SEOUL (Reuters) - South Korea's consumer sentiment dropped sharply this month to hit the weakest level in more than two years on growing worries about political uncertainty following parliament's impeachment of President Yoon Suk Yeol.

The consumer sentiment index fell to 88.4 in December from 100.7 in November, the lowest since the index hit 86.6 in November 2022, when 159 people were killed in a Halloween crowd crush, the Bank of Korea's monthly survey of consumers showed.

The Composite Consumer Sentiment Index falling below the threshold of 100 means consumers have turned pessimistic over the economy.

Thousands of protesters massed on Seoul's streets as the parliament voted to impeach President Yoon on Dec. 14 over his short-lived declaration of martial law on Dec. 3.

Tuesday's data, the first monthly indicator since the crisis erupted over the martial law decree, shows consumer confidence is fast fraying amid political divisions as constitutional justices are set to weigh up whether to formally remove Yoon.

In the days following Yoon's martial law declaration, the benchmark Kospi plunged while the South Korean won last week hit its weakest level in 15 years.

A sub-index on consumer spending outlook dropped by 7 points as "domestic political uncertainties worsened consumption sentiment across travel spending, dining out expenses and durable goods, which declined by 8 points, 6 points and 3 points, respectively," the BOK said in a statement.

Governor Rhee Chang-yong on Dec. 18 also said the political turmoil is weighing on the South Korean economy, and called for more fiscal support and other measures to ensure growth remains intact.

By Bing Hong Lok

SINGAPORE (Reuters) - Singapore's key consumer price gauge rose 1.9% in November on a yearly basis, lower than economists' forecasts and the smallest rise in nearly three years, official data showed on Monday.

The core inflation rate - which excludes private road transport and accommodation costs - was lower than the 2.1% forecast by a Reuters poll of economists and compared with a 2.1% rise seen in October.

It was the smallest rise since November 2021, when it climbed by 1.6%.

Headline inflation was 1.6% in annual terms in November, lower than the 1.8% expected in the poll.

The Monetary Authority of Singapore had forecast core inflation to be around 2% in the fourth quarter.

Slowing inflation has created room for Singapore's central bank to ease monetary policy in January but analysts have said the MAS might wait until later in 2025 on the back of incoming U.S. President Donald Trump's policies.

The MAS left monetary policy settings unchanged in October even as growth picked up and inflation declined. It has not changed policy since a tightening in October 2022, which was the fifth tightening in a row.

Last month, the trade ministry raised its GDP growth forecast for 2024 to 3.5% from a previous range of 2.0% to 3.0%, after third-quarter growth surpassed expectations at 5.4%.

Most economists polled in a MAS survey released recently expect the MAS to maintain its current monetary policy in its quarterly reviews in January, April and July.

A third of those polled in the MAS survey expected a January easing via a reduction in the slope of the Singapore dollar nominal effective exchange rate, down from half in the previous survey.

By Simon Robinson

(Reuters) - Inflation dropped in most economies around the world in 2024, but voters didn’t care.

Angered by the hefty ramp-up in prices for everything from eggs to energy over the past few years, they punished incumbent parties at almost every opportunity. The pain of inflation lingers, and ruling parties took the blame in election after election.

In the United States, higher costs helped Donald Trump win a second term as president four years after he was voted out of the White House and then falsely claimed election fraud. His supporters failed in their bid to overturn Trump's defeat by storming the U.S. Capitol on Jan. 6, 2021. This year, they made their voices heard at the ballot box, ushering in a new American leadership likely to test democratic institutions at home and relations abroad.

The inflation-driven anti-incumbent sentiment also ushered in new governments in Britain and Botswana, Portugal and Panama. South Korean voters put the opposition into power in its parliament, a check on President Yoon Suk Yeol. In early December, the president imposed martial law, a move the National Assembly quickly reversed. Elections also shook up France and Germany, and Japan and India.

One place there was no change: Russia, where Vladimir Putin was re-elected president with 88% of the vote, a record in post-Soviet Russia. 

