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WASHINGTON (Reuters) -Delta Air Lines and Aeromexico challenged a Trump administration decision ordering them to unwind a joint venture by January 1 that let the carriers coordinate scheduling, pricing and capacity decisions for U.S.–Mexico flights. The companies filed a legal challenge to the U.S. Transportation Department decision last month in the 11th Circuit Court of Appeals that was made public Friday. The department ordered an end to the nearly nine-year-old joint venture as part of a number of actions aimed at Mexican aviation, citing competition concerns. (Reporting by David Shepardson; editing by Diane Craft)

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(Reuters) -Levi Strauss & Co shares fell about 9% on Friday as investors focused on the denim maker's warning of a tariff-related hit to its fourth-quarter margin, overlooking a higher annual profit forecast. The margin-hit forecast highlights the impact of the Trump administration's changing trade policies on consumer-facing companies, especially those with suppliers in countries that do not have trade deals with Washington in place yet. Levi's has capitalized on the resurgence of baggy, loose-fit apparel among Gen Z customers and raised its 2025 sales and profit forecasts on Thursday, but the company still warned of a 130-basis-point hit to its fourth-quarter gross margins. "While management calls this (growing expenses) transitory, the concern is that Levi's has struggled to show an ability to scale expenses for 3-5 years now, thus creating lower levels of visibility into 2026 margin," Ike Boruchow, equity analyst at Wells Fargo, said. The company sources the bulk of its products from South Asia, including Bangladesh, Cambodia and Pakistan – countries that face high tariffs currently. Wall Street analysts called the forecast "conservative," with Barclays analysts saying that the lackluster forecast came in despite the company not seeing any adverse changes in shopping trends in September. Trump's trade policies have also pressured the margins of other retailers such as Ralph Lauren, Abercrombie & Fitch and Coach handbag owner Tapestry. However, companies that cater to more affluent customers face less burden as they can pass on the higher costs to the consumer.  Levi's has secured about 70% of its holiday inventory early and slightly raised prices to mitigate tariff impact and prepare for the holiday quarter, executives said in a post-earnings call. It has also broadened its product offerings, leaned into full-price sales and kept a tight leash on inventory to offset weaker consumer sentiment and tariff-related pressures. This has helped the company's stock to climb about 40% so far this year. Its forward price-to-earnings multiple, a common benchmark for valuing companies, is 16.94, compared with Ralph Lauren's 20.59, Abercrombie's 7.48 and American Eagle Outfitters' 11.38. (Reporting by Kanchana Chakravarty and Prerna Bedi in Bengaluru; Editing by Janane Venkatraman and Shinjini Ganguli)

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By Karen Brettell and Amanda Cooper NEW YORK (Reuters) -The dollar dropped on Friday after U.S. President Donald Trump threatened to hike tariffs against China, reigniting concerns over how the trade war will impact the U.S. economy. Trump also said he may cancel a planned meeting with Chinese President Xi Jinping and complained on social media about what he called China's plans to hold the global economy hostage after China dramatically expanded its rare earths export controls on Thursday. The comments lifted the euro and the yen against the greenback, while currencies linked to commodities and raw materials, including the Australian dollar, fell. "Ultimately, it does create a lot of negativity for the U.S. economy," said Juan Perez, director of trading at Monex USA in Washington. "Is China really going to have to be very retaliatory moving forward in order to get the United States to negotiate better? So it creates a lot of doubt.” The dollar index was last down 0.4% a 98.99. It is still on track for a weekly gain of 1.66%, the largest since September 2024, after the Japanese yen and euro this week were hurt by fiscal concerns in their regions. Traders are also watching for signs on when the U.S. federal government will reopen and release data that will shape Federal Reserve policy. The U.S. Bureau of Labor Statistics said on Friday it would publish September's consumer inflation report on October 24 to assist the Social Security Administration determine the annual cost-of-living adjustment for 2026. It comes after many Fed officials expressed concern at their last meeting over inflation risks. "A lot of the easing that central banks either have done, or in the case of the Fed are considering, is being done with a very finely tuned sensitivity to inflation," said Eric Theoret, FX strategist at Scotiabank in Toronto. Traders are pricing in a 97% chance that the Federal Reserve cuts rates by 25 bps at its October meeting, while the odds of an additional cut in December are at 92%, according to the CME Group's FedWatch Tool. YEN WEAKENS ON FISCAL FEARS The Japanese currency has dropped this week on concerns that the Bank of Japan may not hike interest rates again this year after fiscal dove Sanae Takaichi's surprise victory to lead the ruling party, stoking worries of Japanese authorities needing to step in to support the yen. Japanese Finance Minister Katsunobu Kato said on Friday that the government was concerned about excessive volatility in the foreign exchange market.  "Today was the first time that the Minister of Finance expressed a verbal intervention, cautioning about excessive moves in the yen," said Marc Chandler, chief market strategist at Bannockburn Global Forex in New York.  Japanese officials last year expressed concern about a move that weakened the currency by 10 yen in a month and Chandler said a similar move today from the September 17 low would indicate concern around the 155.5 yen level. The yen was last up 0.86% against the greenback to 151.73 per dollar. But the dollar is headed for a 2.9% weekly gain on the currency for the week, its biggest advance since September 2024. The yen has weakened from 147.44 yen per dollar last Friday.  Takaichi said on Thursday she did not want to trigger excessive declines in the yen. She added that the BOJ is responsible for setting monetary policy but that any decision it makes must align with the government's goal.  She looked set to become prime minister in a parliament vote that was expected on October 15. But the date will be likely pushed back after the Liberal Democratic Party's junior coalition partner Komeito pulled its support, breaking their 26-year-old alliance.  FRENCH DRAMA DENTS EURO The euro was up 0.38% on the day at $1.1607 but headed for its biggest weekly decline since July at 1.15% due to political turmoil in France. President Emmanuel Macron welcomed mainstream political leaders to a crunch meeting at the Elysee ahead of a self-imposed late-Friday deadline to name a new prime minister, as the country's central bank chief warned political disorder was sapping growth. The political paralysis has made it challenging to pass a belt-tightening budget and has made investors increasingly worried about France's worsening deficit, on top of evidence of slowing momentum in other key economic engines such as Germany. "The data from Germany's not good, and therefore I think that makes the euro a little bit more susceptible to wobbles on the French news," said Rabobank chief strategist Jane Foley. The Canadian dollar jumped against the greenback after data on Friday showed that Canada's economy posted a surprise 60,400 net job gains in September. "The market's still leaning towards cuts for Canada, but definitely shaving off a bit of the bias in that direction," said Theoret. The loonie was last up 0.15% versus the greenback at C$1.4 per dollar. In cryptocurrencies, bitcoin fell 2.98% to $117,568. (Reporting by Karen Brettell; Additional reporting by Amanda Cooper; Editing by Emelia Sithole-Matarise, Nia Williams and Toby Chopra)

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By Marianna Parraga HOUSTON (Reuters) -Toronto-listed Gold Reserve said on Friday it has filed motions to disqualify a court officer and the judge overseeing an auction of shares in the parent of Venezuela-owned Citgo Petroleum, as well as two firms advising the Delaware court. The miner has been trying to prevent the court from declaring a $5.9 billion bid by rival Amber Energy, an affiliate of hedge fund Elliott Investment Management, as the auction's winner since its own $7.9 billion bid was not recommended in August. Gold Reserve is one of 15 creditors lining up to cash proceeds from the auction of shares in PDV Holding, a unit of Venezuelan state oil company PDVSA, as compensation for debt defaults and expropriations in Venezuela. GOLD RESERVE ALLEGES CONFLICTS OF INTEREST Gold Reserve has also requested a temporary stay of all decisions concerning any bids submitted in the sale process pending resolution of its disqualification motion. "Gold Reserve is seeking full transparency on these issues for its shareholders," it said in a release. The company is seeking to disqualify the Delaware judge overseeing the case, Leonard Stark, as well as court officer Robert Pincus, who switched his recommendation of the auction's winner to Elliott's Amber from Gold Reserve. Reuters could not immediately reach Stark for comment. A counsel for Pincus did not immediately respond to a request for comment. Lawyers representing Venezuela had requested in September the suspension of an important sale hearing due to an alleged conflict of interest involving advising firm Weil, Gotshal & Manges. But Stark denied the motion. Gold Reserve is now requesting Weil be disqualified over an allegation