Barack Obama

Monday's meeting in Washington DC was Mr Obama's first with a foreign leader since his election in November.

His transition office said the talks highlighted the importance of the relationship between the US and Mexico.

Mr Obama, who will be sworn in on 20 January, will make his first foreign trip to Canada, officials have said.

No date has been set but officials indicated it would be "soon" after Mr Obama takes office, restoring a long-standing tradition that Canada is the first destination for a new US president.

"It will be the first foreign trip of his presidency, underscoring the importance of the relationship between the United States and Canada," said Brooke Anderson, a transition spokeswoman.

Canada is the US's biggest trading partner, followed by China, and then Mexico.

After joining Mr Calderon for a lunch of tortilla soup, Mr Obama said his administration was "going to be ready on day one" to work to build stronger relations with Mexico.

Their meeting at the Mexican Cultural Institute included discussion on efforts by the Mexican government to tackle the drugs gangs that have seen more than 30,000 troops deployed since 2006.

There were more than 5,000 drug-related murders there last year, with many of the deaths in cities just across the border from the US.

In December, the US justice department said Mexican drug traffickers posed the biggest organised crime threat to the US.

Mr Obama has previously praised Mr Calderon's stance and supports a multi-million dollar aid package known as the Merida Initiative to help Mexico in the fight against illegal drugs.

He has also spoken about the need to address not only the flow of drugs north but the smuggling of guns from the US to Mexico.

"The friendship between the US and Mexico has been strong," he said. "I believe it can be even stronger."

Bail-out

There is strong opposition in Congress to releasing the money with the House of Representatives and the Senate considering blocking the move.

But funds would be likely to remain available because any disapproval could be vetoed by President Bush.

But observers say if the payout was rejected, it could aggravate markets.

There have been hopes that if the final tranche of the bail-out was approved, it would give a strong start to Mr Obama's efforts to fighting the financial crisis when he takes office next week.

The president-elect's team have been trying to douse opposition to the payment of the rest of the funds agreed last year under the Troubled Asset Relief Program (Tarp).

"I called President Bush to trigger the second half of what's known as the Tarp, that's related to financial rescue," said Mr Obama.

"I did so because in consultation with the business community and my top economic advisers, it is clear that the financial system, although improved from where it was in September, is still fragile."

The White House said that President Bush had formally requested on Monday evening that Congress release the remaining pledged capital.
The US House of Representatives passed the $700bn government plan to rescue the US financial sector in October last year - having rejected an earlier version of it which hammered global stock markets.

The package was aimed at buying up the bad debts of failing financial institutions on Wall Street.

The Treasury Department, which is managing the Tarp, has already committed the first half of it - mainly to capital injections into troubled banks, but many Congress members are unhappy with how it has been handled.

US Democratic congressman Barney Frank said that he and Mr Obama agreed that new rules were needed to govern how the next $350bn was disbursed - but said he wanted these written into law.

PrimeMinister speaks with Iran

As part of stepped-up diplomatic offensive to get Pakistan to act against perpetraors of Mumbai
terror attacks, Prime Minister Manmohan Singh last night (December 27) spoke to Iranian President Ahmednijad and is understood to have asked him to pressure Islamabad to do more to end cross-border terrorism.

Singh conveyed to Ahmednijad that Pakistan has to take concrete action to stop cross-border terror and by being in denial mode would not help.The Prime Minister is understood to have told the Iranian leader that India has so far exercised restraint and asked him to presssure Pakistan to take concrete action against handlers of those who carried out the Mumbai terror attacks last month.

The telephonic conversation between Singh and Ahmednijad came a day after External Affairs Minister Pranab Mukherjee to his Iranian counterpart Manounchehr Mottaki on the issue.

Mukherjee had also spoken to his counterparts from the US, China and Saudi Arabia over phone and told them that India has “ample evidence” about involvement of Pakistan-based elements in the Mumbai strikes and that they should to put pressure on Islamabad to act against them.