By Rae Wee

SINGAPORE (Reuters) - Asian stocks were headed for a fifth straight month of gains on Friday, bolstered by the growing view that cooling inflation in the United States would allow the Federal Reserve to ease rates later this year.

Friday is packed with risk events for markets after a relatively subdued rest of the week, with U.S. Democratic President Joe Biden and his Republican rival Donald Trump set to take the stage at 0100 GMT for their first debate of the year ahead of November's U.S. presidential elections.

Chinese markets, in particular, will be looking out for comments about the trade relationship with Beijing, which has further soured in recent years.

On the data front, figures for May's U.S. core personal consumption expenditures (PCE) price index - the Fed's preferred measure of inflation - are due later on Friday, and could offer further clarity on the U.S. rate outlook.

"If tonight's core PCE inflation were to come in much hotter than the 2.6% expected and after upside surprises to Canadian and Australian inflation data this week, it would inflame concerns that the decline in global inflation has bottomed out and may have reaccelerated in some countries," said Tony Sycamore, a market analyst at IG.

MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.06% early in the Asian session, and was on track to gain some 3.2% for the month, its best performance since February.

Growing expectations of an imminent Fed easing cycle and momentum from the artificial intelligence boom have sparked a risk rally across stock markets and catapulted Wall Street to record highs, in turn lifting Asian shares.

Traders are now pricing in a 64% chance of a first Fed cut in September, up from 50% a month ago, according to the CME FedWatch tool.

Japan's Nikkei jumped 0.78%, reversing some of its losses from the previous session. It was eyeing a monthly gain of 3%, helped by a weak yen and a rally in technology stocks.

S&P 500 futures and Nasdaq futures both ticked higher, rising 0.18% and 0.3%, respectively.

In currencies, the yen continued to languish near a 38-year low on the weaker side of 160 per dollar, leaving markets on alert for any intervention from Japanese authorities to prop up the currency.

The yen was last marginally higher at 160.68 per dollar, but was set to lose more than 2% for the month, as it continues to be hammered by stark interest rate differentials between the U.S. and Japan.

"Considering that the current pace of depreciation is slower than in April, there should be no reason why 160 has to be the line in the sand," said Vincent Chung, associate portfolio manager for T. Rowe Price's diversified income bond strategy.

"Most expectations suggest that intervention would likely occur if there were a quick depreciation to 163."

Tokyo spent 9.79 trillion yen ($60.94 billion) at the end of April and in early May to push the yen up 5% from its then 34-year low of 160.245.

Data on Friday showed core consumer prices in Japan's capital rose 2.1% in June from a year earlier, highlighting the challenge the Bank of Japan faces in timing its next interest rate hike, as cost pressures from the weak yen keep inflation above its 2% target but also hurt consumption.

The euro was last 0.04% higher at $1.0707, though it was headed for a 1.3% monthly decline as the common currency continues to be weighed by political turmoil in the bloc, with France's snap election due to kick off this weekend.

In commodity markets, gold has felt the burden of a firm dollar and fell 0.14% to $2,324.12 an ounce. [GOL/]

Brent crude oil futures rose 0.24% to $86.60 a barrel, while U.S. West Texas Intermediate crude futures gained 0.29% to $81.97 per barrel.

By Jonathan Stempel

NEW YORK (Reuters) - Ten large banks including Bank of America, Goldman Sachs and JPMorgan Chase (NYSE:JPM) will pay $46 million to settle a long-running antitrust lawsuit accusing them of conspiring to rig the now $465.9 trillion market for interest rate swaps.

Lawyers for investors filed a preliminary settlement to end the eight-year-old nationwide case on Thursday in Manhattan federal court.

The settlement requires approval by U.S. District Judge Paul Oetken, and boosts the value of all settlements in the case to $71 million.

Other settling banks include Barclays, BNP Paribas (OTC:BNPQY), Citigroup, Deutsche Bank, Morgan Stanley, NatWest and UBS.

