WASHINGTON (Reuters) – Boeing on Tuesday named Kirkland H. Donald, a retired Navy admiral, as the independent advisor to lead a comprehensive quality review of Boeing’s quality management system for commercial airplanes.

Donald and a team of outside experts will provide recommendations to Boeing CEO Dave Calhoun and to the aerospace safety committee of Boeing’s board of directors, Boeing said.

The appointment is effective immediately.

(Reporting by Valerie Insinna; Editing by Chris Reese)

By Kevin Yao

BEIJING (Reuters) – China’s economy likely perked up slightly in the fourth quarter, enabling the government to hit its growth target after the previous year’s miss, but the outlook for 2024 remains shaky amid a protracted property slump and weak consumer confidence.

Data on Wednesday (0200 GMT) is expected to show gross domestic product (GDP) grew 5.3% in October-December from a year earlier, quickening from the 4.9 pace in the third quarter, according to a Reuters poll.

But on a quarterly basis, the economy is forecast to grow 1.0% in the fourth quarter, slowing from a 1.3% pace in July-September, underlining the weak momentum despite a raft of policy steps.

For 2023, the economy likely expanded 5.2%, partly helped by the previous year’s low-base effect which was marked by COVID-19 lockdowns.

The economy grew just 3% in 2022 due to strict COVID curbs, badly missing the official target.

Confounding most analysts’ expectations, the world’s second-largest economy has struggled to mount a strong and sustainable post-COVID pandemic bounce, burdened by a protracted property crisis, weak consumer and business confidence, mounting local government debts, and weak global growth.

Beijing set a growth target of around 5% in 2023 and policy insiders expect it to maintain a similar goal for this year.

Analysts polled by Reuters expected growth to slow to 4.6% in 2024, and ease further to 4.5% in 2025, which may raise the heat on policymakers to unveil more stimulus to restore confidence and ride out the property slump.

Recent data suggested the economy was starting 2024 on shaky footing, with persistent deflationary pressures and a slight pick-up in exports unlikely to kindle a quick turnaround in lacklustre factory activity. December bank lending was also weak.

“Attention will be on the year-end data to be released on Wednesday,” said Matthew Ryan, head of market strategy at global financial services firm Ebury. “GDP growth is particularly worth watching, as it could set the tone for sentiment toward China in 2024.”

Investor disappointment with China’s performance last year pushed the yuan currency to a 16-year low at one point. The market capitalisation of stocks listed in Shanghai and Shenzhen fell by a cumulative $258 billion during 2023 and Hong Kong-listed shares lost $592 billion.

MORE EASING STILL SEE ON THE CARDS

Separate data on December activity, to be released alongside GDP data on Wednesday, is expected to show factory output growth steadied while consumption growth slowed and investment remained tepid.

Retail sales, a key gauge of consumption, are forecast to grow 8.0% in December from a year earlier, slowing from a 10.1% rise in November. Factory output is seen growing 6.6% in December year-on-year, matching November’s rise.

The People’s Bank of China (PBOC) has pledged to step up policy support for the economy this year and promote a rebound in prices.

On Monday, the PBOC left the medium-term policy rate unchanged, defying market expectations for a cut as pressure on the yuan currency continued to limit the scope of monetary easing.

Analysts polled by Reuters expected the central bank to cut the one-year loan prime rate (LPR) — the benchmark lending rate — by 10 basis points (bps) in the first quarter.

“Despite the surprise, we continue to expect the PBOC to eventually deliver two rounds of policy rate cuts and one RRR cut in H1 2024, given the ongoing economic dip and the fading of pent-up demand for consumption, which we expect to accelerate following the Chinese New Year holidays in February,” Ting Lu, chief China economist at Nomura, said in a note.

The government, which in October unveiled 1 trillion yuan ($139.22 billion) in sovereign bonds to fund investment projects, is likely to press ahead with more fiscal spending to drive growth, analysts said.

