2024-07-01 11:27

July 1 (Reuters) - Turkey has begun mediating talks between Somalia and Ethiopia over a port deal Addis Ababa signed with the breakaway region of Somaliland earlier this year, Ankara and four officials familiar with the matter said. The negotiations are the latest attempt to mend diplomatic ties between the East African neighbours, whose relationship soured in January when Ethiopia agreed to lease 20 km (12 miles) of coastline from Somaliland, in exchange for recognition of its independence. Mogadishu called the agreement illegal and retaliated by expelling the Ethiopian ambassador and threatening to kick out thousands of Ethiopian troops stationed in the country helping battle Islamist insurgents. Turkey's foreign ministry said Foreign Minister Hakan Fidan had hosted both his Ethiopian and Somali counterparts in Ankara, adding the three had signed a joint statement following "candid, cordial and forward-looking" talks on their differences. The Somali and Ethiopian ministers discussed ways to address their differences "within a mutually acceptable framework", and agreed to hold another round of talks in Ankara on Sept. 2, the statement said. "The Ministers of Somalia and Ethiopia reiterated their commitment to the peaceful resolution of differences," it added. Spokespeople for the Somali government and Ethiopia's foreign ministry, government and intelligence service did not immediately respond to requests for comment. A spokesperson for Somaliland, which has struggled to gain international recognition despite governing itself and enjoying comparative peace and stability since declaring independence in 1991, said it was not involved in the talks. The goal of the negotiation was unclear, and expectations of a resolution were low, two of the officials said. "Despite rumours that Somalia has softened its stance on refusing to engage in dialogue until Ethiopia withdraws the (agreement), it seems unlikely," one of the officials said. "I don't see a way forward, and I don't expect much will come from these talks." Turkey has become a close ally of the Somali government since President Recep Tayyip Erdogan first visited Mogadishu in 2011, training its security forces and supplying development assistance. The two nations signed a defence pact in February under which Ankara will provide maritime security support to Somalia to help the African country defend its territorial waters. Turkey has built schools, hospitals and infrastructure and provided scholarships for Somalis to study in Turkey, and in return secured a foothold in Africa and on a key global shipping route. A Turkish diplomatic source said Ankara's mediation efforts began after Ethiopian Prime Minister Abiy Ahmed visited Erdogan in Ankara in May and conveyed a letter asking Turkey to mediate between Somalia and Ethiopia. Sign up here. https://www.reuters.com/world/turkey-mediating-somalia-ethiopia-talks-port-deal-officials-2024-07-01/

2024-07-01 11:20

MOSCOW, July 1 (Reuters) - Two Russian regions declared a state of emergency on Monday as summer wildfires spread amid intense heat. The governor of the remote Siberian region of Tuva said the authorities had taken the step due to forest fires caused by intense heat, strong winds and dry thunderstorms. "At the moment 23 forest fires have been registered on the territory of the republic. About 1,700 hectares are covered by fire. Most of them are in inaccessible mountainous areas," Vladislav Khovalyg, head of Tuva region, posted on Telegram. Weather forecasters predict the heat will subside in the next few days, and rain is expected in some parts of the region, he said. "However we cannot rely on the weather: July as a whole promises to be the most difficult month in terms of the fire situation. And we have to fight for every hectare of forest," Khovalyg wrote. In Russia’s Far East, a federal state of emergency was declared in the Republic of Sakha, also known as Yakutia. The Russian ministry of emergency situations said there were 107 wildfires registered on more than 331,000 hectares. The situation was being monitored by drones, the ministry said on Telegram. Sign up here. https://www.reuters.com/world/europe/russia-declares-state-emergency-two-regions-due-forest-fires-2024-07-01/

