March 18 (Reuters) - A look at the day ahead in European

and global markets from Wayne Cole

It's been a mostly quiet start to a busy week in Asia,

though China came bearing positive surprises as industrial

output and retail sales beat forecasts.

A 7% y/y jump in output for January and February, combined

to smooth out the Lunar New Year effect, handily topped the 5%

market median and adds to evidence that factory growth globally

is picking up again. Eyes are now on a raft of PMIs due on

Thursday to reinforce the message.

Not so hot was a 9% y/y drop in Chinese property investment,

the country's Achilles heel and another argument for the

People's Bank of China to lower loan rates on Wednesday.

It's a packed week for policy makers as central banks in the

United States, Japan, UK, Switzerland, Norway, Australia,

Indonesia, Taiwan, Turkey, Brazil and Mexico all meet.

Speculation is rife the Bank of Japan (BOJ) will end eight

years of negative interest rates on Tuesday and cease or amend

its yield curve control policy.

The Nikkei newspaper on Saturday became just the latest

media outlet to flag the move, after major companies granted the

biggest pay hikes in 33 years.

There is a chance the BOJ might wait for its April 26

meeting given that is when it will issue updated economic

forecasts, though it has dropped so many hints recently that the

market is fully priced for a move now.

One-month rates have climbed into positive

territory for the first time since 2016, albeit to just 0.01%.

So discounted is a change that the yen has been easing

broadly and the dollar has regained the 149.00 handle.

That, in part, reflects expectations the BOJ will be at

pains to emphasise it is not aiming to tighten policy but rather

slowly transition to something less extraordinary.

As a result, the market sees rates around 0.26% by the end

of the year which would still make the yen the funding currency

of choice for carry trades.

DOT PLOTS IN FOCUS

The Reserve Bank of Australia (RBA) also meets Tuesday and

is certain to hold at 4.35%, though there is a chance it might

further water down its tightening bias.

Likewise, the Federal Reserve is considered certain to keep

U.S. rates at 5.25-5.5% on Wednesday and all eyes will be on the

FOMC dot plots for rates and inflation.

Analysts assume policy makers will look through the recent

run of unhelpfully high inflation readings as a seasonal and

statistical aberration, but there has to be a risk the median

dot plot shifts to two 25 bps rate cuts this year rather than

the former three cuts.

Futures now imply around a 58% chance of a first

rate cut in June, compared to 75% a week ago, and have about 73

basis points of easing priced in for this year.

Much will depend on what tone Chair Jerome Powell chooses to

adopt at his post-meeting media conference, with cautious

optimism being favoured recently.

The Bank of England (BoE) meets Thursday and is likely to

hold at 5.25% - a cut is priced as a 2% chance. A first easing

in June is put at 50-50, with 25 bps fully priced in for August

and 60 bps for all of 2024.

Inflation data for February is due on Wednesday and the

outcome could set the tone for the meeting.

Markets see rather more chance - around 29% - the Swiss

National Bank (SNB) could trim its 1.75% rate on Thursday.

Consumer price inflation is running 0.6 ppts below the bank's

1.8% first-quarter forecast, while core inflation of 1.1% is the

lowest since January 2022.

The Swiss franc has eased from record highs on the euro

over the last couple of months, breaking through the

floor of a huge upward trend channel stretching back to early

2021.

Yet, the franc's real effective exchange rate is still the

highest it's been since a brief crisis-induced spike in 2011 and

a major disinflationary drag on the economy, arguing for lower

rates now that the SNB has backed away from intervention.

Key developments that could influence markets on Monday:

- Bank of Japan starts two-day policy meeting

- Participation by ECB bank supervisor Claudia Buch in

fireside chat

- Euro Zone final inflation data for Feb and the total trade

balance for Jan