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By Gregor Stuart Hunter SINGAPORE (Reuters) -The U.S. dollar rose to its strongest levels in six weeks in early Asian trading on Wednesday as risks around the U.S. government shutdown intensified, sparking fresh investor worries and boosting demand for safe haven assets. The dollar index, which measures the greenback's strength against a basket of six currencies, rose 0.50% to 98.616, its highest level since 27 August, as U.S. President Donald Trump threatened to carry out mass firings of federal workers during the standoff. "With no resolution to the government shutdown in sight, sentiment in financial markets deteriorated," analysts from Westpac wrote in a research report. With the shutdown entering its second week, the probability of an end to the shutdown within the next week stands at 26%, according to the betting site Polymarket. The yield on benchmark 10-year Treasury bond edged up to 4.1307% compared with its U.S. close of 4.127% on Tuesday. The Federal Reserve is still widely expected to lower interest rates later this month, with Fed funds futures implying a 94.6% probability of a 25-basis-point cut, according to the CME Group's FedWatch tool. Precious metals markets recorded fresh highs as investors sought safe havens, with U.S. gold futures breaching the $4,000 per ounce milestone on Tuesday. "Uncertainty about the global economy is one of the main drivers, and the U.S. government shutdown isn't exactly helping sentiment either," analysts from ING wrote in a research note. Against the yen, the dollar was trading at 152.205 yen, up 0.2% from late U.S. levels and hovering near the strongest level since February, as investors weigh up the impact of Sanae Takaichi's economic policy settings. 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 traded at $0.5801, little changed before the Reserve Bank of New Zealand's policy decision later in the day. The central bank is widely expected to ease monetary policy, but markets are split on whether it will cut by 25 basis points or 50 basis points to revive a weakened economy. The Australian dollar was unchanged at $0.65836. The euro stood at $1.1655, steady so far in Asia, while sterling was at $1.3429, up 0.1%. The offshore yuan fetched 7.1469 yuan per dollar, trading flat compared with the previous session. (Reporting by Gregor Stuart HunterEditing by Shri Navaratnam)

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By Valerie Volcovici, David Shepardson and Nichola Groom WASHINGTON (Reuters) –  The U.S. government is considering cancelling billions of dollars in funding for clean energy programs, including awards for auto manufacturing and carbon capture, according to a list of targeted projects seen by Reuters. Projects on the list include two major direct air capture hubs that received billion-dollar awards from former President Joe Biden's administration, including one that involves oil company Occidental . Semafor reported the list earlier and said it could impact $12 billion in projects. Also on the list is $500 million awarded last year to General Motors to convert its Lansing Grand River Assembly Plant in Michigan to EVs; $335 million for Stellantis to convert the shuttered Belvidere Assembly plant in Illinois to build mid-size electric trucks; and $250 million for Stellantis to convert its Indiana Transmission Plant in Kokomo to produce EV components. Last week, the Department of Energy announced plans to cancel $7.56 billion in financing for hundreds of energy projects it said would not provide sufficient returns to taxpayers. The Energy Department is also considering rescinding a $32 million award to Hyundai Mobis which operates a Stellantis supplier in Ohio to produce plug-in hybrid components and battery packs and $89 million for Harley-Davidson expand its York, Pennsylvania plant for EV motorcycle manufacturing. Also on the list is a $80 million award for Blue Bird to convert a former Georgia plant to build electric school buses; and $75 million to engine company Cummins to convert part of an existing Indiana plant to make zero-emission components and electric powertrain systems. The DOE also is considering cutting $208 million for the Volvo Group to upgrade plants in Maryland, Virginia and Pennsylvania to increase EV production capacity. The Energy Department said in a statement it "continues to conduct an individualized and thorough review of financial awards made by the previous administration. No determinations have been made other than what has been previously announced." Occidental, GM, Harley-Davidson and Stellantis declined or did not immediately comment. The total sum of the grants in question was uncertain. The list included some projects that DOE said in May it canceled. The previous cancellations included $331 million at an olefins plant carbon reduction at Exxon's Baytown, Texas refinery; $500 million to Heidelberg Materials, US in Louisiana; and $375 million to Eastman Chemical Company in Texas White House budget director Russell Vought said in a post on X last week that the administration would terminate nearly $8 billion in climate-related funding in 16 Democratic-led states, including California and New York. (Reporting by Valerie Volcovici in Washington, additional reporting by Chandni Shah in Bengaluru, Nichola Groom in Los Angeles and David Shepardson and Timothy Gardner in Washington; Editing by Nia Williams and David Gregorio)

