European shares, trading near 2-month lows on mounting fears of higher interest rates and subdued by lower company forecasts, will take direction from central bank meetings and a raft of company results next week.
Corporate reports will be broad-based, coming from financial, chemical, retail, consumer goods and oil firms and any guidance cuts may be interpreted as a sign high crude prices - around $61 as a winter looms - are hurting margins.
The US Federal Reserve's policy-makers meet on Tuesday and are expected to raise interest rates then, while the European Central Bank, whose governing council meets on Thursday, is increasingly expected to raise rates before year-end.
On Friday, the pan-European FTSEurofirst 300 index looked set to end with a weekly loss of around 0.4 percent, down 6 percent from a 41-month high of 1,242.2 struck this month.
"We have had quite a bit of weakness recently and the uncertainty about rising inflation and what this would mean for companies, and how far the Fed will raise rates, will continue for the time being," said ABN Amro European strategist Lars Kreckel.
Next week's third-quarter reporting kicks off with lower profit expected from Dutch bank ABN Amro, while Norwegian oil group Statoil is expected to post a 60 percent surge in operating profit due to high energy prices.
Other companies reporting are Switzerland's UBS and Credit Suisse, Germany's Commerzbank, BASF, Volkswagen and BMW, as well as Anglo-Dutch consumer goods giant Unilever.
SENTIMENT SOURED The market was weighed down this week by disappointing outlooks from European companies like Alcatel, France Telecom, Ahold and Fiat.
US firms hit sentiment too. Microsoft delivered a lower-than-expected revenue target for the current quarter and General Motors' shares slid on bankruptcy rumours after news it had received subpoenas from US regulators.
Still, market commentators say the European equity market correction was necessary and that valuations remain attractive.
While caution will prevail ahead of the rate decisions, investors will soon return to pick up bargains, they add.
"In relative terms, European equities are still more attractive than the US There is a buying opportunity in any weakness," Kreckel said.
High energy prices should also not necessarily hurt companies and Morgan Stanley, believing the ECB will consider hiking rates, remains upbeat about equities investments.
"The investment conclusion is straightforward: earnings should not suffer excessively from higher oil prices, while inflation may rise further. Although the price action has already gone in that direction, our European analyst survey is suggesting that equities may continue to have the upper hand on bonds, in Europe at least," Morgan Stanley said in a note.
CORPORATE AGENDA In the US, major firms reporting results include breakfast cereals maker Kellogg Co, telephone company Qwest Communications International Inc, computer maker Sun Microsystems Inc and media giant Time Warner.
Tuesday's European schedule includes reports from UBS, UK airports operator BAA, British insurer Friends Provident and publisher Pearson.
German chemical giant BASF, truck maker MAN, retailer Metro and Credit Suisse report on Wednesday.
Thursday's news will include results from French media giant Vivendi Universal, utility Suez and German carmakers Volkswagen and BMW. The UK's Marconi Group, Tate & Lyle, Unilever and Dutch computer services firm Getronics will also report. French energy giant Total, Spain's Repsol and British Airways will report on Friday.
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