TOKYO (Reuters) - Japan imposed trade restrictions on China-based companies as part of a fresh round of sanctions against individuals and groups supporting Russia's war on Ukraine, the foreign ministry said in a statement on Friday.

The new sanctions also target firms in India, Kazakhstan, and Uzbekistan. It marks the first time Japan has imposed sanctions on China-based firms in connection with the war in Ukraine, according to Japan's foreign ministry.

Targeted firms include Hong Kong-based Asia Pacific Links Ltd, which provided microchips for Russian drones, and China-based Yilufa Electronics Limited.

The sanctions, which are in line with previous measures imposed by other countries including the United States, forbid Japanese companies from exporting to the targeted firms.

U.S. officials have said China is backing Russia's war effort in Ukraine by providing drone and missile technology for Moscow's biggest military buildup since the Soviet era.

The U.S. broadened its sanctions on Russia last week, including by targeting China-based companies selling semiconductors to Moscow.

Beijing and Moscow are also taking complex steps to ensure bilateral payments are made, potentially exposing some Chinese financial firms to sanctions.

By Cynthia Kim

SEOUL (Reuters) - South Korea's foreign exchange authorities on Friday said they agreed with the National Pension Service to expand a currency swap line to $50 billion from the current $35 billion to defend the tumbling won against the dollar.

"The foreign exchange authorities believe that the FX swap with the National Pension Service can work to alleviate the supply-demand imbalance in the foreign exchange market by absorbing the National Pension Service's spot dollar purchase demand when the currency market is unstable," the finance ministry said in a statement.

The move is seen as an indirect intervention into the spot dollar-won market because the swap line allows the fund to borrow from the central bank's foreign exchange reserves instead of buying dollars in the onshore currency market.

The won slid to 1,393.0 per dollar early on Friday, the weakest level since April 16 and nearing a key resistance level of 1,400 closely watched by the market participants.

By Nandita Bose and Kanishka Singh

WASHINGTON (Reuters) - Billionaire Mike Bloomberg has given nearly $20 million to help Democratic President Joe Biden's re-election effort against Republican former President Donald Trump, two sources familiar with the matter told Reuters on Thursday.

Bloomberg's contribution included $19 million to an independent pro-Biden group known as Future Forward or FF PAC, and over $900,000 to the Biden Victory Fund, which is an amalgamation of the Biden campaign and Democratic Party committees, the sources added, asking not to be identified.

The donations were first reported by the Washington Post. The Biden campaign did not immediately respond to a request for comment.

Bloomberg, the former New York mayor who spent $1 billion of his own money on a failed 2020 presidential bid in the Democratic primaries, injected at least $100 million to help Biden's campaign against Trump in Florida in 2020. Trump, who lost the overall 2020 race to Biden, had won in Florida by over three percentage points.

Biden and Trump have mostly been tied in national polls.

Democrats have maintained an overall cash advantage over Trump and the Biden campaign continues to have a considerably larger war chest. Biden's campaign reported $84 million in the bank at the end of April, compared to $49 million reported by Trump.

However, Biden campaign's fundraising in April lagged Trump's for the first time, after the former president ramped up his joint operation with the Republican National Committee and headlined high-dollar fundraisers.

Pro-Trump spending groups have spent more than $25 million since Trump clinched the Republican nomination on March 6, Federal Election Commission records show, compared to more than $15 million spent by Biden's allies during the same time.

By David Milliken

LONDON (Reuters) - Britain's central bank looks on course to hold interest rates at a 16-year high of 5.25% on Thursday as underlying inflation pressures prove persistent, depriving Prime Minister Rishi Sunak of a much-needed boost ahead of a July 4 election.

Bank of England Governor Andrew Bailey opened the door early last month to a rate cut, saying he was "optimistic that things are moving in the right direction" and that a June rate cut was an option - although no fait accompli.

But despite data on Wednesday showing headline inflation fell back to the BoE's 2% target for the first time in nearly three years in May - reaching its goal quicker than in the United States or euro zone - the medium-term picture is now less reassuring.

Services price inflation has fallen less than the BoE expected at the time of the last meeting - only declining to 5.7% rather than 5.3% - and private-sector wage growth is almost twice the rate the BoE judges as compatible with 2% inflation.

Last month the central bank forecast inflation would rise to around 2.6% by the end of the year, as the effect of recent cuts to regulated household energy bills faded.

None of the 65 economists in a Reuters poll last week said they expected the BoE to follow the lead of the European Central Bank and cut rates this month, with the next statement on Aug. 1 looking by far the most probable start date for an easing cycle.

