Traders may take profits before Christmas

Investors hoping for further steady gains in the run-up to the festive season could be disappointed this week.

Weak US jobs figures triggered a sell-off in London and New York on Friday, and analysts warn that further downbeat data could encourage a wave of profit-taking which would drive share prices lower still.

The impact of the weaker dollar on British exporters, and concerns that the Bank of England could repeat last month's interest rate rise as soon as January, are also weighing on investor confidence.

"All of these give reasons to sell into the market," said Graeme Dickson at Blue Index.

"That is the logic we are following at present: The figures are coming in below expectations, and the market is coming away."

Negative territory

On Friday, the FTSE 100 share index closed 11 points lower at 4,367, pressured by official figures showing that the US economy created 57,000 new jobs in November, far short of the 150,000 predicted by analysts.

The weak jobs number was at odds with revised statistics showing that the US economy expanded by an eye-watering 8.2% in the third quarter - its fastest growth rate in nearly 20 years.

This week, interest rates will be in focus again on Tuesday as the US Federal Reserve holds its monthly rate setting meeting for December.

The Fed is almost certain to leave rates unchanged at 1%, but investors will be paying close attention to the minutes of its 28 October meeting, due out on Thursday.

Any sign of a shift in the US central bank's stance towards raising rates would "make the markets very nervous," Mr Dickson said.

On the corporate side, DIY retailer Kingfisher is due to deliver a trading update for the third quarter on Wednesday.

The company, which owns the B&Q chain, is expected to report like-for-like sales growth of about 2.7%, and is also thought likely to announce solid growth in its French stores.

FTSE reshuffle

Investors keeping track of Kingfisher's results will be keeping one eye on Chancellor Gordon Brown's pre-Budget statement, scheduled to begin at 1230 GMT.

Also on Wednesday, the UK's national carrier BA looks set to fly back into the elite FTSE 100 when the index's quarterly rejig is announced.

BA is likely to replace Mitchells & Butler, owner of the O'Neill's chain of Irish theme pubs.

Other companies tipped for promotion to the FTSE include computer services firm Logica and logistics company Hays, while lenders Provident Financial are at risk of relegation.

Finally, investors keen to cash in on soaring gold prices will get their chance next week.

On Tuesday, the World Gold Council launches a new gold-backed security which will allow investors to buy the yellow metal without having to own and store it.

Gold prices have jumped by more than 6% last month alone due to strong demand for safe haven investments amid dollar weakness and geopolitical uncertainty.