Jan. 4 (Bloomberg) -- European stocks gained for the first time in three days as rising copper prices lifted metal producers and bid speculation boosted chemical makers and phone companies.

BHP Billiton Ltd., the world's largest mining company, and Rio Tinto Group rose. Linde reached the highest in more than 15 years on speculation Dow Chemical Co. may make a takeover offer for the largest maker of industrial gases. Royal KPN NV climbed the most since 2006 on expectations Telefonica SA is interested.

The Dow Jones Stoxx 600 Index added 0.2 percent to 359.50 at 1 p.m. in London, trimming its weekly drop to 1.3 percent. Futures on the Standard & Poor's 500 Index gained 0.2 percent.

``We still remain overweight equities,'' said Henk Potts, who helps oversee $45 billion at Barclays Stockbrokers in London. ``We like mining companies. Demand for metals continues to grow at a stronger pace than supply.''

Europe's Stoxx 600 retreated in the first two trading days of 2008 on speculation record oil prices would curb profit growth. A U.S. employment report today will give investors clues as to how much higher fuel costs and credit-market losses have slowed the world's largest economy.

Asian stocks fell today, led by Japanese automakers and electronics manufacturers, after a decline in U.S. vehicle sales. Japan's Topix sank 4.3 percent on the first day of trading this year, its worst debut to a year since the index was created in 1949.

U.S. Treasury notes dropped for the first time in six days on concern record oil prices will spur inflation. Crude traded above $99 a barrel after reaching a record $100.09 yesterday.

National Markets

National benchmarks gained in 12 of the 18 western European markets. The U.K.'s FTSE 100 increased 0.5 percent, and France's CAC 40 added 0.1 percent. Germany's DAX lost 0.3 percent.

The Stoxx 50 increased 0.5 percent, while the Euro Stoxx 50, a measure for the euro region, was little changed.

BHP Billiton rose 3.1 percent to 1,647 pence. Rio Tinto, the world's third-biggest mining company, advanced 2.9 percent to 5,526 pence.

Copper, nickel and lead increased on the London Metal Exchange. Copper for delivery in three months advanced $81 to $7,051 a metric ton. Nickel climbed $950 to $29,760 a ton, and Lead rose $5 to $2,671 a ton.

Linde gained 4.1 percent to 94.58 euros, the highest since August 1992.

``The rumor Dow Chemical might bid 110 euros per share is boosting the stock,'' said Thomas Nagel, a trader at Equinet AG in Frankfurt.

Spokesmen at Linde and Dow Chemical weren't immediately available for comment.

KPN, Carphone Warehouse

KPN, the largest phone company in the Netherlands, rose 5.1 percent to 12.96 euros, the sharpest increase since Aug. 1, 2006.

``There are rumors in the market about Telefonica being interested in KPN,'' said Rik Zwaneveld, a trader at AFS Brokers BV in Amsterdam. Zwaneveld doesn't hold KPN shares.

A Telefonica spokeswoman who asked not to be named declined to comment on the speculation. Bram Oudshoorn, a spokesman for KPN, said there were no merger talks.

Carphone Warehouse Group Plc, Europe's largest handset retailer, jumped 8.3 percent to 359.5 pence on speculation that it benefited from more iPhone sales and that investors may bid for the company.

``We're seeing investor interest in the stock,'' said Jimmy Yates, a London-based trader at CMC Markets. ``This is likely because of the expectation of a good Christmas period due to iPhone sales. Rumors about bid interest from Vodafone and Best Buy have been doing the rounds for some time.''

Carphone spokesman Shane Conway and Vodafone spokesman Simon Gordon declined to comment. A spokeswoman for Best Buy Co. was not immediately available to comment.

Yara, Syngenta

Yara International ASA jumped 8.2 percent to 270.5 Norwegian kroner, the biggest gain since July 2006. Merrill Lynch & Co. upgraded the stock to ``buy'' from ``neutral,'' citing expectations of a ``confident outlook'' from the company next month and a ``major'' share buyback.

Syngenta AG added 0.7 percent to 304.25 francs. Merrill raised its price estimate for shares of the world's biggest maker of agricultural chemicals to 330 francs from 310.

Renault SA, France's second-largest automaker, slid 6.4 percent to 87.59 euros. Nissan Motor Co., in which Renault has a 44 percent stake, lost the most in more than six years on the Tokyo Stock Exchange, leading Japanese automakers lower after Toyota Motor Corp. cut its forecast for U.S. sales.

Toyota and Nissan's U.S. sales fell in December as a drop in manufacturing showed economic growth is slowing. The companies get as much as 65 percent of their operating profit in North America.

EFG Downgraded

EFG sank 8.2 percent to 40.75 Swiss francs after UBS analysts, including Daniele Brupbacher, cut their recommendation to ``sell' from ``neutral'' and lowered 2008 and 2009 earnings per share estimates by 10 percent and 15 percent, respectively.

Societe Generale SA added 1.2 percent to 98.88 euros after UBS raised its recommendation on France's second-biggest bank by market value to ``buy'' from ``neutral,'' citing the company's ``sustainable earnings stream.''

To contact the reporter for this story: Sarah Thompson in London at sthompson17@bloomberg.net

Last Updated: January 4, 2008 08:12 EST