Investors led by the city of Baltimore and pension funds in Chicago, Los Angeles and Michigan accused the banks of trying from 2013 to 2016 to corner swaps trading, in part by boycotting three upstart platforms that offered better prices and let buy-side investors trade with each other.

This allegedly led to "tremendous profits" for the banks because of their role as dealers, primarily in the form of bid/ask spreads, the investors said.

Credit Suisse, now part of UBS, agreed in 2022 to pay $25 million to settle investors' claims. A different judge dismissed a 12th bank, HSBC, as a defendant in 2017.

All of the banks have denied wrongdoing.

Oetken's refusal in December to certify a class action made the investors' case more difficult, because it's often more costly and not worth the trouble for individual investors to sue on their own.

Lawyers for the investors did not immediately respond to requests for comment. They called the settlement an "excellent recovery" given the challenges of further litigation, oourt papers show.

Interest rate swaps let parties exchange future interest payments, typically by exchanging a fixed rate for a floating rate, to manage risk or bet on whether rates will rise or fall.

The case is part of more than a decade of litigation in Manhattan accusing big banks of colluding in various markets including interest rate benchmarks, U.S. Treasuries, currencies and commodities.

The case is In re: Interest Rate Swaps Antitrust Litigation, U.S. District Court, Southern District of New York, No. 16-md-02704.

BEIJING (Reuters) - China hopes to reach mutually acceptable solutions through negotiation with the European Union on planned tariffs on Chinese electric vehicles to avoid escalation of trade friction, the Chinese commerce ministry said on Thursday.

Working teams from both sides have maintained close communication to expedite relevant work, ministry spokesperson He Yadong said at a news briefing.

By Jonathan Stempel

(Reuters) -A federal appeals court on Wednesday struck down part of the U.S. Securities and Exchange Commission's 2022 rollback of rules that critics said impeded the independence of proxy advice firms that help investors vote in corporate elections.

By a 3-0 vote, the 5th U.S. Circuit Court of Appeals said the SEC's explanation for rescinding rules adopted just two years earlier during the Trump administration was "arbitrary and capricious and therefore unlawful."

The rollback covered requirements that proxy firms such as Institutional Shareholder Services and Glass Lewis notify companies about their advice no later than when they notify clients, and provide clients a means to obtain companies' written responses to that advice.

In announcing the changes, SEC Chair Gary Gensler said it would promote "the timeliness and independence of proxy voting advice, which would help to protect investors and facilitate shareholder democracy."

An SEC spokeswoman said the regulator is reviewing the decision and will determine its appropriate next steps.

The rollback was challenged by Natural Gas Services Group (NYSE:NGS), which supplies compression equipment to the energy industry, and the National Association of Manufacturers.

"Today's decision confirms that federal agencies are bound by the rule of law, even as administrations change," Linda Kelly, the trade group's chief legal officer, said in a statement.

The dispute is part of a long-running battle over how to regulate firms that advise investors how to vote on corporate matters such as shareholder proposals, the election of directors, and whether to approve mergers.

Writing for the appeals court, Circuit Judge Edith Jones said the SEC failed to adequately explain what was wrong with its earlier finding that the 2020 rules posed little or no risk to the timeliness and independence of proxy voting.

She also said the SEC failed to reasonably explain why the risks were so significant that rescission became necessary.

"This was the agency equivalent of saying, 'That was then--this is now,'" Jones wrote.

The New Orleans-based 5th Circuit is perhaps the most conservative of the 13 federal appeals courts. The three judges in Wednesday's panel decision were appointed by Republican presidents.

The case is National Association of Manufacturers et al v SEC et al, 5th U.S. Circuit Court of Appeals, No. 22-51069.

By Rae Wee

SINGAPORE (Reuters) -The yen languished near a 38-year low on Thursday and struggled on the weaker side of 160 per dollar, keeping markets on alert for any signs of intervention from Japanese authorities to prop up the currency.