($1 = 7.1829 Chinese yuan renminbi)

(Reporting by Kevin Yao; Editing by Kim Coghill)

By Rajesh Kumar Singh

CHICAGO (Reuters) – Spirit Airlines faces tough choices about its future including looking for another buyer and finding other ways to shore up its finances after a federal judge on Tuesday blocked its $3.8 billion merger deal with JetBlue Airways, industry experts said.

The ultra low-cost carrier has been struggling to return to sustainable profitability amid rising operating costs and persistent supply-chain problems. That has raised concerns about the company’s ability to repay its debt that is due to mature next year.

The airline this month completed a series of sale and leaseback transactions covering dozens of planes in a bid to repay about $465 million of debt on those jets.

But with a recovery in earnings not in sight, some analysts said the company might consider a bankruptcy filing to clean up its balance sheet and reorganize into a financially stronger airline.

Helane Becker, airline analyst at TD Cowen, said Spirit is likely to look for another buyer, but that a more likely scenario is a Chapter 11 filing, followed by a liquidation. She said the recent capital raise has given the company funds to self-finance a potential Chapter 11 filing.

“We recognize this sounds alarmist and harsh,” Becker said. “But the reality is we believe there are limited scenarios that enable Spirit to restructure.”

The airline is expected to burn cash over the next several years and will have to continue to raise capital to survive, said Conor Cunningham, an analyst at Melius Research.

“The path forward for Spirit turns to survivability,” Cunningham said.

Asked to comment, a Spirit spokesperson referred to the company’s recent capital raise but did not elaborate. The company had no other immediate comment.

The airline has been among the carriers hardest hit by a snag with RTX’s Pratt & Whitney Geared Turbofan (GTF) engines. It is the largest operator of GTF-powered aircraft in the United States.

As a result, it had to ground a number of planes last year. The number of grounded planes is estimated to climb steadily in 2024, from 13 in January to 41 in December.

Meanwhile, excess industry capacity in its key markets is hurting its pricing power, forcing the company to indulge in promotional activity with steep discounting to fill up its planes.

After its third-quarter earnings last October, Florida-based Spirit said it was evaluating its growth profile as it faced softer demand.

Analysts at Seaport Research Partners downgraded the company’s shares after the court’s ruling, citing “the lack of a credible path to profitability.”

Spirit’s woes had led to a sell-off in its stock, raising worries about the impact on JetBlue’s balance sheet after the merger. With Spirit’s shares losing nearly half of their value since JetBlue won its takeover battle, some analysts wondered if that would prompt JetBlue to renegotiate the terms of the deal.

Spirit’s shares plunged 47% on Tuesday after the court’s ruling, while JetBlue’s shares gained about 5%.

Another option would be to find a way to placate the Justice Department’s competition concerns created by the JetBlue deal. The judge who presided over the case had at one point questioned whether further asset divestitures would allow the deal to pass muster. But a lawyer for the U.S. Justice Department said the only remedy was “a full-stop injunction that would restore competition.”

Analysts also raised the possibility that rival Frontier Airlines, which had lost out in a fierce bidding war, could again make a bid.

Bill Franke, whose airline-focused private equity firm Indigo Partners owns 82% of Frontier, had not ruled out making a fresh bid for Spirit if the transaction with JetBlue failed to close. Frontier declined to comment.

“Spirit has to figure out its Plan C,” said Henry Harteveldt, founder of travel consultancy Atmosphere Research Group. “Plan A was to merge with Frontier, Plan B became a merger with JetBlue.”

(Reporting by Rajesh Kumar Singh in Chicago; Editing by Chris Sanders and Matthew Lewis)

By Noel Randewich and Johann M Cherian

(Reuters) – U.S. stocks ended lower on Tuesday after mixed earnings from Morgan Stanley and Goldman Sachs pressured banks, and as sell-offs in Boeing and Apple weighed on the S&P 500.

Morgan Stanley tumbled 4.2% to a more than one-month low after it posted a lower quarterly profit, while Goldman Sachs’ stock ended 0.7% higher after it reported a 51% rise in profit.

The S&P 500 banks index dipped 1.2% to an over one-month low after other major U.S. banks reported lower profits on Friday.

