Investors will be searching for clarity on the state of the global economy this week as data from both sides of the Atlantic sets the tone.
The markets have become increasingly spooked by inflation concerns, particularly following Federal Reserve chairman Ben Bernanke's cautionary comments last week. Investec economist Philip Shaw says the current situation offers "a very mixed picture", adding: "The focus is going to be on the economic figures. It's going to be a busy week for indicators."
The most important data for the US will be the inflation figures due out on Wednesday. Market watchers believe these will spell out a need for a further interest rate rise at the end of the month.
Britain's inflation figures come out on Tuesday, and there will also be inflation data across the eurozone. And this weekend the market will be digesting any comments made on oil and the high cost of crude at the meeting of the G8 group of developed countries.
As for corporate news, the focus will be on a number of trading statements from market heavyweights such as Tesco, Alliance & Leicester and Royal Bank of Scotland.
Tesco is expected to unveil a first-quarter 4.5 per cent rise in like-for-like sales and a 7.5 per cent rise in total sales, according to Williams de Broë retail analyst Freddie George. Overseas sales are likely to continue to power ahead, rising around 25 per cent.
The statements from Alliance & Leicester and Royal Bank of Scotland will be scrutinised to see whether the cycle of bad debts has bottomed out, says Morley Fund Management analyst Neil Wesley. The market will also be looking for any commentary from A&L on takeover speculation, after Crédit Agricole was recently named as a potential suitor.
Overseas, the Wall Street investment banking giants Lehman Brothers and Goldman Sachs are both reporting figures, as is their smaller rival Bear Stearns.
Staying with financial services, Standard Life is set to release its prospectus on Thursday after gaining court approval for a planned demutualisation last week. However, some analysts believe that it may have to reduce the price of its float given the current volatility in the markets and the life insurance industry's recent lacklustre performance. Standard Life initially indicated that it was looking to price its offer between £2.40 and £2.90.
Although some companies have pulled their floations in the face of volatile markets, Standard Life is expected to go ahead with its plans.
Another big deal preoccupying the market at the moment is the battle for control of the Luxembourg-based steel giant Arcelor. Its board will meet today to consider a revised €25bn (£17bn) bid from the billionaire Lakshmi Mittal's rival group Mittal, after the two parties met for the first time late last week. An announcement could come today, though most observers believe tomorrow is more likely.
Mittal wants investors to reject Arcelor's plans to buy Russia's Severstal, which recently entered the fray as a white knight.
Elsewhere, Whitbread, which owns Premier Travel Inns and Costa Coffee, is set to update investors on trading at its annual general meeting on Tuesday. The only division expected to be in positive territory is Premier Travel, which is tipped to be up 5 per cent on a like-for-like basis.
Last Friday the group set an end-of-June deadline for the sale of its pubs.
While retailers and hospitality groups are expected to benefit greatly from the World Cup, not everyone will share in the spoils. For example, both MyTravel and First Choice Holidays are set to unveil their interim results, but the City will be most interested in how their summer sales are faring - generally the time when travel firms make most of their money.
However, some believe that holiday operators will be hit as people choose to stay at home, and in front of their TVs, for the next month.
First Choice is tipped to deliver an adjusted pre-tax loss of £80.8m for the first half.
Among smaller caps, the property comapny Grainger Trust is expected to provide some insight into the strength of the residential market when it unveils its interim results on Tuesday. Investors will be looking for confirmation that modest growth in the market has continued.
Fellow property groups Workspace and London Merchant will provide final results, although in this case their figures will reflect on the non-residential market.
Workspace, which rents out office space to 4,000 small and medium-sized businesses, is expected to deliver an adjusted pre-tax profit of £14.7m - slightly up from the £14.5m delivered in the previous year.
UK RESULTS: (final) Carclo, Hyder Consulting, IFX, Latchways, London Merchant, Workspace, (interim) Civica
UK RESULTS: (F) CML Microsystems, Oxford Instruments, Patientline, Ten Alps, William Ransom & Son; (I) ATH Resources, Pursuit Dynamics, First Choice Holidays, Grainger Trust
UK RESULTS: (F) Accident Exchange, Celsis International, Ensor, London Asia Capital
UK RESULTS: (F) Chamberlin & Hill, New Avesco, (I) MyTravel, OMG
UK RESULTS: None scheduled