European shares, which set new multi-year highs on Friday, are expected to make more gains next week as inflationary pressures ease and mostly solid corporate earnings herald better times to come, market commentators said.
But with only five weeks until the festive holiday season, investors - especially hedge fund managers wanting to lock in profits before year-end - could cash in and nudge prices lower as trading volume begins to thin, they said.
Banks are high on next week's earnings agenda. France's BNP Paribas, Ireland's Anglo Irish Bank Corp, Dutch-Belgian group Fortis, Belgian bank KBC Groep, National Bank of Greece and Bank of Ireland all report towards the end of the week.
British supermarket giant Tesco and airlines Air France-KLM and EasyJet also feature.
The FTSEurofirst 300 index of pan-European blue chip shares was 1 percent higher at 1,243.1 points at 1145 GMT on Friday after setting a 43-month high of 1,244.2 points.
The index looked set to finish the week with a gain of about half a percent after recouping a loss made earlier as some investors took profits and used dips in metal prices to sell mining stocks and a slipping oil price to get out of energy producers.
Economic figures from the United States and the euro zone this week showed signs of tamer inflation and weaker oil prices have underpinned the belief that price rises will be moderate, reducing fears that higher costs will hurt company profits.
"All in all, the inflation data is suggesting that, despite the current synchronised strength of global growth, inflationary pressures still remain pretty well contained. This provides further support to our overweight call on equity markets," said Barclays Stockbrokers macro research analyst Jonathan Ashworth.
Despite easing inflationary fears, the issue will remain in focus and statements from policy meetings by central banks in the US, the UK and Japan will provide further information on the pace at which interest rate changes will occur.
The Federal Reserve and the Bank of England will publish minutes of their November monetary policy meetings on Tuesday. The Bank of Japan will issue its minutes on Thursday.
Also in focus will be key US economic data - October's leading indicator on Monday and the final estimate of November's Michigan consumer sentiment survey on Wednesday - which will show how the world's biggest economy is faring.
In the euro zone, November's business confidence indicators are out in France and Italy towards the end of the week and Germany's IfO will also be watched with interest after surging to a five-year high last month.
In the euro zone, November's business confidence indicators are out in France, Germany and Italy towards the end of the week and on Friday Germany's IfO will be watched with interest after surging to a five-year high last month. Although earnings and outlooks this past week contained some disappointments - high among them Vodafone - the majority of reports were bullish and strategists reiterated that European equities remained attractive.
Future results will be watched closely for further evidence of growth and next week kicks off with British telecoms company Thus on Monday, followed by Intercontinental Hotels, Anglo Irish Bank Corp and Easyjet on Tuesday.
Wednesday sees Air France-KLM, Fortis, satellite operator Inmarsat Plc and precious metals refiner Johnson Matthey.
On Thursday KBC, BNP Paribas, National Bank of Greece, Bank of Ireland, British auto parts chain Halfords and European stock exchange operator Euronext will feature. Tesco reports on Friday.
"Earnings have in majority beaten expectations and earnings expectations have been constantly revised up in the course of 2005," said Pierre-Yves Gauthier, strategist at brokerage OddoSecurities in Paris.
"Looking at 2006, analysts expect a profit growth of around 9 percent or above in Europe," Gauthier said, noting that earnings growth expectations at the start of 2005 were around 10 percent and had been revised to around 20 percent later in the year.
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