Taiwanese regulators cleared on Tuesday China's Xiaomi Inc [XTC.UL] and other smartphone brands of breaching local data protection laws after national security concerns triggered the government to launch a probe in September.

The National Communications Commission, in a report concluding the investigation, said all the 12 brands it had tested, which include

 handsets sold by Apple Inc, Samsung Electronics Co Ltd, LG Electronics Inc and Sony Corp, did not violate the laws.

James Lou, an NCC official who was involved in the testing, said the commission, however, would request mobile phone makers make information transmission more secure.

The probe, which also involved Chinese handset makers Huawei Technologies Co Ltd and ZTE Corp, was a reminder of the scrutiny Chinese technology firms are subject to abroad as governments become increasingly wary of potential cyber security threats from the world's second-biggest economy.

It also highlights Taiwan's sensitivity to security issues involving China, its largest trading partner but one which has never renounced the use of force to take back what it deems a renegade province.

Privately owned Xiaomi, whose budget smartphones are popular throughout Asia, was previously accused of breaching data privacy. In August, the company apologized and said it would change a default feature after a Finnish security company said Xiaomi collected address book data without users' permission.

In September, Taiwan's government began performing independent tests on Xiaomi phones after media reports said that some models automatically send user data back to the firm's servers in mainland China.

The probe was then widened to include local and foreign handsets. The NCC report said handsets made by local firms HTC Corp, Asustek Computer Inc, Far EasTone Telecommunications Co Ltd, Taiwan Mobile Co Ltd and U.S.-based InFocus Corp, whose handsets are made by Taiwan's Hon Hai Precision Industry Co Ltd, were also cleared of breaching the data protection laws.

Reuters

U.S. stocks edged lower on Tuesday, with major indexes pulling back from record levels as the recent trend of modest moves and low volume continued in the next-to-last trading day of the year.

The day's losses were broad if not especially deep. All ten primary S&P 500 sectors were lower on the day, with utilities .SPLRCU - 2014's best sector performer - leading the 

decline with a drop of 0.9 percent, followed by telecom .SPLRCL, which fell 0.4 percent. Both sectors are considered defensive groups.

Equities have been trending to the upside recently, buoyed by strong economic data and the U.S. Federal Reserve's commitment to be "patient" about raising interest rates. After the S&P 500 gained nearly 6 percent over the prior eight sessions, it notched its 53rd record close of the year on Monday, while the Dow just missed extending its streak of positive sessions to eight.

The speed and scale of the rally could push traders to take profits, and volatility could be amplified with many market participants out for the holiday, which depresses volume. The stock market will be closed on Thursday for the New Year's holiday.

"I still like equities, but we’re at a point where valuations are no longer really cheap. I don’t see much that looks inexpensive," said James Liu, global market strategist for JPMorgan Funds in Chicago.

Liu said that investors would typically buy defensive sectors in an environment like the current one, "but those are actually the most expensive. The standard playbook has been turned on its head." He added that he preferred cyclical sectors in 2015.

In the latest economic data, consumer confidence rose slightly less than expected in December, while U.S. single-family home price appreciation slowed less than forecast in October.

NeuroDerm Ltd (NDRM.O) soared 60 percent to $9.88 on heavy volume after it said data from a mid-stage study suggested that a higher dose of its Parkinson's drug could provide an alternative to treatments that require surgery.

Civeo Corp (CVEO.N), which provides temporary housing for oilfield workers and miners, said late Monday it slashed its workforce and forecast revenue could fall by one-third as slumping crude prices force oil producers to cut costs. The stock plunged 51 percent to $4.07 on volume of about 27.4 million shares, making for the most active day in its history.

At 11:00 a.m. the Dow Jones industrial average .DJI fell 48.06 points, or 0.27 percent, to 17,990.17, the S&P 500 .SPX lost 5.28 points, or 0.25 percent, to 2,085.29 and the Nasdaq Composite .IXIC dropped 14.25 points, or 0.3 percent, to 4,792.67.

Declining issues outnumbered advancing ones on the NYSE by 1,677 to 1,235, for a 1.36-to-1 ratio; on the Nasdaq, 1,451 issues fell and 1,090 advanced for a 1.33-to-1 ratio .

The S&P 500 was posting 19 new 52-week highs and 5 new lows; the Nasdaq Composite was recording 69 new highs and 29 new lows.

