The following are the leading stories in Maltese and foreign newspapers.

The Sunday Times leads with the discovery of a fireworks cache in the basement of Peace Band Club at Naxxar, metres away from the square's petrol station. It also reports that the prime minister favours a pay rise for ministers and MPs.

The Malta Independent on Sunday's lead story claims that as the threat of radicalisation in detention centres grows, the US Department sees Malta as a potential terrorism staging post.

Maltatoday reports on the findings of a survey it conducted which shows that 77 per cent of Labour voters favour their leader being elected by party members. It says that while Labourites prefer Joseph Muscat, PN and floaters go for George Abela.

On the other hand, il-mument reveals that a sounding of MLP conference delegates shows that Joseph Muscat is lagging behind in the leadeship race with contenders George Abela and Michael Falzon being neck to neck.

Illum says that while members of the MLP executive are looking for a mole that was passing information to the paper, it quotes Michael Falzon saying that he was never allowed to see the internal opinion polls that Labour was conducting during the electoral campaign.

it-torca also leads with the fireworks find in Naxxar but in another story it says that it could well be that shortages of medicine from hospitals and clinics was the result of slow orders because the government owes medicine importers thousands of euros.

KullHadd claims Jeffrey Pullicino Orlando is not bowing to pressure to resign his parliamentary seat because of the Mistra disco development.

The Press in Britain...

The Sunday Express claims Foreign Secretary David Miliband has been urged to challenge Gordon Brown for the Labour leadership to save the party from meltdown in a general election.

The Observer says that following Labour's worst electoral hammering in 40 years, Brown is poised to scrap a series of unpopular tax rises as part of sweeping changes to stave off a dangerous revolt over the rising cost of living.

The Mail on Sunday adds that a Labour MP is preparing to mount a ‘stalking horse' leadership challenge against Mr Brown.

Meanwhile, The Independent on Sunday explores how "the odd couple" of Conservative leader David Cameron and new London Mayor Boris Johnson could define politics for the next decade.

The Sunday Telegraph goes a step further, saying Boris "will launch a Conservative revolution" by introducing a series of reforms as a test-bed for a future Tory government.

The Financial Times reports central banks in Europe and the US have a launched a fresh co-ordinated assault to ease strains in financial markets.

And elsewhere

Washington Times reports Barack Obama has defeated Hillary Clinton in the Democratic Party caucus on the small Pacific territory of Guam by just seven votes. The territory sends four pledged delegates and five super delegates to the National Convention in August in Denver, although US citizens on the island have no vote in the November election.

Kuwaiti newspaper Al Jarida reports Hamas is willing to show flexibility over a prisoner swap deal which may facilitate the release of the abducted Israel Defence Forces soldier Gilad Shalit. The paper said that Hamas had told Egypt it is willing to continue negotiations over the release of Shalit, who was abducted by Hamas militants in 2006, in exchange for a lull in the fighting between the Islamicorganization and Israel in the Gaza Strip.

The Lebanese newspaper Al Akhbar has reported that the heart procedure Palestinian President Mahmoud Abbas underwent in a Jordan hospital on Thursday resulted from the acute distress he suffered after his meeting with President Bush in Washington last week. A Palestinian official told the paper that Abbas was deeply upset by Bush's unequivocal endorsement of Israel's policy toward the West Bank and Gaza.

According to the German magazine Der Spiegel, Elisabeth Fritzl's father Josef repeatedly raped her in front of the children they had together. Meanwhile, Austrian Chancellor Alfred Gusenbauer warned the international media against issuing any blanket condemnation of the country because of the terrible kidnapping, which saw Josef Fritzl lock his daughter in a basement for 24 years and have seven children with her. He told Germany's mass circulation Bild newspaper there is no specific problem with Austria and would defend his country against efforts by foreign media outlets to try to portray the Fritzl crime as a "specifically Austrian" problem.

China Daily reports that the police have discovered a factory manufacturing flags for the Free Tibet movement. The Guangdong plant had been completing orders from overseas for the emblem of the Tibetan government-in-exile. Workers apparently thought they were just making colourful flags but then some of them saw television pictures of protesters holding the emblem and they alerted the Chinese authorities.

The Wall Street Journal says software giant Microsoft has dropped its three-month-old bid to buy internet firm Yahoo because the two sides cannot agree on an acceptable sale price.

Portugal's Espresso quotes the country's most senior detective saying police were still gathering evidence in their investigation into the disappearance of Madeleine McCann.

Arab News reports a German-based quartet staged the first-ever performance of European classical music in a public venue in Saudi Arabia before a mixed gender audience. The concert, held at a government-run cultural centre, broke many taboos in a country where public music is banned and the sexes are segregated even in lines at fast food outlets.

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