Tag Archives: ASEAN

World Court says it has jurisdiction, Myanmar genocide case to proceed

  • Court rules case brought by Gambia can proceed
  • Any full hearing could take years
  • Myanmar denies genocide

THE HAGUE, July 22 (Reuters) – The World Court on Friday rejected Myanmar’s objections to a genocide case over its treatment of the Muslim Rohingya minority, paving the way for the case to be heard in full.

Myanmar, now ruled by a military junta that seized power in 2021, had argued that Gambia, which brought the suit, had no standing to do so at the top U.N. court, formally known as the International Court of Justice (ICJ).

But presiding Judge Joan Donoghue said all states that had signed the 1948 Genocide Convention could and must act to prevent genocide, and the court had jurisdiction in the case.

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“Gambia, as a state party to the genocide convention, has standing,” she said, reading a summary of the 13-judge panel’s ruling.

The court will now proceed to hearing the merits of the case, a process that will take years.

Gambia took up the Rohingya’s cause in 2019, backed by the 57-nation Organisation for Islamic Cooperation, in a suit aiming to hold Myanmar accountable and prevent further bloodshed.

Gambia Justice Minister Dawda Jallow said outside the courtroom he was “very happy” with the decision and was confident the suit would prevail.

Gambia became involved after his predecessor, Abubacarr Tambadou, a former prosecutor at the U.N. Rwanda tribunal, visited a refugee camp in Bangladesh and said that the stories he heard evoked memories of the genocide in Rwanda.

A representative for Myanmar said that the state would do its “utmost” to protect the country’s “national interest” in further proceedings.

Protesters outside the court’s gates hoisted a red banner with the text “Free Burma” and yelled at cars carrying the junta’s representatives leaving the building after the decision.

A U.N. fact-finding mission concluded that a 2017 military campaign by Myanmar that drove 730,000 Rohingya into neighbouring Bangladesh had included “genocidal acts”.

Myanmar has denied genocide, rejecting the U.N. findings as “biased and flawed”. It says its crackdown was aimed at Rohingya rebels who had carried out attacks.

While the Hague court’s decisions are binding and countries generally follow them, it has no way of enforcing them.

In a 2020 provisional decision it ordered Myanmar to protect the Rohingya from harm, a legal victory that established their right under international law as a protected minority.

However Rohingya groups and rights activists say there has been no meaningful attempt to end their systemic persecution.

Rohingya are still denied citizenship and freedom of movement in Myanmar. Tens of thousands have now been confined to squalid displacement camps for a decade.

Bangladesh’s foreign ministry welcomed the judgment in a statement.

“For the victims living in the camps in Bangladesh as well as in Myanmar, they see the hope that justice will be delivered to them and that the perpetrators in the Myanmar military will be brought to accountability,” said Ambia Parveen of the European Rohingya Council outside the court.

The junta has imprisoned democratic leader Aung San Suu Kyi, who defended Myanmar personally in 2019 hearings in The Hague.

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Reporting by Toby Sterling, and Poppy McPherson in Bangkok; Editing by Peter Graff and Alison Williams

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Russia gas flow lifts euro ahead of ECB rate meeting

  • Resumption in Russia gas flows lifts euro
  • ECB set to hike rates by at least 25 basis points
  • ECB rate decision due at 1215 GMT
  • U.S. crude oil prices trade below $100 a barrel

LONDON, July 21 (Reuters) – Stock markets eased on Thursday as a resumption of Russian gas supplies to Europe lifted the euro ahead of the European Central Bank’s anticipated first interest rate hike in over a decade to quell inflation.

The flow of Russian gas resumed to Germany after a 10-day outage to ease Europe’s supply concerns for now, helping to ease worries about fallout on the economy. read more

The euro edged up, distancing itself further from last week’s parity against the greenback, the recovery bolstered by expectations the ECB might deliver a big 50 basis-point rate hike.

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Russian President Vladimir Putin has warned that supplies could be reduced further or even stop, prompting the EU to tells its members to cut usage.

“European markets are going to be pulled and pushed by Putin’s mood,” said Michael Hewson, chief markets strategist at CMC Markets.

Markets are looking to see how much the ECB will raise interest rates later at 1215 GMT on Thursday, with a 25-bps hike already price in, Hewson said. read more

Traders also await details of an ECB tool to contain stress in bond markets, made all the more urgent by a crumbling government in Italy, one of the euro zone’s most indebted countries.

Italian spreads and debt/GDP

Rate hikes from the U.S. Federal Reserve next week and from the Bank of England in August are also well anticipated by now, Hewson said.

