Nothing keeps Paul Newman from going about his daily business—not even a groundswell of media reports that the actor is gravely ill with cancer. The beloved first citizen of Westport, Conn., "is in good spirits," says a local who observed Newman at a farmer's market with his wife of 50 years, actress Joanne Woodward, 78, and daughter Nell, 49. "He seemed to be enjoying the day with his family." The actor also remains a gracious regular at favorite dining spots. "He looked fine, just not moving as fast as usual," says a restauranteur who saw him recently. "He usually hustles when he walks."

As stories swirl, Newman, 83, has issued one statement about his health—telling reporters June 11 that he's "doing nicely." But a friend says the ex-smoker is battling lung cancer. "I've known since December," says the friend, who last saw him June 8 in Greenwich, Conn., at a Newman's Hole in the Wall Gang Camp benefit for cancer-stricken kids. "He was having a great time, playing auctioneer. He had sparkle in his eyes."

Perhaps, but that was the day a photo of an alarmingly gaunt Newman, taken with Martha Stewart and posted on her blog, stoked rumors. Then his friend, writer A.E. Hotchner, told the Associated Press his pal had cancer—but retracted the statement hours later.

The first hint of problems came in May, when Newman quit as director of a Westport stage play of John Steinbeck's Of Mice and Men, citing unspecified health issues. Around Westport, concern and affection for Newman are palpable. "We're praying for him," says a grocer. "He's just a funny, real guy. His reputation is stellar in this town." Whatever lies ahead, Newman won't face it alone. "He and his wife are always together," says manager Hector Maneiro of Tavern on Main restaurant. "They always seem happy. God bless them."

  • Contributors:
  • Kathy Ehrich Dowd/Westport,
  • Lucia Greene/New York City,
  • Natasha Stoynoff/New York City.
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