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  • China sets modest growth target of about 5% as parliament opens

    China sets modest growth target of about 5% as parliament opens

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    • GDP target around 5% at low end of expectations
    • Work report focuses on consumption, jobs
    • Defence spending to rise 7.2%, up from 7.1% rise
    • Budget deficit target at 3%, wider than previous 2.8%

    BEIJING, March 5 (Reuters) – China set a modest target for economic growth this year of around 5% on Sunday as it kicked-off the annual session of its National People’s Congress (NPC), which is poised to implement the biggest government shake-up in a decade.

    China’s gross domestic product (GDP) grew by just 3% last year, one of its worst showings in decades, squeezed by three years of COVID-19 restrictions, crisis in its vast property sector, a crackdown on private enterprise and weakening demand for Chinese exports.

    In his work report, outgoing Premier Li Keqiang stressed the need for economic stability and expanding consumption, setting a goal to create around 12 million urban jobs this year, up from last year’s target of at least 11 million, and warned that risks remain in the real estate sector.

    Li set a budget deficit target at 3.0% of GDP, widening from a goal of around 2.8% last year.

    “We should give priority to the recovery and expansion of consumption,” said Li, who spoke for just under an hour in a speech to open the parliament, which will run through March 13.

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    “The incomes of urban and rural residents should be boosted through multiple channels. We should stabilize spending on big-ticket items and promote recovery in consumption of consumer services,” he said.

    This year’s growth target of around 5% was at the low end of expectations, as policy sources had recently told Reuters a range as high as 6% could be set. It is also below last year’s target of around 5.5%.

    “While the official growth target has been lowered for the second consecutive year, which might be a disappointment to the market, we reckon investors (should) pay attention to the underlying growth momentum to gauge the recovery pace,” said Zhou Hao, economist at Guotai Junan International.

    Li and a slate of more reform-oriented economic policy officials are set to retire during the congress, making way for loyalists to President Xi Jinping, who further tightened his grip on power when he secured a precedent-breaking third leadership term at October’s Communist Party Congress.

    [1/5] Chinese President Xi Jinping and Li Keqiang talk at the opening session of the National People’s Congress (NPC) at the Great Hall of the People in Beijing, China March 5, 2023. REUTERS/Thomas Peter

    During the NPC, former Shanghai party chief Li Qiang, a longtime Xi ally, is expected to be confirmed as premier, tasked with reinvigorating the world’s second-largest economy.

    The rubber-stamp parliament will also discuss Xi’s plans for an “intensive” and “wide-ranging” reorganisation of state and Communist Party entities, state media reported on Tuesday, with analysts expecting a further deepening of Communist Party penetration of state bodies.

    MILITARY BUDGET RISE

    Li said China’s armed forces should devote greater energy to training under combat conditions and boost combat preparedness, and the budget included a 7.2% increase in defence spending this year, a slightly bigger increase than last year’s budgeted 7.1% rise and again exceeding expected GDP growth.

    On Taiwan, Li struck a moderate tone, saying China should promote the peaceful development of cross-Strait relations and advance the process of China’s “peaceful reunification”, but also take resolute steps to oppose Taiwan independence.

    Beijing faces a host of challenges including increasingly fraught relations with the United States and a worsening demographic outlook, with plunging birth rates and a population drop last year for the first time since the famine year of 1961.

    China plans to lower the costs of childbirth, childcare and education and will actively respond to an ageing population and a decrease in fertility, the nation’s state planner said in a work report released on Sunday.

    The NPC opened on a smoggy day amid tight security in the Chinese capital, with 2,948 delegates gathered in the cavernous Great Hall of the People on the west side of Tiananmen Square.

    During the session, China’s legislature will vote on a plan to reform institutions under the State Council, or cabinet, and decide on a new cabinet line-up for the next five years, according to a meeting agenda.

    It is the first NPC meeting since China abruptly dropped its zero-COVID policy in December, following rare nationwide protests. Excluding the pandemic-shortened meetings of the previous three years, this year’s session will be the shortest in at least 40 years, according to NPC Observer, a blog.

    Additional reporting by the Beijing newsrooom; Writing by Tony Munroe; Editing by Himani Sarkar, William Mallard and Simon Cameron-Moore

    Our Standards: The Thomson Reuters Trust Principles.

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  • Host India doesn’t want G20 to discuss further Russia sanctions – sources

    Host India doesn’t want G20 to discuss further Russia sanctions – sources

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    BENGALURU, Feb 22 (Reuters) – India does not want the G20 to discuss additional sanctions on Russia for its invasion of Ukraine during New Delhi’s one-year presidency of the bloc, six senior Indian officials said on Wednesday, amid debate over how even to describe the conflict.

    On the sidelines of a G20 gathering in India, financial leaders of the Group of Seven (G7) nations will meet on Feb. 23, the eve of the first anniversary of the invasion, to discuss measures against Russia, Japan’s finance minister said on Tuesday.

    The officials, who are directly involved in this week’s G20 meeting of finance ministers and central bank chiefs, said the economic impact of the conflict would be discussed but India did not want to consider additional actions against Russia.

    “India is not keen to discuss or back any additional sanctions on Russia during the G20,” said one of the officials. “The existing sanctions on Russia have had a negative impact on the world.”

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    Another official said sanctions were not a G20 issue. “G20 is an economic forum for discussing growth issues.”

    Spokespeople for the Indian government and the finance and foreign ministries did not immediately respond to requests for comment.

    On Wednesday, the first day of meetings to draft the G20 communique, officials struggled to find an acceptable word to describe the Russia-Ukraine conflict, delegates of at least seven countries present in the meetings said.

    India tried to form a consensus on the words by calling it a “crisis” or a “challenge” instead of a “war”, the officials said, but the discussions concluded without a decision.

    These discussions have been rolled over to Thursday when U.S. Treasury Secretary Janet Yellen will be part of the meetings.

    Indian Foreign Minister S. Jaishankar has previously said the war has disproportionately hit poorer countries by raising prices of fuel and food.

    India’s neighbours – Sri Lanka, Pakistan and Bangladesh – have all sought loans from the International Monetary Fund in recent months to tide over economic troubles brought about by the pandemic and the war.

    U.S. Deputy Treasury Secretary Wally Adeyemo said on Tuesday that Washington and its allies planned in coming days to impose new sanctions and export controls that would target Russia’s purchase of dual-use goods like refrigerators and microwaves to secure semiconductors needed for its military.

    The sanctions would also seek to do more to stem the trans-shipment of oil and other restricted goods through bordering countries.

    In addition, Adeyemo said officials from a coalition of more than 30 countries would warn companies, financial institutions and individuals still doing business with Russia that they faced sanctions.