Spirit Airlines slumped 47% after a federal judge blocked JetBlue Airways’ planned $3.8 billion acquisition of the ultra-low cost carrier, agreeing with the U.S. Department of Justice the deal would hurt consumers.

Apple dropped 1.2% after offering rare discounts on its iPhones in China in response to stiff competition there, days after being overtaken by Microsoft as the world’s most valuable firm.

Federal Reserve Governor Christopher Waller dampened sentiment by saying there should be no rush to cut interest rates even though he was more confident of inflation being on track to meet the Fed’s 2% target.

Traders pared expectations that the Fed might begin its rate cuts in March, with U.S. Treasury yields also rising. [US/]

“Certainly valuations are extended, but I think what is happening today is more of a broader consolidation of markets around that idea that investors had gotten a little too optimistic about how willing the Fed would be to ease rates,” said Ross Mayfield, an investment strategy analyst at Baird.

Following strong December gains, the S&P 500 has been near its January 2022 record high close for the past several sessions. It is now down about 1% from that record high.

Wall Street rose last week as investors continued to bet on an early start to the Fed’s monetary-policy-easing cycle, despite a lack of supporting voices among policymakers and mixed inflation data.

UBS Global Research boosted its 2024 year-end target for the S&P 500 to 5,150 points, representing a more than 8% upside from current levels.

Of the 11 S&P 500 sector indexes, 10 declined, led by a 2.4% drop in energy, followed by a 1.2% loss in materials. The technology index rose 0.4%.

The S&P 500 declined 0.37% to end the session at 4,765.98 points.

The Nasdaq declined 0.19% to 14,944.35 points, while Dow Jones Industrial Average declined 0.62% to 37,361.12 points.

Volume on U.S. exchanges was relatively heavy, with 13.0 billion shares traded, compared to an average of 12.1 billion shares over the previous 20 sessions.

Advanced Micro Devices jumped 8.3% after Barclays analysts raised their price targets for AMD and several other chipmakers, saying they would benefit from growth in artificial intelligence. Larger rival Nvidia climbed about 3% and hit a record high.

Boeing slumped almost 8% to a two-month low after the Federal Aviation Administration extended the grounding of its 737 MAX 9 airplanes indefinitely and Wells Fargo downgraded the stock to “equal weight” from “overweight.”

Declining stocks outnumbered rising ones within the S&P 500 by a 2.6-to-one ratio.

The S&P 500 posted 23 new highs and two new lows; the Nasdaq recorded 63 new highs and 182 new lows.

(Reporting by Noel Randewich in Oakland, California, and Johann M Cherian and Ankika Biswas in Bengaluru; Editing by Richard Chang)

By Nate Raymond, David Shepardson and Rajesh Kumar Singh

BOSTON (Reuters) -A federal judge on Tuesday blocked JetBlue Airways’ planned $3.8 billion acquisition of ultra-low-cost carrier Spirit Airlines after agreeing with the U.S. Department of Justice that the deal was anticompetitive and would harm consumers.

The ruling by U.S. District Judge William Young in Boston marked a victory for the White House in its efforts to prevent further concentration of the U.S. airline industry and raises questions about the viability of another recently proposed deal, Alaska Air’s planned acquisition of Hawaiian Airlines.

President Joe Biden, who has made boosting airline competition a top priority, called the ruling “a victory for consumers everywhere who want lower prices and more choices.”

The court’s ruling finding the deal violated U.S. antitrust law also called into question Spirit’s future. The ultra-low-cost carrier has struggled to turn a profit amid a run-up in operating costs and persistent supply chain problems.

Spirit’s shares closed down about 47% on Tuesday after the ruling was issued, while JetBlue shares ended about 5% higher.

Young said that while a combined JetBlue-Spirit would likely place “stronger competitive pressure” on larger carriers that dominate the domestic airline market, “the consumers that rely on Spirit’s unique, low-price model would likely be harmed.”

