By Myles Neligan BBC News Online business reporter

Investors held their nerve after the Istanbul bombs

The equity market is in for a period of consolidation after last week's terrorist attacks in Turkey, but the recent share price rally may yet have some distance to run.

The FTSE 100 closed at 4,319 on Friday, just 11 points up on the day, and down by 1.7% from the beginning of the week.

The decline came mainly on Thursday as investors digested news of simultaneous bomb attacks on the British consulate and on the offices of HSBC bank in Istanbul.

However, analysts believe the sell-off could have been worse, and say the underlying economic picture remains encouraging.

"The market's reaction was reasonably sanguine," said Hilary Cook at Barclays Private Clients.

"The earnings news is getting better, and there has been a big increase in mergers and acquisition activity, which shows companies are increasingly willing to spend their money."

Ms Cook expects the market to register further modest gains in the weeks ahead.

Dollar woes

But the longer term outlook remains murky, with many analysts expecting higher interest rates and lower real incomes to curb consumer spending and economic growth.

There are also worries that the recent decline in the value of the dollar will cut into European export earnings, squeezing the eurozone economy just as it appears to be emerging from stagnation.

Barring the second official estimate of third quarter economic growth, which is expected to show no change from the original 0.6% figure, there are few significant UK figures due out next week.

Investors will be looking instead to the US and Europe for fresh leads, focusing on Germany's closely-watched Ifo index of business confidence, out on Tuesday, and, on Wednesday, the latest figures for US durable goods orders.

On the corporate front, the main focus of interest will be full-year results from ITV broadcasters and merger partners Carlton and Granada.

Investors will be watching out for news on how the tie-up between the two companies, approved by competition watchdogs last month, is progressing.

City forecasters expect Granada to post pre-tax profits of �153m, against �62.6m for Carlton.