A growing concern about the Chinese economy will be paired with longtime worries about Europe's debt crisis this week, as traders consider whether troubles in the two regions could spread further.

North American traders will likely keep those factors in mind in what's expected to be another cautious week characterized by low volume trading, mostly because many money managers are on vacation.

But signs have started to emerge that, despite all the pessimism, markets are determined to move higher. The hope is that with weak economic data from both Europe and China, as well as uncertainty over the pace of a recovery in the U.S., it is possible that central banks could soon make moves to help bolster the global economy.

A bullish sentiment reared its head late last week as North American markets pushed upwards, and ended higher. Toronto's S&P/TSX composite index made a gain of about two per cent on the week, while on Wall Street the S&P 500 rose to a four-month high.

"We seem to be rallying, albeit slowly, on the backs of possible central banks easing or stimulus," said Allan Small, senior adviser at DWM Securities.

However, with many regions of the world taking much of this month off, it's widely expected that central banks will not make any major decisions for several weeks.

"Many of the political leaders have gone on vacation, so you're not seeing any news in Europe," said Norman Raschkowan, North American strategist for Mackenzie Financial Corp.

"You're not likely to hear any important news this month, so there's kind of a vacuum."

But with a rash of negative data from overseas last week, it'll hard for traders to ignore the growing sentiment that a slowdown in Asia could have broader ramifications.

On Friday, China reported that its export growth slumped to one per cent in July from more than 11 per cent the previous month, largely because of sluggish demand from Europe. It's just the latest sign that China's surge can't last forever: Thursday, the country said that growth had also slowed in auto sales and factory output.

China is the world's second-largest economy and a major player on the world markets stage. Throughout the recession and its aftermath, as other countries struggled, China kept growing and propped up everyone else.

Still, its struggles are a world apart from Europe's. By most counts, China is still growing, just more slowly. In Europe, the economies of several countries are shrinking, including Italy, Britain and Greece.

Meanwhile in the United States, retail sales for July are expected to increase by 0.3 per cent when they're released on Tuesday, according to CIBC World Markets.

"Following a torrid few months, U.S. retail fortunes likely improved modestly in July," wrote CIBC senior economist Andrew Grantham in a note.

"Chain store sales, on average, beat forecasts and a bounce in the annual growth rate suggests that was not entirely due to downbeat expectations."

In Canada, manufacturing shipments for June are expected to rise 0.3 per cent, according to consensus estimates. The report, due Thursday, is expected to show strength in automobiles, in particular.

And quarterly earnings are slated for key mining companies, including Iamgold Corp. (TSX:IMG), as well as construction firm Aecon Group (TSX:ARE) and a various REITS.