• Biden welcomes Australia“s Albanese; China and cybersecurity on the agenda
• California governor Newsom meets China“s President Xi
• US, Australia to discuss China, Pacific security in White House visit
• China“s President Xi to meet California Governor Gavin Newsom
• US orders immediate stop to some AI chip exports to China; Lloyds profits up but lending margins fall – business live
• Asian stocks recover on China spending plans; inflation jolts Aussie
• Philippines eyes multilateral effort to avert South China Sea clashes
• China chases US and Russia guided-missile submarine capabilities with new vessels
• Xi says China is willing to cooperate with US, ahead of potential meeting with Biden
• China“s defence ministry blasts Pentagon“s annual report
• Asian stocks bounce on China spending plans; inflation jolts Aussie

Biden welcomes Australia“s Albanese; China and cybersecurity on the agenda

https://reuters.com/article/usa-australia/biden-welcomes-australias-albanese-china-and-cybersecurity-on-the-agenda-idUSKBN31P0T7

U.S. President Joe Biden welcomed Australian Prime Minister Anthony Albanese to the White House on Wednesday to discuss maritime and cybersecurity defense as they coordinate their China strategy while separately seeking to ease tensions with Beijing.

Australia is a key U.S. ally in the Pacific and the visit comes as crisis rages in the Middle East. Biden scheduled the visit after canceling a trip to Sydney in May to stay in Washington and negotiate a government funding crisis.

The U.S. Australia partnership is "an alliance that is marked by imagination, ingenuity and innovation," Biden told the prime minister upon his arrival at the U.S. presidential complex in Washington, citing their partnership on World War One, World War Two, and the war on terror.

The visit is expected to result in agreements aimed at deterring and competing with China, even as separately the two countries try to thaw relations with Beijing. The two nations are committed to making sure the "Indopacific remains free, open, prosperous and secure," Biden said.

The expected deals include launching an undersea internet cable project and maritime wharf infrastructure investment designed to benefit and woo Pacific Island nations whose assistance may be needed to respond to any future conflict over Taiwan or the South China Sea, according to U.S. officials.

Washington and Canberra, already partners in a decades-old collective defense agreement, will also announce wider security cooperation with Japan.

The balancing act of strengthening deterrence against China without offending Beijing too much is made more complicated by a Middle East crisis that has again diverted Washington's attention away from the Indo-Pacific.

A leadership vacuum in the U.S. House of Representatives has also complicated the approval of a set of laws needed to deliver on Biden's promise to support the AUKUS defense partnership between the United States, Britain and Australia. The AUKUS deal includes transferring sensitive U.S. and British nuclear submarine technology to Australia.

Financing and approvals related to AUKUS still need to come from Congress, where Republican lawmakers, who have a narrow majority, have repeatedly failed to line up enough support behind a party candidate to elect a new speaker of the House.

On Friday, the Biden administration submitted a supplementary budget request to Congress that includes measures to support U.S. commitments under AUKUS.

A senior administration official said Biden would reassure Albanese that the United States will follow through on its end of the deal as Australians express private frustrations over the delays in moving ahead on the partnership.

"We're in close and deep consultations on Capitol Hill," the official told reporters. "We are confident that the various procedural steps and budget conditions necessary to move forward with pillar one of AUKUS will move through in a way that will support our larger endeavor."

The U.S.-Australian efforts, designed to counter China's territorial claims and reduce trade dependence on the Asian country, come as both countries also work to reduce diplomatic tensions with Beijing.

Albanese will visit China, Australia's largest trade partner and biggest buyer of its iron ore, on Nov. 4.

White House aides are working to lock down a meeting between Biden and Chinese President Xi Jinping during the Nov. 11-17 Asia-Pacific Economic Cooperation summit in San Francisco.

Biden and Albanese will also seek to boost cooperation on cybersecurity and Australia's rare earth minerals output to reduce reliance on China, the dominant supplier.

Biden will also announce that a cyberattack on Australia could be taken as an "armed" attack that would trigger U.S. collective defense obligations. In the event of such an attack, the United States would make a case-by-case decision on whether to invoke the treaty, according to another U.S. official.

Australia has been a major hacking target for China.

Biden will also work on the more intangible parts of the U.S.-Australian alliance, hosting Albanese and his partner Jodie Haydon for an official state dinner.

Attendees will eat a three-course banquet prepared by five-time James Beard Foundation Award nominee Katie Button, set against a canvas of American Monarch butterflies and Australian Cairns Birdwing butterflies.

