European shares look set to drift further below three-year highs next week, as investors assess the likely impact of high oil prices on corporate earnings. Among the companies reporting results next week are metals groups, the world's biggest diversified mining group BHP Billiton and the Anglo-Dutch steelmaker Corus.
Results from the second-largest advertising and marketing group in the world, WPP due on Friday, will be another highlight during the trading week.
The benchmark FTSEurofirst 300 Index was trading about 1 percent below its high of 1,199.87 points hit on August 10, mainly on concerns about the potential impact on earnings from the steep price of oil.
However, strategists think the global economy remains on a strong footing for now.
"The rally in global stock markets is backed by accelerating third-quarter growth and rising industrial orders; the Federal Reserve is more firmly in play, but inflation risk appears small," said strategists at HSBC.
On the economic front, the ZEW Centre publishes its indicator of economic sentiment for August on Tuesday, followed by the Ifo research institute which releases its pan-German economic survey for August on Wednesday.
On August 16 US retail heavyweight Wal-Mart Stores Inc warned of a weaker third quarter as oil prices hurt consumer spending. Investors will take bets on which European companies may warn their results due late September, early October, will also be hit.
"Schedule news events look pretty paltry next week so people are dwelling on the bigger picture, wondering when oil prices will dent corporate earnings," said John Hatherly, head of global analysis at fund manager M&G Asset Management.
Dominc White, a strategist at ABN Amro, argued that investors' fears about high oil prices may be unwarranted and they are based on what happened in the past.
"Disruptions to the oil supply have usually been the cause of a price spike. This time around, strong global demand for oil has been the primary cause," he said.
"So while consumers in oil-importing countries have felt the pain from high oil prices, these countries have also benefited from buoyant exports to China."
Financial firms feature heavily among the companies reporting next week. Swedish savings firm Skandia and Switzerland's Bank Sarasin, kick off with results on Monday and Tuesday respectively.
The Nordic's biggest bank by market value Nordea and third-largest bank Handelsbanken also report figures. Dutch-Belgian financial services group Fortis follows on Thursday.
Denmark's second-biggest insurer, Topdanmark and Swiss Re, as well as British engineering groups Invensys, Tomkins and Bodycote all report earnings.
Results from a couple of telecoms firms round out the list. Greek mobile phone operator Cosmote reports results on Thursday and Austria's dominant fixed-line, wireless and Internet service provider, Telekom Austria, reports on Wednesday.