PRESS DIGEST - CANADA - Aug 30

Tension between generals and officials in the Harpergovernment Rosetta Stone Software has left the future direction of Canada's military upin the air. Senior officers at National Defence headquarters, accordingto sources, are opposed to the recommendations ofLieutenant-General Andrew Leslie, chief of transformation, whois calling for savings of $1 billion annually by reorganizingthe Canadian Forces and chopping up to 11,000 personnel, mostlyat headquarters.-- China's ambassador to Canada says the Harper government'sabout-face regarding his country has strengthened bilateralrelations and should foster a major increase in trade andinvestment. Ambassador Zhang Junsai says relations between Canada andChina are rapidly improving now that Ottawa has recognized theneed to diversify its economic and trading focus beyond theUnited States and Europe. The diplomat also cited Canada'sreturn of a high-profile Chinese fugitive as a key milestonethat will fortify the bond between the two countries.Report on Business Section: -- AuRico Gold Inc has struck a friendly deal totake over Northgate Minerals Corp for C$1.46 billion aspart Rosetta Stone languages of its strategy to expand production in times ofrecord-breaking gold prices. The all-stock deal, which some investors described as rich,breaks up a previous agreement Northgate made in July to buyPrimero Mining Corp for C$370 million and vaults AuRico tointermediate gold producer status alongside such peers as OsiskoMining Corp and New Gold Inc.-- Embattled Sino-Forest Corp faces a new threatafter investors and two credit rating agencies sounded the alarmabout the company's ability to repay its nearly C$1.9 billion indebts. In an unusually harsh report, StandardPoor's warned thatthe company's prospects are "extremely weak and likely torapidly deteriorate" in the wake of fresh allegations of fraudat the forestry company, which has executive offices in HongKong and is listed on the Toronto Stock Exchange. The allegations levelled by the Ontario SecuritiesCommission last week, and the departure of top executives,including chairman and chief executive officer Allen Chan, raisethe possibility that bondholders could legally demand earlyrepayment of its debts Rosetta Stone Arabic, SP said.NATIONAL POST -- Canadian businesses are pushing for greater security andeconomic integration with the United States while individualcitizens caution against losing privacy and police independence,the government reported Monday.