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By David Morgan WASHINGTON (Reuters) -The U.S. government shutdown entered its sixth day on Monday, with President Donald Trump's Republicans and congressional Democrats still at an impasse and the White House threatening to ramp up pressure by ordering mass layoffs of federal workers. The Republican-led Senate was slated to vote again on dueling measures to fund federal agencies, including a Republican stopgap bill approved by the House of Representatives that would fund operations through November 21, and a Democratic alternative. Neither was expected to receive the 60 votes needed to advance. Asked on Sunday night when the government would begin laying off federal workers, Trump said: "It's taking place right now." He blamed Democrats for the impasse but did not elaborate on the layoff plans. The White House has said thousands could be fired if the shutdown persists. Trump's budget director, Russell Vought, has already frozen at least $28 billion in infrastructure funds for New York, California and Illinois — all home to sizable Democratic populations and critics of the president. Trump and his Republican allies have also taunted Democrats on social media with deepfake videos drawing on Mexican stereotypes with images that Vice President JD Vance described as a joke.   But Democratic leaders showed no sign of knuckling under to the White House's hardball tactics, which have caused unease among some centrist Republicans who fear the approach could make the impasse harder to overcome. "What we've seen is negotiation through deepfake videos, the House canceling votes and, of course, President Trump spending yesterday on the golf course. That's not responsible behavior," House Democratic leader Hakeem Jeffries told NBC's "Meet the Press." The partial shutdown, the 15th since 1981, was tied for the fourth-longest in U.S. history on Monday, matching the six-day length of a 1995 shutdown that began after then-President Bill Clinton vetoed a Republican spending bill. The longest shutdown lasted 35 days in 2018-2019, during Trump's first term in office. HEALTH INSURANCE IS A DEMOCRATIC PRIORITY Senate Democrats, who are demanding a permanent extension of federal subsidies to help people afford health insurance under the Affordable Care Act, have voted down the House-approved funding bill, known as a continuing resolution or CR, four times. With a 53-47 seat majority and one Republican opposed to the CR, Republican leaders need at least eight Democrats to support their funding legislation. But only two Democrats and an independent who caucuses with them have crossed the aisle so far.  "All we have to do is get five more Democrats to vote 'yes,' the government opens up, and then we can start talking about all these other things they want to have conversations about," Senate Majority Leader John Thune said on the Fox News program "Sunday Morning Futures."  But efforts to strike a deal have gone nowhere so far.  "In those conversations, the Republicans offered nothing," said Senate Democratic leader Chuck Schumer, who said that any breakthrough would depend on a deal among him, Trump, Thune, Jeffries and House Speaker Mike Johnson.    Some Democrats want a deal on ACA healthcare subsidies in place before open enrollment for next year begins on November 1. "We have to get this done by November 1," Democratic Senator Ruben Gallego told CNN, warning that missing that date would mean higher healthcare costs for enrollees and possibly no insurance coverage at all.  Democrats also want protection against White House actions to withhold or cancel funding allocated by Congress. "If we agree to a CR and nothing more, they're telling us: 'We don't plan to abide by it,'" Democratic Senator Adam Schiff told NBC. "We need some written assurance in the law. I won't take a promise that they're not going to renege on any deal we make." The standoff has frozen about $1.7 trillion in funds for agency operations, which amounts to roughly one-quarter of annual federal spending. Much of the remainder goes to health and retirement programs and interest payments on the growing $37.5 trillion debt. (Reporting by David Morgan; Editing by Cynthia Osterman)

