May 12 (Bloomberg) -- European stocks gained, led by financial-services companies after BNP Paribas SA, ING Groep NV and Royal & Sun Alliance Insurance Group Plc reported first- quarter profit that surpassed expectations.

Ericsson AB, the world's largest maker of mobile-phone networks, paced a gain among technology companies as Credit Suisse First Boston predicted a pickup in spending on communications equipment. Nokia Oyj also rose.

``We are generally positive about the outlook for equities for all year,'' said Michael Sieghart, a fund manager at DWS Investment in Frankfurt, which manages $4.5 billion. ``We don't expect a worsening of the current earnings momentum.''

The Dow Jones Stoxx 600 Index added 0.7 percent to 260.29 at 1:58 p.m. in London. The Stoxx 50 and the Euro Stoxx 50, a gauge for the 12 countries using the euro, both rose 0.8 percent. All three measures rose for the first day in four.

Stocks extended gains after a government report showed U.S. retail sales rose more than forecast in April, suggesting stronger consumer spending provided a lift for the world's largest economy at the start of the second quarter.

The Stoxx 600 index has increased 3.7 percent so far this year, outperforming benchmarks for U.S. and Asian markets. Economic growth in the nations sharing the euro accelerated in the first quarter as the German economy, Europe's largest, expanded at the fastest pace since 2001, government reports today showed.

Average per-share earnings growth among companies in the Stoxx 600 will be 12.4 percent, according to a survey of analysts by FactSet Research Systems Inc. That exceeds the average 10 percent growth of the past decade, the data show.

BNP, ING

Benchmarks climbed in all 18 Western European markets except Denmark, Norway and Belgium. France's CAC 40 Index and Sweden's OMXS30 Index were the biggest gainers, adding 1 percent.

BNP Paribas, France's second-biggest bank, rose 4.8 percent to 54.5 euros. The lender said first-quarter profit rose 56 percent to 1.72 billion euros ($2.2 billion), beating the 1.24 billion median estimate of seven analysts surveyed by Bloomberg News.

ING, the largest Dutch financial-services company, increased 2.7 percent to 21.80 euros. First-quarter profit rose 72 percent to 1.94 billion euros, exceeding the 1.67 billion-euro median expectation of eight analysts polled by Bloomberg.

``Corporate- and investment-banking activities have been sustained,'' said Emmanuel Soupre, a fund manager at Neuflize Gestion in Paris, which oversees $15.6 billion. ``Financials have produced positive surprises.''

Royal & Sun Alliance added 5.8 percent to 77.75 pence. The U.K.'s second-biggest property and casualty insurer said first- quarter net income almost tripled to 122 million pounds ($228.2 million) after it sold assets.

Ericsson Upgraded

The company's operating result, which includes a forecast for investment returns, was a profit of 160 million pounds, compared with 82 million pounds. That beat the 120 million-pound median estimate of five analysts surveyed by Bloomberg.

Ericsson climbed 2.3 percent to 22.2 kronor after the CSFB analysts raised their recommendation on the share to ``outperform'' from ``underperform.''

``While wireless infrastructure growth will slow in 2005 to 9 percent, it will re-accelerate to 12.5 percent in 2006 and still grow at a respectable 7 percent in 2007,'' analysts including Eiji Aono said in a note to investors.

Nokia, the world's biggest handset maker, climbed 1.6 percent to 13.31 euros. Alcatel SA, the world's largest maker of broadband equipment, increased 1.1 percent to 8.41 euros.

Industry Gauges

The Stoxx 600 Technology Index added 1.3 percent, while the gauges tracking banks and insurance companies rose 1 percent and 1.3 percent respectively. None of the 18 benchmark's industry groups declined.

U.S. retail sales rose 1.4 percent, double the median estimate in a Bloomberg News survey, reflecting higher receipts at gas stations and greater demand for automobiles and clothing. March sales rose 0.4 percent, more than reported last month, the Commerce Department said today in Washington.

A separate government report showed the number of Americans filing new claims for jobless benefits unexpectedly rose last week to 340,000.

The Standard & Poor's 500 Index of U.S. stocks has declined 3.4 percent in 2005 on concerns about slowing growth. The Morgan Stanley Capital International Asia-Pacific Index, which tracks 945 stocks, has lost 3.8 percent this year.

European Reports

Gross domestic product rose 0.5 percent from the fourth quarter, when it expanded 0.2 percent, the European Union's statistics office, Eurostat, said today in Luxembourg. German growth increased 1 percent, according to the country's Federal Statistics Office.

Oil decreased after a U.S. government report yesterday showed that the country's oil inventories last week rose twice as much as expected. Crude oil for June delivery fell as much as 1.6 percent to $49.63 a barrel on the New York Mercantile Exchange after dropping 3.1 percent yesterday.

Statoil ASA, Norway's largest oil company, lost 4.5 percent to 110.75 Norwegian kroner as the stock traded without the right to a special cash payment of 2.1 kroner.

Lastminute Bid

Lastminute.com Plc, the U.K. seller of short-notice vacations, climbed 8.8 percent to 166.5 pence, extending yesterday's 45 percent increase. Sabre Holdings Corp., operator of the Travelocity.com online travel service, today said it agreed to buy Lastminute.com for 577 million pounds. The bid is 57 percent more than Lastminute's closing price two days ago, the companies said.

ABB Ltd., the world's biggest supplier of power networks, gained 1.7 percent to 7.78 Swiss francs. The company this year expects to post its first-ever profit in the U.S., its largest market, as economic growth boost demand for electricity transmission and distribution equipment.

Shares of Royal Ahold NV and Delhaize Group, the European owners of U.S. supermarket chains, fell on concern about the outlook for sales after the companies reported declines in first-quarter revenue or forecast annual gains that were smaller than previously estimated. U.S. store operators Wal-Mart Stores Inc. and Target Corp. also posted disappointing results.

Delhaize, owner of Food Lion and Harveys stores, tumbled 7.6 percent to 47.21 euros. Ahold, whose grocery chains include Giant, slid 2.8 percent to 5.92 euros.

Agfa-Gevaert NV tumbled 2.2 percent to 23.5 euros. Europe's largest producer of health-care information technology said first- quarter sales slumped 14 percent. Peter van Assche, an analyst at Dexia Securities, downgraded the stock to ``neutral'' from ``add'' and cut the share price forecast to 26 euros from 30 euros.

Schaffner Holding AG, Europe's largest maker of filters against electromagnetic interference, dropped 6.6 percent to 156 Swiss francs after the company posted a fiscal first-half loss from a year-earlier profit, citing higher raw material costs as a factor.

To contact the reporter on this story: Margo Towie in Brussels at mtowie@bloomberg.net.

Last Updated: May 12, 2005 09:00 EDT