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By Lucia Mutikani and Ann Saphir (Reuters) -Alternate data from public and private sources showed the U.S. job market likely remained stalled in September, with sluggish hiring but no change in an unemployment rate economists see as heavily influenced by a decline in the number of foreign-born workers. With the release of numerous official economic indicators delayed by a government shutdown, alternative data, such as a new "real-time" estimate of the unemployment rate issued on Thursday by the Federal Reserve Bank of Chicago, is likely to attract more than the usual scrutiny. The Chicago Fed report, which combines private and available public data, estimated the September jobless rate was 4.3%, the same as in August and evidence that a feared rapid rise in unemployment had not yet begun. But details of the report, along with other data, pointed to ongoing sluggishness in the labor market that is likely to keep Fed officials on track to cut the benchmark interest rate by a quarter of a percentage point at the October 28-29 meeting.  Official reports on the U.S. labor market, including September monthly jobs data that had been scheduled for release by the Labor Department's Bureau of Labor Statistics on Friday, are for now suspended by the government shutdown that has put around 750,000 workers on furlough and halted many but the most critical federal government functions. Also delayed so far are the weekly jobless claims report, August factory orders and construction spending data. Depending on the length of the shutdown, the 15th since 1981, those and other delayed reports could still be available by the time the Fed meets in a little under four weeks. But policymakers were already discussing at-hand, if imperfect, substitutes for the September jobs report, among the main sources of additional data policymakers would receive before their next meeting. The Fed's rate cut discussion now leans heavily on policymakers' views of whether the labor market is holding up reasonably well, with the 4.3% jobless rate considered around full employment, or is at risk of a sharp rupture. The Fed last month cut its policy rate by a quarter of a percentage point to a range of 4% to 4.25% after job gains slowed sharply and the unemployment rate ticked up in August.  "The data dogs are howling because we are not getting our usual supply of information," Chicago Fed President Austan Goolsbee told Marketplace Radio on Wednesday. "The best number is the BLS number, but if we don't have that, we're going to use the Chicago Fed number and other numbers."  The Chicago Fed's new data series, updated twice monthly, showed the hiring rate for unemployed workers dipping slightly and the rate of layoffs and other job separations up a bit.  That put "limited upward pressure" on the unemployment rate, the bank said.  LABOR MARKET IS STAGNATING New data from technology firm Intuit, using a sample of roughly 400,000 small businesses from its QuickBooks platform, showed firms with from one to nine employees shed more than 48,000 jobs in September, a decline of around 0.37%. Firms of that size have seen a steady drop in employment since early 2024, with average monthly employment for the latest quarter down about 400,000 from a peak of 13.1 million. U.S. employers meanwhile announced fewer layoffs in September, but hiring plans so far this year were the lowest since 2009, according to the latest report from global outplacement firm Challenger, Gray & Christmas that provided further signs of a labor market at a standstill as the demand and supply of workers fall because of tougher immigration policy and technological advances. The firm said planned job cuts dropped 37% month-on-month to 54,064 in September. Employers have so far this year announced 946,426 job cuts, the highest year-to-date total since 2020.  Hiring plans so far this year have totaled 204,939, the lowest year-to-date since 2009 when the economy was just emerging from the Great Recession.  "Right now, we're dealing with a stagnating labor market, cost increases and a transformative new technology," said Andrew Challenger, senior vice president at Challenger, Gray & Christmas. "With rate cuts on the way, we may see some stabilizing in the fourth quarter, but other factors could keep employers planning layoffs or holding off hiring." Economists say lingering uncertainty from President Donald Trump's trade policy, immigration raids and the rise of artificial intelligence, have combined to reduce demand and labor supply. Nonfarm payroll gains averaged only 29,000 jobs per month in the three months to August compared to 82,000 during the same period last year. Challenger said the government accounted for the bulk