By Raphael Satter and Diane Bartz

WASHINGTON (Reuters) - The United States, Britain and more than a dozen other countries on Sunday unveiled what a senior U.S. official described as the first detailed international agreement on how to keep artificial intelligence safe from rogue actors, pushing for companies to create AI systems that are "secure by design."

In a 20-page document unveiled Sunday, the 18 countries agreed that companies designing and using AI need to develop and deploy it in a way that keeps customers and the wider public safe from misuse.

The agreement is non-binding and carries mostly general recommendations such as monitoring AI systems for abuse, protecting data from tampering and vetting software suppliers.

Still, the director of the U.S. Cybersecurity and Infrastructure Security Agency, Jen Easterly, said it was important that so many countries put their names to the idea that AI systems needed to put safety first.

"This is the first time that we have seen an affirmation that these capabilities should not just be about cool features and how quickly we can get them to market or how we can compete to drive down costs," Easterly told Reuters, saying the guidelines represent "an agreement that the most important thing that needs to be done at the design phase is security."

The agreement is the latest in a series of initiatives - few of which carry teeth - by governments around the world to shape the development of AI, whose weight is increasingly being felt in industry and society at large.

In addition to the United States and Britain, the 18 countries that signed on to the new guidelines include Germany, Italy, the Czech Republic, Estonia, Poland, Australia, Chile, Israel, Nigeria and Singapore.

The framework deals with questions of how to keep AI technology from being hijacked by hackers and includes recommendations such as only releasing models after appropriate security testing.

It does not tackle thorny questions around the appropriate uses of AI, or how the data that feeds these models is gathered.

The rise of AI has fed a host of concerns, including the fear that it could be used to disrupt the democratic process, turbocharge fraud, or lead to dramatic job loss, among other harms.

Europe is ahead of the United States on regulations around AI, with lawmakers there drafting AI rules. France, Germany and Italy also recently reached an agreement on how artificial intelligence should be regulated that supports "mandatory self-regulation through codes of conduct" for so-called foundation models of AI, which are designed to produce a broad range of outputs.

The Biden administration has been pressing lawmakers for AI regulation, but a polarized U.S. Congress has made little headway in passing effective regulation.

The White House sought to reduce AI risks to consumers, workers, and minority groups while bolstering national security with a new executive order in October.

By Devayani Sathyan

BENGALURU (Reuters) - The Bank of Korea will hold its key policy rate at 3.50% when it meets on Thursday as inflation remains sticky, according to a Reuters poll which also forecast the first rate cut won't be until the third quarter of 2024.

Although the Bank of Korea (BOK) expected a brief rise in inflation in November the figure came in at nearly twice the central bank's 2.0% target.

Signs of a soft landing in Asia's fourth-largest economy, coupled with a rebound in household debt in one of the most indebted countries in the world, indicate monetary conditions need to remain tight for longer. All 36 economists in the Nov. 21-27 Reuters poll predicted the BOK would leave the base rate at 3.50% on Thursday, its last meeting of the year.

"We expect the Bank of Korea to keep its policy rate at 3.50% at its upcoming meeting. The board is also likely to retain a hawkish bias amid persistent concerns about the upside risks to inflation and household debt growth," noted Krystal Tan, economist at ANZ.

"That said, with policy rate settings already in restrictive territory, the bar for a rate hike is high, considering the risk of exacerbating financial stress."

Median forecasts showed rates staying at 3.50% until mid-2024 and the first 25 basis point rate cut in the third quarter of 2024, one quarter later than predicted in an October poll taken before the last meeting.

Since a May poll, the prediction for the first rate cut has been pushed back from the end of 2023 to the second half of 2024.

Among economists who had a long-term view 85%, or 22 of 26, predicted at least one 25 basis point rate cut by end-September while just 30% expected a cut before July.

That puts the BOK roughly in line with its Southeast Asian peers which were also expected to cut rates by end-September. [ID/INT][PH/INT]

Medians showed rates at 3.00% by the end of 2024.

"We see a high chance that this meeting is their last time making a hawkish-hold decision before shifting to dovish-hold from next year. We see the BOK turning neutral in Q1 2024, dovish in Q2 2024, and cutting in Q3 2024," noted Kathleen Oh, chief Korea economist at Morgan Stanley.

LONDON (Reuters) - Shoppers at British store chains have seen the slowest increase in prices in almost a year and a half but retailers might struggle to keep inflation on its downward path, an industry group said on Tuesday.

The British Retail Consortium said annual shop price inflation dropped to 4.3% in the 12 months to November, its weakest since June 2022 and slower than October's 5.2% rise.