    Indian Prime Minister Narendra Modi’s government has not openly criticised Moscow for the invasion and instead called for dialogue and diplomacy to end the war. India has also sharply raised purchases of oil from Russia, its biggest supplier of defence hardware.

    Jaishankar told Reuters partner ANI this week that India’s relationship with Russia had been “extraordinarily steady and it has been steady through all the turbulence in global politics”.

    Additional reporting by Krishn Kaushik; Writing by Krishna N. Das; Editing by Raju Gopalakrishnan and Nick Macfie

    Our Standards: The Thomson Reuters Trust Principles.

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  • Indian shares fall ahead of inflation data; Adani stocks slide

    Indian shares fall ahead of inflation data; Adani stocks slide

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    BENGALURU, Feb 13 (Reuters) – Indian shares were off to a muted start on Monday, ahead of domestic retail inflation data due later in the day and U.S. inflation data due tomorrow, while the ongoing uncertainty and spillover effects from the Adani Group’s market rout continued to create an overhang.

    The Nifty 50 index (.NSEI) was down 0.29% at 17,804.60 as of 9:37 a.m. IST, while the S&P BSE Sensex (.BSESN) fell 0.35% to 60,472.28.

    Ten of the 13 major sectoral indexes declined, with information technology stocks (.NIFTYIT) falling nearly 2% amid worries of a growth slowdown in the U.S., from where they get a significant share of their revenue.

    On the flip side, metals (.NIFTYMET) gained with a 1% rise.

    Twenty-seven of Nifty 50 constituents advanced with Titan Co (TITN.NS) and Eicher Motors Ltd (EICH.NS) among top gainers.

    Wall Street equities closed lower on Friday, on fears of a longer-than-expected high-rate regime after hawkish comments from key Federal Reserve officials.

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    Asian markets fell, with the MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) sliding 0.63%.

    Investors await India’s retail inflation data for January, due today. A Reuters poll of economists showed that India’s annual retail inflation rose from a 12-month low in December, but stayed within the 6% upper limit of RBI’s tolerance band in January.

    The uncertainty over the Adani conglomerate added to concerns in domestic markets.

    “The Adani group saga continues to weigh on investors’ minds and hence the sentiment has been negative,” said Prashanth Tapse of Mehta Equities.

    The group has lost over $100 billion in market value since Jan. 24, when U.S. short-seller Hindenburg Research accused the conglomerate of stock manipulation and improper use of tax havens.

    India’s market regulator is probing the group’s links to some of the investors in its scrapped $2.5 billion share sale of the flagship Adani Enterprises.

    ($1 = 82.5250 Indian rupees)

    Reporting by Bharath Rajeswaran in Bengaluru; Editing by Janane Venkatraman, Nivedita Bhattacharjee

    Our Standards: The Thomson Reuters Trust Principles.

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  • Analysis: Loans to Russian soldiers fuel calls for European banks to quit

    Analysis: Loans to Russian soldiers fuel calls for European banks to quit

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    BERLIN/LONDON, Feb 13 (Reuters) – A Russian scheme to grant loan payment holidays to troops fighting in Ukraine, and for banks to write off the entire debt if they are killed or maimed, has added to growing pressure for the remaining overseas lenders in Russia to leave.

    Almost a year since Moscow launched what it calls a “special military operation” in Ukraine, a handful of European banks, including Austria’s Raiffeisen Bank International (RBIV.VI) and Italy’s UniCredit (CRDI.MI), are still making money in Russia.

    The loan relief scheme has not only triggered criticism from Ukraine’s central bank, which said it had appealed to Raiffeisen and other banks to stop doing business in Russia, but also from investors concerned about any reputational impact.

    Raiffeisen and UniCredit are both deeply embedded in the Russian financial system and are the only foreign banks on the central bank’s list of 13 “systemically important credit institutions”, underscoring their importance to Russia’s economy, which is grappling with sweeping Western sanctions.

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    Their role in supporting the Russian economy at a critical time for President Vladimir Putin has prompted some investors to go public with their misgivings.

    “Companies should be very careful,” said Kiran Aziz, of Norwegian pension fund KLP, cautioning of a major risk that the banks could be used to “in other ways finance the war”. KLP funds hold shares in both Raiffeisen and UniCredit.

    At the time the payment holiday law was going through parliament in September, Vyacheslav Volodin, the influential speaker of the lower house, made clear its importance to Russia.

    “Soldiers and officers ensure the security of our country and we must be sure that they will be taken care of,” he said.

    Eric Christian Pederson of Nordea Asset Management, which has more than 300 billion euros ($320 billion) under management, said he too was concerned about Raiffeisen and UniCredit’s Russian presence and had raised this with them.

    The requirement that the banks grant payment holidays to soldiers “illustrates the dangers of operating in jurisdictions where companies can … be forced into actions that go directly against their corporate values,” he added.

    “We feel that it is right for companies to withdraw from Russia, given its unprovoked attack on Ukraine,” said Pederson. Refinitiv data shows Nordea owns shares in UniCredit.

    Banks restructured a total of 167,600 loans for military personnel or their family members, worth more than 800 million euros, between Sept. 21 and the end of last year, Russian central bank data shows.

    Raiffeisen said that only 0.2% of its Russian loans are affected by the “government-imposed loan moratorium”, a sum it described as “negligible”. The bank has a total of almost 9 billion euros of loans in Russia, where it has been for more than 25 years, including to companies.

    It made a net profit of roughly 3.8 billion euros last year, thanks in large part to a 2 billion euro plus profit from its Russia business.

    UniCredit, which entered the Russian market almost 20 years ago when it acquired an Austrian bank, said that the rule was “mandatory under the federal law … for all banks”, declining to say how many of its loans had been forgiven.

    The Italian bank added that its business in Russia was focused on companies rather than individuals. Of UniCredit’s more than 20 billion euro total revenue last year, Russia accounted for more than 1 billion euros.

    But despite an initial sharp fall, UniCredit’s shares are now significantly higher than before Russia moved its troops into Ukraine on Feb. 24 last year, while Raiffeisen’s, with a more limited free float, have not recovered.

    “Any profiteering on the ongoing war is not acceptable or aligned with our view of responsible investments,” said a spokesperson for Swedbank Robur, one of Scandinavia’s top investors, adding that reputational risk was a worry.

    Swedbank Robur said it has stakes in both banks, but did not disclose figures.

    Larger institutional investors, including France’s Amundi and Norway’s sovereign wealth fund, which advocates responsible investing, declined to comment when asked for their views.

    WINDOW CLOSING?