Instead, the expectation is for a repeat of May's 7-2 vote split, when Deputy Governor Dave Ramsden and external Monetary Policy Committee member Swati Dhingra voted for a quarter-point cut.

"We think the Bank of England is left waiting for more reassuring data ... either in the shape of a more decisive moderation in services CPI or with all other broader signals ... pointing in a softer direction," Victoria Clarke, chief UK economist at Santander (BME:SAN), said.

While unemployment is at a two-and-a-half year high of 4.4%, economic growth this year has been reasonable by Britain's recent weak standards.

Financial markets are doubtful about an August rate cut. On Wednesday they priced in only a 30% chance, with a first move more likely in September and a risk of a delay until November, similar to expectations for the U.S. Federal Reserve.

Either way, any cut is likely to be too late for Sunak, whose Conservative Party is around 20 points behind the opposition Labour Party in the pre-election polls.

While Sunak has sought credit for the fall in inflation since he took office in October 2022, when it was at a 41-year high of 11.1%, Labour blames high mortgage rates on economic mismanagement by the Conservatives' previous leader, Liz Truss.

Since the start of the election campaign the BoE has been in a self-imposed period of silence, cancelling public events.

Before that, BoE Chief Economist Huw Pill had described an excessive focus on a June rate cut as "ill advised" but both he and Deputy Governor Ben Broadbent - who steps down at the end of this month - said a rate cut over the summer was possible.

The BoE began to raise rates in December 2021, earlier than other major central banks, and they reached their current peak in August 2023.

By Ankur Banerjee

SINGAPORE (Reuters) -Asian stocks took a breather on Thursday, hovering near their highest in two years as traders waited for more U.S. policy clues, while sterling was steady before a Bank of England meeting where rates are expected to remain unchanged.

Apart from the BoE, investors will also watch for central bank decisions from Switzerland and Norway on Thursday to set the tone for a global rates outlook.

MSCI's broadest index of Asia-Pacific shares outside Japan was little changed at 572.42, just below the two-year high of 573.38 it touched on Wednesday boosted by tech stocks. The index is on course for a 4% rise in June.

European stock markets were due for a higher open, with Eurostoxx 50 futures and FTSE futures0.2% higher ahead of the slew of central bank decisions.

The pound was steady at $1.27125 in cautious trading but is down 0.2% in June. [FRX/]

Data on Wednesday showed British inflation returned to its 2% target for the first time in nearly three years in May, but strong underlying price pressures all but rule out an interest rate cut ahead of election next month.

Most economists in a Reuters poll last week thought the central bank would start to cut rates in August, but markets see only a 30% chance of an August rate cut and think a first move is more likely in September or November.

Markets have priced in 43 basis points of easing from BoE this year.

The Swiss National Bank on the other hand is widely expected to cut its key policy rate by 25 basis points for a second straight meeting. Norway's central bank is likely to keep its key policy interest rate unchanged.

In Asia, Japan's Nikkeiwas 0.10% higher, while stocks in China and Hong Kong fell, weighed down by lacklustre property shares, as Beijing left its key benchmark lending rates unchanged despite recent data showing the economy remains wobbly.

The onshore yuanweakened past 7.26 per dollar for the first time since November.

The dollar index, which measures the U.S. unit against six rivals, was little changed at 105.27, while the euro was steady at $1.0746.

A surge in tech stocks on Tuesday lifted AI chipmaker Nvidia (NASDAQ:NVDA) above Microsoft (NASDAQ:MSFT) as the world's most valuable company, leading to a global rally in tech shares.

U.S. markets were closed on Wednesday, with tech heavy Nasdaq futures up 0.5% on Thursday.

The frenzy over artificial intelligence has resulted in technology stocks roaring through the year, with Nvidia leading the pack along with select few behemoths as U.S. stocks clock record highs and also boost Asian counterparts.

"Nvidia remains the most important stock in the world," Chris Weston, head of research at Pepperstone, said in a note.

Weston though cautioned that index market breadth has been poor, with participation underwhelming, suggesting the rally has been built on a shaky foundation.

"The fact remains the market is now all in on the rally in AI-related names and big tech and given the lack of clear immediate risk the path of least resistance is for higher equity index levels."

On a macro level, investors are looking for fresh cues as to when the Federal Reserve would start its policy easing cycle after the central bank last week projected just one rate cut in the year and policymakers this week have also been cautious.

