Wednesday found that three-quarters of New Jersey voters approved of Christie’s performance and nearly seven in 10 say he deserves to be re-elected.

New Jersey Democrats also have not rallied behind a single challenger. State Senate President Stephen Sweeney has said he is considering running, but the poll found that Christie would easily defeat Sweeney.

Christie would also trounce Barbara Buono – who has said she will run against the governor – and possible challenger Richard Codey, the poll found. Both are Democratic state senators.

(Reporting by Alexei Oreskovic in San Francisco and Hilary Russ in New York; Editing by Eric Beech)

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CDC: Flu seems to level off except in the West

New government figures show that flu cases seem to be leveling off nationwide. Flu activity is declining in most regions although still rising in the West.

The Centers for Disease Control and Prevention says hospitalizations and deaths spiked again last week, especially among the elderly. The CDC says quick treatment with antiviral medicines is important, in particular for the very young or old. The season's first flu case resistant to treatment with Tamiflu was reported Friday.

Eight more children have died from the flu, bringing this season's total pediatric deaths to 37. About 100 children die in an average flu season.

There is still vaccine available although it may be hard to find. The CDC has a website that can help.

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CDC: http://www.cdc.gov/flu/

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IHT Rendezvous: IHT Quick Read: Jan. 26

NEWS Ordinary investors are falling in love again with the stock market after nearly five years of bitter separation. More money has poured into stocks worldwide in the first three weeks of January through mutual funds than in any comparable period since 2001. Nathaniel Popper reports from New York.

Cyril Ramaphosa, the man who was once Nelson Mandela’s chosen successor, is returning to government in South Africa, this time as a business tycoon. Bill Keller reports from Johannesburg.

In an unusual display of direct diplomacy, the U.S. Commerce Department is lobbying in Brussels on behalf of the Obama administration against sweeping new privacy controls that could hurt the U.S. technology industry in Europe. Kevin J. O’Brien reports from New York.

Although women in the United States armed forces have routinely shown bravery under fire, the question that is now facing the Pentagon is whether female soldiers can perform ground combat tasks day in and day out now that they are allowed to take part in combat duty. James Dao reports from New York.

As Brazil and Argentina lose some of their luster, are sub-Saharan African nations on the rise? Billionaire dealmakers who have gathered in Davos, Switzerland, want to know. Liz Alderman reports from Davos.

ARTS Portraits by the artist Jusepe de Ribera, hidden up high and in the darkness of a church in Naples, Italy, are, like the city, expressions of the spiritual embedded in the profane. Michael Kimmelman reports from Naples, Italy.

SPORTS At the Australian Open, Andy Murray finally outdueled Roger Federer in a major event and heads to men’s final. Christopher Clarey reports from Melbourne.

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How Facebook Passive-Aggressively Dismissed Twitter’s New Vine App

Facebook has now clarified why it blocked Twitter’s new video-sharing app Vine, suggesting on its developer blog Friday afternoon that Facebook didn’t think much of Vine’s integration — or lack thereof — with the social network. Basically, Twitter’s pseudo GIF-maker thing connected with Facebook, but only so you could “find Friends” — presumably because Twitter wants people to use the app on Twitter. But for the privilege of its people, Facebook wants apps to give back to the network.

RELATED: Facebook Is Already Trying to Break Twitter’s New Toy

Without mentioning Twitter or Vine explicitly, Facebook’s Justin Osofsky explained in the blog post that some apps “are using Facebook to either replicate our functionality or bootstrap their growth in a way that creates little value for people on Facebook, such as not providing users an easy way to share back to Facebook.” How’s that for passive aggression?

RELATED: Uganda Threatens to Shut Down Social Networking

Osofsky points developers to a policy page updated today, which reflects that sentiment by stating: 

Reciprocity and Replicating core functionality: (a) Reciprocity: Facebook Platform enables developers to build personalized, social experiences via the Graph API and related APIs. If you use any Facebook APIs to build personalized or social experiences, you must also enable people to easily share their experiences back with people on Facebook. (b) Replicating core functionality: You may not use Facebook Platform to promote, or to export user data to, a product or service that replicates a core Facebook product or service without our permission.

In short, if apps want access to Facebook’s massive user base of 1 billion-plus friends, they better bring people back to Facebook. And the war raged on.