It was the sixth month in a row that the pace of price growth weakened.

Food price inflation fell to 7.8% from 8.8% on the year but rose 0.3% in November from October.

Non-food inflation eased to an annual 2.5% from 3.4%.

BRC Chief Executive Helen Dickinson said there was a risk that the fall in inflation could stall or go into reverse because of rising business rates - a property-based tax - plus new regulations and a jump in the minimum wage.

Britain's broader official consumer price inflation peaked at 11.1% in October 2022 and was 4.6% in October this year.

The Bank of England has paused its run of interest rate increases after 14 consecutive hikes. But Governor Andrew Bailey and other top officials say it is too early to think about cutting borrowing costs.

By Libby George and Rachel Savage

LONDON/JOHANNESBURG (Reuters) -The collapse of Zambia's $3 billion bond rework deal this week is reverberating well beyond the country's borders, raising doubts about the very framework designed to get bankrupt nations back on track quickly.

Zambia's government said on Monday an International Monetary Fund-approved deal with bondholders - agreed in principle less than a month ago - could not proceed due to objections from bilateral creditors, who say the terms of the deal are not comparable to relief offered by a group of countries including France, China and India.

The setback sent the bonds of countries in the midst of debt reworks such as Ghana and Sri Lanka tumbling. It also raised fresh questions about the commitment of Western nations and multilateral lenders to help poor countries claw their way out of unmanageable debt.

"To me there is a real problem, and the real problem goes beyond Zambia," said Brad Setser, a Council on Foreign Relations fellow and former U.S. government official, suggesting the way debt sustainability and market accessibility for low income countries was assessed might need to be adjusted.

The core of the issue is the Common Framework, a G20-backed debt negotiation architecture that aimed to smooth and speed deals for insolvent low-income countries thrust into crisis during the COVID-19 pandemic with a historically complicated tangle of lenders that, for the first time, included China.

It established basic principles at its 2020 launch, with more to be defined and debated along the way. Progress has, however, proven more arduous than expected.

Zambia – the Framework's test case - is entering its fourth year of default and its long, thorny path could deter other struggling countries such as Tunisia, Egypt and Kenya from Common Framework debt reworks.

International bondholders say the Framework failed to provide the transparency on other creditors' concessions needed to cut comparably fair deals. Most agree it provides no clarity on what fair treatment of various creditors would actually look like, nor how the value of concessions given to indebted nations should be calculated.

Milestones such as Zambia's memorandum of understanding (MoU) with bilateral creditors on restructuring $6.3 billion of debt and similar successes for Ghana raised hopes the Framework was working. Now there are once again whispers that it's failing.

"This has not been a success and we need a reset," said Kevin Gallagher, director of Boston University's Global Development Policy Center.

The IMF did not respond to a request for comment sent over a U.S. holiday.

A QUESTION OF FAIRNESS

The current rift centres on "Comparability of Treatment" - a principle from the Paris Club of wealthy creditor nations aimed at ensuring its members don't give outsized concessions compared to private lenders or others outside the group.

Zambia's government said the Official Creditor Committee (OCC) sank the bondholder deal because it fell afoul of that principle under a "base case" scenario. This outraged bondholders, who say they offered more debt relief than bilateral lenders on a net present value (NPV) basis and a principal haircut of 18% when official creditors tabled none.

With no rules on how to calculate concessions, creditors can come to different conclusions regarding the figures.

"One of the founding principles of the Common Framework was indeed Comparability of Treatment. The fact that we've gotten this far without reaching a common understanding of what that is, is indeed unhelpful," said Yvette Babb, a portfolio manager at William Blair.

Tallying different creditors' priorities is tricky: Bondholders target shorter-term cashflows but will accept principal writedowns, while official creditors favour maturity extensions.

"Are you willing to allow deals that allow bondholders to get a lot of money out before official creditors? And are you willing to let bondholders take money out when the IMF is putting money in?," said Setser.

HOW TO FIX IT

Zambia's government said there was no consensus between OCC co-chairs China and France on the concessions needed from bondholders to secure a deal. The OCC statement also did not say which creditor country raised concerns, making it harder to address them, investors said.

Convincing China, which emerged as a key creditor after a decade-long lending spree, to cut deals alongside other creditors has been a core challenge.

China's repeated assertions that it must safeguard its taxpayers' money, its rejection of blanket acceptance that multilateral lenders do not take haircuts and its objections to the IMF's debt sustainability assessments have upended the official lenders' historic approaches to debt deals.

