Caught between sluggish global growth and worldwide debt deleveraging, investors face another week of potentially gloomy economic news with no relief in sight from the growing concerns about eurozone debt.
The focus will be mainly on the European Central Bank's monthly policy meeting, the U.S. non-farm payrolls report and data on the outlook for the world's manufacturing sector, which still represents 20 percent of the global economy.
But these events are not expected to offer much diversion from the steadily worsening crisis in the eurozone, which is driving demand for safe haven assets.
"It's about capital preservation from an investor point of view," said Richard Batty, global investment strategist at Standard Life Investments, which has $240.7 billion of assets under management.
"It's a risk averse attitude that the market's taking."
Standard Life's global outlook for the second quarter remains moderately cautious, favouring U.S. equities and corporate debt due to signs of strength in that economy, and remaining neutral to light in riskier assets in Europe and Asia where it sees problems affecting a number of economies.
These problems have become much more prominent in Europe over the past week where new data signaled a worsening in the outlook for many countries with the worries spreading to the euro area's bigger and more stable economies.
An ECB region-wide survey of bank lending published last week, the first to fully take into account the 1 trillion euros ($1.3 trillion) it injected into the banking system, found that while banks were more willing to lend, the demand for credit from companies has fallen.
This weakness has been reflected in surveys of business sentiment across the euro area and in many corporate earnings reports, especially from banks, as Europe's first quarter earnings season gets into full swing.
In the markets the main impact has been to drive down yields in German government bonds and U.S. Treasuries to around record lows, while the main index of European stocks, the FTSE Eurofirst index, actually had a fairly flat week and the euro was little changed.
The gloomier outlook has been encouraging calls from the region's political leaders for a shift away from tough government austerity measures to more growth-oriented strategies but is not expected to prompt any action from ECB policymakers on Thursday.
"The ECB is going to stick to its wait-and-see stance, without any meaningful changes in rhetoric," Unicredit economist Marco Valli said.
The market will, however, scrutinise the regular news conference after the meeting for signs the bank is preparing to ease policy in some form.
A Reuters poll of 60 economists found three-quarters of them expect the ECB will restart its government bond-buying programme at some point in the next three months because of the growing tensions in the euro zone bond market.
The political rhetoric on the need for more growth is also likely to increase over the coming week in the run up to the final round of the French presidential vote and the Greek general elections on Sunday, May 6.
But this is likely to fall on deaf ears in the markets.
"For us there's a lot of talk there, but we'd be surprised if anything concrete comes about," said Standard Life's Batty.
Jim Reid, credit strategist at Deutsche Bank, said what was really needed is much better policy cohesion between euro zone governments and the ECB.
"There are signs that the stress in the market now will lead to a revisiting of the policy response and an acceptance the current mix is not great."
Spain, the eurozone's fourth-largest economy and current focus of the debt crisis, will provide a real test of where investor sentiment stands when it sells 3- and 5-year bonds on Thursday.
The sale will be even more closely watched after the country suffered a surprise two-notch credit rating downgrade which pushed yields on its 10-year debt over the key six percent level on Friday.
The amount investors demand to hold Spain's debt rather than safer German bonds has risen about a 120 basis points since Prime Minister Mariano Rajoy announced in early March the government was abandoning its deficit-reduction targets for the year.
Outside the euro zone's problems, growth is the biggest concern facing investors following a disappointing 2.2 percent rise in U.S. first quarter economic output.
The U.S. is due to report that non-farm payrolls in April grew by 175,000 on Friday, a rebound from the surprise rise of only 120,000 in March which did much to unsettle growth hopes across all the markets.
Before the jobs numbers, the Institute for Supply Management (ISM) will issue an update on manufacturing activity for April on Tuesday.
The Chinese growth outlook also be further clarified with the release of the government's manufacturing purchasing manager's series on Tuesday and the non-manufacturing PMI on Thursday.
Emerging market equities have performed well so far this year with the MSCI emerging index up over 11 percent for the year to date, but growing worries about the health of euro zone peripheral states have reversed some of these gains over the past six weeks.
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