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SANAA, Yemen — Officials say the death toll from a suicide bombing at a military parade rehearsal in the capital Sanaa has risen to 38 troops.

The military officials say the Monday’s bombing near Sanaa’s presidential palace is one of the deadliest attacks in the city in months.

They said the attacker was a soldier taking part in the drill, lining up with fellow troops at a main square in the capital.

The officials spoke on condition of anonymity because they were not authorized to speak to the media.

THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP’s earlier story is below.

SANAA, Yemen — A suicide bomber blew himself up at a military parade drill in the Yemeni capital Sanaa on Monday, killing at least 20 soldiers and wounding scores of others in what was one of the deadliest attacks in the city in months, officials and witnesses said.

The attacker was a soldier who was taking part in the drill, lining up with fellow troops at a main square in the capital, not far from the presidential palace, said the officials, speaking on condition of anonymity because they were not authorized to speak to the media.

The bomber detonated his explosives minutes before the arrival of the defense minister and the chief of staff, who were expected to greet the troops, the officials said. The drill was a rehearsal for a parade for the celebration of Yemen’s National Day on Tuesday.

The attack left a scene of carnage, with scores of bleeding soldiers lying on the ground as ambulances rushed to the scene.

Meanwhile, Yemeni security officials said three U.S. Coast Guard trainers came under attack on Sunday by militants belonging to an al-Qaida front group in the Red Sea port city of Hodeida.

The three Americans were traveling in a car near their hotel when the militants pulled up in another vehicle and sprayed them with machinegun fire. One was injured, the officials said Monday, speaking on condition of anonymity because they were not authorized to speak to the media.

In Sanaa, no one immediately claimed responsibility for Monday’s suicide bombing, but the soldiers targeted were mostly troops from Yemen’s Central Security, a paramilitary force commanded by Yahya Saleh, a nephew of ousted president, Ali Abdullah Saleh.

Saleh stepped down in February as part of a U.S.-backed power-transfer deal brokered by Gulf Arab countries. It gave Saleh immunity from prosecution in return for relinquishing his power.

Since then, the new president, Abed Rabbo Mansour Hadi, has pledged to restructure the army and purge it from Saleh’s family members and loyalists suspected of hindering reforms.

Hadi has also vowed to step up the fight against al-Qaida, which expanded its foothold after exploiting the political and security turmoil in the wake of the uprising against Saleh.

Since the revolt erupted, inspired by other Arab Spring uprisings, al-Qaida militants overran large swaths of territory and several towns and cities in the south, pushing out government forces and establishing their own rule.

In recent weeks, the army has launched a concerted effort to uproot the militants from their strongholds — and is closely coordinating with a small contingent of U.S. troops who are helping guide the operations from inside Yemen.

BEIRUT — Street battles between pro- and anti-Syrian groups in the Lebanese capital killed two people overnight and wounded 15 as the spiraling conflict in neighboring Syria spilled across the border.

Some Beirut residents kept their children home from school following the fighting, which was among the worst the Lebanese capital has seen in four years. Gunmen fired rocket-propelled grenades and machine guns in battles that lasted more than four hours.

The streets were calmer Monday, but some shops remained closed.

The violence in the predominantly Sunni neighborhood of Tariq Jadidah erupted hours after an anti-Syrian cleric and his bodyguard were shot dead at a checkpoint in northern Lebanon, an incident that instantly spiked tensions.

Authorities braced for the possibility of more violence Monday in the north, where Sunni cleric Sheik Ahmed Abdul-Wahid and his bodyguard were to be buried. Gunmen carrying automatic rifles shouted for the downfall of the Syrian regime in the cleric’s hometown of Beireh, where he was to be buried later in the day.

Amid fears the situation might deteriorate, four Gulf countries — Kuwait, Qatar, Bahrain and United Arab Emirates — have warned their citizens against travel to Lebanon.