of planned layoffs, with 299,755 job cuts announced so far this year, part of an unprecedented campaign by the White House to reduce the federal workforce. Trump threatened to fire more federal workers if there was a shutdown. The surge in AI is costing jobs in the technology sector, with companies in the industry announcing 107,878 layoffs so far this year. Challenger said AI was also making it difficult to land positions, particularly for entry-level engineers. Should the shutdown persist into next week, reports due later this month, including consumer price, retail sales, housing starts and producer inflation data for September, will probably not be published, impacting decision making by households, investors and policymakers.   (Reporting by Ann Saphir; Additional reporting by Howard Schneider and Lucia Mutikani; Editing by Jamie Freed and Andrea Ricci)

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By David Morgan, Bo Erickson, Nolan D. McCaskill and Richard Cowan WASHINGTON (Reuters) -U.S. President Donald Trump's administration on Wednesday froze $26 billion for Democratic-leaning states, following through on a threat to use the government shutdown to target Democratic priorities. The targeted programs included $18 billion for transit projects in New York, home to Congress's top two Democrats, and $8 billion for green-energy projects in 16 Democratic-run states, including California and Illinois. Vice President JD Vance, meanwhile, warned that the administration might extend its purge of federal workers if the shutdown lasts more than a few days.  The moves made clear that Trump would carry out his threat to take advantage of the shutdown to punish his political opponents and extend his control over the $7 trillion federal budget, established by the U.S. Constitution as the domain of Congress.  "Billions of dollars can be saved," he wrote on Truth Social late on Wednesday. The government shutdown, the 15th since 1981, suspended scientific research, financial oversight, environmental cleanup efforts and a wide range of other activities. Some 750,000 federal workers were ordered not to work, while others, such as troops and Border Patrol agents, began to work without pay. The Department of Veterans Affairs said it would provide burials at national cemeteries, but would not erect headstones or mow the grass. Vance said at a White House briefing that the administration would be forced to resort to layoffs if the shutdown lasts more than a few days, adding to the 300,000 who will be pushed out by December. Previous shutdowns have not resulted in permanent layoffs. The U.S. Patent and Trademark Office said it would lay off 1% of its 14,000 employees, according to an internal letter seen by Reuters. SCHUMER ALLEGES SHUTDOWN 'BLACKMAIL' Hakeem Jeffries, the top Democrat in the House of Representatives, said the funding freeze for subway and harbor projects in his home of New York would throw thousands out of work. Top Senate Democrat Chuck Schumer, also from New York, said Trump was targeting regular Americans for partisan aims. "He is using the American people as pawns, threatening pain on the country as blackmail," Schumer said. Republican Senator Thom Tillis said he was concerned that the freezing of infrastructure funds for New York could make it harder for Congress to exit the shutdown. "They need to be really careful with that, because they can create a toxic environment here," Tillis said. "So hopefully they're working with the leader, and the leader with them, on not creating more work to get us out of this posture." Republican Senate Leader John Thune dismissed concerns that the spending freeze amounted to hostage-taking. "Well, vote to open up the government and that issue goes away, right? I mean, it's pretty straightforward," he said at a press conference. Jeffries said he had not had any contact with the White House since a meeting with Trump earlier in the week. "We haven't heard from the White House since the White House meeting on Monday," he said in an CNN interview. "Clearly, they wanted to shut the government down." DIFFERENT DAY, DIFFERENT VOTE, SAME RESULTS Meanwhile, the Senate again rejected efforts to keep the government functioning as both a Republican proposal that would fund the government through November 21 and a Democratic vote that would pair funding with additional health benefits failed in floor votes. Trump's Republicans hold a 53-47 Senate majority, but they need the support of at least seven of Schumer's Democrats to meet the chamber's 60-vote threshold for spending bills. At issue on the government funding front is $1.7 trillion for agency operations, which amounts to roughly one-quarter of annual spending. Much of the remainder goes to health and