Earnings from European blue chips such as BT Group may support equity markets next week, but worries over the economic fallout of stronger oil prices and higher US interest rates will keep sentiment on a leash.
Investors will want to hear how British Airways and Air France are coping with higher fuel costs when the two airlines report their annual results on Monday and Tuesday.
Soaring oil prices - near all-time highs on concerns OPEC may not be able to meet the surging demand fed by global economic expansion - sparked worries that consumers' spending power and companies' profit margins may be hurt.
Britain's grocery group J. Sainsbury and mobile firm mm02, reinsurers Hannover Re and Scor, and Compass, the world's biggest catering firm, are also among the marquee companies reporting.
European shares have been moving sideways for two months - unable to break convincingly above multi-month highs set in early March - amid resurging security risks and as investors bet much of the good earnings news has already been priced in.
"Markets are struggling with this idea of whether economies can absorb a combination of higher interest rates, a higher oil price and a slowdown in China.
Those are three big worries," said European equity strategist Teun Draaisma at Morgan Stanley.
Recovery watchers will tune in to Germany's ZEW business expectations survey on Tuesday. The publication of the latest New York Fed Manufacturing Survey on Monday, US housing starts on Tuesday and the Philadelphia Federal Reserve index of business conditions on Thursday may offer fresh clues on the timing and pace of US interest rate rises.
The FTSE Eurotop 300 of pan European blue chips was 0.6 percent lower at 974.31 points by 0835 GMT on Friday, showing gains of only 1.6 percent since the start of the year.
Britain's top fixed-line carrier BT is among next week's key earnings reports, with investors eager to see on Thursday whether the former monopoly has been able to stem a decline in revenues in the final quarter of its 2003/2004 fiscal year.
Britain's mm02 reports its full-year results on Tuesday, a few days after one-time suitor Dutch operator KPN squashed lingering hopes of a bid for the mobile firm by saying it was not looking at any merger and acquisitions.
Scottish & Southern and United Utilities are due to release their annual results on Wednesday and Thursday respectively, while troubled French chemicals company Rhodia reports interim numbers on Monday.
Technology shares will be in the spotlight when US computer and printer giant Hewlett-Packard and Applied Materials report on Tuesday, and telecoms equipment maker Ciena on Thursday.
And investors will look for any forecast chip titan Intel may make at its shareholders meeting on Wednesday.
Other European firms lining up to update the market include property investor Land Securities and Finland's drugmaker Orion on Tuesday, and Man Group, the world's largest-listed hedge fund firm, on Thursday.
A so-far solid earnings season has been largely overshadowed by worries that the monetary measures the United States and China will cool their rapidly expanding economies and smother the recovery in corporate profits.
Market watchers agree that the Fed will raise interest rates in June, or August at the latest, but they differ on how far the US central bank will go, now that the world's largest economy is on a sure footing and inflation on the rise.
"There are sufficient differences with the economic position of 1994 to suppose that the Fed will be more circumspect with regard to rate increases this time," said Commerzbank strategist Rolf Elgeti, referring to the disruption to markets triggered by the unexpected 1994 policy tightening.
Equity markets will continue to struggle until investors can measure how steep the Federal Reserve's monetary tightening will be, Morgan Stanley's Draaisma said.
Investors also need to see oil prices fall, which he said was unlikely to happen until at least the June 30 handover of power to the Iraqis in Iraq.
Concerns over higher interest rates and oil prices may weigh on market for another couple of months, but once these fears are dispelled, improving corporate fundamentals will the lay the ground for further equity gains, strategists said.
"We see very little downside for the market from current levels," said HSBC equity strategist Robert Parkes. "We expect markets to start drifting higher once the rate and oil stories wind down, supported by the corporate newsflow.