The fighting underscores how the bloodshed in Syria, where President Bashar Assad‘s regime is cracking down on an uprising against his rule, can fuel violence across the border in Lebanon.

Lebanon has a fragile political faultline precisely over the issue of Syria.

There is an array of die-hard pro-Syrian Lebanese parties and politicians, as well as support for the regime on the street level. There is an equally deep hatred of Assad among other Lebanese who fear Damascus is still calling the shots here. The two sides are the legacy of Syria’s virtual rule over Lebanon from 1976 to 2005 and its continued influence since.

On Monday, a gunman in Beireh shouted “Down with Bashar!” and said the Syrian leader was trying to “transfer the crisis to Lebanon.”

Lebanon and Syria share a complex web of political and sectarian ties and rivalries, which can easily turn violent. Last week, clashes sparked by the Syrian crisis killed at least eight people and wounded dozens in the northern city of Tripoli.

The revolt in Syria began 15 months ago, and there are fears the unrest will lead to a regional conflagration that could draw in neighboring countries. The U.N. estimates the conflict has killed more than 9,000 people since March 2011.

Syrian activists said regime forces killed dozens of people during a raid Sunday on the central town of Soran in Hama province, security officials said.

One activist group, the Britain-based Syrian Observatory for Human Rights, put the death toll at 39, citing a network of sources on the ground. Syria-based activist Mustafa Osso said the figure was more than 20.

The death toll could not be independently confirmed.

A video posted online by activists showed the bodies of five people said to be of the same family who were killed during the shelling of Soran.

Syria is a geographical linchpin in the Middle East, raising the possibility that the crisis there will bleed into other countries.

The circumstances surrounding Sunday’s shooting death of the Abdul-Wahid, the Sunni cleric, and his bodyguard remained unclear but the state-run National News Agency said they appeared to have been killed by soldiers after their convoy failed to stop at an army checkpoint.

The Lebanese army on Sunday issued a statement, saying it deeply regretted the incident and that a committee will investigate.

The clashes in Beirut subsided around 4 a.m. Monday after anti-Syrian gunmen took control of the headquarters of the pro-Syrian Arab Movement Party.

The fighting was among the most intense fighting in Beirut since May 2008, when gunmen from the Shiite Hezbollah militant group swept through Sunni neighborhoods after the pro-Western government tried to dismantle the group’s telecommunications network.

More than 80 people were killed in the 2008 violence, pushing the country to the brink of civil war.

Also Monday, Syria’s state-run news agency SANA, said Assad issued a presidential decree calling on the country’s newly elected parliament to hold its first meeting on Thursday. A parliament speaker is usually elected on the first meeting of a new parliament.

Assad has pointed to the parliamentary elections earlier this month as a sign of his long-promised reforms, but the opposition dismissed the vote as a sham meant to preserve his autocratic rule.

As the violence intensified, there are growing fears that al-Qaida or other extremists could be entering the fray. In a statement posted on a militant web site late Sunday, a group calling itself the Al-Nusra Front claimed responsibility for a suicide car bomb attack in the parking lot of a Syrian military compound in the eastern city of Deir el-Zour.

Saturday’s attack, the latest in increasingly frequent bombings in the country’s major cities to target the regime’s security services, killed at least nine people and wounded dozens.

Little is known about the group although Western intelligence officials say it could be a front for a branch of al-Qaida militants from Iraq operating in Syria. The group claimed responsibility for several other suicide attacks in Syria.

____

Malla reported from Beireh, Lebanon.

SANAA, Yemen — A suicide bomber blew himself up at a military parade drill in the Yemeni capital Sanaa on Monday, killing at least 20 soldiers and wounding scores of others in what was one of the deadliest attacks in the city in months, officials and witnesses said.

The attacker was a soldier who was taking part in the drill, lining up with fellow troops at a main square in the capital, not far from the presidential palace, said the officials, speaking on condition of anonymity because they were not authorized to speak to the media.

