NEW YORK (Reuters) – Europe will again be at the center of investors’ focus this week as the U.S. earnings season passes the halfway mark and there is little on the economic calendar to give the market direction.

Economic data expected this week includes weekly initial jobless claims, the Thomson Reuters/University of Michigan’s consumer sentiment index and international trade figures.

Improving data helped push the S&P 500 (.SPX)(.INX) index up nearly 7 percent for the year, highlighted by Friday’s stronger-than-expected jobs report.

“It’s the old ping-pong game. Today it is the U.S., tomorrow it is Europe again,” said Joe Saluzzi, co-manager of trading at Themis Trading in Chatham, New Jersey.

“Normally in this type of tape when there is no economic news, it seems like the bias goes to the upside.” But whether European bond yields spike or other news from Europe emerges will be the wild card for the markets, Saluzzi said.

Greece remains at the forefront of the euro zone crisis as the government struggles for agreement on fiscal reforms that would be accepted by political leaders and private bondholders as it tries to avoid a disorderly default.

Talks on a bond swap and 130 billion euros in bailout funds have been continuing for weeks before a March deadline when 14.5 billion euros of bonds come due. Hopes that a deal was on the horizon dissipated on Friday as euro zone finance ministers delayed a meeting scheduled for Monday.

“There is always the chance in brinkmanship — which is what is being played here — that you have a dangerous outcome if the pieces don’t come together,” said Paul Mendelsohn, chief investment strategist at Windham Financial Services in Charlotte, Vermont.

“They have until March 19. They are going to keep pushing this thing until everybody gets the best deal they can out of it or they decide not to move forward and let Greece go. It’s always a possibility at the end of the game.”

The flood of earnings reports will slow this week. Some 66 S&P 500 companies are expected to report, including Walt Disney Co (DIS.N), Coca-Cola Co (KO.N) and Cisco Systems Inc (CSCO.O). NYSE Euronext (NYX.N) is also due to report results after the exchange terminated merger plans with Deutsche Boerse (DB1Gn.DE) on Thursday.

Through Friday, 283 companies in the S&P 500 have reported results, with 60 percent posting earnings that have topped Wall Street expectations, a lower percentage than seen in recent quarters through this stage of the reporting season.

The payrolls report on Friday helped lift the S&P 500 1.5 percent to 1,344.90, past a recent resistance point of 1,325, which the benchmark index had failed to pass on several occasions recently. Analysts said the resistance level could now serve as support, with 1,350 representing a new resistance point for equities.

But even with the gains sparked by the payrolls report, a lack of volume remains a troubling sign, one which could be alleviated by a resolution of the Greek question.

“The (payrolls) news is great but you are not getting a ton of volume, so you still get some skepticism,” said Ken Polcari, managing director at ICAP Equities in New York.

“It is going to be slow to get these people back. Ultimately I still think the large asset managers are waiting for a Greece decision because no matter what, the market will pull back and that is when they will jump in.”

(Reporting By Chuck Mikolajczak; Editing by Kenneth Barry and Maureen Bavdek)

For those who have read the news and don’t know whether to laugh or cry, it could be that a little bit of both is in order. A new budget report that has just been released indicates that the U.S. federal budget deficit – which does not include a massive number of promised payments for things like Social Security, Medicare, Medicaid, etc. – will fall to “just” $ 1.1 trillion in the fiscal year that ends in September. For those counting at home, that deficit, though smaller than last year’s monstrosity, is in itself a disgrace.

The news is another among perhaps hundreds of thousands of other tidbits that indicate that the state of the United States is one of peril. It seems doubtful that anything meaningful will be done about this, of course, though there is at least lip service about what should be done. Noted House Budget Committee Chairman Paul Ryan, a Republican, “Four straight years of trillion-dollar deficits, no credible plan to lift the crushing burden of debt. The president and his party’s leaders have fallen short in their duty to tackle our generation’s most pressing fiscal and economic challenges.”

Indeed, Ryan’s Republicans have often failed just as much, having spent the past three decades – along with Democrats – destroying the nation’s financial situation with ill-conceived and wasteful spending programs. On the other side of the aisle, Senate Budget Committee Chairman Kent Conrad has noted, “We will not solve this problem unless both sides, Democrats and Republicans, are willing to move off their fixed positions and find common ground. Republicans must be willing to put revenue on the table.”

Of course, “revenue” in this context is taxpayer money, something that has been spent all too easily and poorly over the past several years. When considering that the level of taxation in the U.S. is already too high – and that spending is likewise too high – the actual solution to the problem sounds quite simple. Of course, with over 50% of the country receiving some sort of payment from the federal government each month, it’s no wonder that trouble is ahead.