SYDNEY (Reuters) - Australian consumer price inflation held at a two-year low in January, dashing forecasts for a tick higher and reinforcing market expectations interest rates would not need to increase any further.

There has been limited market reaction as the January release is heavily weighted toward goods prices that have been falling faster than services, and thus suggest some scope for a downside surprise.

Data from the Australian Bureau of Statistics on Wednesday showed its monthly consumer price index (CPI) rose at an annual pace of 3.4% in January, unchanged from December and under market forecasts of 3.6%.

A closely watched measure of core inflation, the trimmed mean, rose an annual 3.8%, down from 4.0% in December. Inflation excluding volatile items and holiday travel slowed to 4.1% from 4.2%.

For January alone, CPI fell 0.3% from the previous month, driven by declines in holiday travel, clothes and garments and petrol. Holiday travel slumped 5.2% from a month earlier.

The Reserve Bank of Australia has raised interest rates by 425 basis points since May 2022 to a 12-year top of 4.35%, and has not ruled out the risk of another hike if necessary to bring inflation back to the bank's target band of 2-3%.

Financial markets are confident the RBA is done tightening. Swaps imply about a 60% chance of a first rate cut in August and a total easing of 38 basis points by the end of the year, little changed from before.

The Australian dollar was little changed at $0.6547, and three year bond futures held at 96.26.

By Stephen Nellis and Shivansh Tiwary

(Reuters) -Apple has canceled work on its electric car, a source familiar with the matter told Reuters on Tuesday, a decade after the iPhone maker kicked off the project.

Shares of the company were up 0.7% in afternoon trading, having pared some losses from earlier in the trading day.

Several employees working on the electric car project will be shifted to the firm's artificial intelligence (AI) division, according to Bloomberg News, which first reported the development.

Apple (NASDAQ:AAPL) declined to comment.

High interest rates to tame inflation have soured consumer sentiment and led to a slowdown in demand for usually pricier electric vehicles, prompting the industry to cut jobs and reduce production.

Several major automakers, including EV market leader Tesla (NASDAQ:TSLA), have decided to pull back on investments, with some shifting plans to focus on hybrids instead of fully battery-powered cars.

Apple kicked off Project Titan, as its car effort was known internally, a decade ago, as a wave of interest in self-driving vehicles swept through Silicon Valley.

Reuters reported in 2020 that Apple was considering releasing a vehicle as soon as 2024 or 2025.

But progress had been uneven even before the COVID-19 pandemic disrupted the global automotive industry.

Apple had laid off 190 workers from the group in 2019 after revamping its software approach.

The design of the concept vehicle also changed, from a radical, steering-wheel-free autonomous vehicle that would have been a departure from traditional automotive design, to a more conventional car with advanced driver-assistance features.

By Tom Westbrook

SINGAPORE (Reuters) -Asian shares slipped on Tuesday, with slightly warmer-than-expected Japanese inflation putting investors on guard ahead of price data due in Europe and the U.S. this week, though bitcoin extended gains on signs that institutional buyers are circling.

The yen steadied at 150.50 to the dollar and inched off a three-month low on the euro as Japanese inflation stayed at the central bank's 2% year-on-year target, keeping alive expectations it would exit negative rates by April.

Tokyo's Nikkei eked a fresh record high, but closed just 0.01% firmer. MSCI's broadest index of Asia-Pacific shares outside Japan dipped 0.2%, keeping below last week's seven-month peak. (T)

Brent crude futures hovered around $82.63 a barrel after Reuters reported Hamas received a draft Gaza truce proposal including a 40-day pause in fighting.

S&P 500 nudged 0.1% lower while Nasdaq futures, FTSE futures and European futures each fell about 0.2%.

The Federal Reserve's favoured measure of inflation - the core personal consumption expenditures (PCE) price index - is due on Thursday and forecasts are for a rise of 0.4%.

"If as expected, the core m/m reading would be the highest since last February and fit with the patience message from the Fed," said analysts at ANZ Bank.

Rate jitters and enormous auctions - $127 billion on Tuesday and another $42 billion on Wednesday - left Treasuries under pressure, though yields steadied in the Asia day. [US/]

Ten-year U.S. Treasury yields were last 1.4 basis points lower at 4.29%. Two-year yields fell 3 bps to 4.71%.

Markets have already pushed out the likely timing of a first Federal Reserve easing from May to June, which is currently priced at around a 70% probability. Futures imply a little more than three quarter-point cuts this year, compared to five at the start of the month.