The bomber detonated his explosives minutes before the arrival of the defense minister and the chief of staff, who were expected to greet the troops, the officials said. The drill was a rehearsal for a parade for the celebration of Yemen’s National Day on Tuesday.

The attack left a scene of carnage, with scores of bleeding soldiers lying on the ground as ambulances rushed to the scene.

Meanwhile, Yemeni security officials said three U.S. Coast Guard trainers came under attack on Sunday by militants belonging to an al-Qaida front group in the Red Sea port city of Hodeida.

The three Americans were traveling in a car near their hotel when the militants pulled up in another vehicle and sprayed them with machinegun fire. One was injured, the officials said Monday, speaking on condition of anonymity because they were not authorized to speak to the media.

In Sanaa, no one immediately claimed responsibility for Monday’s suicide bombing, but the soldiers targeted were mostly troops from Yemen’s Central Security, a paramilitary force commanded by Yahya Saleh, a nephew of ousted president, Ali Abdullah Saleh.

Saleh stepped down in February as part of a U.S.-backed power-transfer deal brokered by Gulf Arab countries. It gave Saleh immunity from prosecution in return for relinquishing his power.

Since then, the new president, Abed Rabbo Mansour Hadi, has pledged to restructure the army and purge it from Saleh’s family members and loyalists suspected of hindering reforms.

Hadi has also vowed to step up the fight against al-Qaida, which expanded its foothold after exploiting the political and security turmoil in the wake of the uprising against Saleh.

Since the revolt erupted, inspired by other Arab Spring uprisings, al-Qaida militants overran large swaths of territory and several towns and cities in the south, pushing out government forces and establishing their own rule.

In recent weeks, the army has launched a concerted effort to uproot the militants from their strongholds — and is closely coordinating with a small contingent of U.S. troops who are helping guide the operations from inside Yemen.

NEW DELHI: The government on Monday tabled the much-awaited white paper on black money in Parliament which did not disclose any name but made a strong case for setting up Lokpal and Lokayuktas to deal with the menace.

The white paper, which was tabled by finance minister Pranab Mukherjee in the Lok Sabha, also did not provide government’s estimate of black money, within and outside the country, though it quoted various estimates of other agencies on the issue.

The 97-page document, however, pitched for fast-track courts to expeditiously deal with financial offences and deterrent punishment for offenders.

It has also suggested tax incentives for encouraging use of debit and credit cards as these leave audit trails.

On the possibility of any tax immunity scheme, especially gold deposit scheme, to deal with black money, it said, “The issue of complete tax immunity needs to be examined in the light of other policy objectives.”

The document seeks to dispel the impression that government was not doing enough to deal with black money and talks about various policy options and strategies it has been pursuing to address the issue of corruption in public life.

Referring to the issue of institutions like Lokpal and Lokayuktas, the paper said, “(they) need to be put in place at the earliest, in the Centre and the states respectively, to expedite investigations into cases of corruption and bring the guilty to justice.”

The government has not been able to push through the Lokpal Bill in Rajya Sabha, despite pressure from the civil society. The Bill was approved by the Lok Sabha.

In order to check the menace of black money, Mukherjee in his foreward to the paper said the government has brought five bills “the Lokpal Bill, the Judicial Accountability Bill, the Whistle Blowers Bill, the Grievance Redressal Bill and the Public Procurement Bill, which are at various stages of consideration by Parliament”.

The expansion of information exchange network at the international level will help in curbing cross-border flow of illicit wealth, he said, adding “while these measures will set the tone for an equitable, transparent and a more efficient economy, there is much that we could do, both individually and collectively, to strengthen the moral fibre of our society.”

The paper suggested four-pronged strategy to curb generation of black money. These include more incentives for voluntary compliance of tax laws, reforms in vulnerable sectors of economy and creation credible deterrence.

