MORNING BID EUROPE-Walloon "Non" for EU-Canada trade?

* 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) 18 (Reuters) - European Union trade ministers meet in Luxembourg today aiming to approve a free trade agreement with Canada but facing regional opposition in Belgium that could yet scupper the entire deal. Belgium has a centre-right coalition firmly in favour of CETA, but its peculiar structure means it cannot sign up without backing from all five sub-federal governments representing its regions and its linguistic communities. This is highlighting two wider points about the EU: first, how difficult it is finding it to seal any new trade deals at all in a climate of growing wariness of globalisation; second, how hard it may prove much further down the line to win unanimity for any deal on Brexit.

British inflation is expected to start its Brexit-inspired climb in data for September due at 0830 GMT. The plunge in the value of sterling, which will push up the price of imports, means the consumer price index is likely to rise to 0.9 percent from 0.6 percent in August, according to a Reuters poll of economists. The CPI could jump by 3 percent next year, squeezing living standards and slowing overall economic growth sharply.

Spain looks finally to be edging closer to resolving a political stalemate that has left it without a government for more than 300 days. The main opposition Socialists' federation in the influential southern region of Andalusia said it would back an abstention in a forthcoming confidence vote for acting Prime Minister Mariano Rajoy due by the end of the month that would avert an unprecedented third parliamentary election later this year. The Socialist Party's senior members will now meet on Oct 23 to confirm the party's position. Once a hugely powerful electoral machine, the party's fortunes are declining: a poll this weekend showed it would slip into third place behind upstart leftist party Podemos if they forced a new election.

MARKETS AT 0655 GMT

It's inflation day in Britain and the United States - and timely given the ongoing jolt to western bond markets and super-low yields. Although another sharp spike in UK gilt and U.S. Treasury yields to four-month highs faded again by Monday's close, long-dormant inflation has crept back onto the radar. September data released later may only show glacial shifts, but markets will be hypersensitive nonetheless. Crude oil's recent bounceback to register year-on-year gains will start to feed headline CPI rates again worldwide and there's growing anxiety about just how much the near 20 percent Brexit-related sterling devaluation will aggravate energy, food and other import prices going forward. UK annual inflation is expected to have risen to 0.9 percent last month, but the core rate should push as high as 1.4 percent. Both are still well below the Bank of England's 2 pct target, but with BoE (Shenzhen: 200725.SZ - news) signaling strongly that it's now prepared to let inflation exceed that target without reacting, then 10-year gilt yields of about 1.2 percent look expensive. The lack of short-term interest rate support for the pound leaves sterling vulnerable, meantime, and risks aggravating the CPI picture further. Fed noises of late have also suggested it won't react aggresssively to headline inflation rises, with chair Yellen on Friday suggesting the central bank was prepared to run a 'high pressure' economy for a period. Her vice president Fischer rowed back a little from that late on Monday but her point resonated in markets and spoke to ongoing Fed hesitation in raising interest rates this year despite futures pricing still showing a 70+ pct chance of December hike. Annual US CPI inflation is expected to have jumped to 1.5 pct from 1.1 pct last month, with core rates remaining above targets at 2.3 pct. Amplifying the bond market anxiety is this week's ECB meeting amid recent fears it was thinking of running down or tapering its QE campaign before it ends next March. Ten-year Treasury yields nudged back higher overnight to 1.77 pct, but still shy of Monday's peaks above 1.8 pct. Bund futures are lower again first thing. The dollar index has slipped back slightly as euro/dollar recaptured $1.10 and sterling reclaimed $1.22. After a day in the red for most equity markets on Monday, Asia bourses were mostly higher earlier and European stocks are expected to jump back at the open too. The heavy earnings week continues stateside later with the likes of Goldman Sachs (NYSE: GS-PB - news) , Blackrock (Sao Paolo: BLAK34.SA - news) and Intel (Euronext: INCO.NX - news) all reporting Q3s.

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

* Europe corp events: Asos (LSE: ASC.L - news) , Accor (EUREX: 485822.EX - news) , Danone (LSE: 0KFX.L - news) , Remy Cointreau (Swiss: RCO.SW - news) , Burberry, BHP, Diageo (LSE: DGE.L - news)

* UK Sept inflation

* US Q3 earnings: Goldman Sachs, Blackrock, Intel, J&J, Yahoo (NasdaqGS: YHOO - news) , Omnicom, Philip Morris, Comerica (OTC BB: CMPWW - news) ,

* US Sept CPI inflation, Aug TIC data

* Chile (Stuttgart: 704599.SG - news) interest rate decision

* Brazil Aug retail sales

* Italian PM Renzi meets US President Obama in DC (Editing by Andrew Heavens)