RBNZ RETREAT

Currency trade was fairly subdued Asia, with recent pressure on the Australian and New Zealand dollars extending. The Aussie touched a one-week low of $0.6525, squeezed by a tumble in iron ore prices, before a slight recovery to $0.6547. [AUD/]

The kiwi was also at a week-low as traders trimmed wagers that New Zealand's central bank might even hike interest rates when it meets on Wednesday.

"With 9 bp priced, we see modest NZD weakness on the announcement," said NatWest Markets currency strategist Antony George.

The euro held steady at $1.0850 and sterling inched down to $1.2676 with speculators trimming bullish bets. Bitcoin rose more than 3% to top $57,000.

Figures on inflation in the European Union are also due this week, on Friday, with the core gauge again seen slowing to the lowest since early 2022 at 2.9% and bringing nearer the day when the European Central Bank (ECB) might ease policy.

Markets are almost fully priced for a first cut in June, with April seen as a 36% chance. In speeches on Monday, ECB President Christine Lagarde and Bank of Greece Governor Yannis Stournaras again pointed to a reticence to rush into cuts

Bank of England deputy Dave Ramsden and Riksbank Governor Erik Thedeen appear later on Tuesday while a smattering of mostly second-tier U.S. and European data are due including consumer confidence for Germany, France and the U.S.

By Andrea Shalal

SAO PAULO (Reuters) - Strong U.S. economic growth has been a "key driver" of better than expected global growth, U.S. Treasury Secretary Janet Yellen will tell a news conference on Tuesday ahead of this week's meeting of G20 finance officials in Sao Paulo, Brazil.

In excerpts of her remarks released by Treasury, Yellen said the International Monetary Fund and other forecasters had projected a broad-based slowdown in the global economy in 2023 that did not happen.

Instead, growth came in at 3.1%, exceeding expectations, and inflation fell, with prices expected to continue falling this year in about 80% of economies, she said.

"Going forward, we remain cognizant of the risks facing the global outlook and continue to carefully monitor the economic challenges in certain countries, but the global economy remains resilient," she said.

Yellen said U.S. economic strength had underpinned global growth, fueled by Biden administration policies supporting businesses hit hard by the COVID-19 pandemic and investments in domestic manufacturing, clean energy and infrastructure.

U.S. inflation had also declined significantly from its peak and the U.S. labor market was historically strong, she said, with the prime-age labor force above its pre-pandemic level and the unemployment rate near historic lows.

"Had a U.S. recession come in 2023, like many predicted, global growth would have been thrown off track. While there are risks to our outlook, America’s growth has consistently exceeded projections," Yellen said.

The IMF last month edged its global growth outlook to 3.1% in 2024, up two-tenths of a percentage point from its October forecast, and left its 2025 forecast unchanged at 3.2%.

The IMF's chief economist, Pierre-Olivier Gourinchas, said the global lender's updated World Economic Outlook showed a "soft landing" was in sight, but overall growth and global trade remained lower than the historical average.

Yellen said growth in many economies, including Brazil, the current president of the Group of 20 economies, had also contributed to global growth, although other economies still faced challenges. She did not specify which countries were facing problems.

IMF spokesperson Julie Kozack last week told reporters the global lender would take new information on the Japanese and British economies, which both slipped into recession, into account as it prepared a new global forecast to be released in April.

(This story has been corrected to fix the spelling of Sao Paulo in the dateline and paragraph 1)

By Kevin Buckland

TOKYO (Reuters) -The dollar traded on the back foot on Tuesday, as markets looked ahead to a week of U.S. economic data that will provide fresh signals on how soon the Federal Reserve may begin cutting interest rates.

Leading cryptocurrency bitcoin soared to a more than two-year high above $57,000 after enterprise software firm MicroStrategy Inc announced it had bought about 3,000 more of the tokens for $155 million.

The U.S. dollar index, which measures the currency against a basket of peers including the euro and yen, traded flat at 103.77 in Asian time, following a 0.17% slide on Monday.

Markets have all but ruled out a cut at the Fed's March meeting and have recently pushed back expectations for a cut to June from May, CME's FedWatch Tool showed, following strong U.S. consumer and producer price data.

U.S. durable goods data is due later on Tuesday, while January's U.S. personal consumption expenditures price index, which is the Fed's preferred measure of inflation, will be released on Thursday.

"A still softish DXY (dollar index) doesn't quite convey the USD's story right here ... and, if anything, key upcoming event risk can potentially fuel another leg up," Westpac's head of FX strategy, Richard Franulovich, wrote in a note.

"The bulk of DXY's gains this year have unfolded over just a handful of marquee sessions, and outside that it has been decidedly consolidative," he said. "The lacklustre DXY in recent days looks mostly like a continuation of that profile."

