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

With so much going on in markets right now, it's hard to know where to look.

The raging Trump-led trade war - branded "dumb" by Canadian Prime Minister Justin Trudeau - certainly has investors' attention, keeping sentiment subdued across asset classes.

For instance, one index of global equities has lost some 2% so far this week and Brent crude is plumbing six-month lows.

But it's not as simple as that, with Wall Street poised to open higher following a sell-off on Tuesday, and futures indicating even bigger gains for European bourses.

The parties hoping to form Germany's next government have given reason for optimism, with landmark agreements to create a 500 billion euro ($530 billion) infrastructure fund and loosen fiscal rules to boost defence spending and revitalise growth.

In a similar vein, the European Commission has proposed borrowing up to 150 billion euros to lend to EU governments under a rearmament plan.

The backdrop of course is the volatile negotiations for peace in Ukraine, with Washington seeming to pull away from allies in Europe and to draw closer to Moscow.

But rapprochement suddenly looks closer, with U.S. President Donald Trump sounding very satisfied with a reconciliatory letter from Ukrainian President Volodymyr Zelenskiy after their extraordinary clash in the Oval Office last week.

Trump revealed the letter in his first address to Congress following his return to office, in which he touched on the breadth of his many executive orders merely six weeks since inauguration.

In what analysts said might be a cause for concern, Trump advocated scrapping a bipartisan law giving $52.7 billion in subsidies for semiconductor manufacturing, though initial reaction in markets was barely noticeable.

Meanwhile, investors have judged tit-for-tat tariff countermeasures to have been relatively tame so far.

Chinese policymakers are girding for any trade war with a

promise to unlock more fiscal stimulus.

That comes from the just-begun annual session of the National People's Congress, which runs until Tuesday, leaving lots of time for more details to emerge.

Developments that could influence markets on Wednesday:

* Earnings announcements including Adidas, Bayer * PMIs from US, UK, Germany, France, euro zone * Euro zone producer prices * US ADP employment report($1 = 0.9418 euros)