China's central bank and finance ministry did not respond to requests for comment.

Already, a group called the Global Sovereign Debt Roundtable - comprised of development banks, G20 chair India and official and private creditors – is trying to work through the Framework's snags and seek a consensus on net present values and comparability of treatment.

Any such consensus, William Blair's Babb said, would eliminate "a large degree of this discretionary assessment".

"That is a fundamental principle that I think could be agreed on to avoid this becoming a stumbling block in other discussions," she added.

The IMF has also promised to rejig its debt sustainability calculations – key figures in restructurings – and make its process more transparent.

With a record $554 billion of sovereign debt in default globally, according to the Institute of International Finance, getting countries out of distress quickly is key.

Zambia's finance minister has said the long delays have curtailed economic growth and hit the poorest of the population.

Some say the Framework, while flawed, is the only way, and that countries outside it, such as Suriname and Sri Lanka, have also struggled to finalise deals.

"Sovereign debt restructuring is a very ugly, messy process," said Mark Sobel, a former U.S. representative at the IMF, adding its aim was also to cut through the web of competing domestic powers within China to allow it to give debtor countries much-need relief.

"To me, the Common Framework, for better or for worse, is the only game in town."

The World Bank has released a report titled "Safety First" which highlights the significant economic impact of crime on South Africa. The report reveals that crimes cost the country more than 10% of its Gross Domestic Product (GDP) annually. This cost comes in various forms such as transfer costs, spending on protection, and opportunity losses, all of which pose challenges to the nation's fiscal sustainability.

The World Bank's analysis points to a worrying trend in South Africa's crime statistics. Before the pandemic, the country experienced an average of 3,600 violent crimes per 100,000 people and had a homicide rate in 2021 that was six times higher than that of its peers, at 41.9 per 100,000 individuals. As of 2023, South Africa ranks seventh on the Global Organised Crime Index, reflecting a sharp increase in organized criminal activity.

The ripple effects of high crime rates are felt across various sectors:

Businesses, especially small enterprises, face inflated operating expenses due to high protection costs against crime. Additionally, direct losses from criminal activities stifle the private sector's dynamism.

Households suffer from deepened income inequality due to opportunity costs associated with crime.

The public sector is under pressure as resources are diverted from developmental initiatives to policing efforts, impacting fiscal sustainability.

Moreover, inadequate institutional strength hampers effective responses against the escalation of organized crime.

To address these issues, the World Bank recommends targeted policies focusing on reducing the homicide rate and combating organized crime. These measures are considered essential for mitigating the economic damage caused by criminal activities and fostering growth and equity in South Africa.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

By Leika Kihara

TOKYO (Reuters) -Japan's business-to-business service inflation accelerated in October as a tight job market lifted labour costs, underscoring a broadening of price pressures that could heighten the chance of a near-term end to ultra-loose monetary policy.

The services producer price index, which measures the price companies charge each other for services, rose 2.3% in October from a year earlier, up from a revised 2.0% gain in September, Bank of Japan (BOJ) data showed on Monday.

Information and communication, machinery repair and worker dispatching businesses saw fees increase from year-earlier levels due to higher labour costs.

A surge in inbound tourism drove up hotel fees 49.9%.

The data suggest Japan's economy is making progress towards achieving sustained rises in inflation accompanied by solid wage growth.

BOJ Governor Kazuo Ueda has said inflation has been driven mostly by cost-push factors and must shift to a more demand-driven rise in prices backed by higher wages for the bank to consider normalising its ultra-loose monetary policy.

His remarks have heightened market attention to developments in services prices, which most vividly reflect wages pressures companies face in their businesses.

With inflation having held above the BOJ's 2% target for more than a year, companies have faced unprecedented pressure to compensate employees with pay hikes to retain and lure talent.

Indications from businesses, unions and economists suggest the labour and cost pressures that had set the stage for this year's pay hikes - the largest in more than three decades - will persist heading into next year's key spring wage talks.

A Reuters poll in October showed nearly two-thirds of economists project that the BOJ will end its negative interest rate policy next year.

BEIJING (Reuters) -Profits at China's industrial firms fell 7.8% in the first 10 months of 2023 from a year earlier, official data showed on Monday, as a shaky post-pandemic economic recovery struggles to gain momentum.

The slide followed a 9% profit decline in the first nine months, National Bureau of Statistics (NBS) data showed.

China's economic recovery has been uneven this year, with a brisk start in the first quarter fading quickly in the second before gaining momentum in the third.

