LONDON (Reuters) -British inflation rose to its highest in eight months in November but an underlying measure of price growth watched closely by the Bank of England held steady, offering the central bank a little bit of relief.

Consumer prices rose by an annual 2.6% in November, up from an increase of 2.3% in October and moving further away from September's 1.7% rise - the first time in almost three and a half years that inflation fell below the BoE's 2% target.

The inflation rate was the highest since March and in line with economists' expectations in a Reuters poll.

The increase in the rate was broad-based but most prominent for transport - particularly petrol and car purchase costs - and was only partly offset by smaller rises in air fares and the cost of eating out.

"Another consecutive monthly rise in inflation, reaching its highest level since March, underscores the persistent price pressures within the UK economy," Martin Sartorius, principal economist at the Confederation of British Industry, said.

The BoE is worried about persistently strong wage growth while the new government's tax increase for employers is expected to filter through into higher prices after it is introduced in April.

Some economists have predicted headline consumer price inflation is likely to hit 3% in 2025.

The BoE - which is expected to keep interest rates on hold on Thursday after its December meeting - predicted consumer price inflation in November would be 2.4% when it published a set of projections six weeks ago.

BEIJING (Reuters) -Joblessness among the youth in Chinese cities eased for a third straight month in November after reaching its highest this year in August, official data showed on Wednesday.

The urban jobless rate for 16-to-24-year-olds, excluding students, fell to 16.1% from 17.1% in October, according to data from the National Bureau of Statistics.

The unemployment rate for 25-29-year-olds also dropped, falling slightly to 6.7% from 6.8%, while the jobless rate for 30-59-year-olds was unchanged at 3.8%.

The nationwide jobless rate was at 5% in November, according to data released by the statistics bureau on Monday.

China stopped reporting the data for youth joblessness for months after the unemployment rate for 16-24-year-olds hit a record 21.3% in June last year.

The National Bureau of Statistics resumed publishing the closely watched benchmark in December 2023 after changing the methodology to exclude students.

The jobless rate also does not account for job seekers who have given up on job searches, and does not assess the unemployment situation in rural China.

China's economic recovery has stuttered this year amid weak domestic demand and a prolonged property crisis, although some officials are expecting the economy to achieve its 2024 growth target of around 5%.

The government has announced a wave of stimulus measures to buttress the economy ahead of more external headwinds expected from a second Trump administration in the United States next year.

Chinese government advisers have also recommended that Beijing should maintain an economic growth target of around 5.0% for next year, pushing for stronger fiscal stimulus to mitigate the impact of expected Trump tariff hikes on the country's exports.

By Jihoon Lee

SEOUL (Reuters) - South Korean Foreign Minister Cho Tae-yul said on Wednesday that President Yoon Suk Yeol's short-lived bid to impose martial law had created some limitations communicating with the team of U.S. President-elect Donald Trump and undercut both sides' political momentum.

At a rare joint news conference for foreign media, Cho and Finance Minister Choi Sang-mok sought to reassure Seoul's allies and calm market jitters since the martial law attempt that shocked the nation and triggered the biggest political crisis in decades.

Cho said Seoul had built a network and communication channels with Trump's campaign that were "stronger than those of any other country", but the martial law order undermined "the political momentum" between the two sides.

"It is true that there have been some disruptions with communication over the past two weeks due to this situation," Cho said.

Investing.com-- U.S. stock index futures edged lower on Tuesday evening following a negative session on Wall Street, as caution grew before the Federal Reserve's final interest rate decision for the year.

Markets have fully priced in a 25 basis point cut at the end of a Fed meeting on Wednesday, while the focus will be on long-term rate outlook signals. The Fed is expected to adopt a slower rate cut path after lowering rates in December.

S&P 500 Futures inched 0.1% lower to 6,119.0 points, while Nasdaq 100 Futures fell 0.3% to 22,252.25 points by 18:40 ET (23:38 GMT). 

