ANTIQUES SHOPS

The Spaniard was joined on the front row by Red Bull's double world champion Sebastian Vettel, who will be attempting to win a Grand Prix in his native Germany for the first time, after qualifying in atrocious conditions.

Vettel's team mate Mark Webber, second in the championship after nine of the 20 races, was third fastest but the Australian will drop five places after being penalized for an unscheduled gearbox change before qualifying.

Seven-times world champion Michael Schumacher, fourth fastest for Mercedes in front of his home fans, will therefore start alongside Force India's Nico Hulkenberg on an all-German second row.

"It was not fun, that's for sure," said Alonso of his second pole in a row, with the other coming at a wet Silverstone two weeks ago, and 22nd of his career.

"When you have this type of conditions it's very difficult to put a clean lap together and very easy to finish in the gravel or in the grass or in the wall.

"It's a bit of a survival moment. You try to complete the lap and whatever the position is, you are happy," added the double world champion.

TOO WET

A huge clap of thunder shuddered over the circuit before the start of the second part of qualifying, announcing a deluge which left pools of standing water all over the track.

Vettel and Webber held the lead before Alonso went in for a new set of extreme wet tires near the end and came out to produce a stunning lap of one minute 40.621 seconds, four tenths of a second quicker than anyone else.

Alonso said before the start of the final session that he though conditions were too wet to continue.

"We made a good strategy call with a pit stop in the third qualifying session and very fresh tires and that helped," he said.

"In these conditions it's always a bit of a lottery," said Vettel, who has yet to win a race in July. "You can lose the car without making any mistake."

"There are rivers everywhere, as soon as the car aquaplanes you are a passenger."

Vettel was held up by Webber at one point but said his Red Bull team mate probably had not seen him,

"I think we have shown the car is strong in all conditions," said Webber. "It was an intense, tricky session for drivers and engineers. It was a challenge for us."

"But it's never ideal to put ourselves on the back foot by shooting ourselves in the foot

McLaren pair Jenson Button and Lewis Hamilton, who have had a disappointing last two races, were seventh and eighth fastest after looking quick on Friday with new upgrades but will move up due to Webber's demotion.

Germany's Nico Rosberg, Schumacher's team mate, and French driver Romain Grosjean for Lotus also have five place penalties for Sunday's race due to gearbox changes.

Hamilton said he had paid the price for getting his final lap in before others.

"The track got better and better and I guess the other guys were able to post quicker times after that," said the Briton. "The track was drying so we would have got better if we had one more lap, but it was like driving on ice for us."

Britain's Paul Di Resta was ninth as both the Force India drivers made it into the top 10.

(Reporting By Brian Homewood, editing by Alan Baldwin)

The city's bond insurers snubbed proposals from managers of the city of nearly 300,000 in California's Central Valley, where crime and unemployment have soared as the housing market fell. Retired city employees and fire and police unions over three months made some headway, but in the end the only tentative deals were with six other unions.

The city is trying to convince a federal bankruptcy judge to give it Chapter 9 protection from creditors. Initial proposals included ending health care for retirees, suspending payments on much of its debt for five years and draconian cuts of payments on $124.3 million of pension obligation bonds.

The city faces a $26 million shortfall in the current fiscal year, when its main budget, or General Fund, revenues are projected to be $155 million. It has cut $90 million in General Fund spending in the last three years.

Stockton's future may be a roadmap for other troubled California cities. Los Angeles-area's San Bernardino is preparing to file for bankruptcy and Compton may do so later in the year. Stockton's case will test how far courts are willing to let cities cut retiree benefits.

Stockton became an outpost of the San Francisco Bay Area, 80 miles away, when the housing market boomed, and the town began to spend like a big city, building a new sports complex, redeveloping its riverfront and buying a new town hall.

The development is a money-loser, the town hall has been taken over by a creditor, and the mainstay of city finances - property taxes - has dried up; housing prices more than tripled in the first half of the last decade but faded back to 2000 levels in 2009.

The roughly 800 pages of proposals and records of meetings over three months that the city presented on Friday are its evidence that it negotiated in good faith and cannot afford to pay its debts. (See the proposals and records of meetings here: link.reuters.com/xym59s.)

City Manager Bob Deis in an open letter accompanying the papers said the city could not cut services any more. "The City ranks at the top in violent crime and at the bottom in police officer staffing levels among major cities in the country. It has some of the busiest fire stations in the country," he wrote.

The proposals disclosed on Friday evening are months old, but the city sets the agenda in Chapter 9 talks. Its proposal to end health care coverage for retirees is already the subject of a related case, which has a hearing set for Monday.

Assured Guaranty, the insurer on the pension bonds, has scorned Stockton's efforts, arguing the city made no real attempt to raise revenue or cut pensions. City documents showed Assured, National Public Finance Guarantee Corp and bondholder trustee Wells Fargo Bank NA, which has repossessed three of Stockton's parking garages and the building slated to be city hall, did not counter Stockton's offers.

National Public Finance Guarantee Corp, a wholly owned subsidiary of MBIA Inc, has about $224 million of exposure to Stockton, including $89 million backed by the city's General Fund.

Assured Guaranty disputes whether Stockton should be in bankruptcy court and has said it intends to "vigorously enforce" its rights as a creditor in Chapter 9 proceedings, including its right to contest the city's eligibility for bankruptcy and any plan of adjustment it considers unfair.

Assured Guaranty has $161.4 million of exposure to Stockton debt, including just over $121 million of exposure to the city's pension obligation bonds.

"Many other cities across the country are experiencing similar financial challenges, but they (and their respective voters) have responsibly chosen to make the difficult decisions rather than choosing bankruptcy," Assured wrote in a June 29 statement.

City manager Deis told the Stockton Record at the time: "They (Assured) literally want anarchy in the streets."

(Editing by Louise Ireland)