Market Watch: Footsie braced for tentative May after month of giddy rises

But traders began May tentatively, with many world markets closed for May Day. The Footsie eventually finished 0.5 points down on the day at 4,243.2 after trading in a narrow range for much of the session.

On Wall Street, the Dow Jones Industrial Average was coming off its best month in nine years but made marginal gains as mixed economic and corporate news gave further grounds for caution.

Among the banks which report interim management statements this week, Royal Bank of Scotland was 2.2p better off at 44p, as Deutsche Bank brokers were the latest to make positive noises on the sector.

But Barclays' strong recent run came to an end with a 2.5p fall to 279p, as markets mulled the potential for a further clampdown on lucrative investment banking following a critical report by MPs. Lloyds Banking Group, on which Deutsche held its sell rating, shed 2.4p to 109.6p.

A prominent faller was drugs firm AstraZeneca as investors took profits after better than expected results yesterday. Shares fell 60p to 2,325p. Thomas Cook also lost 2% as the fallout from swine flu took its toll. Shares were down 3p at 259.75p following the firm's decision to suspend flights to Mexico.

This week, fashion chain Next's update on recent trading will allow markets their latest look at the fragile conditions on the high street. The retailer is likely to have seen a more positive April with good weather for most of the month and a later Easter boosting takings.

A CBI survey signalled the first rise in sales volumes in over a year, although it admitted that the later holiday season could have skewed its data.

While conditions are undoubtedly tough – and lower interest rates have been offset by economic fears and rising unemployment – Next has seen its stock soar over the past two months, with gains in the order of 60%. This reflects more appetite for risk among investors amid signs that the worst stages of the recession could be over, as well as recognition of Next's strong management team.

The firm protected margins and the Next brand by refusing to be panicked into pre-Christmas price cuts.

It expects to meet market expectations for profits of around 358m in the current year.

Knorr to Dove soap consumer giant Unilever delivers first-quarter figures on Thursday, with markets hoping for an improvement on the gloomy February update.

Guinness to Smirnoff drinks firm Diageo's trading update on Thursday will also come under close scrutiny after a tough three months for the industry.

In February the company downgraded its expected profit growth this year to between 4% and 6%, compared with its earlier prediction of 7% to 9%, as the slowdown grips.

Net sales growth also fell to 3% in the six months to the end of December – down from 6% in the first quarter of the period.

Many travel firms continue to be hit as consumers tighten their belts and the weaker pound means many holidaymakers have been put off weekend breaks to Europe.

Last year easyJet said increased fuel costs had caused annual profits to fall 45% in the 12 months to September 30, despite a 31.5% rise in revenues.

RBS Equity Research said it forecast losses for the airline in the first six months of its financial year, accompanied by record negative margins.

Week ahead

TUESDAY

BAA (Q1)

WEDNESDAY

easyJet, Minorplanet Systems, Sage (interims); British American Tobacco, JD Wetherspoon, Next (trading updates); BAE Systems, National Express (AGMs)

THURSDAY

Vedanta Resources (finals); Unilever (Q1); Barclays, Diageo, Old Mutual, RSA Insurance (trading updates); Bovis Homes, GKN, Johnson Service Group, Reckitt Benckiser, Rok (AGMs)

FRIDAY

Inmarsat (Q1); Royal Bank of Scotland (trading update)