Nodding to the downbeat politics of the moment, a planned performance by the pop group B-52s at the dinner is being scrapped in favor of music from a U.S. military band.

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California governor Newsom meets China“s President Xi

https://reuters.com/article/china-california-xi/california-governor-newsom-meets-chinas-president-xi-idUSKBN31P12D

California governor Gavin Newsom met Chinese president Xi Jinping on Wednesday to discuss climate change and other issues, Newsom told reporters.

Newsom said he had an opportunity to focus more deeply and substantively on climate change in the meeting with Xi, but also discussed Israel as well as the deadly drug fentanyl.

Newsom began his weeklong trip to China on Monday, visiting Hong Kong and Shenzhen before meeting senior officials in Beijing on Wednesday, including foreign minister Wang Yi.

US, Australia to discuss China, Pacific security in White House visit

https://reuters.com/article/usa-australia/us-australia-to-discuss-china-pacific-security-in-white-house-visit-idUSKBN31P0T7

U.S. President Joe Biden and Australian Prime Minister Anthony Albanese will discuss maritime and cybersecurity defense on Wednesday as they coordinate their China strategy in an official White House visit.

Australia is a key U.S. ally in the Pacific and the visit comes as crisis rages in the Middle East. Biden scheduled the visit after canceling a trip to Sydney in May to stay in Washington and negotiate a government funding crisis.

The visit will produce a series of agreements aimed at deterring and competing with China, even as separately the two countries try to thaw relations with Beijing.

The expected deals include launching an undersea internet cable project and maritime wharf infrastructure investment designed to benefit and woo Pacific Island nations whose assistance may be needed to respond to any future conflict over Taiwan or the South China Sea, according to U.S. officials.

Washington and Canberra, already partners in a decades-old collective defense agreement, will also announce wider security cooperation with Japan.

The balancing act of strengthening deterrence against China without offending Beijing too much is made more complicated by a Middle East crisis that has again diverted Washington's attention away from the Indo-Pacific.

A leadership vacuum in the U.S. House of Representatives has also complicated the approval of a set of laws needed to deliver on Biden's promise to support the AUKUS defense partnership between the United States, Britain and Australia. The AUKUS deal includes transferring sensitive U.S. and British nuclear submarine technology to Australia.

Financing and approvals related to AUKUS still need to come from Congress, where Republican lawmakers, who have a narrow majority, have repeatedly failed to line up enough support behind a party candidate to elect a new speaker of the House.

On Friday, the Biden administration submitted a supplementary budget request to Congress that includes measures to support U.S. commitments under AUKUS.

A senior administration official said Biden would reassure Albanese that the United States will follow through on its end of the deal as Australians express private frustrations over the delays in moving ahead on the partnership.

"We're in close and deep consultations on Capitol Hill," the official told reporters. "We are confident that the various procedural steps and budget conditions necessary to move forward with pillar one of AUKUS will move through in a way that will support our larger endeavor."

The U.S.-Australian efforts, designed to counter China's territorial claims and reduce trade dependence on the Asian country, come as both countries also work to reduce diplomatic tensions with Beijing.

Albanese will visit China, Australia's largest trade partner and biggest buyer of its iron ore, on Nov. 4.

White House aides are working to lock down a meeting between Biden and Chinese President Xi Jinping during the Nov. 11-17 Asia-Pacific Economic Cooperation summit in San Francisco.

Biden and Albanese will also seek to boost cooperation on cybersecurity and Australia's rare earth minerals output to reduce reliance on China, the dominant supplier.

Biden will also announce that a cyberattack on Australia could be taken as an "armed" attack that would trigger U.S. collective defense obligations. In the event of such an attack, the United States would make a case-by-case decision on whether to invoke the treaty, according to another U.S. official.

Australia has been a major hacking target for China.

Biden will also work on the more intangible parts of the U.S.-Australian alliance.

Albanese, his partner Jodie Haydon and the Bidens will eat a three-course banquet prepared by five-time James Beard Foundation Award nominee Katie Button, set against a canvas of American Monarch butterflies and Australian Cairns Birdwing butterflies.

Nodding to the downbeat politics of the moment, a planned performance by the pop group B-52s at the dinner is being scrapped in favor of music from a U.S. military band.

Related Galleries:

China“s President Xi to meet California Governor Gavin Newsom

https://reuters.com/article/china-california/chinas-president-xi-to-meet-california-governor-gavin-newsom-idUSKBN31P0OO

China President Xi Jinping will meet California Governor Gavin Newsom, Chinese state media said on Wednesday.

