LONDON, Dec 31: Fears of terrorist attack cast a shadow over New Year celebrations around the globe on Wednesday, with warplanes patrolling American skies and armed undercover sky marshals guarding some flights.

New York Mayor Michael Bloomberg, his city targeted in the Sept 2001 attacks, suggested turning up for festivities at Times Square amounted to defiance of terrorists.

Australians, Japanese and Hong Kong Chinese rang in 2004 in rolling worldwide celebrations that will bring millions onto the street across the world.

Some international airlines, responding to US warnings of a possible attack by militants using aircraft, placed armed sky marshals on flights. Cities from Rome to New York imposed flight restrictions and airports stepped up security.

US authorities, who have said they fear an attack bigger than the 2001 strikes, restricted flights over Las Vegas and New York, which host the country's two biggest street parties.

Mr Bloomberg accused the head of a US House of Representatives panel on terrorism of lacking courage for shunning Times Square because of security worries. Republican Christopher Shays had said he would not go there "for anything".

"You're going to see a million people here who have the courage to come," the mayor said. Warplanes will be on high alert to intercept any errant flight. In Pasadena, California, where thousands will attend American football's annual New Year's Day Rose Bowl game, police will use electronic sensors to detect any biological attack.

Police in Britain said they remained on high alert, but saw no specific threat in coming days. In Jakarta, police said they feared militants could launch attacks on New Year's eve festivities.

Indonesia has been the scene of several major attacks in recent years, including an explosion in Oct 2002 at a Bali nightclub favoured by foreigners that killed 202.

Ten days ago, the United States raised its terror alert to its second highest level. But protecting mass gatherings against infiltration by individual bombers or by attacks from the air is an enormous task, even with close international cooperation.

DEBATE OVER GUARDS: Britain's aircraft pilots' body said it had reached agreement with one airline on rules governing armed air guards. "We remain opposed to the whole concept of bringing sky marshal guns on board an aircraft. This will not make flights more safe," said Jim McAuslan, general secretary of the British Airline Pilots' Association (BALPA), in a statement.