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By Kevin Buckland and Lucy Raitano TOKYO & LONDON (Reuters) -European stocks, bonds and the euro fell on Monday, dragged down by tumbling French assets after the surprise collapse of the government, while political stories in Japan and the U.S. lifted Japanese equities and gold. New French prime minister Sebastien Lecornu resigned on Monday, barely 14 hours after appointing his cabinet. At 0850 GMT, the pan-European benchmark STOXX 600 was down 0.4%, while France's CAC 40 sunk 2%. Shares in French banks were hard hit, with BNP Paribas, Societe Generale and Credit Agricole falling between 4.7-6%. "The bigger concern for the market is really what comes next, because if Macron decides to appoint another prime minister that’s going to be the sixth PM in two years," said Michael Brown, senior research strategist at Pepperstone. Any newcomer would face the same challenging parliamentary arithmetic and problems when trying to pass the budget, said Brown. POLITICAL INSTABILITY IN FRANCE French political instability has ramped up since Emmanuel Macron's re-election in 2022, with no party or grouping holding a parliamentary majority. The euro slipped 0.7% to $1.1667, and sterling was off 0.35% to $1.3423. At 0856 GMT, however, U.S. S&P 500 futures still pointed to gains of about 0.3%, with the cash index having risen to a record high on Friday. In Japan, stocks surged more than 5% to an all-time high while the yen skidded on Monday after fiscal and monetary dove Sanae Takaichi was elected as leader of the ruling party, putting her on course to become the nation's first female prime minister. Meanwhile, gold climbed to a record peak close to $4,000, while leading cryptocurrency bitcoin rallied to a lifetime high on Sunday, with investors increasingly turning to alternative assets as a store of value as the U.S. government shutdown frayed nerves. Japan's Nikkei soared above 48,000 for the first time ever after Takaichi beat the more moderate Shinjiro Koizumi in the Liberal Democratic Party's leadership vote on Saturday, stoking expectations for fiscal stimulus. The yen slumped as much as 2% to beyond 150 per U.S. dollar for the first time since August 1, and slid as much as 1.8% to an all-time low versus the euro at 176.25. Worries about Japan's finances sent the yield on 30-year government bonds to an all-time high. SHORT-DATED JAPANESE GOVERNMENT BOND YIELDS SLIDE At the same time, short-dated Japanese government bond yields slid to a two-week low as traders pared bets on when the Bank of Japan will resume raising interest rates. Market-implied odds of a BOJ hike by year-end fell to 41% from 68% on Friday. A year ago, Takaichi criticised the BOJ's decision to raise rates as "stupid", although her recent rhetoric has been more restrained, saying only that central bank policy should be aligned with the government. "We believe concerns among some investors that the next administration might pursue extreme fiscal expansion or exert political pressure on the BOJ are overblown," Morgan Stanley MUFG Securities economists wrote in a research report, noting that Takaichi's stance appears closely aligned with BOJ Governor Kazuo Ueda's cautious approach to policy normalisation. Most other major share markets around the region were closed for holidays, including mainland China, South Korea and Taiwan. Gold last changed hands around $3,942 after advancing as much as 1.5% earlier to a record just above $3,944. Bitcoin traded around $123,988 following its jump to $125,653.32 on Sunday. Oil prices rose after OPEC+ announced on Sunday it would increase production by 137,000 barrels per day (bpd) from November, the same modest monthly increase as in October, amid persistent concerns over a looming supply glut. In the run-up to the meeting, sources said Russia was advocating an output increase of 137,000 bpd to avoid pressuring prices, but Saudi Arabia would have preferred double, triple or even quadruple that figure to regain market share more quickly. Brent crude futures gained 1.6% to $65.54 a barrel. (Reporting by Kevin Buckland; Editing by Sam Holmes and Ed Osmond)

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By Rocky Swift and Junko Fujita TOKYO (Reuters) -Japanese shares surged to a record high on Monday, while the yen and long-term bonds tumbled as Sanae Takaichi was all but confirmed to become the country's next premier, stoking bets on a revival in big spending and loose monetary policy. The Nikkei 225 Index soared 4.75% to close at 47,944.76. It traded as high as 48,150.04, breaking through three psychologically key thousand-point barriers for the first time ever. The broader Topix gauge jumped 3.1%. The 30-year Japanese government bond (JGB) plunged, sending the yield to a record high. Meanwhile, the yield on the two-year note slid, reflecting expectations of later rate hikes by the Bank of Japan. The yen tumbled nearly 2% against the dollar and traded at an all-time low versus the euro. Takaichi was considered to have the most expansionist fiscal and monetary agenda among five candidates in the Liberal Democratic Party race to replace hawkish Prime Minister Shigeru Ishiba. "The Nikkei was on course to reach as high as 48,000 by year-end, but because Takaichi was chosen as the LDP leader, it shot up toward that level already," said Hitoshi Asaoka, the chief