European investors will be looking to the United States this week for fresh guidance on the economy as heavyweights Alcoa, Yahoo! and General Electric kick off a new earnings season.
Nearer to home, first-quarter sales are due from France's Carrefour on Wednesday, the world's second-largest retailer.
L'Oreal, the world's biggest cosmetics group, posts first-quarter sales on Wednesday, followed by industry rival Clarins on Thursday, offering clues as to the size of consumers' wallets.
Buoyant US jobs data, released on Friday, which showed the fastest pace of growth in nearly four years, will boost sentiment going into next week, analysts said.
The US non-farm payroll data showed the economy created 308,000 jobs last month, three times as many as economists had forecast.
"Payrolls are much better than expected which gives everyone the impression that the final leg of the recovery could be coming through. And that will be helpful," said Mark Wall, senior European economist at Deutsche Bank.
"But Europe is still struggling a little bit with its own recovery so that could be a dampening factor for European markets. They can't share in the optimism quite to the same degree," he added.
Matthew Wickens, strategist at ABN Amro urged caution.
"We're more confident that the recovery is going to be durable and that's good news given equity focus is on growth. But part of the reason why profits have been good is because we haven't seen labour costs increase."
"The question for the equity market is when do we have to start worrying about higher labour costs and interest rate hikes," he said.
Some analysts are expecting US first-quarter results to be an improvement on last year by an average of 16 percent.
US aluminium giant Alcoa reports on Monday, Internet portal Yahoo! on Wednesday, with conglomerate and Dow industrial heavyweight General Electric, and SunTrust Banks on Thursday.
On Friday afternoon, the pan-European FTSE Eurotop 300 index was trading around 1,009.4 points, less than two percent off its highs for the year.
Carrefour first-quarter sales may stoke interest after the firm forecast more growth this year. The French retailer, which has 10,000 stores in 19 countries and is expected to open 900 outlets in 2004, saw a rise in net 2003 profits as lower financial charges offset some weakness at its hyper-markets.
Investors may anxiously eye this year's sales at French cosmetics firm L'Oreal after the company said its 2003 net profit nearly halved to 30.3 million euros, partly due to the impact of currencies.
UK consumer spending may come under threat if the Bank of England's Monetary Policy Committee decides next Thursday to raise interest rates by 25 basis points from the current 4.0 percent.
Signs of more earnings recovery this year will be greeted eagerly by the market, though not all the news is likely to be pleasing.
French technology consultant Altran Technologies is expected to post a sharply lower 2003 operating profit on Tuesday, hit by restructuring charges and still difficult business conditions.
Reuters monthly Purchasing Management Institute figures on euro zone service sector activity are due on Monday, alongside those for the UK, Italy, France and Germany.
Activity in the euro zone service sector, which accounts for about two thirds of the economy, grew more slowly in February as the euro's strength hit demand from manufacturing companies.
The index, which covers more than 2,000 companies in Germany, France, Italy, Spain and Ireland, slipped to 56.2, below a consensus forecast of 57.1, its lowest level since October 2003.
Comments
Comments are closed.