The STOXX index (.STOXX) of 600 European companies was off 0.4%. The MSCI All-Country stock index (.MIWD00000PUS) eased 0.14%.

Italian bonds sold off sharply following the collapse of Mario Draghi’s government in the euro area’s third biggest economy. read more

Nadege Dufosse, head of cross-asset strategy at Candriam, said political turmoil in Italy is putting more pressure on the ECB to have its so-called anti-fragmentation tool in place to cap bond yields and reassure markets.

“I think they will have to deliver on that point, I think it’s the main risk today. It must convince investors that it will be efficient,” Dufosse said.

After the latest series of rate hikes, investors will be trying to gauge whether the economy is headed for a soft or hard landing as higher borrowing costs are absorbed, she said.

“It’s the expectations for the fourth quarter or next year that can really determine the trend in the market. For now we do not have the answer and we just have to be very pragmatic,” Dufosse said.

Bucking the trend, the Bank of Japan left monetary policy unchanged on Thursday, as expected, and raised its inflation forecasts a little bit. The yen held steady at 138.37 per dollar. read more

Nasdaq 100 futures fell 0.25% and S&P 500 futures fell 0.2%. Earnings from Blackstone, Dow Chemical, Philip Morris International, Twitter and American Airlines were due on Thursday.

CHINA CLOUDS

Wall Street indexes rallied overnight but even better-than-expected results from Tesla after hours couldn’t carry the positive mood into the Asia session. read more

MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) fell 0.1% and Japan’s Nikkei (.N225) gained 0.4%.

A cloud over Chinese growth due to its strict COVID-19 controls and fresh concern over the ailing property market is also casting gloom over the prospects for global demand.

Growth-sensitive commodities such as copper and iron ore have been sliding and this week Chinese banks and property stocks have been hurt by borrowers boycotting mortgage payments on unfinished homes. read more

“Past due mortgages doubled over the week, and … potential home buyers are waiting for a general drop in home prices for the housing market, including completed projects,” ING analysts said in a note to clients on Thursday.

“This is negative even for cash-rich developers.”

China’s yuan was slightly firmer at 6.7664 to the dollar. Against other currencies the greenback steadied after dipping earlier in the week. The Australian dollar bought $0.68650.

The benchmark 10-year Treasury yield held at 3.0415%, below the 2-year yield of 3.2359%, a market signal that often presages a recession.

Oil prices fell for a second straight session, as demand concerns outweighed tight global supply after U.S. government data showed tepid gasoline consumption during the peak summer driving season.

Brent crude was down 2.25% at $104.50 a barrel, while U.S. West Texas Intermediate dropped 2.6% to $97.32 a barrel.

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Additional reportig by Tom Westbrook, Editing by Sam Holmes, Kim Coghill and Nick Macfie

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Stocks climb, euro inches higher in big week for markets

LONDON, July 18 (Reuters) – World equity markets got off to a solid start on Monday and the euro pulled away from parity as market participants scaled back bets on the Federal Reserve interest rate hike next week and on optimism spurred by central bank pledges to support China’s economy.

U.S. stock futures were up more than 1% while European stock indices were a sea of green in a big week for the region.

The European Central Bank is set to raise rates for the first time in more than a decade on Thursday, the same day the bloc will be hoping Russia resumes gas supplies. Italy, meanwhile, is again in the grip of a political crisis. read more

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The pan-European STOXX 600 index (.STOXX) was up 1.3% by 1030 GMT after posting a 0.8% drop last week. Gains on Monday were broad-based and led by miners (.SXPP), energy stocks (.SXEP) and banks (.SX7P).

“It is a wild week this week, there is so much going on,” said James Rossiter, senior global strategist at TD Securities.

“The ECB is a huge focus, there is not a lot of scope for the ECB to surprise, 25 bps is locked in I think… and then there is Italy and Nord Stream too.”

Italy’s borrowing costs surged on Monday and the premium investors demand for holding Italian debt over safer German paper was at its widest in a month as political turmoil in Europe’s fourth largest economy rumbled on.

Prime Minister Mario Draghi attempted to resign from his post on Thursday after the 5-Star Movement, a coalition partner, failed to back him in a confidence vote. Draghi’s resignation was rejected by the Italian president. read more

Draghi is expected to address parliament on Wednesday but Italy’s 10-year bond yield rose 10 basis points (bps) on Monday to as high as 3.48% , pushing the closely watched spread over German Bund yields to its widest level in over a month at around 235 bps .