Social Media News Headlines – Yahoo! News

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American Idol Auditions in Baton Rouge Are (Almost) Drama-Free

TV Watch

American Idol

By Steve Helling

01/24/2013 at 10:00 PM EST

From left: Randy Jackson, Mariah Carey, Ryan Seacrest, Nicki Minaj and Keith Urban

George Holz/FOX

There were no catfights on Thursday's American Idol. No one stormed off the set. Everyone was on their best behavior as contestants auditioned in Baton Rouge, La.

That's not to say that things didn't get weird. Nicki Minaj nicknamed one contestant "Mushroom" and rubbed her fingers through his hair to bestow her "special powers" on him. (Whenever Minaj speaks, Mariah Carey simply stares off into space, as if she's just trying to find her happy place.) The Idol producers also began a baffling trend of splicing footage of squealing farm animals between the bad auditions.

But there were some bright spots: Burnell Taylor, a Hurricane Katrina survivor, made Carey cry with his capable rendition of "I'm Here" from the musical The Color Purple. "This is what we came for," said Minaj, who was apparently speaking about Taylor's voice, not Carey's tears. "While everyone else auditioned, you entertained us."

Hulking firefighter Dustin Watts wowed the judges with his version of Garth Brooks's "She's Every Woman." And yes, ladies, he's single. We know this because Minaj continued her practice of asking good-looking guys if they have a girlfriend. "You have a great style," Keith Urban told Watts. "You've got a confidence about you."

Tennessean Paul Jolley's family seemed shocked that he made it to Hollywood, which may have been overdone, considering that the 22-year-old singer has opened for country stars Chely Wright, Lorrie Morgan and Aaron Tippin. His pleasant version of "I Won't Let Go" by Rascal Flatts impressed the judges. "It was effortless," said Carey. "I know that people are going to love you."

Perhaps the most unique contestant of the night was Calvin Peters, a 27-year-old physician from Fort Worth, Texas. The third-year resident is known as "the singing doctor," and wowed the judges with his audition of Maxwell's "Whenever, Wherever, Whatever." Carey called him "handsome," which seems to be a trend this season.

Most of the night's successful women were lumped into a montage, except for Miss Baton Rouge Megan Miller, who impressed the judges while auditioning on crutches. Perhaps the lack of female character development is a reason why the show hasn't crowned a woman champ since Jordin Sparks won in 2007. Then again, the judges this season seem confident a female singer is going to win.

Before the episode could end without a drop of drama, Urban accidentally referred to Minaj as "Mariah." Both women shot him withering looks and commanded him to say more than 1000 Hail Marys.

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Spanish newspaper sorry for "false photo" of Venezuela's Chavez

MADRID/CARACAS (Reuters) - Spain's influential El Pais newspaper apologized on Thursday for splashing a "false photo" of Venezuela's cancer-stricken leader Hugo Chavez on its front page, prompting a furious response from the government in Caracas, which vowed to take legal action.

Within minutes of posting the image online as a global exclusive, El Pais said it had discovered from social media that the photo was not of Chavez. It removed it from its website and withdrew its print edition.

Venezuela's government said the publication of the photo - which showed the head of a man lying down with a breathing tube in his mouth - was "grotesque," while Argentinian President Cristina Fernandez, a close ally of Chavez, called it vile.

"El Pais apologizes to its readers for the damage caused. The newspaper has opened an investigation to determine the circumstances of what happened and the errors that were committed in the verification of the photo," the paper said.

Chavez, 58, is fighting to recover in Cuba after undergoing his fourth cancer operation in just 18 months. He has not spoken or appeared in public for six weeks, fuelling speculation about how serious his condition is.

El Pais, one of the world's biggest Spanish-language publications and an institution both in Spain and in Latin America, said it received the grainy image from the agency Gtres Online, which it said represents 60 other agencies in Spain.

In a statement, El Pais said the newspaper was told it had been taken seven days earlier by a Cuban nurse who was part of Chavez's medical team, and was then sent to the nurse's sister, who lives in Spain.

"The agency has acknowledged it was deceived by those who provided the material and will take legal action," El Pais said.

The photo was on the newspaper's website for half an hour and also appeared in early editions of the print version that were then pulled from newsstands and replaced with a new edition with a different front page.

