US president Barack Obama says the United States has asked Iran to return a captured spy drone, as a top Iranian official says his country will reverse engineer the plane and is in the "final stages" of unlocking its software secrets.

Mr Obama confirmed the request for the drone, which Tehran said it brought down while overflying its territory, at a news conference with Iraqi prime minister Nouri al-Maliki.

"We've asked for it back. We'll see how the Iranians respond," he said.

Tehran says it is planning to use the downed craft to produce a fleet of its own drones.

Prime Minister Julia Gillard has denied ministers threatened to resign from Parliament if they were demoted in yesterday's Cabinet reshuffle.

Two of the so-called faceless men who engineered Ms Gillard's coup against Kevin Rudd last year, Bill Shorten and Mark Arbib, were promoted yesterday as Ms Gillard unveiled an expanded Cabinet.

Rudd supporter Kim Carr was booted out of Cabinet and there have been reports two ministers - Robert McClelland and Peter Garrett - threatened to resign from Parliament and force by-elections if they were sacked.

From Paul Sheehan...

Everyone has a bad banking story, and we take for granted all the productive things the banks do for us. It is the bad stories that come to mind when the big four banks issue their profit statements. In the latest financial year the big four made a combined profit of $24 billion.

The EPA's findings about fracking's contamination of ground water have sent a shockwave through a gas industry in denial.

A television advertisement shown during a children's show after school and depicting students sharing Oreo cookies was not aimed at children, the Advertising Standards Board ruled, because it was appealing to adults' sense of nostalgia.

Writing from the very region that produces more clichés per square foot than any other "story" – the Middle East – I should perhaps pause before I say I have never read so much garbage, so much utter drivel, as I have about the world financial crisis.

The O'Farrell government's whip in the upper house has become a minor sensation on Twitter this afternoon, attacking other users, telling one to "go fuck yourself" and declaring himself the "Marieke Hardy" of the Right.

Peter Phelps, a member of the hard right of the NSW Liberal Party, who notably once described traffic lights as a "Bolshevist menace", joined the social networking site less than a month ago with some trepidation.

Dr Phelps quickly responded: "go fuck yourself, commie! And you can't complain because I put in smiley ;-)".

A number of Twitter users criticised him for the response, which only elicited further strong reactions from the politician.

On Dec. 8, 1941, Franklin Roosevelt took the rostrum before a joint session of Congress to ask for a declaration of war on Japan.

A day earlier, at dawn, carrier-based Japanese aircraft had launched a sneak attack devastating the U.S. battle fleet at Pearl Harbor.

Europe’s worst financial crisis in generations is forging a new European Union, pushing Britain to the sidelines and creating a more integrated, fiscally disciplined core of nations under the auspices of a resurgent Germany.

Britain is facing isolation in Europe after prime minister David Cameron vetoed a radical change to the treaty governing the European Union.

All EU countries except Britain signed a "new fiscal compact" treaty giving Brussels ultimate authority over the way EU governments raise taxes and spends revenue.

After two years of foot-dragging on deepening integration, 26 member nations are set to approve a series of tough new rules that will include "automatic consequences" for countries whose public deficits exceed 3 per cent of GDP.

Euro zone members agreed to a treaty that requires stricter fiscal discipline, but efforts to reach unanimity among the members of the European Union failed as Britain refused to go along.

----------------------------

Lack of urgency in the Durban meeting halls and pressing issues elsewhere threaten to block progress as the UN climate summit enters its final days.

Some delegates said there was no clear process for bridging divides.

Others suggested that the EU summit on Thursday and Friday would see European leaders "thinking of the euro crisis, not the climate crisis".

Most nations appear to want a strong deal - but the exceptions are some of the world's most powerful countries.