Oct. 12 (Bloomberg) -- European stocks and U.S. index futures rose and government bonds fell as Royal Philips Electronics NV’s unexpected profit bolstered speculation that the economic recovery is gaining momentum. The dollar climbed. The Dow Jones Stoxx 600 Index of European shares advanced 1.1 percent at 10:09 a.m. in London, building on its biggest weekly rally since July. Futures on the Standard & Poor’s 500 Index added 0.6 percent, indicating the benchmark gauge of U.S. equities may increase for a sixth day. German government bonds declined, with the yield on the benchmark bund rising 1 basis point to 3.2 percent. The dollar advanced against the yen. Philips, Europe’s largest consumer-electronics maker, posted a third-quarter profit as operating earnings at the consumer unit more than 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. Federal Reserve Bank of St. Louis President James Bullard said in a speech yesterday that U.S. jobs growth will return this year or next. “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 6.1 percent in Amsterdam, while energy companies rose with oil. Total SA, Europe’s biggest refiner, rose 1.2 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 economic contractions in Germany and France ended. The rise in U.S. futures indicated the S&P 500 may extend its longest stretch of gains in a month. Intel Corp., Goldman Sachs Group Inc., and 29 companies in the S&P 500 are scheduled to report results this week. Russia’s Micex Index posted the steepest gain among benchmark equity indexes worldwide, climbing 2.7 percent to the highest level in 13 months. OAO Lukoil, the country’s second- biggest oil company, led the advance. Crude oil for November delivery advanced 1 percent to $72.46 a barrel in New York trading, gaining for a third day. German bunds, Europe’s benchmark debt securities, rose for a second day. 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.

Source