Last month's mixed picture only added to the uncertainty as prolonged distress in China's property sector, local government debt risks, soft domestic and global demand, and geopolitical tensions have unnerved investors and bruised corporate profits.

Facing a double whammy of macro headwinds and supply glut, LONGi Green Energy Technology Co, a major domestic solar energy manufacturer, saw its third quarter net profit plummet 44.1% to 2.5 billion yuan ($346.7 million).

With a burst of policy support measures since June having had a modest effect on reviving growth, policymakers are under rising pressure to roll out more stimulus, especially as China faces mounting debt risks and structural challenges.

"Transforming the economic growth mode is more important than pursuing a high growth rate," China's central bank governor said in a speech this month, suggesting an urgent need for longer-term structural reforms as investment-led growth loses steam.

State-owned firms posted a 9.9% decline in earnings in the first 10 months, foreign firms recorded a 10.2% slide and private-sector companies saw profits down 1.9%, according to a breakdown of the NBS data.

Industrial profits data covers firms with annual revenues of at least 20 million yuan ($2.74 million) from their main operations.

($1 = 7.2922 Chinese yuan)

Investing.com -- With investors on tenterhooks over when global interest rates might start to fall, upcoming inflation data this week will be in focus. OPEC+ meets to discuss oil output cuts and data from China will give fresh insights on the economic outlook for the world’s number-two economy. Here’s what you need to know to start your week.

U.S. inflation data

On the heels of October's unchanged reading on consumer price inflation, markets will be hoping that another U.S. inflation report on Thursday will bolster the case for an end to Federal Reserve rate hikes.

The Fed’s preferred inflation gauge, the personal consumption expenditures price index, is expected to have risen 0.1% in November. The PCE index rose 0.4% in September, matching the rise in August.

The core reading, which strips out food and fuel costs and is considered a better gauge of underlying inflation, is expected to have risen 3.5% on a year-over-year basis.

Other economic data out during the week includes a consumer confidence index for November on Tuesday - October's reading showed a third straight monthly decline. There will also be the first revision of third quarter GDP, figures on new home sales for October, the weekly report on jobless claims and the Fed’s Beige Book.

Year-end rally?

Signs the U.S. stock market rally is broadening from the so-called Magnificent Seven of mega-cap growth and technology companies is bolstering investor hopes for a rally through year-end.

The Magnificent Seven group of stocks is made up of Apple (NASDAQ:AAPL), Microsoft (NASDAQ:MSFT), Alphabet (NASDAQ:GOOGL), Amazon (NASDAQ:AMZN), Nvidia (NASDAQ:NVDA), Meta (NASDAQ:META) and Tesla (NASDAQ:TSLA) and they collectively hold a 28% weight in the S&P 500 index. They make up nearly 50% of the weighting of the Nasdaq 100, which is up nearly 47% for the year to date.

Equities have risen sharply, with the broad S&P 500 advancing approximately 10% over the last three weeks, fuelled by falling Treasury yields and cooling inflation readings that could signal the end of Federal Reserve rate hikes.

Investors will get further readings of inflation and consumer confidence (see above) during the week, but stronger-than-expected data could spur a selloff in Treasuries, sending yields higher.

OPEC+ meeting

Oil fell on Friday, but prices notched their first week of gains in over a month ahead of a meeting later this week to decide on production cuts in 2024.

Brent crude futures settled down 1.4%, at $80.23 a barrel, while crude oil WTI futures fell 2.5%, from Wednesday's close to $75.17. There was no settlement for WTI on Thursday owing to the U.S. Thanksgiving holiday.

The gains for the week came as OPEC+ prepares for a meeting on Thursday that will have output cuts high on the agenda after recent oil price declines on demand concerns and burgeoning supply, particularly from non-OPEC producers.

The OPEC+ group, comprising of the Organization of the Petroleum Exporting Countries and allies including Russia, surprised the market last Wednesday by delaying its scheduled Nov. 26 meeting to Nov. 30 after producers struggled to reach a consensus on output levels.

Eurozone inflation

The Eurozone is to publish inflation data on Thursday that is expected to point to price pressures moderating again in November.

Consumer price inflation is expected to increase at an annual rate of 2.8%, easing slightly from 2.9% the prior month. Underlying inflation is expected to slow to 3.9%.

But despite indications that inflation is cooling, European Central Bank President Christine Lagarde has warned that borrowing costs will need to stay restrictive for longer.

Last Thursday, the minutes of the ECB’s latest policy meeting indicated that officials agree they should be ready to hike again if needed.

