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

All eyes will be on the release of British consumer price figures later on Wednesday, where a hotter-than-expected print is likely to dash hopes of another rate cut from the Bank of England (BoE) this year.

Expectations are for the inflation rate to have risen to 4% in September, the highest among the world's big rich economies and double the BoE's target.

Currently, markets are pricing in a nearly 15% chance that the central bank could ease rates by 25 basis points at its November meeting. But an upside surprise in Wednesday's figures is almost certain to wipe out those bets.

That would also cloud the rate outlook for the central bank into the year-end, as policymakers remain divided between those who want aggressive action to offset the slowing job market, others who worry about persistent inflation pressure and a majority in the middle who favour gradual rate cuts.

The fast pace of price growth in the UK - which continues to strain households and keep borrowing costs elevated - adds to the challenge for finance minister Rachel Reeves, who has pledged to ease cost-of-living pressures and speed economic growth.

Reeves has signalled that she will raise taxes and cut spending in her November 26 budget plan as she tries to stay on course to meet her fiscal targets and avoid upsetting investors who have already pushed up British borrowing costs sharply.

Elsewhere in markets, investors were still reeling from the sudden plunge in gold prices, which has stalled the metal's blistering rally despite no obvious trigger.

Asian shares similarly retreated, while Japan's Nikkei reversed early losses to trade higher after a report that the country's new Prime Minister, Sanae Takaichi, is preparing an economic stimulus package that is likely to exceed last year's 13.9 trillion yen ($92.19 billion) to help households tackle inflation.

Global money managers are circling back to Japan's stock and debt markets, drawn by the promises of its new reflationist government and a desire to diversify from pricier U.S. and European markets.

Key developments that could influence markets on Wednesday:

- UK inflation (September)

- Barclays, Tesla earnings

(Editing by Muralikumar Anantharaman)