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SAO PAULO (Reuters) -Brazilian internet provider Desktop confirmed on Tuesday that it had held preliminary talks about a transaction with telecom operator Claro, following a media report that it could soon be acquired by Claro. Desktop, which specializes in fiber optic internet, said in a securities filing the discussions for a "potential transaction" were non-binding and no agreement had been reached on price, structure or other key terms so far. News outlet Brazil Journal reported earlier in the day that Claro was in "advanced talks" for a full takeover that would take Desktop private. News of the potential acquisition sent Desktop shares surging as much as 16% in Sao Paulo on Tuesday, before they settled 10% higher. In contrast, Brazil's benchmark Bovespa stock index fell 1.6%. Brazil Journal reported, citing two sources, that Claro was conducting due diligence but had not yet submitted a binding offer. Claro is owned by Mexican telecommunications firm America Movil, which declined to comment. This is not the first time Desktop has been an acquisition target. In 2024, Claro rival Telefonica Brasil also held talks with the internet provider about a potential purchase. Meanwhile, America Movil and Chilean firm Entel are weighing a joint offer for Telefonica's operations in Chile, they said on Monday. (Reporting by Andre Romani; additional reporting by Luciana Magalhaes in Sao Paulo and Cassandra Garrison in Mexico City; Editing by Kylie Madry, Natalia Siniawski and Jamie Freed)

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(Reuters) -Toymaker Mattel is partnering with OpenAI to test the ChatGPT maker's artificial-intelligence video model Sora 2, OpenAI CEO Sam Altman said at the company's Developer Day conference on Monday. "Mattel has been a great partner working with us to test Sora 2 in the API (application programming interface) and see what they can do to bring product ideas to life more quickly. So one of their designers can now start with a sketch and then turn these early concepts into something that you can see and share and react to," Altman said. Monday's moves are the latest in a stream of announcements for OpenAI, which sparked the modern AI boom with the launch of ChatGPT about three years ago. Many of CEO Sam Altman's ambitions are bold and expensive, even by Silicon Valley standards, sparking some concern among tech investors about whether or not AI investments are a bubble. (Reporting by Zaheer Kachwala in Bengaluru, Deepa Seetharaman and Kenrick Cai in San Francisco; Editing by Pooja Desai)