It mentioned that reform of financial and real estate sectors would help in reducing generation of black money in long term as freeing of gold imports had helped in checking smuggling.

“Fine tuning of financial regulation remains one of the key areas in creating deterrence against generation of black money and detecting black money in the process of being laundered…Strengthening of other reporting regimes can allow appropriate systems for flagging of dubious transactions in future and improve the probability of their timely detection and prevention,” it added.

In order to curb black money in the real estate sector, which accounts for 11% of GDP, the paper suggested that government should develop a nationwide data base, introduce TDS on sale of property and set up electronic payment system.

The white paper has also made a case for tracking bullion and jewellery transactions, encouraging payment through debit and credit cards and prevent misuse of “off market” and “dabba trading” on equities and commodities market.

It said that in order to ensure transparent and efficient allocation of natural and man-made resources, including mines, land and spectrum, “oversight in the form of comprehensive regulations, independent regulator, and appointment of ombudsmen for grievance redressal…can be considered as a remedy.”

The introduction of Goods and Services Tax, it added, would be a major step in integrating the efforts of different agencies dealing with black money.

Referring to the misuse of corporate structure, the paper said, “The Vodafone tax case provides an instance of the misuse of corporate structure for avoiding the payment of taxes.”

In this case, it said, the Hutchison Group had made investments in India from 1992 to 2006 through a number of subsidiaries having ‘separate corporate personality’ but which were essentially post box companies based in the Cayman Islands, British Virgin Islands, and Mauritius.

The Hutchison Group sold its entire business operation in India in February 2007 to the Vodafone Group for a total consideration of $11.2 billion and the same was effected through transfer of a solitary share of a Cayman Islands company.

When the tax authorities requested the accounts of the said company, it said, “The answer given was that as per Cayman Islands law, the company was not required to prepare its accounts.”

With increasing realization about the harmful effect of ownership being concealed behind complicated corporate ownership structure, such structure is coming under scrutiny.

“…it is expected that efforts taken by India in this regard as also global pressure will provide a check on these tendencies,” it said.

MUMBAI: IPL players Wayne Parnell and Rahul Sharma of Pune Warriors team, who were detained along with 94 others during a raid on a rave party in suburban Juhu, were let off today after collection of their blood and urine samples.

In another development, Vishay Handa, director of city-based Oakwood Premier Hotel, where the rave party was held last night was arrested under Narcotic Drugs and Psychotropic Substances Act.

A police officer said, “All those who were detained last night during the rave party were allowed to go after their blood and urine samples were taken.”

“Among those who were allowed to go include two IPL cricketers – Wayne Parnell and leg-spinner Rahul Sharma (both play for Pune Warriors India),” the officer said.

“The blood and urine samples were taken to Cooper, Bhabha and J J hospitals, to examine if they consumed the drugs,” the officer said.

Police had said last night that two IPL players from the Pune Warriors team, one of them a foreigner, were among the 96 persons who were detained following a raid.

“Approximately 110 grams of cocaine along with MDMA, popularly known as ecstasy, and charas were seized,” Additional Commissioner of Police Vishwas Nagre Patil had said.

I came for birthday party, didn’t know about rave: Sharma

India and Pune Warriors cricketer Rahul Sharma today refuted the allegation that he was present at a rave party at a Mumbai hotel, claiming that he had gone there to attend a birthday celebration.

“I was invited to a birthday party. Wayne Parnell was with me, I did not know that there was a rave party at the hotel,” said the spinner, who along with his Pune Warriors teammate, was detained by the police after a raid at the Hotel Oakwoods in Juhu.

“We reached there at around 7 in the evening and all of a sudden within half an hour of us reaching there, the police raid happened. We didn’t know what was happening, I asked the police officers and they told me that a raid was in progress,” he said.

Sharma said he has been cooperative with the police and claimed that he has never touched alcohol.

“We have cooperated with the police and have even given medical tests. I belong to a simple family and have not even had a beer in my life, where does the question of attending a rave party arise?” he asked.

