The Week Ahead: City takes a drop of the hard stuff

Christmas is coming and a stockingful of companies are expected to report next week. In tune with the festive spirit, December begins with results from brewers and pub operators, but investors also await a decision on UK interest rates as well as an Opec meeting.

Scottish & Newcastle, the owner of Kronenbourg lager, is likely to report steady progress, but the market will be more interested in its strategy after it sold its pubs estate to Spirit, the venture capital-backed group, last month. Investors will be asking about the brewer's plans to increase its presence in emerging markets such as Russia, while cutting costs in the developed markets of western Europe.

Wolverhampton & Dudley, which owns Banks's bitter, is expected to reveal healthy profits after a hot summer boosted sales in its country pubs. Mitchells & Butlers, the bar and restaurant operator demerged from Six Continents, is likely to report a profit decline in its first full-year results as an independent company. The owner of All Bar One and Harvester restaurants has promised to return £500m to shareholders, but investors are concerned about the company's growth prospects.

Expect a positive trading statement from Barclays, as consumers continue to borrow despite the recent hike in interest rates. We'll see if the rumours about its interest in buying Spain's Banco Atlantico have any substance.

GlaxoSmithKline will treat investors to a review of its new drugs pipeline for the first time in three years. The drugs giant has only a few products in late-stage development, so the market will be looking for evidence of future blockbusters.

A trading statement from Reed Elsevier, the publisher of scientific and legal journals, is likely to show an improvement from the first half, but the market is still expecting the company to miss its target of increasing earnings by more than 10 per cent.

Compass, the catering group, is expected to report more than 6 per cent sales growth and an improvement in margins, but the market will be asking if this momentum can continue in 2004.

There will be few surprises from Sage, the UK's biggest software company, which is predicted to report a 12 per cent profit increase to £151m. Investors will be looking for signs of a recovery in technology spending, particularly in the US.

Three water companies are turning on the tap with figures, but the market's attention will turn towards the outlook for pricing as the regulatory review continues. United Utilities, which operates in the Liverpool and Manchester area, disappointed the market with a £1bn rights issue in July, but it has since received a favourable response from Ofwat, the regulator, with regard to price increases. There was harsh treatment for AWG, which owns Anglian Water, as its plans to raise prices were rejected. Kelda, the owner of Yorkshire Water, is requesting only small price hikes, and continues to buy back shares after selling its stake in Waste Recycling Group for £144m in June. But the company has completed less than a quarter of its buy- back programme and questions will be asked about when it will be resumed.

Investors will be keeping a close eye on the oil price, as Opec meets to set its oil production policy. Its decision to cut output at the last meeting in September took the market by surprise, but with the oil price at the top end of the $22 to $28 per barrel target range, there will be pressure to keep further production cuts on hold. A research note from Lehman Brothers said: "Having surprised us last time with a quota cut, we think that this meeting will be relatively uneventful and we expect no change to quota levels".

In terms of economic news, the Bank of England's Monetary Policy Committee makes its decision on interest rates on Thursday. The market is expecting rates to be left unchanged at 3.75 per cent after a 0.25 per cent increase last month. On the same day, the European Central Bank is expected to keep rates on hold at 2 per cent.

The FTSE 100 is struggling to break through the 4,400 level, but investors are positive about the market. Jim Wood-Smith of Gerrard, the fund manager, said: "Almost all the ingredients are in place for a good pre-Christmas rally, but on the other hand, the further the market rises this year, the less it is likely to do so in 2004. It is a little like settling down to a bottle of Chablis; it is always tempting to wolf it down as quickly as possible, but doing so will only result in indigestion and a hangover".