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

Kevin Buckland

Wall Street's mild bounce on the back of a tame CPI reading

did not provide much impetus for Asian markets, leaving European

investors with little cause for optimism.

One problem is that the inflation data, while offering some

relief from the run of discouraging indicators lately, won't

translate directly into a lower PCE price index - the Fed's

preferred gauge of price pressures - because the cooling came

mostly in services.

Another concern is that February's data doesn't fully

capture the impact of President Donald Trump's wave of tariffs.

And ultimately, the primary worry for markets is not

inflation, but growth.

On the subject of tariffs, Europe finds itself directly in

Trump's sights after the EU's threat of counter-measures was met

by a warning of reciprocal duties from the United States.

It remains to be seen whether Trump's approach to Europe

mirrors the ramp-up-and-reprieve strategy used for Canada and

Mexico, or the tax-and-then-tax-again model applied to China.

The good news is that, according to Germany's Kiel

Institute, only a "small fraction" of targeted products from the

EU are exported to the United States.

Meanwhile, Britain continues to keep a relatively low

profile, refraining from immediate tariff retaliation but

keeping all options open.

That may be why sterling continues its steady climb while

the euro is slipping back, albeit after a steeper ascent.

A majority of Americans believe Trump's economic policy has

been too erratic, and an even greater number expect higher

prices as a result.

Warnings from corporate America are also surfacing, with

airline Delta and retail giant Walmart ( WMT )

indicating that the unusually high level of economic uncertainty

will impact their profits.

A potential de-escalation in Trump's trade war could be sown

at home rather than due to tit-for-tat tariffs from major

trading partners. However, a more than 10% slide in the S&P 500

in just three weeks doesn't seem to be prompting a

reconsideration of U.S. policy.

Key developments that could influence markets on Thursday:

- UK RICS housing survey (Feb)

- Sweden CPI (Feb)

- Euro area industrial production (Jan)

- US PPI (Feb), weekly jobless claims

(Editing by Jacqueline Wong)