    Some foreign banks have made relatively quick exits.

    France’s Societe Generale (SOGN.PA) severed its Russia ties in May by selling Rosbank (ROSB.MM) to businessman Vladimir Potanin’s Interros Group.

    But the continued presence of two of Europe’s biggest banks is attracting the attention of regulators at the European Central Bank (ECB), one person familiar with the matter said.

    Andrea Enria, the ECB’s chief supervisor, said the window to quit was “closing a bit” because Russian authorities were taking a more “hostile” approach. But he also voiced support for any bank wanting to reduce their business there or leave.

    Raiffeisen and UniCredit confirmed they were in discussions about Russia with the ECB.

    UniCredit said it kept the ECB “fully and regularly up to date on our strategy of orderly de-risking our exposure to Russia”.

    But with money still to be made, Raiffeisen saw profit from its business in Russia more than triple last year.

    Meanwhile, Russian savers lodged more than 20 billion euros with the bank, which offers a place to deposit funds with fewer sanctions risks.

    This means there is no great impetus for banks to leave Russia, despite regulatory pressure.

    And in Austria, which has close historical and economic ties to eastern Europe and Russia, politicians are largely silent on Raiffeisen’s continuing Russian presence, which in recent months prompted protests outside its headquarters.

    Johann Strobl, Raiffeisen’s CEO, has said he is examining options for the Russian business, although points out that any move is complicated, having earlier said that the bank is not “a sausage stand” that could be closed overnight.

    For some the question is more about morality than money.

    Heinrich Schaller, head of RBI’s third largest shareholder Raiffeisenlandesbank Oberoesterreich and deputy chairman of Raiffeisen, is among those to have aired doubts about staying.

    “Of course it is a question of morals,” he said recently. “No doubt about it.”

    Whatever shareholders may say, a decree by Putin is likely to make getting out of Russia difficult. It banned investors from so-called unfriendly countries from selling shares in banks, unless the Russian President grants an exemption.

    ($1 = 0.9376 euros)

    Additional reporting by Alexandra Schwarz-Goerlich in Vienna and Tom Sims in Frankfurt; Writing by John O’Donnell; Editing by Alexander Smith

    Our Standards: The Thomson Reuters Trust Principles.

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  • It’s ‘now or never’ to stop Japan’s shrinking population, PM says

    It’s ‘now or never’ to stop Japan’s shrinking population, PM says

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    Jan 23 (Reuters) – Japanese Prime minister Fumio Kishida pledged on Monday to take urgent steps to tackle the country’s declining birth rate, saying it was “now or never” for one of the world’s oldest societies.

    Japan has in recent years been trying to encourage its people to have more children with promises of cash bonuses and better benefits, but it remains one of the most expensive places in the world to raise a child, according to surveys.

    Births plunged to a new record low last year, according to official estimates, dropping below 800,000 for the first time – a watershed moment that came eight years earlier than the government had expected.

    That most likely precipitated a further population decline in a country where the median age is 49, the highest in the world behind only the tiny city-state of Monaco.

    “Our nation is on the cusp of whether it can maintain its societal functions,” Kishida said in a policy speech at the opening of this year’s parliamentary session.

    “It is now or never when it comes to policies regarding births and child-rearing – it is an issue that simply cannot wait any longer,” he added.

    Kishida said he would submit plans to double the budget for child-related policies by June, and that a new Children and Families government agency to oversee the issue would be set up in April.

    Japan is the third-most-expensive country globally to raise a child, according to YuWa Population Research, behind only China and South Korea, countries also seeing shrinking populations in worrying signs for the global economy.

    Other countries are also coming to grips with ageing and shrinking populations. Last week, China reported that its population dropped in 2022 for the first time in 60 years.

    Reporting by Sakura Murakami; Editing by John Geddie and Gerry Doyle

    Our Standards: The Thomson Reuters Trust Principles.

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  • Poland says Germany refused talks on World War Two reparations

    Poland says Germany refused talks on World War Two reparations

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    WARSAW, Jan 3 (Reuters) – Germany has rebuffed the latest push by Poland’s nationalist government for vast reparations over World War Two, saying in response to a diplomatic note that the issue was closed, the foreign ministry in Warsaw said on Tuesday.

    A spokesperson for the German foreign ministry said it had responded to a letter sent by Poland on the subject in October and did not comment on the contents of diplomatic correspondence.

    Poland estimates its World War Two losses caused by Germany at 6.2 trillion zlotys ($1.4 trillion) and has demanded reparations, but Berlin has repeatedly said all financial claims related to the war have been settled.

    “This answer, to sum it up, shows an absolutely disrespectful attitude towards Poland and Poles,” Arkadiusz Mularczyk, Poland’s deputy foreign minister, said in an interview with the Polish Press Agency.

    “Germany does not pursue a friendly policy towards Poland, they want to build their sphere of influence here and treat Poland as a vassal state.”

    When asked about further dialogue with Germany regarding compensation, Mularczyk said it would continue “through international organisations”.

    Some six million Poles, including three million Polish Jews, were killed during the war and Warsaw was razed to the ground following a 1944 uprising in which about 200,000 civilians died.

    In 1953, Poland’s then-communist rulers relinquished all claims to war reparations under pressure from the Soviet Union, which wanted to free East Germany, also a Soviet satellite, from any liabilities.

    Poland’s ruling nationalist Law and Justice (PiS) party says that agreement is invalid because Poland was unable to negotiate fair compensation. It has revived calls for compensation since it took power in 2015 and has made the promotion of Poland’s wartime victimhood a central plank of its appeal to nationalism.

    The combative stance towards Germany, often used by PiS to mobilise its constituency, has strained relations with Berlin.

    In a joint press conference with Polish foreign minister Zbigniew Rau last October, German foreign minister Annalena Baerbock said the pain caused by Germany during World War Two was “passed on through generations” in Poland but that the issue of reparations was closed.

    ($1 = 4.4324 zlotys)

    Reporting by Alan Charlish; Additional reporting by Victoria Waldersee;
    Editing by Paul Simao and Mark Potter

    Our Standards: The Thomson Reuters Trust Principles.

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  • Putin’s call for Orthodox Christmas truce in Ukraine greeted with scepticism

    Putin’s call for Orthodox Christmas truce in Ukraine greeted with scepticism

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    • Putin orders ceasefire to start at noon on Friday
    • Ukraine says no truce until invaders leave
    • Germany, U.S. agree to send combat vehicles to Ukraine

    KYIV/BAKHMUT, Ukraine, Jan 5 (Reuters) – Russian President Vladimir Putin called on Thursday for a 36-hour ceasefire in Ukraine to mark Orthodox Christmas, a move rejected by Kyiv which said there could be no truce until Russia withdraws its troops from occupied land.

