Oct. 12 (Bloomberg) -- European stocks and U.S. index futures rose as Royal Philips Electronics NV’s unexpected profit bolstered speculation that the economic recovery is gaining momentum. The yen weakened, while oil advanced. The Dow Jones Stoxx 600 Index of European shares added 1.2 percent at 12:16 p.m. in London, building on its biggest weekly rally since July. Futures on the Standard & Poor’s 500 Index rose 0.7 percent, indicating the benchmark gauge of U.S. equities may increase for a sixth day. The yen declined against 15 of the 16 most-traded currencies tracked by Bloomberg, while oil climbed for a third day in New York. Philips, Europe’s largest consumer-electronics maker, posted a third-quarter profit as operating earnings at the consumer unit doubled. The results came after Alcoa Inc., the largest American aluminum producer, started earnings season in the U.S. last week with income that beat analysts’ estimates. “Equities are holding up near the highs following an encouraging start to the U.S. third-quarter earnings season,” Kenneth Broux, an economist at Lloyds Banking Group Plc in London, wrote today in a note to clients. It’s “hard to argue against a bearish short-term backdrop for bond yields as we look ahead to this week’s calendar.” Philips helped lead the gains in Europe’s Stoxx 600, adding 6.7 percent in Amsterdam, while energy companies rose with oil. Total SA, Europe’s biggest refiner, rose 1.8 percent in Paris. Philips, Bayer Philips posted third-quarter net income of 174 million euros ($256 million). Analysts had predicted a loss of 44.7 million euros, according to 13 estimates compiled by Bloomberg. Earnings for companies in the Stoxx 600 may rise 3.7 percent this year and 31 percent in 2010, according to analysts’ estimates compiled by Bloomberg. The index has rebounded 55 percent since March 9 as companies from Bayer AG to Philips reported earnings that beat analysts’ estimates and the recessions in Germany and France ended. Allied Irish Banks Plc rose 3.1 percent and Bank of Ireland Plc added 1.3 percent in Dublin. Ireland’s Green Party voted to stay in the nation’s governing coalition, averting a general election as a so-called bad bank prepares to buy property loans. The Greens supported a government plan to pay 54 billion euros for banks’ property loans. The rise in U.S. futures indicated the S&P 500 may extend its longest stretch of gains in a month. General Electric Co., Intel Corp., Goldman Sachs Group Inc. and 28 companies in the S&P 500 are scheduled to report results this week. GE Earnings GE, the biggest maker of appliances for new U.S. homes, added 1.4 percent in pre-market New York trading after the earnings results from Philips. GE will post earnings Oct. 16. Russia’s Micex Index climbed 2.4 percent. OAO Lukoil, the country’s second-biggest oil company, added 2 percent. Crude oil for November delivery advanced 1.6 percent to $72.95 a barrel in New York. The cost to protect against a default by Latvia rose to the highest level in a month. Credit-default swaps linked to the Baltic country increased 7 basis points to 594 basis points, according to CMA Datavision in London. Latvia will try to reach a last-minute agreement on budget cuts today to satisfy the terms of bailout loans from international donors. Prime Minister Valdis Dombrovskis has signaled his government will agree on an additional 175 million lati ($362 million) in cuts. The yen dropped the most against higher-yielding currencies, sliding 1.2 percent versus the Canadian dollar and 1.1 percent compared with the Mexican peso. It declined 0.6 percent against the U.S. dollar. German bunds, Europe’s benchmark debt securities, were little changed. Governments in the 16-nation region may sell a record 33 billion euros of bonds this week, according to Commerzbank AG, Germany’s second-biggest lender. The U.S. Treasury market was closed for the Columbus Day holiday. To contact the reporters on this story: Daniel Hauck in London at dhauck1@bloomberg.net.

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