European investors will focus on the Federal Reserve's interest rate decision next week and clues about the U.S. economy, while a smattering of company results will also roll on in Europe and the United States.

Truck makers will be in the spotlight, with MAN AG's supervisory board set to meet this weekend to review plans to buy Swedish rival Scania AB and create the market leading truck maker in Europe.

Financial markets will also keep an eye on the IMF meetings in Singapore, with leaders from the Group of Seven industrialised economies meeting on Sept. 16.

Topping the week's events, the Fed is widely expected to keep borrowing costs on hold at 5.25 percent at its meeting on Wednesday, after it left rates unchanged in August and broke a string of 17 consecutive rate increases.

Franz Wenzel, senior investment strategist at AXA Investment Managers in Paris, said inflation was unlikely to be a big worry for stock markets.

Gasoline and oil prices are decelerating and that should help to reassure the markets that the Fed is on hold rather than (being in) a tightening mode, Wenzel said.

We think that M&A activity will be continue to keep the markets in a grip and investors will focus on that and this will be a driver for markets.

Europe's FTSEurofirst index <.FTEU3> of 300 leading shares has recovered from a near one month low struck this week, as strong company earnings and bid speculation outweighed losses in heavyweight mining and oil and gas sectors.

By 1315 GMT on Friday, the index was at 1,374, up 12 percent from the year's low of 1,230.1 hit in June and more than 7 percent higher so far this year.

Stocks were supported on Friday by U.S. CPI data coming in line with estimates. The pan-European index appeared set to end with week with gains of more than 1 percent.

EQUITIES IN FAVOUR

Fund managers and strategists said markets were supported by strong corporate earnings growth and a fall in U.S. crude oil prices to below $63 a barrel the lowest since March.

A Merrill Lynch global poll of fund managers showed investors moved back into equities in September and cut cash allocations, with falling oil prices boosting sentiment.

Asset allocators continue to prefer eurozone equities, primarily at the expense of U.S. stocks, Merrill said.

Jeff Currington, European equities portfolio manager at Credit Suisse, said uncertainty over the U.S. economic growth slowdown had put a cap on markets, which are trading just below the near five year highs struck in May.

Our feeling is that some of the very defensive sectors look fairly fully valued, things like the food and drink companies, said Currington.

On the earnings front, first half results are due on Monday from online gaming company BETonSPORTS Plc, which has closed its U.S. business, the driver of most of the company's profits, after legal issues.

On Tuesday, miner Kazakhmys Plc and Danish sugar and food ingredients group Danisco A/S report results.

German investor sentiment as measured by the ZEW indicator is also due on the same day.

Stocks will also look for any implications from Oracle Corp and Morgan Stanley's results, due this week.

On Wednesday, minutes of the Bank of England's latest rate setting meeting are due to be released.

Other European results due this week include those from wines and spirits group Pernod Richard, Italian oil and gas firm ENI and UK grocer Wm Morrison Supermarkets Plc.

Inflation Merrill Lynch