“We expect volatility to remain high until then in response to various rumours concerning whether he will remain firm on his resignation or whether he is willing to remain in place,” UniCredit analysts said in a note.

“Any indication that could increase the likelihood of early elections will ultimately be negative for BTPs and drive the spread wider.”

Overnight, a gauge of Asian shares (.MIAPJ0000PUS) rose more than 1%, its biggest daily rise in nearly two months, boosted by a jump in Chinese shares as regulators encouraged lenders to extend loans to qualified real estate projects.

It came too as the high-flying dollar, which has had its strongest start to a year in recent memory, eased on Monday. /FRX

The uncertainty will haunt the ECB at a policy meeting where it is likely to kick off a tightening cycle with a rise of 25 bps, with markets hanging on details of an anti-fragmentation tool intended to ease pressure on borrowing costs for the Union’s most indebted members. read more

Friday’s rally on Wall Street reverberated through global markets with MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) up 1.4%, having shed 3.5% last week.

A wider index of global stocks (.MIWO00000PUS) was up 0.4%.

Chinese blue chips (.CSI300) added 1.0% as the head of the country’s central bank pledged to help the economy, though Shanghai had also announced more districtwide coronavirus testing. read more

Traders are back to expecting a 75 basis point interest rate hike from the Federal Reserve next week, after flirting with the prospect of a 100 basis point move to rein in inflation.

“We do not believe that central banks will be able to raise rates to the extent that they or the market forecasts given the headwinds to already moderating economic growth,” said Steve Ellis, global CIO of fixed income at Fidelity International.

Corporate earnings will be in sharp focus this week with Goldman Sachs Group Inc (GS.N), Bank of America Corp (BAC.N), International Business Corp (IBM.N), Netflix Inc (NFLX.O), Tesla Inc .O and Twitter Inc (TWTR.N) due to report.

Of the 35 companies in the S&P 500 that have reported, 80% have beaten analyst expectations, according to Refinitiv. Analysts now expect aggregate year-on-year second-quarter profit growth of 5.6%, down from 6.8% at the beginning of the quarter.

Rising interest rates and a firm dollar have been a major drag for non-yielding gold which was stuck at $1,713 an ounce after shedding 2% last week.

Oil prices rose in the risk-on wave. President Joe Biden continued his trip to the Middle East hoping to get agreement on an increase in output, having seemingly come away from Saudi Arabia empty handed.

After an early dip, Brent crude added $2.54, or 2.5%, to $103.70 a barrel, after a 2.1% gain on Friday.

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Additional reporting by Marc Jones in London; editing by Kirsten Donovan and Bernadette Baum

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Sri Lanka protest sites calm as president’s resignation awaited

  • President Rajapaksa on way to Singapore from Maldives-source
  • Sri Lanka interim president imposes curfew in Colombo
  • Protesters to hand back president, prime minister’s residences

COLOMBO, July 14 (Reuters) – Sri Lanka’s main city, Colombo, was calm on Thursday as people waited for the resignation of President Gotabaya Rajapaksa, who fled to the Maldives to escape a popular uprising that erupted as the country struggled with an economic crisis.

Rajapaksa was on his way to Singapore from the Maldives on Thursday, a Sri Lankan government source said. His decision on Wednesday to make his ally Prime Minister Ranil Wickremesinghe the acting president triggered more protests, with demonstrators storming parliament and the premier’s office demanding that he quit too. read more

Rajapaksa had repeatedly assured the speaker of parliament that he would step down on Wednesday, but his resignation letter had not arrived as of Thursday, said an aide to Speaker Mahinda Yapa Abeywardena.

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The speaker could seek the advice of the attorney general on the next steps if the letter did not come by the end of the day, said the aide, who did not want to be named given the sensitivity of the matter.

Inside the president’s residence, ordinary Sri Lankans wandered the halls, taking in the building’s extensive art collection, luxury cars and swimming pool.

“The fight is not over,” said Terance Rodrigo, a 26-year-old student who said he has been inside the compound since it was taken over by protesters on Saturday along with the prime minister’s official residence.

“We have to make society better than this. The government is not solving people’s problems.”

The usual protest sites, however, were calm and organisers said they would hand the residences back to the government.

“With the president out of the country … holding the captured places holds no symbolic value any more,” Chameera Dedduwage, one of the organisers, told Reuters.

Wickremesinghe, nevertheless, imposed a curfew in Colombo from noon (0630 GMT) to early morning on Friday in a bid to prevent further unrest.

