A look at the day ahead in European and global markets from Tom

Westbrook

Markets head into the release of U.S. inflation figures

expecting they won't get in the way of an interest rate cut next

week.

None of the economists polled by Reuters see core CPI

topping 0.3% for November and anything at that level or below is

unlikely to ruffle too many prices.

It's the surprise, to markets pricing 21 basis points of

U.S. easing next week, that traders may need to watch out for.

Even a core reading of 0.3% would put the three-month

annualised rate around 3.6%, which is uncomfortably high, and so

a higher reading might give pause to bets on a December cut and

to U.S. share indexes that are trading near record peaks.

Asia trade was wary, with the dollar easing on the yen and

steady elsewhere and stocks in a holding pattern.

In one of their most dovish statements in more than a

decade, Chinese leaders signalled on Monday they are ready to

deploy whatever stimulus is needed to counter the impact of

expected U.S. trade tariffs. But after initial gains, markets

have cooled and Chinese shares were mostly flat.

The Canadian dollar is pinned near a 4-1/2 year low as

rising unemployment has fed expectations for a 50 bp rate cut

later on Wednesday.

German stocks were also catching their breath after shooting

to record peaks despite a dour economic outlook. The benchmark

DAX index is up 5.5% in two weeks and some of the top

gainers have just started to slip from recent peaks.

Weapons giant Rheinmetall is down about 7% in two

sessions, although it has more than doubled this year.

Soaring Siemens Energy shares, which had zoomed

up more than 35% in November and are up more than 300% this

year, fell more than 4% on Tuesday.

Key developments that could influence markets on Wednesday:

- U.S. CPI data

(Editing by Sam Holmes)