(Reuters) -The International Monetary Fund (IMF) on Tuesday said progress had been made in negotiations with El Salvador toward a fund-supported program with the Central American nation, though issues remained such as its use of Bitcoin cryptocurrency.

Discussions focused on policies that could be supported by an IMF program, it said in a statement, such as those which could strengthen public finances, boost bank reserve buffers, improve governance and transparency and mitigate risks from the country's investment in Bitcoin.

The IMF and El Salvador have reached "preliminary understandings" on improving the nation's primary balance, the IMF said, to around 3.5% of gross domestic product (GDP) over a three-year period.

The country also plans to gradually strengthen its reserve buffers by reducing reliance on domestic financing and instead receiving support from the IMF and other development banks, the fund said.

On Bitcoin, the IMF said that many potential risks "have not yet materialized," but that there was a joint recognition that El Salvador needed to enhance transparency and mitigate risks from the project.

Salvadoran President Nayib Bukele made bitcoin a legal tender and has touted plans for "Bitcoin City," a tax-free crypto haven powered by geothermal energy from a volcano.

By Jesus Calero

(Reuters) - Norwegian salmon farmers face challenges from an unusually harsh winter and the El Nino climate phenomenon which led to record fish mortality and concerns over long-term forecasts ahead of a warmer summer.

El Nino — a climate pattern raising temperatures across the planet — followed by colder waters and a 20-year high in jellyfish attacks have driven fish mortality to a record 16.7% so far this year, the Norwegian Veterinary Institute said.

"This winter has been something close to a perfect storm for the industry when it comes to challenging farming conditions," Carnegie analyst Philip Scrase said.

Norway, the largest producer of farmed Atlantic salmon, accounting for 50% of the global market, hopes for a healing summer after a tough first half of the year.

But record high temperatures and warmer waters increase the threat of sea lice for salmon farmers.

"Treating sea lice (vaccines) often stresses the fish, posing a threat to its welfare and its resilience to other diseases," DNB analyst Alexander Aukner said.

To protect the fish, companies like Leroy Seafood are testing special underwater cages deep in the sea to keep the lice at bay.

Farmers are also keeping young salmon longer in land-based facilities to shield them from harsh climate conditions, though this has not improved mortality rates.

Some facilities are running at too high temperatures, causing fish to outgrow their organs and die when they enter seawater, said Christian Olsen Nordby and Kristoffer Haugland from Arctic Securities.

EXPORT BAN, PROCESSING JAM

Salmon exports make up about 2% of Norway's annual GDP, with 1.2 million tonnes of salmon valued at $11.2 billion exported last year, Norwegian Seafood Council said.

To protect the industry's reputation, Norway has banned the export of wounded fish, classified as low-grade salmon.

This forces farmers to increase domestic processing of low-grade salmon into premium products like fillets or smoked goods that they can sell abroad legally.

Before the ban, unprocessed fish bypassed tariff barriers to reach European markets, but now farmers need to sell the surplus injured fish at a discount to third-party processors, Scrase said.

Those with filleting capacity, like SalMar, meanwhile face inefficiencies in their facilities due to a lack of workers needed to handle the higher volumes.

To tackle this, world's largest producer Mowi and smaller rival Grieg Seafood are upgrading their processing facilities.

However, Scrase noted that salmon spot prices were sliding, as the availability of premium salmon eases supply constraints.

ENOUGH FOR A GUIDANCE CUT

Despite farmers' efforts, analysts doubt the industry's ability to maintain harvest volumes.

SalMar lowered its 2024 volume guidance earlier this year, while other major players have kept projections unchanged.

Kontali, an aquaculture data provider, has revised its 2024 volume growth estimate for Norway and the global market to just 1%, reflecting lower sea biomass.

Aukner and Scrase expect many farmers to struggle to meet their volume targets this year, though the summer is crucial to determine full-year volumes.

"We are yet to see material downgrades in harvest volumes, but the 'buffer' in volume guidance has definitely been eaten into and reduced," Nordby and Haugland said.

($1 = 10.9335 Norwegian crowns)

By Brigid Riley

TOKYO (Reuters) - Japanese stocks rebounded sharply on Tuesday, clawing back most of the double-digit losses suffered the previous day as comments from the U.S. Fed and data gave investors pause in their concerns over recession and equity valuations.

The Nikkei's rally, after the market's biggest single day rout since the 1987 Black Monday sell-off, came as the yen reversed its gains, indicating the carnage in yen-funded global carry trades too was easing.