Dow Jones Futures were largely steady at 43,964.0 points, after the index recorded its longest losing streak since 1978 on Tuesday.

Fed set to cut rates, markets assess retail sales data

Market focus will be squarely on the Fed’s economic projections for the next year, and comments from Chair Jerome Powell. 

This could help investors gauge the Fed’s long-term rate outlook, at a time when inflation has remained stubborn and is expected to rise further under upcoming President Donald Trump.

Investors expect the Fed to indicate a slower pace of rate cuts in 2025, as persistent inflation and a strong labor market—two key challenges for the Fed—continue to pose concerns.

Earlier in the day, data showed that retail sales rose by 0.7% in November, above the 0.5% forecast. 

Stronger-than-expected retail sales data signals that the economy remains strong and consumer spending remains robust, despite challenges like inflation and high interest rates. 

This strength was driven by a solid labor market and steady household finances.

Tech drags Wall St, Dow falls for ninth straight session

Wall Street indexes retreated on Tuesday with the tech sector giving away some of its recent gains, as investors exercised caution ahead of the rate decision.

NVIDIA Corporation (NASDAQ:NVDA) dropped 1.2%, while Alphabet (NASDAQ:GOOG) fell 0.5%

The S&P 500 fell 0.4% to 6050.61 points, while the NASDAQ Composite lost 0.3% to 20,108.30 points. The Dow Jones Industrial Average closed 0.6% lower at 43,449.90 points.

The Nasdaq reached a record high on Monday, and the S&P 500 is sitting on hefty gains this year, but the Dow has faced challenges, marking its ninth consecutive daily decline on Tuesday — the longest losing streak since February 1978. 

A combination of U.S. fiscal expansion, potential tax cuts, and a healthy economy is likely to push Treasury yields higher, with T. Rowe Price projecting yields could even reach 6%.

In its latest note, the investment manager suggests that a 5% 10-year Treasury yield could be reached as early as the first quarter of 2025, after which a move toward 6% is possible.

"Is a 6% 10‑year Treasury yield possible? Why not? But we can consider that when we move through 5%," wrote Arif Husain, T. Rowe Price’s Head of Fixed Income, in the note.

The 10-year Treasury yield, which last touched 6% in 2000, stood at about 4.4% on Tuesday.

Husain also suggested that the current transition period in the U.S. politics is an opportunity to position for rising longer‑term Treasury yields and a steeper yield curve. Between the U.S. election and

the presidential inauguration, markets are now in a “calm before the storm.” 

He further noted that the decreasing foreign demand for U.S. Treasuries could add upward pressure on yields, and potential tariffs and immigration policies would likely be inflationary.

The Fed appears to have guided the economy into an elusive soft landing with little chance of a recession on the horizon, especially if the expected post election pent‑up demand scenario plays out, he added. 

The Fed is set to announce its rate decision on Wednesday, with a widely expected 25 basis point cut to 4.25%-4.5% at its final policy meeting of the year.

By Gavin Jones

ROME (Reuters) - Italy's growth rebound from the COVID-19 pandemic is petering out much faster than expected as structural weaknesses resurface, raising risks for the fragile public finances of the euro zone's third largest economy.

After gross domestic product unexpectedly stagnated in the third quarter, national statistics bureau ISTAT said this month it expected no near-term recovery and forecast 2024 growth of just 0.5%, half the government's official 1% target.

ISTAT's estimate would return Italy to its customary place among the euro zone's weakest performers and contradict an upbeat picture painted by Prime Minister Giorgia Meloni, as well as some economists, just a few months ago.

Recent data has been grim. Business confidence is at its lowest since 2021, a long-running manufacturing crisis is deepening, and the services sector which had propped up the economy for most of the year is now also contracting.

"Italy's business model made up of small firms is no longer conducive to growth, it has insufficient public investment and it is fighting the green transition instead of embracing it as a growth opportunity," said Francesco Saraceno, economics professor at Paris's Science Po and Rome's LUISS university.