He said the deal would eliminate Spirit’s low fares and its ability to put pressure on other higher-priced airlines, including JetBlue, to cut prices. Rivals on average cut prices 7% to 11% when Spirit enters a market, he said.

“The government has demonstrated that consumers value Spirit flights as a unique, economical product option,” Young wrote. “The removal of Spirit as an option for consumers, therefore, would constitute a cognizable harm.”

U.S. Attorney General Merrick Garland called the ruling “a victory for tens of millions of travelers who would have faced higher fares and fewer choices had the proposed merger between JetBlue and Spirit been allowed to move forward.”

While Young ruled in the Justice Department’s favor, he did not go as far as the government had asked and broadly bar any combination of the two companies, saying he was only going to block the deal “as it currently stands.”

The judge, who at trial had questioned whether further asset divestitures could make the deal work, said “the courthouse doors remain open should the defendant airlines decide to try again.”

Some investors and analysts in the past had expressed concerns that Spirit’s troubles could hurt JetBlue after the merger. Some analysts had also suggested JetBlue renegotiate the deal, citing the fall in Spirit’s share price even before Tuesday’s ruling.

The airlines can appeal the ruling. In a joint statement, JetBlue and Spirit said they were evaluating “next steps as part of the legal process.” They said JetBlue had already “removed any reasonable anti-competitive concerns that the Department of Justice raised.”

The Justice Department, along with Democratic state attorney generals from six states and the District of Columbia, had argued the JetBlue-Spirit deal would lead to fewer flights and higher prices for millions of Americans.

They said that allowing JetBlue to absorb its no-frills, budget rival Spirit would “extinguish a vital source of low-cost competitive disruption along more than 375 routes,” causing nearly $1 billion of net harm annually to consumers.

JetBlue’s lawyers argued that the case was a “misguided” challenge to a merger between the nation’s sixth- and seventh- largest airlines, which combined would control 10.2% of a domestic market dominated by four larger airlines.

Those four U.S. carriers – United Airlines, American Airlines, Delta Air Lines and Southwest Airlines – control 80% of the market following a series of previous airline mergers that the federal government blessed.

Spirit was the first U.S. domestic carrier to allow passengers to pick what features of their flights they pay for, such as checked bags and food and drink service. Its model has pushed competing airlines to slash prices, the Justice Department said.

JetBlue is a higher-cost airline than Spirit. But it has historically maintained a low-cost model compared with larger airlines and been able to similarly pressure larger airlines to reduce prices when it enters a new route.

The New York-based airline had tried to address U.S. regulators’ concerns by agreeing to divest gates and slots at key airports in New York City; Boston; Newark, New Jersey; and Fort Lauderdale, Florida.

The Justice Department’s case is part of a broader push by the Biden administration to aggressively step up antitrust enforcement, an initiative that has had mixed results in court.

JetBlue was already the focus of one of its earlier cases, with a different Boston judge, Leo Sorokin, in May siding with the government in finding that JetBlue’s U.S. Northeast partnership with American Airlines violated antitrust law.

JetBlue subsequently decided to terminate the alliance. American Airlines is appealing Sorokin’s decision.

(Reporting by Nate Raymond in Boston, David Shepardson in Washington and Rajesh Kumar Singh in ChicagoEditing by Alexia Garamfalvi, Anna Driver and Matthew Lewis)

MEXICO CITY (Reuters) – Mexico Pacific said on Tuesday it had reached a deal to supply Exxon Mobil with an additional 1.2 million tonnes per annum of liquefied natural gas, clearing the way for a final investment decision to expand its Saguaro Energia LNG plant.

ExxonMobil LNG Asia Pacific tied up the agreement to buy the LNG from a proposed third train, or production unit, at the Saguaro Energia project on Mexico’s west coast, Mexico Pacific said in a statement.

Under the new deal, Exxon will buy the LNG on a free-on-board basis over a 20-year term.

With the agreement, Houston-based Mexico Pacific has locked in the sales required to make a final investment decision later this year on building the third train, CEO Ivan Van der Walt said in the statement.