In a turbulent day of trading, the Nikkei was up 8% at 33,975.53 as of 0516 GMT, after plunging 12.4% on Monday. The index was last up 2,623.1 points, having earlier jumped more than 3,000 points to surpass its largest intraday points gain on record.

The broader Topix was up 7.5% at 2,394.33.

Investors had been shaken by last week's plunge in global stock markets, U.S. recession risks, and worries investments funded by a cheap yen were being unwound, triggering a sell-off in Japanese equities on Monday.

Traders said they now appeared to be reconsidering the severity of their initial response, buying back shares on the dip.

"Fundamentally, nothing significant has changed for the Japanese economy. It is the unwinding of the carry trade driving a lot of the momentum sells," said Ray Sharma-Ong, head of multi-asset investment solutions for Southeast Asia at abrdn.

The Nikkei rally helped lift other Asian stock markets. Overnight, safe-haven U.S. yields too had risen from lows in a sign the panic was abating.

But uncertainties remained, with analysts pointing to the possibility of more volatile market moves in the near-term.

"We're not yet sure if this is just a breather between water-boardings or there is more pain to follow," said Matt Simpson, senior market analyst at City Index.

Japanese officials meanwhile scrambled to calm markets, with Prime Minister Fumio Kishida urging caution and calling on market participants to stay calm.

An emergency trilateral meeting of the Ministry of Finance, Financial Services Agency and the Bank of Japan is scheduled for 0600 GMT to discuss markets.

BOJ IN A HURRY?

Khoon Goh, head of Asia research at ANZ, noted that the Nikkei also rebounded to varying degrees after the three previous occasions when it experienced double digit declines, including in the wake of the global financial crisis in 2008 and Tohoku earthquake in 2011.

"But it took a while before the Nikkei clawed back all those losses," he said.

From July 11 to Monday's close of 31,458.42, the Nikkei has seen 113 trillion yen ($792 billion) wiped off its peak market value.

Monday's collapse was a "reminder that it is next-to-impossible to diversify equity risk by region (or by sector or style) during major corrections or bear markets," said Stephen Dover (NYSE:DOV), chief market strategist and head of Franklin Templeton Institute at Franklin Templeton.

"Opportunity will arise, but in our view, it is premature to step in at this point."

Last week, the BOJ raised interest rates to levels unseen in 15 years, a hawkish move that analysts also say spooked the market especially given fears of a possible U.S. recession.

"The market was afraid (the BOJ) may tighten too fast," said Kenji Abe, chief strategist at Daiwa Securities.

BlackRock (NYSE:BLK) Investment Institute said on Tuesday that they see a "greater risk of a BOJ policy misstep" and are reviewing their Japan overweight position.

On Tuesday, large price rebounds were led by big name technology shares such as chip-related stocks Tokyo Electron, up 15%, and Advantest, rising over 13%.

AI-focused startup investor SoftBank (TYO:9984) Group jumped 8.6%.

Circuit breakers were triggered multiple times before and during the session, causing the temporary suspension of trading in Topix and Nikkei futures.

(Reuters) - Asian share markets rebounded on Tuesday reversing a historic sell-off after central bankers sought to calm investor fears.

Japan's Nikkei rallied 9.4% as of the midday break, after plunging 12% on Monday in its biggest one-day percentage drop since October 1987.

Currency markets remained on edge, with the yen down 1% after rising for five straight sessions to a seven-month high on Monday.

QUOTES

RON SHAMGAR, HEAD OF AUSTRALIAN EQUITIES, TAMIM ASSET MANAGEMENT, SYDNEY

"My view is that this market turmoil is mostly driven by the yen carry trade being partly unwound. That’s happened on the same day where U.S. jobs numbers came in slightly weaker than expected and a potential imminent attack by Iran on Israel.

"Combine those factors with a market that so far hasn’t seen the usual and bi-annual pullback or correction of 5-10% this calendar year - and you had a so-called rug pull. We think volatility will persist over the next few weeks and stock prices direction will be dictated by the upcoming results season in Australia and the U.S. during late August."

GARY NG, SENIOR ECONOMIST FOR NATIXIS, HONG KONG

"It is hard to say the worst is behind us ... pressure might linger a little bit."

"There are many moving parts, with three key concerns come from the outlook of the U.S. economy, the unwinding of investors' trades in Japan and geopolitical risks in the Middle East ... particularly the last one, which has not been fully realised for now. As for the U.S. recession outlook, we see some sectors in the economy like consumption still holding up, and datasets in the coming weeks might come out not as bad as the surface looks, and it may help stabilise things."