Newsom is also expected to meet several other high-ranking officials to discuss climate cooperation, promote bilateral economic development and tourism and encourage cultural exchanges.

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US orders immediate stop to some AI chip exports to China; Lloyds profits up but lending margins fall – business live

https://www.theguardian.com/business/live/2023/oct/25/us-ai-arrtificial-intelligence-china-lloyds-profits-nvidia-exports-bank-of-england-ftse-100-business-live

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Asian stocks recover on China spending plans; inflation jolts Aussie

https://reuters.com/article/global-markets/asian-stocks-recover-on-china-spending-plans-inflation-jolts-aussie-idUSKBN31P02X

China helped Asian stocks rise from 11-month lows on Wednesday as investors cheered the approval of a trillion-yuan sovereign issue as a harbinger of stimulus, while the Aussie dollar jumped after hotter-than-expected inflation lifted rate forecasts.

MSCI's broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS), which hit its lowest since last November on Tuesday, rose 0.6% and the Hang Seng (.HSI) climbed more than 1%. Japan's Nikkei (.N225) rose 1.2%.

U.S. Treasuries held onto a bounce-back after the 10-year yield breached 5% on Monday, with the benchmark yield firm at 4.82%.

Shares in Google parent Alphabet (GOOGL.O) fell 6% in after-hours trade on investors' disappointment at its slowing cloud business, while Microsoft (MSFT.O) shares rose nearly 4% - leaving Nasdaq 100 futures 0.4% lower in Asia trade.

European stock futures were steady, while oil and the euro were weighed by Tuesday's weaker-than-forecast purchasing managers surveys on the continent. Euro zone lending data and a German business survey are due later in the session.

China's blue-chip CSI300 index (.CSI300), which had been pinned near four-year lows, rose 0.5%.

China's top parliament approved a 1 trillion yuan ($137 billion) bond issue, state media reported, adding the funds would be spent rebuilding disaster zones and improving infrastructure.

Also helping the mood was state-owned investment company Central Huijin announcing it was buying exchange-traded funds, a move which has sparked strong rallies in the past.

"Government expenditure will help the economy to stabilise further and strengthen growth in the fourth quarter," said Steven Leung, executive director of institutional sales at broker UOB Kay Hian in Hong Kong.

Central Huijin promising ETF purchases drove rallies of more than 20% in 2013 and 2015, according to UOB, and Leung said the signal had given a strong boost to sentiment. Hong Kong leader John Lee also said stock-trading duties and some property stamp duties would be cut in his annual policy statement.

In currency markets, the euro nursed losses at $1.0601, having dropped when the euro zone composite PMI fell deeper into contractionary territory.

The yen sat at 149.84, perhaps steadied by the persistent selling pressure that is driving rock-bottom Japanese yields a little higher. Ten-year Japanese government bond yields touched a decade high of 0.865%.

The Australian dollar was the standout gainer, rising more than 0.5% to touch a two-week high of $0.64.

The annual pace of inflation in Australia slowed in the third quarter, but the Reserve Bank of Australia's (RBA)preferred core measure rose 1.2% to top forecasts of 1.1%.

"We consider the lift in underlying inflation over Q3 23 to be sufficiently strong for the RBA to act on their hiking bias at the upcoming Board meeting," said analysts at CBA.

RBA Governor Michele Bullock is due to appear before a parliamentary committee on Thursday.

Brent crude futures were steady at $87.92 a barrel, with Europe's faltering economy prompting traders to wind back gains made in the wake of conflict in the Middle East.

The United States and Russia were among several nations pushing for a pause in fighting between Israel and Hamas to allow aid into the besieged Gaza Strip.

After touching $1,997 an ounce last week, spot gold traded at $1,971. Bitcoin, meanwhile, seems to have awoken from long hibernation during the so-called "winter" that followed numerous scandals including the collapse of exchange FTX.

Bitcoin is up 15% this week mostly thanks to speculation that exchange-traded fund applications from BlackRock and others will succeed and drive capital into the asset class. Bitcoin last bought $34,158.

The U.S. Securities and Exchange Commission has declined to comment on the speculation.

($1 = 7.3090 Chinese yuan)

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Philippines eyes multilateral effort to avert South China Sea clashes

https://reuters.com/article/southchinasea-philippines-china/philippines-eyes-multilateral-effort-to-avert-south-china-sea-clashes-idUSKBN31P08W

The Philippines will boost multilateral activities including freedom of navigation patrols in the South China Sea, its defence minister said on Wednesday, expressing hope that more countries would "join our fight" after an altercation with China this week.