“I have told everything to the team management and things would be clear once the medical report comes out,” he said.

NEW DELHI: Australian cricketer Luke Pomersbach, who was with Royal Challengers Bangalore in IPL 5, has reportedly confessed to being drunk and unintentionally touching the victim Zohal Hamid.

Reports on Monday said that Pomersbach confessed to his crime in a statement to the police.

Reports added that another Royal Challengers Bangalore player KP Appanna’s name has cropped up in the investigations into the molestation case.

Investigators claimed that Appanna was the person who accompanied Pomersbach when he went to the victim’s room for the second time.

Pomersbach was arrested on Friday after Zohal Hamid alleged that he molested her and hit her fiance Sahil Peerzada when he objected to the cricketer’s behaviour.

Peerzada was punched in his ear following which he had to undergo a surgery.

Zohal had alleged that some team members of Luke had pressurised her to withdraw the case against Pomersbach.

NEW DELHI: Investigators on Monday claimed that Australian cricketer Luke Pomersbach, arrested on charges of molesting an American woman, had told them that he inadvertently touched the victim and was under the influence of alcohol when the incident took place.

Police sources also said that the name of Royal Challengers player KP Appanna has cropped up in the case after he was identified in a CCTV footage. He was allegedly seen accompanying Pomersbach to the room of the victim.

Pomersbach was arrested on Friday after Zohal Hamid alleged that he molested her and hit her fiance Sahil Peerzada when he objected to the cricketer’s behaviour. Peerzada was punched in his ear following which he had to undergo a surgery.

Peerzada was released from hospital on Monday after surgery.

On Appanna, a senior police official said, “We have examined the CCTV footages and identified Appanna. We have spoken to him. We are yet to formally question him.”

Appanna, a leg spinner who plays for Karnataka in Ranji Trophy, could not be contacted for his comments.

He was allegedly seen with Luke at the corridor of the hotel, the official said, adding they were yet to ascertain whether he entered the room where the victim was staying.

Zohal had alleged that some team members of Luke had pressurised her to withdraw the case against Pomersbach.

JOPLIN, Mo. — It was a label they sought both to embrace and avoid, a refrain overheard in whispers or uttered bluntly at soccer games, summer camps and national academic competitions: Here come the tornado kids from Joplin.

For the 428 members of Joplin High School‘s Class of 2012, Monday night’s graduation— featuring a commencement speech by President Barack Obama —caps a senior year marked by tragedy, turmoil and perseverance.

The president will visit southwest Missouri the day before the one-year anniversary of the country’s deadliest single tornado in six decades. The May 22, 2011, twister killed 161 people, injured hundreds more and destroyed thousands of buildings, including Joplin High. Five other Joplin schools were also destroyed, with four more among the damaged structures.

The twister arrived hours after last year’s high school graduation, forever defining the Joplin High Class of 2011 and their younger classmates as well.

“They had to grow up the night of the storm,” Joplin High principal Kerry Sachetta said. “They saw things they never should have had to see.”

School officials vowed to return to class on time. They turned a vacant big-box retail store at the city’s only mall into a temporary Joplin High for juniors and seniors, with freshmen and 10th-graders at another location across town. A middle school relocated to an industrial park warehouse.

Despite the less-than-ideal location, Joplin students embraced their return to a school they saw as a refuge, a safe haven in a town otherwise gone awry, said Joplin High English teacher Brenda White.

“Those kids who lost something needed normalcy,” she said. “And there was no real place to go. But school is a normal place.”

The Joplin tornado helped tighten bonds, diminish cliques, elevate school spirit and strengthen community ties, students and teachers said. Fights and other disciplinary violations declined dramatically.

“Once we had been through (everything) this last year, people just weren’t interested in a lot of the general high school nonsense,” said graduating senior Derek Carter, who will attend the University of Alabama in the fall. “Everyone realized that the carefree nature of high school that we always had, it just doesn’t fit as well anymore.”