Protests against the economic crisis have simmered for months and came to a head last weekend when hundreds of thousands of people took over government buildings in Colombo, blaming the powerful Rajapaksa family and allies for runaway inflation, shortages of basic goods and corruption.

HOSPITALISATIONS OVERNIGHT

Police said one person was killed and 84 injured in clashes between riot police and protesters on Wednesday near the parliament building and the prime minister’s office, as people demanded the ouster of both Rajapaksa and Wickremesinghe.

Police spokesman Nalin Thalduwa said the man who died was a 26-year-old protester who succumbed after he was injured near the prime minister’s office.

The area around parliament was deserted on Thursday morning. Police manned a barricade on the approach road. Nearby, life returned to normal, with shops open and plenty of cars on the road.

The night before, an intersection there was packed with several hundred protesters and ambulances regularly ferried the injured out of the area.

“We want Ranil to go home,” Malik Perera, a 29-year-old rickshaw driver who said he took part in the protests, said on Thursday. “They have sold the country, we want a good person to take over, until then we won’t stop.”

Sitting in a park opposite the entrance to parliament, he showed bruising on his back that he said he received during the clashes.

Rajapaksa, his wife and two bodyguards left the main international airport near Colombo on an air force plane early on Wednesday. Maldives media said he was now waiting to fly to Singapore.

Government sources and aides said the president’s brothers, former president and prime minister Mahinda Rajapaksa and former finance minister Basil Rajapaksa, were still in Sri Lanka.

Sri Lanka’s parliament is expected to name a new full-time president on July 20, and a top ruling party source told Reuters Wickremesinghe was the party’s first choice, although no decision had been taken. The opposition’s choice is their main leader Sajith Premadasa, the son of a former president.

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Additional reporting by Sudarshan Varadhan and Waruna Karunatilake; Writing by Krishna N. Das; Editing by Raju Gopalakrishnan

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Euro battles parity pressure ahead of U.S. inflation data

LONDON, July 13 (Reuters) – Stocks slipped on Wednesday and the euro lurked just above parity against the dollar, as traders waited to see if U.S. inflation data later bolsters the case for another supersized Federal Reserve interest rate hike this month.

Recession worries meant Europe’s bourses were stumbling again after a relatively steady session in Asia Pacific where South Korea and New Zealand had jacked up their rates again.

London’s FTSE (.FTSE), Germany’s DAX (.GDAXI) and France’s CAC40 (.FCHI) were all down 0.6-0.8% , while the euro managed to claw up to $1.0050 even as gas prices jumped another 4.2% /FRX

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Copper, which is attuned to global growth, had hit a 20-month low too having now slumped 30% since April, although Wall Street futures were pointing higher.

UK economic growth data also delivered an unexpected rise but investors were far more focused on whether the U.S. inflation numbers due shortly show it pushing toward 9%, which would be the highest since 1981. read more

“Markets have been held up a bit in terms of parity in euro-dollar but we still have an incredible number of moving parts,” Societe Generale’s Kit Juckes said, explaining that the higher the U.S. inflation numbers, the clearer it will be that the Fed will crack on with rate hikes.

It increased them by a supersized 75 basis points at its last meeting, its first move of that scale since 1994.

“If that (high inflation reading) happens today, that could get the bond market a bit nervous again, invert the U.S. yield curve more and send the euro decisively through parity,” Juckes said.

Underscoring the global inflation concerns, South Korea’s central bank on Wednesday raised its rates by 50 basis points, the biggest increase since the bank adopted its current policy system in 1999, and New Zealand’s central bank also delivered its third straight 50 bps hike in a row. read more

It left fixed income markets all waiting on 1230 GMT U.S. inflation data. German government bond yields edged up to 1.15%, after falling sharply for two days , while 10-year U.S. Treasuries hovered at 2.97% as they also digested the IMF’s latest U.S. growth forecast cut. read more

Bond market recessionary warning signs are now flashing “with growing alarm” Deutsche Bank’s Jim Reid said. One in particular is the 2 year/10 year U.S. Treasury curve, which has inverted before every one of the last 10 U.S. recessions, and remains near its most inverted of this cycle so far at -8.5 bps.

PARITY WATCH

Wall Street futures were pointing to marginally higher starts for the main S&P 500, Nasdaq and Dow Jones indexes after a late slump on Tuesday.

Overnight, MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) gained 0.5%, snapping two straight days of losses and having slumped to its lowest in two years the day before.

Taiwanese stocks led the gains after Taiwan’s finance ministry said on Tuesday evening it would activate its stock stabilisation fund. The market (.TWII) had fallen to a 19-month low that day.

