By Aditya Kalra and Nishit Navin

NEW DELHI/BENGALURU (Reuters) -Japan's Sony (NYSE:SONY) Group said on Monday it has sent a termination notice to Zee Entertainment to call off a $10 billion merger of their Indian operations, following an impasse over who will lead the combined entity.

The deal, announced more than two years ago, was perceived as crucial for the survival of the companies in a highly competitive market, given the impending merger between Disney's Indian businesses and the media assets of billionaire Mukesh Ambani's Reliance Industries.

Sony said it had been "engaged in discussions in good faith to extend the end date but the discussion period had expired without an agreement upon an extension of the end date".

It cited unmet conditions of the merger agreement as the reason for the termination.

Although Sony did not specify on Monday what conditions were unfulfilled, a stalemate over who will lead the combined company had put the merger in danger.

Zee proposed CEO Punit Goenka, but Sony disagreed in light of a market regulator probe into Goenka.

Sony said it did not expect any material impact on its fiscal 2024 results from the termination as it did factor in the deal to its outlook.

Zee did not immediately respond to Reuters' request for comment.

On Friday, Zee had said it was committed to the merger and was working to close the deal through "good faith negotiations". It was seeking to discuss an extension to a Jan. 20 deadline to close the deal.

"A deal collapse will have a negative impact on both parties as they were looking at scaling up in the Indian market which is going through a digital disruption and a potential threat of increased competition intensity if the Reliance-Disney deal goes through," said Karan Taurani, an analyst at Elara Capital.

The cash-strapped local broadcaster is also contending with declining profits, advertising revenue and cash reserves in a market where global streaming giants such as Netflix (NASDAQ:NFLX) and Amazon.com (NASDAQ:AMZN) are also jostling for share.

Zee's four-year pact with Disney's Star for TV broadcasting rights of certain cricket events will also be at risk if the deal collapses, as Zee would have to pay $1.32 billion to $1.44 billion over the tenure of the agreement, analysts have said.

The broadcaster missed an early-January deadline to pay $200 million, Bloomberg News reported on Jan. 9.

Zee shares closed 1.5% lower in a Saturday trading session in Mumbai. The market is closed on Monday for a public holiday in Maharashtra state.

(Reuters) - The U.S economy should avoid a recession in the coming year, according to an increasingly large majority of economists polled by the National Association of Business Economics.

Some 91% of respondents to the latest NABE survey, published on Monday, assigned a probability of 50% or less to the U.S. entering a recession over the next 12 months.

That was up from 79% in the October survey, and a far cry from the view a year ago, when a majority of economists expected a recession as the Federal Reserve raised interest rates to fight high inflation.

The rising optimism apparent in the survey is in line with much of the latest economic data, including a measure of consumer sentiment that last week rose to a 2 1/2-year high. Also, inflation has been falling faster than expected, and the labor market is cooling but not collapsing.

Fed policymakers, who have held the policy rate in its current 5.25%-5.5% range since July, have signaled they are likely to cut rates this year as long as inflation continues to drop.

Economists polled by NABE expect corporate sales and profit margins to rise this year, and say supply chain problems and labor shortages are easing, potentially positive news for the inflation outlook.

Some 63% of respondents in the latest survey reported no shortages of input materials, up from 46% three months ago; and just over half of respondents reported no labor shortages, up from 38% from the prior report. Both are among the best readings since the pandemic began, NABE said.

Higher interest rates, increased geopolitical instability, and higher costs pose the biggest risks to that picture of broadly healthy business conditions in the new year, according to the survey of 57 NABE members, conducted Dec. 28-Jan. 9.

At the same time economists cited lower interest rates, along with lower costs and better labor availability, as presenting the biggest upside risks to the outlook.

Investing.com-- Traders were seen pricing in a greater chance that the Federal Reserve will keep interest rates on hold in March, the CME Fedwatch tool showed on Monday, signaling a drastic shift from earlier expectations for a rate cut.

The tool showed Fed Fund futures pricing in a 50.7% chance the central bank will keep its benchmark interest rate in a band of 5.25% to 5.50%, up sharply from a 19% chance seen last week.

Expectations for a chance of a 25 basis point cut- which were running high for nearly two months- now stood at 48.1%, down sharply from the 76.9% probability seen a week ago.

