MORNING BID EUROPE-A daily note from our Economics/Politics Editor

* A daily view from EMEA Economics & Politics Editor Mike Peacock. The views expressed are his own.

LONDON, March 4(Reuters) - A day before the European Central Bank's monthly meeting, service sector PMI surveys for euro zone countries will be scrutinized to see if they add to a developing trend of above-forecast economic data.

Since the turn of the year, European data has generally surprised on the upside, with Germany leading the way. German retail sales released yesterday leapt by 2.9 percent month-on-month in January, way above what was expected, for example, while growth was robust in Q4, with domestic demand to the fore.

Germany's biggest union IG Metall has negotiated an inflation-busting pay rise of 3.4 percent for its members which is likely to set the bar for other sectors' wage deals and so further propel consumer spending.

Economists point to the greater discretionary income given to consumers by a dramatic fall in energy prices over the past six months and the prospect of the ECB's money printing programme, which begins this month and aims to pump more than 1 trillion euros of new money into the euro economy over the next 18 months.

For the ECB, the question is whether it is now underestimating future growth, having spent two years cutting its forecasts to catch up with a grimmer reality. While the Federal Reserve and Bank of England view cheap energy as a boon to the economy, the ECB has fretted that it could entrench deflationary expectations.

Germany's Angela Merkel will be in Brussels for talks with European Commission President Jean-Claude Juncker. The pair will speak to the media later. Greece and Ukraine are likely to be uppermost in their minds.

Greece insists it will not run out of money this month or soon and has promised to detail its reform plans at a meeting of euro zone finance ministers next Monday. Despite agreeing a four-month extension to its bailout, the euro zone is loath to give any more financial help until it is sure Athens will meet its commitments under that programme.

Last night, the Greek government submitted a bill to offer free food and electricity to thousands of poverty-stricken Greeks as its first legislative act in parliament. It is trying to assure its lenders that such measures will not wreck the budget while showing Greeks it is sticking to pre-election pledges. But trust is in short supply among its euro zone peers.

Greece will sell 875 million euros of six-month treasury bills to refinance a maturing issue. Its plea to be allowed to issue more short-term debt has been rejected so far. Whether Greek banks can still hoover up the bills on offer given a likely absence of foreign buyers will be interesting.

Barack Obama and Merkel, France's Francois Hollande and Britain's David Cameron agreed on a teleconference last night that they were ready to step up sanctions against Russia if there were further violations of a ceasefire agreement in Ukraine.

The quartet said a major breach of the ceasefire pact would engender a "strong reaction from the international community", Hollande's office said.

On Tuesday, Kiev announced its highest casualty toll in several days with three Ukrainian servicemen dead and nine wounded amid shelling by pro-Russian separatists.

Ukraine's central bank will raise its benchmark refinancing rate to 30 percent from 19.5 as the bank tries to rein in rocketing inflation and persistent currency weakness.

Poland has a monetary policy meeting today. Central bank governor Marek Belka has said a rate cut is likely from an already record low 2 percent. Seventeen out of 25 economists polled by Reuters expect the central bank to cut the benchmark rate to 1.75 percent. Five predicted a 50 basis point cut, while three expected no change.

The consensus is for rates to trough at 1.5 percent in the second quarter of the year. India's central bank lowered its policy rate by 25 basis points to 7.5 percent earlier, its second surprise cut this year. (Editing by Catherine Evans)