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MORNING BID: TARIFF WORRIES WEIGH AS CPI CHEER FADES

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 DAL.N and retail giant Walmart WMT.N 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

(Kevin Buckland)