Reuters

 Italian prosecutors on Tuesday ordered the crippled Greek ferry Norman Atlantic back to Italy as part of a criminal investigation, saying they feared more bodies will be found once the vessel is properly searched given the presence of stowaways and huge discrepancies in the names on the manifest and those rescued.

The fire-tinged vessel was adrift for a third day off the Albanian coast, where two sailors were killed earlier Tuesday when a tow line being deployed apparently snapped, according to Albanian officials.

The coast guard said another body from the ferry was found Tuesday, bringing the toll so far to 11. Three of the dead were Italian truck drivers who worked for the Naples-based Eurofish company and had gone to pick up eel shipments in Greece. The company was closed for the day in mourning.

More than 400 people were rescued from the ferry, most in daring, nighttime helicopter sorties that persisted despite high winds and seas, after a fire broke out before dawn Sunday on a car deck. Both Italian and Greek authorities have announced criminal investigations into the cause of the blaze.

Italian prosecutors secured jurisdiction over the case from Albanian judicial authorities, citing the ship's Italian owner and Italian captain.

Bari prosecutor Giuseppe Volpe, who ordered the ferry back to the Italian port of Brindisi, said it was likely that other bodies will be found in the cargo areas of the ferry once searched, given that there was "incontrovertible" evidence that migrants were stowed away onboard. Two Afghans and a Syrian were among the 49 who disembarked in Bari on Monday morning, one of whom had already asked for political asylum, he said.

"Our fear is that unfortunately once the wreck is recovered, we'll find other dead people on board," he said.

The search for possible missing people continued in the seas off Albania amid ongoing confusion over how many passengers were on board. The ferry company said there were 475 on board, but Volpe said there were at least 18 "overbookings" and an untold number of stowaways.

Greek maritime officials, meanwhile, revealed that the first word about the problems on board the ship came from a passenger, not the crew, calling an emergency number.

"We are aboard the Norman Atlantic of Anek lines heading for Ancona and it is on fire. My name is Argyris Stavros, the ship is on fire and they don't know what to do. I don't know what time it is, what time is it? It's 5:40." according to a recording of the call played out during a news conference.

As an Italian ship with about 180 of the survivors on board headed toward Brindisi, salvage companies were working to secure tow lines to begin moving the ferry, hampered by high winds and seas.

Italian judicial authorities have enlisted the Italian tug company, Barretta, to take charge of bringing the Norman Atlantic ferry to Brindisi. No timeframe was given, but Barretta said it could arrive within a day.

Besides Barretta, the ship owner's insurance company has contracted the Dutch salvage firm Smit to secure the wreck.

Smit spokesman Martijn Schuttevaer said one line was connected by early Tuesday and that the priority was to get a heavier tow line connection, aided by the arrival of larger tugs. It wasn't clear if that was the operation underway when the Albanian sailors were struck.

Schuttevaer said crews were also going through the vessel to extinguish any remaining fire.

"There is still smoke," he said.

But Volpe cautioned that only Barretta was legally responsible for bringing the ferry to Italy. Schuttevaer noted that "prosecutors are not going to pick up the bill for the salvage," and that the ship owner's insurance company would.

A ship carrying 39 survivors was diverted from the southern Italian port of Manfredonia to Taranto because of poor weather, adding another 12 hours or more to their journey to dry land. The survivors include five children and three people who are injured.

AP

U.S. consumer confidence increased in December, bolstered by a brightening jobs situation that left perceptions about economic conditions at a high last seen in February 2008, according to a private sector report released on Tuesday.

The Conference Board, an industry group, said its index of consumer attitudes rose to 92.6 from an upwardly revised 91.0 the month

before. Economists expected a reading of 93.0 for December, according to a Reuters poll.

November was originally reported as 88.7.

"Consumer confidence rebounded modestly in December, propelled by a considerably more favorable assessment of current economic and labor market conditions," Lynn Franco, director of economic indicators at The Conference Board, said in a statement. "... They are more confident at year-end than they were at the beginning of the year."

The expectations index in December was 88.5 versus November's revised 89.3, and the present situation index rose to 98.6 from a revised 93.7 in November. The present situation index is now at its highest level since February 2008.

The "jobs hard to get" index was 27.7 in December, versus a revised 28.7 the month before.