The Japanese yen languished at 158.17 per dollar as the wide difference in the interest rates between Japan and the United States weigh on the currency. The yen is down over 10% against the dollar this year. "I think the best-case scenario is September Fed interest rate cut that narrows the yield differential between dollar and yen", according to Stefan Hofer, chief investment strategist, LGT Bank Asia.

In commodities, oil prices were mixed, with Brentsteady at $85.12 per barrel, while U.S. West Texas Intermediate crude for June was 0.23% lower at $81.38 per barrel. [O/R]

By Vivek Mishra and Hari Kishan

BENGALURU (Reuters) - The Indian economy is likely to remain the fastest-growing major one in coming years, but a majority of independent economists and policy experts polled by Reuters are not confident it will make any difference in narrowing stark economic inequality.

Despite over 8% economic growth last fiscal year and a roaring stock market in Mumbai that is easily one of the world's most expensive, New Delhi still distributes free food grains to more than 800 million of its 1.4 billion people.

Prime Minister Narendra Modi, sworn in for a third term with the support of regional parties after a shock election where his Bharatiya Janata Party lost its sizeable majority in parliament, has retained most ministers from his second one.

Yet rising economic inequality - around its highest in decades - and high youth unemployment were widely reported as reasons for the electoral drubbing after securing sweeping victories in 2014 and 2019 on development and economic reform platforms.

A nearly 85% majority of development economists and policy experts, 43 out of 51, in a May 15-June 18 Reuters poll, said they were not confident economic inequality would significantly reduce over the next five years, including 21 who said they had no confidence at all.

Only six said they were confident and two said very confident. These are separate from private economists who regularly forecast economic data and interest rates.

"Acknowledging that it is a problem will be a good first step ... Currently, reduction of economic inequality is not a policy objective of decision-makers," said Reetika Khera, a development economist at the Indian Institute of Technology in New Delhi.

"Inequality is not something that will go away on its own ... it needs proactive government interventions."

Even for a developing economy, income inequality in India is too extreme, according to a March report from the World Inequality Lab.

However, not everyone agrees.

"I don't think the inequality metrics are meaningful for India. The key issue is not inequality but how the bottom of the pyramid fares economically. This is not a function of how the top does," said Nagpurnanand Prabhala, finance professor at Johns Hopkins University.

India has the second-highest number of billionaires in Asia but has tens of millions who depend on the government's 100 days minimum guaranteed wage employment programme, digging wells, building roads, and filling potholes for about $4 a day.

"The present government has created an economic system that shrunk the middle-income group considerably. The poor are on public dole ... the rich are on public cross-subsidy using crony capitalism," said Saibal Kar, professor of industrial economics at the Center for Studies in Social Sciences.

"The economic and social freedoms are low owing to repressive public policies. This has to change. Unless it changes, inequality will rise further."

SKILLS NEEDED, NOT JUST JOBS

Asked to rate the quality of India's economic growth over the past 10 years, a near-80% majority of economists surveyed, 42 of 53, said it was not inclusive, with 17 saying not at all. Eight said fairly inclusive and three said inclusive.

And yet 60%, 32 of 53, said India would maintain or exceed the current solid GDP growth rate over the next five years. The rest said it will fall short.

While the Modi government has set a target of turning India into a developed economy by 2047, several experts in the survey said the government should first improve workers' skills, create more jobs and focus on inclusive growth.

In December, the government's chief economic adviser said the subsidised grain distribution, as well as spending on education and health had helped to distribute income more equally.

During the election campaign, a government document showed Modi wanted to focus on 70 areas of improvement including workforce skills and vocational training.

Over 90% of experts polled, 49 of 54, who answered a separate question said unemployment would be the biggest economic challenge for the government over the next five years.

The unemployment rate was at 7.0% in May, according to the Center for Monitoring Indian Economy, a think-tank, up from around 6% before the pandemic.

"Most countries that have experienced more rapid growth did it on the basis of a farm-to-factory structural transformation," said Parikshit Ghosh, professor at the Delhi School of Economics, adding manufacturing as a share of GDP has hovered around 15% for about 30 years.

"Of the multiple factors behind this, perhaps the most important is the failure to invest seriously in education."

India spends around 3% of GDP on public education, half the 6% the government's National Policy on Education recommends.

Other experts pointed out the ongoing challenges presented by a society still mired in caste and class divisions.

"We don't even talk about the cleavage that has been ripping our society apart for thousands of years now in our living rooms - we still live in a world where Dalit families are cleaning toilets in urban and rural areas, generation after generation," said Aditi Bhowmick, a public policy expert, who previously worked as India Director at Development Data Lab.