In the broader market, the dollar pared some of its gains from the previous session as U.S. Treasury yields eased a touch, though the greenback held near an eight-week high against a basket of currencies.

The yen rose 0.3% to 160.33 per dollar in the Asian session, nursing some of its losses after having fallen to a low of 160.88 on Wednesday, its weakest since 1986.

The Japanese currency has fallen some 2% for the month and 12% for the year against a resilient dollar, as it continues to be hammered by stark interest rate differentials between the U.S. and Japan, which has maintained the appeal of using the yen as a funding currency for carry trades.

In a carry trade, an investor borrows in a currency with low interest rates and invests the proceeds in higher-yielding assets.

Still, the yen's latest slide past the key 160 per dollar level has kept traders nervous over possible intervention from Tokyo, after authorities spent 9.79 trillion yen ($60.94 billion) at the end of April and in early May to push the yen up 5% from its 34-year low of 160.245 then.

Analysts said while the risk of intervention has increased, Japanese authorities could be holding out for Friday's release of the U.S. personal consumption expenditures (PCE) price index before entering the market.

"Both the level of the exchange rate and pace of the depreciation are important for the Ministry of Finance (MoF) to consider intervening in FX markets," said Boris Kovacevic, global macro strategist at Convera.

"However, subdued volatility in options markets suggests that the recent leg higher has not met all criteria the MoF is looking for.

"Policymakers could wait out Friday's PCE report that is expected to show continued disinflation in the U.S. before making a final decision before the weekend."

DOLLAR STRENGTH

Sterling edged away from an over one-month low of $1.2616 hit the previous session and rose 0.13% to $1.2638, while the euro advanced 0.11% to $1.0693.

Still, the common currency was on track to lose roughly 1.4% for the month, weighed down by political turmoil in the euro zone in the lead up to France's snap election set to begin this weekend.

The dollar index dipped 0.1% to 105.92, not far from a nearly two-month high of 106.13 hit in the previous session, on the back of a rise in U.S. Treasury yields.

"I just think it's a combination of things," said Ray Attrill, head of FX strategy at National Australia Bank (OTC:NABZY), of the higher U.S. yields.

"A few people have been mentioning when (Japan) intervened back in April, May, that there was some suggestion that if the Bank of Japan was going to have to be offloading Treasuries to fund the intervention, it could have an impact.

"But I think there's maybe a bit of a ... lag effect of - Aussie yields were much higher after the CPI, and I think for once, that actually had a little bit of contagion impact to bond markets elsewhere."

An upside surprise in Australian inflation on Wednesday had caught traders off-guard and prompted markets to raise the chances of another interest rate hike this year, which in turn sent domestic yields higher.

The Australian dollar rose 0.23% to $0.6663, drawing some support from Wednesday's inflation shock, while the New Zealand dollar ticked up 0.07% to $0.6088.

Currency moves outside of the yen have been largely subdued for the most part of the week, as traders await Friday's U.S. core PCE data - the Federal Reserve's preferred measure of inflation, for further clues on the U.S. rate outlook.

Wednesday was the last day that investors could trade currencies for the quarter, given that spot foreign exchange settlement takes two business days.

Trading of U.S. stocks, however, moved to a shorter settlement cycle last month, known as T+1.

($1 = 160.6500 yen)

By Daniel Ramos

LA PAZ (Reuters) -Bolivian armed forces pulled back from the presidential palace in La Paz on Wednesday evening and a general was arrested after President Luis Arce slammed a "coup" attempt against the government and called for international support.

Earlier in the day, military units led by General Juan Jose Zuniga, recently stripped of his military command, had gathered in the central Plaza Murillo square, home to the presidential palace and Congress. A Reuters witness saw an armored vehicle ram a door of the presidential palace and soldiers rush in.

"Today the country is facing an attempted coup d'état. Today the country faces once again interests so that democracy in Bolivia is cut short," Arce said in comments from the presidential palace, with armed soldiers outside.

"The Bolivian people are summoned today. We need the Bolivian people to organize and mobilize against the coup d'état in favor of democracy."

