European shares may test new 2004 lows next week as oil prices and economic data still dictate investor mood and overshadow earnings from food titan Nestle and financial giant Allianz.
A scorecard from global miner BHP Billiton will also get top billing in a thinning earnings agenda on Wednesday, while Zurich Financial and advertising firm WPP Group report interim results on Thursday and Friday.
But doubts over the sustainability of US economic growth, hampered by surging oil prices and higher interest rates, will likely keep shareholders' sentiment cautious at best.
"The US economy has never had to struggle this hard to eke out a recovery," said Morgan Stanley chief economist Stephen Roach. "Lacking in the organic sustenance of job creation and wage earnings, the economy has become addicted to the steroids of extraordinary monetary and fiscal support."
"For such an unbalanced and vulnerable economy, it doesn't take much of a shock to put a low-quality recovery in trouble," Roach said, adding: "As bad luck would have it, that's precisely the risk as oil has once again entered the macro equation."
US oil prices stood firmly above $45 a barrel on Friday - up some 40 percent for the year so far - underpinned by worries of fresh sabotage on Iraq's oil industry and possible supply disruptions in Venezuela, where President Hugo Chavez faces a referendum on his rule. The potential for heightened security alerts at the Athens Olympic Games may also cap sentiment.
The market will look at the fresh batch of US economic data, searching for evidence to back the Federal Reserve's optimism, voiced earlier in the week, that the economy's soft spot was only temporary.
Investors await the publication of US core July consumer prices on Tuesday to gauge how energy costs indirectly feed into all sectors of the economy, amid fears inflationary pressures could crimp consumption, the kingpin of US economic growth.
Other US economic numbers due out include the New York Manufacturing Survey on Monday, housing starts and industrial production on Tuesday, and the Philadelphia Federal Reserve survey of business conditions on Thursday.
Germany's ZEW business conditions index will be scoured on Tuesday for fresh clues on how Europe's largest economy fares.
On Friday, the FTSE Eurotop 300 index of pan-European blue chips was trading at 942 points, standing 1.7 percent lower than at the start of the year.
"The markets might be breaking out on the downside from the trading range we have had for quite a while," said Patrik Schowitz, a European strategist at HSBC. "At the moment, the markets seem to be scared of whether economic growth in the United States will be strong enough."
Investors will eye Allianz on Monday as they expect the German insurance and banking giant to post lower second-quarter net profits after a strong first quarter. They are also eagerly awaiting news on the performance of its problem child Dresdner Bank, which is due to report separately on Tuesday.
Topdanmark, Finland's Sampo and Norway's Storebrand are other insurers lining up to report numbers early next week, a few days after bigger rivals Aegon and Axa both posted sharply higher profits.
Technology shares may nab the spotlight again as US chip equipment maker Applied Materials, telecoms equipment maker Ciena and business software maker Novell update investors on their performance.
The sector was rattled this week by glum outlooks from US networking giant Cisco and computer and printer maker Hewlett-Packard. An upbeat guidance by personal computer giant Dell on Friday failed to heal sentiment.
Other names lining up to hand in their scorecards in Europe included airlines Finnair and Swiss on Tuesday, German pharmaceuticals wholesaler Celesio on Monday, and Danish drug maker Lundbeck and Austrian steelmaker Voestalpine on Tuesday.
"Steel and chemicals have done well and companies from both sectors have said they can raise prices, which shows that there's pretty strong economic activity," said HSBC's Schowitz.
Vestas, the world's biggest wind turbine maker, will report second-quarter earnings on Wednesday after lowering this week its 2004 sales and profitability forecasts.
Swedish fashion retailer Hennes & Mauritz will also be eyed when it publishes its July sales on Tuesday.
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