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

Ankur Banerjee

Another day, another bout of threats from "tariff man". This

time on pharmaceutical and semiconductor imports that investors

seem to have taken in stride for now, expecting the latest

measure to also be used as a negotiating tool.

U.S. President Donald Trump said sectoral tariffs on

pharmaceuticals and semiconductor chips would start at "25% or

higher, and it will go very substantially higher over the course

of a year." He intends to impose similar tariffs on autos as

soon as April 2.

Trump, the self-declared "tariff man," had been telegraphing

his intentions of imposing tariffs for months, so some of the

news may have been priced in. And while investors remain wary,

they are looking beyond the ebbing tariff worries.

That leaves the spotlight on European stocks' stunning start

to the year, with the pan-European STOXX 600 index

closing at record high on Tuesday, taking its 2025 gains to

nearly 10%. Futures point to a subdued open.

The rising chances of increased military spending in Europe

against a backdrop of peace talks to end the Russia-Ukraine

conflict have helped defence stocks this week and with no

resolution in sight, the defence sector may be set for its ninth

straight session of gains.

Earnings from top iron ore producer Rio Tinto will

be the main event in the corporate world during European hours

with investors keen to hear from Rio on how it will navigate

choppy waters in a world full of tariffs.

BHP, the world's largest listed miner, on Tuesday

flagged risks to global growth from potential trade tensions, as

it logged its lowest first-half profit in six years.

On the macro side, UK inflation data for January is due to

be out at 0700 GMT and will likely show a slight acceleration to

2.8% last month from 2.5% in December, according to a Reuters

poll.

That along with Tuesday's data showing the UK's accelerating

wage growth has underscored why the Bank of England has been

cautious about cutting interest rates despite a weak overall

economy, leaving sterling well supported near a

two-month peak.

The pound is up 1.8% in February and on course to snap a

three-month losing streak amid dollar weakness.

Key developments that could influence markets on Wednesday:

* UK PPI and CPI for January

* Earnings: HSBC, Glencore and Rio Tinto