MORNING BID EUROPE-Trump and Europe: worst fears confirmed

* 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, Jan 30 (Reuters) - The furore over U.S. President Donald Trump's ban on entry of refugees and people from seven Muslim-majority countries dominated the news over the weekend and will continue to do so, despite what looks to be a number of moves by his administration to limit the scope of the move.

This confirms the worst fears of many European leaders that Trump will not be playing by the rules and they will come under increasing domestic pressure to distance themselves from him. The office of German Chancellor Angela Merkel even let it be known that she had explained to him how the Geneva Conventions establish certain rights for refugees. Trump has nonetheless invited Merkel to Washington -- if she goes, that is trip she will have to handle carefully.

The latest turn-up in the French presidential race is the emergence of clear open path for independent candidate Emmanuel Macron to win the middle-of-the-road vote. Socialist voters on Sunday chose hard-left Benoit Hamon as their candidate, while the tough economically liberal platform of conservative Francois Fillon may be too much for many centrist voters to swallow.

Add to that the continuing allegations that Fillon's wife benefited from a large salary for minimal or non-existent parliamentary work and the odds on Macron being a serious contender are shortening. Like Fillon, he would be expected to comprehensively beat the National Front's Marine Le Pen (Other OTC: PENC - news) if it was him that went head-to-head with her in the run-off.

MARKETS AT 0755 GMT

The more alarming the early orders issued by US President Trump, the harder world markets appear to be finding it to assume that the as yet unspecified fiscal stimulus will override everything. The latest travel bans on refugees and natives of seven mainly Muslim countries has sparked international condemnation and more unease amongst chief executives already unnerved by verbal and twitter attacks on individual companies and sectors by the White House.

For more than two months, impressive incoming economic numbers and a forecast-beating Q4 earnings season have all seen investors lean toward the Trump reflation trade rather than the Trump protectionist fallout and international relations broadsides. But with US Q4 GDP missing forecasts and little meat on the new administration's economic policy bones, markets may stutter again as attention switches back to central banks this week. Wall St stocks closed a fraction lower on Friday and hopes of a rekindling of the Trump rally last week have stalled again.

Monday's start has been quiet with the absence of Chinese markets and much of Asia for the Lunar new year holidays, but Tokyo ended lower ahead of tomorrow's Bank of Japan meeting and as the dollar slipped back against the yen again.

There's plenty to chew on in Europe, meantime, with German headline inflation expected to jump back to the ECB's target of 2 pct in January from 1.7 pct last month - underlining bond market concerns about the longevity of the ECB's super-easy monetary stance and QE plan.

Market inflation expectations embedded in the euro five-year, five-year forward markets rose to 1.8 pct on Friday - again approaching the ECB target of close to 2 pct. Draghi speaks tomorrow and will be watched closely again for any hint of when rebounding inflation may change the long-term thinking at the central bank. Euro/dollar is firmer again this morning, testing levels back above $1.07.

The political news of the weekend was the win for left-wing candidate Benoit Hamon over former PM Vals in France's socialist party presidential primaries. All things equal, market strategists see that surprise as benefitting centrist independent candidate Emmanuel Macron and, at the margins at least, weakening the chances of far right leader Marine Le Pen. French 10-year bond yields touched their highest in 16 months earlier. The FOMC decision on Wednesday night is not expected to involve a major policy decision, but there's growing talk of a March rate rise and even of if or when the Fed will start to run down its QE bond stash. European stocks are expected to open lower.

Upcoming events/data/ themes for market reports on Monday:

* European corp events: Future PLC (Frankfurt: 923414 - news) , Bankia (Amsterdam: QU8.AS - news)

* German prelim Jan national and states' CPI

* Swiss Jan Kof sentiment indicator

* Belgium Q4 GDP, Jan inflation

* Spain Q4 GDP

* Turkey Jan econ confidence

* Ukraine Dec current account

* US Q4 earnings: Legett & Platt, Principal Financial (NYSE: PFG - news)

* US Dec consumption, income, PCE price index

* US Dec pending home sales (editing by John Stonestreet)