Japan’s Nikkei (.N225) finished up 0.5% after it had lost nearly 2% the previous day.

“Sharp weakness in oil prices in July suggests that June’s (inflation) may mark a peak, however. If so, the most dynamic phase of Fed tightening could conclude with a 75bps rate rise on 27 July,” analysts at ANZ said.

“However, our expectation is that underlying strength in core inflation and still deeply negative real policy rates means 50bps rate rises will still be appropriate after the summer.”

Worries that higher rates could bring the global economy to a standstill, or even worse into recession, has been the key driver behind both the 20% slump in world stocks this year and the surge in the safe-haven U.S. dollar.

The euro , which is down over 11% since January was last at $1.0050, as investors waited to see whether it would fall below one U.S. dollar for the first time since 2002.

It dropped to just a whisker away on Tuesday, falling as low as $1.00005.

The dollar was also firm on other peers, and its index measure against major rivals was holding at just under 108.

Oil prices paused their overnight declines. Brent crude was little changed at $100 a barrel with U.S. West Texas Intermediate crude at $96.31. Industrial metal copper though buckled another 0.75% on the London Metal Exchange (LME) to $7,310 a tonne having slipped as low as $7,202.50.

Leading cryptocurrency bitcoin meanwhile was up over 2% and looked on track to snap a three-day losing streak, though at $19,772 was still trading below the key psychological $20,000 mark.

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Additional reporting by Alun John in Hong Kong and Sam Byford in Tokyo;
Editing by Alison Williams, Kirsten Donovan

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China says it ‘drove’ away U.S. destroyer that sailed near disputed isles

Arleigh Burke-class guided-missile destroyer USS Benfold (DDG 65), forward-deployed to the U.S. 7th Fleet area of operations, conducts underway operations in the South China Sea, in this handout picture released on July 13, 2022. U.S. Navy/Handout via REUTERS

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BEIJING, July 13 (Reuters) – A U.S. destroyer sailed near the disputed Paracel Islands in the South China Sea on Wednesday, drawing an angry reaction from Beijing, which said its military had “driven away” the ship after it illegally entering territorial waters.

The United States regularly carries out what it calls Freedom of Navigation Operations in the South China Sea challenging what it says are restrictions on innocent passage imposed by China and other claimants.

The U.S. Navy said the USS Benfold “asserted navigational rights and freedoms in the South China Sea near the Paracel Islands, consistent with international law”.

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China says it does not impede freedom of navigation or overflight, accusing the United States of deliberately provoking tensions.

The People’s Liberation Army’s Southern Theatre Command said the U.S. ship’s actions seriously violated China’s sovereignty and security by illegally entering China’s territorial waters around the Paracels, which are also claimed by Vietnam and Taiwan.

“The PLA’s Southern Theatre Command organised sea and air forces to follow, monitor, warn and drive away” the ship, it added, showing pictures of the Benfold taken from the deck of the Chinese frigate the Xianning.

“The facts once again show that the United States is nothing short of a ‘security risk maker in the South China Sea’ and a ‘destroyer of regional peace and stability.'”

The U.S. Navy said the Chinese statement on the mission was “false” and the latest in a long string of Chinese actions to “misrepresent lawful U.S. maritime operations and assert its excessive and illegitimate maritime claims at the expense of its Southeastern Asian neighbours in the South China Sea”.

The United States is defending every country’s right to fly, sail, and operate wherever international law allows, and nothing China “says otherwise will deter us”, it added.

China seized control of the Paracel Islands from the then-South Vietnamese government in 1974.

Monday marked the sixth anniversary of a ruling by an international tribunal that invalidated China’s sweeping claims to the South China Sea, a conduit for about $3 trillion worth of ship-borne trade each year.

China has never accepted the ruling.

China claims almost the entire South China Sea. Vietnam, the Philippines, Malaysia, Taiwan and Brunei all have competing and often overlapping claims.

China has built artificial islands on some of its South China Sea holdings, including airports, raising regional concerns about Beijing’s intentions.

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Reporting by Beijing Newsroom; Additional reporting by Ben Blanchard in Tapei; Writing by Bernard Orr; Editing by Muralikumar Anantharaman and Kim Coghill

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Asian stocks fall to two-year low, euro nears par with dollar on growth fears

HONG KONG, July 12 (Reuters) – Global equities faltered, oil fell and the euro inched closer to parity with the safe haven dollar on Tuesday as the prospect of further tightening by central banks, renewed COVID outbreaks in China and Europe’s energy shortages spooked investors.

MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) fell 1.3% to its lowest level in two years, while Japan’s Nikkei (.N225) lost 2%.

Futures also pointed to a week open in the U.S. and Europe, as U.S. S&P 500 e-minis , lost 0.6%, Nasdaq futures fell 0.7%, pan-region Euro Stoxx 50 futures shed 0.8% and FTSE futures slipped 0.44%.

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The euro fell as low as $1.0005 against the U.S. dollar, moving ever closer to parity for the first time since December 2002, as investors worry an energy crisis will tip the region into a recession.

“Risk-off sentiment is dominating global markets,” said Yuting Shao, macro strategist at State Street Global Markets.

“The dollar is the go-to international reserve currency. So when there is a recessionary risk or there’s pickup of volatility, the greenback is the currency that people rush to because that is the safest,” Shao added.

The dollar index , which tracks the currency against a basked of six peers rose to 108.44, the highest since October 2002.

The focus for this week will be macro data including U.S. consumer inflation on Wednesday, and comments from Federal Reserve Officials as investors look for clues on the outcome of the Fed’s upcoming policy meeting before officials enter the pre-meet blackout period.

A high inflation reading would add pressure for the Fed to step up its already aggressive pace of interest rate increases.

Also high on investors’ list of worries is the fact that a growing number of Chinese cities, including the commercial hub Shanghai, are adopting fresh COVID-19 curbs starting from this week to rein in new infections after finding a highly-transmissible Omicron subvariant. read more

By early afternoon, Hong Kong’s benchmark Hang Seng Index (.HSI) fell 1.21% to its lowest since June 17, while the mainland China blue chip CSI300 (.CSI300) lost 1.3%.

Additionally, the surging cost of energy in Europe is a major fear as the biggest single pipeline carrying Russian natural gas to Germany entered annual maintenance, with flows expected to stop for 10 days.

Investors are worried the shutdown might be extended because of the war in Ukraine, restricting European gas supply further and tipping the struggling eurozone economy into recession. read more

The yield on benchmark 10-year Treasury notes was at 2.9595%, having dropped back below 3% overnight as investors bought safe haven Treasuries amid a sell-off on Wall Street.

Growth fears were also weighing on oil, despite concerns about the tight supply.

Brent crude futures fell $1.35, or 1.3%, to $105.75 a barrel, while U.S. West Texas Intermediate crude was at $102.64 a barrel, down $1.45, or 1.4%.

Gold was slightly lower. Spot gold was traded at $1728.98 per ounce.

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Shares slide ahead of U.S. inflation data, earnings hurdles

People pass by an electronic screen showing Japan’s Nikkei share price index inside a conference hall in Tokyo, Japan June 14, 2022. REUTERS/Issei Kato

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  • European shares down 1.3%, S&P 500 futures off 0.8%
  • Dollar tops 137 yen before U.S. CPI, inflation expectations
  • Banks kick off earnings season from Thursday

SYDNEY/LONDON, July 11 (Reuters) – Shares slid on Monday as investors braced for a U.S. inflation report that could force another super-sized hike in interest rates, and the start of an earnings season in which profits will be under pressure.

The STOXX index of European shares fell 1.3% (.STOXX), with S&P 500 futures down 0.8% and Nasdaq futures off 0.9% as an upbeat U.S. June payrolls report raised expectations of a 75 basis point hike from the Federal Reserve.

MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) slipped 1.8%, while Chinese blue chips (.CSI300) lost 1.9% after Shanghai discovered a COVID-19 case involving a new subvariant, Omicron BA.5.2.1. read more

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Bond yields and the rampant U.S. dollar also rose, the latter hitting a 24-year peak against the yen.

Underlining the global nature of the inflation challenge, central banks in Canada and New Zealand are expected to tighten policy further this week.

While Wall Street did eke out some gains last week, the market mood will be tested by earnings from JPMorgan and Morgan Stanley on Thursday, with Citigroup and Wells Fargo the day after.

Another hurdle will be Wednesday’s U.S. consumer price report, in which markets see headline inflation accelerating further to 8.8% but a slight slowdown in the core measure to 5.8%.

An early reading on consumer inflation expectations this week will also have the close attention of the Fed.

“Unexpected weakness in these releases will be required to dislodge expectations for a 75 bps July 27 Fed rate rise, which lifted from about 71 bps to 74 bps post the payrolls report,” said Ray Attrill, head of FX strategy at NAB.

PARITY PARTY

Treasury yields climbed around 10 basis points on the jobs report and the 10-year stood at 3.09% on Monday, up from a recent low of 2.746%.

