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

Europe's most valuable company and the top supplier of chip-making equipment reports on Wednesday with the AI rally getting some speed wobbles.

ASML is the only maker of EUV lithography systems, the huge $300 million machines needed to produce the tiny circuitry on cutting-edge chips.

It is set to report an 8.8% rise in second-quarter net profit at 2.61 billion euros ($2.99 billion) on a 14% increase in revenue at 8.8 billion euros, LSEG estimates showed. Analysts are also looking for an increase to the company's full-year revenue forecast currently at 36 billion to 40 billion euros.

The market mood is such that only a big beat will do, with IBM ( IBM ) the latest illustration of how AI is upending business models in software and computing and how fickle markets are turning about picking the boom's winners and losers.

IBM SHEDS A QUARTER OF ITS VALUE

"Big Blue" said it had failed to keep pace with the shift in corporate spending from software to data-centre infrastructure.

A projected revenue rise of just 1% put its adjusted earnings-per-share forecast at $2.93 compared with market expectations of $3.02. The result sent IBM's ( IBM ) shares down 25%.

South Korea's volatile KOSPI shot up 8% in Asia, with a surprise slowdown in U.S. inflation cooling bets on interest rate hikes and giving investors a reason to be cheerful.

Brent crude futures kept over $85 a barrel, though stayed short of fresh peaks as investors wait to see how long the Strait of Hormuz will again be blocked to oil tankers.

Data showed China's economic growth slowed to 4.3% in the first half, short of economists' expectations. Still, there was little reaction, since the theme of export strength and domestic weakness are well worn and because investors hope the slowdown will prompt a bit of a fiscal impulse.

The Bank of Canada is widely expected to hold interest rates steady later on Wednesday.

Key developments that could influence markets on Wednesday:

-- Earnings: ASML, BNY, Blackrock, Johnson & Johnson, Morgan Stanley, United Airlines

-- Economics: Eurozone industrial production, U.S. PPI

-- Interest rates: Bank of Canada seen holding rates

($1 = 0.8744 euros)