Reuters

A lawyer for an Iranian-American former U.S. Marine jailed in Tehran was reported on Tuesday as saying the United States had sought his release through a prisoner swap, but officials in Washington denied any proposed exchange.

Mahmoud Alizadeh Tabatabai, attorney for former Marine Amir Hekmati, told Iran's semi-official Tasnim News Agency that the United States had made the request and it had been put to Iran's judiciary, which has not yet responded.

"The US has submitted the request via its interest section in Iran," Tabatabai was quoted by Tasnim as saying.

Tabatabai did not say which individual or individuals Washington had proposed to release in return for Hekmati's freedom, adding that the names would be made public at the Iranian judiciary's discretion.

Reuters telephone calls to Tabatabai's office in Tehran went unanswered. State Department deputy spokesperson Marie Harf said Washington had not suggested a prisoner swap.

"The U.S government has not proposed a prisoner exchange for Mr. Hekmati. It is not true," Harf said, calling on the Iranian government to release Hekmati immediately, as well as two other detained U.S. citizens.

Hekmati was arrested in August 2011, his family says, and convicted of spying for the CIA, a charge his relatives and the U.S. government deny. His family says he was detained while visiting his grandmother in Tehran.

He was sentenced to death, but a higher court nullified the penalty in March 2012 and sent the case to another court. Hekmati went on a hunger strike earlier this month to protest his detention.

Hekmati's case is another irritant between Washington and Tehran, who severed relations following Iran's 1979 Islamic Revolution. The United States and other world powers are engaged in sensitive negotiations with Iran over curbing Iran's nuclear program in exchange for easing economic sanctions.

Hekmati served as an infantryman, language and cultural adviser and Arabic and Persian linguist in the U.S. Marine Corps from 2001 to 2005, performing some of his service in Iraq.

Reuters

The school hired the former Michigan star quarterback Tuesday, just two days after he left his job at coach of the San Francisco 49ers. Husky voiced and grinning, Harbaugh called it a "homecoming" for himself and his family.

"Throughout my life I have dreamed of coaching at the University of Michigan," Harbaugh said in a statement moments before he was introduced at a packed news conference. "Now I have the honor to live it.

The 51-year-old Harbaugh coached the 49ers to three straight NFC championship games. San Francisco lost the 2013 Super Bowl to a Baltimore Ravens team coached by his brother, John. After the 49ers slipped to 8-8 this season and missed the playoffs, he parted ways with the team Sunday in what both sides called a mutual decision.

Now his name is the buzz of the Big Ten.

"He's basically Michigan royalty right now," said former Wolverines quarterback Denard Robinson, now a Jacksonville Jaguars running back. "He's the man right now. I think he's going to do a great job and help out recruiting. He's had success at every school he went to. I think it's a great fit for Michigan."

An expensive one, too, with media reports saying Michigan offered Harbaugh $48 million over six years. Interim athletic director Jim Hackett said Harbaugh had signed a seven-year deal, but didn't immediately disclose full details.

"Out guy came home," Hackett said.

Big Ten Network analyst and former college coach Gerry DiNardo said Michigan, the only school with more than 900 all-time wins, would be bringing in a "rock star" capable of returning the Wolverines to elite status in a short time.

"This gives Michigan a chance to catch up," DiNardo said.

Still, Michigan's new coach has his work cut out for him in a Big Ten East Division that's only getting tougher.

Meyer is preparing the Buckeyes for this week's semifinal against Alabama in the inaugural College Football Playoff. Michigan State's Mark Dantonio has built a program that has staying power. Penn State's James Franklin is a celebrated recruiter who looks to have the Nittany Lions on the rise.

Under Brady Hoke, Michigan dipped to 5-7 this season and was among only four Big Teams to not earn a bowl bid. The Wolverines were 31-20 in Hoke's four seasons and declined steadily after an 11-2 mark in his first year.

Harbaugh went 58-27 overall as a college coach at San Diego and Stanford, including a 29-21 record in four seasons with the Cardinal. He took over a 1-11 team when he was hired in December 2006 and quickly turned the program back into a winner and bowl contender.

Harbaugh's first Stanford team went 4-8 in a season highlighted by a 24-23 win over No. 1 Southern California, a game in which the Cardinal was a 41-point underdog. Stanford was 5-7 the following season, then improved to 8-5 and earned a Sun Bowl berth in 2009 — the school's first bowl appearance since 2001. They won the Orange Bowl with quarterback Andrew Luck his final season.

