A look at the day ahead in European and global markets from Ankur Banerjee

Nervousness in the market over the looming U.S. debt ceiling deadline prevailed through the Asian hours and will remain the main focus for investors as Europe wakes up.

While the talks between U.S. President Joe Biden and top congressional Republican Kevin McCarthy did not end in a deal, they edged closer to an agreement that would avoid what could be a catastrophic U.S. debt default.

McCarthy, the speaker of the House of Representatives, told reporters the two sides remained far apart on an agreement. But he said, "It is possible to get a deal by the end of the week. It's not that difficult to get to an agreement."

Biden, who cut short an Asia trip this week, said, "There is still work to do."

Close but no cigar. Not yet anyway, but a measure of the cost to insure exposure to U.S. government debt declined after the meeting, which the White House described as "productive and direct."

And so the market is in a holding pattern, with MSCI Asia ex-Japan choppy, dollar hovering around a five-week peak and gold just shy of the key $2,000 per ounce mark.

European markets are set for a lower open, with traders waiting for April inflation data for the eurozone.

With a whole host of Fed speakers through the week, expect hawkish rhetoric to keep investors jittery and guessing about what the Federal Reserve is likely to do with interest rates.

Focus will also be on UBS Group AG after the Swiss bank flagged a financial hit of about $17 billion from the takeover of Credit Suisse Group AG.

Meanwhile, Capital One Financial Corp got a lift after billionaire investor Warren Buffett's Berkshire Hathaway Inc disclosed it had taken a stake of nearly $1 billion in the credit cards-focused bank.

BlackRock Inc has asked its staff to return to the office at least four days a week, joining other major financial firms in changing work-from-home policy as financial institutions start to look beyond COVID-19-induced restrictions.

Elsewhere, Tesla Chief Executive Elon Musk on Tuesday said the electric vehicle maker was not immune to global economic conditions, which he said will be difficult for the next 12 months.

Finally, we end with some good news. Japan's economy emerged from recession and grew faster than expected in the first quarter as a post-pandemic consumption rebound offset global headwind.

Key developments that could influence markets on Wednesday:

Economic events: eurozone inflation data for April, France unemployment rate

Earnings: Target, Cisco, Tencent and Siemens

(Reporting by Ankur Banerjee in Singapore; Editing by Christopher Cushing)