SEOUL (Reuters) - South Korea's exports are expected to recover going forward, but at a sluggish pace compared with the past due to a narrower gap in competitiveness against China, the central bank said in a report published on Friday.

"Even if the sluggishness of the information technology (IT) industry cycle eases from the second half of this year, exports are not expected to rebound by as much as in the past due to structural changes in the Chinese economy," the Bank of Korea (BOK) said.

The BOK said that recent weakness in China-bound exports was 35% due to structural factors such as higher competitiveness of Chinese companies, while 65% resulted from a cyclical factor of weak demand.

The estimates were based on data comparison before and after China scrapped its stringent COVID-19 lockdown measures late last year, according to the report.

Separate data showed on Friday South Korea's exports for the first 20 days of July dropped 15% over a year, after falling 6% for the whole of June.

The data suggests that exports are due to extend their downturn this month to a tenth consecutive month, which has been mostly driven by China-bound shipments of semiconductors, and it may take some time for exports to fully get on a recovery path.

Amid divergence between weak semiconductor exports to China and strong automobile sales to the U.S. and the European Union, Asia's fourth-largest economy posted a surplus of $56.38 billion in trade of goods with the U.S. last year, far larger than the $15.06 billion with China, which had been the biggest market for years.

Exports of automobiles, mostly shipped to the U.S. and the European Union, will continue to grow gradually going forward, the BOK said in the report.

By Anant Chandak

BENGALURU (Reuters) - South Korea's economic growth likely slowed a bit last quarter as languishing exports and high interest rates hurt private consumption that accounts for about half of the economy, a Reuters poll of economists found.

While exports from Asia's fourth-largest economy declined in June, imports also fell, indicating a lack of vitality in domestic and foreign demand, especially from China, the country's largest trade partner.

On a year-on-year basis, gross domestic product (GDP) was expected to have expanded 0.8% in the April-June period, according to the median forecast of 22 economists, slightly slower compared to a revised 0.9% growth in January-March.

However, on a quarterly basis, the export-led economy grew a seasonally adjusted 0.5%, a tad higher than 0.3% growth in the preceding quarter, underscoring a lacklustre recovery after it narrowly avoided a technical recession in Q1.

"GDP growth...is expected to be at a similar pace to the first quarter, due to sluggish exports and manufacturing sector, weak investment as well as smaller government spending," said Park Sang-hyun, economist at HI Investment and Securities.

"Economic growth is expected to rebound in the second half of this year...but it will depend on the pace of economic recovery in China."

Initial hopes for an economic boom in China, buoyed by the ending of COVID pandemic-led lockdowns, have been dashed as the world's second-biggest economy is now projected to grow just 5.5% this year and 4.8% next. [ECILT/CN]

Underwhelming growth figures have sent shockwaves through the global economy, impacting not only South Korea but also other Asian economies that heavily rely on Chinese demand, raising concerns about the broader economic outlook.

South Korea's economic growth was forecast to average 1.2% this year, a sharp fall from 2.6% seen last year, a separate Reuters poll showed.

"The economy is set to struggle...as domestic demand remains suppressed by tight monetary policy while exports are likely to weaken as demand from advanced economies weakens and the boost from automotive production fades," wrote Shivaan Tandon, emerging Asia economist at Capital Economics.

By Olena Harmash

KYIV (Reuters) -Ukraine's central bank said it will nationalise Russian-owned Sense Bank, one of the country's top commercial banks, and put it under temporary administration on Friday.

The National Bank of Ukraine (NBU) said in a statement on Thursday it decided to "withdraw from the market the systemically important" bank and submitted a proposal to the government on the state's participation in the process.

The "safe" transfer will not be noticeable to clients, NBU Governor Andriy Pyshnyi told a media briefing.

Previously known as Alfa-Bank Ukraine, Sense Bank is Ukraine's 10th largest in terms of assets and is on the list of systemically important banks, central bank data showed.

As part of its economic response to Moscow's large-scale invasion on Feb. 24, 2022, Kyiv has imposed sanctions on Russia and opened court cases to confiscate assets held by the Russian state in Ukraine and businessmen close to the Kremlin.

In June, President Volodymyr Zelenskiy signed into law the legislation allowing the government to nationalize banks from owners that came under sanctions due to Russia's invasion.

In his nightly video address, Zelenskiy took note of the central bank's move, without identifying Sense Bank by name.

"It is now only right that the cabinet of ministers immediately considers the relevant proposals of the central bank and supports them in relation to this financial institution," Zelenskiy said.

"In the interests of investors, for the sake of financial stability and fundamental justice."