Carter and his classmates have been feted by celebrities, from American Idol winner David Cook’s performance at the homecoming dance to pop star Katy Perry’s welcome message for prom.

With few textbooks to salvage from the rubble, the school overhauled its approach to teaching and embraced a technology-first approach, thanks to an estimated donation of $1 million from the United Arab Emirates government that helped equip each Joplin high school student with a laptop computer.

The transition wasn’t entirely smooth, White said.

“I have never worked so hard in my life at any job as I have this year,” she said. “Everything was brand new. There were no books. You had to get your own lessons. You had to get the kids up to speed. You had to get up to speed. You had to learn (computer) programs and how to structure the information.”

On Tuesday, the Joplin school system will symbolically break ground at three new schools being built to replace those lost last year, including a new high school expected to open in 2014. Construction will be financed in part by a $62 million bond issued approved by Joplin voters in April.

Graduating senior Siri Ancha, who plans to study medicine in a combined six-year degree program at the University of Missouri-Kansas City, used to think she would leave Joplin behind once college beckoned. Ancha now realizes that she’s inextricably linked to her hometown.

“For the longest time, I thought I had to go to college some place far away, I had to leave this place,” she said. “But I’m glad I’m only going to be three hours away now. Because being a part of this town has meant so much to me, especially this year. Not just because of the tornado. Joplin is a great community. I definitely have the Joplin pride now.”

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Alan Scher Zagier can be reached at on Twitter at http://twitter.com/azagier .

SANTO DOMINGO, Dominican Republic — A governing party official appeared to have scored a first-round win in the Dominican Republic‘s presidential election but supporters of his main opponent complained of vote-buying and other forms of fraud and said they would challenge the results.

Danilo Medina of the current president’s Dominican Liberation Party received just over 51 percent of Sunday’s vote with 83 percent of the ballots counted, according to the Caribbean country’s Electoral Commission. His main rival, former President Hipolito Mejia of the Dominican Revolutionary Party, had nearly 47 percent. The winner needed more than 50 percent to avoid a runoff.

Medina said he was confident he would win, but that the Electoral Commission would keep scrutinizing ballots through the night. He thanked a crowd of supporters and sent them home.

“We will celebrate in a big way tomorrow,” he said.

Mejia did not concede and questioned the results as did others in his party. Luis Abinader, his vice presidential candidate, said the Dominican Revolutionary Party would present a report detailing irregularities on Monday.

“We are going to defend democracy,” Abinader said. “We are going to show the country what really has happened today.”

Mejia’s representative on the Electoral Commission accused the ruling party of fraud, saying the former president should have received many more votes than the results reflected. “We all know what party the director of the Electoral Commission belongs to,” he said at a news conference.

The balloting appeared orderly in general but there were widespread reports that backers of both parties were offering people payments of about $15 to vote for their candidate or to turn over their voting cards and withhold their vote. Campaign officials denied the allegations.

Observers from the Organization of American States confirmed incidents of vote-buying but not enough to taint the overall results of what was otherwise a “successful,” election, said the head of the mission, Tabare Vazquez, a former president of Uruguay.

The candidates were vying to succeed President Leonel Fernandez, who spent $2.6 billion on such major infrastructure projects as a subway system, hospitals and roads to modernize a country that is the top tourist destination in the Caribbean but remains largely poor. Fernandez was barred by the Constitution from running for a third consecutive term.

Many voters conceded that Medina, a 60-year-old economist and stalwart of the Dominican Liberation Party, wasn’t a particularly exciting candidate, but said they were eager for stability in a country with a history of economic and political turmoil.

“I don’t want major change,” said Amauris Chang, a 59-year-old shop owner. “I want the country to grow and I want it to be peaceful, and I think that’s a common idea among people who are civilized.”

