MORNING BID EUROPE-May's Brexit dash: not a hope in hell?

* 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, Feb 7 (Reuters) - If Donald Tusk's "special place in hell" tirade reflects the frustration felt in Brussels with Britain's Brexit planning, that does not bode well for Theresa May's trip there today to seek changes to the Irish backstop. She (Munich: SOQ.MU - news) will meet not only Tusk but Jean-Claude Juncker, with whom she had a separate on-camera clash over his description of her game plan as "nebulous". No wonder then, that local media report that her cabinet has been told next Thursday's parliamentary vote may have to be postponed as a renegotiated deal is unlikely by then. Separately, opposition leader Jeremy Corbyn has offered to help May get a new deal through the assembly as long as it hits five criteria, including keeping Britain in a customs union with the EU and close alignment to the single market. It does not, however, repeat Labour's current policy of insisting on the "exact same" rights for citizens as currently afforded by single-market membership. Whether or not this is a game-changer, it is already dismaying pro-EU Labour backbenchers who say this was not the policy agreed by the party. In particular, Corbyn makes no mention of any second referendum.

The continued uncertainty over Brexit means any prospect of a rate increase by the Bank of England, whose policy-makers meet today, is distant. Instead, it is likely to trim its growth forecasts and tie any future rate tightening to the country's ability to avoid a no-deal Brexit: Investors so far are pricing in only a 50-50 chance rates will rise this year.

More bad news for the German economy this morning as industrial output fell in December for the fourth month in a row, confounding expectations of an increase. This comes after yesterday's week orders data and will add to concern about whether the overall euro zone economy is heading towards a recession. The European Commission will issue its quarterly forecasts for the euro zone economy later this morning and the ECB gives its own economic update in its regular bulletin.

MARKETS AT 0755 GMT Valentine's week is shaping up to be the next crunch week for world markets, which have taken a breather after a strong week of Fed and earnings-related optimism. U.S.-China trade talks resume in Beijing next week, with U.S. Treasury Secretary Steven Mnuchin overnight holding out the possibility of a breakthrough there. More ominously, Feb. 15 is also the latest deadline for the White House and Congress to reach some compromise over President Donald Trump’s demand for funding for his wall with Mexico before he shuts down the Federal government again. No sign agreement is in the offing to date. And Feb. 13 and 14 are when UK PM Theresa May is due to come back to parliament with her latest proposals on reaching a deal with the European Union on Brexit. May attempts to wrestle some more flexibility from EU counterparts in Brussels later on Thursday in the existing agreement reached late last year, but EU President Donald Tusk’s comments Wednesday about a "special place in hell" for Brexit advocates show little mood for compromise.

Wall Street stocks closed in the red on Wednesday, ending five straight days of gains, as anxiety about incoming corporate revenue forecasts and big misses from gaming companies punctured recent optimism. The Asia markets that were opened were mixed, with Japan’s blue chips ending in the red, too, despite a 17 percent jump by tech investment giant Softbank (Swiss: SOFB.SW - news) after it announced a record share buyback and a surge in quarterly profits. Australian shares also rallied after Wednesday’s unexpected dovish tilt by the Reserve Bank of Australia. Wednesday’s related hit to the Aussie dollar was matched on Thursday by a slide in the New Zealand dollar as disappointing employment data prompted traders to bet its central bank would lean the same way as the RBA. In Europe, stocks were expected to open lower in a heavy day for corporate updates, after German industrial output numbers for December disappointed by falling for the fourth month in a row, compounding the industrial orders surprise on Wednesday. Disappointing earnings from Societe Generale also weighed on sentiment. Unicredit (EUREX: DE000A163206.EX - news) was more upbeat.

The dollar index hit its highest since Jan. 25, meantime, with euro/dollar slipping further to $1.1350 amid jitters over the weakness of incoming economic readings and what that means for European Central Bank policy. Sterling remained weaker against the U.S. currency, with eyes on PM May’s Brussels trip and the Bank of England’s latest policy meeting and inflation report later in the day. The S&P Global ratings agency warned around 20 companies, plenty of banks and the UK sovereign could see "negative rating action" from a no-deal Brexit.

Elsewhere, India’s central bank surprised with a 25-bps interest rate cut to 6.25 percent. Only 21 of 65 analysts polled by Reuters had thought it might. * Europe corp events: Amer Sports (LSE: 0K7Y.L - news) , Beazley (LSE: BEZ.L - news) , Bellway (Frankfurt: 869646 - news) trading, CNH, Cofinimmo (EUREX: COF.EX - news) , Compass trading, DKSH, DNB (LSE: 0O84.L - news) , DSV (LSE: 0JN9.L - news) , Fiat (Hanover: FIA1.HA - news) , IAG traffic, ICA Gruppen (LSE: 0NB9.L - news) , Lagardere (Paris: FR0000130213 - news) sales, L'Oreal, Mapfre (LSE: 0NQ2.L - news) , Mediobanca (Milan: MB.MI - news) , Norsk Hydro (LSE: NHY.L - news) , Osram Licht (IOB: 0QFR.IL - news) , Pernod Ricard (TLO: RI-U.TI - news) , Publicis (Paris: FR0000130577 - news) , Sampo (LSE: 0HAG.L - news) , Sanofi (LSE: 0O59.L - news) , Scor sales, Securitas (LSE: 0IAH.L - news) , Smith & Nephew (Frankfurt: 502816 - news) , Societe Generale, Swisscom (IOB: 0QKI.IL - news) , Tate & Lyle (LSE: TATE.L - news) trading, Total (LSE: 524773.L - news) , UniCredit, UBI (Taiwan OTC: 6562.TWO - news) , Vestas Wind, Voestalpine (IOB: 0MKX.IL - news) , Zurich Insurance (IOB: 0QP2.IL - news)

* Germany, Spain Dec industrial output

* France Dec trade balance

* Italy Dec retail sales

* UK Halifax Jan house prices index

* ECB board member Mersch speaks in Brussels

* German Chancellor Merkel meets prime ministers of Czech Republic, Slovakia, Poland and Hungary in Bratislava

* Bank of England policy decision, minutes and quarterly inflation report, with press conference with BoE (Shenzhen: 000725.SZ - news) chief Carney

* US Q4 earnings: Alliance Data, CNH Industrial, CVS, EQT, Intercontinental Exchange (NYSE: ICE - news) , Kellogg (Hamburg: 944624.HM - news) , Marathon Petroleum, Masco (Berlin: 950004.BE - news) , Philip Morris, PPL, S&P Global (Frankfurt: 851710 - news) , Tapestry, Tyson Foods (Frankfurt: 870625 - news) , Vulcan Materials, Willis Towers Watson, Yum! Brands. (after-mkt): DXC, Expedia (Frankfurt: A1JRLJ - news) , Fiserv (NasdaqGS: FISV - news) , Mohawk, Motorola Solutions (NYSE: MSI - news) , News Corp, VeriSign (Frankfurt: 911090 - news) , Western Union

* US weekly jobless claims, Dec (Shanghai: 600875.SS - news) consumer credit

* Mexico central bank policy decision

* Mexico Jan inflation

* US Treasury auctions 30-year bonds (Editing by Larry King)