2024-07-01 10:58

LONDON, July 1 (Reuters) - Hedge funds betting on a rise in banking shares abandoned trades last week at the fastest pace since May 2021, according to a June 28 Goldman Sachs note, meaning they missed the sector's rally on Monday after the first round in the French election. Long positions or bets on a rise in prices of banking and other financial stocks were ditched among the highest rates in five years in the week to June 27, particularly in Europe, said the note which only went to clients. European bank stocks rallied as much as 1.9% on Monday after Marine Le Pen's far-right National Rally (RN) party and its allies took a smaller lead than some expected in Sunday's first round, suggesting a hung parliament could result and hamper the party's agenda. French assets had been pummelled in the lead-up to the surprise election, as the prospect of either the far right, or far left, gaining a majority raised the risk of a swell of spending that could undermine the government's fragile finances. Shares on Monday in the country's three largest lenders, BNP Paribas (BNPP.PA) New Tab, opens new tab, Credit Agricole (CAGR.PA) New Tab, opens new tab and Societe Generale (SOGN.PA) New Tab, opens new tab rose between 4.1% and 4.7%, while the cost of insuring their bonds against default fell to its lowest in two weeks. Financial stocks were also sold elsewhere, in every region apart from developing markets Asia in the week to June 27 and were led, in notional terms, by Europe, the note said. A modest amount of hedge funds bought financials in order to exit short positions, said Goldman Sachs, without revealing the exact number. A short position is the opposite to a long trade, with the investor anticipating a stock to fall in price so that it can buy it back at a cheaper price. Stock sectors that hedge funds sold out of included capital markets companies, banks, consumer finance and insurance, said the bank. Trading companies and those which package up mortgages to be publicly traded saw modest buying, said Goldman. Sign up here. https://www.reuters.com/markets/hedge-flow-hedge-funds-miss-post-french-election-stock-jump-goldman-sachs-data-2024-07-01/

2024-07-01 10:48

A look at the day ahead in U.S. and global markets from Mike Dolan An event-packed but shortened week stateside kicks off the second half of 2024, with European markets rallying on Monday as the first round of French assembly elections points to a hung parliament and policy gridlock. Although French far-right coalition parties got the largest share of the vote at Sunday's first round as expected, the percentage was shy of last-minute opinion polls and the grouping looks short of an overall majority when the process is over. In part due to the high turnout, next Sunday's second phase of voting will see more than half the parliamentary seats contested by three candidates - which means tactical voting to shut out the far right will likely affect their overall tally. That suggests an outcome of messy parliamentary maths that stymies significant policy initiatives, not to mention another three years of "co-habitation" with the powerful presidency. Viewed against "worst case" concerns of a wave of unfunded tax cuts from the former National Front and its allies, not to mention tense battles with Brussels, investors breathed a partial sigh of relief that it all looks muddier than that. The benchmark CAC40 French stock index (.FCHI) New Tab, opens new tab jumped more than 2% on Monday - clawing back losses seen since the snap election announcement almost a month ago and returning to positive territory for the year to date. The risk premium on French 10-year government bonds over German equivalents fell back to as low as 72 basis points, from 12-year peaks of about 85bp on Friday. The euro jumped more than half a cent against the dollar, to its best levels in more than two weeks. That's knocked the dollar (.DXY) New Tab, opens new tab back across the board - with the French results perhaps delaying the reaction to the soft U.S. PCE inflation report for May. This saw U.S. core inflation come in at slightly less than the 0.1% expected for the month, and the annual core rate drop to 2.6% for the first time in three years. German states' inflation numbers for June point to further easing of national price pressures too. Still, Federal Reserve officials seem in no mind to take one month's return to disinflation at face value and several have insisted they need to see months of such data to be convinced it's safe to cut interest rates. The European Central Bank has already reduced rates this year and looks set to act at least one more time before the Fed makes its first move. ECB President Christine Lagarde speaks at the bank's annual forum in Sintra, Portugal later on Monday and will be joined by Fed chair Jerome Powell there on Tuesday. A hawkish message was sent by the Bank for International Settlements on Sunday, warning that rising government debt levels amid a number of major elections this year could roil global financial markets. "They (governments) must cut short the rise in public debt and accept that interest rates may not return to the pre-pandemic ultra low levels," he said. "We need a solid foundation to build upon," said BIS General Manager Agustin Carstens. Otherwise, the U.S. week is broken up by the Independence Day holiday on Thursday but is packed with big labor market data - some of which is frontloaded a day early because of the holiday. The JOLTs job openings release is due on Tuesday, for example, and the weekly jobless report on Wednesday - but the national payrolls report will be on Friday as usual. Elsewhere, the UK holds its general election while the U.S. is away on Thursday. Sterling and UK stocks (.FTSE) New Tab, opens new tab were firmer on Monday, with opinion polls still pointing to a huge majority of more than 200 seats for the opposition Labour Party. Japan's yen , meantime, continued to flirt with 38-year lows above 161 per dollar - with no sign yet of any official intervention. U.S. stock futures and bond yields were higher ahead of Monday's open. Key developments that should provide more direction to U.S. markets later on Monday: * US June manufacturing surveys from ISM and S&P Global * New York Federal Reserve President John Williams speaks; European Central Bank President Christine Lagarde speaks at ECB's annual forum in Sintra, Portugal * US Treasury sells 3-, 6-month bills Sign up here. https://www.reuters.com/markets/us/global-markets-view-usa-2024-07-01/