The Philippines and China earlier this week accused each other of raising tensions, with Manila saying China's coastguard intentionally collided with its boats on a resupply mission to a small contingent of troops stationed on a rusty ship grounded two decades ago.

The incident, near a disputed reef in the Philippines' exclusive economic zone, drew widespread condemnation of Beijing, which says it has sovereignty over almost the entire South China Sea, despite an international arbitration award declaring that claim has no legal basis.

The recent incident with China "could result in more willing nations to join our fight," Defence Secretary Gilberto Teodoro said in a televised interview on state-run PTV. He did not elaborate on what that would entail.

Teodoro also said he is optimistic on the progress on reciprocal access agreement between Japan and the Philippines.

Philippine ties with China have deteriorated this year, with more confrontations at sea, coinciding with Manila strengthening its decades-old military alliance with the United States, including granting Washington expanded access to its bases.

China chases US and Russia guided-missile submarine capabilities with new vessels

https://reuters.com/article/china-military-submarine/analysis-china-chases-us-and-russia-guided-missile-submarine-capabilities-with-new-vessels-idUSKBN31P0DJ

China has launched its first nuclear-powered guided missile submarines, according to the Pentagon's latest report on China's military - giving it land and sea attack options once the sole province of U.S. and Russian vessels.

The Pentagon report, published Oct. 20, marks the first apparent confirmation that modified submarines seen in Chinese shipyards over the last 18 months are Type 093B guided missile submarines.

Reuters revealed in May 2022 that satellite images from Huludao shipyard in northeast China showed a new or upgraded class of submarine, possibly with vertical tubes for launching cruise missiles.

The Pentagon report says that in the short term, the Chinese navy "will have the ability to conduct long-range precision strikes against land targets from its submarine and surface combatants using land-attack cruise missiles, notably enhancing (China's) power projection capability".

Known as SSGNs, conventionally armed missile submarines were developed by the Soviet Union during the Cold War in part to target U.S. aircraft carriers, while the U.S. Navy developed its own version by converting ballistic missile boats to carry large numbers of land-attack Tomahawk cruise missiles.

Cruise missiles are typically long-range, precision weapons that, unlike ballistic weapons, fly at low altitudes or skim the surface of the sea.

The submarine USS Florida fired 93 Tomahawks against Libyan air defences in 2011 - the first combat strikes from a U.S. SSGN and an event that regional military attaches say was closely studied by Chinese strategists.

Some analysts say the PLA navy will be eager to deploy the vessels as an extra weapon against aircraft carriers as well as a land-attack platform, allowing strikes from a far greater range than its fleets of smaller attack submarines.

The report notes that three of the new SSGNs could be operational by next year, as part of a wider expansion of its submarine fleet - both nuclear and diesel powered - which could number 65 vessels in 2025.

The Chinese defence ministry did not respond to questions from Reuters.

The confirmation comes amid an intensifying submarine arms race as China constructs a new generation of nuclear-armed boats as part of its evolving deterrent force.

The effort to track China's submarines at sea is one of the core drivers of increased deployments and contingency planning by the U.S. Navy and other militaries across the Indo-Pacific region.

Singapore-based security scholar Collin Koh said the SSGNs were an important new capability for the Chinese navy.

With an expected core armament of cruise missiles, "this potentially allows them to carry out saturated land and anti-ship attacks at standoff range”, he said, which would complicate strategic calculations by China's rivals.

"I would also expect the Chinese have learned from the Russian experience in using them to threaten U.S. aircraft carriers – with an SSGN, you can launch strikes at standoff range, unlike a typical attack submarine that could have more limited weapon options, and that is a real advantage," said Koh, of the S. Rajaratnam School of International Studies.

Research discussed at the U.S. Naval War College in May noted that the PLA was close to breakthroughs in making its nuclear-powered submarines far quieter and more difficult for the U.S. and its allies to track.

Some diplomats and analysts said, however, that it was unclear whether those breakthroughs had been incorporated into the recently launched SSGNs. The upgrades are expected in nuclear-powered boats launched before the end of the decade.

"Unless they are certain of improvements, we can expect the PLA navy to be cautious in how they initially deploy them," said an Asian military attache who is tracking China's submarine force. The attache declined to be named because of the sensitivity of the matter. "But we know the submarine force is a priority for Xi Jinping, and this is one more sign they are getting there."