it had been representing Elliott while the Citgo sale process was ongoing. The miner also said that Weil and Evercore, which is helping the court evaluate the bids, have ongoing relationships with some bondholders that could receive auction proceeds under Elliott's bid. Weil and Evercore did not immediately reply to requests for comment. The motions were filed under seal on Thursday, with the Venezuelan parties also filing motions to disqualify Pincus, Weil and Evercore. Judge Stark has set a court hearing for October 21 to listen to the parties over the conflicts that have emerged since Pincus switched his recommendation. He is expected to issue a final ruling on the winner after that. (Reporting by Marianna Parraga; Editing by Mark Potter and Joe Bavier)

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By Erwin Seba HOUSTON (Reuters) -Brent and U.S. crude futures fell more than $2 a barrel, or more than 3%, on Friday as U.S. President Donald Trump's threat to impose increased tariffs on China cast a shadow over the demand outlook in a market seen as oversupplied. "The sell-off was driven by a shift to risk-off markets following Trump's post threatening tariffs on Chinese goods," said Giovanni Staunovo, an analyst with UBS. Brent crude futures were down $2.54, or 3.89%, at $62.68 a barrel at 1:14 p.m. CDT (1814 GMT), the lowest since early May. U.S. West Texas Intermediate crude was down $2.68, or 4.36%, at $58.83, the lowest since early May. "Today is the culmination of a variety of factors of which Trump's threat of a massive increase in tariffs on China is just the latest," said Andrew Lipow, president of Lipow Oil Associates. Production increases from OPEC, additional output gains in North and South America, and the loss of geopolitical risk after the Gaza ceasefire agreement "are all factors that can be layered on top of Trump's announcement this morning of tariffs on China," Lipow said. Trump, who was due to meet Chinese President Xi Jinping in about three weeks in South Korea, complained on social media about what he characterized as China's plans to hold the global economy hostage, after China dramatically expanded its export controls on rare earth elements on Thursday. China dominates the market for such elements, which are essential to tech manufacturing. In addition to threatening to cancel the meeting with Xi, Trump said he may impose a massive increase in tariffs on Chinese goods. Israel and the Palestinian militant group Hamas signed a ceasefire agreement on Thursday in the first phase of Trump's initiative to end the war in Gaza. Under the deal, which Israel's government ratified on Friday, fighting will cease, Israel will partially withdraw from Gaza, and Hamas will free all remaining hostages it captured in the attack that precipitated the war, in exchange for hundreds of prisoners held by Israel. Numerous vessels have been attacked by the Iran-aligned Houthis in Yemen since 2023, targeting ships they deem linked to Israel in what they described as solidarity with Palestinians over the war in Gaza. The Gaza ceasefire deal means the focus can move back to the impending oil surplus, as OPEC proceeds with the unwinding of production cuts, said Daniel Hynes, an analyst at ANZ.  A smaller-than-expected November hike in output agreed by the Organization of the Petroleum Exporting Countries and allies (OPEC+) on Sunday eased some of those oversupply concerns. "Markets' expectations for a sharp ramp-up in crude supply have not manifested themselves in substantially lower prices," BMI analysts said in a note on Friday. Investors are also worried that a prolonged U.S. government shutdown could dampen the American economy and hurt oil demand in the world's largest crude consumer. (Reporting by Erwin Seba in Houston, Anna Hirtenstein in London; Additional reporting by Stephanie Kelly and Sudarshan Varadhan; Editing by Christian Schmollinger, Mark Potter, Nia Williams, Andrea Ricci and Edmund Klamann)

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By Jarrett Renshaw WASHINGTON (Reuters) -President Donald Trump is expected to make an announcement on Friday about lowering U.S. drug prices, according to a White House official who declined to provide additional details. The announcement is with Britain-based AstraZeneca for a "most-favored-nation" drug pricing model aimed at making prescription medicines more affordable, MSNBC reported, citing a White House official. The deal includes cutting prices for the government's Medicaid health plan for low-income Americans and discounted prices through the TrumpRx website planned for next year, MSNBC said. AstraZeneca CEO Pascal Soriot will be present at the White House for the announcement, it said. The White House was not available for comment. AstraZeneca declined to comment. ANNOUNCEMENT COMES AFTER PFIZER DEAL The announcement, which follows a deal Trump announced last week with U.S. drugmaker Pfizer, is set to take place at 5 