retirement programs and interest payments on the growing $37.5 trillion debt. A bipartisan group of senators huddled on the floor during the vote, trying to find a path forward. "I want to see that a deal is a deal, and I would like to see the Republicans make a commitment to work with us on health care," said Senator Tim Kaine, a Virginia Democrat who represents many federal workers near the nation's capital. "But I've never said that has to be all I's dotted and T's crossed because that could be complicated." Democrats are also seeking guarantees that Trump will not be able to ignore spending bills he signs into law, as he has repeatedly done since returning to office. Both sides sought to pin the blame on the other, looking for advantage ahead of the 2026 midterm elections that will determine control of Congress. Democrats said Republicans were responsible for the disruption, as they control the levers of power in Washington. Republicans said Democrats were surrendering to partisan pressures to oppose Trump, even though they have routinely backed spending bills in the past. They also repeated a false claim that the Democratic proposal would extend health coverage to people who are in the country illegally. According to the nonpartisan Congressional Budget Office, the Democratic plan would only restore coverage to certain categories of immigrants who are in the country legally, such as asylum seekers and people on work visas. Several government agencies posted notices on their websites blaming the "radical left" for the shutdown – a possible violation of a law known as the Hatch Act meant to insulate nuts-and-bolts government services from partisan politics.  The longest U.S. government shutdown, which stretched over 35 days in 2018-2019 during Trump's first term, ended in part after flight delays caused by air traffic controllers calling in sick. (Reporting by Courtney Rozen, Richard Cowan, Nolan D. McCaskill, Bo Erickson and David Morgan; Additional reporting by Mike Stone, Doina Chacu, Jasper Ward, Costas Pitas, Katharine Jackson and Bhargav Acharya; Writing by Andy Sullivan and James Oliphant; Editing by Scott Malone, Lincoln Feast, Alistair Bell, Daniel Wallis and Richard Chang)

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By Pooja Menon and Sheila Dang (Reuters) -Occidental Petroleum will sell its chemicals arm OxyChem to Warren Buffett's Berkshire Hathaway for $9.7 billion, the company said on Thursday, marking its biggest divestment yet to slash debt after years of costly acquisitions. Shares of the U.S. oil and gas producer, however, fell more than 6% in morning trading. Roth MKM analysts said in a note the sale of OxyChem could weigh on free cash flow growth in coming years, as the unit was expected to contribute significantly to expansion. Scotiabank analyst Paul Cheng noted that the transaction price seemed low as he had previously estimated the division's value at $12 billion. OxyChem, which produces chemicals used for treating swimming pools and vinyl products used for water supply piping and medical supplies, generated combined revenue of $2.42 billion in the first two quarters of this year. If the deal closes, it would be the biggest purchase for Berkshire since its $11.6 billion buyout of insurance firm Alleghany Corporation in 2022, and expand its chemical portfolio beyond Lubrizol. Berkshire is Occidental's largest shareholder and it began acquiring a stake in the company in February 2022, around the time when Russia invaded Ukraine. The divestment highlights the close ties between the two. In a 2019 meeting with Buffett, Occidental CEO Vicki Hollub secured a $10 billion investment that allowed her to make an offer for oil producer Anadarko Petroleum, outbidding rival Chevron to secure some of the richest shale oilfields in Texas. But the $55 billion purchase of Anadarko left Occidental saddled with debt. The burden was exacerbated after the company closed its $12 billion acquisition of privately held U.S. shale oil producer CrownRock last year. To reduce its massive debt load, which stood at $23.34 billion by the end of June, Occidental has been steadily divesting assets in recent years. The company had disclosed in August $950 million of additional divestitures since the start of the second quarter, of which $370 million had already closed and it repaid $3 billion of debt year-to-date. Occidental said on Thursday it would use $6.5 billion of the proceeds to reduce debt, bringing the total principal debt below the $15 billion target set after the CrownRock deal. The latest deal, expected to close in the fourth quarter, also indicates that Occidental is refocusing on its oil and gas business, which formed 75% of its total earnings last year. CEO Hollub said OxyChem's sale would allow Occidental to "unlock 20-plus years of low-cost resource runway" in oil and gas. (Reporting by Pooja Menon in Bengaluru and Sheila Dang in Houston; Editing by Nathan Crooks, Nia Williams, Shilpi Majumdar and Franklin Paul)