The shift in expectations for a rate cut came amid a slew of strong U.S. economic readings, with retail spending remaining strong, inflation inching higher and the labor market continuing to run hot.

A chorus of Fed officials also downplayed expectations for an early rate cut, stating that resilience in the U.S. economy gave the bank more impetus to keep rates higher for longer. They also noted that consumer inflation remained well above the Fed’s 2% annual target, and that rate cuts would only come when inflation was moving closer to the target.

"While I think it’s appropriate for us to look forward and ask when would policy adjustments be necessary, so we don’t put a stranglehold on the economy, it’s really premature to think that that’s around the corner," San Francisco Fed President Mary Daly said in an interview on Friday.

Atlanta Fed President Ralph Bostic also said last week that he expects rate cuts to begin only from the third quarter. Both Bostic and Daly are part of the rate-setting committee this year.

Comments from Fed officials came just ahead of the media blackout period before the central bank’s January meeting. The Fed is widely expected to keep rates steady at 23-year highs when it meets next week, with the CME tool pointing to a 97.4% chance for a hold.

Expectations of early interest rate cuts by the Fed had driven a stellar rally in global financial markets towards the end of 2023. But this rally had somewhat slowed in recent weeks, in the face of higher-for-longer rates.

The dollar had surged to an over one-month high last week on the shifting expectations, while 10-year Treasury yields broke back above the 4% level.

While the Fed signaled in its December meeting that it will consider cutting interest rates in 2024, it gave scant cues on the timing and scale of the potential cuts. The central bank had also warned that any signs of sticky inflation and labor market strength will keep rates higher for longer.

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Investing.com-- The People’s Bank of China kept its benchmark loan prime rate at record lows on Monday as widely expected, indicating that the central bank has limited headroom to further loosen monetary conditions and buoy an economic recovery.

The PBOC left its one-year LPR at 3.45%, while the five-year LPR, which is used to determine mortgage rates, was left unchanged at 4.20% in the PBOC's first rate decision of 2024.

Both LPR rates were at historic lows after a series of cuts over the past four years, as the PBOC loosened monetary policy in the face of slowing economic growth.

Monday's move was largely in line with market expectations after the central bank unexpectedly kept its medium-term lending rates on hold earlier in January, although it also maintained its near record-high pace of liquidity injections.

The LPR is determined by the PBOC based on considerations from 18 designated commercial banks, and is used as a benchmark for lending rates in the country.

The PBOC had cut the rate further into record-low territory over the past two years, as it struggled to further stimulate Chinese lending conditions and support an economic rebound. But its measures have had little effect so far, with recent data confirming that a post-COVID economic rebound largely failed to materialize in 2023.

China’s gross domestic product grew less than expected in the fourth quarter, and also barely edged past a 5% government target for the year, as weakening export demand added to economic pressure from sluggish domestic spending and investment.

The PBOC has also repeatedly signaled reluctance towards cutting the LPR further, stating that such a move could cause more weakness in the yuan and also destabilize the banking sector.

With the central bank’s liquidity measures providing little support to the economy, investors have ramped up calls for more targeted, fiscal measures from Beijing. But such measures also appear unlikely as China grapples with high levels of government debt.

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Investing.com -- Earnings season ramps up, big central banks kick off their first meetings of 2024 and PMI data is set to show how the global economy is faring at the start of the year. Here's what you need to know to start your week.

US data

While slowing inflation has fueled expectations for the Federal Reserve to start cutting rates this year some policymakers have pushed back on rate cut bets. A key US inflation reading on Thursday will be closely watched for fresh insights on the future path of interest rates.

December's personal consumption expenditures data comes after the price index increased 2.6% in the 12 months to November and monthly prices fell for the first time in more than three and a half years.

The government is to release data on fourth quarter GDP on Wednesday, which is expected to come in at 2.0% after a 4.9% increase in the prior quarter.

Fed officials will be observing the traditional blackout period ahead of their upcoming policy meeting on Jan. 30-31.

Earnings ramp up

Earnings season is ramping up with investors looking ahead to results from some big names including Netflix (NASDAQ:NFLX), which reports on Tuesday, followed by Tesla (NASDAQ:TSLA) on Wednesday, as well as 3M (NYSE:MMM) and Intel (NASDAQ:INTC).

