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By David Milliken and Phoebe Seers LONDON, Oct 8 (Reuters) – Global financial markets could tumble if investors' mood sours on the prospects for artificial intelligence or the independence of the U.S. Federal Reserve, the Bank of England warned on Wednesday. The BoE said share price valuations on U.S. stock markets were similar to those seen near the peak of the dotcom bubble on some measures and noted that U.S. government bonds were vulnerable to any weakening in the Fed's credibility. "The risk of a sharp market correction has increased," the BoE's Financial Policy Committee said in a quarterly update, in its sharpest warning to date of the dangers of an AI-triggered market slump, adding that the risk of spillovers to Britain's financial system from such a shock was "material". The FPC is chaired by BoE Governor Andrew Bailey and focuses on financial stability risks. Bailey told Britain's parliament last month about his concerns over Fed independence. President Donald Trump has repeatedly urged the U.S. central bank to slash interest rates and has sought to remove one of its policymakers. "A sudden or significant change in perceptions of Federal Reserve credibility could result in a sharp repricing of U.S. dollar assets, including in U.S. sovereign debt markets, with the potential for increased volatility, risk premia and global spillovers," the BoE said. British government borrowing costs are closely correlated with U.S. Treasury yields, and a fall in U.S. bond prices would probably push up the cost of servicing new British public debt. Thirty-year gilt yields hit their highest since 1998 last month and yields for shorter maturities – where most British borrowing is concentrated – have risen too. The BoE said this increase reflected concerns about the difficulty reining in high borrowing across advanced economies, amplified by political uncertainty in France and Japan. On AI, the BoE said that 30% of the U.S. S&P 500's valuation was made up by the five largest companies, the greatest concentration in 50 years. Share valuations based on past earnings were the most stretched since the dotcom bubble 25 years ago, though looked less so based on investors' expectations for future profits. "This, when combined with increasing concentration within market indices, leaves markets particularly exposed should expectations around the impact of AI become less optimistic," the BoE said. The central bank saw little change in domestic financial stability risks, as households and businesses continued to cope with rising inflation – forecast to have hit 4% in September – and increased borrowing costs compared with past years. Risk managers surveyed by the BoE were more confident in the stability of the British financial system than six months ago, and viewed the main dangers as coming from cyberattacks and geopolitical factors. The BoE left unchanged its main tools for regulating banks. It kept the countercyclical capital buffer (CCyB) steady at 2% and after an annual review left the minimum leverage ratio at 3.25%. (Reporting by David Milliken and Phoebe Seers) ((david.milliken@thomsonreuters.com; +44 20 7513 4034)) Keywords: BRITAIN BOE/

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By Sneha S K and Siddhi Mahatole (Reuters) -Peter Marks, the former top vaccine regulator who was ousted from the U.S. Food and Drug Administration earlier this year, has joined Eli Lilly, the drugmaker told Reuters on Tuesday. Marks will oversee molecule discovery and infectious diseases at Lilly, starting this month. "Peter's expertise strengthens our abilities across multiple areas, both in our existing portfolio and in our work in emerging areas," the company said. Lilly added it continually evaluates breakthrough science which could benefit patients. Marks, who played a key role in U.S. President Donald Trump's first term in developing COVID-19 vaccines, resigned in March after being forced out by U.S. Health Secretary Robert F. Kennedy Jr. Shares of U.S. drugmakers fell, when reports on Marks' ouster from the FDA first came out in late March. As director of the FDA's Center for Biologics Evaluation and Research, Marks had publicly supported programs that expedited the development of rare disease treatments and gene therapies during his tenure. "We believe that Dr. Marks can bring significant value to Lilly given his tremendous experience and background," said Leerink Partners analyst David Risinger. Marks' move follows similar transitions by other senior FDA officials such as former head of the FDA's drug evaluation unit, Patrizia Cavazzoni, who joined Pfizer in February as its chief medical officer. Former U.S. FDA Commissioner Scott Gottlieb is also a member of Pfizer's board. (Reporting by Siddhi Mahatole and Sneha S K in Bengaluru; Editing by Shailesh Kuber)