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(Reuters) -Federal Reserve Bank of Dallas President Lorie Logan on Thursday said the U.S. central bank appropriately took out some insurance against any sharp deterioration in the labor market with its interest-rate cut last month, but needs to be "cautious" with any further rate cuts because inflation is running above target and is heading upward.  "We need to be very cautious about rate cuts from here and make sure that we appropriately calibrate policy so that you don't ease conditions too much and only to have to reverse course, which would be very painful in terms of restoring price stability," Logan told a classroom of economics students at the University of Texas at Austin's graduate school of business.  (Reporting by Ann Saphir)

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WASHINGTON (Reuters) -Alphabet's Google said hackers are sending extortion emails to an unspecified number of executives, claiming to have stolen sensitive data from their Oracle business applications. In a statement, Google said a group claiming affiliation with the ransomware gang cl0p was sending emails to "executives at numerous organizations claiming to have stolen sensitive data from their Oracle E-Business Suite." Google cautioned that it "does not currently have sufficient evidence to definitively assess the veracity of these claims." Messages seeking comment from cl0p and Oracle were not immediately returned. Google described the email campaign as "high-volume" but declined to share further details. (Reporting by Raphael Satter in WashingtonEditing by Shri Navaratnam)

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By Manya Saini and Arasu Kannagi Basil (Reuters) -Fair Isaac Corp's shares surged in Thursday morning trading after the U.S. data analytics company said it would license its credit scores directly to mortgage resellers, raising concerns of margin pressure for major credit bureaus.  Shares of Experian, Equifax and TransUnion tumbled on fears that the move could curtail the intermediary role of the credit reporting companies. FICO score, created by Fair Isaac, is a U.S. credit scoring system used by nearly 90% of lenders to evaluate a borrower's creditworthiness. The higher the number, the lower the risk of default. Fair Isaac said direct access to FICO scores for lenders and mortgage resellers would increase competition and bring price transparency.    "This new distribution model will allow lenders to avoid paying the current about 100% markup the credit bureaus currently charge for the FICO score," analysts at brokerage Raymond James said.   Fair Isaac's latest move was lauded by Federal Housing Finance Agency Director Bill Pulte, who said in a post on social media platform X that the company has generated "creative solutions" to help the American consumer. Pulte had earlier this year criticized the company over its pricing as he pushed to broaden the use of rival scoring models in mortgage lending. Following his comment, FICO shares extended gains and was last up 26%. If the gains hold, it would erase all the losses for the year. Citigroup analysts said direct licensing would cut out the margin that companies such as Experian and Equifax make on the FICO credit score. "Our initial reaction is this is negative for Experian and Equifax," they wrote in a note. Experian shares were down 4.8% in London. U.S.-listed Equifax fell 7%, while TransUnion was last down 11%.  Experian, Equifax and the Consumer Data Industry Association did not immediately respond to requests for comment, while TransUnion declined to comment. INDUSTRY SHIFT  The stock had taken a hit when Pulte allowed lenders to use VantageScore for Fannie Mae and Freddie Mac mortgages. VantageScore, founded in 2006, is a joint venture between credit bureaus Equifax, Experian and TransUnion. The agency's decision introduced direct competition for FICO in the mortgage market, sparking doubts about its ability to continue increasing its prices. "This is likely an FHFA-friendly outcome," brokerage Needham said, and could help lift the "FHFA overhang" on the stock. Fair Isaac said its direct mortgage score licensing plan would bring immediate cost savings to lenders, brokers and other industry participants, while noting that firms opting to work through the credit bureaus can continue to do so. "This change eliminates unnecessary mark-ups on the FICO Score and puts pricing model choice in the hands of those who use FICO scores to drive mortgage decisions," CEO Will Lansing said.  The change could intensify competition in the credit scoring business as it gives lenders more direct access to FICO scores. "By introducing a licensing program for tri-merge resellers, FICO is effectively taking away the ability of the credit bureaus to mark up the FICO score," Jefferies analysts said in a note.  The new model could hit credit bureau earnings by an average of 10% to 15%, it warned. "For the bureaus to take price, they will now have to directly negotiate with the lenders, as well as compete with each other."  (Reporting by Manya Saini and Arasu Kannagi Basil in Bengaluru and Samuel Indyk in London; Editing by Arun Koyyur)

