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In Pakistan, a terror attack on the country's main defence industry complex has killed around 60 people and injured as many as 80 others. Two suicide bombers blew themselves up at separate gates of the plant, northwest of the capital Islamabad, as employees were exiting. A spokesperson for Pakistani Taliban groups claimed responsibility for the attack, saying it was in retaliation for military airstrikes in the region near the border with Afghanistan. He threatened more bombings unless military operations in the area were called off.

Russia has said it intends to keep 500 troops in a security zone surrounding Georgia's breakaway South Ossetia region amid growing criticism at the slow pace of Moscow's military withdrawal. Russian Foreign Minister Sergei Lavrov said up to eight checkpoints would be established in the security zone where 500 peacekeepers are to be deployed. Meanwhile the Pentagon has said it has seen "minimal movements" of Russian forces from Georgia, but no significant withdrawal. Germany has described Russia's progress as "very unsatisfactory". Russian military trucks have been seen leaving the Georgian city of Gori, but there was no sign of the large-scale pullout as reported earlier by Russian news agencies.

NATO says it can confirm that Russia had suspended military cooperation activities with the western alliance until further notice. The announcement follows agreement by NATO foreign ministers this week that normal ties with Moscow are not possible until Russia withdraws troops from Georgia, in line with a French-mediated peace plan to end the South Ossetia conflict.   

The airline Spanair says its plane, which crashed in Madrid with 153 fatalities on Wednesday, had a mechanical fault. Spanair said the pilot of the plane registered an air intake problem, but that this was fixed before the plane's first attempt to take off. Investigators are still trying to establish why the McDonnell Douglas MD-82 aircraft veered off the runway during its second attempted take-off. Spanish media have reported that one of the plane's engines was on fire at the time. Earlier on Thursday, Spaniards held a minute's silence for the victims of the crash. Germany's foreign ministry says it expects four Germans are among the dead. Only 19 people on board the plane survived, and many of them are in a critical condition.

The United States and Iraq are still thrashing out a new deal for the presence of US soldiers on Iraqi soil. US Secretary of State Condoleezza Rice held a press conference in Baghdad following an unannounced visit for talks with the Iraqi leadership. Rice insisted the protracted negotiations to secure a mandate beyond 2008 were not a sign of a "bad situation". Earlier, Rice said the two sides were very close to finalising a deal. Iraqi officials have previously said they want a new agreement to include a deadline for US forces to withdraw from the country and an end to the immunity of US troops from Iraqi law.

US private equity group Lone Star plans to buy German bank IKB, which was one of the country's major casualties in the US subprime mortgage crisis. Germany's state development bank KfW, the government and private investors rescued the Düsseldorf-based bank from bankruptcy, pumping billions into IKB, which specialises in loans to small- and medium-sized business. KfW sold its 91 percent stake in IKB for an undisclosed sum, believed to be around 300 million euros. Two state-owned German banks, BayernLB and WestLB, were also interested but withdrew from the bidding. The sale is subject approval from KfW's, the German financial supervisory authority and the European Commission.

At the Olympics in Beijing, Jamaica has extended its winning streak in the track events, after Veronica Campbell-Brown won the gold medal in the women's 200-metre sprint. Meanwhile, Ukranian heptathlon silver medalist Lyudmila Blonska has been suspended from the games after her second doping test came back positive. She faces a lifetime ban from athletics because it is her second offence. Also on Thursday, four equestrian riders were suspended, including Germany's Christian Ahlmann, after their horses tested positive for doping. In other Olympic sports, Germany beat Japan 2-0 to win the bonze medal in the women's football competition. In the men's hockey semi-final Germany beat the Netherlands 4-3 to reach the final.