The 49ers hired Harbaugh four days after the bowl, and he went 44-19-1 with two NFC West titles in four seasons.

Harbaugh is now being looked to as the coach who can finally return Michigan to prominence.

"I think it gives the Big Ten great credibility," said Lou Holtz, the former coach and an ESPN analyst. "I've always felt the real evaluation of a conference is strength of coaches. When you look at the SEC, there's Nick Saban, there was Urban Meyer (at Florida), Steve Spurrier, Mark Richt, Les Miles. Now in the Big Ten you've got an Urban Meyer, a Jim Harbaugh, a Mark Dantonio."

Harbaugh's leadership showed up during his playing days in Ann Arbor. The starting quarterback for three seasons under Schembechler, he is well remembered for delivering a victory he guaranteed over Ohio State in 1986, the same season he was Big Ten player of the year and finished third in Heisman Trophy voting.

He played 15 years in the NFL, earning the nickname "Captain Comeback" for leading fourth-quarter playoff rallies for the Indianapolis Colts. Harbaugh later coached quarterbacks for the Oakland Raiders in 2002-03 before returning to the college ranks.

DiNardo, whose coaching resume includes stops at LSU, Indiana and Vanderbilt, said he doubted Harbaugh would have taken the job if he weren't promised to have full autonomy in running the program.

"You don't pay someone millions of dollars and tell him what jersey number the quarterback should wear," DiNardo said. "This coach has to be left alone, whether that's the size of the recruiting staff or facilities or non-conference schedule. All those decisions have to be Jim Harbaugh's. No one told Bo Schembechler what to do. He sees the big picture."

AP

A New York congressman who pleaded guilty to tax evasion just days ago has announced he'll resign from office next week because he would not be able to give the job his full attention anymore.

Republican Rep. Michael Grimm issued a statement late Monday saying he will resign effective Jan. 5.

"The events which led to this day did not break my spirit, nor the will of the voters," he said. "However, I do not believe that I can continue to be 100% effective in the next Congress, and therefore, out of respect for the office and the people I so proudly represent, it is time for me to start the next chapter of my life."

Grimm's guilty plea last week to aiding in the filing of a false tax return came after he was re-elected to his Staten Island seat in November, even though he was under indictment.

Following the plea, Grimm said he would stay in Congress as long as he could.

Grimm reportedly talked with House Speaker John Boehner, R-Ohio, before deciding to step down. Boehner has forced other lawmakers to resign for lesser offenses.

Boehner has not discussed Grimm's future publicly. Boehner spokesman Michael Steel said in an email, "We do not discuss private conversations the speaker has with members."

The new Congress is scheduled to open Jan. 6, and Grimm's presence would have been a distraction for Republicans who will control both the House and the Senate.

House Minority Leader Nancy Pelosi, D-Calif., and the Democratic National Committee had called on Grimm to resign.

A former Marine and FBI agent with support from former New York City Mayor Rudolph Giuliani, Grimm was elected to Congress in 2010, scoring an upset win over first-term Democratic Rep. Michael McMahon.

According to an indictment, the tax fraud began in 2007 after Grimm retired from the FBI and began investing in a small Manhattan restaurant called Healthalicious.

The indictment accused him of underreporting more than $1 million in wages and receipts to evade payroll, income and sales taxes, partly by paying immigrant workers, some of them in the country illegally, in cash.

Sentencing was scheduled for June 8. Prosecutors said a range of 24 to 30 months in prison would be appropriate, while the defense estimated the appropriate sentence as between 12 and 18 months.

After his court appearance, Grimm said he planned to stay in Congress. "As long as I'm able to serve, I'm going to serve," he said.

He also apologized for his actions. "I should not have done it and I am truly sorry for it," he said.

But in his statement Monday, Grimm said he made his "very difficult decision ... with a heavy heart" after much thought and prayer.

The New York Daily News first reported Grimm's plans to give up his seat.

AP

Family members of those aboard AirAsia Flight 8501 collapsed in agony Tuesday as images of debris and a bloated body flashed across Indonesian television screens, proof that the plane crashed into the sea two days earlier with 162 people on board.

The low-cost carrier vanished Sunday halfway through a two-hour flight between Surabaya, Indonesia and Singapore after encountering storm clouds, sparking an international hunt with dozens of planes, ships and helicopters.