    The United States and Germany made a joint announcement to supply Ukraine with armoured combat vehicles, a boost for Ukrainian President Volodymyr Zelenskiy who has urged Western allies to provide his forces with armour and heavy weapons for months.

    Fifty Bradley Fighting Vehicles would be included in a $2.8 billion U.S. package. Germany said it was sending Marder Infantry Fighting Vehicles, following an announcement by France on Wednesday it was sending AMX-10 RC armoured combat vehicles.

    The Kremlin said Putin had ordered Russian troops to cease firing from midday on Friday along the entire front, in response to a call for a Christmas truce from Patriarch Kirill of Moscow, the head of the Russian Orthodox Church, a close Putin ally.

    “Proceeding from the fact that a large number of citizens professing Orthodoxy live in the areas of hostilities, we call on the Ukrainian side to declare a ceasefire and allow them to attend services on Christmas Eve, as well as on Christmas Day,” Putin said in his order.

    Russia’s Orthodox Church observes Christmas on Jan. 7. Ukraine’s main Orthodox Church has rejected the authority of the Moscow patriarch, and many Ukrainian believers have shifted their calendar to celebrate Christmas on Dec. 25 as in the West.

    A genuine truce in Ukraine would be the first since May, when the sides halted intense fighting in the devastated port of Mariupol to allow Ukrainian forces to surrender there.

    On Thursday night, Zelenskiy accused Russia of wanting to use a truce as cover to stop Ukrainian advances in the strategic industrial area and eastern frontline known as the Donbas.

    “They now want to use Christmas as a cover, albeit briefly, to stop the advances of our boys in Donbas and bring equipment, ammunitions and mobilised troops closer to our positions,” Zelenskiy said in his nightly video address, speaking pointedly in Russian rather than Ukrainian.

    ‘CYNICAL’ SAYS U.S.

    In Washington, U.S. President Joe Biden, the State Department and the Pentagon greeted Putin’s order with scepticism. Biden said he thought Putin was “trying to find some oxygen”.

    Ukraine has scored some battlefield successes in the past few months although Russia has kept up a barrage of missile and drone strikes on Ukraine’s energy plants, knocking out power to millions of people at times in the middle of winter. Russia has denied targeting civilians since its invasion began Feb. 24 but the strikes included Christmas Day and New Year’s attacks on civilian infrastructure, according to Kyiv.

    “There’s one word that best described that and it’s ‘cynical’,” U.S. State Department spokesperson Ned Price said in a press briefing of Putin’s ceasefire order.

    “Our concern … is that the Russians would seek to use any temporary pause in fighting to rest, to refit, to regroup, and ultimately to re-attack,” Price said.

    Putin’s ceasefire also appeared to face challenges from Russia’s own side. Denis Pushilin, Russian-installed leader in Ukraine’s Donetsk province, scene of the heaviest fighting, wrote on Telegram: “There can be no talk of any truce!”

    He said Putin’s order involved only halting offensive operations.

    Earlier on Thursday, the Kremlin said Putin had told Turkey’s President Tayyip Erdogan that Moscow was ready for peace talks – but only under the condition that Ukraine “take into account the new territorial realities”, a reference to Kyiv acknowledging Moscow’s annexation of Ukrainian territory. Ukrainian presidential adviser Mikhailo Podolyak called that demand “fully unacceptable”.

    MEAT GRINDER

    Ten months after Putin ordered what he calls a “special military operation” to protect Russian security, Moscow and Kyiv have entered the new year with hardened diplomatic positions.

    Putin has shown no willingness to discuss relinquishing his territorial conquests, despite mounting losses among his troops.

    While some of the heaviest fighting of the war continues, the front line has been static since the last big Russian retreat in mid-November. The worst battles have taken place near the eastern city of Bakhmut, which both sides have compared to a meat grinder.

    Ukraine says Russia has lost thousands of troops despite seizing scant ground in months of futile waves of assaults on Bakhmut. Russia says the city is key to its aim to capture the rest of Donetsk province, one of four partially occupied regions it claims to have annexed.

    Near the front, Reuters saw explosions from outgoing artillery and smoke filling the sky.

    “We are holding up. The guys are trying to hold up the defence,” said Viktor, a 39-year-old Ukrainian soldier driving an armoured vehicle out of Soledar, a salt-mining town on Bakhmut’s northeastern outskirts.

    Most civilians have been evacuated from Bakhmut. Those who have stayed survive under near constant bombardment, with no heat or electricity. Parts of the city are a wasteland, with sections of residential apartment blocks flattened into concrete piles.

    Reporting by Reuters bureaux; Writing by Peter Graff and Grant McCool; Editing by Andrew Heavens and Cynthia Osterman

    Our Standards: The Thomson Reuters Trust Principles.

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  • Canada’s deep yield curve inversion adds to BoC rate hike dilemma

    Canada’s deep yield curve inversion adds to BoC rate hike dilemma

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    TORONTO, Dec 4 (Reuters) – As the Bank of Canada considers ditching oversized interest rate hikes, it is dealing with an economy likely more overheated than previously thought but also the bond market’s clearest signal yet that recession and lower inflation lie ahead.

    Canada’s central bank says that the economy needs to slow from overheated levels in order to ease inflation. If its tightening campaign overshoots to achieve that objective it could trigger a deeper downturn than expected.

    The bond market could be flagging that risk. The yield on the Canadian 10-year government bond has fallen nearly 100 basis points below the 2-year yield, marking the biggest inversion of Canada’s yield curve in Refinitiv data going back to 1994 and deeper than the U.S. Treasury yield curve inversion.

    Some analysts see curve inversions as predictors of recessions. Canada’s economy is likely to be particularly sensitive to higher rates after Canadians borrowed heavily during the COVID-19 pandemic to participate in a red-hot housing market.

    “Markets think the Canadian economy is about to suffer a triple blow as domestic consumption collapses, U.S. demand weakens and global commodity prices drop,” said Karl Schamotta, chief market strategist at Corpay.

    The BoC has opened the door to slowing the pace of rate increases to a quarter of a percentage point following multiple oversized hikes in recent months that lifted the benchmark rate to 3.75%, its highest since 2008.

    Money markets are betting on a 25-basis-point increase when the bank meets to set policy on Wednesday, but a slim majority of economists in a Reuters poll expect a larger move.

    RESILIENT ECONOMY

    Canada’s employment report for November showed that the labour market remains tight, while gross domestic product grew at an annualized rate of 2.9% in the third quarter.