Moscow continued to prosecute its war against Ukraine, grinding out notable territorial gains. The big question is what impact Trump’s return to the White House will have on the conflict. He has promised to end the war in a day. Many in Ukraine and elsewhere in Europe fear that will mean siding with Putin and freezing the status quo. 

In the Middle East, Israel continued its war against Gaza and extended it to Lebanon, where it left Iran-backed Hezbollah damaged and in disarray. In Syria, a well-coordinated collection of rebel groups toppled Bashar al-Assad and now seeks to run the country. 

In business, companies around the world grappled with how to adapt to artificial intelligence. The dominance of tech companies for investors can be summed up in this simple fact: seven tech firms — the so-called Magnificent Seven — now account for more than one-third of the S&P 500’s market cap. 

Elon Musk, who runs one of those companies, Tesla (NASDAQ:TSLA), is an adviser and financial backer to President-elect Trump. Looking ahead, that combination of tech bro mojo and political power could well define 2025. 

nvesting.com-- Most Asian stocks rose on Monday, tracking gains in Wall Street after softer U.S. inflation data spurred bets that interest rates will still fall in the coming year. 

Japanese stocks were among the better performers for the day, buoyed by speculation over a potential merger between Honda (NYSE:HMC) and Nissan (OTC:NSANY), as reports said a deal was close. 

Regional markets took positive cues from Wall Street, which surged on Friday after PCE price index data- the Federal Reserve’s preferred inflation gauge- read softer than expected for November. The reading helped ease some concerns that U.S. rates will fall at a slower pace in 2025, especially after the Fed struck a hawkish tone during a meeting last week.

U.S. stock futures rose in Asian trade, also supported by optimism over the U.S. government avoiding a shutdown. 

Japanese shares rise amid Honda-Nissan merger reports 

Japan’s Nikkei 225 and TOPIX indexes rose 0.9% and 0.5%, respectively. 

Gains in Japanese markets came amid increased focus on Honda Motor Co Ltd (TYO:7267) and Nissan Motor Co., Ltd. (TYO:7201), after a report from public broadcaster NHK said a preliminary agreement will be signed later on Monday, with the goal of finalizing merger terms by June 2025. 

Honda rose nearly 2%, while Nissan fell slightly after rallying about 20% last week. Mitsubishi Motors Corp. (TYO:7211), which could also be pulled into the merger, rose 2.8%. 

The merger has the potential to create the third-largest global automaker by sales, and is being considered as Honda and Nissan grapple with increased competition and softening sales, especially in top auto market China. 

Beyond speculation over the merger, focus in Japanese markets was also on key inflation data for November released on Friday. The reading showed inflation picked up more than expected in November, keeping expectations of interest rate hikes by the Bank of Japan squarely in play. 

Asia stocks rise with focus on US rates, China stimulus 

Broader Asian markets advanced on Monday amid optimism over softer U.S. inflation, although most regional markets were still nursing losses from the prior week.

Australia’s ASX 200 rose 1.2%, with local shares of News Corp (ASX:NWS) (NASDAQ:NWSA) rising 2.2% after after the firm said it will sell television broadcaster Foxtel to British sports streamer DAZN Group in a A$3.4 billion ($2.1 billion) deal. 

China’s Shanghai Shenzhen CSI 300 and Shanghai Composite indexes rose 0.6% and 0.2%, respectively, while Hong Kong’s Hang Seng index added 0.5%. 

Chinese markets were sitting on some gains in recent sessions after Beijing offered up more assurances that it will ramp up fiscal spending in 2025 to support economic growth.

South Korea’s KOSPI added 1.5% and was the best performer in the region, as investors bought into heavily discounted stocks after local markets were walloped by heightened political uncertainty earlier this month. 

Singapore’s Straits Times Index rose 1.1%, with Talkmed Group Ltd (SGX:TALK) rallying nearly 6% after receiving an offer to be taken private. 

Singapore Post Ltd (SGX:SPOS) slid 8% after it fired its CEO Phang Heng Wee over alleged misconduct. 

Futures for India’s Nifty 50 index pointed to a slightly positive open, after the index fell sharply through the prior week.

