MORNING BID EUROPE-Brexit's true believers take the reins

* A look at the day ahead from European Economics and Politics Editor Mark John and EMEA markets editor Mike Dolan. The views expressed are their own.

LONDON, July 25 (Reuters) - For the first time in the three years since the referendum, the true believers in Brexit hold the reins of power in Britain. After his cull of Theresa May's cabinet, Boris Johnson's new team reads like a Vote Leave roster: his chief adviser, Dominic Cummings, was the architect of the whole campaign, and such new arrivals as Home Secretary Priti Patel and House of Commons leader Jacob Rees-Mogg were prominent Leave faces. Johnson will gather them all for their first cabinet meeting today before he delivers his first speech to parliament -- where opponents of no-deal will be plotting to thwart his do-or-die Brexit by Oct, 31.

The world's biggest central banks are playing their own global version of the waiting game. While the European Central Bank is expected to signal some form of easing today, it like the Bank of Japan will probably wait to see what the Federal Reserve does before it heads resolutely in the same direction. The simplest move today would be just to tweak its interest rate guidance, which now indicates rates will be kept steady through mid-2020. But with just three months of his eight-year tenure left, Mario Draghi has only a few more opportunities to secure his legacy, suggesting big steps will come by September at the latest before he hands over to Christine Lagarde on Oct. 31. As usual, the rate decision is at 1145 GMT, followed by Draghi's news conference at 1230 GMT.

Just as the prospect of an Italian coalition split grew less imminent yesterday after peace broke out between the ruling League and 5-Star partners, Spain looks to be heading ever closer to new elections. Acting prime minister Pedro Sanchez has just hours to secure a coalition deal with far-left Podemos and win support from smaller parties if he is to be confirmed in a vote on Thursday afternoon and avoid the risk of a repeat vote later this year. Although both parties agree on rolling back the austerity-inspired reforms of the Rajoy years, they are deeply split on the number of jobs Podemos should have in the new government and whether Catalonia should have a fresh vote on its future. Coalition-building is never easy -- in Spain, where there is little tradition of doing it, forging consensus is clearly even harder. MARKETS AT 0655 GMT Given all the speculation of further monetary easing as soon as Thursday, the European Central Bank will have its work cut out getting ahead of market pricing and not disappointing when it makes its decision later today. With futures markets pricing in a 50% chance of an interest rate cut on Thursday and euro sovereign bond markets rallying hard on expectations ECB President Mario Draghi will indicate a resumption of bond buying stimulus this year, there is plenty of scope for disappointment and some reversal of recent market moves. After July’s flash PMI business surveys for the euro zone came in weaker than forecast and showed an ongoing contraction in German manufacturing, the ECB at least has some additional macro data cover for a decision to ease now. Euro/dollar remained under pressure going into today’s meeting, hovering near Wednesday’s two-moth lows just above $1.11, and the euro reached a new two-year low against the Swiss franc. Traders are wary of the Swiss National Bank intervening on the currency markets to limit the franc’s gains as the ECB prepares to ease again, and the Swiss currency has been buoyed by rising geopolitical tensions as well – a standoff in the Gulf between Iran and the United States and Britain, an overnight missile launch by North Korea and a host of other uncertainties from trade wars to Brexit.

Ten-year German bund yields rose from record-low negative levels set yesterday. Ten-year U.S. Treasury yields also nudged lower first thing. Sterling’s recovery against the euro on Wednesday probably had more to do with the ECB meeting than with domestic politics, as the new British PM, Boris Johnson, made sweeping changes to the government cabinet, packing it with lawmakers who support his stance on leaving the European Union on Oct. 31 with or without a deal. There was little market reaction to the news that former interior minister Sajid Javid would replace Philip Hammond as finance minister. Johnson holds his first cabinet meeting later today and the pound was weaker against the dollar and euro first thing. Elsewhere in Europe, eyes were on Madrid as the Spanish parliament votes for the second time this week on whether acting PM Pedro Sanchez will be confirmed as premier.

In emerging markets, Turkey takes centre stage later today, when the central bank holds its first meeting after the sacking of Governor Murat Cetinkaya, ostensibly for not cutting rates fast enough. The lira was flat early on. A Reuters poll forecast a 250-basis-point cut of the bank’s 24% policy rate, but markets have priced in at least 300 basis points. The bigger question is how much further they will be cut going forward. Equity markets were deep in the earnings season, meantime, with the S&P 500 ending at a record high on the expected Fed easing and positive noises from the chip sector. Facebook shares rose after the bell on better-than-forecast earnings, even though it was fined $5 billion by U.S. authorities over privacy missteps. It pared back gains of up to 5% in after-market trading, however.

In European corporate news, there are mixed signals from companies in sectors ranging from spirits to pharma, perfumes to chemicals, cars to yogurts, you name it. Shares in Nokia are expected to gain as much as 7% after reporting a surprise rise in second-quarter profit; it may have benefitted from U.S. restrictions on Chinese rival Huawei. In chips, STMicro is forecast down 2% after it cut its revenue outlook. Rivals Aixtron and Siltronic are seen rising after leaving their guidance unchanged. In cars, Volkswagen shares are expected to rise 1% to 3% after reporting a 30% jump in second-quarter operating profit, led by higher-margin sports utility vehicle sales. Valeo is seen rising 3% to 4% after it confirmed its financial-year goals. In Paris, where stock futures are rallying 0.9% to their highest since 2017, blue-chips Danone and Total are expected to rise after reporting results. Total is also boosted by its asset sale plan. Over to liquor, where AB InBev, which makes Budweiser, Corona and Stella Artois, is set to rise 2% after it reported a second-quarter beat as beer sales grew at their fastest pace in five years. AB InBev took a hit earlier this month after cancelling its Asia IPO. Diageo, the world's largest spirits company, reported higher profits, helped by growth across all its markets.

Cobham is seen rising 30% after U.S. buyout group Advent offered to buy the British engineer for 4 billion pounds. In pharma, Switzerland's Roche shares were seen rising 2% after raising its full-year sales outlook as newer drugs fuelled first-half results.

* Europe corp events: Unilever, STMicro, AstraZeneca, Unilever, Loomis, Nokia, Telefonica, BanInter, Atos, ABInbev, Saipem, Roche, ABB, BASF, Anglo American, Diageo, Total, Clariant, Kering, Wizz Air, Sika, Scor, VW, Schneider Electric, Danone, Subsea 7, JCDecaux, Inchape, Vivendi, Carrefour, Howden, Aeroports de Paris, Lagardere, Galapagos, Permanent TSB, Daily Mail trading

* Italy June trade balance

* Germany July Ifo business sentiment

* Spain Q2 jobless

* UK July CBI distributive trades

* Turkey central bank policy decision

* Sweden July consumer/manufacturing confidence, June jobless, PPI and household lending

* European Central Bank policy meeting and press conference from ECB chief Draghi

* US earnings: Amazon, Alphabet, Raytheon, Invesco, Comcast, Borgwarner, Goodyear, Huntington Bancshares, Valero Energy, Newmont Mining, SouthWest Airlines, Briston-Myers Squibb, 3M, Hershey

* US June durable goods orders, weekly jobless claims

* Mexico May retail sales

* Argentina June trade balance

* APEC finance ministers meet in Santiago

* US Treasury auctions 7-year notes

(Editing by Larry King)