MORNING BID EUROPE-Busy day for Mrs May, euro zone checks its pulse

* A look at the day ahead from EMEA chief desk editor Jeremy Gaunt and EMEA markets editor Mike Dolan. The views expressed are their own.

LONDON, July 20 (Reuters) - We are beginning to see the first signs of Brexit stress in economic indicators, as well as in gloomy projections from the likes of the International Monetary Fund and European Commission. Germany's ZEW investor sentiment index yesterday - a pulse taken entirely after the British referendum - was dire, falling from plus 19.2 to minus 6.8, far worse than any one of 40 economists polled by Reuters had foreseen.

There is probably a bit of knee-jerkery going on, but great oaks out of little acorns grow, so there will be more than usual attention today to the flash euro zone consumer sentiment index for July. Reuters polling points to a slight deterioration - to minus 8 from minus 7.3. The ZEW numbers suggests this might be optimistic.

As for Britain itself, a flavour of what has been going on in the country may be discerned from the Bank of England's agents report on the real economy. This is a relatively obscure report that lays out what people who work from the bank across the UK are picking up. This time, it may make for interesting reading, particularly since the BoE has effectively been given an "over to you Mr Carney" from the government until new finance minister Philip Hammond can come up with something fiscal in the autumn.

A busy day, anyway, for Britain's Prime Minister Theresa May. First (Other OTC: FSTC - news) comes the trial by fire that is her first Prime Minister's Questions in parliament - a peculiarly British event that involves much political jousting, shouting, jeering and hear-hears - then she is off to meet German Chancellor Angela Merkel to talk about Brexit. Who would be a fly on the wall at that meeting?

Sport is politics too and Russia's feeling of being dissed by the West won't have been eased by the International Olympic Committee's decisions to pull some if its patronage over doping. The IOC is waiting to get a legal opinion on whether it can ban Russia from the Rio Games.

Moving on regardless, the Russian Olympic Committee today is scheduled to announce the names of the sportspeople selected to go to Rio, even if they may not.

MARKETS AT 0645 GMT

The dollar has flexed its muscle again over the past 24 hours, with its index hitting its highest in four months, as a fresh divergence in monetary policy expectations between the United States and the rest of the world has opened up. After a series of hefty June data releases and a decent start to the Q2 US earnings season, futures markets have started to bring Fed rate hikes back onto the radar. July is off the agenda still, but the market has built back a 20 percent chance of rate hike in September and is almost 50/50 for a move by year-end. Given that markets assumed the Fed was basically on hold through next year shortly after the Brexit vote, that's a considerable shift. And the move stands out against the latest sweep of easing signalled by the Bank of England, Bank of Japan and likely the ECB tomorrow too. With New Zealand and Australia also signalling possible rate cuts next month, then thinking on the Fed is swimming against a considerable tide and the dollar is buoyed up. The move, which sees euro/dollar back below $1.10, dollar/yen above 106 and sterling looking to slip back below $1.30, is also weighing on commodities and Brent crude is struggling below $47. It (Other OTC: ITGL - news) will also pressure emerging markets, which had been seeing some inflows of late, and the likes of Turkey's lira is on the slide again as the government's purges following the failed coup deepen. Brazil decides on interest rates later, although consensus is for no change. World equity markets have stalled, with Wall St stocks dialling back slightly after a series of record highs. Asia bourses were mixed, with Shanghai and Tokyo lower, but HK and Jakarta up smartly.

Upcoming events/data/ themes for market reports on Wednesday:

- Europe corp events: Nordea, SAP (Amsterdam: AP6.AS - news) , ASML

- German June producer prices

- Germany auctions 5-year notes

- UK June jobless, May earnings; DMO auctions 2039 gilt

- Swiss July ZEW

- EZ May current account/investment

- SAfrica June inflation

- Turkey July consumer confidence

- US Q2 earnings: Morgan Stanley (Xetra: 885836 - news) , Halliburton (Hanover: HAL.HA - news) , Intel (Euronext: INCO.NX - news) , Amex, eBay, Northern Trust, Mattel (NasdaqGS: MAT - news) , Qualcomm (Hanover: QCI.HA - news) etc

- Brazil rate decision

(editing by John Stonestreet)