In Venezuela, anxious Chavez supporters and opponents alike are waiting for any new picture, video or audio message from the socialist leader, who is famed for filling the airwaves with long-winded speeches, jokes and withering jabs at his foes.

NO SIGHT OF CHAVEZ

Officials say his condition is improving after he suffered multiple complications, including unexpected bleeding and a severe respiratory problem following the December 11 surgery.

But, in contrast to Chavez's previous visits to Havana, officials have not published any evidence of his condition. In 2011, with great fanfare, they broadcast video footage of him reading a newspaper, walking in a garden, and chatting with his friend and mentor, Cuba's ex-leader Fidel Castro.

In the absence of such proof this time, many Venezuelans are questioning the terse official bulletins and suspect Chavez's extraordinary 14 years in power could be coming to an end.

The president has never said exactly what type of cancer he has, only that the initial tumor found in mid-2011 was in his pelvic area and was the size of a baseball.

Venezuelan opposition leaders have long accused the government of secrecy over his illness, while supporters accuse "bourgeois" local and foreign media of being in league with the opposition to spread rumors he is at death's door.

The handling of information relating to Chavez's health has become as contentious as the man himself, and his administration's updates have been confusing and contradictory.

The government says it has never been more transparent. It described El Pais's publication of the picture - a screengrab from an unrelated 2008 video - as part of efforts by far-right political forces to attack Chavez's self-styled revolution.

It said it would take appropriate legal action, and that the newspaper's apology to its readers was not enough.

"Neither their disgusting photos nor their systematic campaigns will stop the president's advance," Information Minister Ernesto Villegas told a news conference in Caracas.

"Would El Pais publish a similar photo of a European leader? Of its director? Sensationalism is valid if the victim is a revolutionary 'sudaca'," he added, using a pejorative term that is sometimes used in Spain to refer to Latin Americans.

(Editing by Eric Walsh)

(This story was refiled to correct the spelling of Venezuela in the headline)

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Asian shares down; Seoul hit by weak techs but Nikkei surges

TOKYO (Reuters) - Asian shares fell on Friday, hurt by a drop in regional technology stocks and on caution ahead of the corporate earnings season, but gains in Japan and Australia limited overall losses for equities.

Upbeat manufacturing reports from the United States, Germany and China underpinned sentiment for other assets, supporting copper while curbing selling pressure in oil.

"The PMI indicators from the U.S., Europe and China should serve to keep markets tracking higher," said CMC Markets senior trader Tim Waterer in Sydney.

The MSCI's broadest index of Asia-Pacific shares outside Japan <.miapj0000pus> eased 0.5 percent, and was set for a weekly drop of 1 percent, its biggest such loss in two months.

A 1.4 percent slide in the technology sector <.miapjit00pus> dragged the pan-Asian index down, as tech-heavy markets such as South Korea and Taiwan fell.

Seoul shares <.ks11> declined 0.9 percent, weighed by weak profits for automakers, while tech shares continued to falter as Samsung Electronics announced cautious spending plans for the first time since the global financial crisis.

Shares of Apple Inc's suppliers extended their declines after Apple's below-estimate results announced earlier in the week: Taiwan's Largan Precision weakened and Samsung shares shed as much as 3.3 percent.

Hong Kong <.hsi> and Shanghai <.ssec> were the other laggards as investors took profits from recent rallies and remained cautious ahead of the upcoming earnings season.

A 0.3 percent rise in London copper to $8,118 a metric ton and gold prices steadying around $1,669 an ounce helped push commodity-reliant Australian shares <.axjo> up 0.5 percent to a fresh 21-month high, marking an eighth straight session of gains.

U.S. crude eased 0.1 percent to $95.87 a barrel and Brent inched down 0.2 percent to $113.11.

"It now seems that the stronger tone in global equity markets, coupled with a notable easing in European and US market tensions, is leading to short-term pressure on gold," said Ed Meir, an analyst at INTL FCStone, in a research note.

