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URGENT: Video shows beheading of second American journalist

DUBAI (Reuters) - The Islamic State militant group released a video purporting to show the beheading of U.S. hostage Steven Sotloff, the SITE monitoring service reported on Tuesday. A masked figure in the video also issued a threat against a British hostage, a man the group named as David Haines, and warned governments to back off "this evil alliance of America against the Islamic State", the monitoring service said. (Reporting by William Maclean, Editing by Angus MacSwan)

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New Republican governors meet with Boehner

WASHINGTON (Reuters) - Newly elected Republican governors pleaded with the party's congressional leaders on Wednesday for greater financial flexibility and less federal regulation for states facing big budget shortfalls and stumbling economies.

More than a dozen incoming Republican governors met at the Capitol with future House of Representatives Speaker John Boehner and Senate Republican leader Mitch McConnell to discuss ways to create jobs, ease regulations on business and roll back elements of President Barack Obama's healthcare overhaul.

"The point of the message is 'let our people go,'" said John Kasich of Ohio, a former congressman who blasted Washington's approach to governing.

"We want flexibility," Kasich said. "The policies in Washington are hurting our state's ability to create jobs. Companies want certainty."

Many governors have had to cut spending and raise taxes in the last few years as the recession, persistent high unemployment and a housing market collapse battered state economies.

The governors reprised complaints about unfunded spending mandates passed to states by Washington in programs like Medicaid, the federal health program for the poor, and promised to work with Congress to roll back the healthcare plan, a top priority for the new Republican leadership.

"We are not just going to say no, we are also going to tell them what we can do" to ease the burden on states, said Nikki Haley, governor-elect of South Carolina.

Boehner and McConnell pledged to work closely with the new governors, many of whom are headed to the White House on Thursday for a meeting with Obama.

"We want to establish a relationship with the governors where we can work together and provide the kind of flexibility governors are looking for," said Boehner, who will take the speaker's gavel in January.

(Editing by Cynthia Osterman)

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