'SIGNIFICANT RISK'

The central bank said the connections of Sense Bank's owners with Russia "pose a significant reputational risk and have a significant negative impact on the bank's activities."

"The regulatory capital of Sense Bank fell by 50% in the period from March 1, 2022, to July 1, 2023, while at the same time, it grew by about 29% at other systemically important banks," Pyshnyi said.

Ukrainian-born Russian-Israeli businessman Mikhail Fridman has a 32.86% stake in ABH Holdings S.A., the majority owner of Sense Bank, while Russian magnate Petr Aven holds 12.4%, the bank said on its website. Fridman and Aven could not be immediately reached for comment.

Sense Bank, with 3 million depositors, posted losses of 7 billion hryvnias ($189.75 million) in 2022, the central bank said.

The Ukrainian financial sector and its banking system have proved remarkably resilient during nearly 17 months of the war under the central bank and government's policies and strong financial support from Kyiv's Western partners.

Central bank officials said they discussed their plans to nationalise the bank with the International Monetary Fund, the country's key lender.

The officials said the government's decision was expected on Friday and all steps on the bank's nationalisation should be completed over the weekend.

Fridman and Aven are long-term partners in oil, banking and retail businesses and they face Western sanctions over their alleged ties to the Kremlin following Russia's invasion of Ukraine. Fridman, who was born in western Ukraine during the Soviet-era times, cast the war in Ukraine as a tragedy.

($1 = 36.8910 hryvnias)

By Daniel Ramos

LA PAZ (Reuters) -Bolivia's lithium resources are now estimated at 23 million metric tons, its president said on Thursday after government studies that further cement the South American country's position as the global leader in lithium resources.

The new figure, reached after more than 66 wells were explored across the Coipasa and Pastos Grandes salt flats, compares with a previous estimate of 21 million metric tons.

President Luis Arce told reporters the government had also begun talks with representatives of the European Union for investments in lithium projects.

"All eyes are on Latin America and Bolivia because of the wealth we have of lithium and strategic minerals," Arce said, adding that at a summit with EU representatives in Brussels earlier this week there had been interest not just in lithium but other minerals and metals in Bolivia.

Metals such as silver, zinc, lead and tin are also mined in the country.

Bolivia has previously turned to investments from Russian and Chinese firms to develop its huge but largely untapped lithium resources.

In the first half of this year, it signed three lithium deals with two Chinese and one Russian firm pledging to invest a total of $2.8 billion to industrialize Bolivia's resources.

The white metal, a key component for batteries used to power electric vehicles, has seen its price skyrocket over recent years as carmakers rushed to shift their production away from combustion engine vehicles to comply with more stringent regulations that aim to curb climate change.

South America's so-called "lithium triangle" holds more than half the world's lithium resources, according to U.S. Geological Survey (USGS) estimates. Bolivia's reserves, however, surpass those of its neighbors Argentina and Chile, estimated at 20 million metric tons and 11 million metric tons respectively.

By David Brunnstrom

WASHINGTON (Reuters) - China does not want a trade or tech war but will definitely respond if the United States imposes more curbs on its chip sector, China's ambassador to Washington said on Wednesday.

Ambassador Xie Feng told the Aspen Security Forum China did not shy away from competition, but the way it was defined by the United States was not fair. He highlighted existing U.S. prohibitions on Chinese imports of equipment to make advanced chips.

"This is like ... restricting the other side to wear outdated swimwear in a swimming contest, while you yourself (are) wearing a Speedo," he said.

Xie referred to reports that Washington is considering an outbound investment review mechanism, and further prohibition on the export of AI chips to China.

"The Chinese government cannot simply sit idly by. There's a Chinese saying that we will not ... make provocations, but we will not flinch from provocations," he said.

"China, definitely ... will make our response. But definitely it's not our hope to have a tit for tat. We don't want ... a trade war, technological war, we want to say goodbye to the Iron Curtain as well as the Silicon Curtain."

The Biden administration has been finalizing an executive order that would restrict certain investment in sectors including advanced semiconductors, quantum computing and artificial intelligence, and a senior administration official said the aim was to wrap up reviews of it by Labor Day.

China targeted U.S. chip maker Micron Technology (NASDAQ:MU) after Washington imposed a series of export controls on American components and chipmaker tools to ensure that they are not used to advance China's military capabilities.

The Cybersecurity Administration of China said in May that Micron failed its security review and barred operators of key domestic infrastructure from purchasing its products.

U.S. Treasury Secretary Janet Yellen said last week at the end of a four-day trip to China she had spoken with Chinese counterparts about the proposed order, and said that any investment curbs would be "highly targeted, and clearly directed, narrowly at a few sectors where we have specific national security concerns."

