The Russian government said household disposable income would also fall by as much as 2.8%

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The Russian government has warned the economy will fall into recession next year as Western sanctions, in response to its role in eastern Ukraine, and falling oil prices begin to bite.

Russia's economic development ministry estimates the economy will contract by 0.8% next year.

It had previously estimated the the economy would grow by 1.2% in 2015.

Russia's reliance on tax revenues from the oil industry makes it particularly sensitive to price movements.

Household disposable incomes are also forecast to decline by as much as 2.8%, compared with a previous estimate that they would grow by 0.4%.

The sharp revision in Russia's economic forecast is the first admission from the government that the economy will contract.

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Russia is a non-investible country for all but the bravest of hedge fund investors right now, and will remain in this category until both the rouble and oil stabilise at minimum”

Chris WeaferMacro-Advisory

"The current prognosis is based on a drop in GDP by 0.8% in 2015, against the previous prognosis of growth by 1.2%," deputy prime minister Alexi Vedev said.

Budget

On Monday, the rouble suffered its biggest one-day fall since 1998.

The currency slid almost 9% against the dollar before rallying after suspected central bank intervention. The currency has already lost 40% in value this year.

The Russian finance ministry has also not ruled out spending more than 500 billion roubles from the budget's Reserve Fund next year.

The 2015-2017 budget allows for spending of up to 500bn roubles (£5.9bn) next year from the Reserve Fund, but Maxim Oreshkin, head of the finance ministry's long-term strategic planning department, said it was possible the government could spend more to support the economy.

He added that if the average oil price were $80 per barrel in 2015, the finance ministry's forecast for a fall in GDP was in line with the economy ministry's prediction of a 0.8% contraction.

He also said that a scenario in which the oil price averaged $60 a barrel in 2015 was pessimistic, and at that price, the Russian economy would contract as forecast in the central bank's "stress scenario".

'Damage'

The bank published its stress scenario last month, saying that at $60 per barrel, GDP would decline by 3.5% to 4%.

"The real damage from the collapsing rouble and oil price is to investment and growth,'' said Chris Weafer, senior partner at Moscow-based Macro-Advisory, in a note to investors.

"Russia is a non-investible country for all but the bravest of hedge fund investors right now, and will remain in this category until both the rouble and oil stabilise at minimum."

The price of oil has fallen nearly 40% since the summer because of oversupply caused by rising US shale oil production.

Demand has also fallen, particularly in China, the world's second largest consumer of the commodity, where industrial production has slowed in recent months.

Last week, Opec ministers met to discuss a possible cut in oil production in order to stabilise the oil price, but the meeting broke up without agreement.

Opec secretary general Abdallah Salem el-Badri said: "There's a price decline. That does not mean that we should really rush and do something."

The fall in the oil price has been causing concern for several members of the oil cartel, as most require a price above $80 a barrel to balance their government budgets and many need prices to be above $100 a barrel.

The FBI warns that the malware overrides data on computer hard drives

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The US Federal Bureau of Investigation (FBI) has warned that cyber-hackers have used malicious software to launch destructive attacks in the US.

A five-page confidential warning was issued to US businesses on Monday, according to Reuters news agency.

The software would make it impossible to recover any lost data, the FBI said.

The warning follows a confirmation from the FBI that it is investigating last week's hack into Sony Pictures Entertainment's network.

Sony Pictures was forced to shut down its corporate network in the attack and some of its unreleased films have also been leaked online.

But the warning from the US authorities did not name any victims that have been targeted.

Instead, it provided some technical details about the malicious software and advice on how to handle such an attack.

North Korea in the spotlight

There have been accusations that North Korea may have been responsible for the attack on Sony Pictures after the country's government described a film due to be released by the studio on Christmas Day as an "undisguised sponsoring of terrorism as well as an act of war".

The Interview, starring Seth Rogan and James Franco, tells the story of a CIA plot to assassinate the North Korean leader.

Pyongyang has written letters to the UN Secretary General and President Barack Obama asking for the film to be blocked, but when asked if it was involved in the cyber-attack on Sony, a spokesman only said "wait and see".

Sony has not accused North Korea of involvement and said it was investigating the source of the hacking.

The wife of Abu Bakr al-Baghdadi has reportedly been detained at the Syrian border

Lebanese authorities detained Abu Bakr al-Baghdadi's wife and child about 10 days ago, according to two officials.

Both were reportedly using false identity documents and are now being questioned, according to local media.