Six candidates were running for president, but Medina’s only real opponent was Mejia, who lost his bid for a second presidential term in 2004 because of a deep economic crisis sparked by the collapse of three banks.

Mejia and his Dominican Revolutionary Party have a devoted following. Supporters of the 71-year-old garrulous populist sought to portray some of the public works spending as wasteful and benefiting backers of the president, and insisted he wasn’t to blame for the 2004 economic crisis.

“The crisis could have happened to any government. It had nothing to do with Hipolito Mejia,” said 62-year-old maintenance man Alonso Calcano.

Demetrio Espinosa, a 60-year-old jobless resident of the capital’s Colonial district, said Mejia understands the needs of poor people like him. He said most people can’t afford to be treated in the new hospitals nor do they need a subway if they don’t have a job.

“They made a lot of their friends into millionaires and spent the public’s money,” Espinosa said of the ruling party.

Besides president, Dominicans were electing a vice president from a field that included the heavily favored first lady, Margarita Cedeno de Fernandez, and seven members of the Chamber of Deputies who will represent people who have settled overseas. Tens of thousands were expected to cast ballots in places with large numbers of Dominicans, including New York, New Jersey, Florida and Puerto Rico.

Both presidential candidates proposed to increase spending on education and to do what they can to create jobs in a country of 10 million people that is largely dependent on tourism and where unemployment is officially about 14 percent, though the vast majority of workers are in the poorly paid informal sector. The typical salary for those who do have regular jobs is around $260 a month.

The Dominican Republic has also become an important route for drug smugglers seeking to reach the U.S. through nearby Puerto Rico and there are widespread concerns about the influence of drug trafficking. The candidates also traded accusations of incompetence and corruption.

SHANGHAI/NEW YORK (Reuters) – Chinese Internet entrepreneur Jack Ma is buying back up to half of a 40 percent stake in his Alibaba Group from Yahoo Inc for $7.1 billion, in a deal that moves the Chinese e-commerce leader closer to a public listing.

Under the agreement, Yahoo will sell half its stake in Alibaba for at least $6.3 billion in cash and up to $800 million in new Alibaba preferred stock. The deal, announced in a joint statement on Monday, caps years of often acrimonious talks over how Alibaba could reclaim some or all of the 40 percent stake that Yahoo bought for about $1 billion in 2005.

While Alibaba founder Ma had a strong personal rapport with Jerry Yang, Yahoo’s co-founder who led the initial investment in Alibaba, ties between the two firms soured when Yang was ousted and replaced as CEO by Carol Bartz.

Relations were also complicated by a spat over the Chinese group’s payment unit Alipay, and Yahoo’s attempt to appoint more directors at Alibaba. Negotiations over a complex deal for Ma, who owns close to 7.5 percent of Alibaba, to buy back most of the Yahoo stake for up to $9 billion faltered earlier this year over valuation.

Yahoo, which has come under fire from shareholders for failing to take aggressive action to reverse a decline in advertising revenue in the face of competition from Google Inc and Facebook, will hand most of the sale proceeds, after tax, to its stockholders.

“For Yahoo it’s a decent compromise, they were never going to keep all the 40 percent stake and expect to see these guys IPO. I think they sold it off at a pretty reasonable valuation,” said Michael Clendenin at RedTech Advisors in Shanghai. “Yahoo still has a lot of bigger problems ahead of them, I mean, they are a portal so they’re going the way of the dodo bird.”

“Credit to Jack Ma, he’s a wheeler and dealer and he got a very good deal on this one,” he added.

A source familiar with the deal said Yahoo built in incentives for Alibaba, which operates the popular Chinese online marketplace Taobao, to hold an initial public offering by end-2015. Alibaba would buy back half of Yahoo’s remaining stake – a 10 percent holding – at the IPO price or allow Yahoo to sell those shares in the offering before end-2015.

Alibaba Group, valued at $30-35 billion, listed its Alibaba.com unit in 2007, and in February agreed to buy it out, with Ma saying a group IPO would reward employees for their service.