The dollar slipped 0.13% to 150.485 yen, as Japan's currency firmed following the release of figures showing consumer inflation stayed at the Bank of Japan's 2% target, rather than dipping below it for the first time in nearly two years, as economists had forecast.

The euro was unchanged at $1.08505, following a 0.27% advance in the previous session.

Bitcoin was last 3.3% higher at $56,338, after earlier jumping to $57,055 for the first time since December of 2021.

Risk-sensitive antipodean currencies sank amid a slide in regional equities, continuing a retreat from multi-week peaks.

The Australian dollar lost 0.2% to $0.6528, after reaching a three-week high of $0.6595 on Thursday.

The kiwi eased 0.3% to $0.61555, after touching the highest since Jan. 15 at $0.6218 on Thursday.

Traders are gearing up for what could turn out to be a significant policy meeting by the Reserve Bank of New Zealand (RBNZ) on Wednesday. Markets are pricing in a one-in-three chance the RBNZ will raise its 5.5% official cash rate to combat stubborn inflation.

(Reuters) - Kansas City Federal Reserve Bank President Jeffrey Schmid on Monday used a debut speech on policy to signal that he, like most of his central banking colleagues, is in no rush to cut interest rates.

"With inflation running above target, labor markets tight and demand showing considerable momentum, my own view is that there is no need to preemptively adjust the stance of policy," Schmid said in his first extensive public remarks since he began the job last August. "Instead, I believe that the best course of action is to be patient, continue to watch how the economy responds to the policy tightening that has occurred, and wait for convincing evidence that the inflation fight has been won."

Schmid's cautious approach suggests a hawkish outlook in sync with recent Kansas City Fed presidents.

But it is also one that resonates with the message of other Fed policymakers in recent weeks signaling they want to keep the policy rate in its current 5.25%-5.5% range until they have greater confidence that inflation is headed to the Fed's 2% goal.

Shipping disruptions in the Red Sea could put renewed upward pressure on goods prices, Schmid said, and hotter-than-expected consumer price inflation in January, especially for services, argues for "caution" on expectations for further disinflation.

Schmid also signaled hawkishness with regards to the Fed's balance sheet. While he said he is in "no hurry" to halt the ongoing reduction in the size of the balance sheet, Schmid said he does not favor an "overly cautious approach."

Some Fed policymakers have argued that the time may soon come to slow those reductions to give time for the Fed to assess how far it can shrink its portfolio without roiling markets.

"Some interest-rate volatility should be tolerated as we continue to shrink our balance sheet," he said.

LONDON (Reuters) - European banks are set to hand investors a record 120 billion euros ($130 billion) in dividends and share buybacks this year, analysts say, returning more of the profits reaped from a period of higher interest rates.

Bank of Ireland on Monday became the latest lender to announce a hike in payouts, joining others including BNP Paribas (OTC:BNPQY), Deutsche Bank and Santander (BME:SAN) in promising more cash for their investors.

Switzerland's UBS this month pledged to restart its buyback programme, while state-owned Italian lender Monte dei Paschi di Siena announced it would pay its first dividend in 13 years.

UniCredit said it was giving away all of its 2023 profits - 8.6 billion euros including 5.6 billion euros worth of buybacks - and that it would share 90% of 2024's net profit.

Across European banks, dividend payouts for 2024 will total nearly 80 billion euros, with buybacks taking overall capital returns to shareholders close to 120 billion euros, a record high, Bank of America analysts estimate.

Over the next 15 months, which takes in the final dividend payments yet to be made for 2023 results, as well as the forecast 2024 dividend and planned buybacks, banks are expected to have paid out a total of 172 billion euros - about 17% of their market capitalisation, BofA said.

Banks, after years of depressed share prices as interest rates hovered near zero, have reaped huge profits from the gap between the rates they charge borrowers and how much they pay for deposits.

This has lifted their share prices, and executives have turned to dividends and buybacks as the favoured way to deploy their excess capital.

UBS analysts estimate the top 50 European banks will have a dividend yield of 7.3% in 2024, up from 5.8% in 2022. The yield is expected to drop to 7.2% in 2025 and then hit 7.4% in 2026, UBS analysts calculate.

Still, many lenders' share prices trade significantly below their book value and concerns about falling interest rates and a weaker economic outlook is worrying some investors.

Analysts expect overall bank capital returns to drop back from record highs from next year as buybacks become less generous, with BofA estimating distributions for 2025 of between 110 and 120 billion euros.

