A report on Monday is expected to show that the British economy grew by 0.5 per cent in the second quarter after expanding 0.1 per cent in the first, the fastest increase since the third quarter of last year.
"We think growth will outweigh the impact of rising bond yields, so we're positive on equities," said Mark Phillips, manager at Scottish Equitable.
The benchmark FT-SE 100 index closed at 6,180.8 points on Friday, down 1 per cent on the week, led lower by a 6.5 per cent drop in the mining index. Of the 20 industry sub-indices represented in the FT-SE 350, half rose and half fell.
Billiton led FT-SE 100 declines, dropping 11 per cent as speculation waned that it would be involved in mergers in the aluminum industry. It had risen 11 per cent the previous week, after news that Alcan Aluminium had bid for rivals Pechiney and Algroup. Billiton is still up 153 per cent this year.
The FT-SE 100's 5 per cent advance this year was capped by concern about the extent of US rate rises. That may damp trading on Monday and Tuesday when the US Federal Reserve meets to set interest rates in the world's biggest economy. The Fed is expected to raise its benchmark rate a quarter point to 5.25 per cent and then leave it unchanged for the rest of the year.
"You should really hold off and wait for the Fed," said Michael Browne, head of equity strategy at Chase Asset Management. Higher interest rates could damp global expansion, cutting profit growth of UK companies traded in the US, such as BP Amoco.
Mr Browne recommends that investors buy stocks such as Glaxo Wellcome, which is now looking cheap after falling 23 per cent this year. The world's biggest maker of Aids treatments rose 12p to 1,633p Friday for a five- day gain of 2.5 per cent.
Confidence about economic growth in the UK and further afield could boost manufacturing companies such as British Aerospace. Credit Lyonnais Securities Europe analysts on Friday said they favoured the industry. "The radical restructuring of the sector over the last year is about to bear fruit," they said.
Rolls Royce, which makes aircraft engines, is the only FT-SE 100 company slated to report earnings on Thursday.