SACRAMENTO, Calif. — California officials hope to reach a deal today on how to erase a $26.3 billion budget deficit that has forced the state to issue IOUs for the first time in nearly 20 years.

Legislative leaders said they made "huge progress" Friday night in talks in the governor's office and plan to meet again tonight in hopes of finalizing an agreement.

A deal would clear the way for votes later in the week in the state Legislature.

6 DEAD, 3 INJURED IN UTAH CAR CRASH

MAGNA, Utah — Six people were killed, including four children, and three people were seriously injured when two cars collided early yesterday in the Salt Lake City suburb of Magna, authorities said.

A Dodge Stratus carrying two adults and five children was trying to make a left turn when it was T-boned by a Mercury Sable carrying an adult and a teen, the Utah Highway Patrol reported.

Highway Patrol Sgt. Jeff Nigbur said six of the seven people in the Dodge were killed. The only survivor, a young child, was in critical condition at Primary Children's Medical Center.

The two people in the Mercury were taken to University of Utah Hospital, where they were in serious condition.

POLICE KILLED 12 IN UIGHUR RIOTING

BEIJING — Chinese police killed 12 people during July 5 rioting in the western city of Urumqi, a senior official said — a rare acknowledgment by the government that security forces opened fire in the worst ethnic clashes to hit the region in decades.

The unrest began when a peaceful protest by Muslim ethnic minority Uighurs turned violent after it was stopped by police. The Uighurs went on a rampage, smashing windows, burning cars and beating Han Chinese, the nation's dominant ethnic group.

Two days after the first rioting, vigilante groups of ethnic Han took to the streets and attacked Uighurs.

Xinjiang Gov. Nur Bekri said police shot the "mobsters" after first firing warning shots. In yesterday's Xinhua News Agency report, Bekri also said the death toll from the unrest had risen to 197. The government had previously said the rioting killed 192 and injured 1,721.

ITALIAN HOME AFTER FREED IN PHILIPPINES

ROME — An Italian aid worker held captive in the Philippine jungle for six months by al-Qaida-linked militants returned home to celebrations in his small Tuscan town yesterday.

Gaunt but smiling, Eugenio Vagni, 62, landed in Bologna and continued on to his hometown of Montevarchi, which welcomed him with an open-air party in a piazza.

Last Sunday, Abu Sayyaf militants on Jolo Island freed the Red Cross worker, ending one of the Philippines' worst hostage crises in recent years, after the government agreed to release the two arrested wives of the kidnappers' leader. Italy's foreign minister has said no ransom was paid.