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By Foo Yun Chee and Inti Landauro BRUSSELS (Reuters) -The European Commission on Wednesday announced a 1-billion-euro ($1.1 billion) plan to ramp up the use of artificial intelligence in key industries amid a push to cut the European Union's reliance on U.S. and Chinese technologies. The EU executive's Apply AI strategy followed an action plan unveiled in April which seeks to lighten the regulatory burden and costs for startups struggling to comply with landmark AI rules which entered into force in August last year. The move also underscores Europe's goal of achieving strategic autonomy in key sectors amid trade tensions with the United States and China and the dominance of U.S. Big Tech. "I want the future of AI to be made in Europe," Commission President Ursula von der Leyen said in a statement. "AI adoption needs to be widespread, and with these strategies, we will help speed up the process. We will drive this 'AI first' mindset across all our key sectors, from robotics to healthcare, energy and automotive," she said. The Commission singled out healthcare, pharmaceuticals, energy, mobility, manufacturing, construction, agri-food, defence, communications and culture as critical sectors that should use more AI. Sector-specific measures under the Apply AI strategy include setting up a network of AI-powered advanced screening centres in healthcare and developing agentic AI in manufacturing, climate and pharmaceutical industries. The 1 billion euros will come from EU research projects such as Horizon Europe and the Digital Europe programme, which may encourage EU countries and the private sector to provide matching funds, the Commission said. ($1 = 0.8569 euros) (Reporting by Foo Yun Chee, Editing by Jan Strupczewski, Charlotte Van Campenhout)

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(Reuters) -Hyundai Motor is recalling 135,386 Santa Fe vehicles in the U.S. due to fire risk from an improperly installed starter motor increasing the risk of an electrical short during a crash, the U.S. National Highway Traffic Safety Administration said on Wednesday. (Reporting by Anusha Shah in Bengaluru; Editing by Mrigank Dhaniwala)

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By Stefano Rebaudo and Gregor Stuart Hunter (Reuters) -The euro and the yen were headed for a third straight daily loss against the U.S. dollar, pressured by political turmoil in France and expectations of increased fiscal spending in Japan. Expansive economic policies in Japan and France’s struggle to rein in its fiscal deficit are expected to increase the risk premium investors demand to hold government bonds, weighing on both currencies. Stocks fell and the dollar firmed on Wednesday while a prolonged U.S. government shutdown catapulted gold spot prices beyond $4,000 per ounce for the first time.  SAFE-HAVEN DEMAND FOR DOLLAR The greenback also drew some support from safe-haven demand, with betting site Polymarket putting the odds of a U.S. government shutdown ending within the next week at just 26%. The dollar index, which measures the greenback's strength against a basket of six currencies, rose 0.30% to as much as 98.91, its highest since August 5, as U.S. President Donald Trump threatened to carry out mass firings of federal workers during the standoff. Investors are also questioning whether the Federal Reserve is prepared to cut rates aggressively. Markets are pricing in around 110 basis points of easing by the end of 2026 — roughly unchanged from a week ago — and see a 92% chance of a 25 bp cut later this month. Kansas City Federal Reserve Bank President Jeff Schmid on Monday signalled he is disinclined to cut interest rates further. "With stock indexes near all-time highs, gold prices rallying higher, and corporate bond credit spreads very tight, the case for monetary policy being overly restrictive still looks rather flimsy," said Thierry Wizman, global forex and rates strategist at Macquarie Group. The euro hit a fresh 1-1/2-month low at $1.1607, and was last down 0.38% at $1.1613. "While we see risk of the greenback facing potential headwinds next year if Fed independence is questioned, we currently see scope for short-covering in favour of the U.S. dollar based on the high amount of Fed easing that is already in the price, and given the backdrop of geopolitical tensions," said Jane Foley, senior forex strategist at Rabobank. UNCERTAINTY IN FRANCE, CHANGE IN JAPAN Analysts warned that a French election could weigh on government bonds and the euro, as a stronger showing by populist parties may cloud visibility on structural reforms and deficit consolidation.  French Prime Minister Sebastien Lecornu was due to make a speech at 0730 GMT on Wednesday. The dollar hit 152.46 versus the yen, its highest level since mid-February and was last up 0.35% at 152.40. Takaichi, who surprised markets by winning the ruling party's leadership election over the weekend to become Japan's next prime minister, has left investors wondering whether the protégé of the late Shinzo Abe could usher in similar stimulus policies that may boost stocks but leave the yen fragile. The kiwi dollar tumbled as much as 1% to lows of $0.5739 after the Reserve Bank of New Zealand surprised the market with a larger-than-expected 50-basis-point interest rate cut and flagged more easing ahead following the recent deterioration in economic data. "There's a good chance it can fall below 57 cents," said Joseph Capurso, head of FX, international and geoeconomics research at Commonwealth Bank of Australia. The offshore yuan fetched 7.1506 yuan per dollar, 0.1% weaker compared with the previous session. (Reporting by Stefano Rebaudo and Gregor Stuart Hunter; Editing by Shri Navaratnam, Christian Schmollinger, Aidan Lewis)