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By David Shepardson WASHINGTON (Reuters) -Air traffic control staffing issues are delaying flights for a second straight day at numerous U.S. airports as the government shutdown reaches its seventh day, the Federal Aviation Administration said in a notice on Tuesday. More than 3,000 flights have been delayed, according to flight tracking data, as staffing shortages have impacted a widening number of airports, including Houston, Nashville, Dallas, Chicago O'Hare and Newark. The FAA is reducing the number of arriving flights per hour at Chicago O'Hare, citing staffing, with average delays of 41 minutes, and there are also staffing issues at Atlanta Air Route Traffic Control Center. Arriving flights were being held for up to 30 minutes at Newark due to the staffing issues, the FAA said, while Washington Reagan might see new slowdowns due to low staffing on Tuesday. Nashville air traffic control is facing significant staffing issues and will curtail operations later on Tuesday, the FAA said. Approach control will be taken over later by Memphis Center, it added. Both political parties are pointing the finger at each other for the impacts. White House press secretary Karoline Leavitt said Democrats were to blame for the aviation slowdown, while California Governor Gavin Newsom, a Democrat, said President Donald Trump was responsible. Severe weather is also impacting flights across the country. Some 13,000 air traffic controllers and about 50,000 Transportation Security Administration officers must still turn up for work during the government shutdown, but they are not being paid. Controllers are set to receive a partial paycheck on October 14 for work performed before the shutdown. Transportation Secretary Sean Duffy said on Monday the FAA had seen a slight increase in controllers taking sick leave and air traffic staffing has been cut by 50% in some areas since the shutdown started last week. "If we don't have controllers, we're going to make sure the airspace is safe. So what we do is we'll slow traffic," Duffy said on Tuesday on Fox News' "Fox and Friends." FlightAware, a flight tracking website, said more than 3,000 U.S. flights had been delayed on Tuesday, including 225 at Nashville, or 20% of its flights, and more than 570 flights at Chicago O'Hare, or more than 20% of its flights. Southwest Airlines has delayed more than 500 flights and American Airlines 400 flights, FlightAware data showed. In 2019, during a 35-day shutdown, the number of absences by controllers and TSA officers rose as workers missed paychecks, extending checkpoint wait times at some airports. Authorities were forced to slow air traffic in New York, which put pressure on lawmakers to quickly end the standoff. The U.S. has faced air traffic control shortages for more than a decade, and many controllers had been working mandatory overtime and six-day weeks even before the shutdown. The FAA is about 3,500 air traffic controllers short of targeted staffing levels. (Reporting by David Shepardson; Editing by Chris Sanders and Jamie Freed)

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(Reuters) -Elon Musk's xAI is raising more financing than initially planned, including an equity investment from Nvidia, to bring its ongoing funding round to $20 billion, Bloomberg News reported on Tuesday, citing people with knowledge of the matter. The financing, which includes equity and debt, will be tied to the Nvidia graphics processing units that xAI plans to use in Colossus 2, according to Bloomberg. Reuters could not immediately verify the report. (Reporting by Chandni Shah in Bengaluru; Editing by Alan Barona)

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By Abhirup Roy and Harshita Mary Varghese (Reuters) -Tesla rolled out "affordable" versions of its best-selling Model Y SUV and its Model 3 sedan, but the starting prices of $39,990 and $36,990 were too high, some said, to attract a new class of buyers to the electric vehicle brand. CEO Elon Musk has touted the car as a way to tap a wider swath of buyers, saying last year that a price below $30,000, after incentives, was the key. Tesla is trying to reverse falling sales of its aging lineup amid rising competition in Europe and China, and the loss of a $7,500 U.S. tax credit. The new cars drop some premium finishes and features but offer driving ranges above 300 miles. Tesla's stock closed down 4.5% and Tesla bull Dan Ives, an analyst at Wedbush, said he was disappointed that the cars were only about $5,000 cheaper than the next-level trims of the models. The new Standard versions cost more than the cheapest U.S. models in September, when the now-expired tax credit was included. Musk has for years promised mass-market vehicles, though last year he canceled plans for an all-new $25,000 EV, Reuters first reported. Instead, he chose to build lower-priced versions based on Tesla's current models, sparking concerns among investors and analysts that the cheaper cars would cannibalize sales of existing vehicles and limit growth. "It's basically a pricing lever and not much of a product catalyst," said Shay Boloor, chief market strategist at research firm Futurum Equities. "I don't see it as unlocking new demand at scale." Fearing a drop in demand after losing the tax credits, some automakers in the U.S. have already cut prices while some others have figured out mechanisms to effectively extend the benefit of the incentives. Investors and analysts said dropping the price below $40,000 will help drive sales as the latest offerings compete next year with Chevrolet's Equinox, Hyundai Ioniq 5 and Kia's EV4. Some, though, expected a bigger slash by Tesla to below $30,000. "I just don't know that this is enough," said Shawn Campbell, an advisor at Camelthorn Investments. "Longer term, this news doesn't solve the problem posed by lower cost Chinese competitors in global markets. In my opinion, Tesla needs a sub-30k EV." In Europe, where Musk's far-right political views have undermined brand loyalty, the new entries will be up against more than a dozen electric and plug-in-hybrid models with price tags below $30,000. Sales in the September-ending quarter rose to a record as consumers rushed to take advantage of the EV tax credit before its expiration on September 30, but expectations are that they will slow down for the rest of the year, unless the affordable car comes to the rescue. "The desire to buy the car is very high. (It's) just (that) people don't have enough money in the bank account to buy it," Musk said in July during Tesla's second-quarter earnings call. "So the more affordable we can make the car, the better." 'A WALMART HOODIE' FOR TESLA Both Standard versions offer 321 miles (516 km) of range and less powerful acceleration than the current higher trims, called Premium. The Model 3 includes a smaller battery pack. Both cars can be ordered immediately, with deliveries set to start between December 2025 and January 2026 for many locations, Tesla's website showed.  The Standard versions do not come with Autosteer, Tesla's driver assistance system, touchscreens and seat heating for rear passengers. Tesla has also removed the LED lightbar in the cheaper Model Y. Both come with textile seats, with vegan leather available for the Model 3, and manually adjusted side-view mirrors.  Musk has been pivoting the company toward artificial intelligence, focusing on robotaxis and humanoid robots, but the new cars are key to hopes of near-term revenue growth. "For the market, this is Tesla dropping its Steve Jobs turtleneck and slipping into a Walmart hoodie," said Michael Ashley Schulman, chief investment officer at Running Point. "It's no longer the cool rebel at the edge of innovation – it's the establishment trying to play both Tesla and Toyota at once." (Reporting by Abhirup Roy in San Francisco and Akash Sriram and Harshita Mary Varghese in Bengaluru; Editing by Peter Henderson, Richard Chang, Sriraj Kalluvila and Alan Barona)