The new pact follows on a deal late last year under which Exxon agreed to buy about 2 million tonnes per annum from Saguaro Energia’s first two LNG trains.

The Saguaro Energia project is set to ship 15 million tonnes per annum of LNG to Asia, using gas from the U.S. Permian Basin. The project has a price tag of over $15 billion, officials from the Mexican state of Sonora said last year.

Reuters has emailed Exxon a request for comment.

(Reporting by Kylie Madry; Editing by Susan Fenton and Sonali Paul)

By Shariq Khan

NEW YORK (Reuters) -Oil prices were little changed on Tuesday, pressured as the dollar jumped to its highest in a month but supported by jitters about the impact to energy supplies from escalating tensions in the Middle East.

Global benchmark Brent crude futures rose 14 cents, or 0.2%, to settle at $78.29 a barrel. At the session high, Brent futures were up by a dollar a barrel.

U.S. West Texas Intermediate crude futures (WTI) ended at $72.40 a barrel, down 28 cents, or 0.4%, from Friday’s settlement. U.S. markets were closed for a public holiday on Monday.

“Oil prices are looking for a direction,” said Rob Thummel, managing director at energy investment firm Tortoise Capital.

Weighing on prices, the U.S. dollar hit a one-month high as investors dialed back expectations of an interest rate cut by the Federal Reserve in March. A stronger greenback dents demand for dollar-denominated oil among buyers using other currencies.

Forecasts for milder weather later in January in the major U.S. production hubs also weighed on prices, said Jay Hatfield, portfolio manager at InfraCap in New York.

Warmer weather could dampen demand for heating oil, a refined product used to warm homes in parts of the U.S. Northeast and Midwest, Hatfield noted.

Meteorologists projected weather in the U.S. Lower 48 states would switch from colder than normal this week to mostly warmer than normal from Jan. 22-31.

Oil prices drew support from signs of escalating tensions in the Middle East, as the U.S. military carried out a new strike in Yemen against four Houthi anti-ship ballistic missiles.

Houthi attacks on Red Sea shipping have been disrupting global movement of goods through the key trading route.

“Tensions in the Middle East are rising so the geopolitical risk premium in oil prices should be rising as well,” Tortoise Capital’s Thummel said.

Concerns of the conflict spreading throughout the region grew on Tuesday, as Iran’s striking of targets in the semi-autonomous Kurdistan region of Iraq triggered a diplomatic dispute. Iran also attacked Islamic State positions in Syria.

Despite the escalation, oil traders appear to be waiting for hard evidence of supply disruption before they push prices higher, said Fiona Cincotta, analyst at City Index.

Global energy trader Gunvor Group expects oil prices to hold at current levels and does not expect a major impact to oil production from the Red Sea disruptions, its CEO told Reuters on the sidelines of the World Economic Forum in Davos.

(Reporting by Shariq Khan; additional reporting by Robert Harvey, Arathy Somasekhar and Trixie Yap; editing by David Gregorio and Marguerita Choy)

By Jonathan Stempel and Luc Cohen

NEW YORK (Reuters) -Fresh off a campaign victory in Iowa, Donald Trump sat in a New York courtroom on Tuesday to defend himself for a second time against charges that he defamed writer E. Jean Carroll after she accused him of raping her decades ago.

Trump watched from the defendant’s table as Carroll’s lawyer told a jury that the then-U.S. president made her life miserable when she went public in 2019 with her story that he had attacked her in a department store dressing room in Manhattan.

“He used the world’s biggest microphone to attack Ms. Carroll, to humiliate her, and to destroy her reputation,” lawyer Shawn Crowley said.

Carroll, 80, is seeking at least $10 million in damages in a civil case that will put the allegations of sexual assault back in the headlines while he pursues the 2024 Republican presidential nomination.

Crowley said Trump’s “horrible” lies unleashed a torrent of abuse from his followers, and wrecked her sense of safety.

“As he’s campaigning for president of the United States, Donald Trump continues to lie about Ms. Carroll,” Crowley said.