Reports differ over whether the child is a girl or a boy.

A senior Lebanese security official said that DNA tests were conducted to verify that al-Baghdadi was their father.

Lebanese daily As-Safir said that the arrest was in "coordination with foreign intelligence agencies."

Both Lebanese officials, who spoke on condition of anonymity in line with regulations, refused to give any details about the woman who is believed to be one of the wives of the militant group's reclusive leader.

Authorities in Lebanon have made several arrests in recent months in a bid to crack down on IS and its sympathisers.

IS currently controls several key areas in Iraq and Syria, including Mosul, the second-largest city in Iraq.

Reports of beheadings, sexual violence and enslavement have emerged from IS strongholds.

The group was responsible for the murder US journalists James Foley and Steven Sotloff, as well as British aid workers David Haines and Alan Henning.

According to a biography circulated by jihadists on the internet, the militant was educated at the University of Baghdad and – according to some – was a cleric in a mosque at the time of the US invasion.

He has at least one wife, although under rules followed by IS he is allowed up to four.

With IS, al-Baghdadi has declared an 'Islamic Caliphate' and called for "volcanoes of jihad" across the globe.

A US-led coalition is currently bombarded the militant group from the skies of Iraq and Syria.

On the ground Iraqi and Kurdish forces are battling to push back the terrorists.

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Benjamin Netanyahu said Yair Lapid and Tzipi Livni had "harshly attacked" both himself and the coalition government.

Mr Netanyahu explained that he wanted an election two years early to win "a clear mandate to lead Israel".

Disagreements over a series of economic and political policies have strained relations within the coalition.

Under Israeli electoral law, voting would probably take place in mid-March if the Knesset were to be dissolved this week.

'Personal risk'

Speaking at a news conference on Tuesday, Mr Netanyahu said it was "impossible" to lead the government with the current coalition, describing Ms Livni and Mr Lapid's activities as a "putsch".

The PM said he was taking "a personal risk" by calling for elections but that he was doing so "for the good of the country".

Analysis: The BBC's Kevin Connolly in Jerusalem

Israeli voters are no strangers to transitory coalition administrations - the current government is the 32nd they've see in the 67 years since the foundation of the state.

But it is almost certainly destined to be one of the shortest-lived; it is only two years since the last parliamentary elections here.

The last few weeks have seen a sharp rise in tensions between key partners in the current right-of-centre coalition.

Mr Netanyahu is thought to regard Mr Lapid as being too ambitious for comfort.

He may be hoping to return to power at the head of a re-formulated coalition in which the finance minister's secular party would be replaced with a religious block representing the interest of ultra-orthodox Jews.

Israeli MPs are expected to vote on a bill to dissolve the parliament on Wednesday.

Mr Netanyahu's comments come after talks with Mr Lapid - who leads Yesh Atid, the centrist party that is the second largest in the governing coalition - ended without an agreement on Monday night.

Mr Netanyahu and his ministers have disagreed about the content of a bill designed to strengthen the Jewish nature of the Israeli state and over a proposed tax break for first-time home buyers, which Mr Lapid regards as his signature issue.

Yesh Atid leader Yair Lapid said the elections were "unnecessary"

Ms Livni reportedly accused the prime minister of cowardice in his sacking of her

On Tuesday morning, Mr Lapid told an economic conference that the prime minister had "decided to take Israel to unnecessary elections".

As speculation about an election mounted, Ms Livni accused Mr Netanyahu of "extremism, provocativeness and paranoia".

The government did not know how to fight terrorism while also "upholding freedom and Zionism", she added.

Mr Netanyahu and his ministers disagreed about strengthening the Jewish nature of the Israeli state

Ms Livni, who leads the centrist Hatnua party, also accused Mr Netanyahu of "inciting sectors in Israel against each other".

'Cowardice'

Mr Netanyahu's office issued a statement on Tuesday announcing: "The prime minister plans to call for parliament's dissolution as soon as possible and to go to the people and get a clear mandate to lead Israel."

It also said he had ordered the dismissal of Mr Lapid and Ms Livni.

"In past weeks, including the past day, ministers Lapid and Livni have harshly attacked the government that I head. I will no longer tolerate an opposition inside the government," the statement added.

Following Mr Netanyahu's new conference, Ms Livni reportedly accused the prime minister of cowardice in his sacking of her, saying that he "didn't even dare to look me in the eye to fire me", and she denied there was a "putsch" against him.