A few hours later, a Reuters witness saw soldiers withdraw from the square and police take control of the plaza. Bolivian authorities arrested Zuniga and took him away, though their destination was unclear.

Inside the presidential palace, Arce swore in José Wilson Sanchez as the military commander, Zuniga's former role. He called for calm and order to be restored.

"I order that all personnel mobilized on the streets return to their units," Sanchez said. "We entreat that the blood of our soldiers not be spilled."

The United States said it was closely monitoring the situation and urged calm and restraint.

Tensions have been building in Bolivia ahead of general elections in 2025, with leftist ex-President Evo Morales planning to run against former ally Arce, creating a major rift in the ruling socialist party and wider political uncertainty.

Many do not want a return of Morales, who governed from 2006-2019 when he was ousted amid widespread protests and replaced by an interim conservative government. Arce then won election in 2020.

Zuniga said recently that Morales should not be able to return as president and threatened to block him if he attempted to, which led Arce to remove Zuniga from his post.

Ahead of the attack on the presidential palace, Zuniga had addressed reporters in the square and cited growing anger in the landlocked country, which has been battling an economic slump with depleted central bank reserves and pressure on the boliviano currency as gas exports have dried up.

"The three chiefs of the armed forces have come to express our dismay," Zuniga told a local TV station, calling for a new cabinet of ministers.

"Stop destroying, stop impoverishing our country, stop humiliating our army," he said in full uniform, flanked by soldiers, insisting the action being taken was supported by the public.

Zuniga told reporters later on Wednesday that Arce had on Sunday asked him to "raise something up" to boost his popularity, without offering evidence.

Interior Minister Eduardo del Castillo later said Zuniga was seeking to court popular support and that the nine people injured in the attempt proved "this was not a drill."

'STRONGEST CONDEMNATION'

Morales, head of the ruling MAS socialist party, said that his supporters would mobilize in support of democracy.

"We will not allow the armed forces to violate democracy and intimidate people," Morales said.

Bolivia's public prosecutor's office said it would launch a criminal investigation against Zuniga and others involved in the attempted coup.

Public support for Arce and Bolivia's democracy has poured in from regional leaders and beyond.

"We express the strongest condemnation of the attempted coup d'état in Bolivia. Our total support and support for President Luis Alberto Arce Catacora," Mexican President Andres Manuel Lopez Obrador said on X.

Even conservative political opponents of the government in Bolivia condemned the military action, including ex-President Jeanine Anez, who was imprisoned in 2022 amid political turmoil.

"I fully reject of the mobilization of the military in the Plaza Murillo attempting to destroy constitutional order," she wrote on X. "The MAS with Arce and Evo must be got out through the vote in 2025. We Bolivians will defend democracy."

By Tim Reid

(Reuters) - Sixteen Nobel prize-winning economists signed a letter on Tuesday warning that the U.S. and world economy will suffer if Republican presidential candidate Donald Trump wins the U.S. presidential election in November.

The jointly signed letter, first reported by Axios, says the economic agenda of U.S. President Joe Biden, a Democrat, is "vastly superior" to Trump's, the former Republican president seeking a second term.

The economists say Trump's economic plans would reignite inflation, in part because of his pledge to impose stiffer tariffs on Chinese imports, which they say will hike prices on many goods bought by U.S. consumers.

"While each of us has different views on the particulars of various economic policies, we all agree that Joe Biden's economic agenda is vastly superior to Donald Trump," the economists state in their letter.

"We believe that a second Trump term would have a negative impact on the U.S.'s economic standing in the world, and a destabilizing effect on the U.S.'s domestic economy."

The letter was signed by prominent economists including Joseph Stiglitz, who won the Nobel prize for economics in 2001, and Sir Angus Deaton, an economic Nobel laureate in 2015.

Biden and Trump are locked in a close election race. The Nov. 5 contest will be decided by voters in a handful of battleground states which are closely contested because their voting preferences can swing to Republicans or Democrats.