By Kaori Kaneko and Satoshi Sugiyama

TOKYO (Reuters) -Japan's inflation-adjusted real wages rose in June for the first time in more than two years as nominal pay gained at the fastest pace in nearly three decades, data showed, backing the central bank's view that wage increases are broadening.

However, household spending fell more than expected in the same month, clouding the outlook for the Bank of Japan's plan to steadily raise interest rates.

The latest market rout, which came in the wake of the BOJ's decision last week to raise interest rates, may also dampen consumer sentiment, some analysts say.

Real wages grew 1.1% in June, rising for the first time in 27 months, after a revised 1.3% drop in May, data from the labour ministry showed on Tuesday.

Nominal wages, the average total cash earnings per worker, grew 4.5%, the fastest pace of growth since January 1997, to 498,884 yen ($3,480), the data showed.

Regular pay for permanent workers rose 2.7% in June after a revised 2.6% gain in May, a sign the bumper pay hikes offered by firms in this year's wage negotiations are pushing up household income.

But separate data released on Tuesday showed household spending fell 1.4% in June from a year earlier, more than a median market forecast for a 0.9% drop, suggesting that rising living costs are discouraging consumers from boosting spending.

($1 = 143.3800 yen)

By Manya Saini and Saeed Azhar

(Reuters) -U.S. bank stocks slumped on Monday as fears of a recession sent investors fleeing from a sector closely tied to the health of the economy and toward safe-haven assets.

The S&P 500 Banks Index, tracking a basket of large-cap bank stocks, closed down 2.4%, while the KBW Regional Banking Index fell 2.8%.

Citigroup led big bank losses with a 3.4% fall.

JPMorgan Chase (NYSE:JPM) fell 2% and Bank of America declined nearly 2.5%. Goldman Sachs dropped 2.5%.

Lenders typically feel the squeeze as recessions heighten concerns over credit losses due to higher unemployment. Loan demand - a key factor in profitability - also takes a beating.

"The economy is potentially slowing more than people appreciated, based on last week's economic data, that first and foremost is the biggest driver as it impacts loan growth, income growth, credit quality," said Jason Goldberg, banking analyst at Barclays.

Investors have been jittery since a crisis of confidence hit the sector last year, in part due to higher interest rates, and took down three major regional players.

Among regional banks, Customers Bancorp (NYSE:CUBI)'s shares fell nearly 4.4%, while Huntington Bancshares (NASDAQ:HBAN) dropped 3.4%.

"This market volatility, coupled with potential liquidity dislocation, could pose significant challenges for banks, especially in managing funding and liquidity risks," said Moody's (NYSE:MCO) Corp's banking analyst Laurent Birade.

The U.S. unemployment rate jumped to a near three-year high of 4.3% in July amid a significant slowdown in hiring, heightening fears the labor market was deteriorating and potentially making the economy vulnerable to a recession.

"It's very normal, especially with interest rates having gone up as much as they have and you're seeing that weakness in the commercial real estate market, to see credit losses normalizing," said Erika Najarian, analyst at UBS.

"The jobs print is essentially saying things are not as awesome as they were, they're not saying that things are terrible."

The economic weakness will likely seep into the sector's outlook after a mixed sector-quarter earnings season, where executives from top U.S. banks remained divided over the Fed's future path on interest rate cuts and flagged deterioration in consumer health.

"This may be a few-day blip. I don't think anybody's ready to call this the beginning of a several-quarter downturn in the markets or the economy," said Stephen Biggar, banking analyst at Argus Research.

Morgan Stanley analyst Manan Gosalia said in a note potential rate cuts will be credit positive for mid-sized banks as it will help reduce funding costs and stimulate loan demand.

The S&P 500 Banks Index is down 9.5% month-to-date, compared with a 6% decline in the benchmark S&P 500. The KBW Regional Banking Index has lost about 10% over the same period.

By Faith Hung and James Pomfret

TAIPEI (Reuters) - Taiwan stocks ended down 8.4% on Monday, a record slump, with tech stocks including TSMC plunging as investors sold off one of Asia's top performing markets this year, spooked by a poor outlook for global tech stocks and the U.S. economy.

The main index shed 1,807.21 points, its worst one-day percentage fall, to close at 19,830.88, the lowest level since April 23. The decline was fuelled by a sell-off in tech, and then spread more broadly as the index dipped below the key 20,000 level.

