Aug. 26 (Bloomberg) -- European stocks rose as U.S. reports that showed consumer confidence climbed more than forecast and home sales rebounded overshadowed concern that the U.K. and German economies are slowing.

UBS AG, the European bank hardest hit by the subprime contagion, gained 1.5 percent, and Nokia Oyj, the world's biggest mobile-phone maker, climbed 2.9 percent. Alcatel-Lucent SA, the world's largest supplier of fixed-line phone networks, advanced 4.7 percent as the euro's drop to a six-month low against the dollar boosted the value of European companies' overseas sales.

The Dow Jones Stoxx 600 Index rose 0.2 percent to 282.74, as 12 of 18 industry groups increased. The measure fell as much as 1.4 percent earlier as concern deepened the U.K. and Germany may be slipping into recession.

``The better-than-expected data from the U.S. helps to compensate the bad news we saw today in Germany and the U.K.,'' said Peter Braendle, a Zurich-based fund manager at Swisscanto Asset Management AG, which has $58 billion under management.

The Conference Board's confidence index rose to 56.9 from 51.9 in July in the U.S. Separate reports showed new-home sales increased in July from a 17-year low, while home prices dropped at a slower pace in the second quarter.

National benchmark indexes rose in 12 of the 18 western European markets today. France's CAC 40 gained 0.3 percent, while Germany's DAX added 0.7 percent. The U.K. market, which was closed yesterday for a holiday, slipped 0.6 percent.

UBS, Nokia

UBS, the biggest Swiss bank, gained 1.5 percent to 23.14 francs. Nokia rallied 2.9 percent to 17.82 euros.

The Stoxx 600 has dropped 22 percent this year as losses related to the collapse of the U.S. subprime mortgage market surpassed $500 billion and inflation accelerated, threatening economic and profit growth.

Earlier today, the Munich-based Ifo institute said its business climate index declined to 94.8 in August from 97.5 the previous month. Economists had predicted a drop to 97.2.

German consumer confidence sank to the lowest in more than five years as soaring energy prices sapped purchasing power and the economic outlook deteriorated, another report showed today.

The U.K. economy, Europe's largest after Germany, is likely to enter a ``mild recession'' this quarter, Societe Generale SA wrote in a note to clients. The French brokerage cut its 2009 growth forecast to 0.5 percent from 1.2 percent.

Technology Stocks

Technology companies posted the biggest rally among 18 industries in the Stoxx 600 as the euro fell against the dollar and dropped for a second day versus the Japanese yen.

Alcatel-Lucent added 4.7 percent to 4.10 euros. The Paris- based company depends on the U.S. and Asia for almost half of its revenue, according to Bloomberg data.

Separately, Le Canard Enchaine reported the company's nomination committee wants to name former chief science officer Mike Quigley as chief executive officer. Stephane Lapeyrade, a spokesman for the Paris-based company, declined to comment on the report or the names of nominees for the CEO job.

BHP Billiton Ltd., the biggest mining company, sank 1.3 percent to 1,676 pence, following metal prices lower in London. Anglo American Plc, the fourth-largest diversified mining company, retreated 2.6 percent to 2,799 pence.

Gold Drops

Gold declined after the euro fell against the dollar, diminishing demand for the metal as an alternative investment. Copper, zinc and nickel also retreated.

Analysts have slashed earnings estimates this year as the economy cools. Profit for companies in Europe's Stoxx 600 will fall 2 percent in 2008, according to projections compiled by Bloomberg. That's down from the 11 percent average growth forecast at the start of the year.

Commerzbank AG, Germany's second-biggest bank, fell 1 percent to 19.95 euros. Royal Bank of Scotland Group Plc lost 1.4 percent to 217.75 pence.

BankUnited Financial Corp., Florida's largest bank, may lose its ``well-capitalized'' status under federal rules for financial strength unless it attracts at least $400 million of new capital, the company said late yesterday. Columbian Bank & Trust Co. was closed by U.S. regulators, becoming the ninth U.S. bank to collapse this year, the Federal Deposit Insurance Corp. said on Aug. 22.

Taylor Wimpey Plc, the U.K.'s biggest homebuilder, climbed 14 percent to 52 pence. Building magazine reported lenders have agreed to relax loan conditions without requiring the company to raise new capital first. Gordon Simpson, external spokesman for Taylor Wimpey, said the company wouldn't comment on market speculation.

Axon Group Plc, a U.K. business adviser for companies that run SAP AG software, climbed 21 percent to 606 pence. Infosys Technologies Ltd., India's second-largest computer-services provider, offered to buy Axon for 600 pence a share.

To contact the reporter on this story: Adam Haigh in London at ahaigh1@bloomberg.net

Last Updated: August 26, 2008 13:03 EDT