Housebuilding stocks will be in the City spotlight this week, while a raft of major retailers will also be unveiling their Christmas trading performances.

Good news is likely to be in short supply among several housebuilders giving trading updates. Until December's cut, the sector had been faced with five interest rate hikes slowing the market, banks tightening up mortgage lending since last summer's financial turmoil and the Northern Rock crisis hitting confidence.

Share prices have tumbled.

While further rate cuts are expected this year, UBS analyst Charlie Campbell said: "The credit crunch has restricted mortgage supply and we don't see this reversing until the middle of 2008.

"We think it prudent to take the view that mortgage availability does not recover in time for the key spring selling season."

FTSE 100 Index stock Persimmon is first to report on Wednesday.

Although downgraded by UBS, brokers at Panmure Gordon have said its current weak share price offers a good buying opportunity.

Potential takeover targets in the FTSE 250 - Redrow, Bovis Homes and Bellway - will also issue updates.

Redrow, due on Thursday, warned of a ten per cent fall in completions in the first half of the year two months ago as buyers sat on their hands.

In the same week fellow builder Bovis Homes - reporting on Friday - said it had seen lower completions and a three per cent fall in the average selling price achieved in the previous year. Bellway, which holds its annual meeting on Friday, also experienced a seven per cent fall in reservations in the four months to November.

The company's December update gave a gloomy summary of the dual problems facing the industry: "Whilst the supply side of house building remains constrained by planning, product and construction starts, the demand side is being affected by lack of consumer confidence and the economy generally."

The City is split over what to expect from high street giant Marks & Spencer when it updates on trading next Wednesday after the most difficult Christmas in years for retailers.

Sainsbury's is the first of the super-markets to report third quarter figures, with results covering the key festive period due out on Wednesday.

The update from the UK's third-largest grocer comes after a torrid past few days on the stock market for retailers, but trading results from upmarket grocer Waitrose suggested the food sector may have held up well.

Waitrose, part of the John Lewis Partnership, reported double-digit sales growth in the key Christmas week, up 28.5 per cent at £79.2 million.

Analysts are expecting Sainsbury's to report a healthy 3.6 per cent increase in like-for-like sales, excluding petrol.

This compares with a marginally higher 4.2 per cent hike in third quarter trading last year but will still be a strong result, according to Seymour Pierce analyst Andrew Wade.

He said supermarkets should report a "pretty solid Christmas all in all" after a slow start to trading.

Sainsbury's could report like-for-like sales as high as four per cent, Mr Wade added.