    That’s much stronger than the 1.5% pace forecast by the BoC and together with upward revisions to historical growth could indicate that demand has moved further ahead of supply, economists say.

    But they also say that the details of the third-quarter GDP data, including a contraction in domestic demand, and a preliminary report showing no growth in October are signs that higher borrowing costs have begun to impact activity.

    The BoC has forecast that growth would stall from the fourth quarter of this year through the middle of 2023.

    The depth of Canada’s curve inversion is signaling a “bad recession” not a mild one, said David Rosenberg, chief economist & strategist at Rosenberg Research.

    It reflects greater risk to the outlook in Canada than the United States due to “a more inflated residential real estate market and consumer debt bubble,” Rosenberg said.

    Inflation is likely to be more persistent after it spread from goods prices to services and wages, where higher costs can become more entrenched. Still, 3-month measures of underlying inflation that are closely watched by the BoC – CPI-median and CPI-trim – show price pressures easing.

    They fell to an average of 2.75% in October, according to estimates by Stephen Brown, senior Canada economist at Capital Economics. That’s well below more commonly used 12-month rates.

    “The yield curve would not invert to this extent unless investors also believed that inflation will drop back down toward the Bank’s target,” said Brown.

    Like the Federal Reserve, the BoC has a 2% target for inflation.

    “The curve is telling us the Bank of Canada will be forced into a reversal by late 2023, with rates remaining depressed for years to come,” Corpay’s Schamotta said.

    Reporting by Fergal Smith; Editing by Andrea Ricci

    Our Standards: The Thomson Reuters Trust Principles.

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  • China’s Xi unwilling to accept western vaccines, U.S. official says

    China’s Xi unwilling to accept western vaccines, U.S. official says

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    WASHINGTON, Dec 3 (Reuters) – Chinese leader Xi Jinping is unwilling to accept Western vaccines despite the challenges China is facing with COVID-19, and while recent protests there are not a threat to Communist Party rule, they could affect his personal standing, U.S. Director of National Intelligence Avril Haines said on Saturday.

    Although China’s daily COVID cases are near all-time highs, some cities are taking steps to loosen testing and quarantine rules after Xi’s zero-COVID policy triggered a sharp economic slowdown and public unrest.

    Haines, speaking at the annual Reagan National Defense Forum in California, said that despite the social and economic impact of the virus, Xi “is unwilling to take a better vaccine from the West, and is instead relying on a vaccine in China that’s just not nearly as effective against Omicron.”

    “Seeing protests and the response to it is countering the narrative that he likes to put forward, which is that China is so much more effective at government,” Haines said.

    “It’s, again, not something we see as being a threat to stability at this moment, or regime change or anything like that,” she said, while adding: “How it develops will be important to Xi’s standing.”

    China’s foreign ministry did not immediately respond to a request for comment sent on Sunday.

    China has not approved any foreign COVID vaccines, opting for those produced domestically, which some studies have suggested are not as effective as some foreign ones. That means easing virus prevention measures could come with big risks, according to experts.

    China had not asked the United States for vaccines, the White House said earlier in the week.

    One U.S. official told Reuters there was “no expectation at present” that China would approve western vaccines.

    “It seems fairly far-fetched that China would greenlight Western vaccines at this point. It’s a matter of national pride, and they’d have to swallow quite a bit of it if they went this route,” the official said.

    Haines also said North Korea recognized that China was less likely to hold it accountable for what she said was Pyongyang’s “extraordinary” number of weapons tests this year.

    Amid a record year for missile tests, North Korean leader Kim Jong Un said last week his country intends to have the world’s most powerful nuclear force.

    Speaking on a later panel, Admiral John Aquilino, the commander of the U.S. Indo-Pacific Command, said China had no motivation to restrain any country, including North Korea, that was generating problems for the United States.

    “I’d argue quite differently that it’s in their strategy to drive those problems,” Aquilino said of China.

    He said China had considerable leverage to press North Korea over its weapons tests, but that he was not optimistic about Beijing “doing anything helpful to stabilize the region.”

    Reporting by Michael Martina, David Brunnstrom, Idrees Ali, and Eric Beech; Additional reporting by Martin Quin Pollard in Beijing; Editing by Sandra Maler and Lincoln Feast

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  • Consumer inflation in Japan’s capital rises at fastest pace in 40 years

    Consumer inflation in Japan’s capital rises at fastest pace in 40 years

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    • Tokyo Nov core CPI up 3.6% vs f’cast +3.5%
    • Tokyo CPI stays above BOJ’s 2% target for 6th straight month
    • Data underscores broadening inflationary pressure

    TOKYO, Nov 25 (Reuters) – Core consumer prices in Japan’s capital, a leading indicator of nationwide trends, rose at their fastest annual pace in 40 years in November and exceeded the central bank’s 2% target for a sixth straight month, signalling broadening inflationary pressure.

    The increase, driven mostly by food and fuel bills but spreading to a broader range of goods, cast doubt on the view of the Bank of Japan (BOJ) that recent cost-push inflation will prove transitory, some analysts said.

    The Tokyo core consumer price index (CPI), which excludes fresh food but includes fuel, was 3.6% higher in November than a year earlier, government data showed on Friday. The rise exceeded a median market forecast of 3.5% and the 3.4% increase seen in October

    The last time Tokyo inflation was faster was April 1982, when the core CPI was 4.2% higher than a year before.

    While the rise was driven mostly by electricity bills and food prices, companies were also charging more for durable goods as the weak yen pushed up the cost of imports, the data showed.

    “Price hikes are broadening and suggests the weak yen could keep inflation elevated well into next year,” said Mari Iwashita, chief market economist at Daiwa Securities.

    “Core consumer inflation may stay around the BOJ’s 2% target for much of next year, which would make it hard for the bank to keep arguing that the price rises are temporary.”

    The Tokyo core-core CPI index, which excludes fuel as well as fresh food, was 2.5% higher in November than a year earlier, picking up from the 2.2% annual gain seen in October.

    BOJ AN OUTLIER

    The BOJ has kept interest rates ultra-low on the view that inflation will slow back below its target next year when the boost from fuel price gains dissipate. The central bank has therefore remained an outlier from a wave monetary tightening around the world aimed at combating soaring inflation.

    Contrary to the experience of some western economies, where wages have surged with inflation, growth in wages and services prices remain muted in Japan.

    Of the components making up the Tokyo CPI data, services prices in November were up just 0.7% on a year earlier, after a 0.8% annual increase seen in October. That compared with a 7.7% spike in durable goods prices for November, which followed October’s 7.0% annual gain.