A hawkish Fed combined with fears of recession, particularly in Europe, has kept the dollar up at 20-year highs against a basket of competitors . The dollar broke above 137.00 to reach its highest since 1998 at 137.28 yen as the Bank of Japan remained dovish. read more

Japan’s conservative coalition government was projected to have increased its majority in upper house elections on Sunday, two days after the assassination of former prime minister Shinzo Abe. read more

The euro continued to struggle at $1.0122 , having shed 2.4% last week to hit a two-decade low and major retracement target at $1.0072.

“With little economic relief on the horizon for Europe, and U.S. inflation data likely to mark a new high for the year and keep the Fed hiking aggressively, we think the risks remain skewed in favour of the greenback,” said Jonas Goltermann, a senior markets economist at Capital Economics.

“Indeed, we think the EUR/USD rate will break through parity before long, and may well trade some way through that level.”

Rising interest rates and a strong dollar have been a headache for non-yielding gold, which was ailing at $1,739 an ounce , having fallen for four weeks in a row.

Oil prices also lost around 4% last week as worries about demand offset supply constraints.

Data from China due on Friday are likely to confirm the world’s second-largest economy contracted sharply in the second quarter amid coronavirus lockdowns.

Brent was trading down $1.27 lower at $105.76, while U.S. crude slipped $1.43 to $103.36 per barrel.

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Reporting by Wayne Cole and Lawrence White; Editing by Kenneth Maxwell, Bradley Perrett and Kirsten Donovan

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U.S., Chinese foreign ministers hold first in person talks since October

NUSA DUA, Indonesia, July 9 (Reuters) – U.S. Secretary of State Antony Blinken and China’s Foreign Minister Wang Yi met on Saturday for the first in-person talks since October after attending a G20 summit where the top U.S. diplomat led efforts to pressure Russia over its war in Ukraine.

U.S. officials say Blinken’s meeting with Wang in Bali, Indonesia, including a morning session of talks and a working lunch, is aimed at keeping the difficult U.S. relationship with China stable and preventing it from veering inadvertently into conflict. read more

“There is no substitute for face to face … diplomacy, and in a relationship as complex and consequential as the one between the United States and China there is a lot to talk about,” Blinken told reporters at the beginning of the meeting.

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“We very much look forward to a productive and constructive conversation,” he said.

Blinken is expected to repeat warnings to China not to support Russia’s war in Ukraine and the two sides will address contentious issues that include Taiwan, China’s extensive South China Sea claims, its expansion of influence in the Pacific, human rights, and trade tariffs.

However, both sides share an interest in keeping the relationship stable and Blinken and U.S. officials say President Joe Biden and Chinese President Xi Jinping are expected to speak again in coming weeks, something Saturday’s meeting is likely to address.

“China and the United States are two major countries, so it is necessary for the two countries to maintain normal exchanges,” Wang told reporters.

“At the same time, we do need to talk together to ensure that this relationship will continue to move forward along the right track,” Wang said.

Daniel Russel, a top U.S. diplomat for East Asia under former President Barack Obama who has close contact with Biden administration officials, said he believed a key aim for the meeting would be to explore the possibility of an in-person meeting between Biden and Xi, their first as leaders, possibly on the sidelines of a G20 summit in Bali in November.

The United States calls China its main strategic rival and is concerned it might one day attempt to take over the self-ruled democratic island of Taiwan, just as Russia attacked Ukraine.

The top U.S. diplomat for East Asia, Daniel Kritenbrink, said on Tuesday he expected a “candid” exchange with Wang and said it would be another opportunity “to convey our expectations about what we would expect China to do and not to do in the context of Ukraine”.

Shortly before Russia’s Feb. 24 Ukraine invasion, Beijing and Moscow announced a “no limits” partnership. But U.S. officials have said they have not seen China evade tough U.S.-led sanctions on Russia or provide it with military equipment.

However, China has declined to condemn Russia’s actions and it has criticized the sweeping sanctions.

U.S. officials have warned of consequences, including sanctions, should China start offering material support for Russia’s war effort, which it calls a “special military operation” to degrade the Ukrainian military though Kyiv counters that it is an imperial-style land grab.

Despite their strategic rivalry, the world’s two largest economies remain major trading partners and Biden has been considering scrapping tariffs on a range of Chinese goods to curb surging U.S. inflation before the November midterm elections, with control of Congress in focus. read more

(This story has been refiled to edit headline to show first in person talks)

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Additional reporting by Ryan Woo in Beijing; Writing by Ed Davies; Editing by Christian Schmollinger, Robert Birsel

Our Standards: The Thomson Reuters Trust Principles.

