Earnings reports from Corporate America will help shed some light this week on whether the economic recovery remains on track — possibly shifting some investor focus away from the problems of debt-stricken Europe.

It is a light week for economic data, save for the release of the U.S. Federal Reserve’s so-called Beige Book — a study of regional economic conditions.

Traders will likely be inclined to move their focus slightly away from Europe as they await details from leaders later in the month on what concrete steps they intend to take to ensure the region’s banks can withstand a worsening of the government debt crisis, including Greek default that many view as inevitable.

Growing confidence that European leaders are finally getting a grip on the debt issue after months of vague assurances pushed markets up sharply last week, with the TSX ending the week up 4.25% while New York’s Dow industrials gained 4.87%. However, the TSX is still almost 16% below its recent highs in early March.

“The markets are giving them the benefit of the doubt. Maybe it’s one last chance,” said John Johnston, chief strategist at Davis Rea Ltd.

However “earnings will be front and centre” this week, he said.

Markets were also lifted last week by better than expected retail sales data from the U.S. and manufacturing sales in Canada.

Prominent American companies reporting this week include financial giants Citigroup and Wells Fargo along with tech bellwether IBM on Monday.

Chip maker Intel Corp. and Bank of America report Tuesday, American Express Wednesday while conglomerate General Electric, viewed as a barometer for the overall economy because of its exposure across so many businesses, hands in quarterly results on Friday.

The earnings season got under way last week as resource giant Alcoa Inc. disappointed investors.

But Google Inc. blew past expectations while financial heavyweight JPMorgan Chase also came up short of expectations.

“What you’re generally seeing is, technology numbers are quite strong whereas the U.S. financials relatively soft,” said Robert Gorman, chief portfolio strategist at TD Waterhouse.

“Capital spending has been limited but where they are spending, it seems as if they are looking to enhance productivity and where do you do that? The number one area is technology. So while the spending is limited, a lot of it does seem to be going to the tech sector.”

In the main, though, Gorman expects “pretty solid numbers.”

The Canadian earnings season typically lags the American companies by two to three weeks, but investors will take in reports this week from gas company EnCana Corp. (TSX:ECA), Shaw Communications. (TSX:SJR.B) and Precision Drilling (TSX:PD), all based in Calgary, as well as Toronto-based Celestica Inc. (TSX:CLS).

Beyond taking in the Fed’s Beige Book report on economic conditions on Wednesday, traders will also take in the latest inflation data for Canada and the U.S.

Statistics Canada is expected to report Friday that its consumer price index rose by 0.1% in September from August, down from a 0.3% rise in the previous month because of lower gasoline prices. Such a reading would translate into an annualized rate of three per cent.

That inflation reading is higher than the Bank of Canada would like, but CIBC World Markets economist Emanuella Enenajor noted that the bank “sees slow economic growth as a factor restraining inflation in the future.”

In the U.S., the CPI was expected to rise 0.3% during September after gaining 0.4% in August.