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

It's been a muted session in Asia with investors still nursing a grudge over China's latest policy package, which was heavy on debt swapping but again light on direct stimulus.

Analysts assume Beijing wants to keep its powder dry should President-elect Trump really go ahead with his proposed 60% tariffs, but that just extends the wait for a few weeks or months.

The need for action was underlined by inflation data on the weekend that showed Chinese consumer prices grew just 0.3% in the year to October, while producer prices dropped 2.9% y/y as China continued to export deflation.

Eyes are now on retail sales and industrial output this Friday for any hint that Beijing's policies are gaining traction. A 1.3% fall in Chinese blue chips suggested hopes were not particularly high.

Over in Japan, investors are waiting to see if Prime Minister Ishiba will still be in power after a parliamentary vote today. The general assumption is that he will survive, though that leaves him with the tricky task of running a minority government.

An added twist came when Yuichiro Tamaki, the head of a Japanese opposition party that has emerged as a potential king maker in parliament, said a tabloid report about his extra-marital affair with a model was "basically true".

Such political uncertainty complicates life for the Bank of Japan as it ponders whether to hike rates next month. Opinions from its last meeting showed some members were already wary of market volatility, and that was before Trump's win.

At the same time, markets see less scope for further aggressive easing by the Federal Reserve given that Trump's stated policies, if followed in full, would likely put upward pressure on inflation and bond yields.

The implied chance of a December rate cut has come back to 66%, from atop 80% before the election, and a move in January is now seen as an outside bet. JPMorgan, for one, sees the Fed easing cycle terminating at 3.5%, rather than 3.0%.

U.S. consumer prices are due Wednesday and a core reading above the 0.3% forecast would be a further blow to hopes for a December easing.

All of which helped to nudge the dollar up 0.5% on the yen to 153.40, while the euro stayed stuck at $1.0725.

The political outlook was no clearer in Europe as German Chancellor Scholz said he would be willing to bring forward a vote of confidence in parliament to before Christmas, which would pave the way for snap elections.

Key developments that could influence markets on Monday:

- Speech by ECB board member Elizabeth McCaul

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Europe's biggest economy is flagging China's augmented debt

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(By Wayne Cole; Editing by Edmund Klamann)

((Wayne.Cole@thomsonreuters.com; 612 9171 7144; Reuters Messaging: wayne.cole.thomsonreuters.com@reuters.net))