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

Kevin Buckland

European traders who went to bed thinking a quarter-point

Fed rate cut was a lock for next week may well have had a rude

awakening on this Friday the 13th, with the odds for a

super-sized half-point reduction back at nearly a coin toss.

It started with separate reports in the Financial Times and

the Wall Street Journal that both said the Sept. 18 decision

remained "a close call". Then former New York Fed President Bill

Dudley, who remains highly influential, said at an event in

Singapore that there's "a strong case" for a 50 bps reduction.

That put the dollar on the defensive, as it slipped back

towards its lowest level this year against the yen and lost

additional ground on the euro. Two-year Treasury yields were

back below 3.6% in Asian hours.

Gold pushed to a new all-time peak at $2,570.

Reactions in the equities markets were mixed. Hong Kong's

Hang Seng was up more than 1% and Australian stocks were also

higher.

But for the Nikkei, a decline was pretty much a given with

the yen that much stronger. South Korea also slumped and

mainland Chinese stocks struggled. It's worth noting that all

three of those markets are heading into a long holiday weekend,

with South Korean traders not back at work until next Thursday.

A very early look at pan-European STOXX 50 futures was

positive, pointing up 0.3%.

There's little on the data docket in Europe on Friday to

distract from Fed-focused speculation, which has boosted the

chance of a 50 bps cut to 43% versus 28% early in the Asian

morning. Some CPI prints are continuing to roll in, including

from France and Greece. Data is also due on the euro region's

industrial production.

No central bank speeches are on the calendar, with the Fed

and the Bank of England - which will announce policy next

Thursday, with no change expected - in blackout periods.

Meanwhile, the ECB has moved mostly into the rear-view mirror

after Thursday's well-telegraphed rate cut, and no clear

guidance from President Christine Lagarde on when to expect the

next one.

Key developments that could influence markets on Friday:

-France, Greece, Poland, Slovakia CPI (August)

-Euro zone industrial production (July)