Jurors will only consider how much Trump should pay Carroll in damages, not whether the alleged assault took place or whether Trump lied about it afterward.

U.S. District Judge Lewis Kaplan said he expects the trial to last three to five days.

Trump, 77, has said he wants to testify.

He could spend much of this year shuttling between campaign rallies and courtrooms, as he seeks to win the 2024 Republican presidential nomination.

He won the first state contest in Iowa on Monday by a wide margin, and opinion polls show him leading in the next contest in New Hampshire a week from today.

Trump has pleaded not guilty in four criminal cases that could potentially land him in prison before the November presidential election, including two that accuse him of trying to overturn his 2020 loss to Democrat Joe Biden. He also is a defendant in at least two other civil cases.

Trump has cast himself as the victim of political persecution. On Tuesday, he said Kaplan should dismiss the case.

“Judge Kaplan should put this whole corrupt, Crooked Joe Biden-directed Election Interference attack on me immediately to rest,” he posted on social media. “He should do it for America.”

SECOND TRIAL

Trump’s high profile was apparent as prospective jurors were screened for the case. Many acknowledged they were familiar with Trump’s various legal troubles, though none said they knew the details of the first defamation trial.

Many said they had backed Democratic candidates in previous elections, reflecting the New York City area’s left-leaning tilt, and one said she had volunteered for Biden’s 2020 campaign.

Two others said they believed Trump’s false claims that the election had been stolen from him. One said she used to work for his daughter Ivanka. They were not chosen for the jury.

Jurors’ identities are being kept confidential.

Trump has already lost one defamation case against Carroll.

A jury last May ordered Trump to pay the former Elle magazine columnist $5 million for having sexually abused her during the encounter, and defaming her in 2022 by denying that it happened. Trump skipped that trial.

Kaplan, who has overseen both cases, has barred Trump from arguing that he did not defame or sexually assault Carroll or that she made up her account.

In both cases, Trump has said he did not know Carroll and that she invented their encounter to sell her memoir.

Trump is appealing the $5 million award, and could appeal any award at the second trial. Appeals could take years.

NEW ATTACKS

In recent weeks, Trump has escalated his attacks on Carroll, including a false accusation on social media this weekend that she did not know the decade of their encounter.

He also called Kaplan “terrible, biased, irrationally angry,” echoing attacks he has made on judges overseeing some of his other cases.

Trump may face an uphill fight to escape significant additional damages because of Kaplan’s pre-trial rulings.

These include banning Trump from suggesting he did not rape Carroll, as New York’s penal law defines the term, because the first jury did not find that Trump committed rape.

Kaplan has ruled that because Trump used his fingers in the assault, Carroll’s rape claim was “substantially true.”

Trump also cannot discuss DNA evidence or Carroll’s sexual activities, or suggest that Democrats are bankrolling her case. Carroll is a Democrat.

And as at the first trial, jurors will be able to see the 2005 “Access Hollywood” video where Trump graphically described the ability of famous people like himself to have sexual relations with beautiful women.

Trump did not retract his comments when asked about them in a 2022 deposition. Kaplan has said the video could offer “useful insight into Mr. Trump’s state of mind” toward Carroll.

Trump lawyer Alina Habba on Sunday assured Kaplan that he was “well aware” of the court’s rulings “and the strict confines placed on his testimony.”

(Reporting by Jonathan Stempel and Luc Cohen in New York; Writing by Andy Sullivan; Editing by Noeleen Walder, Mark Porter, Franklin Paul and Daniel Wallis)

By Shariq Khan

NEW YORK (Reuters) -Oil prices were little changed on Tuesday, pressured as the dollar jumped to its highest in a month but supported by jitters about the impact to energy supplies from escalating tensions in the Middle East.

U.S. West Texas Intermediate (WTI) crude futures settled at $72.40 a barrel, down 28 cents, or 0.4%, from Friday’s settlement. U.S. markets were closed for a public holiday on Monday.

Global benchmark Brent Crude futures rose 14 cents, or 0.2%, from Monday’s settlement to $78.29 a barrel. At the session high, Brent futures were up by a dollar a barrel.

