MORNING BID EUROPE-Syrian game-change

* 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, Oct (HKSE: 3366-OL.HK - news) 1 (Reuters) - Russia's launching of air strikes in Syria is a potential game-changer, not least because of the row over what it is actually striking. Western officials assert it is attacking not Islamic State but Syrian rebels that in some cases the U.S (Other OTC: UBGXF - news) .-led coalition may be supporting. The mechanics of "deconfliction", ie making sure Russian aircraft do not accidentally clash with Western warplanes, is a pressing issue, with U.S. Secretary of State John Kerry saying he now expects urgent discussions. A wider angle is how this transforms Russia's role in geopolitics, and what indirect effect it might have on other knots of tensions between Moscow and the West, not least Ukraine. Is Vladimir Putin in the process of gradually turning himself from pariah to an awkward yet indispensable player?

MARKETS (at 0645 GMT)

Into the home stretch of 2015 as the final quarter kicks off. The scorecard so far looks pretty grim with most benchmark equity bourses now in the red for the year to date. Some stabilization of Chinese business sentiment in the latest updates and revisions to its PMI series released earlier has encouraged a positive start to Q4 across Asia. Shanghai/HK themselves are closed through the middle of next week, however, and that's probably as much a reason for calm as any PMI readings. But if you believe China is at the nexus of global market worries, then any stability at all there at all has an effect through the whole interlinked chain. Commodity prices have stabilized too, so too the worst affected and most-leveraged miners etc etc. And it may well be that we get no new major development there now until the middle of next week. At which point, we may be better informed about the other major wildcard in Fed decision making. Yesterday's ADP report indicated that Friday's September payrolls will continue to support a Fed rate move. Back in Europe, a return to headline deflation in the euro zone shows that no central bank has an easy decision to make. With inflation expectations sinking again far below the ECB's target, the pressure to lean the opposite direction of the Fed remains. Euro/dollar continues to flatline, however, so it remains to be seen just how much of all that is priced in. So, positive start in Asia and on Wall St futures has Eurostocks pointing higher too.

EM assets start the last quarter on a chipper note with stocks extending Thursday's gains to hit the highest level in over a week as Asian stocks rally on the back of China data just beating expectations, though trading was thin with Chinese bourses closed for holidays. Currencies are also strengthening with broad gains in Asia, Turkish lira at the highest since last Wednesday and the South African rand highest since the end of last week. Russia's rouble unchanged, fails to make any gains on rising oil or slowing contraction in manufacturing PMIs as Moscow launches Syria airstrikes in the biggest Middle East intervention in decades.

EVENTS

French updated short-term forecasts

ECB publishes Target (NYSE: TGT - news) 2 balances

Czech deficit/debt data 2014

Manufacturing PMIs released nationally

BoE financial policy committee publishes notes

Turkish MPC minutes published

ECB's Draghi speaks in Washington

Italian deficit/GDP ratio Q2 data; September state sector borrowing requirement data.

UK ONS Q2 productivity data

Europe corp events: German car executives speak at Berlin conference through Friday

French, Italian, Spanish, Belgian monthly vehicle registrations data

UK, France, Spain govt bond auctions

Norway, Austria Sept jobless (Editing by Sonya Hepinstall)