Inflation is only forecast to return to the ECB’s target of 2% in the second half of 2025.

China outlook

China is to release official purchasing manager indexes for November on Thursday, with investors on the lookout for any signs of a recovery in the world’s second largest economy.

In October data showed that factory activity fell back into contraction despite a raft of government measures aimed at shoring up the faltering economy, which has been hit by weak consumption and a crisis in the country's debt-laden property sector, which comprises around a quarter of gross domestic product.

China's economy grew at a faster-than-expected 4.9% in the third quarter, But Beijing still faces an uphill battle to achieve its annual growth target of around 5%.

--Reuters contributed to this report

LONDON - The Bank of England's chief economist, Huw Pill, has recently stressed the importance of maintaining a strong approach to combat persistent high inflation, even as signs of an economic slowdown emerge. Despite October's inflation rate sitting at a significant 4.6%, well above the Bank's 2% target, Pill pointed to supply-driven factors as the main drivers of continued price pressures.

Pill refrained from making specific interest rate predictions in his interview but advocated for the continuation of tight monetary policy. This stance is in light of stubborn inflation within the service sector and strong wage growth. Furthermore, the Bank of England's downgraded assessment of the UK's supply capacity suggests limited potential for growth without risking further inflation, underlining the need for ongoing vigilance by the Monetary Policy Committee (MPC).

While Pill has avoided forecasting interest rates, he acknowledged that financial market expectations for rate cuts starting next summer are plausible, with current rates at 5.25%. Nonetheless, Governor Andrew Bailey has indicated that investors might be placing too much emphasis on recent drops in headline inflation figures.

The MPC has been warned against relaxing its stringent monetary policies prematurely, as doing so could undermine efforts to stabilize prices. The Bank's steadfast approach reflects its commitment to reining in inflation while navigating the delicate balance between supporting economic activity and preventing a surge in inflationary pressures.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

By Joe Cash

BEIJING (Reuters) -Uruguayan President Luis Lacalle Pou and Chinese Premier Li Qiang are keen to keep working on a bilateral free trade agreement as well as pursue one between China and the wider Mercosur trade bloc, according to a joint statement.

The statement follows a Thursday meeting in Beijing between the two and comes after China and Uruguay this week upgraded their bilateral relationship to a "comprehensive strategic partnership," elevating Montevideo's ties with Beijing to those of Argentina and Brazil.

Beijing is seen as particularly interested in an FTA with Mercosur as that could put pressure on Paraguay, the last remaining South American country with ties to Taipei, to rethink its links with Taiwan which China considers part of its territory.

The statement said that Uruaguay and China were committed to pursuing a bilateral FTA and noted that a joint feasibility study had been completed.

"At the same time, the two sides are willing to promote China-Mercosur FTA talks," it added.

Lacalle Pou first proposed a bilateral FTA with China in 2021 to secure similar opportunities for its exporters as those enjoyed by Chile, Costa Rica, Ecuador and Peru - countries which have secured tariff-free access to the world's second-largest economy.

"Uruguay is firmly committed to close relations with China and active participation in the Belt and Road Initiative (BRI)," Lacalle Pou said, according to a readout of the meeting in Chinese state media.

Uruguay was also "willing to... accelerate establishing an FTA between Uruguay, Mercosur and China," Chinese media quoted him as saying.

But Uruguay faces stiff opposition from fellow Mercosur members Argentina, Brazil and Paraguay who want their bloc to settle an FTA with Europe instead.

Last November, they warned they could take "measures" against Uruguay if it forged ahead with its plans to unilaterally negotiate an FTA with China.

Uruguay has also applied to join a major trans-Pacific free trade pact that China also aspires to join, but both Montevideo and Beijing must overcome significant political hurdles before that is possible.

Li was quoted as saying that China and Uruguay should take the signing of Belt and Road Initiative cooperation documents as an opportunity to promote a continuing increase in bilateral trade.

China accounted for 27% of Uruguay's exports in 2022, United Nations Comtrade data shows.

At present, Uruguayan beef, which constituted two-thirds of those exports to China, is subject to a 12% tariff.

By comparison, other major beef exporters Australia and New Zealand, which have FTAs with China, pay tariffs at 3.3% and 0%.

Uruguay came close to signing an FTA with the United States in 2006, but its government at the time eventually rejected the deal over fears of expulsion from Mercosur if it did so.

According to a study conducted by the National Meat Institute of Uruguay in 2021, if China signs an FTA with Uruguay, the meat industry can implement a 0% preferential tariff, which will reduce tariffs by $150 million.