On the third day of searching, the first signs of the jet were found in shallow, aqua waters only about 10 miles (16 kilometers) from the plane's last known coordinates: A life jacket, an emergency exit door. Parts of the jetliner's 

interior, including an oxygen tank, were brought to the nearest town, Pangkalan Bun. Another find included a bright blue plastic suitcase, completely unscratched.

"I know the plane has crashed, but I cannot believe my brother and his family are dead," said Ifan Joko, who lost seven relatives, three of them children, as they traveled to Singapore to ring in the New Year. "... We still pray they are alive."

First Adm. Sigit Setiayanta, Naval Aviation Center commander at Surabaya Air Force base, told reporters six corpses were spotted about 160 kilometers (100 miles) from Central Kalimantan province.

Rescue workers were lowered on ropes from a hovering helicopter to retrieve bodies. Efforts were hindered by 2-meter-high (6-foot) waves and strong winds, National Search and Rescue Director SB Supriyadi said, but the first body was later picked up by a navy ship. Officials said as many as six others followed, but they disagreed about the exact number.

Supriyadi was on the aircraft and saw what appeared to be more wreckage under the water, which was clear and a relatively shallow 20 to 30 meters (65 to 100 feet).

Television coverage of the discovery sent a spasm of pain through the room at the Surabaya airport where relatives were waiting for news, especially as it showed a half-naked man floating in the water, a shirt partially covering his head.

Many screamed and wailed uncontrollably, breaking down into tears while they squeezed each other. One middle-aged man collapsed and had to be carried out on a stretcher.

Their horror at the news was captured by cameras on the other side of windows into the waiting room. To grant traumatized family members privacy, officials blacked out the glass later Tuesday evening.

Around 125 family members were planning to travel to Pangkalan Bun on Wednesday to start identifying their loved ones. Body bags and coffins have been prepared at hospitals there, while dozens of elite military divers will join the massive search. They are desperate to scour the water ahead of approaching rough weather.

The crash caps an astonishingly tragic year for air travel in Southeast Asia, and Malaysia in particular. Malaysia-based AirAsia's loss comes on top of the still-unsolved disappearance of Malaysia Airlines Flight 370 in March with 239 people aboard, and the downing of Malaysia Airlines Flight 17 in July over Ukraine, which killed all 298 passengers and crew.

Nearly all the passengers and crew were Indonesians, who are frequent visitors to Singapore, particularly on holidays.

Haidar Fauzie, 60, said his youngest child and only daughter, Khairunnisa Haidar, was a stewardess who had worked with AirAsia for two years.

On learning about the crash, he struggled to console his grieving wife. They last saw their child six weeks ago, when she returned home on holiday.

"From the start, we already knew the risks associated with being a stewardess," said Fauzie. "She is beautiful and smart. It has always been her dream to fly. We couldn't have stopped her."

Before flying to Surabaya to pay his respects to the families, AirAsia group CEO Tony Fernandes tweeted, "My heart is filled with sadness for all the families involved in QZ 8501. On behalf of AirAsia my condolences to all. Words cannot express how sorry I am."

Fernandes, the founder and the face of AirAsia, and a constant presence in Indonesia since the tragedy started unfolding, said he planned to travel to the recovery site on Wednesday.

"I have apologized profusely for what they are going through," he said of his contact with relatives. "I am the leader of this company, and I have to take responsibility. That is why I'm here. I'm not running away from my obligations."

It is not clear what brought the plane down.

The last communication indicated the pilots were worried about bad weather. They sought permission to climb above threatening clouds, but were denied due to heavy air traffic. Four minutes later, the jet disappeared from the radar without issuing a distress signal.

The plane's cockpit voice and flight data recorders, or black boxes, have yet to be recovered. Scott Hamilton, managing director of aviation consultancy Leeham Co., said in a post on his website that autopsies may provide some of the earliest clues about what happened.

"If death was due to blunt force trauma, this could suggest passengers were alive upon impact with the water," he wrote. "If death came from other circumstances, this could suggest an explosive decompression and in-flight break up occurred."

Several countries rushed to Indonesia to help with search and recovery efforts.

The United States said it was sending the USS Sampson destroyer, joining at least 30 ships, 15 aircraft and seven helicopters in the search for the jet, said Indonesia's Search and Rescue Agency chief Henry Bambang Soelistyo.