2024-07-01 09:47

LONDON, July 1 (Reuters) - The pound slipped against the euro on Monday as the single currency rallied on investor expectations that France's far right party might not secure an outright majority after winning the first round of a national election. The euro was up 0.27% against the pound at 84.97 pence, climbing further away from a two-year low of 83.97 pence hit in mid-June. The common currency climbed around 0.5% against the dollar. Marine Le Pen's far-right Rassemblement National (RN) won the most votes in the first round of France's parliamentary election on Sunday, with President Emmanuel Macron's grouping in third place behind a left-wing coalition. Yet the final outcome will depend on days of alliance-building before next weekend's second round of votes. Market analysts said RN fared slightly less well than expected and that a hung parliament seemed the most likely outcome, limiting some fears about the party's high-spending fiscal policies. "This morning markets mostly breathe a small sigh of relief as Rassemblement National did not get as much support as some polls had suggested," said Bas van Geffen, senior macro strategist at Rabobank. Sterling was up 0.24% against the U.S. currency at $1.2676 as the euro's gains held down the greenback. The pound has traded around the same level since the start of the year, and is one of the best performers against the dollar in 2024. Services and wage inflation in Britain has remained sticky, causing investors to push back their expectations for Bank of England rate cuts. Traders now think the first reduction is likely due in August or September. Analysts have said expectations that the Labour party will win a thumping majority in Thursday's election and bring some stability to UK politics has likely helped British assets somewhat, although the impact has probably been muted. "The chances of the election result deviating the Bank of England policy path are very low," said Francesco Pesole, currency strategist at ING. "The pound should continue to rely on external drivers - both in EU politics and US macro - and key domestic data releases." Sign up here. https://www.reuters.com/markets/currencies/sterling-loses-ground-euro-after-french-election-first-round-2024-07-01/

2024-07-01 08:29

MUMBAI, July 1 (Reuters) - The central banks of India, Malaysia, Thailand, Singapore and the Philippines are working together to start an instant cross-border retail payments platform by 2026, the Bank of International Settlements (BIS) said on Monday. BIS, dubbed the central bankers' central bank, said it aims to link each country's instant digital payment system -- like India's United Payment Interface (UPI) and Singapore's PayNow -- as part of Project Nexus, its initiative to enhance cross-border payments. India and the other four countries will be the founding members of the platform, while Indonesia will serve as a special observer, the BIS said. "Even with just the first wave of connected countries, Nexus has the potential to connect a market of 1.7 billion people globally, allowing them to make instant payments to each other easily and cheaply," Agustín Carstens, general manager of the BIS, said in a statement. Sign up here. https://www.reuters.com/markets/asia/india-four-se-asia-countries-plan-instant-retail-cross-border-payments-2024-07-01/