($1 = 0.9223 euros)

By Emma Farge and Rachna Uppal

ABU DHABI (Reuters) -Trade ministers from nearly every country in the world gathered in Abu Dhabi on Monday for a World Trade Organization meeting that aims to set new global commerce rules, but even its ambitious chief Ngozi Okonjo-Iweala sought to curb expectations.

The almost 30-year-old global watchdog, whose rules underpin 75% of global commerce, tries to strike deals by consensus, but such efforts are becoming more difficult amid signs that the global economy is fragmenting into separate blocs.

"Let's not pretend that any of this will be easy," Ngozi Okonjo-Iweala said in his opening speech, describing the atmosphere as "tougher" than the WTO's last 2022 meeting, citing wars, tensions and elections and signs that trade growth will undershoot the body's own estimate.

She called on ministers to "roll up their sleeves" and complete negotiations, but seemed to rule out any deal in Abu Dhabi on reforming the body's mothballed appeals court.

"We are not there yet," she said.

However, negotiators say they are still hopeful for an agreement that could buoy global fish stocks and protect fishermen by banning government subsidies.

"We are not in dreamland here. International cooperation is in bad shape. Real success would be fish, plus two or three things," one trade delegate told Reuters.

Other outcomes from the four-day meeting that are either definite or achievable are the accession of two new members - Comoros and East Timor - and a deal among some 120 countries to remove development-hampering investment barriers.

Tougher areas are extending a 25-year moratorium on applying tariffs on digital trade, which South Africa and India oppose, and an agreement on agriculture trade rules that has eluded negotiators for decades.

"The multilateral trading system with the WTO at its core is at a critical juncture; it is confronting many challenges," Thani Al Zeyoudi, conference chair and UAE's minister of foreign trade said in an opening address.

"The WTO remains a powerful force in countering the current unilateralism, protectionism, and discrimination."

FUTURE RELEVANCE

On Sunday, the UAE announced a $10 million grant to support WTO initiatives such as the Fisheries Funding Mechanism, the Enhanced Integrated Framework (EIF), and the Women Exporters in the Digital Economy (WEIDE) Fund, launched during the conference.

Zeyoudi said that trade and sustainability would be on the agenda as part of an effort to ensure the body's future relevance.

One factor that could help is the determination of Okonjo-Iweala, a former Nigerian finance minister, whose insistence on all-night meetings helped deliver a package of deals in Geneva in 2022.

"What makes me a bit more optimistic than others at this point is that the director-general is a very proactive person and is prepared to push ministers. Also, the UAE trade minister is very results-orientated," said Alan Yanovich, partner at law firm Akin Gump Strauss.

John Denton, International Chamber of Commerce Secretary General, said even a modest outcome such as a forward-looking ministerial statement that showed common purpose among governments would be worth taking.

"The WTO is a public good ultimately, and our view is that there is a major cost to the real economy from any erosion of that system," he said.

By Wayne Cole

SYDNEY (Reuters) -Asian shares stalled near seven-month highs on Monday as investors awaited inflation data from the United States, Japan and Europe that will help refine expectations for future rate moves.

The Federal Reserve's favoured measure of inflation - the core personal consumption expenditures (PCE) price index - is due on Thursday and forecasts are for a rise of 0.4%.

It was not long ago investors were hoping for just a 0.2% increase but high readings on consumer and producer prices suggest the risk is for a result as high as 0.5%.

Markets have already pushed out the likely timing of a first Fed easing from May to June, which is currently priced at around a 70% probability. Futures imply a little more than three quarter-point cuts this year, compared to five at the start of the month.

There are at least 10 Fed speakers on the docket this week, and are likely to repeat their mantra of staying cautious on rates. The ISM manufacturing survey is due on Friday, as are PMIs for China.

Despite the hawkish shift, Wall Street still managed to make new highs helped by huge gains for AI diva Nvidia (NASDAQ:NVDA), which added $277 billion in market value last week.

"This may be a catalyst not only for the Street to get materially more bullish on U.S. Equities but also to see a further decoupling of stocks and yields since the Mag7 are proving to deliver on earnings expectations irrespective of the interest rate environment," wrote analysts at JPMorgan in a note.

On Monday, S&P 500 futures and Nasdaq futures were both trading 0.2% lower. EUROSTOXX 50 futures and FTSE futures both eased 0.1%.

MSCI's broadest index of Asia-Pacific shares outside Japan dipped 0.3%, having climbed 1.7% last week to seven-month highs.

Those past gains were helped in large part by a rally in Chinese stocks, which have jumped almost 10% in as many sessions on hopes for more aggressive stimulus. Blue chips were off 0.4% on Monday.

Japan's Nikkei rose 0.5%, having climbed 1.6% last week to clear its previous record high as bulls look to test the 40,000 barrier.