She said the order would enacted in a transparent way, through a rule-making process that would allow public input.

By Rae Wee

SINGAPORE (Reuters) - The Australian dollar surged on Thursday after the country's employment data far outpaced market expectations, while the yuan marched higher after China's monetary authorities ramped up efforts to defend its weakening currency.

Australia employment handily beat expectations for a second straight month in June, figures on Thursday showed, as net employment rose by 32,600 from May, exceeding market forecasts for an increase of 15,000.

Its jobless rate also held near 50-year lows, in a show of labour market resilience that could risk further rate rises by the Reserve Bank of Australia (RBA).

That boosted the Aussie and sent it spiking nearly 1% to an intra-day high of $0.6840 in Asia trade, taking the New Zealand dollar along with it.

The kiwi was last 0.63% higher at $0.6303, with both Antipodean currencies on track to reverse four straight sessions of losses.

"The Australian dollar has spiked higher across the board after the economy delivered another rate-hike defying report," said Matt Simpson, senior market analyst at City Index.

"Ultimately, it's another strong set of employment figures which keeps the pressure on a data-dependant (Reserve Bank of Australia) to potentially hike rates in August."

In Asia, China left its lending benchmarks unchanged on Thursday, as expected, though its central bank said in a statement it raised a parameter on cross-border corporate financing under its macro-prudential assessments to 1.5 from 1.25. The ratio dictates the maximum any company can borrow as a proportion of its net assets.

The move was meant to make it easier for domestic firms to raise funds from overseas markets, which comes at a time when the Chinese yuan is facing downward pressure as the country's economic recovery falters.

Allowing more capital inflows could alleviate the pressure on the currency.

The hike indicated the People's Bank of China's policy guidance to "defend the (yuan) and curb the excessive forex volatility alongside the strong CNY fixing bias", said Ken Cheung, chief Asian FX strategist at Mizuho Bank.

Sources also told Reuters on Thursday that China's major state-owned banks were seen selling dollars to buy yuan in the offshore spot market in early Asian trades.

The yuan jumped in the onshore and offshore markets following the developments, with both strengthening more than 0.5% against the U.S. dollar.

The offshore yuan was last nearly 0.7% higher at 7.1840 per dollar, while the onshore yuan last traded 7.1770 per dollar, having earlier hit a session-high of 7.1620.

"(It was) a one-two punch driving (the yuan) firmer and supporting sentiment," said Christopher Wong, a currency strategist at OCBC.

But the move could be short term and the yuan could weaken again if disappointment over the absence of economic stimulus from China grows, he added.

RATES OUTLOOK

In the broader currency market, the U.S. dollar was on the back foot, though strayed away from its recent 15-month low.

Sterling was nursing deep losses after a sharp fall in the previous session following Britain's inflation data, which undershot market expectations.

The pound was little changed at $1.29385, after having slid more than 0.7% on Wednesday.

That inflation reading pulled back market expectations of further aggressive rate hikes from the Bank of England (BoE), with the prospect of Britain's rates rising above 6% now likely off the table.

Traders had at one point expected interest rates to rise as high as 6.5%.

"The market I think is a bit more reasonable now with its expectations for rate hikes by the BoE," said Joseph Capurso, head of international and sustainable economics at Commonwealth Bank of Australia (OTC:CMWAY).

The euro rose 0.18% to $1.1220, as investors looked to next week's European Central Bank (ECB) policy meeting for further clarity on its rate outlook.

ECB policymakers have in recent days taken a more dovish tone, with governing council member Yannis Stournaras the latest to guide that future rate rises past July's likely 25 basis points increase remains up in the air.

The U.S. dollar index slipped 0.15% to 100.10, but had regained some lost ground after last week's more than 2% slump.

The Japanese yen rose nearly 0.3% to 139.33 per dollar.

(Reuters) - BofA Global Research on Thursday cut China's economic growth forecast for this year to 5.1% on a disappointing second-quarter gross domestic product (GDP) growth and potential delay in forceful policy response.

The brokerage previously expected the country's economy to grow at 5.7%.

It also lowered China's growth forecast for 2024 to 4.8% from the earlier 5%.

"The downward revision reflects our more cautious view on both investment and consumption growth, esp. in 3Q," the Wall Street bank said in a note.

"But as more signs of growth pressure emerge, policy makers will likely ramp up easing efforts by late 3Q, leading to a modest pick-up of growth momentum in 4Q."

By David Shepardson

WASHINGTON (Reuters) -U.S. government agencies are targeting buying 9,500 electric vehicles in the 2023 budget year, but face supply issues and higher costs, a federal report said on Wednesday.

That's almost three times the number acquired in the prior budget year.

The Government Accountability Office said 26 agencies with approved EV acquisition plans estimated they would need over $470 million for vehicle purchases and almost $300 million in estimated costs to design and install the necessary infrastructure and for other expenses. The vehicles purchase would cost almost $200 million more than the lowest-priced comparable gasoline-powered vehicles. The agencies represent more than 99% of the federal vehicle fleet excluding the U.S. Postal Service (USPS), which is an independent federal entity.

The White House did not immediately comment.

Agencies face hurdles to buy as many EVs as they would like or are unsure if EVs will meet all needs. The Transportation Department told GAO it initially wanted to order 430 ZEVs for 2022 but their order was scaled back to 292 due, in part, to order cancellations from manufacturers.

Customs and Border Protection (CBP) officials told GAO they do not believe that EVs "can support law enforcement equipment or perform law enforcement missions in extreme environments, such as those on the borders," the report said.

President Joe Biden in December 2021 issued an executive order directing the government to end purchases of gas-powered vehicles by 2035. Biden's order also directs that 100% of light-duty federal acquisitions by 2027 be electric or plug-in hybrid vehicles (PHEV).

Biden's order covers 380,000 federal vehicles and covered agencies purchases about 45,000 annually. It does not apply to USPS.

Federal agencies quintupled purchases of EVs and PHEVs in the 12-months ending Sept. 30, 2022 moving from 1% of vehicle acquisitions in 2021 to 12% of light-duty purchases in 2022, or 3,567 total.

In May, USPS said it expected to receive next-generation delivery vehicles in June 2024, nine months behind schedule.

By Patricia Zengerle

WASHINGTON (Reuters) - Republican and Democratic members of the U.S. House of Representatives introduced legislation on Wednesday that would authorize President Joe Biden's administration to negotiate a tax agreement with Taiwan, seeking to foster investment as Washington works to shore up the island against a rising China.

The lawmakers, including House Foreign Affairs Committee Chairman Michael McCaul and top Democrat Gregory Meeks, said the agreement, similar to a treaty, would facilitate investment, protect against tax evasion and allow businesses in both the United States and Taiwan to avoid double taxation.

"In addition to the advantages we will receive from more investment from Taiwan, this is another important step in safeguarding Taiwan and maintaining peace and stability in the Indo-Pacific," McCaul said in a statement.

The bill is a companion to a measure introduced in the Senate in May by lawmakers including the chairman and ranking member of the Senate Foreign Relations Committee.

Washington and Taipei do not have formal diplomatic relations, so the lack of a tax agreement means Taiwanese businesses and individuals are taxed on their income by both the U.S. and Taiwanese governments.

China views democratically governed Taiwan as its own territory and has increased military, political and economic pressure to assert those claims.

Taiwan is a major global supplier of the semiconductor chips essential to a wide range of consumer goods and military equipment.

(Reuters) - Power demand in Texas hit a record high for a second straight day on Tuesday as homes and businesses cranked up air conditioners to escape a brutal heat wave.

The Electric Reliability Council of Texas (ERCOT), which operates the grid for more than 26 million customers representing about 90% of the state's power load, has said it has enough resources available to meet soaring demand.

Texas residents have worried about extreme weather since a deadly winter storm in February 2021 left millions without power, water and heat for days as ERCOT struggled to prevent a grid collapse after the closure of an unusually large amount of generation.

After setting 11 demand records last summer, ERCOT said usage hit a preliminary 82,592 megawatts (MW) at 1800 Central Time (2300 GMT), which would top the grid's previous all-time high of 81,911 MW set on July 17.

That is the fifth record high in ERCOT this summer.

One megawatt can power around 1,000 U.S. homes on a typical day, but only about 200 homes on a hot summer day in Texas.

Meteorologists at AccuWeather forecast high temperatures in Houston, the biggest city in Texas, would hit at least 100 degrees Fahrenheit (37.8 Celsius) every day from July 17-21. That compares with a normal high of 94 F for this time of year.

    Next-day or spot power prices at the ERCOT North Hub, which includes Dallas, fell to $45 per megawatt hour (MWh) on Tuesday from a nearly seven-month high of $475 on Friday. That compares with an average of $38 so far this year, $78 in 2022 and a five-year average of $66.

Rising economic and population growth has boosted electricity use in Sun Belt states like Texas and Arizona even though overall U.S. power demand is projected to ease in 2023 after hitting a record high in 2022.

(This story has been refiled to correct the GMT time in paragraph 4)