MORNING BID EUROPE-Doubling down: Orban's anti-migration drive

* 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, April 20 (Reuters) - Financier George Soros' Open Society Foundations will close their office in Budapest and move their eastern European operations to Berlin, media reports suggest. This, if confirmed, comes after an aggressive campaign led against the NGO by the recently re-elected Hungarian Prime Minister Viktor Orban, which has targeted the pro-liberal group as part of its crackdown on migration. Orban is out this morning with a robust statement to the effect that he won't be shedding a tear at the departure of the group and issuing a call to a June summit of EU leaders not to take any further steps on migration policy. All in all it looks as though predictions that Orban's election win this month will embolden him to pursue what he calls his "illiberal democracy" model are turning out to be accurate.

Bank of England chief Mark Carney has given financial markets pause for thought on their expectations of an interest rate rise in May, pointing out in a BBC interview ahead of an IMF meeting in Washington that there were other opportunities for the bank to tighten later in the year. That, combined with soft retail sales data earlier in the day, was enough to knock nearly a cent off sterling against the dollar. Carney also had some pretty downbeat remarks on the underlying health of the UK economy, noting that the imminence of Brexit had dampened investment, and that productivity remained stagnant.

Italian Senate speaker Maria Casellati is due to report back to President Sergio Mattarella today on whether she has made any progress in fostering a coalition government. As things stand, there does not appear to be much evidence of that. Likewise, a 5-Star gambit to try to entice the far-right League into government and separate it from its Forza Italia partner looks to have failed. Unless there is a last-minute breakthrough, the president is likely to take a few days to decide what to do next; in theory the next step should be to ask the head of the lower house to see if there is any chance of a 5-Star alliance with the former-ruling PD party. Regional elections over the next two Sundays could, depending on the outcome, also change the dynamic and point to a way out of the deadlock.

MARKETS AT 0655 GMT

It’s either tech or trade. Today it’s the former’s turn to hurt markets after the world's largest contract chipmaker Taiwan (Taiwan OTC: 6549.TWO - news) Semiconductor slashed revenue targets and blamed softer demand for smartphones. That’s knocked world shares off one-month highs, kicked Apple (NasdaqGS: AAPL - news) shares almost 3 percent lower last night and Asian tech shares are all red this morning. Europe is likely to open lower too. Meanwhile, oil’s price surge to three year highs has hit Treasuries by raising inflation expectations with 10yr yields hitting a one-month high and helping the 2-10 yield curve steepen a bit after two weeks of relentless flattening. That modest steepening may not last however given the Treasury’s huge debt issuance plans for the short-end, with sales of $32 billion worth of two-year fixed rate debt planned for next week. But all this has kind of been overshadowed by the BOE (Shenzhen: 000725.SZ - news) bombshell. Sterling, already at two-week lows to the dollar after a string of disappointing data cast doubt on the bank’s rate hike path, has slumped another 0.2 percent this morning after BOE governor Mark Carney said in an interview late Thursday there would be “other meetings” this year. That is likely causing havoc for sterling long positions as expectations start to reverse of a May rate rise – a Reuters poll had analysts unanimous in predicting the BOE would raise rates in May 10. May rate probabilities have already fallen to 40 percent from 70 percent yesterday.

Higher inflation stemming from oil might be welcomed by the BOJ - data in Japan showed core inflation (which includes oil products but excludes fresh food), rose 0.9 percent year-on-year in March. That means the BOJ remains far off its 2 percent price growth target even after five years of stimulus, and even as the economy is enjoying its longest continuous expansion since the 1980s. The yen is at one-week low to the dollar. On other currencies, the dollar is supported modestly by higher US yields while the swiss franc meanwhile has retreated a touch after hitting the 1.20 level on Thursday, the level associated with Frankenshock three years ago when the SNB abruptly abandoned its exchange rate cap on the currency.

European shares are expected to open without clear direction on Friday as investors digest a raft of earnings updates, although the FTSE could see extra support after comments from the Bank of England governor dampened expectations for a rate hike in May. Futures were trading between a 0.1 percent fall and a rise of 0.3 percent. The rally in commodity prices has softened and that will likely lead to some profit taking among mining stocks, seen down 0.5 percent in pre-market, although their spectacular gains this week have put the pan-European STOXX 600 index set for its fourth straight week of gains.

Results released this morning could give some support to the broader market with a smaller than expected loss at Ericsson (Hanover: ERCB.HA - news) seen pushing its shares up as much as 10 percent at the open, while in the battered telecoms sector, Telia is seen rising after it announced a welcome share buyback plan as Q1 core earnings slightly topped market expectations. Another disappointing update from Reckitt Benckiser (Xetra: A0M1W6 - news) is seen driving its shares down 1-2 percent after its quarterly sales growth missed estimates, further stressing gloomy prospects for consumer goods makers. Tech stocks will continue to be in focus after ASM International posted lower first-quarter earnings this morning and following losses in the previous session on the back of a weaker than expected results from Taiwan Semiconductor.

Emerging market shares are down 1 percent, hit by the tech rout though the index is set for a second straight week of gains. Upward pressure on Treasury yields, a steady dollar and commodity prices taking a breather leaves currencies broadly treading water, though both Turkey’s lira and Russia’s rouble are on track for more than 1 percent gains over the week, with South Africa’s rand not far behind. (Editing by Hugh Lawson)