A Chinese frigate also was on the way, while Singapore said it was sending two underwater beacon detectors to try to detect pings from the plane's all-important cockpit voice and flight data recorders. Malaysia, Australia and Thailand also are involved in the search.

AP

The cost of being uninsured in America is going up significantly next year for millions of people.

It's the first year all taxpayers have to report to the Internal Revenue Service whether they had health insurance for the previous year, as required under President Barack Obama's law. Those who were uninsured

 face fines, unless they qualify for one of about 30 exemptions, most of which involve financial hardships.

Dayna Dayson of Phoenix estimates that she'll have to pay the tax man $290 when she files her federal return. Dayson, who's in her early 30s, works in marketing and doesn't have a lot left over each month after housing, transportation and other fixed costs. She'd like health insurance but she couldn't afford it in 2014, as required by the law.

"It's touted as this amazing thing, but right now, for me, it doesn't fit into my budget," she said.

Ryan Moon of Des Moines, Iowa, graduated from college in 2013 with a bachelor's degree in political science and is still hunting for a permanent job with benefits. He expects to pay a fine of $95. A supporter of the health care law, he feels conflicted about its insurance mandate and fines.

"I hate the idea that you have to pay a penalty, but at the same time, it helps other people," said Moon, who's in his early 20s. "It really helps society, but society has to be forced to help society."

Going without health insurance has always involved financial risks. You could have an accident and end up with thousands of dollars in medical bills. Now, you may also get fined. In a decision that allowed Obama's law to advance, the Supreme Court ruled in 2012 that the coverage requirement and its accompanying fines were a constitutionally valid exercise of Congress' authority to tax.

In 2015, all taxpayers have to report to the IRS on their health insurance status the previous year. Most will check a box. It's also when the IRS starts collecting fines from some uninsured people, and deciding if others qualify for exemptions.

What many people don't realize is that the penalties go up significantly in 2015. Only 3 percent of uninsured people know what the fine for 2015 will be, according to a recent poll by the nonpartisan Kaiser Family Foundation.

Figuring out your potential exposure if you're uninsured isn't simple.

For 2014, the fine is the greater of $95 per person or 1 percent of household income above the threshold for filing taxes. It will jump in 2015 to the greater of 2 percent of income or $325. By 2016, the average fine will be about $1,100, based on government figures.

People can get a sense of the potential hit by going online and using the Tax Policy Center's Affordable Care Act penalty calculator.

Many taxpayers may be able to get a pass. Based on congressional analysis, tax preparation giant H&R Block says roughly 4 million uninsured people will pay penalties and 26 million will qualify for exemptions from the list of more than 30 waivers.

But it's unclear whether taxpayers are aware of the exemptions.

Deciding what kind of waiver to seek could be crucial. Some can be claimed directly on a tax return, but others involve mailing paperwork to the Health and Human Services Department. Tax preparation companies say the IRS has told them it's taking steps to make sure taxpayers' returns don't languish in bureaucratic limbo while HHS rules on their waivers.

TurboTax has created a free online tool called "Exemption Check" for people to see if they may qualify for a waiver. Charges apply later if the taxpayer files through TurboTax.

Timing will be critical for uninsured people who want to avoid the rising penalties for 2015.

That's because Feb. 15 is the last day of open enrollment under the health law. After that, only people with special circumstances can sign up. But just 5 percent of uninsured people know the correct deadline, according to the Kaiser poll.

"We could be looking at a real train wreck after Feb. 15," said Stan Dorn, a health policy expert at the nonpartisan Urban Institute. "People will file their tax returns and learn they are subject to a much larger penalty for 2015, and they can do absolutely nothing to avoid that."

The insurance requirement and penalties remain the most unpopular part of the health care law. They were intended to serve a broader purpose by nudging healthy people into the insurance pool, helping to keep premiums more affordable.

Sensitive to political backlash, supporters of the health care law have played down the penalties in their sign-up campaigns. But stressing the positive — such as the availability of financial help and the fact that insurers can no longer turn away people with health problems — may be contributing to the information gap about the penalties.

Dayson, the Phoenix resident, says she's hoping her employer will offer a health plan she can fit into her budget, allowing her to avoid higher fines for 2015.