European markets are seen falling, with financial spread-betters predicting London's FTSE 100 <.ftse>, Paris's CAC-40 <.fchi> and Frankfurt's DAX <.gdaxi> would open down as much as 0.4 percent. U.S. stock futures were down 0.2 percent, pointing to a softer Wall Street start. <.l><.eu><.n/>

JAPAN IN SPOTLIGHT

Japan's Nikkei stock average <.n225> outperformed its Asian peers with a 2.9 percent surge as the yen hit fresh lows versus the dollar and the euro on expectations Japan will continue to pursue bold policies to beat deflation and stimulate growth. The Nikkei rose for an 11th straight week. <.t/>

"Trading on Japan is gaining momentum among foreign investors, centering around the dollar/yen, which has dictated Nikkei's direction," said Tetsuro Ii, the chief executive of Commons Asset Management.

The yen's slide bolsters sentiment for Japanese equities as it lifts earnings prospects for exporters, ahead of the quarterly earnings season set to start next week.

The dollar scaled its highest level since June 2010 to reach 90.695 yen early on Friday and the euro rose to 121.32, its highest since April 2011. Prime Minister Shinzo Abe's new administration has made clear it wants a weaker yen, providing investors a reason to short the currency.

More than 80 percent of Japanese firms are in favor of Abe's drive for aggressive monetary easing and huge fiscal spending, though most also feared Japan would face a debt crisis within a few years, according to a Reuters poll.

The yen's two-month decline has more legs, many traders and analysts believe, noting the yen has barely caught up to levels before a potential debt default by Greece sparked the euro zone debt crisis and sent the euro plummeting nearly three years ago.

The yen was around 95 yen against the dollar and 123 yen against the euro early in May 2010 when protests flared up in Greece against its austerity steps in exchange for a bailout.

Despite the recent rallies, the Nikkei remains well below levels before the 2008 financial crisis while the Standard & Poor's 500 Index <.spx> and Germany's benchmark stock index have both already exceeded that level, thanks to the weakness of the euro and the dollar, measured against a basket of currencies.

"JPY weakness should continue over the coming year driven by an expansion of the Bank of Japan's balance sheet relative to the European Central Bank and the Federal Reserve," said Kit Juckes, FX strategist at Societe Generale in a note. "I don't know how long the USD/JPY is going to pause at around 90, but a move to 100 still seems very likely in the longer run."

(Additional reporting by Victoria Thieberger in Melbourne and Rujun Shen in Singapore; Editing by Shri Navaratnam)

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India Ink: David C. Headley Gets 35 Years for Mumbai Attack

CHICAGO — David C. Headley, an American who confessed to helping plan the deadly 2008 terrorist attacks in Mumbai, India, was sentenced here on Thursday to 35 years in prison, the maximum sought by federal prosecutors.

Balancing what was described in court as a “very heinous crime” and “very significant cooperation,” the ruling came after lawyers for the government and the defense urged Judge Harry D. Leinenweber of Federal District Court to downgrade Mr. Headley’s punishment from life in prison. They said he had cooperated with the authorities and provided useful information about Lashkar-e-Taiba, the Pakistan-based militant group with which he had worked.

“No matter how good our intelligence is, no matter how technologically advanced our investigative techniques are, we need witnesses,” Gary S. Shapiro, the acting United States attorney for the Northern District of Illinois, said after the decision. “And the only way you get witnesses in this world is by threatening to prosecute them and then offering them some real incentive to provide you with that information.”

According to court documents, Mr. Headley, 52, attended Lashkar-e-Taiba training camps in Pakistan between 2002 and 2005. He later admitted to scouting targets in Mumbai for the group before the raids in November 2008, in which 163 people and 9 gunmen died. Six of the victims were American.

After his arrest at a Chicago airport a year later, Mr. Headley pleaded guilty to 12 conspiracy charges over his involvement in the Mumbai attack and a proposed terrorist plot against a Danish newspaper that published cartoon caricatures of the Prophet Muhammad. Prosecutors said that Mr. Headley immediately began sharing information that led to criminal charges against at least seven other people. He also testified against his co-defendant, the Chicago businessman Tahawwur Rana, who last week was sentenced to 14 years in prison.

In exchange for his cooperation, which is expected to continue while he is in prison, prosecutors also agreed not to seek the death penalty or extradite Mr. Headley to Pakistan, India or Denmark.

But on Thursday, some expressed concern that Mr. Headley was getting more leniency than he deserved.

Standing before the court, Linda Ragsdale, who was injured in the Mumbai attack, fought back tears as she described the gunfire she witnessed at a hotel that was raided in the militant attack.

“I know the sound of life leaving a 13-year-old child,” she said.

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