“The valuation is reasonable … but I don’t think this is going to affect the IPO strategy,” said Elinor Leung, analyst at CLSA. “I don’t think the IPO is going to be imminent, meaning this year. Net-net this is going to be positive for Yahoo because you cash out on half the stake, but Yahoo’s main worry is their U.S. business.”

Alibaba said it would raise the money through a mix of cash, debt and equity. Sources said the group was in talks with existing shareholders including Singapore state investor Temasek Holdings to raise about $2.3 billion in equity to part-finance the deal. Alibaba was not immediately available to comment and a Temasek spokesman declined to comment.

Temasek bought shares from Alibaba employees in September in a tender offer in which DST Global, Silver Lake and Yunfeng Capital also took part. According to Basis Point, a Thomson Reuters publication, Alibaba is likely to increase a $3 billion loan for taking its listed unit private to $4 billion.

Alibaba has long been the dominant player in China’s booming e-commerce sector, but the landscape in the world’s biggest Internet market is evolving, with Amazon.com, Dangdang and 360buy emerging as tough competitors. Taobao has around 90 percent market share in China’s consumer-to-consumer online trading and more than 53 percent of the business-to-consumer market.

SIMPLIFYING YAHOO

Yahoo’s Alibaba stake and its 35 percent holding in Yahoo Japan, which it jointly owns with Softbank Corp, are considered the crown jewels of the struggling U.S. Internet company. Some investors have said Yahoo should monetize some of those holdings and return the proceeds to shareholders. Softbank owns around 30 percent of Alibaba.

Analysts have said selling down the Asian assets would raise cash for Yahoo and simplify its structure, making it easier for investors to value its core U.S. operations. Yahoo said it would return “substantially all” of the after-tax cash proceeds from the deal to its stockholders, increasing a planned share buyback authorization by $5 billion.

The deal marks an important accomplishment and an early sign of progress for Yahoo interim CEO Ross Levinsohn, the fifth person to step into the top job in the past five years at the company, which have seen falling revenue, layoffs, management reorganizations and executive departures.

Many analysts expect Levinsohn – who follows Scott Thompson, who stood down earlier this month after he was accused of overstating his qualifications, and Bartz, who was fired last September – to re-orient the company around its media properties including Yahoo Sports and Yahoo Finance, while focusing less on expensive tech efforts such as search and social networking.

Finalizing a deal with Alibaba could remove a distraction, allowing Levinsohn to focus on a comeback plan, while potentially earning goodwill from investors frustrated by missteps and poor performance.

“For Yahoo, this is something that needed to get done because Alibaba was having a bit of an issue with … the group being so dominantly owned by foreign entities,” Nomura Securities analyst Jin Yoon told Reuters.

“The China asset was kind of their crown jewel so I don’t actually expect Yahoo to fully depart from China and I do expect Yahoo will have some sort of remaining involvement with Alibaba Group.”

Sunnyvale, California-based Yahoo and Japan’s Softbank agreed to cap their shareholder voting rights in Alibaba at below 50 percent, said one source familiar with the issue, effectively keeping foreign ownership in check.

In addition to the share repurchase, Yahoo and Alibaba will amend their existing technology and intellectual property licensing agreement, with Alibaba continuing to operate Yahoo China under the Yahoo brand for up to four years. Yahoo will be freed from restrictions on it making other investments in China. Alibaba will make an upfront lump sum royalty payment of $550 million to Yahoo and keep paying royalties for up to four years.

UBS was lead financial adviser to Yahoo, while Credit Suisse advised Alibaba.

(Additional reporting by Jonathan Gordon, Denny Thomas and Chyen Yee Lee in Hong Kong, Alexei Oreskovic in San Francisco and Saeed Azhar in Singapore; Writing by Ian Geoghegan; Editing by Muralikumar Anantharaman)