LONDON (Reuters) - "Simples" was how Theresa May summed up the route through the Brexit morass in parliament on Tuesday. It was probably the first time a British leader had used the slogan of an insurance-selling TV meerkat to analyse a political crisis, but the state of play is not that straightforward.

A person walks across Millennium Bridge during heavy fog in London, February 23, 2019

True, by holding out the option of a delay to Brexit, she has probably achieved her goal of pre-empting the ministerial revolt that had been looming in today's parliament votes on Brexit arrangements. And the prospect of delay elicited a mild sigh of relief in financial markets, with analysts trimming down the probability assigned to no deal.

But beyond that, there is no clarity and still the prospect that March 29 will just be replaced by a new cliff-edge at the end of June. Hardcore Brexiters will meanwhile lobby for Conservative lawmakers to vote in favour of retaining the no-deal option in a vote due mid-March.

And after European Union officials seemed initially receptive to agreeing the idea of a short delay as proposed by May, French and German officials have come out this morning saying it would have to be clear what exactly the point of the delay would be.

That implies the EU could play hard to get, possibly setting conditions for agreeing an extension to Article 50. Such considerations will no doubt be discussed by France’s Emmanuel Macron and Germany’s Angela Merkel when they meet in Paris today.

The European Commission today publishes its analysis of the economic and social policies of each EU country, and will chide those for which it sees imbalances in their economies. A dozen such countries can expect to get a ticking off, among them Germany for its persistently high trade surplus. Cyprus, Greece and Italy will likely be singled out for particular criticism.

There will be keen interest in the trial of 12 Catalan separatist leaders for rebellion today when former Spanish leader Mariano Rajoy testifies as a witness. He was PM when they pursued their illegal drive towards independence in 2017.

MARKETS AT 0755 GMT

World markets remained buoyant on Wednesday, largely encouraged by U.S. Federal Reserve Chair Jerome Powell’s confirmation of the Fed’s pause in monetary tightening and planned end to its balance sheet rundown.

But that’s been in markets for weeks now, so stocks and bonds had little additional fuel – Wall Street ended flat overnight and Asia’s stock markets nudged higher on a broadly softer dollar and lower U.S. Treasury yields.

Sterling continued to be eyed closely, extending Monday’s gains against the dollar and euro first thing after UK PM Theresa May’s plan to offer parliament a chance to vote against no deal and extend the Brexit date if withdrawal agreement doesn’t pass her by March 12.

While the permutations and combinations of outcomes still remain hard to fathom, markets - at the margins at least – see the latest gambit as reducing the chances of what they see as a worst case -- exit with no deal.

Deutsche Bank, for example, cut its probability of no deal to 10 percent from 15 percent and lifted its chance of a second referendum and new election by five percentage points to 10 percent and 20 percent respectively. Its most likely scenario remains that May gets an amended deal through parliament by the end of next month, but it reduced that probability to 35 percent from 50 percent.

Sterling gains on Tuesday lifted it to its highest in 21 months against the euro and the biggest one-day gain against the dollar since October. As a result of May’s moves, parliamentary amendments aimed at stopping no deal and scheduled for Wednesday now are unlikely to get the support they previously would have.

EU negotiator Michel Barnier said on Wednesday that the Irish border backstop – a part of May’s agreement rejected by factions within her own party – cannot be renegotiated and an extension of the Brexit date would achieve little.

Elsewhere, European stocks were marked lower as the corporate earnings season ground on. Upbeat consumer confidence readings from France on Tuesday were watched closely as opinion polls showing President Emmanuel Macron’s approval ratings improving and support for the "yellow vest" protesters waning. Euro zone February consumer and business confidence readings are out later.

Beyond that, markets are keeping tabs on various geopolitical events. Trump is in Vietnam for his second summit with North Korea’s Kim Jong Un and there are concerns about escalating tensions between India and Pakistan.

The U.S. special investigation into Donald Trump’s links with Russia continues. Michael Cohen, Trump’s former fixer, is due to testify on Wednesday that Trump knew ahead of time about a leak of emails that would hurt his Democratic rival, Hillary Clinton, in the 2016 presidential election, and that Trump directed negotiations for a real estate project in Moscow as he campaigned for the presidency, even though he publicly stated he had no business interests in Russia, according to a draft of Cohen's planned testimony.

The safe-haven yen and Swiss franc were both stronger first thing Wednesday.

-- 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 --