March 27 (Bloomberg) -- European stocks rose for a second day this week, led by financial firms and mining companies, on prospects for improved earnings.

Swiss Life Holding, the country's biggest life insurer, climbed to a one-month high after posting record profit, and Man Group Plc advanced as the hedge fund manager said earnings will top predictions. HBOS Plc of the U.K. led gains by banks. Retailer Hennes & Mauritz AB rallied the most in more than five years after first-quarter profit exceeded analysts' estimates.

The Dow Jones Stoxx 600 Index, down 15 percent this year, added 1.3 percent to 308.46. The measure is valued at 11.7 times estimated earnings, near the lowest since at least January 2002, weekly Bloomberg data show, and profits will probably only rise 2.8 percent this year.

``Valuations are beginning to discount the worst of the downturn,'' said Richard Moore, who manages the Santander U.K. Growth Fund in London and owns Man Group shares. Santander Asset Management oversees $234 billion worldwide. ``One recent change I have made is to buy back into the banking sector.''

SAP AG led technology shares lower after Oracle Corp., the world's third-largest software maker, said customers delayed orders for business applications on concern that the U.S. economy is slowing.

National benchmark indexes climbed in all 18 western European markets. The U.K.'s FTSE 100 added 1 percent and Germany's DAX rallied 1.4 percent. France's CAC 40 increased 0.9 percent. The Stoxx 50 increased 1.3 percent, and the Euro Stoxx 50, a measure for the euro region, rose 1.1 percent.

Swiss Life

Swiss Life climbed 7.2 percent to 268.25 Swiss francs. The life insurer said 2007 profit gained 44 percent to a record 1.35 billion francs ($1.36 billion) on the sale of its Belgian and Dutch units and the Banca del Gottardo private bank. That beat analysts' estimates.

Man Group rose 2.7 percent to 560 pence after the world's biggest publicly traded hedge fund manager said annual earnings will top analysts' estimates, helped by rising performance fees.

Financial stocks have underperformed the market in the past year as credit losses and mortgage writedowns worldwide reached more than $208 billion since the beginning of 2007. The Stoxx 600 Banks Index has lost 32 percent in the last 12 months, almost double the decline for the broader measure.

HBOS, Britain's biggest mortgage lender, added 3 percent to 557.5 pence. Natixis SA, the French investment bank formed in a 2006 merger, gained 3.3 percent to 10.2 euros. ING Wholesale Banking upgraded the stock to ``buy'' from ``hold.''

Hennes & Mauritz

Hennes & Mauritz jumped 7.8 percent to 364.5 Swedish kronor, the biggest gain since 2002. The retailer said first-quarter profit rose 28 percent to 2.94 billion kronor ($493 million), beating the 2.8 billion-krona average estimate of seven analysts.

Compass Group, the biggest provider of food services to companies, hospitals and schools, jumped 3.5 percent to 321.5 pence. Five-month sales and profit beat its forecasts after the company negotiated better terms with suppliers and won contracts.

Opap SA surged 14 percent to 22.84 euros. Europe's third- biggest publicly traded gaming company reported fourth-quarter profit that surpassed analysts' estimates. Net income climbed 13 percent to 174 million euros ($273.6 million).

Q-Cells AG rallied 15 percent to 59.24 euros. Germany's largest solar-energy company said it expects to report 2008 revenue of 1.275 billion euros, compared with an earlier forecast of 1.2 billion euros.

Public Power

Public Power Corp. increased 8.4 percent to 27 euros. Greece's biggest electricity producer said profit surged 10-fold last year after it sold a stake in a telephone company.

Rentokil Initial Plc jumped 9.7 percent to 96 pence after Merrill Lynch & Co. added shares of the world's largest pest- control company to its ``Europe 1'' list.

Hypo Real Estate Holding AG soared 14 percent to 16.96 euros. Germany's second-biggest commercial-property lender said it doesn't need to sell new shares and that it expects to reach a 2010 profit forecast.

SAP, the world's largest business-management software maker, sank 4.2 percent to 31.28 euros. Dassault Systemes SA, whose software was used to design the Airbus A380 aircraft, lost 1.9 percent to 36.09 euros.

The increased threat of recession has prompted customers to be more careful in their technology spending, Oracle said late yesterday.

To contact the reporter on this story: Adria Cimino in Paris at acimino1@bloomberg.net.

Last Updated: March 27, 2008 13:21 EDT