Julie Candler with the BBC news.

Saudi Arabia says it's severing all air traffic links and commercial relations with Iran. The measures were announced by the Saudi foreign minister Adel al-Jubeir.

“We've decided to cut off all diplomatic relations with Iran. We will also be cutting off all air traffic to and from Iran. We will be cutting off all commercial relations with Iran and we will have a travel ban against people traveling to Iran.”

The announcement comes amid extreme tension between the two countries following the Saudi execution of a dissident Shiite Muslim cleric Nemer al-Nemer.”

British intelligence sources have told the BBC they believe they've identified the main suspect to the latest propaganda video by the Islamic State group. He's been named Siddhartha Dhar from east London. Frank Gardner has more details.

“Within hours of the latest Islamic State propaganda video being posted online, British intelligence agencies were working to establish the identity of the masked militant shown murdering one of five bound captives in cold blood. There has been growing speculation it could be Siddhartha Dhar,a British jihadist arrested in 2014 and who later jumped bail to appear in Syria holding his young son and a machine gun. A senior member of the banned Islamist extremist group Almhar Jirun has told the BBC he has no doubt that the voice is that of Mr. Dhar.”

The US Justice Department is suing the German carmaker Volkswagen which has admitted fitting emission cheating software to millions of vehicles. The lawsuit accused VW of causing excessive pollution harming public health and cheating consumers. From Washington, here is Jane O'Brien.

“The civil complaint is the latest episode in the scandal that is threatened to engulf what was the world's largest automaker until last year when the cheating allegations emerged. The Environmental Protection Agency says thousands of tons of excess nitrogen oxide were emitted from Volkswagen diesel cars as a result of software that activated pollution controls only when the vehicles were being tested. The lawsuit covers around half a million cars, but VW has admitted installing the devices on 11 million. ”

Stock markets in the United States have closed down for the day by more than 1.5%. It's the Dow&Jones's worst start to a new year since 2008. Share prices worldwide fell on Monday prompted by weak economic figures from China. Andrew Walker reports.

“The slides started in China and it has spread to the great majority of financial markets. The initial fall was in part a response to news of a declining Chinese manufacturing output last month which reinforced concerns about just how abruptly the country's economic growth is slowing. That's one of the biggest uncertainties hanging over the rest of the world. The mood among international investors was also adversely affected by the latest political tensions that have erupted in the Middle East.”

World news from the BBC.

President Obama has discussed his plans to tighten gun controls in the US with the attorney general and the head of the FBI. After meeting them, Mr. Obama defended his proposal to bypass congress and announce new measures through a series of executive orders.

“We have tens of thousands of people every single year who were killed by guns. We have suicides that are committed by firearms at a rate that far exceeds other countries. We have a frequency of mass shootings that far exceeds other countries in frequency, and although it is my strong belief that for us to get our complete arm around the problem, congress needs to act, what I asked my team to do is to see what more we could do.”

Twenty of the 30 presidential candidates in the Central African Republic are calling for the vote to be canceled alleging it was fraudulent. It was hoped that Wednesday's poll would help restore peace to the country while thousands have died in the sectarian violence.

Germany says passport-free travel in Europe is at risk. The warning follows a decision by Denmark to tighten controls at its southern border with Germany to try to tackle the influx of migrants. The Danish prime minister said this was in response to similar measures taken by Sweden. The German foreign ministry spokesman Martin Schafer says the European Union as a whole must strike a deal to protect the Schengen Agreement allowing freedom of movement.

The Spanish football giant Real Madrid has sacked their coach Rafa Benitez after just seven months. He'll be replaced by Zinedine Zidane, a former France captain who's been coaching Real's B team, Real Madrid currently third in the league behind Atlético Madrid and arch rivals Barcelona. Benitez has been under growing pressure since a four nil defeat to Barcelona in November. BBC news.