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MILAN (Reuters) -Stellantis CEO Antonio Filosa has reshuffled the automaker's top ranks, naming new heads for its European operations and global manufacturing, just days after appointing a new CFO. Emanuele Cappellano, the head of the automaker's South American operations, will take over as head of 'Enlarged Europe and European Brands', replacing Jean-Philippe Imparato, who will now focus on leading the group's ailing luxury brand Maserati, the company announced on Wednesday. Cappellano will keep his role of head of the group's commercial vehicle unit Stellantis Pro One, while Herlander Zola will succeed him as South American chief. In a separate statement Stellantis said Francesco Ciancia will rejoin the group on November 1 as global head of manufacturing and as a member of its leadership team. Ciancia returns from Mercedes-Benz, where he led van operations, and brings over two decades of experience in manufacturing and plant management, including previous roles at Fiat Chrysler and Stellantis, the company said. The latest management shake-up follows last month's appointment of Joao Laranjo as CFO, as Filosa accelerates efforts to streamline the group's operations ahead of an update of the group's business plan, expected in the first half of 2026. "With these new appointments we are promoting exceptional talent from inside and out to leadership roles as we prepare our business for future success," Filosa said. The new appointments also include Ralph Gilles as global head of design and Gregoire Olivier as head of the China and Asia-Pacific region. (Reporting by Giulio Piovaccari; Editing by Muralikumar Anantharaman)

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By Brijesh Patel and Anushree Mukherjee (Reuters) -Gold extended its historic rally to break above $4,000 an ounce for the first time on Wednesday, as investors piled into the safe haven to seek cover from mounting geopolitical uncertainty while betting on more U.S. interest rate cuts. Spot gold jumped 1.2% to $4,032.46 per ounce by 0653 GMT. U.S. gold futures for December delivery climbed 1.3% to $4,054.80 per ounce. Traditionally, gold is seen as a store of value during times of instability. As one of the best-performing assets of 2025, spot gold is up 53% year-to-date after rising 27% in 2024. The rally has been driven by a cocktail of factors, including expectations of interest rate cuts, ongoing political and economic uncertainty, solid central bank buying, inflows into gold exchange-traded funds and a weak dollar. "There's so much faith in this trade right now that the market will look for the next big round number which is 5,000 with the Fed likely to continue to lower rates," said Tai Wong, an independent metals trader. "There will be some bumps in the road like a lasting truce in the Mideast or Ukraine but the fundamental drivers of the trade, massive and growing debt, reserve diversification, and a weaker dollar are unlikely to change in the medium term." Adding to the uncertainties, the U.S. government shutdown entered its seventh day on Tuesday. The shutdown has postponed the release of key economic indicators from the world's biggest economy, forcing investors to rely on secondary, non-government data to gauge the timing and extent of Fed rate cuts. Investors are now pricing in a 25-basis-point cut at the Fed meeting this month, with an additional 25-bp cut anticipated in December. "Rising uncertainty levels tend to fuel gains in the gold price and we are seeing this theme play out again," said KCM Trade Chief Market Analyst Tim Waterer. "Market dynamics of lower U.S. interest rates and the ongoing government shutdown are still working in favour of gold. But the temptation to take profits around the $4,000 mark pose a potential short-term risk." A "fear of missing out" is also boosting the rally, analysts say. Additionally, political turmoil in France and Japan has also boosted demand for the safe-haven bullion. Analysts expect strong inflows into exchange-traded funds backed by physical gold, central bank buying and the prospect of lower U.S. interest rates to support gold prices in 2026, prompting Goldman Sachs and UBS to raise their price outlooks. "With the $4,000 barrier broken, new technical horizons have opened. The next resistance levels are seen around $4,050 to $4,100, while former resistance at $3,900 now serves as the first support zone," said Alexander Zumpfe, a precious metals trader at Heraeus Metals Germany. In other precious metals markets, spot silver rose 1.6% to $48.57 per ounce, platinum gained 1.6% to $1,644.40 and palladium climbed 3.1% to $1,378.86. (Reporting by Anushree Mukherjee, Brijesh Patel and Anmol Choubey in Bengaluru; Editing by Sriraj Kalluvila and Christian Schmollinger)

