Tag Archives: United States

Dramatic stock market rally runs out of steam

A screen displays the Dow Jones Industrial Average after the close of trading on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., December 26, 2018. REUTERS/Jeenah Moon

By Trevor Hunnicutt

(Reuters) – A dramatic global stock rally faded on Thursday after a fall in Chinese industrial profits offered a reminder of the pressures on the world economy.

Still, an index of world stocks stayed off near two-year lows hit earlier this week before Wednesday’s 1,000 point-plus surge on the U.S. Dow Jones index, which was attributed to the strongest holiday sales in years.

“Yesterday was a blowout day for U.S. equity markets which triggered optimism that this could be a key reversal day but the upward momentum has not really followed through,” said Lee Hardman, an analyst at MUFG in London.

“One reason is that maybe the sharp move higher was driven by year-end rebalancing, which exaggerated the scale of the rebound, and now we have reverted to the trend which has been in place most of this month.”

That trend is toward weaker stocks, U.S. dollar and oil prices along with stronger demand for safe-haven government bonds, gold and Japanese yen.

MSCI’s gauge of stocks across the globe shed 0.95 percent and U.S. crude fell 2.01 percent to $45.29 per barrel after each staged big rallies the day prior. [O/R]

Markets in mainland China, as well as Hong Kong, closed weaker after data showed earnings at China’s industrial firms dropped in November for the first time in nearly three years.

A Reuters report added to the gloom around the world’s second-biggest economy, saying the White House was considering barring U.S. firms from buying telecoms equipment from China’s Huawei and ZTE.

That and an ongoing partial U.S. government shutdown overshadowed positive noises from the U.S. government on trade talks with Beijing, its efforts to temper the White House’s recent broadsides against the Federal Reserve and a report showing the number of Americans filing applications for jobless benefits fell marginally last week in a sign of labor market strength.

The Dow Jones Industrial Average fell 394.04 points, or 1.72 percent, to 22,484.41, the S&P 500 lost 42.07 points, or 1.70 percent, to 2,425.63 and the Nasdaq Composite dropped 134.06 points, or 2.05 percent, to 6,420.29. [.N]

“So far, we don’t see a shift in fundamentals. Trade tensions between the U.S. and China remain the biggest unknown factor for 2019,” said Hussein Sayed, a strategist at online brokerage FXTM.

There were also renewed concerns in Italy, where troubled lender Banca Carige was denied a cash call by its largest shareholder, pushing its shares down 12.5 percent.

The concerns over a faltering global economy and signs of an oil glut pressured crude prices a day after their 8 percent rally. U.S. Treasury prices also reversed direction after falling sharply on Wednesday, with the 10-year note last rising 15/32 in price to yield 2.7452 percent. [US/]

Another safe-haven, gold, was up 0.6 percent to $1,274.52 an ounce, remaining just below a six-month peak hit earlier this week. [GOL/]

Investors also bought yen, strengthening that currency 0.56 percent against the greenback at 110.74 per dollar. Against a basket of trading partners’ currencies, the dollar was down 0.35 percent. [FRX/]

“We have started to see the yen regain its place as the safe haven of choice,” MUFG’s Hardman said.

(Additional reporting by Abhinav Ramnarayan and Sujata Rao in London; Editing by Chizu Nomiyama)

How partial shutdown of U.S. government could play out

FILE PHOTO: Clouds pass over the U.S. Capitol at the start of the third day of a shut down of the federal government in Washington, U.S., January 22, 2018. REUTERS/Joshua Roberts

WASHINGTON (Reuters) – A partial U.S. government shutdown was widely expected to continue after Congress reconvenes on Thursday, with lawmakers split over President Donald Trump’s demand for $5 billion in taxpayer funding for a proposed Mexican border wall.

The Senate and the House of Representatives were set to meet at 4 p.m. EST on the sixth day of the shutdown and resume debating ways to end it. That will include Senate consideration of a measure already approved by the Republican-controlled House that meets Trump’s wall-funding demand.

