MORNING BID EUROPE-Italy's Renzi feels the heat

* 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, Dec 16 (Reuters) - So here we go, at 1400 EST (1900 GMT), the U.S (Other OTC: UBGXF - news) . Federal Reserve will hike rates for the first time in a decade.

For the ECB and other European central banks still broadly in easing mode, this will be the long-awaited point of monetary policy divergence: a phenomenon they are, it seems, ready to live with, especially if it means a weaker euro boosting exports.

The Bank of England must, on the other hand, decide whether to start hiking in the Fed's coat-tails. For now, low inflation, weak wage growth and the prospect of further euro zone stimulus mean the BoE is probably in no rush to follow the Fed's lead.

Italian Prime Minister Matteo Renzi is increasingly feeling the heat over the rescue of four banks that wiped out the savings of thousands of retail investors, with one headline-grabbing case of a pensioner committing suicide over the losses.

The opposition has announced a vote of no-confidence against the government over its handling of the bank rescue, while separately a minister faces her own no-confidence vote after it emerged her father was vice-president of one of the banks involved.

Renzi commands a majority in both houses, though he has a narrower margin in the Senate, where some critics from his own party sometimes vote against him. It (Other OTC: ITGL - news) is unclear whether the votes will happen this week or next.

MARKETS (AT 0745 GMT)

Relative market stability over the past couple of days looks more like jockeying for position ahead of the Fed decision rather than any conviction about the next direction.

Traders are probably very mindful of the FX and debt market reaction to the other big central bank set-piece this month, when a pretty violent unwinding of short euro positions and back up in euro bond yields greeted the widely expected, if underwhelming, ECB ease.

Similarly, Yellen's decision at 1900 GMT does not look in doubt but there will be anxiety about what's signalled for 2016 as only about two full hikes are currently priced over the coming year.

Curiously, firmer 2-year Treasury yields remain below 1.0 percent and the 99.4 bp peak of Dec 3. Oil prices finding some sort of foothold has helped steady markets, although Tuesday's bounce has dissipated quickly again and Brent crude is back below $38 a barrel.

Wall St gains of about 1 percent overnight were led by banking stocks, which are expected to benefit from higher rates. That resilience helped Asia bourses earlier too, where Tokyo led the pack with gains of more than 2 percent, closely followed by similar rises in Britain and Seoul.

Emerging markets as a whole are on course for the second daily gain in a row after recording nine consecutive losses.

The dollar gave back some of yesterday's sharp surge. Sterling is a touch weaker against the euro after BoE chief Mark Carney told the FT he was concentrating on macroprudential issues such as curbs on the buy-to-let housing market and backed away from any imminent post-Fed decision on UK interest rates.

Upcoming events/data on Wednesday:

Global flash Dec. manufacturing PMIs

European corp. events: Zodiac aerospace (Paris: FR0000125684 - news) corporate sales release, Dixons carphone (Other OTC: DSITF - news) earnings

UK Nov jobless, Oct (HKSE: 3366-OL.HK - news) . average earnings

Euro zone final Nov. inflation

Czech rate decisions

U.S. Nov. industrial output, housing starts/permits

FOMC decision, Yellen news conference

Bank of Canada financial system review

(Editing by Janet Lawrence)