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By Pooja Menon and Sheila Dang (Reuters) -Occidental Petroleum will sell its chemicals arm OxyChem to Warren Buffett's Berkshire Hathaway for $9.7 billion, the company said on Thursday, marking its biggest divestment yet to slash debt after years of costly acquisitions. Shares of the U.S. oil and gas producer, however, fell more than 4% in morning trading. Roth MKM analysts said in a note the sale of OxyChem could weigh on free cash flow growth in coming years, as the unit was expected to contribute significantly to expansion. OxyChem, which produces chemicals used for treating swimming pools and vinyl products used for water supply piping and medical supplies, generated combined revenue of $2.42 billion in the first two quarters of this year. If the deal closes, it would be the biggest purchase for Berkshire since its $11.6 billion buyout of insurance firm Alleghany Corporation in 2022, and expand its chemical portfolio beyond Lubrizol. Berkshire is Occidental's largest shareholder and it began acquiring stake in the company in February 2022, around the time when Russia invaded Ukraine. The divestment highlights the close ties between the two. In a 2019 meeting with Buffett, Occidental CEO Vicki Hollub secured a $10 billion investment that allowed her to make an offer for oil producer Anadarko Petroleum, outbidding rival Chevron to secure some of the richest shale oilfields in Texas. But the $55 billion purchase of Anadarko left Occidental saddled with debt. The burden exacerbated after the company closed its $12 billion acquisition of privately held U.S. shale oil producer CrownRock last year. To reduce its massive debt load, which stood at $23.34 billion by the end of June, Occidental been steadily divesting assets in recent years. The company had disclosed in August $950 million of additional divestitures since the start of the second quarter, of which $370 million already closed and it repaid $3 billion of debt year-to-date. Occidental said on Thursday it would use $6.5 billion of the proceeds to reduce debt, bringing the total principal debt below the $15 billion target set after the CrownRock deal. The latest deal, expected to close in the fourth quarter, also indicates that Occidental is refocusing on its oil and gas business, which formed 75% of its total earnings last year. CEO Hollub said OxyChem's sale would allow Occidental to "unlock 20-plus years of low-cost resource runway" in oil and gas. (Reporting by Pooja Menon in Bengaluru and Sheila Dang in Houston; Editing by Nathan Crooks, Nia Williams and Shilpi Majumdar)

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(Refiles to clarify in Sept. 30 story that Wise moved its primary listing from London to New York in paragraph 12) By Charlie Conchie LONDON (Reuters) -AstraZeneca’s move to upgrade its listing in the U.S. risks pulling liquidity away from London’s stock market and could pave the way for other large companies to follow suit, analysts, investors and advisers said. The British drugmaker, one of London’s most valuable listed companies, said on Monday it would retain its listings in London and Stockholm but also plans to offer its shares directly on the New York Stock Exchange, moving away from the current depositary receipt structure, from next February. AstraZeneca Chair Michel Demare cited the fact that U.S. shareholders represent the drugmaker's largest single investor group while its U.S. business accounted for 43% of total revenue last year and is expected to represent 50% of revenue by 2030. Some analysts and policymakers expressed relief after some media reports had suggested the company was considering ditching its London listing altogether. That would have been another rebuke to the UK after AstraZeneca recently paused a 200 million pound ($268.80 million) investment plan in Cambridge and earlier this year scrapped plans to invest in a vaccine manufacturing facility in Liverpool. A UK government spokesperson said AstraZeneca’s decision that it will stay listed, headquartered