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However, it noted that near-term risks from rising inflation and a changing external environment had increased.

· Pakistanis head to the polls Wednesday in a general election characterized by a heavy presence of extremist parties — a development that threatens to strengthen religious radicalization in the South Asian nation, which has long struggled with domestic terrorism.

Right-wing religious factions have fielded more than 1,500 candidates at the provincial and national level, according to Reuters. Many of those entities espouse a fundamentalist agenda laden with anti-Western rhetoric and a desire for tougher application of Islamic law.

· U.S. President Donald Trump took a pessimistic view of talks with European Commission President Jean-Claude Juncker set for Wednesday aimed at averting a trade war.

In a tweet on Tuesday night, Trump said both the United States and the European Union should drop all tariffs, barriers and subsidies.

“That would finally be called Free Market and Fair Trade!” Trump said. “Hope they do it, we are ready - but they won’t!” he said.

The European Union’s budget commissioner, Guenther Oettinger, said on Wednesday the bloc could try to seek a wide reduction of tariffs in negotiations with the United States this year.

“In this way, we want to avoid a further escalation of the trade conflict, and to avoid a trade war,” Oettinger, a German, told Deutschlandfunk radio.

European Commission President Jean-Claude Juncker travels to Washington on Wednesday for talks focused on trade tensions after the U.S. imposition of tariffs on EU steel and aluminum and U.S. President Donald Trump’s threats to extend those measures to European cars.

· The British government needs to get moving in Brexit negotiations, including on the Northern Ireland border issue, German Foreign Minister Heiko Maas said in a media interview published on Wednesday.

On Tuesday, Brexit minister Dominic Raab said Britain had put forward a "real offer" to a win a deal on leaving the European Union by October, suggesting the government would not shift much from its agreed negotiating stance.

· Deutsche Bank (DBKGn.DE) on Wednesday posted a 14 percent drop in net profit in the second quarter from a year earlier, as Germany’s largest bank restructures under new leadership.

Deutsche last week already flagged that net profit would be more than double analysts’ forecasts in a rare piece of good news for the bank, which is cutting costs to revive profitability.

· After a surprisingly dovish meeting in June, the European Central Bank (ECB) is expected to strike a more balanced tone this week, given heightened uncertainties for the global economy.

The focus will be on the ECB‘s assessments of these risks at its meeting Thursday, with investors concerned of the acute risk of a trade war escalation.

“We expect (ECB President) Mario Draghi to aim for a ‘Goldilocks’ tone at the July 26 press conference — not too hawkish, not too dovish,” said Mark Wall, the chief economist at Deutsche Bank, in a research note.

“The ECB only recently made a commitment to unchanged rates for the next year to lean against trade and volatility risks and avoid an unwarranted tightening of financial conditions.”

· Economists and investors are watching for signs they hope can predict when the wheels will come off a near-record U.S. economic expansion and equities bull market.

Some are already worried about a flattening Treasuries yield curve and slowing housing market, even as other economic vital signs remain healthy.

U.S. economic growth will probably slow gradually over the next two years and the threat of a trade war has made a recession more likely, a recent Reuters poll predicted.

A majority of bond market experts in a separate poll now predict a yield curve inversion in the next one to two years, a red flag for those who believe short-term yields rising above longer-term yields means an imminent recession.

· China’s trade friction with the United States is creating uncertainty for its job market, the state planner said on Wednesday, but vowed not to let the dispute trigger large-scale unemployment.

At a regular briefing, the National Development and Reform Commission (NDRC) said it would keep the unemployment rate within its target, step-up its monitoring of the jobless rate and set up contingency plans to deal with any issues.

China aims to maintain its urban survey-based jobless rate within 5.5 percent in 2018, while keeping registered unemployment rate, another official gauge, within 4.5percent.

· Oil prices edged higher for a second day on Wednesday after data showed U.S. crude inventories fell more than expected last week, easing worries about oversupply that have dragged on markets in recent sessions.

Brent crude was up 57 cents, or 0.8 percent, at $74.01 a barrel by 0623 GMT. The global benchmark settled 38 cents higher on Tuesday.

U.S. West Texas Intermediate rose 27 cents, or 0.4 percent, to $68.79, having risen nearly 1 percent in the previous session.