Analysts say the situation is even more worrying considering that Italy is receiving a constant flow of tens of billions of euros from Brussels as part of the European Union's post-COVID Recovery Fund.

Spain, the other main recipient of the fund, is growing at least four times as fast.

SHORT-TERM BOOST

Saraceno said Italy's buoyancy in 2021-2022 was based mainly on state-funded incentives for the building sector - the so-called "superbonus" - which powered an investment surge that has reversed this year as the costly scheme has been phased out.

Italy has been the most sluggish euro zone economy since the launch of the single currency 25 years ago, and its latest slump threatens to derail its public finances that have already been compromised by the superbonus.

The public debt, proportionally the second largest in the euro zone, is forecast by the government to rise to around 138% of GDP in 2026 from 135% last year.

If growth in 2025 comes in significantly below Rome's 1.2% target, as most forecasters now expect, that debt ratio will probably climb faster. Investors may then become more reluctant to buy Italian bonds, increasing the government's heavy debt-servicing burden.

Italy is already under EU orders to slash its budget deficit due to massive overshoots in the last two years, removing any hope of spending its way to growth.

SPAIN POWERS AHEAD

The country's weakness stands in stark contrast to Spain, whose GDP is forecast to grow by around 3% this year. Over the last year Spain has expanded at quarterly rates of between 0.7% and 0.9%, while Italy has hovered between zero and 0.3%.

Angel Talavera, head of European research at Oxford Economics, said Spain's success in attracting migrants and integrating them into its economy had been a key driver of its growth, along with a tourism boom and firm consumer spending.

Italy's far fewer migrants rarely do skilled or even semi-skilled jobs, and are often confined to the informal economy.

Meanwhile young Italians are leaving the country in their thousands due to a lack of promising career prospects. The

Investing.com-- China's top leaders have agreed to increase the country's budget deficit to 4% of gross domestic product (GDP) in 2025, marking the highest level on record, Reuters reported on Tuesday citing unnamed sources.

The decision, made during December's Politburo meeting and the Central Economic Work Conference (CEWC), aligns with plans for a more proactive fiscal policy to support economic growth, the report stated.

The new deficit target represents a significant rise from the previously projected 3% of GDP for 2024. The additional spending, equivalent to approximately 1.3 trillion yuan ($179.4 billion), will be funded partly through the issuance of off-budget special bonds, according to the report. Official announcements on these targets are expected during the annual parliamentary session in March.

After the news, Chinese stocks pared some losses. The Shanghai Composite index was slightly lower after falling nearly 0.7% earlier in the day. The Shanghai Shenzhen CSI 300 index climbed 0.8%, while Hong Kong’s Hang Seng index reversed earlier losses to gain 0.1%.

China is also maintaining an economic growth target of around 5% for 2024, consistent with this year’s goal, despite ongoing economic challenges such as the property market crisis, high local government debt, and weak consumer demand, the Reuters report said.

The CEWC summary emphasized the necessity of steady economic growth, alongside fiscal and monetary measures aimed at stabilizing the economy, a state media summary of the closed-door CEWC showed.

Reuters report stated that the central bank plans to adopt an "appropriately loose" monetary stance, potentially signaling more rate cuts and liquidity injections.

Additionally, China's economy faces looming external risks, including potential U.S. tariffs exceeding 60% on Chinese goods, should President-elect Donald Trump implement his campaign pledges. Analysts warn such measures could shrink profits for exporters, exacerbate overcapacity, and weigh on economic growth.

For now, Beijing appears prepared to rely on fiscal stimulus while exploring other tools, including exchange rate adjustments, to counter external pressures, the report added.

SHANGHAI (Reuters) - China's capital markets witnessed a record outflow of $45.7 billion in November, according to official data tracking cross-border investments in stocks and bonds.