The S&P 500 posted a record high close on Friday for the first time in two years, fueled by a rally in chipmakers and other big tech stocks but could lose momentum if earnings results over the next few weeks fail to justify relatively high valuations.

"This new record level of the S&P 500 is sustainable as long as earnings meet expectations," Steve Sosnick, Chief Strategist at Interactive Brokers told Reuters.

"If, on the other hand, we find out that the market has either gotten ahead of itself ... or we get guidance from some of these companies that doesn't match the bullish sentiment that's being priced into them, that can be a real risk.”

It’s also set to be a big week for European tech, with ASML (AS:ASML), Logitech (NASDAQ:LOGI) and SAP (NYSE:SAP) reporting, as well as luxury powerhouse LVMH (EPA:LVMH).

Central bank meetings

The European Central Bank holds its first policy meeting of 2024 on Thursday against a background of rate cut speculation, with markets pricing in five rate cuts this year.

Some policymakers say markets are getting ahead of themselves and President Christine Lagarde has warned that pricing too many cuts would not help the bank fight inflation.

The Bank of Japan is to conclude its latest policy meeting on Tuesday with markets expecting no change but with investors on the lookout for any indications on a possible exit from negative interest rates later in the year.

Meanwhile, the Bank of Canada is widely expected to keep interest rates on hold at 5% on Wednesday for what would be a fourth straight meeting.

PMIs

Investors are betting heavily on a so-called soft landing for the global economy, along with rate cuts later this year.

Wednesday’s flash Purchasing Managers' Index readings for the Eurozone, UK and US will give a sense of how business activity, in contraction territory across much of the world, has held up at the start of the year.

New orders and hiring intentions will come under scrutiny as they are two of the more forward-looking components. New orders have trends lower everywhere, often a sign of firms preparing for tough times ahead - at odds with the rosy outlook in financial markets.

Oil prices

Oil prices settled slightly lower on Friday but recorded a weekly gain as Middle East tensions and disruptions to oil output offset concerns about the Chinese and global economies.

For the week, Brent gained about 0.5% while U.S. crude rose over 1%.

The International Energy Agency last week raised its 2024 global demand forecast, but its projection is half that of producer group OPEC. The Paris-based agency also said that - barring significant disruptions to flows - the market looked reasonably well supplied in 2024.

"The forecast for global oil demand growth remains unclear, with stakeholders and research institutions providing widely differing projections," analyst Bjarne Schieldrop of SEB told Reuters.

--Reuters contributed to this report

By Jonathan Saul

LONDON (Reuters) - Countries in the Red Sea region need to enhance security to protect seafarers at risk as attacks on merchant shipping worsen, industry officials said on Thursday.

Attacks on ships by Yemen's Iran-allied Houthi militia since November have slowed trade between Asia and Europe and alarmed major powers in an escalation of the war between Israel and Palestinian Hamas militants in Gaza.

Seafarers were innocent victims, Arsenio Dominguez, Secretary-General of UN shipping agency the International Maritime Organization, told a meeting with shipping industry officials on Thursday, adding that freedom of navigation must be upheld, to guarantee the flow of goods by sea.

Stephen Cotton, General Secretary of the International Transport Workers' Federation (ITF), the leading union organisation for seafarers, said the body was "very concerned", adding "seafarers' safety must be the number one priority".

The Houthis are holding 25 crew members from the Galaxy Leader, which was hijacked by the militant group on Nov. 19.

Cotton said the Galaxy Leader's crew must be unconditionally released.

In a positive step, the Indian Navy said on Thursday it had rescued the crew of a U.S.-owned vessel in the Gulf of Aden after a Houthi attack.

In December areas deemed warlike and high risk were extended into the southern area of the Red Sea as part of negotiated arrangements between seafarers and commercial shipping companies, known as the IBF.

Lawyers said the measure increased protection for seafarers.

"This designation triggers increased costs for shipowners, as seafarers covered by IBF agreements are entitled to double their basic pay, along with double compensation for death or disability," David Ashmore, employment lawyer at global law firm Reed Smith, said.

Some 12% of global trade is estimated to pass through the Red Sea.

