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

Wee

The Bank of England announces its interest rate decision on

Thursday, where what had once seemed like a straightforward hold

is now under intense scrutiny.

Markets are pricing in an almost one-in-three chance of a

cut to 3.75%, up from a one-in-10 possibility a month ago.

At 3.8%, Britain's inflation rate remains the highest among the

Group of Seven major advanced economies, but a steady reading

and a cooling labour market have offered tentative signs that

inflationary pressures are abating.

More crucially, it's the likelihood of further

belt-tightening in the nation's upcoming budget that could

provide an added impetus for policymakers to lower rates on

Thursday.

British finance minister Rachel Reeves earlier this week paved

the way for broad tax rises to avoid a return to "austerity",

framing her second annual budget as one of "hard choices" to

protect public spending while reducing Britain's debt.

Reeves' rare pre-budget speech left some analysts puzzled over

the timing, though they generally expect the upcoming budget to

be disinflationary.

ASIAN SHARES BOUNCE BACK

Investors will also get a clutch of earnings from European

companies later in the day, with AstraZeneca ( AZN ) and

Deutsche Post among those set to report results.

The outlook for European corporate health has substantially

improved, the latest earnings forecasts showed, as investors'

worst fears for quarterly earnings failed to materialise.

Elsewhere in markets, Asia shares were upbeat, reversing their

steep losses from the previous session after

better-than-expected U.S. economic data drew investors back into

indexes trading near record highs.

Fears of inflated technology stock valuations seem to have

abated for now, with investors seeing little cause for panic

after Wednesday's sharp selloff.

In Hong Kong, Pony Ai and WeRide stocks

dropped as the Chinese autonomous driving developers started

trading, after raising nearly $1.2 billion in share offerings.

A host of Federal Reserve officials are also due to speak

later on Thursday, which could offer some clues on the U.S. rate

outlook.

Resilience in the world's largest economy has led traders to

pare back bets of a Fed cut in December, with markets now

pricing in a 61% chance of a 25-basis-point cut, down from about

70% earlier in the week.

And on the tariffs front, U.S. Supreme Court justices on

Wednesday raised doubts over the legality of President Donald

Trump's sweeping tariffs, in a case with implications for the

global economy that marks a major test of Trump's powers.

Key developments that could influence markets on Thursday:

- Bank of England rate decision

- AstraZeneca ( AZN ), Deutsche Post, Henkel, Sainsbury earnings

- Fed's Barr, Williams, Hammack, Waller, Paulson, Musalem

speak