    Separate data released by the BOJ on Friday showed the corporate service price index, which measures prices that firms charge each other for services, had been 1.8% higher in October than a year earlier. That was slower than a 2.1% annual gain seen in September.

    BOJ Governor Haruhiko Kuroda has repeatedly said that, for inflation to sustainably hit his 2% inflation target, wages must rise enough to offset the rise in goods prices.

    Slow wage growth has been among factors delaying Japan’s recovery from the coronavirus pandemic. The world’s third-largest economy unexpectedly shrank an annualised 1.2% in the third quarter, partly because of soft consumption.

    The Tokyo CPI data heightens the chance of further rises in nationwide core consumer prices, which in October were 3.6% higher than a year earlier, also marking a 40-year high. The nationwide data for November is scheduled for release on Dec. 23.

    Reporting by Takahiko Wada and Leika Kihara; Editing by Sam Holmes and Bradley Perrett

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  • Weapons industry booms as Eastern Europe arms Ukraine

    Weapons industry booms as Eastern Europe arms Ukraine

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    • E.Europe arms companies step up production for Ukraine
    • Hope to find new markets as defence spends rise
    • Can produce and service Soviet-era and NATO-standard weaponry Poland, Czechs among big suppliers of military aid to Kyiv
    • Industry’s history stretches from 1800s and through Cold War

    PRAGUE/WARSAW, Nov 24 (Reuters) – Eastern Europe’s arms industry is churning out guns, artillery shells and other military supplies at a pace not seen since the Cold War as governments in the region lead efforts to aid Ukraine in its fight against Russia.

    Allies have been supplying Kyiv with weapons and military equipment since Russia invaded its neighbour on Feb. 24, depleting their own inventories along the way.

    The United States and Britain committed the most direct military aid to Ukraine between Jan. 24 and Oct. 3, a Kiel Institute for the World Economy tracker shows, with Poland in third place and the Czech Republic ninth.

    Still wary of Russia, their Soviet-era master, some former Warsaw Pact countries see helping Ukraine as a matter of regional security.

    But nearly a dozen government and company officials and analysts who spoke to Reuters said the conflict also presented new opportunities for the region’s arms industry.

    “Taking into account the realities of the ongoing war in Ukraine and the visible attitude of many countries aimed at increased spending in the field of defence budgets, there is a real chance to enter new markets and increase export revenues in the coming years,” said Sebastian Chwalek, CEO of Poland’s PGZ.

    State-owned PGZ controls more than 50 companies making weapons and ammunition – from armoured transporters to unmanned air systems – and holds stakes in dozens more.

    It now plans to invest up to 8 billion zlotys ($1.8 billion)over the next decade, more than double its pre-war target, Chwalek told Reuters. That includes new facilities located further from the border with Russia’s ally Belarus for security reasons, he said.

    Other manufacturers too are increasing production capacity and racing to hire workers, companies and government officials from Poland, Slovakia and the Czech Republic said.

    Immediately after Russia’s attack some eastern European militaries and manufacturers began emptying their warehouses of Soviet-era weapons and ammunition that Ukrainians were familiar with, as Kyiv waited for NATO-standard equipment from the West.

    As those stocks have dwindled, arms makers have cranked up production of both older and modern equipment to keep supplies flowing. The stream of weapons has helped Ukraine push back Russian forces and reclaim swathes of territory.

    Chwalek said PGZ would now produce 1,000 portable Piorun manpad air-defence systems in 2023 – not all for Ukraine -compared to 600 in 2022 and 300 to 350 in previous years.

    The company, which he said has also delivered artillery and mortar systems, howitzers, bulletproof vests, small arms and ammunition to Ukraine, is likely to surpass a pre-war 2022 revenue target of 6.74 billion zlotys.

    Companies and officials who spoke to Reuters declined to give specific details of military supplies to Ukraine, and some did not want to be identified, citing security and commercial sensitivities.

    HISTORIC INDUSTRY

    Eastern Europe’s arms industry dates back to the 19th Century, when Czech Emil Skoda began manufacturing weapons for the Austro-Hungarian Empire.

    Under Communism, huge factories in Czechoslovakia, the Warsaw Pact’s second-largest weapons producer, Poland and elsewhere in the region kept people employed, turning out weapons for Cold War conflicts Moscow stoked around the world.

    [1/6] GROT C16 FB-M1, modular assault rifles system is seen at PGZ (Polska Grupa Zbrojna) arms factory Fabryka Broni Lucznikin Radom Poland, November 7, 2022. REUTERS/Kacper Pempel

    “The Czech Republic was one of the powerhouses of weapons exporters and we have the personnel, material base and production lines needed to increase capacity,” its NATO Ambassador Jakub Landovsky told Reuters.

    “This is a great chance for the Czechs to increase what we need after giving the Ukrainians the old Soviet-era stocks. This can show other countries we can be a reliable partner in the arms industry.”

    The 1991 collapse of the Soviet Union and NATO’s expansion into the region pushed companies to modernise, but “they can still quickly produce things like ammunition that fits the Soviet systems”, said Siemon Wezeman, a researcher at the Stockholm International Peace Research Institute.

    Deliveries to Ukraine have included artillery rounds of “Eastern” calibres, such as 152mm howitzer rounds and 122mm rockets not produced by Western companies, officials and companies said.

    They said Ukraine had acquired weapons and equipment via donations from governments and direct commercial contracts between Kyiv and the manufacturers.

    NOT JUST BUSINESS

    “Eastern European countries support Ukraine substantially,” Christoph Trebesch, a professor at the Kiel Institute, said. “At the same time it’s an opportunity for them to build up their military production industry.”

    Ukraine has received nearly 50 billion crowns ($2.1 billion) of weapons and equipment from Czech companies, about 95% of which were commercial deliveries, Czech Deputy Defence Minister Tomas Kopecny told Reuters. Czech arms exports this year will be the highest since 1989, he said, with many companies in the sector adding jobs and capacity.

    “For the Czech defence industry, the conflict in Ukraine, and the assistance it provides is clearly a boost that we have not seen in the last 30 years,” Kopecny said.

    David Hac, chief executive of Czech STV Group, outlined to Reuters plans to add new production lines for small-calibre ammunition and said it is considering expanding its large-calibre capability. In a tight labour market, the company is trying to poach workers from a slowing car industry, he said.

    Defence sales helped the Czechoslovak Group, which owns companies including Excalibur Army, Tatra Trucks and Tatra Defence, nearly double its first-half revenues from a year earlier, to 13.8 billion crowns.

    The company is increasing production of both 155mm NATO and 152mm Eastern calibre rounds and refurbishing infantry fighting vehicles and Soviet-era T-72 tanks, spokesman Andrej Cirtek told Reuters.