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Xi says China is willing to cooperate with US, ahead of potential meeting with Biden

https://www.theguardian.com/world/2023/oct/25/xi-says-china-is-willing-to-cooperate-with-us-ahead-of-potential-meeting-with-biden

Chinese leader Xi Jinping has said China is willing to cooperate with the US as both sides manage their differences and work together to respond to global challenges, amid hopes of a meeting between Xi and US president Joe Biden later this year.

In a letter delivered at an annual dinner of the US-headquarterd National Committee on US-China Relations, Xi said that whether or not the US and China could establish the “right” way of getting along would be crucial to the world, according to state media.

Xi’s call for more stable bilateral ties, which he says should be built on the principles of “mutual respect, peaceful co-existence and win-win cooperation”, comes before a key visit by foreign minister Wang Yi to Washington later this week.

The trip from Thursday to Saturday by the top Chinese diplomat will be the highest-level in-person engagement ahead of an expected meeting Biden and Xi in San Francisco at the November Asia-Pacific Economic Cooperation (Apec) summit.

“Chinese observers believe the visit [by Wang] will pave the way for a possible meeting between the heads of the two states but added that Washington needs to make concrete efforts to address Beijing’s concerns and show its sincerity,” China’s state-controlled Global Times wrote in a commentary.

US-China relations have plummeted in recent years, and attempts to repair ties earlier this year were dashed by the spy ballon saga in January, when US authorities shot down a balloon it said was Chinese spycraft flying in US airspace. US secretary of state Antony Blinken cancelled a visit to China in response, but later met his Chinese counterparts in the summer.

Washington’s top priority has been to ensure the intense competition between the world’s two biggest economies and their disagreements over a host of issues from trade to Taiwan and the South China Sea does not veer into conflict.

Chinese state media has reported that Wang expects to discuss the conflicts in Gaza and Ukraine, and worsening tensions with the Philippines in the South China Sea.

Blinken told the UN security council on Tuesday that he will work with Wang to prevent the conflict in the Middle East from spreading when they meet on Friday.

US officials are keen for Beijing to use its influence with Iran and other countries in the Middle East to help prevent the conflict widening.

Analysts said that while China had expressed concern about the US approach
to the conflict, the two sides share a common interest in avoiding a wider regional war.

“That might be a basis for some common ground, even if China likely sees some benefits to the hit the United States is taking in the region among its Arab partners,” said Dalia Dassa Kaye, a senior fellow at the UCLA Burkle Center for International Relations.

However, she said Beijing’s actual leverage could be limited, while others questioned Beijing’s willingness to use it.

Jon Alterman, head of the Middle East program at Washington’s Center for Strategic and International Studies, said China, as a major oil consumer, certainly has an interest in preventing a direct US-Iranian confrontation as it would spike oil prices.

“Still, the Chinese are unlikely to do any heavy lifting here,” he said. “I expect they’ll want a seat at the table when the Israel-Gaza struggle gets resolved, but they don’t feel much need or ability to hasten resolution.”

Israel’s bombing and siege of Gaza in response to the Hamas attacks has stirred anger in Muslim-majority countries, and Washington fears an imminent ground offensive could spark a wider conflict.

China has consistently called for restraint and a ceasefire in response to Israel’s bombardment of Gaza, but has also sharpened its criticism of Israel.

China“s defence ministry blasts Pentagon“s annual report

https://reuters.com/article/china-usa-defence/chinas-defence-ministry-blasts-pentagons-annual-report-idUSKBN31P040

China's defence ministry on Wednesday denounced the U.S. Defense Department's annual report on China, saying it distorts the country's security policy and military strategy.

Over the next decade, the People's Republic of China will rapidly modernise, diversify, and expand its nuclear forces, the Pentagon said in its report to U.S. Congress, laying out China's national ambitions, including its defence policy and military strategies.

The Pentagon said China has more than 500 nuclear warheads and will probably have more than 1,000 warheads by 2030. The report said China would use new fast-breeder reactors and reprocessing facilities to produce plutonium for its nuclear weapons, despite publicly saying the technologies are intended for peaceful purposes.

"We express our strong dissatisfaction and resolute opposition to this report," Chinese Defence Ministry spokesperson Wu Qian said in a statement, adding that it "exaggerates and hypes the non-existent 'Chinese military threat'".

Wu said the development of China's armed forces is aimed at containing the threat of war, safeguarding its own security and safeguarding world peace, and is not aimed at any specific country or target.

China and the United States have recently traded barbs over global and national security concerns, military interactions in the South China Sea and over Taiwan, which China claims as its own territory.

