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

As trade tensions simmer and investors contend with Germany ripping up its fiscal rulebook, the European Central Bank is widely expected to cut interest rates again on Thursday but what comes next remains up in the air.

The ECB has cut rates five times since June as inflation retreated and economic growth faltered. But with rates slowly approaching a level that no longer restricts economic growth, one might expect an end to the easing cycle.

That may not be the case here, though, as the spectre of a trade war with the United States looms large. Also clouding the near-term outlook are announcements by Germany and the European Commission on changes to fiscal rules, to allow higher defence and infrastructure spending.

All eyes will be on the ECB when it announces its policy decision at 1315 GMT, followed by ECB President Christine Lagarde's 1345 GMT press conference.

The markets are still digesting Berlin's big bazooka measures announced late on Tuesday, which triggered a steep selloff in German bonds, a surge in the euro to a four-month high and the best day for the DAX index in well over two years.

Futures indicate the DAX is set for a higher open on Thursday while German 10-year Bund futures are down 0.7%, indicating a likely decline in cash bond prices once that market opens.

Germany's 10-year yield, the euro zone's benchmark, climbed more than 30 basis points on Wednesday, its biggest daily rise since the euro was launched in 1999.

Investors' mostly exuberant reaction to the fiscal binge contrasted with investor angst about the tightening purse strings in the United States.

Stocks in Asia on Thursday tracked Wall Street higher as investors held out hope that trade tensions could ease after U.S. President Donald Trump exempted automakers from tariffs for a month.

And as my colleague Jamie McGeever notes in his revamped newsletter: As long as Washington's chaotic "on-off, on-off" tariff policy persists, a fog of nervous uncertainty and heightened volatility will hang over the markets.

Key developments that could influence markets on Thursday:

Feb PMI data for euro zone, Germany, France and UK

ECB interest rate decision

Earnings: Reckitt Benckiser, ITV and Merck KGaA