"It is difficult to predict when the decline will stop. It's too early to tell," said David Wu, an analyst with Cathay Futures Consulting Department in Taipei.

Taiwan was one of several markets that tumbled across Asia on Monday amid fears the United States could be heading for recession and as investors sought refuge from risk assets.

Concerns about a widening conflict in the Middle East also weighed on sentiment.

The Taiwan Stock Exchange will hold a media conference to "explain recent market movements and contingency response plans" at 3 p.m. (0700 GMT), the exchange said in brief statement. No further details were given.

A two-day rout late last week left the S&P 500 nearly 6% from its July peak while the tech-heavy Nasdaq Composite extended losses to notch its first 10% correction from a record high since early 2022.

"We think the decline will continue into the next two days, seeking technical support levels of 19,200-19,300 points," Allen Huang, a vice president of Mega International Investment Services, Huang told Reuters.

Shares in the dominant technology stock Taiwan Semiconductor Manufacturing (TSMC), the world's largest contract chipmaker, took a battering. The stock had surged over the past year amid skyrocketing demand for chips used in artificial intelligence, but its price plunged 9.75%, near the daily limit of 10%, to close at T$815.

"The fundamentals for TSMC have not changed at all. Yes, there was market talk last week that delivery of Nvidia (NASDAQ:NVDA)'s new GB 200 chips would be delayed, and Intel (NASDAQ:INTC)'s earnings results were terrible. But TSMC and the upstream AI supply chain would not be affected by those events," Huang added.

Taiwan's Minister of Economic Affairs JK Guo, said investors needed to brace for more possible pain. "Everyone must be prepared for a global stock market crash, this is part of the business cycle," Guo told reporters.

By Leika Kihara

TOKYO (Reuters) -At least two of the Bank of Japan's nine board members called for an early interest rate increase at a policy meeting in June, minutes showed on Monday, underlining the central bank's hawkish tilt that provides scope for further hikes ahead.

"Members agreed that the yen's recent falls were among factors that push up inflation, and must warrant close attention in guiding monetary policy," the minutes showed.

The discussions underscore how yen moves and concerns over an inflation overshoot were key factors discussed at the BOJ's June meeting, and led to its decision in July to raise interest rates to levels unseen in 15 years.

With the Japanese currency having sharply reversed course to hit a 7-month high on Monday, markets are focusing on BOJ Deputy Governor Shinichi Uchida's speech on Wednesday for clues on the pace of future rate hikes.

The yen's latest surge has been buoyed by weak U.S. labour data, which has stoked recession worries.

"Given how latest yen rises are reducing the risk of an inflation overshoot, we expect the BOJ to hike rates at a cycle of once every six months," rather than at a more frequent pace, said Yoshimasa Maruyama, chief market economist at SMBC Nikko Securities.

While the BOJ kept interest rates steady at the June meeting, some board members warned that rising import costs from a weak yen were hurting consumer sentiment and heightening the risk of an inflation overshoot, the minutes showed.

One member said the BOJ must consider "adjusting the degree of monetary easing" to forestall future risks of an inflation overshoot, given how firms are renewing efforts to pass on increasing costs to consumers.

"Another member said the BOJ must continue to closely monitor relevant data in preparation for the next meeting in July and, if deemed appropriate, raise interest rates without delay," according to the minutes.

The yen, which hovered around 157 to the dollar at the time of the June meeting, hit a 38-year low below 161 in July - a move that likely affected the BOJ's decision to hike short-term rates to 0.25% from 0-0.1% at the July 30-31 meeting.

The Japanese currency stood at 145.15 on Monday.

Following the rate hike in July, BOJ Governor Kazuo Ueda did not rule out another increase this year and stressed its readiness to keep hiking borrowing costs to levels deemed neutral to the economy - seen by analysts as anywhere between 1% and 1.5%.

The outlook for private consumption likely holds the key to the next rate hike timing, some analysts say, with rising living costs hurting household sentiment.

"Some members said close attention must be paid to how much boost consumption would get from improvements in income" from wage increases, the June minutes showed.

Japan's second-quarter gross domestic product (GDP) data, due on Aug. 15, will likely show consumption rebounding after four quarters of declines, according to a Reuters poll.

cBy Wayne Cole

SYDNEY (Reuters) -Share markets tumbled and bonds rallied in Asia on Monday as fears the United States could be heading for recession sent investors rushing from risk assets while wagering interest rates will have to fall rapidly to rescue growth.