and paying tax in the UK brought clarity and was positive for employment, growth and innovation. "The decision signals clear confidence in the UK economy," the spokesperson said. "It shows British companies can scale globally, attract international investment – including from U.S. markets – and remain rooted in the UK." A person familiar with AstraZeneca's plans said the company, which has a market capitalisation of $230 billion as of Monday's close, had no current plans to scrap its London listing. Yet some people flag risks that not only could trading of AstraZeneca shares now drift towards New York, but that other large London-listed firms will be watching to see if they should follow in its wake. "A large proportion of large UK-listed companies have a big U.S. investor base," said Charles Hall, head of research at London investment bank Peel Hunt. "All companies look at what others do, and today this will be on the boardroom paper of a lot of other FTSE firms as they assess what the implications are.” Around 22.5% of AstraZeneca's shareholders are based in North America, similar to FTSE 100 companies such as HSBC, Shell, Rolls Royce, BAT and Rio Tinto, which range at 20.5-24.7%, according to LSEG data. "The risk to London will be if liquidity in AZ shares moves more to the U.S. than London as a result," said Alasdair Steele, a partner at law firm CMS. VALUATION GAP A number of London-listed firms have come under pressure from shareholders to consider swapping their primary listing to other markets due to a perceived valuation gap and the bumper performance of indices in other jurisdictions. The FTSE 100 is up 58% over the past decade, compared to the S&P 500, which is up 250%. "The wider point is that Astra is just too big a company for the London market now," said Mark Kelly, chief executive of advisory firm MKP Advisors. "Big companies like AstraZeneca should be part of big indices, where billions of dollars are being traded every day, and the reality is that in London you miss out on some of that," he said. Fintech firm Wise revealed plans to move its primary listing from London to New York this year, while mining companies Rio Tinto  and Glencore have both rejected calls to exit the market. Publisher Pearson has faced similar calls from investors to shift its listing.  Ian Pyle, senior investment director at Aberdeen, an AstraZeneca shareholder, pointed to a risk that the drugmaker may make a full exit in future. “The risk for the UK market is if this triple listing doesn’t deliver the desired outcome, then it may be a pathway to a primary listing in the U.S. and de-listing from the UK,” he said. Pyle and Hall at Peel Hunt both said AstraZeneca's recommitment to London was a positive for the market in the immediate term. The London Stock Exchange group, which has been campaigning for companies to choose the City for new listings, emphasized in a statement that AstraZeneca's decision represented "no change to their continued commitment to the UK, our capital markets and their important place as a key constituent of the FTSE100.” Still, AstraZeneca Chair Demare, in his letter to shareholders about the move on Monday, highlighted New York's advantages: "The U.S. has the world’s largest and most liquid public markets by capitalisation, and the largest pool of innovative biopharma companies and investors,” he wrote. Mark Austin, a partner at Latham & Watkins who has been involved in the overhaul of the UK's listing rules, remained confident of London's appeal.  "This should not be seen as a negative (for London)," Austin said. "It is about a UK-headquartered and UK and Swedish listed global company giving global investors easier access to its shares while keeping all the benefits of London." ($1 = 0.7440 pounds) (Reporting by Charlie Conchie; Additional reporting by Alistair Smout and Danilo; Editing by Anousha Sakoui and Susan Fenton)

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By Amy-Jo Crowley, Dominique Patton and Mathieu Rosemain LONDON (Reuters) -Armani representatives have approached potential buyers over a minority stake in the renowned Italian fashion group, three sources told Reuters, starting a de facto auction for a slice of one of the world's best-known fashion empires weeks after the designer's death.  