Welcome to the Brussels Edition, Bloomberg’s daily briefing on what matters most in the heart of the European Union.

The Russia-Ukraine war has entered a new volatile phase, 1,000 days after Moscow’s tanks rolled across Ukrainian borders. Yesterday, Kyiv for the first time used US-made long-range missiles to strike a military base on Russian territory. The Kremlin responded by stepping up its threat of a nuclear response to conventional attacks. Adding to concerns, two undersea data cables were damaged in the Baltic Sea in back-to-back incidents over two days. While no evidence of Russia’s involvement has been presented, German Defense Minister Boris Pistorius said they should be investigated as acts of sabotage and pointed at Russia as the potential culprit. 

—Gian Volpicelli

Carbon Levy |  The EU is ready to soften the blow from a landmark carbon border levy designed to stop the dirtiest industries from moving abroad to escape a tightening of climate regulation. The Commission will explore steps to help domestic industries such as steel and aluminum in a review brought forward to next year.

Deep Cuts | Italy’s central bank governor called on the ECB to cut interest rates far enough to help boost sluggish economic growth. Fabio Panetta, who also sits on the ECB’s Governing Council, said “restrictive monetary conditions are no longer necessary.” The ECB is currently weighing how quickly to lower borrowing costs.

Battery Recycling | The world’s largest maker of EV batteries is in talks to establish battery recycling operations in Europe. China’s CATL is discussing possible sites with several European governments, including Hungary, we’re told.

Trade Block| France and Poland are teaming up to try to torpedo a trade deal between the EU and Latin America’s Mercosur. Agriculture ministers from the two nations plan to meet in Warsaw to discuss their objections to the pact.

Not Quitting | Chancellor Olaf Scholz said he would be his party’s candidate in the upcoming German election, brushing aside speculation that the Social Democrats would choose a more popular official to run in his place.

Accession Talks | The EU will move ahead “swiftly” with an initial phase of accession talks for Ukraine and Moldova during the first half of 2025 under Poland’s rotating presidency of the bloc, a senior official in Warsaw told us. Still, with a total of 35 negotiating chapters and Ukraine still at war, any process is likely to take years, meaning EU membership will remain a distant prospect. 

Greater Penalties | The EU’s securities regulator is recommending greater penalties for failed trades as it looks to improve the efficiency of the region’s financial markets. The authority proposed a “moderate” increase of penalty rates for most asset classes.

Shadow Fleet | A vast shadow fleet of aging, uninsured tankers is helping billions of dollars of sanctioned Iranian oil reach China — although Beijing has officially imported no oil from Teheran in two years. A Bloomberg analysis of five years’ worth of satellite image reveal how Iran is relying on this dark network to successfully skirt export restrictions as the US tightened its sanctions.

Swiss watch exports fell for the second month in a row in October on a slump in shipments to China. Exports of Swiss timepieces and watch movements declined 2.8% overall to about $2.6 billion in value, with China’s imports down 39%.  Swiss watch exports are on track to post an overall decline this year for the first time since the pandemic disrupted sales in 2020.

All times CET

• 7:40 a.m. Vsevolod Chentsov, Head of Ukraine's Mission to the EU, speaks in interview with Bloomberg TV. Watch live here

• 9:00 a.m. Belgian Prime Minister Alexander de Croo speaks in fireside chat with Bloomberg's Kriti Gupta at the European Business Summit in Brussels

• 11 a.m. EU climate commissioner Wopke Hoekstra holds news conference on COP29 in Baku, Azerbaijan. 

• 12:10 p.m. EU top digital bureaucrat Roberto Viola speaks on AI regulation at the European Business Summit.