Investors began where they finished on Friday by knocking Nasdaq futures down 2.27%, while S&P 500 futures dropped 1.41%. EUROSTOXX 50 futures fell 0.6% and FTSE futures 0.2%.

Japan's Nikkei shed a staggering 5.5% to hit seven-month lows, marking its biggest three-session loss since the 2011 financial crisis.

MSCI's broadest index of Asia-Pacific shares outside Japan lost 2.0%. Chinese blue chips were a rare gainer with a rise of 0.4%, aided by a rise in the Caixin services PMI to 52.1.

Japanese 10-year bond yields fell a steep 17 basis points to the lowest since April at 0.785%, as markets radically reconsidered the prospect of another hike from the Bank of Japan.

Treasury bonds were in demand with 10-year yields hitting 3.723%, the lowest since mid-2023.

Two-year yields dropped to 3.818%, having already fallen 50 basis points last week , and could soon slide below 10-year yields, turning the curve positive in a way that has heralded recessions in the past.

The worryingly weak July payrolls report saw markets price in a near 70% chance the Federal Reserve will not only cut rates in September, but ease by a full 50 basis points. Futures imply 115 basis points of cuts in the 5.25-5.5% funds rate this year, and see rates around 3.0% by the end of 2025.

Investing.com -- Fears over the economy are set to remain to the fore amid worries that the Federal Reserve may have left interest rates elevated for too long, allowing them to hurt growth. More high-profile earnings reports are due and oil prices look set to remain volatile amid a combination of recession fears and geopolitical risks. Here's your look at what's happening in markets for the week ahead.

1.U.S. data, Fed speakers

After Friday’s weak July jobs report stoked fears over the prospect of a recession the economic calendar for the week ahead is considerably lighter.

The Institute of Supply Management releases its service sector index on Monday which is expected to point to modest growth.

Investors will get a fresh update on the state of the labor market on Thursday, with the weekly report on initial jobless claims, which are expected to pull back just slightly from an almost one-year high.

Investors will also get a chance to hear from San Francisco Fed President Mary Daly and Richmond Fed President Thomas Barkin after the central bank kept rates on hold last week, but left the door open for a September rate cut.

2. More earnings

While most of the mega cap companies have already reported some high-profile earnings results are expected in the coming days.

Results from industrial bellwether Caterpillar (NYSE:CAT) and media and entertainment giant Walt Disney (NYSE:DIS) will give more insight into the health of manufacturing and the consumer. Also reporting are healthcare heavyweights, including weight-loss drugmaker Eli Lilly (NYSE:LLY) and Super Micro Computer (NASDAQ:SMCI), which is at the center of the market's artificial intelligence excitement.

U.S.  stocks sold off for a second day on Friday, pushing the Nasdaq Composite into correction territory as indications that the economy is slowing stoked fears that the Fed has waited too long to cut rates.

Adding to the downward pressure was a drop in Amazon (NASDAQ:AMZN) and Intel (NASDAQ:INTC) after quarterly results and disappointing forecasts.

3. China outlook

Investors will get an update on how the economic recovery in China is shaping up in the second half of the year with a slew of economic releases this week.

The week begins with a private-sector survey on services activity, followed by trade data on Wednesday and a reading on consumer prices at the end of the week.

Recent data has pointed to a gloomy outlook for the world’s number two economy, and recent surprise rate cuts have reflected a growing sense of urgency in Beijing's efforts to shore up growth.

Officials will be keeping an especially close eye on Friday's inflation number for clues on how much more needs to be done to boost lackluster domestic demand.

4. Reserve Bank of Australia decision

The RBA is expected to keep interest rates on hold at its upcoming policy meeting on Tuesday after data last month showed that core inflation unexpectedly slowed to a two-year low in the second quarter and the rate of economic growth moderated in the first quarter.

Market participants will be focusing on the central banks forward guidance with markets pricing in a 70% probability of an easing in interest rates by the end of the year should inflation continue to slow.

5. Oil prices

Oil prices fell on Friday, settling at their lowest since January as weak economic data out of the U.S. and top oil importer China raised worries over the demand outlook.

The soft U.S. jobs report coupled with weakening manufacturing activity in China sent prices lower on the risk that a sluggish global economic recovery would weigh on oil consumption.

Oil investors are also watching the Middle East, where Lebanon's Iran-backed group Hezbollah said its conflict with Israel had entered a new phase.

Meanwhile, an OPEC+ meeting last Thursday left the group's oil output policy unchanged, including a plan to start unwinding one layer of production cuts from October.

--Reuters contributed to this report