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G20 host calls for end to Ukraine war as Russia dismisses criticism

  • Russian foreign minister rejects ‘frenzied’ criticism of war
  • Lavrov leaves during Ukraine minister’s virtual address
  • Indonesia warns food prices to hit low-income nations hardest
  • UK foreign minister Liz Truss cuts short Bali trip

NUSA DUA, Indonesia, July 8 (Reuters) – G20 host Indonesia urged foreign ministers of the group on Friday to help end the war in Ukraine, as Russia’s top diplomat accused the West of scuppering a chance to tackle global economic issues with “frenzied” criticism of the conflict.

The G20 ministers’ meeting in Bali has been overshadowed by the war and its impact on the global economy, with top officials from Western countries and Japan stressing it would not be a “business as usual” event.

Shouts of “When will you stop the war” and “Why don’t you stop the war” were heard as Russian Foreign Minister Sergei Lavrov shook hands with his Indonesian counterpart Retno Marsudi as he arrived for the meeting.

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Lavrov said ministers from Western nations “strayed almost immediately, as soon as they took the floor, to the frenzied criticism of the Russian Federation in connection with the situation in Ukraine”.

“Aggressors’, ‘invaders’, ‘occupiers’ – we heard a lot of things today,” Lavrov told reporters after the first session of the talks, in which he was seated between representatives from Mexico and Saudi Arabia. read more

Russia has maintained it has launched a “special military operation” to degrade the Ukrainian military and root out people it calls dangerous nationalists.

Ukraine and its Western backers say Russia is engaged in an imperial-style land grab. They say Russia has no justification for the invasion.

Retno had called on the G20 to “find a way forward” to address global challenges and said the repercussions of the war, including rising energy and food prices, would hit low-income countries the hardest.

“It is our responsibility to end the war sooner than later and settle our differences at the negotiating table, not at the battlefield,” Retno said at the opening of talks.

Challenges related to rising food and energy costs had been “dramatically exacerbated by Russian aggression against Ukraine”, U.S. Secretary of State Antony Blinken said on the sidelines of the meeting.

During the plenary meeting, Blinken confronted Russia about blocking the export of Ukrainian grain and stealing it, a Western official said.

“He addressed Russia directly, saying: To our Russian colleagues: Ukraine is not your country. Its grain is not your grain. Why are you blocking the ports? You should let the grain out'”, the official said.

Lavrov was not in the room at the time, the official said.

Ukraine has struggled to export goods, with many of its ports blocked as war rages along its southern coast. It is the world’s fourth-largest grain exporter.

Lavrov told reporters later Russia was ready to negotiate with Ukraine and Turkey about grain but it is unclear when such talks might take place.

‘NEW COLD WAR’

Ukraine’s foreign minister addressed the meeting virtually, with Lavrov leaving the room during his speech, Ukraine’s ambassador to Indonesia said.

Underlining tensions in the lead-up to the meeting, Retno said G7 counterparts had informed her they could not join Thursday’s welcome dinner where Lavrov was present.

A senior official for the Indonesian foreign ministry told Reuters no communique was expected from Friday’s meeting.

Retno had said it was important the host “create an atmosphere that’s comfortable for everybody”, noting it was the first time since the Feb. 24 invasion of Ukraine that all major players were sitting in the same room.

China’s Foreign Minister Wang Yi said on the sidelines of the meeting Beijing opposed any act of hyping up bloc confrontation, and creating a “new Cold War”.

Friday’s agenda includes the closed-door meeting of top diplomats from G20 countries including China, India, the United States, Brazil, Canada, Japan and South Africa, as well as bilateral talks on the sidelines.

For the first time in three years, the Chinese and Australian foreign ministers will also hold talks on Friday, signalling a thaw in relations that has soured over claims of foreign interference and retaliatory trade sanctions. read more

Absent from Friday’s events was British Foreign Secretary Liz Truss, who was represented by Tim Barrow, second permanent under-secretary at the foreign office. Truss had cut her Bali trip short after the resignation of British Prime Minister Boris Johnson, media reports said.

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Additional reporting by Ryan Woo in Beijing, Kirsty Needham in Sydney and Yuddy Cahya Budiman in Nusa Dua; Writing by Kate Lamb; Editing by Martin Petty, Ed Davies and Raju Gopalakrishnan

Our Standards: The Thomson Reuters Trust Principles.

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