strategist at Asset Management One. "The market welcomes her spending policy, but whether she can achieve that goal is not certain, as the LDP is still a minority party. The Nikkei may retreat once before year-end." NEW POLICY DYNAMICS Takaichi began eyeing cabinet posts on Monday, with media reporting she planned to install former defence minister Minoru Kihara as chief cabinet secretary and bring back ex-foreign minister Toshimitsu Motegi as the country's top diplomat. Her pick for finance minister, which will be closely watched by investors, was unclear. In the lead-up to the LDP race, a "Takaichi trade" emerged – long on stocks and bearish on Japanese government bonds, particularly longer maturities – positioning for a win by the veteran lawmaker who is a devotee of the "Abenomics" stimulus policies of the late Shinzo Abe. Yields on two-, five-, and 10-year JGBs had all reached levels not seen since the financial crisis in 2008 in the run up to the LDP election on bets the BOJ could raise rates as early as this month's meeting. Long-term JGB yields had fallen, flattening the so-called yield curve. In a run-off vote on Saturday, Takaichi beat farm minister Shinjiro Koizumi, who was seen as more laissez-faire on monetary policy. "The market had bet that Koizumi would win, and they were positioned for curve flattening," said Miki Den, the senior Japan rate strategist at SMBC Nikko Securities. "But because the bet on Koizumi was so strong, it will take time to unwind the flattening positions." The yen sank 1.8% to 150.13 yen versus the dollar and weakened to 176.22 against the euro, an all-time low. The yen swaps market on Monday indicated a 41% likelihood of a rate hike by December, down from 68% on Friday. As a candidate, Takaichi proposed boosting investment in strategic business sectors, including artificial intelligence, semiconductors, nuclear fusion and defence. Shares in those sectors were among the biggest gainers in Tokyo trading. Mitsubishi Heavy Industries, a major military contractor, jumped 11%, and Japan Steel Works, a supplier of nuclear energy machinery, soared more than 15%.  Yields on long-term debt face upward pressure on expectations Takaichi will push for more deficit spending, adding to concerns about Japan's creditworthiness. The yield on the 40-year JGB, the longest tenor, soared 12.5 basis points to 3.505%. The 30-year yield briefly reached 3.29%, an all-time high. An auction of 30-year JGBs on Tuesday will be closely watched for signs of concerns about Japan's finances and debt management under Takaichi. Despite a modest issuance amount, the debt sale "is expected to be weak because investors —wary of higher term-premia after Ms. Takaichi's ascent and possible fiscal stimulus— are reluctant to add long-duration risk," Shoki Omori, the chief desk strategist at Mizuho Securities, wrote in a note. After her LDP victory, Takaichi told a press conference the government and central bank must work closely to ensure Japan's economy achieves demand-driven inflation backed by rising wages and corporate profits. (Reporting by Junko Fujita and Rocky Swift; Additional reporting by John Geddie and Kevin Buckland; Editing by Sam Holmes)

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ROME/PARIS (Reuters) -A framework agreement between France's Airbus and Thales and Italy's Leonardo to create a major new European satellite manufacturer will still require some weeks, a source told Reuters on Monday. The person familiar with the matter said key details remain under discussion and that the boards of the three companies are working to reach a unified position. Talks between the aerospace companies encountered a setback after existing partners Thales and Leonardo asked for more time, French daily La Tribune reported. Leonardo declined to comment. Thales did not immediately reply to requests for comment. A spokesperson for Airbus said: "Talks with our partners continue and are confidential in nature; it is too early to comment further". Airbus and the other two companies, which own Airbus' main competitor in satellite production, Thales Alenia Space, have been in talks for months to create a new European venture to compete more effectively with rivals from China and the U.S., including Elon Musk's SpaceX. The deal aims at combining Thales Alenia Space and Telespazio – two joint ventures between Leonardo and Thales – Airbus Space Systems, Airbus Intelligence and the space activities owned by Leonardo. La Tribune reported that talks accelerated last week but hit a last-minute obstacle over how workshare would be divided among the three companies. (Reporting by Giuseppe Fonte in Rome, Tim Hepher in Paris and Giulia Segreti in Rome; Editing by Kirsten Donovan and Louise Heavens)

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