MORNING BID EUROPE-UK's Corbyn softens on Brexit

* 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 26 (Reuters) - Things are finally starting to move in Britain's Brexit debate. Today UK Labour leader Jeremy Corbyn will confirm a softening of its Brexit policy by saying Britain will need a customs union with the EU once it leaves. Assuming its deputies in coming weeks back a parliamentary push by Conservative rebels who want the same, that could blow a big hole in PM Theresa May's entire Brexit plan. Corbyn's position on the single market will for now remain more ambiguous: according to extracts of his speech released to local media, he will call for "full tariff-free access" to it but also "protections, clarifications or exemptions, where necessary". All this comes before May's own speech on Friday setting out a harder, more divergent Brexit. The added rub in all this is that neither of the two Brexit visions in their current form are compatible with what the EU says its can accept: final clarity is still a very long way off.

Angela Merkel's Christian Democrats (CDU) meet today to approve a coalition deal with the Social Democrats (SPD). The deal should pass easily in what is just a prelude to the much trickier vote among the SPD membership - results of which are due next Sunday. Merkel has made doubly sure she will get her party's backing by picking a new, younger cabinet that includes one of her most outspoken internal critics, the 37-year-old Jens Spahn. And in a further sign she accepts the need to start handing over the reins of power to others, she has also lined up a possible successor, Annegret Kramp-Karrenbauer, to take over her as CDU secretary-general.

With (Other OTC: WWTH - news) just six weeks to the country's general election, Hungarian Prime Minister Viktor Orban's ruling Fidesz party has suffered an unexpected setback in a local poll after an opposition-backed independent candidate comfortably beat the Fidesz candidate for mayor. Although Orban is still expected to win on April 8, Sunday's result could change dynamics within the opposition, which had thus far struggled to mount any serious challenge.

MARKETS

A pretty powerful global stock market rally kicks off a week with some considerable event risks in Europe and the United (Shenzhen: 000925.SZ - news) States. The tone was set by a 1.6 percent surge in the S&P500 on Friday, dragging the ViX volatility gauge below 16.50 percent to its lowest since February 2. Led again by the red-hot technology sector, the stock market jump was encouraged by a retreat in 10-year U.S. Treasury yields to as low as 2.85 percent as evidence of brisk foreign demand emerged after a heavy week of new U.S. bond sales. The mood was also improved by the Federal Reserve’s Board of Governors, whose semiannual report to Congress on monetary policy appeared to confirm market expectations of three interest rate rises this year, beginning next month, and showed little additional alarm about future inflation prospects. New Fed chief Powell testifies to the House committee tomorrow and few now expect him to rock the boat unduly. European Central Bank chief Draghi testifies later on Monday to the European Parliament, meantime, and is similarly not expected to deviate greatly from existing guidance – not least with a nervy time for European politics due next weekend at Italy’s general election and Germany’s SPD vote on joining a grand coalition. European and Wall St futures were up smartly on Monday, with 10-year German bund yields down to a 1-month low of 0.64 percent and euro/dollar firmer at $1.2330. The dollar index was down about 0.25 percent so far on Monday. Sterling traded 0.5 percent higher at $1.4034 ahead of several crucial speeches on Brexit by leading politicians, including Labour party leader Jeremy Corbyn on Monday. Asia bourses were higher across the board, with Shanghai and Tokyo benchmark stock indices both up more 1 percent. Russia's rouble-based MOEX index hit an all-time high and the rouble firmed in early trade on Monday after S&P raised Russia's foreign currency long-term and short-term sovereign credit ratings to investment grade. Brent crude hit its highest level in more than 2 weeks, above $67.

1. The European earnings season may have past its peak but there is still good-old fashioned M&A to keep traders busy today as futures show that European markets seem set to follow the pace of their Asian peers and open about 0.5 percent up.

1. Deutsche Bank (IOB: 0H7D.IL - news) will definitely be one of the session’s most-watched stock after it announced that it will list its asset management unit, a move which must sadden a lot of rivals and M&A bankers who could have benefitted from a sale. Still in M&A and still in Germany, Daimler (IOB: 0NXX.IL - news) will also be under the spotlight after the chairman of Geely Automobile Holdings said he had built a $9 billion stake in the German group.

1. In Italy, the project to create a joint venture between Telecom Italia and the pay-TV arm of its biggest shareholder, French media group Vivendi (LSE: 0IIF.L - news) , is an "uphill struggle" but the project is not dead, a source familiar with the matter said.

1. In terms of earnings, - Bank of Ireland (EUREX: 1269463.EX - news) , the most exposed Irish lender to the British property market, restored dividend and its profit in line with year ago.

1. The Steinhoff saga continues with South Africa's Independent Regulatory Board for Auditors saying it would pursue further lines of investigation.

1. Dutch postal company PostNL (Swiss: PN6.SW - news) is set to fall after lowering its cash operating income target for 2020.

1. In emerging markets, Russia's rouble-based MOEX index hit an all-time high and the rouble firmed in early trade on Monday after S&P raised Russia's foreign currency long-term and short-term sovereign credit ratings to investment grade.

* Europe corp events: Associated British Foods (LSE: ABF.L - news) trading statement, Luxottica (Milan: LUX.MI - news) earnings call, Bunzl Q4, Pirelli, Hiscox (Swiss: 27373019.SW - news) , PostNL

* UK Jan mortgage lending and credit data

* BoE (Shenzhen: 000725.SZ - news) deputy governor Cunliffe speaks in London

* ECB executive board member Coeure speaks in Frankfurt

* European Union and International Monetary Fund inspectors will start the final review of Greece's bailout progress on Monday. The country's bailout ends in August.

* First (Other OTC: FSTC - news) round of wage negotiations by German public-sector union Verdi. Press conference due

* Israel central bank policy decision

* ECB President Mario Draghi participates in a regular hearing before the European Parliament's committee on economic affairs.

* Brazil Jan current account

* Mexico Dec retail sales

* St Louis Fed Chief Bullard and Fed Vice Chair for supervision Quarles speak in DC

(Editing by x x)