While headline inflation has slowed in the past two years, many U.S. consumers are still unhappy with the higher prices they have to pay for food, gas and other goods, according to public opinion polls.

Trump has pledged to impose tariffs on foreign imports, and up to at least 60% on Chinese goods coming into the U.S., a cost the economists say will be passed on to U.S. consumers in the form of price hikes.

"Many Americans are concerned about inflation, which has come down remarkably fast. There is rightly a worry that Donald Trump will reignite this inflation, with his fiscally irresponsible budgets," the letter states.

The Trump campaign did not immediately respond to a request for comment. James Singer, a Biden campaign spokesperson, called Trump's economic agenda dangerous.

The U.S. economy will be a major theme in the first presidential debate between Biden and Trump on Thursday. Trump blames Biden for high prices and inflation, while Biden claims Trump's trade policies, including tariffs, will raise inflation.

By Leika Kihara

TOKYO (Reuters) - A rare unscheduled revision to Japan's first-quarter gross domestic product (GDP) may lead to a sharp downgrade, possibly affecting the central bank's growth forecasts and the timing of its next interest rate hike, some analysts say.

The government said on Tuesday it will revise GDP figures for January-March to reflect corrections made in construction orders data, and announce the findings on July 1.

Given the big downward revision to the construction orders data, the revised January-March GDP figures are likely to show the economy contracted more than expected, some analysts say.

Yoshiki Shinke, senior executive economist at Dai-ichi Life Research Institute, expects the revision to show Japan's economy shrank an annualised 2.7% in the first quarter, much bigger than the current estimate of a 1.8% contraction.

The revision is likely to push down Japan's economic growth for the fiscal year that ended in March to 1.0% from 1.2%, and may lead to a downgrade in the current fiscal year's growth projections including for the Bank of Japan, he said.

"What's worrying is that the revision could affect monetary policy," by forcing the BOJ to trim its growth projections in fresh quarterly forecasts due at its next meeting on July 30-31.

Many economists expect the central bank to hike rates from current levels near zero sometime this year, with some betting on the chance of action at the July meeting.

"It could make it somewhat difficult for the BOJ to justify raising interest rates if it were to sharply downgrade its fiscal 2024 forecast," Shinke said.

The BOJ currently projects the economy to expand 0.8% in fiscal 2024. It has signaled readiness to raise interest rates if the economy moves in line with its forecast, and heightens the chance of inflation durably hitting its 2% target.

Japan's economy shrank an annualised 1.8% in the first quarter on weak consumption and exports, data released on June 10 showed, after a 0.4% increase in the previous quarter. The July 1 revision may also lead to downgrades in GDP figures for the third and fourth quarters of last year, analysts say.

By Stella Qiu and Wayne Cole

SYDNEY (Reuters) - Australian consumer inflation accelerated to a six-month high in May, while a key measure of core prices rose for a fourth month, figures that caught traders off-guard and prompted markets to raise the chances of another interest rate hike this year.

The Australian dollar climbed 0.4% to $0.6677 and the three-year bond futures tumbled 14 ticks to 95.97, their lowest level in three weeks.

Markets moved to imply a 50% chance of a quarter-point hike from the Reserve Bank of Australia by September, up from 12% before the data, with a move likely in August depending on the outcome of the full second-quarter CPI report.

Futures also priced out any chance of a cut in the 4.35% cash rate this year, and had only 17 basis points of easing implied by the end of 2025 compared to 44 basis points early in the day..

Data from the Australian Bureau of Statistics on Wednesday showed its monthly consumer price index (CPI) rose at an annual pace of 4.0% in May, up from 3.6% in April and well above market forecasts of 3.8%.

The CPI dipped 0.1% in May from April.

A closely watched measure of core inflation, the trimmed mean, climbed to an annual 4.4%, also its highest level in six months and up from 4.1%.

"Australia could be one of the very few developed markets to raise rates," said Russel Chesler, VanEck Head of Investments & Capital Markets.