The Pentagon said in 2022 that China "amplified diplomatic, political, and military pressure against Taiwan".

"The so-called report on China's military power released by the United States is full of all kinds of wrong content, including the statement on the Taiwan issue," a spokesperson for China's Taiwan Affairs Office said at a media briefing on Wednesday.

Calling the military-to-military relationship an important part of Sino-U.S. relations, the Defence Ministry's Wu said, "we maintain frank and effective communication with the United States through military diplomacy".

But he added the difficulties and obstacles facing relations between the two militaries are created by the United States.

"The United States pretends to be confused, while doing things that harm China's security interests, but at the same time shouting that it wants to manage the crisis and strengthen communication," Wu said.

The latest exchange between the two countries comes days before China hosts foreign defence officials at the 10th Xiangshan Forum in Beijing from Oct. 29 to 31.

The United States accepted China's invitation after China turned down a meeting a few months ago between the two countries' defence chiefs.

Asian stocks bounce on China spending plans; inflation jolts Aussie

https://reuters.com/article/global-markets/asian-stocks-bounce-on-china-spending-plans-inflation-jolts-aussie-idUSKBN31P02X

China led Asia's stock markets higher on Wednesday as investors cheered the approval of a trillion-yuan sovereign bond issue as a harbinger of stimulus, while the Aussie dollar hit a two-week high as hotter-than-expected inflation lifted rate forecasts.

MSCI's broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) rose 0.9% and the Hang Seng (.HSI) 2%. Japan's Nikkei (.N225) rose 1.1%.

Bonds have held onto a bounce-back after the 10-year Treasury yield breached 5% on Monday, with the benchmark yield firm at 4.82% in Tokyo trade.

Overnight solid earnings and U.S. economic data lifted Wall Street indexes, while oil and the euro had dropped on weaker-than-forecast purchasing managers surveys on the continent. U.S. and European stock futures were steady in early Asia trade.

China's top parliament approved a 1 trillion yuan ($137 billion) bond issue, state media reported adding the funds would be spent rebuilding disaster zones and improving infrastructure.

Also helping the mood was state-owned investment company Central Huijin announcing it was buying exchange-traded funds, a move which has sparked strong rallies in the past.

"Government expenditure will help the economy to stabilise further and strengthen growth in the fourth quarter," said Steven Leung, executive director of institutional sales at broker UOB Kay Hian in Hong Kong.

Central Huijin promising ETF purchases drove rallies of more than 20% in 2013 and 2015, according to UOB, and Leung said the signal had given a strong boost to sentiment.

China's blue-chip CSI300 index (.CSI300), which had been pinned near four-year lows, bounced 1%.

In currency markets, the euro made its steepest drop for two weeks overnight, falling 0.7% after the euro zone composite PMI fell deeper into contractionary territory to its lowest in three years.

Investors pulled forward European rate cut expectations a little and the euro was nursing losses at $1.0594.

The yen was pinned at 149.85 and the Australian dollar was the standout gainer, rising 0.6% to a two-week high of $0.64.

The annual pace of inflation in Australia slowed in the third quarter, but at 5.4% was above forecasts of 5.3%. Pricing for the odds on a rate hike next month shot to 60% from 35% before the data.

"Given the hawkish rhetoric from the RBA over the past two weeks and an uncomfortably high Q3 CPI outcome, we now expect the RBA to increase the cash rate by 25bp in November to 4.35%," ANZ analysts said in a note.

Oil fell in commodity trade on Tuesday, thanks to the weak economic data from Europe, and was nursing losses on Wednesday. Brent crude futures were steady at $88.13 a barrel, unwinding gains made in the wake of conflict in the Middle East.

"I think commodity markets are recalibrating the geopolitical implications in the Middle East ... more decisive drivers are needed for a clear direction," said Glenn Yin, head of research at AETOS Capital Group in Melbourne.

The United States and Russia were among several nations pushing for a pause in fighting between Israel and Hamas to allow aid into the besieged Gaza Strip.

After touching $1,997 an ounce last week, spot gold traded at $1,973. Bitcoin, meanwhile, seems to have awoken from long hibernation during the so-called "winter" that followed numerous scandals including the collapse of exchange FTX.

It's up 15% this week mostly thanks to speculation that exchange-traded fund applications from BlackRock and others will succeed and drive capital into the asset class. Bitcoin last bought $34,340.

The U.S. Securities and Exchange Commission has declined to comment on the speculation.

($1 = 7.3090 Chinese yuan)

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