In Des Moines, recent college graduate Moon has held a succession of temporary local and state government jobs that don't provide affordable coverage. The penalties are on his mind.

"When it gets up to $325, I hope I have a career that actually offers me a good health care plan," he said.

AP

Golden rays of tropical sunlight slant through the caved-in roof of Saint Thomas de Villanueva chapel, illuminating tiles graced by the faces of saints. Vandals shattered the stained-glass windows and scrawled their names on the thick walls during decades of frigid relations between the Roman Catholic Church and Cuba's communist government.

But a new chain-link fence surrounds the building, protecting it for a future that once seemed unimaginable.

The church is planning to restore the building to its former glory, along with more a dozen more churches, parish houses and other buildings, as part of a quiet reconciliation between the Catholic Church and the Cuban government that has brought relations to a historic high point this Christmas. Authorities have also given permission for the construction of the first two new churches in more than five decades.

After years of bridge-building behind closed doors, the Cuba-Vatican rapprochement burst into the headlines last week when the U.S. government credited Pope Francis with helping facilitate the secret reconciliation talks between the U.S. and Cuba. Francis wrote the leaders of both countries to invite them to resolve their differences.

"We ask the Lord to continue moving forward this process of reconciliation and peace that Pope Francis has favored and supported," Cuban Cardinal Jaime Ortega said in his homily at a Christmas Eve Mass in Havana's colonial cathedral.

Church officials and experts said the mediation and the renovation and construction of churches were essential parts of a fundamental shift in the dealings between the church and the communist state, which has been hostile toward religion for decades.

Developments "are heading in the same direction: a new chapter in the general and economic history of Cuba, and also church-state relations," said Enrique Lopez Oliva, a religious historian at the University of Havana.

The church and the Cuban state were in a state of open hostility in the years immediately after the 1959 revolution that put Fidel Castro in power, a time when some anti-Castro militias used churches to store weapons.

Some priests were sent to labor camps. Churches were confiscated and used by the government as warehouses, bakeries, dining halls or schools.

Openly practicing Catholics were barred from holding public office and membership in the Communist Party. For the faithful, even winning admission to a university could be difficult, and the ubiquitous neighborhood watch committees kept an especially watchful eye on them.

But a thaw began in the 1990s as Cuba removed a constitutional clause declaring the country an officially atheist state. Pope John Paul II paid a momentous visit in 1998 and urged a new era of openness between Cuba and the world. After Benedict XVI visited in 2012, Cuba made Good Friday an official holiday.

Christmas decorations are increasingly visible in office buildings and homes each year. However, the church has made little headway in its hope for more access to state-controlled airwaves and permission to run religious schools.

Earlier this year the editors of a church magazine that has been one of the few independent publications in the country resigned, citing internal pressures from some who felt it was becoming too political.

According to a church member with direct knowledge of the matter, the handover of properties was mentioned during negotiations between Castro and Cardinal Ortega in July 2010, when the church mediated the release of a group of jailed dissidents.

The properties include two churches, a parochial house and other real estate that was being used as stores in Santiago, Cuba's second-largest city; two plots of land and a chapel in the Bayamo-Manzanillo Diocesis; and the College of Jesuit Priests, a huge building that occupies more than a city block in Cienfuegos.

"It's a very positive gesture by authorities, restoring to a certain extent what belongs to the church, and above all it creates an atmosphere of trust," the Rev. Jose Felix Perez, adjunct secretary of the Cuban Catholic Bishops' Conference, told The Associated Press. "It's all happening, it must be said, gradually."

Ortega has publicly welcomed Castro's economic and social reforms, which have enabled hundreds of thousands of Cubans to work for small private businesses and made it much easier for islanders to travel overseas. Those reforms have not extended to political change, and the Communist Party is still the only one allowed.

Despite the gradual opening, experts say the percentage of Cubans who are practicing Catholics remains well below that of most of the rest of Latin America. For many Cubans, Christmas is a day off work to hang out with family and neighbors, with no spiritual component whatsoever.

Joel Dopico, president of the Cuban Council of Churches, said other evangelical and Protestant churches are also receiving properties from the state. He had no precise figures, but said the returns were less than what the Catholic Church has gotten.

"I think very highly of this state policy to return some properties," Dopico said. "It is part of the transformations that that are taking place in the country, where more and more the church will be able to carry out its work and support for the community."

AP