p.m. ET (2100 GMT) in the Oval Office, the White House official had said. Pfizer agreed to lower prescription drug prices in the Medicaid program for lower-income Americans to what it charges in other developed countries in exchange for tariff relief. U.S. patients currently pay by far the most for prescription medicines, often nearly three times more than in other developed nations, and Trump has been pressuring drugmakers to lower their prices to what patients pay elsewhere or face stiff tariffs. Last month, he threatened 100% tariffs, ratcheting up pressure on the pharmaceutical industry to agree to price cuts and shift manufacturing to the U.S., after negotiations broke down earlier this year, lobbyists and executives told Reuters following the Pfizer deal. ASTRAZENECA ALREADY PLEDGED MANUFACTURING MOVE Soriot has worked to keep his company close to Washington while pursuing its growth strategy. AstraZeneca in July announced it will invest $50 billion in U.S. manufacturing and research and development by 2030. It will build its biggest site worldwide in Virginia, and expand facilities in five other U.S. states. In September, the company announced it will sell its diabetes and asthma drugs direct to cash-paying U.S. patients at a discount of up to 70% off list prices, another move in response to Trump's pressure campaign. Soriot this year has played up the company's U.S. credentials. He described the Anglo-Swedish firm as a "very American company," highlighting its identity shift toward its largest market. AstraZeneca will list its shares in the United States as well as its current markets in the UK and Europe. Pfizer was the first major pharmaceutical company to announce a deal with Trump after the president sent letters to 17 leading drugmakers in July telling them to slash prices. He asked them to respond with binding commitments by September 29. The news of an impending second "most-favored-nation" drug pricing announcement was first reported by CBS News reporter Jennifer Jacobs in a post on X, citing people familiar with the matter. (Reporting by Jarrett Renshaw in Washington, Maggie Fick in London and Mariam E Sunny in Bengaluru; Writing by Michael Erman in New Jersey; Editing by Caroline Humer and Bill Berkrot)

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By Rajesh Kumar Singh and Doyinsola Oladipo CHICAGO/NEW YORK (Reuters) -Spirit Airlines' financial troubles reveal that going upscale is not a panacea for the challenges facing low-cost carriers, which are grappling with mounting operating costs, changing customer preferences and stiff competition from the Big Three U.S. airlines. After emerging from bankruptcy protection in March, Spirit tried to rebrand itself and focus on more affluent travelers to turn its business around. But within six months, the Florida-based airline filed for bankruptcy again, underscoring the limits of a strategy that is being replicated across the low-cost sector with similarly mixed results. A post-pandemic runup in wages, aircraft lease costs and other operating expenses has eroded the cost advantage that low-cost airlines once relied on. At the same time, inflation has hit their core customer base harder, while the Big Three – Delta, United, and American – have deployed larger aircraft and expanded basic economy offerings to compete directly for price-sensitive travelers. The result is a squeeze from both ends: rising costs and shrinking market share. MARGINS UNDER PRESSURE Spirit's strategic shift was aimed at tapping in to rising demand for premium travel and building a high-margin revenue stream to offset rising costs. Frontier Airlines, its closest peer, has followed suit by adding first-class-style seating and expanding loyalty perks. Breeze Airways, founded by JetBlue veteran David Neeleman, also offers bundled amenities and larger seats at lower prices than legacy carriers. But Spirit's quarterly revenue fell 20% amid a sharp drop in passenger volume, while non-fuel operating costs surged. The airline posted a $246 million loss in the June quarter. Frontier lost $70 million. Spirit's operating expenses in the June quarter totaled 118% of revenue, up from 84% in 2019. Frontier's expenses hit 108%, a 24-percentage-point jump from before the pandemic. Full-service carriers are also facing cost pressures, but their diversified revenue streams have helped shield margins and outperform the broader industry. Neeleman, CEO of Breeze Airways, attributed the troubles at budget airlines to a direct competition with the legacy airlines. In an interview, he said smaller carriers like Breeze and Allegiant have been making money as they mostly operate on nonstop routes with no competition.          BIG THREE MUSCLE IN Delta, United and American have used higher-capacity aircraft on domestic routes to compete more effectively for budget-conscious travelers. Their basic economy fares, once seen as a niche offering, now account for a growing share of ticket sales. United's basic economy made up 15% of domestic sales last year, up 2 points from 2023. Its chief commercial officer, Andrew Nocella, has called the basic economy offering a "home run" for the airline.  "The proliferation of basic economy was the thing that really hurt," Neeleman told Reuters. At a congressional hearing last month, Frontier CEO Barry Biffle accused legacy carriers of using loyalty programs to subsidize basic economy fares and urged lawmakers to remove barriers that prevent budget airlines from competing on equal footing. "Too many gates are locked, and too many doors are closed," he said. PREMIUM PIVOT RUINS LOW-COST SIMPLICITY Spirit's tiered fare model now includes priority boarding, complimentary snacks and drinks, streaming Wi-Fi, and free checked bags – features once unthinkable for a carrier known for bare-bones service. Frontier has similarly upgraded its offerings and streamlined customer service. But analysts say the shift adds operational complexity and dilutes the simplicity that made low-cost carriers viable. Their premium offerings also pale in comparison with those of legacy airlines. "Have you seen anywhere an example of an airline that has sought to reposition itself up in the value chain and succeeded in surviving?" said John Grant, senior analyst at travel consultancy OAG. Spirit and Frontier declined requests for interviews for this story.  BRAND PERCEPTION STILL A DRAG Discount airlines also face a complex branding challenge when courting high-value travelers as they have built a reputation for "nickel-and-diming" customers. Spirit and Frontier ranked last in J.D. Power's customer satisfaction survey this year. A U.S. Senate report found both the airlines paid $26 million in incentives to staff between 2022 and 2023 to enforce bag policies. "The only reason why people are buying them is because they're basically coupon-clipping," said Michael Taylor, senior managing director at J.D. Power. Both carriers have taken steps to soften their image. Spirit and Frontier have eliminated standard change and cancellation fees on many fares. Frontier has extended flight credit validity, streamlined boarding, and reinstated live phone support for elite loyalty members. Still, some travelers remain unconvinced. Lesly Simmons, a San Francisco-based tech marketing professional, said she paid twice for a checked bag on a Frontier flight and never received a refund. "I couldn't imagine why I would turn away from an established airline that has treated me quite well over the years to an airline that hasn't," said Simmons, who frequently flies with United. (Reporting by Rajesh Kumar Singh in Chicago and Doyinsola Oladipo in New York; Editing by Joe Brock and Matthew Lewis)

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By Howard Schneider WASHINGTON (Reuters) – Federal Reserve Governor Christopher Waller said on Friday that private data shows the job market remains weak and buttresses the case for further interest rate cuts, but added the U.S. central bank need only move in "cautious" quarter-percentage-point steps as it evaluates the economy. The U.S. jobs report for September has been delayed by the ongoing federal government shutdown, but Waller said that private data reports, like the recent one from payroll processor ADP showing a contraction in employment last month, have been consistent in showing the job market losing steam.  Alternate sources of information on the job market "are not really representative … but they are all telling the same story. The labor market is weak," Waller said on CNBC's "Squawk Box" program. "We need to cut rates. But we need to be kind of cautious about it … Do 25 (basis points), keep going, see how it goes." Waller, reportedly on an evolving short list of candidates to replace Fed Chair Jerome Powell next year, said his call for caution stemmed from the contrast between data that show economic growth may be strengthening after a modest first half of the year, and a job market that "is not tight in any way shape or form." "Something has got to give. Either the labor market rebounds to match the GDP growth, or … GDP growth is going to pull back. Whichever way that goes, it's got to affect what you do with policy," Waller said. His view is aligned with the broad consensus at the Fed that rates will continue to fall this year, but contrasts with the call by new Fed Governor Stephen Miran for deep and immediate reductions in borrowing costs. "You adjust as you go, as the data comes in. If you went 75 (basis points) tomorrow, you'd have a bit of a problem if you had the wrong bet," Waller said.  The Fed, which cut rates by a quarter of a percentage point last month, will hold its next policy meeting on October 28-29. Investors anticipate it will reduce rates by a quarter of a percentage point this month, following up with the same-sized reduction in borrowing costs at its final meeting of the year in December. Other policymakers in recent days have revived concerns about persistent inflation and said the Fed may not have much room to lower rates further without risking renewed price pressures. But if the job market is as weak as it seems, "you're not going to get the typical thing people are afraid of … Prices go up. Workers demand higher wages. Those wages get passed through and you get these kind of wild price wage spirals," Waller said. "That's not happening." (Reporting by Howard Schneider; Editing by Alison Williams and Paul Simao)