“Oil prices are looking for a direction,” said Rob Thummel, managing director at energy investment firm Tortoise Capital.

Weighing on prices, the U.S. dollar hit a one-month high as investors dialed back expectations of an interest rate cut by the Federal Reserve in March. A stronger greenback dents demand for dollar-denominated oil among buyers using other currencies.

Forecasts for warm weather later in January in the major U.S. production hubs also weighed on prices, said Jay Hatfield, portfolio manager at InfraCap in New York.

Meteorologists projected weather in the U.S. Lower 48 states would switch from colder than normal this week to mostly warmer than normal from Jan. 22-31.

Oil prices drew support from signs of escalating tensions in the Middle East, as the U.S. military carried out a new strike in Yemen against four Houthi anti-ship ballistic missiles.

Houthi attacks on Red Sea shipping have been disrupting global movement of goods through the key trading route.

“Tensions in the Middle East are rising so the geopolitical risk premium in oil prices should be rising as well,” Thummel said.

Concerns of the conflict spreading throughout the region grew on Tuesday, as Iran’s striking of targets in the semi-autonomous Kurdistan region of Iraq triggered a diplomatic dispute. Iran also attacked Islamic State positions in Syria.

Despite the escalation, oil traders appear to be waiting for hard evidence of supply disruption before they push prices higher, said Fiona Cincotta, analyst at City Index.

Global energy trader Gunvor Group expects oil prices to hold at current levels and does not expect a major impact to oil production from the Red Sea disruptions, its CEO told Reuters on the sidelines of the World Economic Forum in Davos.

(Reporting by Shariq Khan; additional reporting by Robert Harvey, Arathy Somasekhar and Trixie Yap; editing by Barbara Lewis, Jason Neely, Paul Simao and David Gregorio)

By Shariq Khan

NEW YORK (Reuters) -Oil prices edged lower on Tuesday as cooling expectations of interest rate cuts pushed the dollar to a one-month high and forecasters predicted weather in U.S. production hubs will turn warmer-than-normal later this month.

U.S. West Texas Intermediate (WTI) crude futures fell 56 cents, or 0.8%, from Friday’s settlement to $72.12 a barrel by 1:48 p.m. ET (1848 GMT). U.S. markets were closed for a public holiday on Monday.

Global benchmark Brent Crude futures fell 19 cents, or 0.2%, from Monday’s settlement to $77.96 a barrel. At the session high, Brent futures were up by a dollar a barrel.

Weighing on oil prices, the U.S. dollar hit a one-month high as investors dialed back expectations of an interest rate cut by the Federal Reserve in March. As stronger greenback dents demand for dollar-denominated oil among buyers using other currencies.

Forecasts for warm weather later in January in the major U.S. production hubs also weighed on prices, said Jay Hatfield, portfolio manager at InfraCap in New York.

Meteorologists projected weather in the U.S. Lower 48 states would switch from colder than normal this week to mostly warmer than normal from Jan. 22-31.

Oil prices drew support from signs of escalating tensions in the Middle East, as the U.S. military carried out a new strike in Yemen against four Houthi anti-ship ballistic missiles.

Houthi attacks on Red Sea shipping have been disrupting global movement of goods through the key trading route.

“Tensions in the Middle East are rising so the geopolitical risk premium in oil prices should be rising as well,” said Rob Thummel, managing director at energy investment firm Tortoise Capital.

Concerns of the conflict spreading throughout the region grew on Tuesday, as Iran’s striking of targets in the semi-autonomous Kurdistan region of Iraq triggered a diplomatic dispute. Iran also attacked Islamic State positions in Syria.

Despite the escalation, oil traders appear to be waiting for hard evidence of supply disruption before they push prices higher, said Fiona Cincotta, analyst at City Index.

(Reporting by Shariq Khan; additional reporting by Robert Harvey, Arathy Somasekhar and Trixie Yap; editing by Barbara Lewis, Jason Neely, Paul Simao and David Gregorio)