For that bill to move forward in the 100-seat Senate, it would need 60 votes. Republicans have only 51 seats, so they will need to try to persuade some Democrats to back the measure.

But Democrats largely oppose Trump’s proposed wall, which he had initially said would be financed by Mexico. They have offered support for $1.3 billion in general border security funding. It was not clear if some compromise could be struck between that offer and Trump’s demand.

Over the weekend, Mick Mulvaney, the acting White House chief of staff, said the White House had made a counter-offer to Democrats on border security. Media reports said Vice President Mike Pence had proposed $2.1 billion in funding.

Last week Trump said his administration was prepared for a lengthy shutdown.

After weeks of failed talks between Trump and congressional leaders, parts of the U.S. government shut down on Saturday, affecting about 800,000 employees of the Departments of Homeland Security, Justice, Agriculture, Commerce and other agencies.

Most of the federal government, which directly employs almost 4 million people, is unaffected. The Defense, Energy, Labor and other departments are funded through Sept. 30.

Even agencies that are affected never totally close, with workers deemed “essential” still performing their duties.

“Non-essential” federal workers at unfunded agencies are on furlough and staying home. Both they and essential employees will not get paychecks after December until the shutdown ends.

“We continue to believe that it is unlikely that Congress will come up with a deal to end the current partial shutdown until well into January,” financial firm Height Securities said in a commentary note on Wednesday.

The 435-seat House was set to reopen on Thursday but on Jan. 3, the 2017-18 Congress will be replaced by the 2019-20 Congress and control of the House will switch to the Democrats from the Republicans. At that time, Representative Nancy Pelosi is expected to take over as House speaker.

She has vowed swift action to fully reopen the government. Barring some sort of deal in the interim, House Democrats expect to vote on a funding bill on Jan. 3, a Democratic aide said.

In the new Congress, Senate Republicans will increase their number of seats to 53 but still will need Democratic support to pass any legislation requiring a 60-vote majority.

Details of the upcoming House bill were unclear but it was unlikely to include wall funding, like an earlier Senate measure. If such a bill were to pass the House and again win support in the Senate, it would then go to Trump.

At that point, he could face a politically difficult choice – back down on his full wall-funding demand or veto the bill and single-handedly extend the partial shutdown.

If he chose the latter, putting his personal stamp on the shutdown, Congress might then move to override his veto, but that would take a two-thirds vote in both the Senate and the House, a challenging hurdle for lawmakers.

(Reporting by Kevin Drawbaugh and David Morgan; Editing by Richard Chang and Bill Trott)

U.S. stocks attempt rebound

A trader works on the floor of the New York Stock Exchange (NYSE) in New York, U.S., December 26, 2018. REUTERS/Jeenah Moon

By Medha Singh

(Reuters) – U.S. stocks were attempting a modest rebound on Wednesday, boosted by technology shares and an Amazon-led jump in retailers, following four sessions of steep losses that pushed the S&P 500 and Dow Industrials near bear market territory.

After a strong start, the S&P and Dow swung between gains and losses. At its session low, the S&P hit a fresh 20-month low and came within two points of entering bear market territory, measured by a drop of more than 20 percent from a closing high.

The gains were led by technology stocks, which rose 1.49 percent. Their 9.2 percent slump in the past four sessions was the steepest among the 11 major S&P sectors, while the S&P 500 tumbled 7.7 percent.

Amazon.com Inc jumped 4.02 percent after reporting a “record-breaking” season. The stock was giving the biggest boost to the S&P and Nasdaq and led the consumer discretionary index up 1.49 percent.

But investors anxieties were far from gone. President Donald Trump renewed his attack on the Federal Reserve on Christmas, blaming it for the market slump.

Trump also said the U.S. government shutdown, now in its fifth day, would last until his demand for funds to build a wall on the U.S.-Mexico border is met.

A little over 2,100 stocks on the New York Stock Exchange and the Nasdaq hit 52-week lows. That compares with at least 2,600 stocks breaching new lows in the past three sessions.

“The market doesn’t look so healthy. The concerns are government shutdown, the economy, the President – what time is he going to tweet out about Federal Reserve,” said Larry Benedict, founder of the Opportunistic Trader in Boca Raton, Florida.

“We’re seeing the same thing recently and it’s not really good. It opens up every day and it’s met by selling and it ends nearer the low or on the low than the high. For the market to make a bottom, you need a bit of capitulation or panic bottom.”

The S&P was up 24.41 points, or 1.04 percent, at 2,375.51, at 11:37 a.m. ET, a day after the Christmas holiday.

The Dow Jones Industrial Average was up 196.31 points, or 0.90 percent, at 21,988.51 and the Nasdaq Composite was up 98.42 points, or 1.59 percent, at 6,291.34.

Eight of the 11 S&P sectors were higher, with the defensive utilities. SPLRCU real estat and consumer staples flat to lower.

Energy stocks rose 1.8 percent as crude oil prices rebounded.

Retailers jumped 3.14 percent, led by Amazon after a Mastercard report showed U.S. holiday sales were the strongest in six years.

The heavy-weight FAANG group, Facebook Inc, Amazon, Apple Inc, Netflix Inc and Alphabet Inc, rose between 1 percent and 4 percent.

The S&P ended Monday 19.8 percent below its all-time closing high, with roughly three-fourths of its stocks already in a bear market.

The Dow finished Monday 18.9 percent lower than its closing high. The Nasdaq is already in bear market, along with the Dow Jones Transport Average and small-cap Russell 2000 index.

Advancing issues outnumbered decliners by a 1.70-to-1 ratio on the NYSE and a 1.89-to-1 ratio on the Nasdaq.

The S&P index recorded no new 52-week highs and 194 new lows, while the Nasdaq recorded five new highs and 455 new lows.

(Reporting by Medha Singh in Bengaluru; Editing by Anil D’Silva)

Trump says U.S. government shutdown to last until agreement on border wall

U.S. President Donald Trump clasps his hands as he holds a video call with U.S. military service members in the Oval Office on Christmas morning in Washington, U.S., December 25, 2018. REUTERS/James Lawler Duggan

WASHINGTON (Reuters) – U.S. President Donald Trump on Tuesday said the partial shutdown of the federal government was going to last until his demand for funds to build a wall on the U.S.-Mexico border is met.

The U.S. government partially shut down on Saturday, and there is not yet any sign of tangible efforts to reopen agencies closed by a political impasse over Trump’s demand for border wall funds.

“I can’t tell you when the government is going to reopen,” Trump said, speaking after a Christmas Day video conference with U.S. troops serving abroad. “I can tell you it’s not going to reopen until we have a wall, a fence, whatever they’d like to call it. I’ll call it whatever they want, but it’s all the same thing. It’s a barrier from people pouring into the country, from drugs.”

He added: “If you don’t have that (the wall), then we’re just not opening.”

Funding for about a quarter of federal programs – including the departments of Homeland Security, Justice and Agriculture – expired at midnight on Friday. Without a deal to break the impasse, the shutdown is likely to stretch into the new year.

Building the wall was one of Trump’s most frequently repeated campaign promises, but Democrats are vehemently opposed to it.

(Reporting by Makini Brice; writing by Yeganeh Torbati, editing by G Crosse)

Mexico vows to end ‘horror’ migrants face, seeks more detail on U.S. plan

By Dave Graham

MEXICO CITY (Reuters) – The Mexican government on Monday pledged to end the “horror” migrants face crossing the country en route to the U.S. border, and pressed Washington for more details of its plan to send asylum-seekers to Mexico while their requests are processed.

Mexico’s government had said it would on Monday set out its position on the Trump administration’s radical policy change, announced last week, that migrants seeking refuge in the United States would be sent to Mexico while their cases are pending.

But for the second time running, Mexican foreign minister Marcelo Ebrard told a regular news conference that he would seek “more information” from U.S. authorities about the plan both sides unveiled on Thursday.

Most migrants traveling to the United States are from poor and violent countries in Central America. Caravans of them from the region have in recent months fanned tensions between Mexico and U.S. President Donald Trump over border security.

Ebrard reiterated his government would not sign any accord that made Mexico a “safe third country” – an agreement Mexico says U.S. officials have requested which would oblige migrants who arrive first in Mexico to file asylum requests there.

Instead, the minister said, Mexico would “drastically” change its migration policy to ensure that its response to the mass movement of people was humanitarian.

“Today there’s only one way of describing the experience of the migrants that travel through our country: It is a horror. Humiliations, abuses, violations, and outrages,” Ebrard said alongside President Andres Manuel Lopez Obrador.

Deflecting attention from Trump’s often pointed criticism, Mexico has tried to take the higher ground in the debate by promising to help migrants get jobs and visas.

Interior Minister Olga Sanchez told the news conference that migrants would in future enter Mexico in an “orderly” and “safe” way, vowing a shift away from what she called a policy of “repression and militarization” at its southern border.

But many questions remain about how Mexico will cope with an influx of potentially thousands of Central Americans into the country for cases that may take years to process.

Lopez Obrador has sought not to antagonize Trump by commenting on the U.S. president’s demands for a southern border wall, and on Monday he again declined to do so.

“There’s a special situation in the United States and I don’t wish to offer a point of view,” he told reporters. “I will keep my counsel. There will be time.”

(Reporting by Dave Graham; Editing by Chizu Nomiyama and Jonathan Oatis)

SpaceX launches first U.S. national security space mission

By Joseph Ax

(Reuters) – A SpaceX rocket carrying a U.S. military navigation satellite blasted off from Florida’s Cape Canaveral on Sunday, marking the space transportation company’s first national security space mission for the United States.

The Falcon 9 rocket carrying a roughly $500 million GPS satellite built by Lockheed Martin Corp lifted off from Cape Canaveral at 8:51 a.m. local time (1351 GMT). Four previous scheduled launches in the last week, including one on Saturday, were canceled due to weather and technical issues.

The successful launch is a significant victory for billionaire Elon Musk’s privately held rocket company, which has spent years trying to break into the lucrative market for military space launches dominated by Lockheed and Boeing Co.

SpaceX sued the U.S. Air Force in 2014 over the military’s award of a multibillion-dollar, non-compete contract for 36 rocket launches to United Launch Alliance, a partnership of Boeing and Lockheed. It dropped the lawsuit in 2015 after the Air Force agreed to open up competition.

The next year, SpaceX won an $83 million Air Force contract to launch the GPS III satellite, which will have a lifespan of 15 years.

The satellite is the first to launch out of 32 in production by Lockheed under contracts worth a combined $12.6 billion for the Air Force GPS III program, according to Lockheed spokesman Chip Eschenfelder.

The launch was originally scheduled for 2014 but has been hobbled by production delays, the Air Force said.

The next GPS III satellite is due to launch in mid-2019, Eschenfelder said, while subsequent satellites undergo testing in the company’s Colorado processing facility.

(Additional reporting by Eric M. Johnson and Gina Cherelus; Editing by Hugh Lawson and Daniel Wallis)

Mexico says it won’t deport refugees as it seeks details on U.S. plan

FILE PHOTO: A group of Central Americans who are hoping to apply for asylum, wait at the border on an international bridge between Mexico and the U.S. in Ciudad Juarez, Mexico October 31, 2018. REUTERS/Jose Luis Gonzalez

MEXICO CITY (Reuters) – Mexico’s government said on Friday it wanted more details from the United States on its plan to send migrants to Mexico while their asylum claims are processed, and vowed not to deport people seeking refuge.

On Thursday, Mexico said it had agreed on humanitarian grounds to accept some non-Mexican migrants sent by the United States to wait in Mexico while their U.S. asylum requests were processed.

However, many questions remain about how the country would house what could be thousands of people from Central America.

The accord was widely viewed as a concession by Mexico’s new president Andres Manuel Lopez Obrador to his U.S. counterpart Donald Trump, who has threatened to shut down the Mexico-U.S. border if the flow of migrants is not contained.

Questioned at a regular news conference about why Mexico appeared to be giving Trump what he wanted, foreign minister Marcelo Ebrard said Mexico would set out its position more clearly on Monday once it had more information.

“Today, I’m going to ask the U.S. authorities to give us many details,” Ebrard said, noting that the fate of migrants already inside the United States would depend on U.S. law.

To send people to Mexico, the Trump administration is invoking a section of the Immigration and Nationality Act that allows the government to return migrants to a foreign country bordering the United States pending their immigration process.

But some legal experts argue that rule also exempts anyone found inadmissible at the border due to a lack of documents. That could apply to many asylum-seekers.

Ebrard sought to defend the leftist Lopez Obrador administration’s stance as a humanitarian gesture rather than a political one.

“Mexico will not deport people looking for asylum,” he said. “That would go against Mexico’s tradition in favor of the right to asylum, it would go against migrants’ human rights.”

It is unclear how many migrants the new policy could end up returning to Mexico, and Ebrard said he did not believe the measure could be applied retroactively.

Speaking at the same conference, deputy interior minister Alejandro Encinas said the government anticipated that migrant flows to Mexico would increase “significantly” next year, though not necessarily due to more people seeking asylum.

Mexico has pledged to provide work visas to migrants and Encinas said that the government’s public works plans in the south of the country could attract laborers.

Ebrard reiterated that Mexico was not making a deal to become a “safe third country,” which would oblige those seeking asylum who arrive first in Mexico to apply for asylum there.

“We haven’t signed a deal, we’re not going to, nor is the whole asylum procedure going to happen inside Mexico,” he said.

(Reporting by Daina Beth Solomon and Dave Graham; Editing by Chizu Nomiyama and Rosalba O’Brien)

Turkey says it will take over fight against Islamic State after U.S. pull-out

FILE PHOTO: Turkish President Tayyip Erdogan speaks during a joint news conference with his Iranian counterpart Hassan Rouhani (not seen) after their meeting in Ankara, Turkey, December 20, 2018. REUTERS/Umit Bektas

By Ece Toksabay and Dahlia Nehme

ISTANBUL/BEIRUT (Reuters) – Turkey will take over the fight against Islamic State militants in Syria as the United States withdraws its troops, President Tayyip Erdogan said on Friday, in the latest upheaval wrought by Washington’s abrupt policy shift.

The surprise announcement by U.S. President Donald Trump this week that he would withdraw roughly 2,000 troops has felled a pillar of American policy in the Middle East. Critics say Trump’s decision will make it harder to find a diplomatic solution to Syria’s seven-year-old conflict.

For Turkey, the step removes a source of friction with the United States. Erdogan has long castigated his NATO ally over its support for Syrian Kurdish YPG fighters against Islamic State. Turkey considers the YPG a terrorist group and an offshoot of the armed Kurdistan Workers’ Party (PKK), fighting for Kurdish autonomy across the border on Turkish soil.

In a speech in Istanbul, Erdogan said Turkey would mobilize to fight remaining Islamic State forces in Syria and temporarily delay plans to attack Kurdish fighters in the northeast of the country – shifts both precipitated by the American decision to withdraw.

The news was less welcome for other U.S. allies. Both France and Germany warned that the U.S. change off course risked damaging the campaign against Islamic State, the jihadists who seized big swathes of Iraq and Syria in 2014-15 but have now been beaten back to a sliver of Syrian territory.

Likewise, the U.S.-backed militia spearheaded by the YPG said a Turkish attack would force it to divert fighters from the battle against Islamic State to protect its territory.

Islamic State launched an attack in Syria’s southeast against the U.S.-backed SDF militia, employing car bombs and dozens of militants.

“We will be working on our operational plans to eliminate ISIS elements, which are said to remain intact in Syria, in line with our conversation with President Trump,” Erdogan said, referring to Islamic State.

The Turkish president had announced plans last week to start an operation east of the Euphrates River in northern Syria to oust the YPG from the area that it largely controls. This week, he said the campaign could come at any moment. But on Friday, he cited the talk with Trump as a reason to wait.

“Our phone call with President Trump, along with contacts between our diplomats and security officials and statements by the United States, have led us to wait a little longer,” he said.

“We have postponed our military operation against the east of the Euphrates river until we see on the ground the result of America’s decision to withdraw from Syria.”

The Turkish president said, however, that this was not an “open-ended waiting period”.

Turkey has repeatedly voiced frustration over what it says is the slow implementation of a deal with Washington to pull YPG fighters out of Manbij, a town in mainly Arab territory west of the Euphrates in northern Syria.

The United States will probably end its air campaign against IS in Syria when it pulls out troops, U.S. officials have said, as Trump has been forced to defend the planned withdrawal against criticism from allies abroad and at home.

‘TIME FOR OTHERS TO FIGHT’

Trump maintained that IS had been wiped out, a view not shared by key allies, that Washington had been doing the work of other countries and it was “time for others to finally fight”.

His defense secretary, Jim Mattis, opposed the decision and abruptly announced on Thursday he was resigning after meeting with the president.

In a candid letter to Trump, the retired Marine general emphasized the importance of “showing respect” to allies that have voiced surprise and concern about the president’s decision.

Russia said on Friday it did not understand what the United States’ next steps in Syria would be, adding that chaotic and unpredictable decision-making in Washington was creating discomfort in international affairs.

Several of Trump’s fellow Republicans in Congress, joined by opposition Democrats, urged the president to reverse course, saying the withdrawal would strengthen the hand of Russia and Iran in Syria and enable a resurgence of Islamic State.

Trump has given no sign of changing his mind. He promised to remove forces from Syria during his 2016 election campaign.

The roughly 2,000 U.S. troops in Syria, many of them special forces, were ostensibly helping to combat Islamic State but were also seen as a possible bulwark against Syrian President Bashar al-Assad, who has retaken much of the country from his foes in the multi-sided civil war, with military help from Iran and Russia.

IS declared a caliphate in 2014 after seizing parts of Syria and Iraq. The ultra-hardline Sunni militants established their de facto capital in the Syrian city of Raqqa, using it as a base to plot attacks in Europe.

A senior U.S. official last week said Islamic State was down to the last 1 percent of the territory it once held. The group has no remaining territory in Iraq, though militants have resumed attacks since their defeat there last year.

Islamic State launched an attack on Friday on positions held by the SDF in Syria’s southeast and the U.S.-led coalition mounted air strikes in the area, an SDF official said.

Kurdish-led forces in northern Syria may not be able to continue to hold Islamic State prisoners if the situation in the region gets out of control after a U.S. pullout, top Syrian Kurdish official Ilham Ahmed said on Friday.

(Additional reporting by Sarah Dadouch, Ali Kucukgocmen and Ezgi Erkoyun in Istanbul and Tuvan Gumrukcu in Ankara and John Irish in Paris; Writing by David Dolan; Editing by Mark Heinrich and Andrew Roche)

Congress works to avert shutdown but still no money for Trump wall

FILE PHOTO: Workers on the U.S. side, work on the border wall between Mexico and the U.S., as seen from Tijuana, Mexico, December 13, 2018. REUTERS/Carlos Garcia Rawlins

By Richard Cowan and Ginger Gibson

WASHINGTON (Reuters) – The U.S. Congress on Thursday steered toward preventing a partial federal shutdown as leaders hoped for final passage of a temporary government funding bill that still leaves President Donald Trump without money for his promised border wall.

Trump attacked Democrats again for not supporting the wall and said he would not sign any legislation that does not include it, possibly threatening the spending bill that Congress is negotiating.

It was not clear, however, whether Trump was referring to the funding bill that passed the Senate late on Wednesday that is to be debated by the House or Representatives, or whether the warning was aimed at legislation Democrats might advance next year.

The White House was not immediately available for comment.

Rank-and-file House Republicans left a closed-door meeting with their leaders giving conflicting views on whether Trump would sign into law the bill that would keep about 25 percent of federal programs operating beyond midnight on Friday when existing money expires.

The House is expected to act on the legislation later this week.

“The Democrats, who know Steel Slats (Wall) are necessary for Border Security, are putting politics over Country,” Trump said on Twitter on Thursday morning. “What they are just beginning to realize is that I will not sign any of their legislation, including infrastructure unless it has perfect Border Security. U.S.A. WINS!”

Trump appeared to be referring to legislation Democrats might try to advance in 2019, when they take control of the House from Republicans.

In a late-night session on Wednesday, the Senate approved a bill to provide money to keep a series of programs operating through Feb. 8. But it defied the president by refusing to give him any of the $5 billion he demanded to build a wall along the U.S.-Mexico border, his key campaign promise.

Last week in a meeting with Democratic House leader Nancy Pelosi and Senate leader Chuck Schumer Trump had said he would be “proud to shut down the government for border security.”

SEVEN-WEEK EXTENSION

Congress’ midnight Friday deadline was for funneling money to finance federal law enforcement activities, airport security screenings, space exploration, and farm programs, to name a few.

But instead of resolving the budget impasse with a funding bill to keep several federal agencies operating through next September, the end of this fiscal year, the Senate approved only a seven-week extension of existing funds.

Democrats and several of Trump’s own Republicans have balked at money for a wall that the president argues would stop the illegal flow of immigrants and drugs into the United States.

With Democrats taking control of the House on Jan. 3, it will be even harder for Trump to win money for a border wall.

“When House Democrats assume control in two weeks, my primary focus will be to pass reasonable spending legislation that does not fund President Trump’s wasteful wall,” said Democratic Representative Nita Lowey, who in 2019 will chair the House Appropriations Committee, which writes government funding legislation.

Meantime, Trump administration officials were looking for ways to build the wall, which the president initially had pledged Mexico would pay for, by reassigning money already doled out to U.S. agencies for other projects.

The White House has not provided details of that effort but leading Democrats have warned that shifting funds around in such a way would have to be approved by Congress.

Republican Representative Mark Meadows, the leader of a group of hard-right conservatives, told reporters that if this temporary spending bill is enacted, Republican candidates in 2020 will suffer.

“He (Trump) campaigned on the wall” in 2016, Meadows said. “It was the center of his campaign … the American people’s patience is running out,” he said.

(Reporting by Richard Cowan and Ginger Gibson; Additional reporting by Lisa Lambert and Susan Heavey; Editing by Michael Perry and Bill Trott)

U.S. to end air war against Islamic State in Syria

FILE PHOTO: Syrian Democratic Forces and U.S. troops are seen during a patrol near Turkish border in Hasakah, Syria November 4, 2018. REUTERS/Rodi Said/File Photo

By Phil Stewart and Ellen Francis

WASHINGTON/BEIRUT (Reuters) – The United States will end its air campaign against Islamic State in Syria when it pulls out troops, U.S. officials said, sealing an abrupt reversal of policy which has alarmed Western allies as well as Washington’s Kurdish battle partners.

The Syrian Democratic Forces (SDF), which have been fighting Islamic State with U.S. support for three years, said President Donald Trump’s withdrawal of troops would grant the militants breathing space to regroup at a critical stage in the conflict and leave Syrians stuck between “the claws of hostile parties” fighting for territory in the seven-year-old war.

Trump’s announcement on Wednesday upended a central pillar of American policy in the Middle East and stunned U.S. lawmakers and allies.

Western allies including France, Britain and Germany described Trump’s assertion of victory as premature. France, a leading member of the U.S.-led coalition, said it would keep its troops in northern Syria for now because Islamic State militants had not been wiped out.

Trump defended his decision on Thursday, tweeting that he was fulfilling a promise from his 2016 presidential campaign to leave Syria. The United States was doing the work of other countries, including Russia and Iran, with little in return and it was “time for others to finally fight,” he wrote.

U.S. officials said Trump’s order to withdraw troops also signifies an end to the U.S. air campaign against Islamic State in Syria, which has been critical to rolling back the militants there and in neighboring Iraq, with more than 100,000 bombs and missiles fired at targets in the two countries since 2015.

The SDF, supported by about 2,000 U.S. troops, are in the final stages of a campaign to recapture areas seized by the militants.

But they face the threat of a military incursion by Turkey, which considers the Kurdish YPG fighters who spearhead the force to be a terrorist group, and Syrian forces – backed by Russia and Iran – committed to restoring President Bashar al-Assad’s control over the whole country.

The SDF said the battle against Islamic State had reached a decisive phase that required more support, not a precipitate U.S. withdrawal.

THREAT ALIVE

France’s Europe Minister Nathalie Loiseau said: “For now, of course we are staying in Syria because the fight against Islamic State is essential.”

France has about 1,100 troops in Iraq and Syria providing logistics, training and heavy artillery support as well as fighter jets. In Syria, it has dozens of special forces, military advisers and some foreign office personnel.

A British junior defense minister said he disagreed with Trump. “(Islamic State) has morphed into other forms of extremism and the threat is very much alive,” Tobias Ellwood said.

Islamic State declared a caliphate in 2014 after seizing large swathes of Syria and Iraq. The hardline group established its de facto capital in the Syrian city of Raqqa, using it as a base to plot attacks in Europe.

According to U.S. estimates, the group oversaw about 100,000 square kms (39,000 square miles) of territory, with about 8 million people under Islamic State control. It had estimated revenues of nearly $1 billion a year.

A senior U.S. official last week said the group was down to its last 1 percent of the territory it once held. It has no remaining territory in Iraq, although militants have resumed insurgent attacks since the group’s defeat there last year.

Russian President Vladimir Putin said he largely agreed with Trump that Islamic State had been defeated in Syria but added there was a risk it could recover.

He also questioned what Trump’s announcement would mean in practical terms, saying there was no sign yet of a withdrawal of U.S. forces whose presence in Syria Moscow says is illegitimate.

Israel will continue to act “very aggressively against Iran’s efforts to entrench in Syria,” Israeli Prime Minister Benjamin Netanyahu said.

Neighboring Turkey, which has threatened an imminent military incursion targeting the U.S.-allied Kurdish YPG fighters in northern Syria, has not commented directly on Trump’s decision, although an end to the U.S.-Kurdish partnership will be welcomed in Ankara.

Kurdish militants east of the Euphrates in Syria “will be buried in their ditches when the time comes”, state-owned Anadolu news agency reported Defence Minister Hulusi Akar as saying. Turkey considers the YPG a terrorist group and an extension of the outlawed Kurdistan Workers Party (PKK).

Turkey has intervened to sweep YPG and Islamic State fighters from parts of northern Syria that lie west of the Euphrates over the past two years. It has not gone east of the river, partly to avoid direct confrontation with U.S. forces.

(Additional reporting by Daren Butler in Istanbul and John Irish in Paris; Writing by Dominic Evans; Editing by Janet Lawrence)