INFLATION, ALL THE TIME

Figures on Japanese consumer prices are due out on Tuesday and are forecast to show core inflation slowed to 1.8% in January, the lowest since March 2022.

A soft result would add to the case against a tightening from the Bank of Japan, though policy makers seem to be counting on rising wages to justify putting an end to negative rates in either March or April.

Figures on inflation in the European Union are due on Friday, with the core again seen slowing to the lowest since early 2022 at 2.9% and bringing nearer the day when the European Central Bank might ease policy.

Markets are almost fully priced for a first cut in June, with April seen as a 36% chance.

The head of the ECB Christine Lagarde speaks later on Monday, as does the chief economist of the Bank of England.

Incidentally, the Reserve Bank of New Zealand (RBNZ) holds its first policy meeting of the year on Wednesday and there is some chance it might actually hike rates given stubborn inflation, even though the country likely slipped into recession in the fourth quarter.

The shift in Fed pricing saw Treasury yields hit a three month high last week, though bonds did managed to rally on Friday. The market faces a tough test later in the session when Treasury sells $127 billion of two- and five-year notes, with another $42 billion in seven-year paper due on Tuesday. [US/]

There is also a risk some U.S. government agencies could be shut down if Congress cannot agree on a borrowing extension by Friday.

In currency markets, higher bond yields globally have been a burden for the yen which hit multi-month lows on the euro, and a nine-year trough on the Australian and New Zealand dollars.

Early Monday, the euro sat at 162.70 yen, just off its peak of 163.45, while the dollar held at 150.45 yen and just short of its top of 150.88. [USD/]

The single currency was steady at $1.0816, having briefly been as high as $1.0889 last week.

In commodity markets, gold was a fraction softer at $2,032 an ounce, having rallied 1.4% last week.

Oil prices have drifted lower as concerns about demand, particularly from China, have outweighed risks to supply from the Middle East. [O/R]

Brent dipped 40 cents to $81.22 a barrel, while U.S. crude fell 37 cents to $76.12 per barrel.

By Jamie McGeever

(Reuters) - A look at the day ahead in Asian markets.

Stock markets in Asia start the week with clear momentum behind them, especially in Japan and China, but may be vulnerable to a spot of profit-taking as investors pause for breath after last week's tech- and AI-fueled global buying frenzy.

The Asian economic calendar on Monday is light, with Japanese producer price inflation for January the main event, followed by industrial production from Singapore.

China's CSI 300 index of blue chip shares eked out a slender rise on Friday to seal its ninth straight day of gains and best run since January 2018. Another rise on Monday would mark its longest winning streak since late 2014.

Friday's rise was only 0.1% though, suggesting fatigue may be setting in.

For Japan, however, there's little sign of fatigue yet, at least not on the surface, with the Nikkei 225 surging more than 2% on Friday to a new all-time high. The 40,000-point mark will surely be traders' near-term target now.

The weak yen continues to help make Japanese assets attractive to foreign investors, and the dollar goes into Monday's session comfortably above 150.00 yen. Again, is a bout of profit-taking or even intervention imminent, or does recent momentum persist?

Hedge funds' bearish positioning in the yen has grown to historically high levels, the latest U.S. futures market figures show, so perhaps the FX market is ripe for a correction.

The dollar has had a good start to the year, up 2.5% against a basket of G10 currencies and even more against some key Asian currencies, most notably the yen. Morgan Stanley analysts recommend trimming dollar exposure against emerging Asia.

Japanese services PPI ended last year running at an annual rate of 2.4%, the fastest in almost nine years, indicating that broader inflationary pressures are building.

But overall annual wholesale price inflation, when manufacturing sector is taken into account, is virtually zero. Services and manufacturing are giving off very different signals.

Monday's services PPI comes a day before consumer inflation figures are released. The consensus is for core inflation to slow to 1.8% from 2.3% in December, which would be the first print below the Bank of Japan's 2% target in almost two years.

Japan's inflation rates are under close scrutiny as the BOJ prepares to lift interest rates into positive territory for the first time since 2016.

The main economic event in Asia this week could be China's purchasing managers index data on Friday, as they will offer an early glimpse into how manufacturing and service sector activity have fared this month. A tentative rebound may be underway in Chinese stocks, but there's little evidence yet of a similar recovery in the economic numbers.

The Chinese economic surprises index is barely in positive territory, even though expectations have been lowered substantially in recent months.

Here are key developments that could provide more direction to markets on Monday:

- Japan services PPI (January)

- Singapore industrial production (January)

- U.S. 2-year, five year bond auctions

(By Jamie McGeever; editing by Diane Craft)