The City will be anxiously peering across the Atlantic this week in anticipation of an interest rates decision by the United States Federal Reserve.

The decision is set to dictate much of the activity on stockmarkets around the world although investors in London will also be interested in a trading update from drinks giant Diageo and the turnaround at Mr Kipling owner RHM.

RHM has battled to reverse the decline in demand for its cakes after sales plummeted in the UK due to the trend towards healthier eating.

The food producer launched a range of additive-free lowfat cakes in January and this combined with a strong performance in its Hovis bread brand resulted in a much better performance in the second half of the financial year.

The City will be examining the company's full-year results on Thursday to see if the strategy has paid off.

Diageo, the world's largest drinks maker, will update the market on Thursday when the City will be thirsty for positive sales news.

In February, the group, which makes Guinness,Smirnoff vodka and Jose Cuervo tequila, reported better-than-expected profits after strong sales of spirits worldwide.

The firm said operating profits rose seven per cent in the six months to New Year's Eve to £1.2 billion and it

expects to deliver seven per cent operating profits growth in the year to the end of June.

David Liston, analyst at Barclays, said: ""For the most part, international markets have been strong and we expect double digit growth to have been sustained throughout the year in its international division."

Eyes will be on transport g roup Stagecoach on Wednesday when the firm reports full-year results.

Stagecoach has just announced it is selling its London bus operations to Australia's Macquarie Bank for £263.6 million to enable it to concentrate on the bus market outside London where it is pursuing a successful growth strategy.

In the last year it has acquired bus operations in Merseyside, Yorkshire, Lincolnshire and Tayside and investors will be interested to see how these businesses are faring.

Carpet retailer Carpetright when it posts is final results on Tuesday and the figures could give a further insight into the state of the housing market. The group has 437 stores and concessions across the UK and Europe.

It reversed declining sales in the second half of last year as the housing market picked up and signs of further progress will be welcomed.

Paper mills and office products firm DS Smith has been hit by soaring energy costs which are expected to take their toll when it posts its annual profits on Thursday.

Analysts in the City expect pre-tax profits for the year to April 30 to fall to £53 million from £73.9 million 12 months earlier. The company has already estimated that it paid £23 million more for gas and electricity last year than the year before and its forecast for the current year will be a key component of Thursday's announcement.

Half-year figures from Dobbies Garden Centres on Tuesday come as takeover speculation grips the sector following the acquisition of Wyevale Garden Centres by Sir Tom Hunter. ..SUPL: