Trump or Biden’s big economic challenge: millions of struggling Americans

By Jonnelle Marte

(Reuters) – The winner of the race for the White House will face a generation of low-to-middle income Americans struggling to get back to work because of a health crisis not seen in more than 100 years.

Whether it’s President Donald Trump or Democratic challenger and former Vice President Joe Biden, the reality is grim: about half of the 22 million who lost their jobs during the pandemic are still out of work.

New hiring is slowing, dimming prospects for the low-wage workers hit hardest by job losses. Infections of the virus that killed more than 225,000 Americans are rising to new records. Hotels, transportation companies and food providers warn that more layoffs are coming, and the government aid that helped many pay the bills is long gone.

Securing a future for a vast, growing underclass “is the most important challenge America faces over the next few years, 10 years, 20 years,” said Gene Ludwig, a former comptroller of the currency under President Bill Clinton and author of “The Vanishing American Dream,” a book about the economic challenges facing lower and middle income Americans.

“We cannot sustain a democratic society that has these kinds of numbers of low and middle income people that aren’t able to have a hope for the American dream and live decently.”

Congressional Democrats and the Trump administration have been trying to negotiate a $2 trillion coronavirus aid bill, but many Senate Republicans object to the cost and question whether more stimulus is needed. A deal may not be reached until early 2021.

SAVINGS DRY UP

That’s going to be too late for some.

Direct cash payments and enhanced unemployment benefits established by the CARES Act, which added $600 a week to state unemployment benefits, lifted more Americans out of poverty in April even as unemployment soared, according to research by the Center on Poverty & Social Policy at Columbia University.

People receiving the enhanced benefits were able to spend more, build savings and pay off debt, according to an analysis by the JPMorgan Chase Institute.

But after the benefits expired at the end of July, poverty is once again on the rise – with the monthly poverty rate reaching 16.7% in September from 15% in February, according to the Columbia study. After a decade of decline, hunger is rising nationwide.

Lisandra Bonilla, 46, saved roughly a third of the enhanced unemployment benefits she received after she was furloughed in late March from her job at an employment agency in Kissimmee, Florida. “I had saved a lot because I didn’t know what was going to happen,” she said.

It was smart planning: in August her benefits were cut to $275 a week before taxes, the maximum in Florida, down from more than $800.

Bonilla returned to work part-time in late September, but now she is struggling to pay the bills on half her previous pay, and fears her savings will be gone by December.

If she isn’t hired full time soon, she needs to find another job.

“We’re trying to shovel ourselves out of the hole, but at the same time the hole is getting bigger,” said Wendy Edelberg, director of the Hamilton Project and senior fellow at the Brookings Institution.

Two factors are particularly worrying, she said. More than 420,000 small businesses shuttered between March and mid-summer, which is more than three times the typical pace, she estimates. And permanent layoffs are also on the rise, hitting 3.8 million in September from 1.3 million in February – similar to levels seen before the 2008 election.

THE LONGTERM UNEMPLOYMENT TRAP

Bishop Donald Harper has been on more than 50 job interviews since he was furloughed in March.

Harper, 55, a veteran chef, most recently oversaw five restaurants at an Orlando resort. But with occupancy still low, it’s not clear when he’ll get back to work.

Applications for jobs at super markets or in health care have also been fruitless.

“I can do anything and everything,” said Harper, who also serves as a bishop for a nondenominational church. He is struggling to pay for food and utilities on $275-a-week unemployment, and three months behind on his $1,900 a month rent.

“I don’t want to be homeless,” said Harper, who lives with two children ages 10 and 13. He has reached out to more than 20 groups seeking rental assistance, with no luck.

The United States has 2.4 million and growing “long-term” unemployed, officially defined as those who have been out of work for 27 weeks or more. Getting everyone back to work is crucial, but economists say these job seekers are at greater risk of dropping out of the labor market or taking lower paying jobs.

This week, the U.S. Commerce Department is expected to report that Gross Domestic Product surged in the third quarter, thanks in part to fiscal stimulus that kept U.S. workers afloat, but has mostly expired.

Now, people who are out of work or in low-wage jobs need rental support, direct cash payments and food assistance, as well as federal jobs projects and retraining programs, labor economists say.

If elected, Biden has pledged to raise the federal minimum wage, and roll out trillions of dollars in infrastructure and green energy programs. But he’ll need the votes in Congress to do it.

Trump has signaled support for more federal stimulus, but has offered fewer specifics on jobs.

Until help arrives, workers are struggling.

Rachel Alvarez, 44, a single mother of three in Naples, Florida, starts a new job this week as a server at a restaurant – her first time working since she lost her job in March.

Restaurant workers who depend on tips aren’t making much money, because business remains slow due to the coronavirus, she said. She hasn’t paid rent since June, and is still waiting to hear from the county government about a grant.

“I’m going to keep my head up, because if shit like this ever happens to my children I want them to keep their head up too,” said Alvarez.

(Reporting by Jonnelle Marte. Additional reporting by Andy Sullivan and Richard Cowan; Editing by Heather Timmons and Edward Tobin)

Strong retail sales boost optimism before U.S. election, but it may be short lived

By Jonnelle Marte

(Reuters) – In an ordinary presidential election, Friday’s retail sales report would have been a dream for an incumbent like Republican President Donald Trump. Headline sales topped expectations by a wide margin and spending was up from August in all but one of the major categories.

Still, this is no ordinary election. Despite the gains seen in September, spending in key sectors that suffered massive job losses during the pandemic, such as restaurants and clothing stores, remain deeply below last year’s levels.

The report from the Commerce Department offered a reminder that millions of Americans are still out of work, leaving them with less money to spend on dinners out or new outfits. Without a vaccine or effective treatment, many consumers also hesitate to head out to stores or restaurants where they may be exposed to the virus.

On the one hand, the retail report showed that overall retail spending is now above pre-pandemic levels. That is a sign that some people may have spent the $300 supplement the federal government temporarily added to unemployment benefits. Other people may have boosted spending after being called back to work.

If more people continue to see their finances improve, that could bode well for the economy and for the overall outlook people carry when they vote in the Nov. 3 election.

But some economists are also questioning whether the increase in spending seen in September will continue with virus infections rising, job growth stalling and government aid fading.

Enhanced unemployment benefits and direct cash payments distributed as part of the CARES Act made it possible for jobless Americans to boost spending and pad their savings. But much of those savings were spent in August after the supplement to unemployment benefits expired, according to a study released Friday by the JPMorgan Chase Institute.

The White House and Congress have yet to reach a deal on another package. Job growth is also slowing and the number of Americans filing new claims for jobless benefits reached a two-month high last week.

“The progress we’ve made, which has been better than expected, may be slowing,” said John Briggs, head of strategy for the Americas at NatWest Markets. “I don’t know how much it hurts Trump’s chances, but I don’t see how it can help him.”

(Reporting by Jonnelle Marte; Editing by Andrea Ricci)

New clashes in Nagorno-Karabakh; Pompeo says Turkey makes situation worse

By Nvard Hovhannisyan and Nailia Bagirova

YEREVAN/BAKU (Reuters) – Armenian and Azeri forces fought new clashes on Friday, defying hopes of ending nearly three weeks of fighting over the Nagorno-Karabakh enclave, and U.S. Secretary of State Mike Pompeo blamed Turkey for inflaming the situation by arming the Azeris.

The worst outbreak of violence in the South Caucasus since Armenia and Azerbaijan went to war over the enclave in the 1990s, the fighting risks creating a humanitarian disaster, especially if it draws in Russia and Turkey.

Nagorno-Karabakh is internationally recognized as part of Azerbaijan but populated and governed by ethnic Armenians.

Turkey has increased military exports six fold this year to its close ally Azerbaijan. Russia, is close to both sides but has a defense pact with Armenia. News agency RIA reported the Russian navy had started planned military exercises in the Caspian Sea.

(Graphic: Ethnic tensions in Nagorno-Karabakh, https://graphics.reuters.com/ARMENIA-AZERBAIJAN/xklpyqoddpg/armenia-azerbaijan-2020_ethnic.jpg)

There were further signs on Friday that a Russian-brokered ceasefire agreed last Saturday to allow the sides to swap detainees and the bodies of those killed had all but broken down.

Armenia and Azerbaijan each accused the other of launching attacks, and each said it had the upper hand.

Armenian defense ministry official Artsrun Hovhannisyan said Azerbaijan had conducted artillery bombardments of Nagorno-Karabakh from the north, “with total disregard for the humanitarian truce”. He added that Azeri forces had been repelled and had suffered significant losses.

Azerbaijan’s defense ministry said Nagorno-Karabakh forces had been forced to retreat and Azeri forces retained the advantage along the line of contact that divides the sides.

Reuters could not independently verify the reports.

Baku also accused Yerevan of a missile attack on Ordubad in Nakhchivan autonomous province, a region which belongs to Azerbaijan but is surrounded by Armenia and Iran. Armenia denied such an attack.

The Nagorno-Karabakh defense ministry reported 29 more military casualties, bringing to 633 the number of servicemen killed since fighting broke out on Sept. 27. Azerbaijan does not disclose military casualties. The Azeri prosecutor-general’s office said 47 civilians had been killed and 222 wounded.

U.S. CRITICISM OF TURKEY

The hostilities, close to pipelines in Azerbaijan that carry gas and oil to global markets, are stoking concern in Europe and the United States that Turkey and Russia, already at loggerheads over Syria and Libya, will be dragged in.

Pompeo said Turkey had worsened the conflict by providing resources to Azerbaijan. A diplomatic resolution was needed, rather than “third-party countries coming in to lend their firepower to what is already a powder keg of a situation,” he said in an interview with broadcaster WSB Atlanta.

Ankara accuses Armenia of illegally occupying Azeri territory. Armenia says Turkey has encouraged Azerbaijan to pursue a military solution to the conflict, putting Armenian civilians in danger.

Armenia’s foreign ministry said Foreign Minister Zohrab Mnatsakanyan had spoken by phone with United Nations Secretary-General António Guterres, asking the international community to “neutralize” Azeri actions which he said posed “an existential danger of the people of Nagorno-Karabakh”.

Meanwhile Iran tweeted that its foreign minister Mohammad Javad Zarif had offered the Azeri side Teheran’s help with the peace process.

ECONOMIC DAMAGE

The conflict between the two former Soviet republics threatens to further damage their economies, already hit by the COVID-19 pandemic and, in Azerbaijan’s case, weak oil prices.

With 43,280 COVID-19 cases, Azerbaijan said it would close secondary schools and shut the underground rail system in the capital Baku between Oct. 19 and Nov. 2.

Armenia said on Friday its caseload had risen to 61,460.

In projections drafted before fighting started, the World Bank predicted Armenia’s economy would shrink 6.3% this year, while expecting Azerbaijan to contract 4.2%.

(Additional reporting by Margarita Antidze in Tbilisi and Humeyra Pamuk in Washington; Writing by Sujata Rao; Editing by Timothy Heritage and Peter Graff)

Q&A: Where are we in the COVID-19 vaccine race?

By Carl O’Donnell

NEW YORK (Reuters) – Drugmakers and research centers around the world are working on COVID-19 vaccines, with large global trials of several of the candidates involving tens of thousands of participants well underway.

As some companies close in on unveiling their initial findings – with Canadian and European regulators already reviewing early data on some vaccines – the following is what we know about the race to deliver vaccines to help end the coronavirus pandemic that has claimed over a million lives:

Who is furthest along?

U.S. drugmaker Pfizer Inc with German partner BioNTech SE, U.S. biotech Moderna Inc and Britain-based AstraZeneca Plc in conjunction with University of Oxford researchers could provide early analyses of data from their various large trials as early as October or November. Johnson & Johnson is a bit further behind.

What happens in these trials?

The companies are testing their vaccines against a placebo – typically saline solution – in healthy volunteers to see if the rate of COVID-19 infection among those who got the vaccine is significantly lower than in those who received the dummy shot. Neither trial participants nor researchers know who has received the vaccine or placebo until the data is ready for review, or unblinded. The studies rely on subjects becoming naturally infected with COVID-19, so how long it takes to generate results largely depends on how pervasive the virus is where the trials are being conducted. In areas with large outbreaks and community spread, infections will pile up faster.

How will we know if the vaccine works?

The United States, the European Union, the United Kingdom and the World Health Organization have all set similar minimum standards for effectiveness. Vaccines must demonstrate at least 50% efficacy – meaning at least twice as many infections among volunteers who got a placebo as among those in the vaccine group. Independent panels oversee the trials to monitor for safety and effectiveness since the data is hidden from companies and researchers. These data safety monitoring boards take a peek at the interim results at pre-determined milestones, such as after a certain number of people have become infected. If the vaccine is looking significantly better than the placebo, the companies can apply for emergency use, and the study may be halted or continue to its intended conclusion. A trial can also be halted if the panel determines the vaccine to be unsafe.

Will regulators ensure a vaccine is safe before making it available to the public?

The U.S. Food and Drug Administration has said it will not approve a vaccine unless it is both effective and safe. Earlier this month, it added more stringent safety guidelines for U.S. vaccines. The FDA wants developers to follow trial subjects for at least two months after they receive their final vaccine dose to check for any side effects that may crop up. The agency will consider an emergency use authorization (EUA) once that data is collected from at least half of the trial’s participants. The UK Medicines and Healthcare products Regulatory Agency will review the vaccines for the UK and the European Medicines Agency will review vaccines for European Union use.

When will regulators decide?

Regulators will review the vaccines after the companies have enough data to submit applications seeking an EUA or formal approval. Moderna’s first look at data is more likely to come next month. AstraZeneca could provide a look at late-stage data in November. Pfizer/BioNtech said it may have data as early as October, but that it would wait for safety data it expects in the third week of November to file with U.S. regulators.

Regulators for Europe and Canada are considering data on a rolling basis, as it becomes available. The UK and the United States both expect speedy reviews of initial data for possible emergency use before more traditional lengthy reviews for formal commercial approvals.

Could these be the first approved coronavirus vaccines?

Yes, although China and Russia are on a similar timeline. China launched an emergency use program in July aimed at essential workers and others at high risk of infection that has vaccinated hundreds of thousands of people. At least four vaccines are far along including from China National Biotec Group [CHNAPF.UL] (CNBG), CanSino Biologics <6185.HK> and Sinovac. Sinovac and CNBG have said to expect early trial data as soon as November. Russia’s Gamaleya Institute has begun a 40,000-person late-stage trial and is expected to have early data at the end of October or early November. Russia has also given the vaccine to at least hundreds of “high-risk” members of the general population.

Is U.S. authorization up to President Trump?

The FDA must make sure that the benefits of a vaccine outweigh the risks before authorization since they are intended to be given to hundreds of millions of healthy people. However, the U.S. Department of Health and Human Services (HHS) has the authority to override the FDA’s recommendation. President Donald Trump has complained about the new safety guidelines, which delay any vaccine availability until after the Nov. 3 presidential election at the earliest. The Trump administration can hire and fire HHS officials, opening the possibility of political pressure to approve a vaccine.

(Reporting by Carl O’Donnell in New York; Additional reporting by Julie Steenhuysen in Chicago, Michael Erman in New York, Ludwig Burger in Frankfurt, Alistair Smout in London and Polina Ivanovo in Moscow; Editing by Caroline Humer, Bill Berkrot and Frances Kerry)

U.S. coronavirus cases surpass eight million as infections spike nationwide

By Anurag Maan and Shaina Ahluwalia

(Reuters) – U.S. cases of the novel coronavirus crossed 8 million on Thursday, rising by 1 million in less than a month, as another surge in cases hits the nation at the onset of cooler weather.

Since the pandemic started, over 217,000 people have died in the United States.

The United States reported 60,000 new infections on Wednesday, the highest since Aug. 14, with rising cases in every region, especially the Midwest.

Health experts have long warned that colder temperatures driving people inside could promote the spread of the virus. They have not pinpointed the reason for the rise but point to fatigue with COVID-19 precautions and students returning to schools and colleges.

According to a Reuters analysis, 25 states have so far set records for increases in new cases in October.

All Midwest and Northeast states have reported more cases in the past four weeks than in the prior four weeks, with the number of new cases doubling in states like Wisconsin, South Dakota and New Hampshire.

In the Midwest, daily new cases hit a record on Wednesday with over 22,000 new infections. The positive test rate tops 30% in South Dakota and 20% in Idaho and Wisconsin.

Ten states on Thursday reported record increases in new cases, including Wisconsin with 4,000 new cases. “Our numbers are high and they’re growing rapidly,” state Health Secretary-Designate Andrea Palm told a news conference.

“We have now surpassed 1,000 COVID-19 patients who are in the hospital. In some regions of our state, our ICU beds are 90% or more full. Over the course of the past six weeks, our average daily deaths have more than tripled,” Palm added.

California remains the state with the most total cases followed by Texas, Florida, New York and Georgia. Those five states account for over 40% of all reported COVID-19 cases in the nation.

With both cases and positive test rates rising in recent weeks, New York City has closed businesses and schools in neighborhood hot spots despite protests from a small contingent of Orthodox Jews.

In addition to rising cases, hospitals in several states are straining to handle an influx of patients.

In the Midwest, COVID-19 hospitalizations hit a record high for a tenth day in a row on Wednesday. Nationally, the United States reported nearly 37,000 hospitalizations, the highest since Aug. 28.

Wisconsin, which reported record hospitalization on Wednesday, has opened a field hospital outside of Milwaukee to handle COVID-19 patients.

(Reporting by Anurag Maan, Shaina Ahluwalia and Chaithra J in Bengaluru; Editing by Lisa Shumaker)

Catholics, Jews say New York coronavirus restrictions violate religious rights

By Peter Szekely

NEW YORK (Reuters) – New York Governor Andrew Cuomo’s recent measures to stem local outbreaks of the coronavirus have prompted demands from Catholics and Jews that courts void the restrictions because they limit religious freedom.

The Roman Catholic Diocese of New York of Brooklyn was set to hold hearing Thursday afternoon on a suit it filed in U.S. District Court in the borough on Oct. 8, while three Orthodox Jewish congregations filed suit on Thursday in U.S. District Court in Manhattan.

Both actions argue that the state’s restrictions on religious gatherings violate the U.S. Constitution’s First Amendment right to freedom of religion.

Cuomo issued an order on Oct. 6 that shut down non-essential businesses and restricted gatherings at religious institutions to as few as 10 people in certain targeted areas, including some Brooklyn neighborhoods, where infections have spiked.

Cuomo insisted that his infection-fighting measures were not intended to single out religious groups and were consistent with other steps he has taken to combat geographic “clusters,” which he has defined as “red zones,” where infections spread rapidly.

But he also blamed the Orthodox Jewish communities for causing some of the infection spread in their areas.

“They never complied with any of the close-down rules going back to March,” he said in a briefing on Thursday. “That’s why some find it shocking, because they didn’t follow many of the rules all along.”

In their complaint which is laced with historical references to persecution, the Orthodox congregations said Cuomo has outlawed “all but the most minimal communal religious worship.”

“For Jews, communal worship is an essential service for which untold thousands have risked and sacrificed their lives,” the congregations — Ohalei Shem D’Nitra, Yesheos Yakov and Netzach Yisroel — said in a 33-page complaint.

Brooklyn’s Roman Catholic diocese, meanwhile, was rebuffed on Friday in its request for a temporary court order to bar the restrictions from taking effect.

But the diocese said its case was still alive, with U.S. District Court Judge Nicholas Garaufis having set a hearing for 2 p.m. EDT (1800 GMT) Thursday for arguments on its request for a longer-lasting preliminary injunction against the restrictions in 28 areas of Brooklyn and Queens.

In its complaint the diocese said it has complied with the state’s restrictions since the pandemic erupted in March, and that the new targeted measures are overly broad, infringing not only on worship services but also on ceremonies such as weddings and funerals.

“By causing the cancellation or severe curtailment of such services, the order would impose irreparable harm on the Diocese of Brooklyn and those it serves,” said the 22-page complaint.

The state’s targeted measures have sparked protests and occasional violence in some predominantly Hasidic Jewish areas of Brooklyn’s Borough Park neighborhood. In that area, more than 8% of coronavirus tests came back positive last week.

(Reporting by Peter Szekely; Additional reporting by Gabriella Borter; Editing by Tom Brown)

Persistently high U.S. weekly jobless claims point to labor market scarring

By Lucia Mutikani

WASHINGTON (Reuters) – The number of Americans filing new claims for jobless benefits rose to a two-month high last week, stoking fears the COVID-19 pandemic was inflicting lasting damage to the labor market.

The weekly unemployment claims report from the Labor Department on Thursday, the most timely data on the economy’s health, also showed at least 25 million were on jobless benefits at the end of September. It reinforced views the economy’s recovery from the recession, which started in February, was slowing and in urgent need of another government rescue package.

The economic hardship wrought by the coronavirus crisis is a major hurdle to President Donald Trump’s chances of getting a second term in the White House when Americans go to the polls on Nov. 3. Former Vice President Joe Biden, the Democratic Party’s candidate, has blamed the Trump administration’s handling of the pandemic for the worst economic turmoil in at least 73 years.

“The increase in initial claims is disturbing,” said Chris Low, chief economist at FHN in New York. “It is difficult to see it and not think the recovery is vulnerable.”

Initial claims for state unemployment benefits increased 53,000 to a seasonally adjusted 898,000 for the week ended Oct. 10. Data for the prior week was revised to show 5,000 more applications received than previously reported.

Economists polled by Reuters had forecast 825,000 applications in the latest week. The surprise increase came even as California processed no claims. California, the most populous state in the nation, suspended the processing of new applications for two weeks in late September to combat fraud. It resumed accepting claims last Monday.

Unadjusted claims rose 76,670 to 885,885 last week. Economists prefer the unadjusted number given earlier difficulties adjusting the claims data for seasonal fluctuations because of the economic shock caused by the pandemic. Including a government-funded program for the self-employed, gig workers and others who do not qualify for the regular state unemployment programs, 1.3 million people filed claims last week.

Seven months into the pandemic in the United States, first-time claims remain well above their 665,000 peak during the 2007-09 Great Recession, though below a record 6.867 million in March. With new COVID-19 cases surging across the country and the White House and Congress struggling to agree on another rescue package for businesses and the unemployed, claims are likely to remain elevated.

Treasury Secretary Steven Mnuchin said on Thursday he would keep trying to reach a deal with House Speaker Nancy Pelosi, a Democrat, before next month’s election.

Stocks on Wall Street were lower. The dollar gained versus a basket of currencies. U.S. Treasury prices rose.

MILLIONS EXHAUST BENEFITS

About 3.8 million people had permanently lost their jobs in September, with another 2.4 million unemployed for more than six months. Economists fear those numbers could swell.

Though the claims report showed a decline in the number of people on unemployment rolls in early October, economists said that was because many people had exhausted their eligibility for benefits, which are limited to six months in most states.

The number of people receiving benefits after an initial week of aid declined 1.165 million to 10.018 million in the week ending Oct. 3.

About 2.8 million workers filed for extended unemployment benefits in the week ending Sept. 26, up 818,054 from the prior week. That was the largest weekly gain since the program’s launch last spring. These benefits are set to expire on Dec. 31.

Tens of thousands of airline workers have been furloughed. State and local government budgets have been crushed by the pandemic, leading to layoffs that are expected to escalate without help from the federal government.

“Risks to the labor market outlook are weighted heavily to the downside,” said Ryan Sweet, a senior economist at Moody’s Analytics in West Chester, Pennsylvania. “The increased spread of the virus across much of the country could result in an even larger pullback in business activity than expected.”

Though economic activity rebounded in the third quarter because of fiscal stimulus, the stubbornly high jobless claims suggest momentum ebbed heading into the fourth quarter.

Other reports on Thursday showed mixed fortunes for regional manufacturing in October. A survey from the New York Federal Reserve showed its business conditions index fell seven points to a reading of 10.5 this month. Companies reported continued gains in new orders and shipments, though unfilled orders maintained their decline. Factory employment rose modestly, but the average workweek increased significantly.

Separately, the Philadelphia Fed said its business conditions index jumped to a reading of 32.3 from 15.0 in September. Measures of new orders and shipments at factories in the region that covers eastern Pennsylvania, southern New Jersey and Delaware rose. A gauge of factory employment fell, but manufacturers increased hours for workers.

Third-quarter GDP growth estimates are topping a 32% annualized rate. The economy contracted at a 31.4% pace in the second quarter, the deepest decline since the government started keeping records in 1947. Growth estimates for the fourth quarter have been cut to as low as a 2.5% rate from above a 10% pace.

(Reporting by Lucia Mutikani; Editing by Chizu Nomiyama and Andrea Ricci)

Nagorno-Karabakh ceasefire hopes sink as death toll rises

By Nailia Bagirova and Nvard Hovhannisyan

BAKU/YEREVAN (Reuters) – Hopes of a humanitarian ceasefire ending fighting over Nagorno-Karabakh sank further on Thursday as the death toll mounted and Armenia and Azerbaijan accused each other of launching new attacks.

Armenia accused Turkey of blocking flights carrying emergency aid from using its airspace, and Azerbaijan’s president warned of “new victims and new bloodshed” from fighting over the mountain enclave that broke out on Sept. 27.

Azeri President Ilham Aliyev demanded that Armenia “halt attempts to capture liberated territories back” and said his country would take all regions of Nagorno-Karabakh if Armenia “acts negatively.”

Last Saturday’s ceasefire, aimed at letting the sides swap detainees and bodies of those killed in the clashes, has had little impact on the fighting around Nagorno-Karabakh, a mountain territory internationally recognized as part of Azerbaijan but populated and governed by ethnic Armenians.

In the deadliest flare-up since a 1990s war killed about 30,000 people, 604 Nagorno-Karabakh defense personnel have been killed, ethnic Armenian authorities say.

On Thursday, three Azeri civilians were killed and three were wounded during a funeral in Azerbaijan’s Terter region when an artillery shell fell on a cemetery, presidential aid Hikmet Hajiyev said on Twitter.

That would add to Azeri estimates provided on Wednesday that 43 civilians had so far been killed. Baku does not disclose military casualties. The prosecutor’s office said earlier on Thursday that two civilians had been wounded in shelling of the Aghdam area.

The Armenian prosecutor-general’s office said Azeri drones had killed two soldiers in the Vardenis region of Armenia on Wednesday, raising the Armenian military death toll to five. The servicemen were not involved in military action, it said.

A tweet from Nagorno-Karabakh’s ombudsman accused Azerbaijan of using heavy rockets to target civilian infrastructure in the town of Stepanakert.

Reuters could not independently verify the reports.

HUMANITARIAN CONCERNS

International organizations, including the International Committee of the Red Cross, have warned that the conflict, coming on top of the COVID-19 pandemic, could leave tens of thousands of people in need of aid over coming months.

Zareh Sinanyan, Armenian High Commissioner for Diaspora Affairs, said the delivery of 100 tonnes of aid from the United States was being delayed as Turkey had prohibited Armenia-bound humanitarian aid flights over its airspace.

Armenia’s civil aviation committee was told on Wednesday the Qatar Airways flight from Los Angeles was cancelled but gave no reasons, said the committee’s head, Tatevik Revazyan.

“We have grounds to claim that Turkey closed the air route deliberately,” Revazyan told Reuters, adding alternative routes over Russia or Georgia were being sought.

Turkey’s foreign ministry, which handles airspace issues, was not immediately available to comment.

Aside from humanitarian concerns, fears are growing of Russia and Turkey being sucked in. Turkey’s military exports to its ally Azerbaijan have risen six-fold this year, data shows, and Armenia has a defense pact with Russia.

In a phone call on Wednesday with Turkish President Tayyip Erdogan, Russian leader Vladimir Putin expressed concerns about the participation of Middle East fighters in the conflict, though Turkey and Azerbaijan deny the presence of such fighters.

The fighting is also close to Azeri pipelines which carry natural gas and oil to international markets. Aliyev accused Armenia on Wednesday of trying to attack the pipelines, a charge that Armenia denied.

(Additional reporting by Margarita Antidze in Tbilisi and Jonathan Spicer in Ankara; Writing by Sujata Rao; Editing by Timothy Heritage)

World stocks whipsaw on pandemic worries, gold gains

By Koh Gui Qing and Carolyn Cohn

NEW YORK/LONDON (Reuters) – U.S. and European shares whipsawed between modest gains and losses on Wednesday as investors tried to brush aside market risks to focus on the positive, but caution prevailed in the gold market with prices jumping more than 1%.

Reports that some European countries have started to close schools and cancel surgeries due to a resurgence in the COVID-19 pandemic weighed on sentiment, though European shares still managed to trim earlier losses.

In the United States, investors looked to positive earnings reports by investment bank Goldman Sachs Group and UnitedHealth Group Inc, the largest U.S. health insurer, and tried to shelve concerns over two stalled trials for COVID-19 treatment and vaccine that rattled markets on Tuesday.

Investors are hoping that a quick development of a treatment or vaccine for COVID-19 would end the pandemic and aid a recovery in the world economy.

“Bulls are looking to get back on track this morning,” Paul Hickey, a co-founder of Bespoke Investment Group LLC, wrote in a note, but added that an upbeat mood may not hold.

Major U.S. stock indices had given up early gains by 1426 GMT. The S&P 500 was largely flat at 3,512.90, and the Dow Jones Industrial Average was also little changed at 28,655.36. The Nasdaq Composite fell 30 points, or 0.3%, to 11,832.32.

The pan-European STOXX 600 narrowed losses and was down 0.1%, while markets in Frankfurt and Paris were up 0.1% and flat respectively. London, buffeted in part by Brexit angst, dropped 0.6%. World stocks were little changed but still within sight of an all-time high struck on Sept. 3.

Moving beyond bar and pub closures, the Czech Republic shifted schools to distance learning and hospitals started cutting non-urgent medical procedures to free beds.

Moscow authorities said on Wednesday they would introduce online learning for many students starting on Monday, while Northern Ireland announced schools would close for two weeks.

Asian stocks also had a lackluster showing. MSCI’s broadest index of Asia-Pacific shares outside of Japan had tracked Wall Street’s losses overnight to end a seven-day rally.

The index was last down 0.11%, having toppled from a two-and-a-half-year high of 588.76 touched on Tuesday. Chinese shares closed down 0.7%.

Bolstered by uncertainty around the pandemic, the price of gold, a safe-haven asset, climbed by more than 1% to a high of $1,912.51 an ounce.

Government bonds also benefited from investor caution. German bund yields, which move inversely to prices, hit their lowest since May, while the 10-year U.S. Treasury yield dipped to 0.7173%.

The U.S. dollar softened after pulling its best day in three weeks on Tuesday. Its index against a basket of six major currencies fell 0.3% to 93.25. That helped the euro to firm slightly to $1.1768.

Concerns that fuel demand will continue to falter as rising coronavirus cases across Europe and in the United States, the world’s biggest oil consumer, dragged on oil prices. Brent and U.S. crude pared earlier gains and were at $43.19 and $40.99 a barrel, respectively.

(Reporting by Koh Gui Qing; Editing by Lisa Shumaker)

Humanitarian crisis feared as Nagorno-Karabakh ceasefire buckles

By Nvard Hovhannisyan and Nailia Bagirova

YEREVAN/BAKU (Reuters) – Armenia and Azerbaijan accused each other on Tuesday of violating a ceasefire agreed three days ago to quell fighting over Nagorno-Karabakh, drawing warnings from international groups of a humanitarian crisis in the region.

The Russia-brokered truce is buckling despite mounting calls from world powers to halt the fighting, with U.S. Secretary of State Mike Pompeo and the Minsk Group security watchdog among those urging greater commitment to the ceasefire terms.

A Reuters cameraman witnessed shelling in the town of Martuni in Nagorno-Karabakh, a mountain enclave which is internationally recognized as part of Azerbaijan but governed and populated by ethnic Armenians.

A Reuters television crew in Terter in Azerbaijan also said the city center was being shelled earlier on Tuesday.

Azerbaijan accused Armenian forces of “grossly violating the humanitarian truce”, which was agreed on Saturday to allow the sides to swap prisoners and bodies of those killed..

Defense ministry spokesman Vagif Dargiahly said Armenia was shelling the Azeri territories of Goranboy and Aghdam, as well as Terter. Azeri forces were not violating the truce, he added.

Armenian defense ministry spokeswoman Shushan Stepanyan denied the accusation. She said Azeri forces had resumed military operations after an overnight lull, “supported by active artillery fire in the southern, northern, northeastern and eastern directions”.

The fighting which erupted on Sept. 27, is the worst since a 1991-94 war over Nagorno-Karabakh that killed about 30,000.

It is being closely watched abroad, not only due to its proximity to Azeri energy pipelines to Europe but also because of fears that Russia and Turkey could be drawn in.

Russia has a defense pact with Armenia and Turkey is allied with Azerbaijan.

“CATASTROPHIC CONSEQUENCES”

The Minsk Group called on the Armenian and Azeri leaders to immediately implement the ceasefire to prevent “catastrophic consequences for the region”.

The 11-member group includes both Russia and Turkey, but the latter is not involved in the Nagorno-Karabakh talks. Turkish Foreign Minister Mevlut Cavusoglu suggested holding talks that would include Turkey.

Ceasefire demands were “reasonable,” according to Cavusoglu, but he said the international community should ask Armenia to withdraw from Azeri territory.

“Sadly no such call is being made,” he told reporters.

Influential Turkish politician Devlet Bahceli, whose party supports President Erdogan’s AKP in parliament, took a more belligerent note, telling Azerbaijan to secure Nagorno-Karabakh by “hitting Armenia over the head over and over again.”

While Turkey denies military involvement in Nagorno-Karabakh, Armenian President Armen Sarkissian told Germany’s Bild newspaper Ankara’s behavior was worrying.

“I worry because, firstly, there is a third party involved. If it were only about Nagorno-Karabakh and Azerbaijan, I would be much more hopeful that the conflict can be contained,” he said.

DEAD AND WOUNDED

The death toll has risen further, meanwhile. Nagorno-Karabakh officials said 542 servicemen had been killed so far, up 17 from Monday.

Azerbaijan has reported 42 Azeri civilian deaths and 206 wounded since Sept. 27. It has not disclosed military casualties.

Martin Schuepp, Eurasia regional director for the International Committee of the Red Cross (ICRC), said his organization was in “continuous discussions” to facilitate the handover of detainees or bodies of those killed.

But the security situation meant “it has not been possible for us to access all locations that might have been affected,” Schuepp said.

The conflict is also worsening the spread of COVID-19, World Health Organization spokesman Tarik Jasarevic told a United Nations briefing in Geneva.

Armenia’s new cases had doubled over the past 14 days as of Monday, while new infections were up approximately 80% over the past week in Azerbaijan, Jasarevic said. He warned of “direct disruption to health care and a further burden on health systems that are already stretched during the COVID pandemic.”

With tens of thousands of people potentially needing help in coming months, the ICRC is appealing for another 9.2 million Swiss francs ($10.10 million) to fund its humanitarian efforts in the region, Schuepp said.

(Additional reporting by Margarita Antidze in Tbilisi, Riham Alkousaa in Berlin, Stephanie Ulmer-Nebehay in Geneva, Tuvan Gumrukcu and Jonathan Spicer in Ankara; Writing by Sujata Rao; Editing by Giles Elgood, Timothy Heritage, William Maclean)