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Here’s all you need to know ahead of Trump’s visit to Europe

U.S. President Donald Trump is visiting Europe for the first time since taking office at a time when the markets are worried about the sustainability of his presidency.

CNBC takes a look at the importance of the visit for politics and the markets.

Who is Trump visiting?

President Trump will start his European tour in the political heart of Brussels. He is scheduled to meet with European Council President Donald Tusk and European Commission President Jean-Claude Juncker on Thursday morning.

According to Aarti Shankar, policy analyst at Open Europe, this meeting will be the "moment to see how President Trump engages with the bloc."

There have been some tensions between Europe and the U.S. since President Trump took office with the latter telling European countries they should follow the U.K.'s example and turn their back on the European institution.

Trump's protectionist approach has also stalled negotiations on a EU-Us trade deal – the so-called TTIP (Transatlantic Trade and Investment Partnership).

Shankar told CNBC that "there might be some room to discuss trade arrangements for the future". However, above all it could be a moment "to reset" EU-U.S. relations.

Once this meeting is over, President Trump will head to NATO's headquarters, slightly outside Brussels. There, he will participate in his first NATO meeting with other heads of state. Trump has softened his stance on the transatlantic organization since calling it "obsolete" but has repeatedly demanded other NATO members to step up their contributions.

"It will be a priority for Europe to understand what role the U.S. wants to play in NATO," Shankar said. "I'm not sure if Brexit will come up," she added.

What does this meeting mean politically?

Emmanuel Macron addresses supporters after winning the French Presidential Election, at The Louvre on May 7, 2017 in Paris, France.
David Ramos | Getty Images
Emmanuel Macron addresses supporters after winning the French Presidential Election, at The Louvre on May 7, 2017 in Paris, France.

Thursday's meetings will "set the tone" in EU-U.S. relations in Trump's era, political analysts told CNBC.

Karel Lannoo, chief executive officer of the think tank Centre for European Policy Studies, said this is a "very important" moment "as the language will matter a lot."

He also recalled that Thursday's meeting at NATO will be the first interaction between Trump and the recently elected French president, Emmanuel Macron, a pro-European leader, who received the endorsement of former U.S. President Barack Obama.

How will markets react?

Markets have been nervous over the past few days after President Trump told former FBI director James Comey to "let go" a key investigation. Such revelations have raised questions over a potential impeachment.

The Dow saw its worst trading day of 2017 last week and investors chose safe havens such as the yen and gold.

The tone Trump strikes in Brussels will determine market performance, but strategists do not expect major negative reactions.

"Of course we can't predict the unpredictable, and there's been no shortage of that with this president," Tim Hayes, chief investment strategist at Ned Davis Research, told CNBC via email.

"But thus far Trump has been more measured in his foreign policy interactions than many had expected, so a negative market response is a low probability," he said.

"A more likely negative influence would be another bombshell on the domestic front, increasing the expectations for impeachment proceedings. Otherwise the stock market will be more likely to be driven by fundamentals, such as the monetary environment and the outlook for economic and earnings outlooks, all of which remain bullish," Hayes explained.

Didier Borowoski, head of macro-economic research at Amundi, told CNBC via email that "Donald Trump's visit to Europe does not change anything for European investors. The cyclical recovery in the eurozone is fueled by domestic factors and accommodative monetary conditions."

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