"Forget ‘higher for longer’ – we may end up being the ‘highest for the longest’."

With inflation still running above its target band of 2-3%, the RBA has warned it is alert to upside risks. It has held interest rates steady at a 12-year high of 4.35% for five straight meetings.

The central bank will have the luxury of waiting for the quarterly report due at the end of July to decide on its next policy move. But hot readings for April and May suggest the second quarter inflation data could be as strong or stronger than the first quarter report, putting pressure on the RBA to hike in August.

Tapas Strickland, head of market economics at NAB, noted that travel costs in May did not fall as much as analysts were expecting and service prices for telecom and insurance were high.

Indeed, when volatile items and holiday travel were excluded, the CPI dipped to 4.0%, from 4.1%.

"If that quarterly inflation report does print say 1% q/q or a bit higher, then I think it's going to be very hard for the RBA to be on hold," said Strickland. "We're not there in terms of calling (a rate hike), but that risk is clearly growing."

The report showed electricity prices jumped by an annual rate of 6.5%, picking up from April's 4.2% rise, due to the unwinding of government rebates, although they are set to ease from the third quarter as new cost of living relief from the federal and state governments kicks in.

Rent surged 7.4% while insurance costs jumped 14%.

The May report, which provided an update on more services in the second quarter of the year, showed prices for haircuts, restaurant meals and takeaway food were up 5.5%, 4.2% and 4.3% annually.

"We’re still of the view that it’s more time not more hikes that’s needed to quash inflation. But we’re getting a little less steadfast in that conviction," said Harry Murphy Cruise, an economist at Moody’s Analytics.

"An August hike now can’t be ruled out."

By Tom Westbrook

SINGAPORE (Reuters) -The dollar was firm on Wednesday and trading on the precipice of the 160 yen barrier as investors turned cautious and counted down to the release of U.S. price data at the end of the week.

A jump in Australian inflation to a six-month high sent the Aussie dollar up 0.3% to $0.6667 in otherwise subdued markets as traders started to price a 30% risk of a Reserve Bank of Australia (RBA) rate hike as soon as August.

"The RBA's next board meeting on August 6th is now 'live,'" said Tony Sycamore at brokerage IG Markets.

A similar surprise in Canadian inflation had sent the Canadian dollar briefly spiking to a three-week high.

Elsewhere the euro was steady at $1.0714 in Asia and at 159.78 per dollar, the yen's level has markets on alert for intervention since that is only a whisker shy of where Japanese authorities likely stepped in to buy yen in April.

Markets are banking that Friday's U.S. data shows annual growth in the Federal Reserve's favoured core personal consumption expenditure index slowed to 2.6% in May, the lowest in more than three years and opening the way to rate cuts.

Policymakers, however, continue to signal they are in no rush, with Fed Governors Lisa Cook and particularly Michelle Bowman stressing that decisions will depend on data.

"Inflation in the U.S. remains elevated, and I still see a number of upside inflation risks that affect my outlook," Bowman said.

The Australian dollar dipped 0.1% to $0.6640 and the New Zealand dollar similarly slipped to $0.6115, with small moves reflecting thin trade.

Citi said this week that its etraders found interbank FX volumes some 40% lower than thirty-day averages.

Sterling was steady at $1.268, while bitcoin has recovered somewhat from a dip below $60,000 this week to trade at $61,668.

Along with the yen, China's yuan is also getting squeezed by the dollar's stubborn strength. China has seemed to signal some tolerance for a cheaper currency by gradually weakening the midpoint of the yuan's daily trading range on the dollar.

The yuan has hugged the low side of its band for months and was last at 7.2884 per dollar in offshore trade.

"The yen moves more, and yuan moves are more controlled, but they seldom move in opposite directions," said Societe Generale (OTC:SCGLY) strategist Kit Juckes.

"If USD/JPY does break through 160 in the coming days, preventing further yuan weakness would be very difficult indeed."