MORNING BID EUROPE-Fed day - squaring the circle of expectations

* A look at the day ahead from European Economics and Politics Editor Mark John and Chief EMEA Markets Correspondent Nigel Stephenson. The views expressed are their own.

LONDON, Sept 17 (Reuters) - It (Other OTC: ITGL - news) 's Fed day and that will be dominating the thoughts of many. At issue is whether the U.S (Other OTC: UBGXF - news) . central bank will raise interest rates for the first time since 2006 - a narrow majority of those polled by Reuters expect it to stay put, with chances of a small hike calculated at roughly one-in-three. That said, one of the few ways to square the last-gasp, pre-Fed market movements is that traders may be braced for a hike but one twinned with a dovish message on any further tightening and a much lower rate rise horizon than normal. That possibly explains why both Treasury yields and stocks are pumped up into the meeting this week. The decision is due at 1800 GMT, with a news conference by Chair Janet Yellen at 1830 GMT.

After the photo of a drowned toddler, the European migrant crisis has its latest defining image - photos of Hungarian riot police using water cannon and tear gas to beat away those trying to pass over its border into the Schengen zone. U.N. Secretary-General Ban Ki-moon has led expressions of shock: will Viktor Orban's government relent, or pursue its tough line in the face of growing international indignation?

With three days to go before the election, Greece's leftist Syriza party has a narrow 0.6 percentage point lead over its conservative New Democracy rivals, according to the latest poll. That survey came out after the final debate this week between the two party leaders, Alexis Tsipras and Vangelis Meimarakis, but frankly the difference is so small as to be within the margin of error. Second quarter unemployment data due later this morning will be a reminder to Greek voters of the dire state of the economy - the previous figure was 26.6 percent.

Teachers' unions in France have called a strike over secondary school reforms by the Hollande government they say amount to a dumbing-down of the national curriculum. The government has already braved a number of such protests in previous months but, given that teachers have traditionally been a strong support base for Hollande's ruling Socialist Party, the issue is not without political risks for him.

MARKETS

Further context before the Fed move: a slightly easier dollar sides with a futures market pricing showing just a 1-in-4 chance of a move tonight - and possibly the view of Goldman CEO Blankfein and others that the Fed should hold off. The sharp jump in Brent oil prices back to $50 on signs of an easing supply glut stateside gave blue chips an added fillip. A flurry of M&A activity with Altice (Other OTC: ATSVF - news) /Cablevision and Phoenix (LSE: PHNX.L - news) /Guardian Financial was another positive at the margin. Wall St added almost 1 percent and Asia bourses stuck on 1 percent plus. Eurostocks futures are up about 0.5% and early Wall St indications are flat. Bund yields nudge higher, but the 2-year bund/Tnote spread remains above 100bps after hitting its highest since 2007 on Wednesday - again reflecting the stark contrast between Fed and ECB policy stances. Euro/dollar, however, continues to hug $1.13 and has felt no additional pressure from that new spread break yet. Sterling has sustained its gains on the back of surprisingly strong UK wage growth yesterday, even though BoE's Carney continued to signal the turn of the year for a rethink on rates. Apart from the Fed, eyes will be on the Swiss National Bank's latest monetary decision - no changes expected there but the tone will likely remain dovish in the light of the latest downgrades to growth and inflation forecasts and the super-easy stance of the ECB.

EVENTS ZURICH - SNB rate decision, monetary assessment ROME - ISTAT releases July foreign trade data, Confindustria economic forecasts STOCKHOLM - Riksbank Deputy Governor Floden gives speech Monetary policy deliberations AMSTERDAM - Consumer confidence, unemployment BRUSSELS - EU's Juncker and Moscovici, followed by Competition Commissioner Vestager before EU Parliament committee on tax evasion LONDON - United Kingdom-Retail sales ATHENS - Greece-Unemployment rate WARSAW - Poland Retail sales. PPI, Industrial output BERLIN - German 30-year bund auction MADRID - Spain bond auction MOSCOW - Russia Aug jobless, wages, retail sales (Editing by Dominic Evans)