Many expect the ECB will resume quantitative easing; the timing and composition are under scrutiny.

Euro zone purchasing managers' indexes should also indicate whether an apparent recession in Germany manufacturing will drag down services. Evidence it has will lead the market to ratchet up bets on ECB easing, according to a Mizuho analysis.

A Reuters Poll expects a reading of 53.3 for the euro zone  services PMI and 47.6 for the manufacturing PMI. Anything below 50 indicates contraction, rather than growth.

"It is the best leading indicator we have," said Jan von Gerich, rates strategist at Nordea. "PMIs will show the outlook is weak but not dreadful and the ECB has the luxury to wait for the forecasts in September."

Money markets are now pricing in around a 40% chance of a 10-basis-point rate cut by the ECB on Thursday.

On Tuesday, the International Monetary Fund cut forecasts for global growth this year and next. It kept euro zone growth forecasts steady for 2019 and upped them for next year but trimmed its estimate for German growth this year by 0.1% and for Italy's 2020 expansion by 0.1%.

Market expectations of a no-deal Brexit also rose after Boris Johnson was elected leader of Britain's conservative party. Johnson has said he will lead Britain out of the European Union on Oct. 31, deal or no deal.

Investors are likely maintain their focus on Italian and Spanish politics.

The fate of Italy's coalition government is uncertain. Rumours are swirling about a meeting between the leaders of the two squabbling parties who make up the coalition, the 5-Star Movement's Luigi Di Maio and League's Matteo Salvini.

Italy's government bond yields were flat on the day at 1.60% for 10-year debt.

Spanish government bond yields moved in line with the broader market, despite Prime Minister Pedro Sanchez' failure to secure support to form a government.

Sanchez, who won the most seats in an election in April but fell short of a majority, has faced three months of difficult coalition talks with Podemos, whose votes he needs to be confirmed as prime minister.

Spanish 10-year bonds were yielding 0.40% in early trade. They have fallen over 100 basis points this year.