New York: Europe will again be at the centre of investors' focus this week as the US earnings season passes the halfway mark and there is little on the economic calendar to give the market direction.

Economic data expected this week includes weekly initial jobless claims, the Thomson Reuters/University of Michigan's consumer sentiment index and international trade figures.

Improving data helped push the S&P 500 index up nearly 7 per cent for the year, highlighted by Friday's stronger-than-expected jobs report.

"It's the old ping pong game. Today it is the US, tomorrow it is Europe again," said Joe Saluzzi, co-manager of trading at Themis Trading.

"Normally in this type of tape when there is no economic news, it seems like the bias goes to the upside."

Wild card

But Europe and whether European bond yields spike or other news from Europe emerges will be the wild card for the markets, Saluzzi said.

"There is always the chance in brinkmanship — which is what is being played here — that you have a dangerous outcome if the pieces don't come together," said Paul Mendelsohn, chief investment strategist at Windham Financial Services.

"They have until March 19. They are going to keep pushing this thing until everybody gets the best deal they can out of it or they decide not to move forward and let Greece go. It's always a possibility at the end of the game."

The flood of earnings reports will slow this week. A total of 66 S&P 500 companies are expected to report, including Walt Disney, Coca-Cola and Cisco Systems.

NYSE Euronext is also due to report results after the exchange terminated merger plans with Deutsche Boerse on Thursday.

Through Friday, 283 companies in the S&P 500 have reported results, with 60 per cent posting earnings that have topped Wall Street expectations, a lower percentage than seen in recent quarters through this stage of the reporting season.

The payrolls report on Friday helped lift the S&P 500 1.5 per cent to 1,344.90, past a recent resistance point of 1,325, which the benchmark index had failed to pass on several occasions recently. Analysts said the resistance level could now serve as support, with 1,350 representing a new resistance point for equities.

Troubling sign

But even with the gains sparked by the payrolls report, a lack of volume remains a troubling sign, one which could be alleviated by a resolution of the Greek question.

"The [payrolls] news is great but you are not getting a tonne of volume, so you still get some scepticism," said Ken Polcari, managing director at ICAP Equities in New York.

"It is going to be slow to get these people back. Ultimately I still think the large asset managers are waiting for a Greece decision because no matter what, the market will pull back and that is when they will jump in."

Greece is the word

Greece remains at the forefront of the Eurozone crisis as the government continues to struggle for agreement on fiscal reforms that would be accepted by political leaders and private bondholders as it tries to avoid a disorderly default.

Talks on a bond swap and €130 billion (Dh144 billion) in bailout funds have been continuing for weeks before a March deadline when €14.5 billion of bonds fall due. Hopes a deal was on the horizon dissipated on Friday as Eurozone finance ministers delayed a meeting scheduled for tomorrow.

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