(See a separate poll story on unemployment in India)

(Polling by Vivek Mishra, Pranoy Krishna, Devayani Sathyan, Purujit Arun, Anant Chandak, Veronica Khongwir, Milounee Purohit; Editing by Ross Finley and Alison Williams)

BERLIN (Reuters) - German federal and regional tax revenues rose 2.6% to 61.2 billion euros ($65.77 billion) in May from the previous year, helped by a one-off base effect that boosted income on the federal level, the finance ministry said on Thursday.

Growth in wage tax and in flat-rate withholding tax on interest and capital gains contrasted with lower revenues from sales tax and corporation tax compared with a year ago.

In the first five months of the year, tax revenues in Europe's biggest economy rose 2.8% to 322.3 billion euros, said the ministry in its monthly report.

The most recent tax estimates put this year's overall tax revenues 4.1% higher, at almost 864 billion euros.

The government is in the midst of discussions about the 2025 budget with the three parties, including Chancellor Olaf Scholz's Social Democrats (SPD), the Greens and Finance Minister Christian Lindner's Free Democrats (FDP) at odds in many areas.

Looking at the wider economy, the report said that although some indicators had moved sideways in May, the leading ones were increasingly pointing to a moderate recovery for the rest of the year.

($1 = 0.9305 euros)

SHANGHAI/BEIJING/BERLIN (Reuters) -Chinese automakers have urged Beijing to hike tariffs on imported European gasoline-powered cars in retaliation for Brussels' curbs on exports of Chinese-made EVs, the state-backed Global Times newspaper said on Wednesday.

In a closed-door meeting on Tuesday also attended by European car companies, China's auto industry "called on the government to adopt firm countermeasures (and) suggested that positive consideration be given to raising the provisional tariff on gasoline cars with large-displacement engines," according to the report.

The meeting, organised by China's Ministry of Commerce, was held in Beijing and attended by SAIC, BYD (SZ:002594) , BMW (ETR:BMWG), Volkswagen (ETR:VOWG_p) and its Porsche division, two people with direct knowledge of the matter said.

The main aim of the meeting was to put pressure on Europe and lobby against the tariffs Brussels announced last week to shield its car industry from Chinese competition, they added.

The meeting was also attended by Mercedes-Benz (OTC:MBGAF), Stellantis (NYSE:STLA) and Renault (EPA:RENA), two separate sources familiar with the matter told Reuters.

The ministry did not immediately respond to a faxed request for comment.

BMW, Volkswagen, Stellantis and Renault declined to comment.

A spokesperson for Mercedes-Benz said the group supports a liberal trade regime based on WTO rules.

"Against the background of globalisation and the economic interdependencies of our time, the motto for securing prosperity and peace is: dialogue and constructive cooperation. We are counting on the efforts of politicians to continue this dialogue."

Industry insiders say both Europe and China have reasons for wanting to strike a deal in the months ahead to de-escalate tensions and avoid the addition of billions of dollars in new costs for Chinese EV makers, as the EU process allows for review.

'TARIFF WAR'

The announcement to impose tariffs could trigger talks between Brussels and Beijing that are aimed at avoiding them, said Stefan Hartung, CEO of Bosch, the world's largest automotive supplier.

The European Commission said on Wednesday it was looking into the situation "with a view to discussing if a mutually agreeable solution can be found."

EU trade policy is turning increasingly protective amid concerns that China's production-focused, debt-driven development model could see the 27-member bloc flooded with cheap goods, including electric vehicles, as Chinese firms look to boost sales overseas due to weak demand at home.

The European Commission's June 12 announcement that it would impose anti-subsidy duties of up to 38.1% on imported Chinese EVs from July followed a move by the United States to hike tariffs on Chinese cars in May, and opens a new front in the West's trade war with Beijing.

"Personally, I think it is unfair to start a tariff war solely on the basis of (China's) capacity utilisation rate and insufficient demand for China's new energy vehicles," said Zhang Yansheng, chief research fellow, China Center for International Economic Exchanges.

"We can see that China has adopted a package of policies to solve the 'overcapacity' problem, so this year, next year, and into the next four years, China's capacity utilisation will continue to rise," he added.

The Global Times first reported late last month that a Chinese government-affiliated auto research centre was suggesting China raise its import tariffs on imported gasoline sedans and sport utility vehicles with engines larger than 2.5 litres to 25%, from the current rate of 15%.

Chinese authorities have previously hinted at possible retaliatory measures through state media commentaries and interviews with industry figures.