By Susobhan Sarkar and Indradip Ghosh

BENGALURU (Reuters) - Bank Negara Malaysia (BNM) will leave its overnight policy rate (OPR) unchanged at 3.00% on Jan. 24 and hold it there until at least end-2025 as price pressures are expected to increase and growth remains steady, a Reuters poll of economists showed.

That outlook was despite inflation easing to 1.5% in November - its lowest since March 2021 - and remaining far below the government's estimate of 3%-4% for 2023, partly due to BNM hiking rates by a cumulative 125 basis points between May 2022 and May 2023.

With the Malaysian ringgit up nearly 3% against the U.S. dollar so far in 2024 as markets expect the U.S. Federal Reserve to cut rates aggressively this year, the urgency for policy easing by the BNM will be limited in the near term.

All 28 economists in the Jan. 12-18 Reuters poll predicted Malaysia's central bank would keep its key interest rate at 3.00% on Jan. 24 for the fourth consecutive meeting.

Survey medians showed the central bank would keep the rate untouched until at least 2026 and only four of 26 economists expected at least one cut this year.

"The BNM sees policy as already slightly accommodative. It would likely take a material growth slowdown to nudge the bank into making policy more supportive," said Alex Holmes, lead economist, Oxford Economics.

The economy which expanded 3.3% annually in Q3, 2023 was expected to grow 4.5% and 4.6% this year and next, respectively, higher than 4.1% last year.

Meanwhile, inflation was forecast to spike again in the coming quarters and average 2.5% in 2024 and 2.4% in 2025.

"Inflation is likely to creep up due to recently announced government measures, such as a 2% services tax hike, removal of subsidies for selected food and energy items...and a 5-10% luxury goods tax," said Vincent Loo, senior economist, KAF Research.

"The collective impact of these measures is likely to drive inflation higher this year, thereby constraining the potential for policy easing by BNM."

(For other stories from the Reuters global economic poll:)

By Satoshi Sugiyama

TOKYO (Reuters) - Core consumer inflation in Japan's capital Tokyo in January likely fell below 2% for the first time since May 2022, a Reuters poll of economists showed on Friday, reinforcing the view that price pressures are easing.

The core consumer price index (CPI) in Tokyo, a leading indicator of nationwide inflation trends was expected to have climbed 1.9%, according to a median estimate of 18 economists, attributed to a slower increase in energy and food prices. That would follow a 2.1% jump in December.

"The rate of increase in the core index is expected to slow further as food price hikes have subsided and the upward contribution of accommodation prices is expected to contract," said Takumi Tsunoda, senior economist at Shinkin Central Bank Research Institute.

Japan's December core inflation was above the Bank of Japan's 2% target at 2.3% growth but its pace slowed for a second straight month, government data showed on Friday.

Meanwhile, the poll estimated Japan's exports likely swung back to expansion in December, rising 9.1% from the same month a year earlier. That compared with a 0.2% contraction in November.

December imports are seen down 5.3% from a year earlier after a 11.9% decrease in the previous month, resulting in a trade deficit of 122.1 billion yen ($824.05 million), the poll showed.

The government will release the Tokyo CPI data on Jan. 26 at 8:30 a.m. Japan time (Jan. 25 at 2330 GMT) and trade data on Jan. 24 at 8:50 a.m. Japan time (Jan. 23 at 2350 GMT).

($1 = 148.1700 yen)

MOSCOW/WASHINGTON (Reuters) -Russia on Thursday publicly rejected U.S.-Russian arms control talks for now because of U.S. support for Ukraine, a stance Washington said cast doubt on Moscow's openness to a successor to the last treaty limiting their strategic nuclear arsenals.

Russian Foreign Minister Sergei Lavrov told reporters that Washington had proposed separating the issues of Ukraine, which Russia invaded in 2022, sparking a nearly two-year war, and the resumption of "strategic stability" talks on arms control.

But Lavrov said the U.S. proposal was unacceptable to Russia because of the West's backing for Ukraine and accused the West of conducting a "hybrid war" against Moscow. However, he did not rule out the possibility of future arms control talks between the two, which possess the world's largest nuclear arsenals.

