French left outflanks the right

By Wayne Cole

(Reuters) - A look at the day ahead in European and global markets from Wayne Cole.

All the hand-wringing about a far-right victory in France looks to have been premature, with polls suggesting the leftist New Popular Front alliance gained the most seats, though well short of a majority.

Polling agencies - which are generally accurate - forecast the left would get 184-198 seats in the 577-seat assembly, with President Emmanuel Macron's centrist alliance at 160-169 and Marine Le Pen's nationalist, eurosceptic National Rally (RN) and its allies on 135-143.

Analysts assume Macron will try to govern with the cooperation of the left, though exactly what that will look like in practice is uncertain.

The crunch will come in the autumn when the new government has to present the 2025 budget, and analysts suspect it will do little to address France's fiscal deficit and a debt load worth 112% of GDP.

That outlook tempered the initial relief that the far right did not take power, and left the euro down around 0.1% at $1.0826. French bond futures were also a fraction lower, with the market reaction limited so far.

Equities were generally underpinned by a growing confidence the Federal Reserve will cut rates in September following the soft June payrolls report.

Futures now imply a 76% chance of an easing on Sept. 18, with 53 basis points of easing priced in for this year, up from around 40 basis points a month ago.

Fed Chair Jerome Powell will have chance to offer his outlook when he appears before Congress on Tuesday and Wednesday, while several other Fed officials are speaking this week.

Earnings season also kicks off this week with JPMorgan Chase, Citigroup and Wells Fargo reporting on Friday. PepsiCo and Delta Air Lines also report.

The S&P 500 is trading at about 21 times forward earnings estimates, but if the top 10 stocks by market value are excluded that figure drops to 16.5 on average for the rest of the index.

Key developments that could influence markets on Monday:

- Bank of England Monetary Policy Committee member Jonathan Haskel gives a speech

- Spain's Economy Minister Carlos Cuerpo to speak at Europa Press event

- German trade figures for May, Euro Zone Sentix Index for July

(By Wayne Cole; Editing by Christopher Cushing)