By Gram Slattery

WEST PALM BEACH, Florida (Reuters) -President-elect Donald Trump threatened to reassert U.S. control over the Panama Canal on Sunday, accusing Panama of charging excessive rates to use the Central American passage and drawing a sharp rebuke from Panamanian President Jose Raul Mulino.

Speaking to a crowd of supporters in Arizona, Trump also said he would not let the canal fall into the "wrong hands," warning of potential Chinese influence on the passage.

After the event, he posted an image on Truth Social of an American flag flying over a narrow body of water, with the comment: "Welcome to the United States Canal!"

"Has anyone ever heard of the Panama Canal?" Trump said at AmericaFest, an annual event organized by Turning Point, an allied conservative group. "Because we're being ripped off at the Panama Canal like we're being ripped off everywhere else."

Trump's comments were an exceedingly rare example of a U.S. leader saying he could push a sovereign country to hand over territory. They also underlined an expected shift in U.S. diplomacy under Trump, who has not historically shied away from threatening allies and using bellicose rhetoric when dealing with counterparts.

"It was given to Panama and the people of Panama, but it has provisions," Trump said of the canal, which was once owned by the United States but was handed over to Panama decades ago.

"If the principles, both moral and legal, of this magnanimous gesture of giving are not followed, then we will demand that the Panama Canal be returned to us, in full, quickly and without question."

(This Dec 20 story has been to remove the reference to China's crude imports peaking as soon as 2025 in paragraph 9)

By Arathy Somasekhar

HOUSTON (Reuters) - Oil prices settled little changed on Friday as markets weighed Chinese demand and interest rate-cut expectations after data showed cooling U.S. inflation.

Brent crude futures closed up 6 cents, or 0.08%, at $72.94 a barrel. U.S. West Texas Intermediate crude futures rose 8 cents, or 0.12%, at $69.46 per barrel.

Both benchmarks ended the week down about 2.5%.

The U.S. dollar retreated from a two-year high, but was heading for a third consecutive week of gains, after data showed cooling U.S. inflation two days after the Federal Reserve cut interest rates but trimmed its outlook for rate cuts next year.

A weaker dollar makes oil cheaper for holders of other currencies, while rate cuts could boost oil demand.

Inflation slowed in November, pushing Wall Street's main indexes higher in volatile trading.

"The fears over the Fed abandoning support for the market with its interest rate schemes have gone out the window," said John Kilduff, partner at Again Capital in New York.

"There were concerns around the market about the demand outlook, especially as it relates to China, and then if we were going to lose the monetary support from the Fed, it was sort of a one-two punch," Kilduff added.

Chinese state-owned refiner Sinopec (OTC:SHIIY) said in its annual energy outlook on Thursday that China's oil consumption would peak by 2027, as demand for diesel and gasoline weakens. 

Investing.com-- U.S. stock futures fell in Asian trade on Friday after a stop-gap spending bill backed by President-elect Donald Trump was voted down in Congress, raising the prospect of a government shutdown.  

S&P 500 Futures fell 0.4% to 5,912.50 points, while Nasdaq 100 Futures fell 0.5% to 21,263.0 points by 22:10 ET (02:10 GMT). Dow Jones Futures fell 0.3% to 42,661.0 points. Futures extended losses after falling slightly in Thursday evening trade.

The bill was assembled at the eleventh hour by policymakers to include Trump’s demands for higher government spending and a raised debt ceiling. But the spending bill was rejected in a 174-235 vote in the House of Representatives, with several Republican senators also openly defying the President-elect. 

The new bill replaced a bipartisan deal to approve government spending, after Trump and Tesla (NASDAQ:TSLA) CEO Elon Musk came out in opposition of the old deal. 

Government funding is set to expire at midnight on Friday, marking the beginning of a partial government shutdown that could disrupt operations ranging from border security to travel. The disruption is expected to be particularly dire amid increased travel trends during the holiday season. 

Trump and Musk had balked at several provisions in the older bill which they perceived as wasteful giveaways to the Democrats. The revised version of the bill had dropped some provisions to increase lawmaker pay, but on Trump’s demands, proposed limits on national debts for two years- a scenario that would make it easier to pass his promised tax cuts.