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By David Shepardson WASHINGTON (Reuters) -Air traffic control staffing issues are delaying flights for a second straight day at numerous U.S. airports as the government shutdown reaches its seventh day, the Federal Aviation Administration said in a notice on Tuesday. More than 3,000 flights have been delayed, according to flight tracking data, as staffing shortages have impacted a widening number of airports, including Houston, Nashville, Dallas, Chicago O'Hare and Newark. The FAA is reducing the number of arriving flights per hour at Chicago O'Hare, citing staffing, with average delays of 41 minutes, and there are also staffing issues at Atlanta Air Route Traffic Control Center. Arriving flights were being held for up to 30 minutes at Newark due to the staffing issues, the FAA said, while Washington Reagan might see new slowdowns due to low staffing on Tuesday. Nashville air traffic control is facing significant staffing issues and will curtail operations later on Tuesday, the FAA said. Approach control will be taken over later by Memphis Center, it added. Both political parties are pointing the finger at each other for the impacts. White House press secretary Karoline Leavitt said Democrats were to blame for the aviation slowdown, while California Governor Gavin Newsom, a Democrat, said President Donald Trump was responsible. Severe weather is also impacting flights across the country. Some 13,000 air traffic controllers and about 50,000 Transportation Security Administration officers must still turn up for work during the government shutdown, but they are not being paid. Controllers are set to receive a partial paycheck on October 14 for work performed before the shutdown. Transportation Secretary Sean Duffy said on Monday the FAA had seen a slight increase in controllers taking sick leave and air traffic staffing has been cut by 50% in some areas since the shutdown started last week. "If we don't have controllers, we're going to make sure the airspace is safe. So what we do is we'll slow traffic," Duffy said on Tuesday on Fox News' "Fox and Friends." FlightAware, a flight tracking website, said more than 3,000 U.S. flights had been delayed on Tuesday, including 225 at Nashville, or 20% of its flights, and more than 570 flights at Chicago O'Hare, or more than 20% of its flights. Southwest Airlines has delayed more than 500 flights and American Airlines 400 flights, FlightAware data showed. In 2019, during a 35-day shutdown, the number of absences by controllers and TSA officers rose as workers missed paychecks, extending checkpoint wait times at some airports. Authorities were forced to slow air traffic in New York, which put pressure on lawmakers to quickly end the standoff. The U.S. has faced air traffic control shortages for more than a decade, and many controllers had been working mandatory overtime and six-day weeks even before the shutdown. The FAA is about 3,500 air traffic controllers short of targeted staffing levels. (Reporting by David Shepardson; Editing by Chris Sanders and Jamie Freed)