Cross-border receipts of portfolio investment totalled $188.9 billion while payments totalled $234.6 billion, resulting in the biggest monthly deficit under the item, according to forex regulator data released late on Monday.

The portfolio data follows other China capital data that showed a similar trend.

China's central bank on Monday said that foreign institutions cut holdings in Chinese onshore bonds for the third consecutive month in November.

Separately, the Institute of International Finance (IIF), which tracks global portfolio flows, also recorded outflows last month in both China's bond and stock markets.

The IIF said the strengthening of the U.S. dollar in the wake of Donald Trump's victory helped shape portfolio flows in emerging markets including China.

Investing.com-- U.S. stock index futures fell slightly on Monday evening as investors remained cautious before a Federal Reserve meeting this week, where the central bank is expected to cut rates but signal a slower pace of easing.  

Futures steadied after a rally in technology stocks sparked some strength on Wall Street, with the Nasdaq hitting a record high. The Dow, on the other hand, clocked an eighth straight day of losses. 

S&P 500 Futures fell 0.1% to 6,145.50 points, while Nasdaq 100 Futures fell 0.1% to 22,392.25 points by 18:25 ET (23:25 GMT). Dow Jones Futures fell 0.1% to 44,196.0 points. 

Fed rate cut, outlook in focus 

The central bank is widely expected to cut interest rates by 25 basis points at the conclusion of a two-day meeting on Wednesday.

While Wednesday’s rate cut appears to be largely priced in by markets, especially considering recent gains in Wall Street, focus will be chiefly on the central bank’s outlook on rates.

Investors are bracing for the Fed to signal a slower pace of easing in 2025 amid growing signs of sticky inflation and strength in the labor market- two major points of contention for the Fed.

Goldman Sachs analysts said in a recent note that they no longer expect a rate cut in January, and that the bank will cut rates by a slightly slower pace in the coming year. 

Traders were seen pricing in a 81.9% chance the Fed will leave rates unchanged in January, CME Fedwatch showed. 

Beyond the Fed, focus this week is also on retail sales and industrial production data. 

Tech gains boost Nasdaq, Dow lags 

Major tech stocks extended their recent rally on Monday, driving the Nasdaq Composite to record highs. But the Dow lagged amid sustained aversion towards economically sensitive stocks, as investors remained uncertain over policy under incoming President Donald Trump. 

Chips stocks rallied tracking Broadcom Inc (NASDAQ:AVGO), as the network chips maker extended a recent rally on strong artificial intelligence-fueled earnings and guidance. The prospect of lower rates in the near-term also boosted other heavyweight tech stocks, such as Apple Inc (NASDAQ:AAPL), Amazon.com Inc (NASDAQ:AMZN) and Alphabet Inc  (NASDAQ:GOOGL).

The S&P 500 rose 0.4% to 6,074.08 points, while the NASDAQ Composite surged 1.2% to a record high of 20,173.74 points on Friday. The Dow Jones Industrial Average fell 0.3% to 43,717.48 points. 

PARIS (Reuters) - France's services sector shrank further in December, although the pace of contraction eased, according to a closely-watched business survey by S&P Global published on Monday.

The HCOB Services PMI Business Activity Index rose to 48.2 from 46.9 in November, surpassing analysts' expectations for a reading of 46.7, though still below the 50.0 threshold that indicates growth.

The broader French private sector also experienced a slight improvement, with the Composite PMI Output Index climbing to 46.7 from 45.9, beating the forecast of 45.9, despite manufacturing activity falling to a 55-month low of 39.6 from 41.1.

"The service sector remains in limbo. Apart from a brief period around the Summer Olympics in Paris, service providers have struggled to generate growth momentum," said Tariq Kamal Chaudhry, Economist at Hamburg Commercial Bank.

Political instability and weak demand conditions were highlighted by survey respondents as key challenges, contributing to a sharp reduction in employment.

Despite a modest improvement in business confidence, the outlook remains subdued amid ongoing political uncertainty, the survey showed.