A government shutdown presents another layer of uncertainty for Wall Street, which was already nursing steep losses from earlier this week after the Federal Reserve cut interest rates but flagged a substantially slower pace of rate cuts in 2025. 

Focus this Friday is also on key upcoming PCE price index data for November. The reading is the Fed’s preferred inflation gauge, and is likely to factor into the outlook for interest rates.

By Emma-Victoria Farr and Andres Gonzalez

LONDON (Reuters) - Private equity funds in Europe, even though flush with cash, are thinking twice about buying businesses that could be difficult to sell and carefully working through their exit plans before making more acquisitions, bankers and investors said.

In one example, Brookfield walked away from making a binding offer for Spanish waste disposal firm Urbaser due to concerns over exit options, one source familiar with its strategy said. One reason was that it could eventually be too big to sell on, the person said.

A Brookfield spokesperson declined to comment. Urbaser owner Platinum Equity did not respond to a request for comment.

"In the last cycle, funds have done very well on the entry, very well on the execution, but the exit, that has been more difficult," said Nestor Paz-Galindo, UBS head of EMEA global banking and global co-head of M&A.

Big transactions will still take place in Europe, Paz-Galindo said, but are likely to be the preserve of fewer funds.

Bankers told Reuters they expect 2025 will see private equity funds under pressure to not only deploy record levels of unspent capital, but also to sell assets that they have been owning for longer than they have traditionally.

In Europe, the resale of companies from one financial investor to the next is proving difficult, and auctions of private equity-backed companies have seen fewer bidders, bankers and investors said, with sale processes also taking longer.

"There is concern that some assets are just simply too big, and we're seeing sponsors consider divesting divisions or stakes to reduce the size," Stephen Pick, Barclays (LON:BARC)' head of M&A in EMEA, said of how some firms are attempting to secure an exit.

Bain and Cinven are working on the IPO of German drugmaker Stada, which could be valued at around 10 billion euros ($10.50 billion), after talks over a sale to rival financial sponsor firm GTCR stalled, sources close to the matter said.

An M&A solution could still be a fallback option, one of the people said.

Bain, Cinven and GTCR declined to comment.

There are still deals happening, such as the sale by Switzerland's Partners Group of German metering firm Techem for 6.7 billion euros to U.S. asset manager TPG and co-investor GIC.

"There are a significant number of large portfolio companies that rely on IPOs for an exit, given there is currently no M&A market for them given their size," said Paz-Galindo, adding that equity capital markets remained an exit route for these.

Although there have only been a handful of big IPO exits this year, there are signs equity capital markets have been recovering gradually and bankers say that the window is opening, allowing private equity firms to consider share sales again.

By the end of the third quarter, only 9% of total private capital exits were IPOs, data from Preqin shows, up from 7% in 2023, which was the lowest level since 2008.

Meanwhile, the U.S. private equity market has been more active and is poised to see some larger deals in 2025 as financial sponsors face increasing pressure to return liquidity to their limited partners.

A regulatory environment anticipated to be more business-friendly under the second administration of President-elect Donald Trump is also expected to drive a surge in larger transactions, bankers and lawyers said.

BACKLOG

Total (EPA:TTEF) deal values involving financial sponsors in Europe, Middle East and Africa (EMEA) so far this year have reached $297 billion, up 23% on 2023 but still far off the peak of $509 billion in 2021, Dealogic data shows.

The value of shares sold on the public markets by all investors, including private equity, were only $146 billion so far this year across the region, down from $294 billion in 2021, Dealogic data provided by JP Morgan shows.

Selling on to another private equity owner is challenging, because, "many of the value drivers that private equity uses have already been realized," said Tibor Kossa, Goldman Sachs co-head of investment banking for Germany and Austria.

Still the pressure is on to return cash to investors.

"Private equity exits have obviously not been suspended, just postponed ... so we expect more to come, as the pressure by investors in private equity funds for capital returns continues to increase," said Christopher Droege, head of M&A for Germany and Austria at Goldman Sachs.

"There is a large backlog of companies that have been owned by funds for a comparatively long period," Droege added.

SEOUL (Reuters) - South Korea's financial authorities said on Friday they would loosen foreign exchange regulations to improve liquidity conditions in the currency market, as the won traded at a 15-year low.

