Brian Tora of J M Finn

ALTHOUGH Europe remained very much at the forefront of investor thinking as this week began, it was the decision of RBS boss Stephen Hester to forego his bonus that grabbed the headlines.

Bank shares had a rough ride yesterday, though it was more the threat of a financial transaction tax being introduced in Europe than the prospect of bankers earning less that drove sentiment.

As it happens, we will be learning how the banks themselves have been faring soon. This week we have a sprinkling of European banks reporting, starting today with Santander – now quite a powerful presence on our own high streets. Our own familiar names will be declaring their bosses pay packets, amongst other nuggets, once we get into February; Mr Hester’s rewards might look rather slim in comparison.

Shares in general have slid recently, giving back some of the progress they made during much of January. Europe, again, is not helping. The sands of time are running out for Greece and Portugal is looking tricky right now.

While the signs are that some accommodation with private investors in Greek debt might be reached, it is clear the German proposal to hand over budgetary management to Europe is considered a step too far.

A new month is almost upon us, so we can expect a plethora of data and indicators. This week alone we have a clutch of house price indicators and more than a few purchasing managers’ indices. These are regarded as amongst the best medium to long term steers on how business is doing overall. They signalled the recent downturn. It will be interesting to see if they have more encouraging news for investors.

But it will be to the growing number of annual profit statements that investors should pay most attention. While results will inevitably be mixed, there are strong indications that much of the corporate world has been involved in a tidying operation that leaves them stronger in balance sheet terms and better able to withstand the cold winds of economic uncertainty. That may be just sufficient to reverse recent share price falls.