L'Oreal is among those that have been approached, two of the people said. Private equity bidders so far have not been solicited as potential buyers, one of those sources and a fourth person said. Rothschild is expected to advise the company on a transaction, according to two of the sources. The group has a link to the advisory firm through Irving Bellotti, a Rothschild partner who sits on the board of the Armani foundation. The talks are at an early stage, however, one of the people said, adding that any progress could take months. ARMANI INSTRUCTED HEIRS TO SELL STAKE WITHIN 18 MONTHS Reuters could not determine who had done the outreach on behalf of the sellers of the company. The four sources spoke on condition of anonymity because the matter is private. Armani Group and Rothschild declined to comment. L'Oreal, which holds a licensing agreement with the Armani group until 2050, did not respond to requests for comment. In his will, late Italian designer Giorgio Armani instructed heirs to sell an initial 15% stake in the fashion house within 18 months of his death, and later to transfer an additional 30% to 55% stake to the same buyer or seek a market listing. The will says priority should be given to luxury conglomerate LVMH , beauty behemoth L'Oreal, and eyewear maker EssilorLuxottica , with which the fashion house has a commercial partnership. It may also be given to another group of "equal standing" identified by a foundation the designer set up to preserve his legacy with the agreement of Armani's business and life partner Pantaleo Dell'Orco. All three companies named previously issued statements suggesting they were open to the possibility of a deal.  The will was published last month following the designer's death on September 4. It lists six different types of shares with different voting rights.  The charitable foundation and Dell'Orco hold 30% and 40% of the company voting rights respectively, meaning they would together control the fashion group with 70%. The foundation will retain a 30.1% stake in a listing and in a sale, the will says. Dell'Orco, who was also on the foundation's executive committee, could not be reached for comment.  A representative for the Armani foundation declined to comment via email. BRAND COULD BE WORTH UP TO 12 BILLION EUROS  Giorgio Armani was the sole major shareholder in the company he set up 50 years ago and over which he maintained a tight creative and managerial rein.  The potential sale process is being closely watched, as the brand remains one of the most iconic in the fashion industry and could be worth between 5 billion euros and 12 billion euros ($14 billion), according to analyst estimates. The provisions in the will are essentially binding and could be challenged in court if not fulfilled, according to the Italian notary association. ($1 = 0.8517 euros) (Reporting by Amy-Jo Crowley in London and Dominique Patton and Mathieu Rosemain in Paris and Lisa Jucca in Milan. Additional reporting by Elisa Anzolin. Editing by Anousha Sakoui and Jan Harvey)

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By Marcela Ayres and Isabel Teles BRASILIA/SAO PAULO (Reuters) -Brazil's government said it was confident the Senate would pass a bill expanding income tax exemptions for the middle class, after the measure cleared the Lower House late Wednesday. The proposal, a key initiative of President Luiz Inacio Lula da Silva, could boost his prospects ahead of next year's general election. Finance Minister Fernando Haddad told reporters he did not expect any hurdles in the Senate. "The bill is based on fiscal balance and seeks tax justice," Haddad told reporters on Thursday, hailing its unanimous passage by lawmakers. "I am certain the proposal will also enjoy broad support in the Senate," Lula wrote on X late Wednesday, adding that the measure would benefit 15 million Brazilian workers. Under the approved legislation, the monthly income tax exemption threshold would rise next year to 5,000 reais ($940), above three minimum wages, from the current 3,036 reais. To offset the revenue loss, the bill introduces a progressive minimum tax on monthly incomes above 50,000 reais and imposes a 10% withholding tax on dividends sent abroad, regardless of whether the recipient is an individual or a company. Beyond exempting monthly incomes up to 5,000 reais, the bill also eases the tax burden for earners up to 7,350 reais, covering much of Brazil's middle class, a key voter bloc that has turned conservative in recent years and that Lula's Workers Party hopes to lure back. The bill further mandates that, beginning in January, any dividend payment exceeding 50,000 reais in a single month from the same company to the same individual will be subject to a 10% withholding tax. Arthur Lira, the bill's sponsor in the Lower House, estimated that the expansion of tax exemptions would reduce revenue by 31.3 billion reais next year, offset by new income tax collections of 25.2 billion reais and 8.9 billion reais from foreign-sent dividend taxation.   ($1 = 5.3203 reais) (Reporting by Marcela Ayres in Brasilia and Isabel Teles in Sao Paulo, Editing by Louise Heavens and Alex Richardson)

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