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By Blake Brittain (Reuters) -Apple was hit with a lawsuit in California federal court by a pair of neuroscientists who say that the tech company misused thousands of copyrighted books to train its Apple Intelligence artificial intelligence model. Susana Martinez-Conde and Stephen Macknik, professors at SUNY Downstate Health Sciences University in Brooklyn, New York, told the court in a proposed class action on Thursday that Apple used illegal "shadow libraries" of pirated books to train Apple Intelligence. A separate group of authors sued Apple last month for allegedly misusing their work in AI training. TECH COMPANIES FACING LAWSUITS The lawsuit is one of many high-stakes cases brought by copyright owners such as authors, news outlets, and music labels against tech companies, including OpenAI, Microsoft, and Meta Platforms, over the unauthorized use of their work in AI training. Anthropic agreed to pay $1.5 billion to settle a lawsuit from another group of authors over the training of its AI-powered chatbot Claude in August. Spokespeople for Apple and Martinez-Conde, Macknik, and their attorney did not immediately respond to requests for comment on the new complaint on Friday. Apple Intelligence is a suite of AI-powered features integrated into iOS devices, including the iPhone and iPad.  "The day after Apple officially introduced Apple Intelligence, the company gained more than $200 billion in value: 'the single most lucrative day in the history of the company,'" the lawsuit said. According to the complaint, Apple utilized datasets comprising thousands of pirated books as well as other copyright-infringing materials scraped from the internet to train its AI system. The lawsuit said that the pirated books included Martinez-Conde and Macknik's "Champions of Illusion: The Science Behind Mind-Boggling Images and Mystifying Brain Puzzles" and "Sleights of Mind: What the Neuroscience of Magic Reveals About Our Everyday Deceptions." The professors requested an unspecified amount of monetary damages and an order for Apple to stop misusing their copyrighted work. (Reporting by Blake Brittain in Washington, Editing by Alexia Garamfalvi and Rod Nickel)

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BRASILIA (Reuters) -Brazil's government on Friday announced a new real estate funding framework that loosens rules on the mandatory allocation of bank resources to the sector, releasing 36.9 billion reais ($6.72 billion) for them to boost housing loans. The changes are based on easing the use of savings accounts as the main source of housing credit in Latin America's largest economy. Although exempt from income tax, savings accounts offer returns well below the benchmark interest rate, leading to significant outflows in recent years as Brazilians gain financial literacy and easier access to fixed-income alternatives through investment platforms. Under the model presented by President Luiz Inacio Lula da Silva's administration, banks will no longer be required to meet central bank reserve requirements or earmark destinations when using savings account funds, in a phased transition. The central bank estimates this will unlock 111 billion reais in new loans in its first year, 52.4 billion reais more than the current framework. Of that, 36.9 billion reais will be made available for immediate lending, it said in a statement. The overhaul is expected to fuel borrowing ahead of the 2026 general election, even as the central bank maintains high interest rates to cool the economy and curb inflation. Until the end of next year, banks must still allocate 65% of savings deposits to housing loans, while 15% may be freely used. The share held as compulsory central bank deposits will fall to 15% from 20%, freeing up 5% for additional housing loans. From 2027, banks that raise market funding and fully allocate it to housing loans may use an equivalent amount from savings accounts, which are typically cheaper, for free allocation over a set period. The government expects the flexibility to improve banks' profitability and enable lower rates on housing loans funded through other sources. Under the new rules, 80% of housing loans must comply with the Housing Finance System, which caps interest at 12% annually. ($1 = 5.4878 reais) (Reporting by Marcela Ayres; Editing by Paul Simao, Kirsten Donovan)

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