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By Ankur Banerjee and Laura Matthews SINGAPORE/NEW YORK (Reuters) -Sanae Takaichi's surprise victory 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. Takaichi, a long-time advocate of the former prime minister's "Abenomics" expansionary policies, has called for higher spending and tax cuts to cushion the rising cost of living and has criticised the Bank of Japan's decision to raise interest rates. Her stance, though, has been relatively softer than last year. The initial reaction from investors to Takaichi's victory was to send Japanese shares to record highs, sell long-end government bonds and take the yen down past the psychologically important 150 per U.S. dollar level. Investors are also drawing parallels to when Abe became Japan's prime minister in 2012, after which he ushered in an era of fiscal stimulus measures through government spending and monetary easing from the Bank of Japan. The Nikkei more than doubled in the nearly 8 years Abe was at the helm. His policies have also been credited with helping usher in corporate governance reforms that lifted the Japanese shares to record highs since then. The Nikkei soared nearly 5% in the two trading sessions since Takaichi's win, closing at a record high on Tuesday. "Abenomics was significant for Japan's capital markets and there is a good chance that Takaichi's win is a big shift in market perception from the previous two prime ministers who were more 'business as usual'," said Van Luu, global head of solutions strategy for fixed income and foreign exchange for Russell Investments in London. There are significant differences though between now and when Abe took over, analysts said, pointing out that Japan faces inflation right now compared to deflation over a decade ago. The impact of U.S. tariffs is also another big unknown. The yen, on the other hand, depreciated about 18% in the same period to trade just below 105 per dollar when Abe left office in September 2020. It was at 86 when Abe became the prime minister in December 2012. On Tuesday, the yen last fetched 150.67. Receding expectations of another BOJ rate hike this year has left the yen vulnerable, with intervention risks also looming. The yen has risen over 4% in 2025, making it a laggard among major peers as it failed to take advantage of a weakening dollar due to long-drawn out negotiations with the U.S. over tariffs and a cautious central bank unwilling to hike rates in a hurry. "There may be tension with the BOJ given Takaichi's dovish tilt and inflation may constrain the ability of the BOJ to be accommodative, but her win is positive for nominal growth," Russell's Luu said. Japanese government bond yields under Abe's leadership slumped to near zero. After years of huge bond buying failed to fire up inflation, the BOJ cut short-term rates below zero in January 2016 to fend off an unwelcome yen rise. The BOJ adopted yield curve control (YCC) eight months later by adding a 0% target for 10-year bond yields to its -0.1% short-term rate target. The BOJ has since phased out YCC and is on a tightening path, with its short-term policy rate at 0.5%. The 10-year yield was hovering near a 17-year high at 1.675% on Tuesday. Much of the focus in the aftermath of Takaichi's victory has been on rising fiscal risks, with super-long Japanese government bond yields hitting record highs over worries around the fiscal health of a country with a massive debt load. "Whilst the fiscal outlook is cloudy at the moment, it is clear to see that Japan will adopt mildly pro-growth policies and remain conservative on fiscal expansion," said Matthias Scheiber, senior portfolio manager and the head of the multi-asset team at Allspring Global Investments. Ipek Ozkardeskaya, senior analyst at Swissquote Bank, said unlike Abe, Takaichi faces rising inflation, record-high debt near 216% of GDP, and a central bank that’s tightening, not easing. "That leaves far less room for bold fiscal or monetary moves." (Reporting by Ankur Banerjee in Singapore and Laura Matthews in New York; Editing by Kim Coghill)

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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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