"We do not see the slightest interest on the part of either the United States or NATO to settle the Ukrainian conflict and listen to Russia's concerns," Lavrov told a news conference, though he left the door open to Moscow's position evolving.

"We do not reject this idea for the future, but we precondition this possibility on the abandonment by the West of its policy of undermining and not respecting Russia’s interests," he said.

In Washington, a senior White House official said Russia may change its mind as the February 2026 expiration of the New START treaty approaches, though he said there were no guarantees. The treaty limits deployed strategic nuclear arsenals of both nations.

"We have to take Russia at its word ... They're refusing to engage bilaterally on these issues," Pranay Vaddi, senior director for arms control at the White House national security council, said in response to a question at a think-tank event on Thursday. "It casts some doubt on Russia's willingness to entertain a conversation about a New START follow-on or returning to New START compliance."

"I think that they will want to come back to the table at some point, and ideally before expiration, but Russia could also be unpredictable," Vaddi added.

New START's lapse would leave the two nations with no nuclear arms agreement at a time when tensions between them are at the highest point since the Cuban missile crisis of 1962.

Lavrov accused the West of pushing Ukraine to use increasingly long-range weapons for strikes deep inside Russia. Such strikes have intensified in recent weeks, including an attack on the southern city of Belgorod that killed 25 people on Dec. 30.

Lavrov did not provide evidence for his assertion that the West was encouraging Ukraine to carry out such strikes but accused the United States of seeking military superiority over Russia.

Signed in 2010, the New START treaty caps the number of strategic nuclear warheads that the countries can deploy. Under its terms, Moscow and Washington may deploy no more than 1,550 strategic nuclear warheads and 700 land- and submarine-based missiles and bombers to deliver them.

By Tom Westbrook

SINGAPORE (Reuters) - The dollar headed for a second weekly gain in a row on Friday on signs of resilience in the U.S. economy and caution about rate cuts from central bankers.

Weekly gains on the risk-sensitive Australian and New Zealand dollars of 1.7% and 2.1% are set to be the largest since November and June respectively. Markets price a 57% chance of a U.S. rate cut in March, down from 75% a week ago.

The dollar index is up 0.9% to 103.4 on the week and at 148.12 yen the dollar is up almost 5% on the Japanese currency this year as confidence that the Bank of Japan (BOJ) is about to hike rates has also been rattled.

Data on Friday showed Japan's core inflation slowed to 2.3% in the year to December, its lowest annual pace since June 2022 - seemingly vindicating policymakers' wait-and-see approach.

"The market's realisation that rates hikes will not be easy for the BOJ in the coming months and the coincident repricing of Fed rate cut risks have already been reflected in the move higher in dollar/yen," said Rabobank strategist Jane Foley.

Rabobank revised its one-month forecast for dollar/yen to 148 from 144, expecting further unwinding of bets on the pace of U.S. rate cuts to support the dollar.

Currency moves early in the Asia session were modest on Friday, leaving the euro down 0.7% for the week at $1.0878 and sterling down 0.3% to $1.2708.

The Aussie caught a little support from stabilising iron ore prices and rose 0.1% to $0.6578. The kiwi was steady at $0.6118. [AUD/]

Overnight U.S. labour-market data was strong, with weekly jobless claims dropping to their lowest level in nearly 1-1/2 years, adding to the pressure on market rate-cut wagers.

Two-year Treasury yields, which track short-term interest rate expectations, are up 22 basis points this week to 4.3587%. [US/]

Earlier data showed retail sales rose more than expected in December. Federal Reserve Governor Christopher Waller said on Tuesday the U.S. economy's strength gives policymakers flexibility to move "carefully and slowly" which traders took as pushing back at pricing for a speedy fall in rates.

A similarly hawkish chorus from European central bankers has also dialled back expectations for cuts in Europe, limiting the euro's fall on the dollar and driving gains for crosses such as euro/yen and euro/swissy.

An unexpected rise in British inflation also drove a sharp pullback in bets on Bank of England interest rate cuts, and leant support to sterling.

Bitcoin hit a five-week low at $40,484 overnight as traders have taken profits following the U.S. approval of spot bitcoin exchange-traded funds. Speculators drove the price 150% higher during 2023 in anticipation that the approval paved the way for large-scale investors to buy the cryptocurrency.