"Strict regulations restrain the efficiency of foreign exchange management, and there is a need to take into account worsened foreign exchange liquidity conditions after recent events," the finance ministry said in a joint statement with the central bank and regulatory agencies.

The South Korean won on Thursday dropped to its weakest level in 15 years, weighed down by risk-averse sentiment after the U.S. Federal Reserve's cautious stance on more interest rate cuts as well as domestic political uncertainty.

According to the statement, the ceiling of foreign exchange futures contracts will be raised to 75% of capital holdings for local banks and 375% for Seoul branches of foreign banks, from the current 50% and 250%, respectively.

Measures also include allowing companies to take out loans in foreign currencies and exchange the funds for the won, if they are used for investing in facilities such as equipment, property and land purchases.

The ministry said it would implement the measures in a swift manner and consider expanding them after reviewing the effects.

By Stella Qiu

SYDNEY (Reuters) - Asian shares were pinned near three-month lows on Friday as investors awaited key U.S. inflation data that could either ease or worsen concerns about price pressures, while the dollar towered at two-year peaks.

The closely watched inflation gauge - the U.S. Core Personal Consumption Expenditures - is due later in the day. Forecasts are centred on a monthly rise of 0.2% for November, and any upward surprises there could lead markets to further scale back bets for U.S. policy easing next year.

Futures imply just 37 basis points of rate cuts from the Federal Reserve in 2025, less than two cuts, after the U.S. central bank turned hawkish at its last meeting of the year. A rate cut is not fully priced in until June.

Rates now are expected to bottom out at 3.9% by the end of next year, much higher than just a few months ago. That outlook took a heavy toll on the Treasury market, where the benchmark 10-year yields jumped 40 bps over the past two weeks to cross above a key level of 4.5% for the first time since May. [US/]

In Asia, MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.4% on Friday and was headed for a weekly drop of 2.6%. It is, however, up over 8% for the year.

Japan's Nikkei rose 0.2% on Friday and is up a whopping 16% for the year, in part due to the weakness in the yen, which has depreciated 12% in 2024 and drew intervention warnings again from Japanese authorities.

Global central banks have now wrapped up an eventful year of rate decisions, with the UK, Japan, Norway and Australia holding firm, and Switzerland and Canada implementing cuts of 50 basis points at their last meeting of the year. Sweden's Riksbank reduced its policy rate by 25 bps, as did the European Central Bank last week.

"Taken together, it's clear how much central banks are worrying about geopolitics and uncertainty in 2025," said James Rossiter, head of global macro strategy, at TD Securities. "They've nimbly set themselves up for more fluid policymaking in 2025.

"Ultimately, uncertainty is going to remain high, policy shocks significant, and markets are going to twist and turn potentially more than in the recent past. 2025 is going to be a ride."

China's blue chips slipped 0.3% while Hong Kong's Hang Seng edged up 0.2%. The People's Bank of China left its benchmark lending rates unchanged on Friday, matching market expectations.

In the currency markets, the dollar stood tall at a two-year peak of 108.45 against its major peers, enjoying some interest rate advantage.

It held near a five-month high at 157.5 yen, having jumped 1.7% overnight as Bank of Japan held rates steady and Governor Kazuo Ueda struck a dovish tone by saying it would take some time to assess the wage outlook and the impact of Trump's policies.

Data on Friday showed Japan's core inflation accelerated in November, supporting the case of a near-term rate hike. Swaps are split on the chance of a BOJ move in January, with 53% priced in.

The euro is down 1.3% for the week at $1.0364, threatening a key support level of $1.0331. Sterling is set for weekly loss of 1% to $1.2489 and on the verge of breaking a key level of $1.2484.

Treasuries look set for a fourth straight year of losses, with the 10-year yields up a whopping 70 bps this year. They climbed 17 bps this week to 4.57%.

The commodities market has also taken a hit because of a strong U.S. dollar. Oil prices fell on Friday, with U.S. West Texas Intermediate (WTI) down 0.5% to $69.06 and 2.7% lower for the week.

Gold prices are set for a 1.9% fall this week to $2,598 per ounce.