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By Jeslyn Lerh SINGAPORE (Reuters) -Oil prices rose on Wednesday as investors brushed off oversupply fears, having digested a decision earlier by OPEC+ to restrain production increases next month. Brent crude futures rose 50 cents, or 0.8%, to $65.95 a barrel by 0630 GMT. U.S. West Texas Intermediate crude climbed 53 cents, or 0.9%, to $62.26. The benchmarks settled broadly flat in the previous session as investors weighed signs of a supply glut against a smaller-than-expected increase to November output from the Organization of the Petroleum Exporting Countries and affiliates. "The market is in price limbo, with one side bent towards a possible supply glut and the other believing the ramp-up will not be as fast as anticipated," said Emril Jamil, a senior analyst at LSEG Oil Research. Prices are trading higher for now as some traders are holding long positions, or bets that prices will rise, on continued efforts to curb Russian crude flows, Jamil added. OPEC+ had opted for a rise of 137,000 barrels a day, the lowest amount among options the group discussed at the weekend. "Until the physical market shows signs of softening via rising inventories, investors are likely to discount the impact of the production increases," ANZ analysts said on Wednesday. Price gains are however capped as fears of Russian supply disruption eased, with crude oil shipments holding close to a 16-month high over the past four weeks, the ANZ analysts said. Investors are also awaiting U.S. inventory data from the Energy Information Administration later on Wednesday. On Tuesday, sources American Petroleum Institute figures said U.S. crude stocks rose by 2.78 million barrels in the week ended October 3. Conversely, gasoline and distillate inventories fell, the sources said, citing the API data. Meanwhile, U.S. oil production is likely to set a larger record this year than previously expected, the EIA said on Tuesday. (Reporting by Jeslyn Lerh; Editing by Christopher Cushing and Christian Schmollinger)

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(Reuters) -Australia's Lynas Rare Earths has partnered with U.S.-based manufacturer Noveon Magnetics to supply rare-earth permanent magnets to defense and commercial sectors in the U.S., the two companies said on Wednesday. (Reporting by Kumar Tanishk in Bengaluru; Editing by Janane Venkatraman)

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By Stephen Nellis SAN FRANCISCO (Reuters) -U.S. lawmakers are calling for broader bans on chipmaking equipment to China after a bipartisan investigation found that Chinese chipmakers had purchased $38 billion of sophisticated gear last year. Inconsistencies in rules issued by the United States, Japan and the Netherlands have led to non-U.S. chip equipment manufacturers selling to some Chinese firms that U.S. companies could not, according to a report published on Tuesday by the U.S. House of Representatives Select Committee on China. The committee called for broader bans by the U.S. and its allies on chipmaking tool sales to China, rather than narrower bans on sales to specific Chinese chipmakers. The $38 billion was purchased from five top semiconductor manufacturing equipment suppliers, without breaking the law, a 66% increase from 2022, when many of the tool export restrictions were introduced. That accounted for nearly 39% of the aggregate sales of Applied Materials, Lam Research, KLA, ASML and Tokyo Electron, the report found. "These are the sales that made China increasingly competitive in the manufacture of a wide range of semiconductors, with profound implications for human rights and democratic values around the world," the report said. Both U.S. Democratic and Republican administrations have sought to restrict China's ability to make microchips – crucial to fields such as artificial intelligence and military modernization. The two economic superpowers are also vying to sell advanced technology such as AI data centers to other nations. Mark Dougherty, president of Tokyo Electron's U.S. unit, said the industry's China sales have started to decline this year, in part due to new regulations and welcomed more coordination between the U.S. and Japanese governments. "I think it’s clear, from a U.S. perspective, there’s an outcome that is still desired that has not yet been achieved," Dougherty told Reuters in an interview. ASML and KLA declined to comment. Applied Materials and Lam Research did not respond to a request for comment. The committee said the toolmakers cooperated with the committee on the report and were informed of its findings. Three Chinese firms that have become major customers of toolmakers – SwaySure Technology Co, Shenzhen Pengxinxu Technology Co and SiEn (Qingdao) Integrated Circuits Co – are of particular security concern. They were flagged last year by the congressional committee's leaders, Chairman John Moolenaar, a Michigan Republican, and Ranking Member Raja Krishnamoorthi, an Illinois Democrat, in a letter to the Commerce Department alleging ties to a secret network aiding Huawei Technologies, and U.S. officials barred exports to them in December.  The report recommended that the broader bans include tighter restrictions on components that China could use to build its own chipmaking tools. "China is attempting to rewrite the entire supply chain," said Craig Singleton, a senior fellow at the Foundation for Defense of Democracies, a think tank. "What used to be niche tool segments are now battlegrounds." (Reporting by Stephen Nellis in San Francisco; Editing by Peter Henderson, Shri Navaratnam and Edwina Gibbs)

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