A look at the day ahead in U.S. and global markets from Mike Dolan

World markets were subdued on Thursday by simmering trade tensions and Washington's attempt to undermine its Ukrainian ally, while the Federal Reserve surprised with talk of slowing its balance sheet runoff at its recent meeting.

A messy week of conflicting geopolitical, trade and central banking headlines has seen renewed tariff threats from President Donald Trump, a bizarre twist in U.S./Russia talks to end the Ukraine war and mix of interest rate cuts and hawkishness in global monetary policy.

While stocks on Wall Street .SPX and in Europe .STOXX continue to flirt with record highs this week nonetheless, U.S. futures and recently buoyant Chinese stocks have taken a step back ESc1 early on Thursday as the complicated landscape unfolds.

Gold XAU=, at new record highs and up 12% for the year to date, was one of the few unambiguous winners once again.

Topping Thursday's U.S. financial diaries are Walmart's latest results, February U.S. business surveys and jobless numbers.

But the heat is elsewhere clearly, not least as Sunday's German election is at the front of the mind in Europe. Trump's turn against Ukrainian President Volodymyr Zelenskiy as he prepares talks with Russian leader Vladimir Putin raised transatlantic tensions considerably ahead of the vote.

With euro zone economic surprise indexes at their most positive since last April and Thursday's corporate earnings impressing, the possibility of post-election fiscal loosening in Germany - especially on defence spending - saw euro stocks .STOXX recover some of Wednesday's recoil.

However, hawkish European Central Bank board member Isabel Schnabel also threw a curveball into ECB easing hopes on Wednesday by saying "we are getting closer to the point where we may have to pause or halt our rate cuts".

Italy's central bank chief Fabio Panetta took a more dovish line, but the combination saw 10-year German bund yields climb to their highest in three weeks and propped the euro EUR= up too.

FED MINUTES

Back stateside, the Fed's latest meeting minutes underlined its caution about further rate cuts for now but surprised bond markets by revealing a discussion about pausing its "quantitative tightening" policy of running down vast balance sheet holdings of Treasuries and mortgage bonds.

"Regarding the potential for significant swings in reserves over coming months related to debt ceiling dynamics, various participants noted that it may be appropriate to consider pausing or slowing balance sheet runoff until the resolution of this event," the minutes noted.

Fed officials have been bracing for a period of uncertainty due to government financial management and had signalled in recent meeting minutes it would be hard to know whether financial markets had enough or too little liquidity.

The discussion saw Treasury yields US10YT=RR tick lower even after another tepid debt auction for 20-year bonds and dragged the dollar down marginally too.

But the dollar took a bigger hit against Japan's yen JPY= on Thursday as speculation about further Bank of Japan interest rate rises this year went up another notch.

Bank of Japan Governor Kazuo Ueda said he met Prime Minister Shigeru Ishiba for a regular exchange of views on the economy and financial markets. Traders took the fact there was no discussion of rising Japanese debt yields as an indication further policy tightening was seen as warranted.

Japan's 10-year government bond yield JP10YT=RR hit a fresh 15-year high of 1.44% and the yen climbed to its best level of the year.

China and Hong Kong stocks dropped, meantime, following this week's fresh Trump tariff threats and as Chinese interest rates were left unchanged as expected at the latest monthly fixing.

But China's Alibaba 9988.HK rose 2% as it topped Wall Street expectations for third-quarter revenue on strong year-end shopping sales.

Key developments that should provide more direction to U.S. markets later on Thursday:

* Philadelphia Federal Reserve February business survey, US weekly jobless claims; Canada January house prices, producer price index; Mexico central bank meeting minutes

* Federal Reserve Board Governor Adriana Kugler, Fed Vice Chair for Supervision Michael Barr, Chicago Fed President Austan Goolsbee and St Louis Fed boss Alberto Musalem all speak; European Central Bank policymakers Gabriel Makhlouf and Jose Luis Escriva speak

* U.S. corporate earnings: Walmart, Booking, Hasbro, Baxter, Akamai, Newmont, Insulet, Alliant Energy, Centerpoint Energy, Targa, Consolidated Edison, Copart, Epam, Live Nation, LKQ, Pool, Quanta, Southern etc

* U.S. Treasury sells $9 billion of inflation-protected 30-year bonds

(By Mike Dolan, Editing by Alison Williamsmike.dolan@thomsonreuters.com)

((mike.dolan@thomsonreuters.com https://reut.rs/3xFdLhlhomsonreuters.com mike.dolan@thomsonreuters.com; +44 207 542 8488; Reuters Messaging: mike.dolan.reuters.com@thomsonreuters.net/))