    He said supplying Ukraine was more than just good business.

    “After the Russian aggression started, our deliveries for Ukrainian army multiplied,” Cirtek said.

    “The majority of the Czech population still remember times of a Russian occupation of our country before 1990 and we don´t want to have Russian troops closer to our borders.”

    ($1 = 4.5165 zlotys)

    ($1 = 23.3850 Czech crowns)

    Reporting by Michael Kahn and Robert Muller in Prague and Anna Koper in Warsaw; Editing by Catherine Evans

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  • Ghana plans to buy oil with gold instead of U.S. dollars

    Ghana plans to buy oil with gold instead of U.S. dollars

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    ACCRA, Nov 24 (Reuters) – Ghana’s government is working on a new policy to buy oil products with gold rather than U.S. dollar reserves, Vice-President Mahamudu Bawumia said on Facebook on Thursday.

    The move is meant to tackle dwindling foreign currency reserves coupled with demand for dollars by oil importers, which is weakening the local cedi and increasing living costs.

    Ghana’s Gross International Reserves stood at around $6.6 billion at the end of September 2022, equating to less than three months of imports cover. That is down from around $9.7 billion at the end of last year, according to the government.

    If implemented as planned for the first quarter of 2023, the new policy “will fundamentally change our balance of payments and significantly reduce the persistent depreciation of our currency,” Bawumia said.

    Using gold would prevent the exchange rate from directly impacting fuel or utility prices as domestic sellers would no longer need foreign exchange to import oil products, he explained.

    “The barter of gold for oil represents a major structural change,” he added.

    The proposed policy is uncommon. While countries sometimes trade oil for other goods or commodities, such deals typically involve an oil-producing nation receiving non-oil goods rather than the opposite.

    Ghana produces crude oil but it has relied on imports for refined oil products since its only refinery shut down after an explosion in 2017.

    Bawumia’s announcement was posted as Finance Minister Ken Ofori-Atta announced measures to cut spending and boost revenues in a bid to tackle a spiraling debt crisis.

    In a 2023 budget presentation to parliament on Thursday, Ofori-Atta warned the West African nation was at high risk of debt distress and that the cedi’s depreciation was seriously affecting Ghana’s ability to manage its public debt.

    The government is negotiating a relief package with the International Monetary Fund as the cocoa, gold and oil-producing nation faces its worst economic crisis in a generation.

    Reporting by Cooper Inveen and Christian Akorlie
    Writing by Sofia Christensen
    Editing by Estelle Shirbon and Elaine Hardcastle

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  • U.S. may skirt recession in 2023, Europe not so lucky – Morgan Stanley

    U.S. may skirt recession in 2023, Europe not so lucky – Morgan Stanley

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    TOKYO, Nov 14 (Reuters) – Britain and the euro zone economies are likely to tip into recession next year, Morgan Stanley said, but the United States might make a narrow escape thanks to a resilient job market.

    At the same time, China’s expected reopening after almost three years of COVID-19 curbs is set to lead a recovery in its own economy and other emerging Asian markets, the investment bank’s analysts said in a series of reports published on Sunday.

    “Risks are to the downside,” the reports said, projecting the global economy to grow by 2.2% next year, lower than the International Monetary Fund’s latest 2.7% growth estimate. read more

    Next year, Morgan Stanley predicts a sharp split between developed economies “in or near recession” while emerging economies “recover modestly” but said an overall global pickup would likely remain elusive. China’s economy was predicted to grow 5% in 2023, outpacing the average 3.7% growth expected for emerging markets, while the average growth in the Group of 10 developed countries was forecast at just 0.3%.

    Central banks across the globe have raised interest rates this year to curb raging inflation, and in the United States, Morgan Stanley predicted the Federal Reserve to keep rates high in 2023 as inflation remains strong after peaking in the fourth quarter of this year.

    “The U.S. economy just skirts recession in 2023, but the landing doesn’t feel so soft as job growth slows meaningfully and the unemployment rate continues to rise,” the report said, predicting a 0.5% expansion next year.

    “The cumulative effect of tight policy in 2023 spills over into 2024, resulting in two very weak years,” the report added.

    Globally too, the peak in inflation should come in the current quarter, the analysts said, “with disinflation driving the narrative next year”.

    • U.S. core inflation to fall to 2.9% at end-2023, headline inflation to 1.9%
    • Asia growth to dip to 3.4% in 1H23 before recovering to 4.6% in 2H23, fuelled by domestic demand
    • Cross-asset returns – especially in fixed income – will look much better in 2023 than in 2022, driven by cheaper starting valuations
    • High-grade fixed income to outperform global equities
    • EM and Japan stocks to outperform, with U.S. shares lagging

    Reporting by Kevin Buckland, editing by Miral Fahmy

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  • UK’s Sunak reinstates Braverman as interior minister

    UK’s Sunak reinstates Braverman as interior minister

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    LONDON, Oct 25 (Reuters) – British lawmaker Suella Braverman was reappointed as interior minister on Tuesday by Prime Minister Rishi Sunak, less than a week after she resigned from the role for breaching government rules.

    Braverman, 42, stepped down a day before former prime minister Liz Truss did after breaching email security rules, also voicing concerns about the direction of Truss’s government in her resignation letter.

    First elected to parliament in 2015, Braverman is regarded as being on the right wing of the governing Conservative Party.

    She supports Britain’s exit from the European Convention on Human Rights as what she calls the only way the country can solve its immigration problems, and says it was her “dream” to see a flight deporting asylum seekers to Rwanda take off.

    She has said Britain should replace the ECHR with a strengthened British Bill of Rights.

    A committed Brexit supporter, she was appointed as a minister in the Department for Exiting the European Union but resigned in protest at former prime minister Theresa May’s proposed divorce deal.

    After Boris Johnson became leader, she was later appointed Attorney General in 2020, when she was criticised by some lawyers over whether some government policies were legal.

    Reporting by William James, writing by Muvija M and Alistair Smout, editing by Elizabeth Piper

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  • UK justice secretary Brandon Lewis resigns – statement

    UK justice secretary Brandon Lewis resigns – statement

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    LONDON, Oct 25 (Reuters) – British justice secretary Brandon Lewis resigned on Tuesday following the appointment of Rishi Sunak as prime minister.

    “The new PM will have my support from the back benches to tackle the many challenges we face – as a party and as a country,” Lewis said on Twitter.