HOSTILE HINTS

The same newspaper last month also hinted that Chinese companies planned to ask authorities to open an anti-dumping investigation into European pork products, which China's commerce ministry on Monday announced it would undertake.

It has also urged Beijing to look into EU dairy imports.

Exports of passenger vehicles with engines bigger than 2.5 liters from Europe to China totalled 196,000 units in 2023, up 11% year-on-year, according to data from China Passenger Car Association. In the first four months of 2024, exports of such vehicles from Europe to China stood at 44,000 units, down 12% from the same period a year ago.

EU car exports to China were worth 19.4 billion euros ($20.8 billion) in 2023, while the bloc bought 9.7 billion euros of electric vehicles from China, according to EU statistics agency figures.

China accounts for about 30% of German carmakers' sales, and Germany is by far the largest exporter of vehicles with engines of 2.5 litres or above, having shipped $1.2 billion worth to China since the beginning of this year, Chinese customs data shows.

Mercedes Benz (ETR:MBGn)'s big-sized GLE Class SUV, S Class sedans and Porsche's Cayenne are the three most popular imported cars from Europe in China, the three of which accounted for more than one-fifth of the total 155,841 imported cars of European brands in the first five months, according to data tracked by China Merchants Bank International.

Slovakia is China's fourth-largest and the EU's second-biggest provider of cars with large engines. This year it has exported $803 million worth of sport utility vehicles.

The United States, the United Kingdom and Japan all also export large numbers of cars with engines bigger than 2.5 liters, and would presumably stand to benefit most from the proposed tariff increase.

($1 = 0.9314 euros)

FRANKFURT (Reuters) - Europe must foster greater political stability, cut red tape and reduce energy price volatility to reverse a declining trend in foreign investment, consulting firm EY said on Wednesday based on a survey of business leaders.

Europe has struggled economically for years on surging prices and the fallout from Russia's war in Ukraine, fuelling populist sentiment that has lifted the far right in European Parliamentary elections and prompted French President Emmanuel Macron to call a snap national election.

Stagnant growth, big swings in energy costs and political uncertainty have all damaged the bloc's competitiveness, particularly when compared to a booming U.S., leaving the world's two biggest economic blocs on a diverging course.

The more than 500 executives surveyed rank political instability, including upcoming elections, populism and polarisation as the second-biggest risk, trumped only by an increased regulatory burden.

French opinion polls project that Marine Le Pen's far-right National Rally could for the first time top the June 30 and July 7 vote, even if it was unlikely to win enough seats to govern on its own.

This has rattled financial markets in recent days pushing up French borrowing costs on fears that a populist government would strain France's already limited financial resources.

"As geopolitical and global trade tensions intensify, European policymakers need to be equipped to respond rapidly and decisively," EY said. "Individual Member States must be aligned on key areas, including which industries need to be protected and where the threats lie."

Energy price volatility could be reduced by investing in better connected infrastructure and fostering a green transition given that Europe was overly reliant on Russia for decades.

But bureaucracy is the overall biggest threat, the executives said.

"European policymakers can alleviate these concerns by harmonizing regulation, reconsidering the pace of introducing new regulation and repealing outdated laws whenever possible," EY said.

By David Milliken and Suban Abdulla

LONDON (Reuters) - British inflation returned to its 2% target in May for the first time in nearly three years, official figures showed on Wednesday, as the economic effect of the COVID-19 pandemic and Russia's full-scale invasion of Ukraine faded.

The fall in inflation will be welcomed by both Prime Minister Rishi Sunak and the Bank of England - but likely has come too late either to turn around Sunak's fortunes at next month's election or to prompt a BoE rate cut on Thursday.

The drop in annual consumer price inflation from April's 2.3% reading was in line with economists' median expectation in a Reuters poll and marks a sharp decline from the 41-year high of 11.1% reached in October 2022.

The fall has been sharper than in the euro zone or the United States, where consumer price inflation in May was 2.6% and 3.3% respectively, belying concerns a year ago that British inflation was proving unusually sticky.

Even so, consumer prices are up around 20% over the past three years, squeezing living standards and contributing to the unpopularity of Sunak's Conservatives, who are around 20 points behind the opposition Labour Party in opinion polls.

The BoE has said a return of inflation to its target is not enough on its own for it to start cutting interest rates.

While most economists polled by Reuters think it will start to cut interest rates from its 16-year high of 5.25% in August, financial markets think a first move is more likely in September or October - and see just a 10% chance of a cut this week.

The most recent fall in inflation was driven by a cut in regulated household energy bills in April - the effect of which will fade later in the year, when the BoE forecasts inflation will rise again.