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Ready to Take Cues From the U.S.

In a holiday-filled week, many European investors will wait to see what investors in New York do.
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Europe's stock markets sometimes need a helping hand.

Although the

European Union

and the common market are tying companies and investors on the Continent ever closer together and 11 nations have sacrificed their marks, francs and punts to create the euro under the guidance of the

European Central Bank

, Europe remains a pretty fractious place.

Each country retains its own particular quirks and idiosyncrasies, which can sometimes make it difficult for the region's equity markets to find a common direction. When local issues fade into the background and no single driving issue materializes, however, European investors often step back and wait for

America to set the pace.

This looks to be the case for the coming week, as holidays in Europe and Japan will take many market participants out of the action. For the first three days of the week, Europe won't even have the Japanese markets to wake up to, as that country closes up shop for the Golden Week holidays through Wednesday. In Europe, markets in both the U.K. and Ireland will be closed on Monday for an extended May Day weekend.

And so, European bourses from Amsterdam to Zurich are likely to follow of the lead of the

Dow Jones Industrial Average

, waiting as the benchmark index searches for its own direction.

"A lot is going to depend on whether the Dow can get and hold above 11,000," says Kurt Michel, a fund manager

for Alte Leipziger Trust Investment

in Oberursel, Germany. "Naturally we'll also have to see what develops in Kosovo."

But the U.S. isn't the only stock market playing the psychological numbers game. London's


just recently cracked 6,500, and Frankfurt's


is clamoring toward 5,500. But a steady climb is by no means certain next week, as the lack of an overarching issue and the holiday-induced thin volumes are likely to increase volatility.

Political and monetary events for the week should provide little excitement or surprises for the markets. On Monday, the European Parliament votes to install former Italian Prime Minister

Romano Prodi

as the new president of the European Commission. And on Thursday, the European Central Bank's Governing Council will meet in Frankfurt to discuss monetary policy in the euro area, but is almost certain to hold interest rates steady.

On Wednesday,

President Clinton

will have a quick meeting with German Chancellor

Gerhard Schroeder

, before meeting with troops headed to Kosovo. The conflict in the Balkans could prove unsettling should it heat up, but as the week ended, it looked as if the situation would not change much, as NATO allies rejected a Yugoslav peace plan. Even the announcement today that Yugoslavian President

Slobodan Milosevic

would release three captive U.S. soldiers was tempered by the U.S. imposing a trade embargo on the Yugoslav Republic of Serbia.

Barring an unexpected breakthrough in Balkans, many European investors next week will kick back each morning and wait for their colleagues in New York to make the call.