    Reporting by Sachin Ravikumar, writing by William James

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  • As UK’s Truss fights for job, new finance minister says she made mistakes

    As UK’s Truss fights for job, new finance minister says she made mistakes

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    • Truss sacked finance minister on Friday
    • New chancellor Hunt warns of tough decisions
    • ‘I’ve listened, I get it’, Truss says
    • BoE’s Bailey says agrees with Hunt on need to fix finances
    • Some Conservative lawmakers say Truss will be ousted

    LONDON, Oct 15 (Reuters) – Britain’s new finance minister Jeremy Hunt said on Saturday some taxes would go up and tough spending decisions were needed, saying Prime Minister Liz Truss had made mistakes as she battles to keep her job just over a month into her term.

    In an attempt to appease financial markets that have been in turmoil for three weeks, Truss fired Kwasi Kwarteng as her chancellor of the exchequer on Friday and scrapped parts of their controversial economic package.

    With opinion poll ratings dire for both the ruling Conservative Party and the prime minister personally, and many of her own lawmakers asking, not if, but how Truss should be removed, Truss is relying on Hunt to help salvage her premiership less than 40 days after taking office.

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    In an article for the Sun newspaper published late on Saturday, Truss admitted the plans had gone “further and faster than the markets were expecting”.

    “I’ve listened, I get it,” she wrote. “We cannot pave the way to a low-tax, high-growth economy without maintaining the confidence of the markets in our commitment to sound money.”

    She said Hunt would lay out at the end of the month the plan to get national debt down “over the medium term”.

    But, the speculation about her future shows no sign of diminishing, with Sunday’s newspapers rife with stories that allies of Rishi Sunak, another former finance minister who she beat to become leader last month, were plotting to force her out within weeks.

    On a tour of TV and radio studios, Hunt gave a blunt assessment of the situation the country faced, saying Truss and Kwarteng had made mistakes and further changes to her plans were possible.

    “We will have some very difficult decisions ahead,” he said.”The thing that people want, the markets want, the country needs now, is stability.”

    The Sunday Times said Hunt would rip up more of Truss’s original package by delaying a planned cut to the basic rate of income tax as part of a desperate bid to balance the books.

    According to the newspaper, Britain’s independent fiscal watchdog had said in a draft forecast there could be a 72 billion pound ($80 billion) black hole in public finances by 2027/28, worse than economists had forecast.

    Truss had won the leadership contest to replace Boris Johnson on a platform of big tax cuts to stimulate growth, which Kwarteng duly announced last month. But the absence of any details of how the cuts would be funded sent the markets into meltdown.

    She has already ditched plans to cut tax for high earners, and said a levy on business would increase, abandoning her proposal to keep it at current levels. But a slump in bond prices after her news conference on Friday still suggested she had not gone far enough.

    ‘MEETING OF MINDS’

    Kwarteng’s Sept. 23 fiscal statement prompted a backlash in financial markets that was so ferocious the Bank of England (BoE) had to intervene to prevent pension funds being caught up in the chaos as borrowing costs surged.

    British Prime Minister Liz Truss attends a news conference in London, Britain, October 14, 2022. Daniel Leal/Pool via REUTERS

    BoE Governor Andrew Bailey said he had spoken to Hunt and they had agreed on the need to repair the public finances.

    “There was a very clear and immediate meeting of minds between us about the importance of fiscal sustainability and the importance of taking measures to do that,” Bailey said in Washington on Saturday. “Of course, there was an important measure taken yesterday.”

    He also warned that inflation pressures might require a bigger interest rate rise than previously thought due to the government’s huge energy subsidies for homes and businesses, and its tax cut plans.

    Hunt is due to announce the government’s medium-term budget plans on Oct. 31, in what will be a key test of its ability to show it can restore its economic policy credibility.

    He cautioned spending would not rise by as much as people would like and all government departments were going to have to find more efficiencies than they were planning.

    “Some taxes will not be cut as quickly as people want, and some taxes will go up. So it’s going to be difficult,” he said. He met Treasury officials on Saturday and will hold talks with Truss on Sunday to go through the plans.

    ‘MISTAKES MADE’

    Hunt, an experienced minister and viewed by many in his party as a safe pair of hands, said he agreed with Truss’s fundamental strategy of kickstarting economic growth, but he added that their approach had not worked.

    “There were some mistakes made in the last few weeks. That’s why I’m sitting here. It was a mistake to cut the top rate of tax at a period when we’re asking everyone to make sacrifices,” he said.

    It was also a mistake, Hunt said, to “fly blind” and produce the tax plans without allowing the independent fiscal watchdog, the Office for Budget Responsibility, to check the figures.

    The fact that Hunt is Britain’s fourth finance minister in four months is testament to a political crisis that has gripped Britain since Johnson was ousted following a series of scandals.

    Hunt said Truss should be judged at an election and on her performance over the next 18 months – not the last 18 days.

    However, she might not get that chance. During the leadership contest, Truss won support from less than a third of Conservative lawmakers and has appointed her backers since taking office – alienating those who supported her rivals.

    The appointment of Hunt, who ran to be leader himself and then backed Sunak, has been seen as a sign of her reaching out, but the move did little to placate some of her party critics.

    “It’s over for her,” one Conservative lawmaker told Reuters after Friday’s events.

    ($1 = 0.8953 pounds)

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    Reporting by Michael Holden, Alistair Smout and William Schomberg
    Editing by Emelia Sithole-Matarise, Helen Popper, Ros Russell and Diane Craft

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  • Swiss National Bank monitoring Credit Suisse situation – Maechler

    Swiss National Bank monitoring Credit Suisse situation – Maechler

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    ZURICH, Oct 5 (Reuters) – The Swiss National Bank (SNB) is following the situation at Credit Suisse (CSGN.S) closely, SNB Governing Board member Andrea Maechler told Reuters on Wednesday.

    Switzerland’s second-biggest bank saw its shares slide by as much as 11.5% and its bonds hit record lows on Monday, before clawing back some of the losses, amid concerns about its ability to restructure its business without asking investors for more money. read more

    “We are monitoring the situation,” Maechler said on the sidelines of an event in Zurich. “They are working on a strategy due to come out at the end of October.”

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    The SNB has declined to comment in the past about Credit Suisse, which has said it has a strong capital base and liquidity. It is due to announce details of a restructuring plan along with third-quarter results on Oct. 27.

    In July, Credit Suisse announced its second strategy review in a year and replaced its chief executive, bringing in restructuring expert Ulrich Koerner to prune its investment banking arm and cut more than $1 billion in costs. read more

    The bank is considering measures to scale back its investment bank into a “capital-light, advisory-led” business, and is evaluating strategic options for the securitised products business, Credit Suisse has said.

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    Reporting by John Revill
    Editing by Michael Shields and Mark Potter

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